Buterin considers the Terra collapse as an example of how price drops expose unsustainable business models, only successful during bullish trends. He said that Bitcoin would have a finite number of coins, which would cause miners not to receive fee payments, not new tokens.
Vitalik Buterin, the creator of the Ethereum network, recently said that falling prices help expose weaknesses in the crypto market.
Buterin believes price drops help reveal problems always present from the beginning. He explained that unsustainable business models usually succeed during booms amid a constant influx of new banknotes.
The co-creator of Ethereum considers the collapse of the Terra ecosystem as an example of how price drops expose unsustainable business models.
The Russian-Canadian programmer thinks it is easy to sustain the development of a protocol during the bullish market. However, he pointed out that newly expanded teams often find it difficult to remain financially stable when prices plummet.
He also stated that the volatility of cryptocurrencies might reduce in the medium term, becoming as volatile as popular traditional assets. In that regard, he considers cryptocurrencies will behave similarly to gold and the stock market.
The Future Security of Bitcoin Worries Vitalik Buterin
Buterin said he is concerned about the security of Bitcoin in the long term due to its low daily income. Besides, the creator of Ethereum fears that its proof of work (PoW) will provide the network with much less security.
The programmer said that the security of Bitcoin in the long term would depend entirely on fees. He explained that BTC is not earning the fee revenue necessary to secure a multi-million dollar system.
Although security is among the main attractions of cryptocurrencies, Buterin thinks that Bitcoin will not always be secure.
He pointed out that blockchains currently use various protocols to reinforce their security, including PoW and proof of stake (PoS).
PoW rewards miners with newly issued Bitcoin for validating blocks, but the cryptocurrency will have a finite number of coins. Therefore, they will not receive new tokens but fee payments for the transactions.
Buterin noted the daily fees on the Bitcoin network were around USD 300,000 but had not grown much over the last five years.
Buterin Believes Bitcoin Cannot Migrate to Proof of Stake
Vitalik Buterin also stated that PoS provides much less security per US dollar spent in transaction fees than PoS. He also pointed out that migrating Bitcoin to that consensus protocol seems politically unfeasible.
Buterin said that Bitcoin should switch to at least hybrid proof of stake to protect itself against attacks. However, the programmer considers that this would be a painful transition.
The creator of Ethereum pointed out that bitcoiners, who tend to be the most pro-PoW advocates, should understand this. He mentioned the Bitcoin civil wars in 2017, which showed the weakness of miners in the governance process.
Regarding the migration of Ethereum to proof of stake, Buterin said the upgrade should occur between September 10th and 20th.
However, Buterin did not talk about the high transaction fees on the Ethereum network, which are subject to many criticisms. That is allegedly one of the primary reasons for the arrival of ETH 2.0, which aims to be a low-fee blockchain.
By Alexander Salazar
