Buterin: ETH Will Be Worthless Unless Protocol Changes
In response to claims that the Ether (ETH) cryptocurrency is headed for collapse unless the protocol changes, Ethereum co-founder Vitalik Buterin agrees for now.
“In Ethereum as it presently exists, this is absolutely true, and in fact if Ethereum were not to change, all parts of the author’s argument [...] would be correct,” Buterin wrote in a Reddit post.
Cryptocurrency entrepreneur Jeremy Rubin made his claims in an article on TechCrunch. In his opinion, Ethereum has problems with scaling and smart contract security that will cause it to lag behind competitors, inevitably leading to a collapse by “economic abstraction.”
Economic abstraction means that the payment of fees (Gas) will happen in a token that is not native to the Ethereum network. Instead of paying gas in ETH, the owner of a smart contract would pay in the token native to their contract, likely based on the ERC-20 standard. This could make ETH redundant and decrease its value by extension.
Buterin argues that Ethereum can survive by being able to evolve and develop. He adds that the Ethereum community is considering two proposals, which could boost ETH at a native protocol level. This means that ETH would be required to pay Gas. In doing so this creates a structure by which the “the equilibrium value of ETH in this scenario [...] is very much nonzero,” Buterin states on Reddit.
However, the community isn’t too worried. “Isn't it better to recognize what's wrong than living in the illusion that everything is going great? He seems humble enough to recognize what's wrong with [his] own project,” says Reddit user u/Alzerion. Others are taking the funny approach to his reply: u/danielkoala writes, “I understand some of these words. Hmpm.”
Still, Ethereum is already looking into ways to solve its problems. Buterin’s previous tweetstorm - comprised of a whopping 75 tweets - explains the history of the Proof of Stake (PoS) consensus and roadmap for Casper, a new PoS model. This effort is now referred to as Ethereum 2.0, and is speculated to be the answer Ethereum needs in terms of scaling. However, Buterin concluded the tweetstorm by saying that there is no formal timeline for its implementation, which could mean a prolonged period of uncertainty for Ethereum.