What did the 'father' of Ethereum say after the plunge of the cryptocurrency?
Vitalik Buterin, the founder of Ether, who was also "blown away" by hundreds of millions of dollars recently, admits that "cryptocurrency is in a bubble."
In a recent interview with CNN , the creator of Ether - Vitalik Buterin - said he was not as alarmed as investors around the world, although this plunge "blows away" many of the 27-year-old's assets. But on the contrary, he believes that cryptocurrencies are in a bubble period, although he asserted that "it will be difficult to predict when it will burst".
Vitalik Buterin, the creator of Ether. Photo: Cryptobriefing.
According to Coinbase, on the morning of May 19, the price of Ether fell below $ 1,900, 40% lower than the previous night. By the morning of May 20, the price of the world's second largest digital currency had recovered to $ 2,700 but was still much lower than the peak of $ 4,384 on May 11.
This plunge may cause Buterin to lose the title of the youngest cryptocurrency billionaire in the world, achieved in early May. The value of Ether in Buterin's wallet was only about 870 million USD as of May 20, down more than 200 million USD compared to the previous year. with the previous morning. "We've seen bubbles burst at least three times," said Buterin. "The reason is usually when there's some event happening that shows the technology isn't right."
Cryptocurrency is not a toy
Buterin laid out his vision for Ethereum in the 2013 White Paper, and the digital currency was born two years later. Currently, Ether has the second largest market capitalization 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 iOS or Android operating system for the crypto space.
At the end of 2017, Buterin took Twitter by storm, asking if the crypto space would really reach its proper market capitalization. At that time, the capitalization of Ether had just crossed the $500 billion mark. Buterin also said that it is not really worth it and that the price of this coin will soon increase.
Buterin is driven by the tremendous progress made in technology and applications in recent years. For example, Ethereum's activity has been strong over the past few months because it is a network that supports selling NFTs (non-replicable digital certificates).
“It looks like cryptocurrencies are about to become more popular, unlike four years ago,” Buterin said. According to the founder of Ether, although uncertain, this digital currency still has the ability to catch and surpass Bitcoin in terms of capitalization.
Impact from Elon Musk
However, Ethereum or cryptocurrency in general still has its problems. First, they are very volatile, especially for retail investors who are used to stock market moves.
Some billionaires are treating cryptocurrencies like a toy. Elon Musk's repeated love affair with many different cryptocurrencies has caused the market to wobble.
With just one tweet, Musk also made the price of the electronics market "evaporate" $ 365 billion on May 15. At that time, Musk informed that Tesla (TSLA) would stop accepting payments in Bitcoin due to concerns that Bitcoin mining would have a negative impact on the environment.
Buterin acknowledged that the cryptocurrency market is vulnerable to events before it "builds up an immune system over time".
"Musk's tweets are the kind of market that has only been literally reached last year and this year. I think the market will learn and Musk won't be influential forever," he said.
The Tesla CEO has also repeatedly "pumped" about Dogecoin - the digital currency that started as a joke, before joking it was a money-making trick earlier this month on a TV show.
" He's a billionaire with over $100 billion and CEO of Tesla and Space X, but that doesn't change the truth - he's still a man who's always been fascinated by iconic coins. dog. I don't think Elon is malicious in this," commented Ether's father.
Don't give me digital coins
Another dog-symbolic coin that gets everyone excited is the Shiba Inu. This coin also started similar to Dogecoin. Shiba prices plunged by about a third last week after Buterin donated $1 billion to the Covid-19 fund in India.
The "burning" of Shiba has shown the lack of liquidity of Altcoins - digital currencies born with the ambition of improving the downside, replacing Bitcoin.
Buterin said: "The challenge with these coins is that the market for them is still pretty small. There's no way to sell a billion dollars of Shiba and make more than a few million dollars.
Recently, Buterin announced his plan to get rid of 90% of the Shiba Inu money he was given. He emphasized that he does not want the founders to send him coins for advertising purposes. "First of all, I don't really know or understand this project well. So I can't authenticate them," he said.
According to Buterin, in his wallet there are several thousand free digital coins. He advises founders who want to do something warm to directly donate these digital coins to charity.
Governments can make it difficult for cryptocurrencies
The market was on fire on May 18, partly because China issued a risk warning about cryptocurrencies. Accordingly, three Chinese associations require financial institutions and payment companies not to engage in any crypto-related transactions, nor provide customers with any other services. related service.
In the face of warnings from China, Buterin acknowledged that regulations were "always a concern," although concerns about an outright ban have faded.
“Doing anything like that is much more difficult and impractical. Right now, governments have enough power to make it harder to get into the crypto space.”
The blockchain system is decentralized, and "governments can't put a total ban on it, but governments can block or restrict access.
“It is important to listen to regulators to try to address concerns,” Buterin said, adding that the risk could be that the relationship between cryptocurrencies and regulators becomes “more strained.” necessary level".
Ethereum transaction fees will decrease
Back in February, billionaire Mark Cuban complained about "irrational" transaction fees that are holding back Ethereum's growth. Buterin acknowledged that transaction fees are "very high" and that the Ethereum blockchain can only handle 20 to 50 transactions per second despite high demand.
The ethereum creator said he is "very confident" the fee will come down thanks to a major technical overhaul, which will allow it to scale quickly.
Ethereum is moving from the original blockchain algorithm - Proof of Work to operating under the new Proof of Stake model.
In a nutshell, upgrading means that participants are incentivized with rewards, paid in Ether, to keep them online and keep the network in check. This will eliminate the energy-consuming race like the Proof of Work algorithm.
According to Buterin, switching to the Proof of Stake algorithm will help Ethereum reduce energy consumption by 1,000 to 10,000 times.
"We're moving from using energy like a medium-sized country to a village," Buterin said. Bitcoin, on the other hand, runs on a Proof of Work algorithm that is the biggest difference when Buterin mentions the environmental concerns surrounding this digital currency.
"I'm sure those concerns are well-founded. The resource consumption is certainly huge. It doesn't destroy the world, but it's definitely a downside," Buterin said.
It's not just the power consumption of Bitcoin miners, he added, but also the hardware needed to mine.
This is why there will be more calls in the Bitcoin community to switch to the Proof of Stake algorithm or combine the two as it evolves and adapts to technological advancements. Buterin predicted: “If Bitcoin continues to operate with current technology, it will run the risk of being left behind.”
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