Ethereum's 'Father': Unfazed By The Recent Sell-off, Claims 'Elon Effect' Will Gradually Lapse | Smart Globies

Ethereum's 'Father': Unfazed By The Recent Sell-off, Claims 'Elon Effect' Will Gradually Lapse

Ethereum's 'Father': Unfazed by the recent sell-off, claims 'Elon effect' will gradually lapse

The market may be over already, or it may end a few months from now, according to Vitalik Buterin.
The massive price crash in the cryptocurrency market over the past few days has shocked investors around the world. But Vitalik Buterin was not among them - although the crisis wiped out a large part of his personal fortune.

In fact, the 27-year-old co-founder of Ethereum shared in an exclusive interview with CNN recently that he believes the crypto market is in a bubble.

However, he stressed that it is "very difficult to predict" when the bubble will burst.

"It could be over," Buterin said. "It could be over months from now."
On the morning of May 19, Ethereum, the internal coin on the network that Buterin invented, fell below $1,900 — a staggering 40% drop from the night of May 18, according to Coinbase. It later recovered to around $2,700 on the morning of May 20, but this price is still down sharply from the previous record high of $4,384 on May 11.

This incident may have cost Buterin significant costs. As the Ethereum digital value in Buterin's public wallet stood at around $870 million on the morning of May 20, a significant drop from about $1.1 billion a day earlier. Despite being only 27 years old, Buterin is a “veteran” in the crypto market who has experienced enough boom and bust cycles over the years.

“So far, we have seen the crypto bubble burst at least three times,” said the Russian-Canadian college dropout. “And often the reason bubbles end is because something happened that shows that the technology of cryptocurrency is not ready yet.”

"Cryptocurrency is not just a toy"

Buterin laid out his vision for Ethereum in his 2013 white paper, and the cryptocurrency launched two years later. Today, it is the second largest cryptocurrency in the world, after Bitcoin.

Unlike Bitcoin, which is considered "digital gold", Ethereum is a blockchain-based platform for developers to build and operate applications. It's like the Android or iOS operating system of the crypto space.

At the end of 2017, Buterin questioned whether the crypto space had really reached its market valuation. At the time, it had just crossed the $500 billion mark. At the time, he noted that it has in fact gained little and that the price of the cryptocurrency will soon increase.

However, what Buterin values is not the FOMO sentiment of the community, but rather the encouragement of the "huge" advances that cryptocurrency technology and applications have made in recent years.

For example, Ethereum activity has skyrocketed in recent months as it is the network that supports the sale of many non-fungible tokens, aka NFTs.

“It looks like crypto is closer to being ready to go mainstream than it was four years ago,” Buterin said. “Cryptocurrency is not just a toy anymore.”

Buterin added that while he is uncertain, there is a "potential" that Ethereum will eventually catch up to and surpass Bitcoin in terms of market value.

Element "Elon"

However, Ethereum and cryptocurrencies in general still have problems. First, they are still extremely volatile, especially for retail investors accustomed to stock market moves.

And "some billionaires" seem to be treating crypto as a toy. A typical example is Elon Musk with causing waves of virtual currency to shake the market.

Public sentiment took a drastic turn after Musk tweeted on May 12 that Tesla would stop accepting bitcoin payments due to environmental concerns about cryptocurrencies. The $365 billion market was gone that day, according to CNBC .

Buterin acknowledged that the crypto market tends to be "vulnerable" to disruptive events, before they can "build an immune system over time".

"Elon Musk's tweets are something the crypto space has only been getting into for the first time, quite literally, in the last few months," Buterin said. "I think it's reasonable to expect a little bit of madness. But the market will learn and Elon won't be able to exert an influence like this forever."

The Tesla CEO also repeatedly pumped Dogecoin, a cryptocurrency that started out as a joke, before mocking it during an appearance on Saturday Night Live earlier this month. And Buterin is extremely interested in this billionaire's passion for Dogecoin.

"The fact that he's a $100+ billion billionaire or the CEO of Tesla and SpaceX, none of this changes the fact that he's ultimately a human being - and humans have a strange association with dogs," Buterin shared. "I don't think Elon Musk has any bad intentions behind his actions."

Vitalik Buterin, the co-creator of Ethereum, said governments cannot completely block blockchain but they can make it harder for people to access.

"Please don't give me virtual money"

Another animal trending cryptocurrency other than Dogecoin that many are excited about is Shiba Inu, which also started as a joke.

The coin depreciated by about a third last week after Buterin donated a billion dollars worth at the time to the Covid-19 relief fund in India.

"The challenge with these 'dog coins' is that the market for them is still pretty thin," Buterin said. "There's really no way to sell a billion dollars of Shiba Inu coins and get more than a few million dollars because of the huge slippage."

Buterin also recently announced plans to burn, or remove from the market 90% of its Shiba Inu cryptocurrency, which has been donated by multiple senders. Buterin also emphasized that he did not want to be given to him by "someone" who created the coin for "marketing" purposes.

"First of all, I don't really know or understand a lot of these projects. So I can't endorse them," he said. "I saw in my wallet a few thousand dollars something called free coins. I don't know what they are."

Buterin urged those who want to "do something warm and soft" with the crypto supply to donate it directly to charity.

Governments Can Make Cryptocurrency Survival Difficult

The latest crypto sell-off was triggered in part by fears of a crackdown in China. A trio of Chinese banking and financial watchdogs said on May 18 that financial institutions and payment companies should not engage in any crypto-related transactions, as well as should not provide crypto-related services to customers.

Speaking about policy news from China, Buterin acknowledged that regulation is "always a concern," although concerns about outright bans have faded.

"Doing anything like that seems much harder and less realistic," Buterin said. “But at the same time, governments have a lot of power to make it harder to get into the crypto space.”

While blockchains are decentralized and "governments can't completely take them down," Buterin said governments can block or restrict access.

“It is important to listen to regulators to try to do their best to address concerns,” the Ethereum creator also added that one of the risks is the relationship between cryptocurrencies. and regulators became "more confrontational than necessary".
Ethereum fees will decrease

Another important problem facing the Ethereum network is the high transaction fees that affect the user experience. Vitalik Buterin acknowledges this problem and admits that at the moment the system can only handle 20-50 transactions per second. While the demand for use far exceeds that number many times.

But he said he is "very confident" that costs will come down soon, as a major engineering overhaul is underway that will allow it to scale quickly.

Ethereum is moving away from Proof of Work, the original algorithm in blockchain technology, towards a newer concept called Proof of Stake. Simply put, this upgrade means that system participants are incentivized with rewards, paid in Ethereum, to stay online and keep the network under control. According to a recent study, switching to Proof-of-Stake will help Ethereum cut the amount of electricity consumed by mining operations by 99%.

"We're going from consuming energy similar to a medium-sized country to just consuming energy like a village," Buterin said.

And he also does not rule out the possibility that Ethereum will one day "catch up and even surpass Bitcoin" to become the world's largest cryptocurrency.

“If bitcoin sticks with its technology, Proof-of-Work path and mining as it is, there is a big risk that it will be left behind,” he asserted.

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