On September 1, Vitalik Buterin conducted an interview with economics author Noah Smith and the Ethereum co-founder talked a lot about Bitcoin and the long-term security of the network. Buterin also discussed the crash in the crypto economy and he insisted that he was “surprised the crash didn’t happen sooner.”
Buterin: Bitcoin ‘fails to achieve level of revenue required to secure what could be a multi-trillion dollar system’
Ethereum co-founder Vitalik Buterin recently interviewed the economics author Noah Smith and Buterin had a lot to say about the current state of crypto. Smith first asked Buterin what he thought of the recent crypto crash and Buterin said he thought he would have crashed sooner.
“I was surprised that the accident didn’t happen sooner,” Buterin said in the interview. “Normally, crypto bubbles last around 6-9 months after breaking above the previous high, after which the rapid drop occurs quite quickly. This time the bull market lasted almost a year and a half,” the promoter added.
Buterin also spoke extensively about the Bitcoin (BTC) network and The Merge, Ethereum’s highly anticipated transition from proof-of-work (PoW) to proof-of-stake (PoS). He claims Bitcoin is not cutting it when it comes to royalty income from block grants.
“In the long term, Bitcoin’s security will come entirely from fees, and Bitcoin is simply failing to achieve the level of revenue required to secure what could be a multi-trillion dollar system,” Buterin said.
When Smith asked Buterin about Bitcoin’s energy consumption, the Ethereum co-founder noted that PoS would not only reduce environmental damage, it was also about securing the blockchain.
“A consensual system that unnecessarily costs huge amounts of electricity is not only bad for the environment, it also requires the issuance of hundreds of thousands of BTC or ETH every year,” Buterin pointed out. “Eventually, of course, the emission will decrease to near zero, in which case it will cease to be a problem, but Bitcoin will then start dealing with another problem: how to ensure that it remains secure. Buterin added:
And these security motivations are also a very important driver behind Ethereum’s move to proof-of-stake.
Ethereum co-founder insists early proof-of-work era is “unsustainable and not coming back”
Buterin understands that Bitcoin won’t change its consensus mechanism, at least for now, but if the chain were attacked, he thinks the discussion of a hybrid PoS algorithm could come into play.
“Of course, if Bitcoin is really attacked, I expect the political will to at least move to a hybrid proof-of-stake will appear quickly, but I expect it to be a painful transition,” said the software developer to Smith. The Ethereum co-founder said he thinks people have the wrong idea that PoS gives the biggest stakeholders control of the network.
“There are also people who try to claim that PoS allows large stakeholders to control the protocol, but I think those arguments are just plain wrong,” Buterin said. “They are based on a misconception that PoW and PoS are governance mechanisms, when in reality they are consensus mechanisms. All they do is help the network agree on the correct channel.
Buterin went on to note that he thought the first version of PoW was a good start, but today he thinks it’s outdated, dying out, and probably won’t be coming back.
The first highly democratized era of proof-of-work was a beautiful thing, and it helped tremendously to make cryptocurrency ownership more egalitarian, but it’s not sustainable and it’s not coming back.
What do you think of Vitalik Buterin’s comments on the crypto crash, Bitcoin network and PoW vs PoS? Let us know what you think about this topic in the comments section below.
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