Ethereum co-founder discusses what’s really important ― and what the future holds
After soaring to great heights in 2021 ― ATHs, the NFT craze, mainstream adoption ― cryptocurrencies have endured a steady selloff in 2022, as total market cap plunged from a record $3 trillion last year to just under $1 trillion currently.
Of course, crypto is not the only thing down in 2022. However, the dip has caused analysts to speculate whether assets like bitcoin (BTC) and ether (ETH) now move in tandem with traditional markets, and no longer to the beat of their own drum.
While we have heaps of historical data to show that the stock market and other securities are cyclical, the tape on crypto runs short. As such, investors ― better yet, believers ― of crypto are left wondering where we go next. Did the bubble finally burst? Is the downturn just a reflection of markets and the economy as a whole? Or is crypto experiencing an identity crisis?
Recently, one of the most prominent figures in the space shared his thoughts on the state of crypto and, more importantly, its future. In a Fortune interview, Ethereum co-founder Vitalik Buterin explained that while he isn’t necessarily worried about crypto, he doesn’t like how Ethereum has been consumed by price speculation.
Crypto’s greater good
To quote Buterin, he finds the obsession over crypto prices “totally not interesting.” As someone who wrote Ethereum’s white paper when still a teenager, he never imagined how big the network (or crypto in general) would become, but also didn’t intend to create the next Bitcoin.
Instead, Ethereum became the second biggest name in crypto thanks to its broader aspirations for blockchain tech. To date, Buterin acknowledged a lot of innovations that have sprung from the Ethereum network, from the emergence of NFTs and DAOs, to the societal impact of cross-border crypto transactions in the Ukraine crisis.
The latter is a rather significant aspect of crypto’s ongoing story, and one that Buterin feels gets lost in the shuffle. While inhabitants of the developed world may look at crypto as a way to get rich in either the short or long term, citizens in Ukraine or Brazil may view it as a “lifeline,” according to Buterin. After all, a big part of crypto’s original ethos was to create a decentralized financial system that can be accessed by anyone, regardless of their financial or social status.
Merge ahead
While Buterin feels Ethereum has accomplished a lot that it set out to do, he still acknowledges that it is very much an unfinished project. For anyone following closely, this is all culminating with the network’s highly anticipated “merge,” in which the Ethereum blockchain will permanently transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism for validating transactions.
While there is a lot of complexity behind this move, the biggest takeaway is that Ethereum will no longer require the heavy computation that Bitcoin and other PoW blockchains need to conduct transactions. Instead, PoS essentially requires participants to put their money where their mouth is and stake crypto ― rather than mine it ― to reap the rewards of validating.
Arguably the biggest benefit Buterin sees in the merge to PoS is its environmental impact. Ridding Ethereum of high-powered mining rigs will drastically improve the network’s sustainability, reportedly reducing energy consumption by 99.5%.
In further efforts to democratize Ethereum for everyone, the merge also intends to make the network more scalable and affordable to transact on. A big issue plaguing the blockchain right now is the prohibitive cost of gas fees, which Buterin plans to alleviate through sharding, a process that eases congestion on the network by splitting it into multiple chains ― creating greater capacity and lowering fees in the process.
While the merge is slated to happen sometime in 2022, the changes will not happen overnight. Buterin acknowledged it will take time for all the benefits to come to fruition, but that the future of Ethereum depends heavily on its ability to evolve. “If Ethereum fails to scale, then Ethereum definitely failed,” remarked Buterin back in December.
Crypto Darwinism
While Ethereum’s virtue and the merge are reasons to be optimistic about the future, they are likely not enough to ease the minds of FUD-consumed investors.
For that, it’s helpful to view the current crypto bear market similarly to the tech bubble burst of the early 2000s. Sure, it’s become a rather cliche comparison by now, but the parallels between Web 1.0 and Web 3.0 should not be understated. Market crashes are often viewed as a game of survival of the fittest, but more optimistically, they can be perceived as an opportunity for great innovation and modernization.
“Crypto has had ups before, and it has had downs before, and it will have ups and downs again,” Buterin said. “The down periods are certainly challenging, though they are also often periods where the most meaningful projects get nurtured and built.”
If Ethereum is truly meant to survive this crypto winter, then the outcome of the merge, and all of the big promises that come with it, will reflect that. The same can be said for its crypto contenders, as there will be more pressure than ever to innovate and provide value to users. It’s sink or swim.