Since the start of the year, I am sure many of you have seen articles touting the demise of Ethereum. Recently, there was a rapid decline in the price of this crypto. Punditry once again went into overdrive. Hodlers of Ethereum will most certainly cry out as they watch the price of their beloved crypto fall. One can at least understand that. But its complete demise is another thing altogether. I decided to have a quick look around the crypto news sites to see if I could anything worth mentioning. Here are just some of the reasons for this sell-off:
Let us now take each point with a very brief discussion:
The introduction of the BitMex-ETH swap allows traders to short the price of ETH with up to 100x leverage. Word on the street is that it has not been confirmed but massive speculative flow facilitated a big drop in the price. Secondly, the big ether sell-off for fiat by the ICO startups has not helped. The core reason for this is that startups run with fiat and not cryptocurrencies, hence the need of fiat for day-to-day activities.
Finally, the matter of economic abstraction. A recent article by entrepreneur Jeremy Rubin caused a stir when he declared the collapse of Ethereum inevitable. Rubin’s article concentrated on economic abstraction (EA), a term the Ethereum community use in describing gas payments through a non-ETH asset. So, what is EA? EA is the paying of smart contract fees through an ERC-20 token other than Ethereum. According to Rubin, the continued use of other ERC-20 tokens for payment may lead to Ethereum’s redundancy.
Rubin’s article ended up soliciting a response from Vitalik Buterin. In what was a long response, Vitalik said the following:
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 (except the part about proof of stake, which would not even apply to Ethereum as it is today) would be correct.
Vitalik also went on to discuss two proposals – modified market fee, and storage maintenance fees. These proposals were essentially ways of dealing with the matter of economic abstraction. Ethereum’s price fell to a low of $168.72. This has since recovered and is currently $207.41. As for Ethereum disappearing, I think not but then again, your guess is as good as mine.
Swap your cryptos here:
Nosa Capital concentrates its' expertise in Strategy, Business Development, Project Management, Project Finance, Trending, and now cryptocurrencies