Ethereum co-founder Vitalik Buterin speaks on ‘collapse of ETH’
Ethereum community got all curious and agitated after Tech Crunch published an article on Ethereum – ‘collapse of ETH is inevitable’. Number of questions and doubts popped up and to answer it all co-founder Vitalik Buterin wrote a post giving an insight about it. Surprisingly, he agrees ‘collapse of ETH is inevitable’, at least for now.
Cryptocurrency entrepreneur Jeremy Rubin wrote the Tech Crunch article stipulating the price of ETH and that it is bound to plummet. Vitalik Buterin agreeing to the piece wrote on Reddit, “In Ethereum as it presently exists, this is absolutely true.”
Buterin further added, “[A]nd in fact if Ethereum were not to change, all parts of the author’s argument […] would be correct.” In the article, Rubin argues that Ethereum has problems with scaling and smart contract security. It is leading to the inability of outdoing the competitors and all of this will inevitably lead to the collapse of Ethereum (ETH) by “economic abstraction.”
The phrase ‘economic abstraction’ is used for describing the transaction payment or smart fee (gas) in some token that’s not Ethereum Network’s native token. It means that instead of paying gas in ETH, a smart contract owner would pay in the token that’s native to their contract that’s likely based on ERC-20 standard. According to Rubin’s argument, if all owners of smart contract pay in ERC-20 tokens instead of ETH, it would result in decreasing the value of the asset or make it valueless.
Vitalik Buterin responding to the article wrote, “…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.
The Ethereum co-founder also went on to explain that they’re trying to change and the community is strongly considering two proposals. He wrote, “…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.”
Vitalik even revealed the two proposals. The first one being, “Instead 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.”
Another one is, “…average gas usage is targeted to 50% of a (2x higher than today) gas limit, using a self-adjusting minimum transaction fee to do the targeting, where the minimum fee gets burned.” The fee will be charged to the block proposer and the block proposer can charge fees in spankchain tokens or other ERC20. However, it will still be the block proposer’s responsible for coming up with the “ETH to pay the minfee.”
Image via Shutterstock
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