An article by TechCrunch, titled ‘collapse of ETH is inevitable’, has made the Ethereum (ETH) community members overcurious as well as agitated...MORE
Amidst mounting doubts and queries, Ethereum co-founder Vitalik Buterin wrote a detailed post describing an insight about the possible outcome of ETH. To everyone’s surprise, Buterin also accepted that ETH will collapse soon.
In the TechCrunch article, author Jeremy Rubin, a crypto entrepreneur, has stipulated the ETH price and predicted that it will surely plunge. Echoing Rubin, Buterin wrote on Reddit,
In Ethereum as it presently exists, this is absolutely true.The Ethereum co-founder further explained,
[A]nd in fact if Ethereum were not to change, all parts of the author’s argument […] would be correct.
In the TechCrunch article, author Jeremy Rubin, a crypto entrepreneur, has stipulated the ETH price and predicted that it will surely plungeRubin said ETH has some problem with scaling and smart contract security, which is leading to the inability of outdoing competitors. All these will finally result in the downfall of Ethereum (ETH) by ‘economic abstraction’.
Economic abstraction means the transaction payment or smart fees (gas) in some tokens which are not the native coins of Ethereum Network. So, a smart contract owner can pay in the token which is native to the contract which is likely based on ERC-20 standard. If all owners of the smart contract pay in ERC-20 tokens in place of ETH, it will decrease the value of Ethereum and its market cap, Rubin argued.
In his response to Rubin’s article, Buterin said,
…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. Both of which have the property that they enshrine the need to pay ETH at protocol level, and furthermore the ETH gets burned, so there’s no way to de-facto take it out of the loop by making the medium-of-exchange loop go faster.
Cryptodawn didn't link to the source, It's Buterin at reddit:
HT his Twitter feed.I obviously have every incentive to disagree with this, but I think there are quite a few very critical economic and technical details that the article is missing.TLDR: we are likely not doing full "economic abstraction".Here is the core of their argument:Suppose we’re building a new decentralized application, BuzzwordCoin. By default, following a standard ERC-20 Token template, every transaction on BuzzwordCoin will pay gas in $ETH. Requiring every BuzzwordCoin transaction to also depend on ETH for fees creates substantial risk, third party dependency, and artificial downwards pressure on the price of the underlying token (if one must sell BuzzwordCoin for ETH ahead of time to run a BuzzwordCoin transaction, then the sell-pressure will happen before the transaction requires it, and must be a larger sale than necessary to ensure sufficient funds to cover the transaction).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. However, the community is strongly considering two proposals, both of which have the property that they enshrine the need to pay ETH at protocol level, and furthermore the ETH gets burned, so there's no way to de-facto take it out of the loop by making the medium-of-exchange loop go faster. The proposals are:...MUCH MOREInstead of paying for Gas in ETH, we could make every BuzzwordCoin transaction deposit a small amount of BuzzwordCoin directly to the block’s miner’s address to pay for the contract’s execution. Paying for Gas in a non-ETH asset is sometimes referred to as economic abstraction in the Ethereum community.
ETH: $285.44 down $3.53 (-1.22% )
