{"id":114678,"date":"2021-05-20T13:01:24","date_gmt":"2021-05-20T13:01:24","guid":{"rendered":"https:\/\/fin2me.com\/?p=114678"},"modified":"2021-05-20T13:01:24","modified_gmt":"2021-05-20T13:01:24","slug":"ethereums-27-year-old-founder-says-were-in-a-crypto-bubble-did-it-just-burst","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/ethereums-27-year-old-founder-says-were-in-a-crypto-bubble-did-it-just-burst\/","title":{"rendered":"Ethereum&#39;s 27-year-old founder says we&#39;re in a crypto bubble. Did it just burst?"},"content":{"rendered":"<p><cite>New York (CNN Business)<\/cite>The crypto crash of the past few days has shocked investors around the world. Vitalik Buterin isn&#8217;t among them &#8212; even though the meltdown wiped out a huge chunk of his personal wealth.<\/p>\n<p>In fact, the 27-year-old co-creator of ethereum told CNN Business in an exclusive interview Tuesday morning he believed cryptocurrencies are in a bubble.<br \/>\nHe stressed, however, that it&#8217;s &#8220;notoriously hard to predict&#8221; when bubbles will pop.<\/p>\n<ul><\/ul>\n<p>&#8220;It could have ended already,&#8221; Buterin said. &#8220;It could end months from now.&#8221;<\/p>\n<ul><\/ul>\n<blockquote>\n<p>Elon is not going to have this influence forever.&quot;<\/p>\n<p>Vitalik Buterin<\/p>\n<\/blockquote>\n<p>By Wednesday morning, ether, the in-house currency on the network Buterin invented, crashed below $1,900 &#8212; a staggering drop of more than 40% from Tuesday night, according to Coinbase. Ether rebounded to around $2,700 Thursday morning, but that&#8217;s still down sharply from the record high of $4,384 on May 11.<\/p>\n<p>The nosedive may have cost Buterin, a Russian-Canadian programmer who dropped out of college, his newfound status as a crypto billionaire. The value of ether in Buterin&#8217;s closely watched public wallet stood at approximately $870 million Thursday morning, down from around $1.1 billion the morning before.<br \/>\nEven though he&#8217;s just 27, Buterin is a veteran of these crypto boom-bust cycles, at least as much as anyone can be.<br \/>\n&#8220;We&#8217;ve had at least three of these big crypto bubbles so far,&#8221; said Buterin, who co-founded Bitcoin Magazine in 2012. &#8220;And often enough, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn&#8217;t there yet.&#8221;<\/p>\n<h3>&#8216;Crypto isn&#8217;t just a toy anymore&#8217;<\/h3>\n<p>Buterin laid out his vision for ethereum in a 2013 white paper, and ethereum launched two years later. Today it&#8217;s the second-largest cryptocurrency, behind only bitcoin.<br \/>\nUnlike bitcoin, which is viewed as &#8220;digital gold,&#8221; ethereum is a blockchain-based platform for developers to build and operate apps. It&#8217;s like the Android or iOS of the crypto space.<br \/>\nIn late 2017, Buterin published a tweet storm that questioned whether the crypto space had really earned its market valuation, which at the time had just surpassed half a trillion dollars. He noted how little had actually been accomplished and crypto prices soon tanked.<br \/>\n<img decoding=\"async\" alt=\"Bitcoin plunges below $40,000 as China widens its crypto crackdown\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210519035859-bitcoin-photo-illustration-0427-large-169.jpg\"><br \/>\nUnlike then, Buterin is encouraged by the &#8220;huge&#8221; progress the technology and applications have made in recent years.<br \/>\nFor example, ethereum activity has skyrocketed in recent months because it is the network that backs the sale of many non-fungible tokens, or NFTs.<br \/>\n&#8220;It feels like crypto is close to ready for the mainstream in a way that it wasn&#8217;t even four years ago,&#8221; Buterin said. &#8220;Crypto isn&#8217;t just a toy anymore.&#8221;<br \/>\nButerin added that although he&#8217;s not sure, there is a &#8220;possibility&#8221; that ethereum eventually catches up and surpasses bitcoin in market value. <\/p>\n<h3>The Elon factor<\/h3>\n<p>Yet ethereum, and cryptocurrencies broadly, still have problems. One, they remain extremely volatile, especially for retail investors used to tamer moves in the stock market.<br \/>\nAnd some billionaires appear to be treating crypto as playthings. Elon Musk&#8217;s on-again, off-again love affair with various coins have sent shockwaves through the entire space.<br \/>\nCrypto sentiment took a turn after Musk tweeted on May 12 that <span>Tesla<\/span> <span>(<span>TSLA<\/span>)<\/span> would stop accepting bitcoin as payment because of concerns about the cryptocurrency&#8217;s environmental footprint. (The complex bitcoin mining process requires vast amounts of computer power and electricity.) A stunning $365 billion vanished from the crypto space that day, according to CNBC.<br \/>\n<img decoding=\"async\" alt=\"Elon Musk is holding steady on bitcoin as crypto markets tumble\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210427123851-01-elon-musk-0309-file-large-169.jpg\"><br \/>\nButerin acknowledged that crypto markets tend to be &#8220;vulnerable&#8221; to disruptive events before they &#8220;build up an immune system over time.&#8221;<br \/>\n&#8220;Elon Musk tweeting is something that the crypto space has only been introduced to for the first time literally last year and this year,&#8221; Buterin said. &#8220;I think it&#8217;s reasonable to expect a bit of craziness. But I do think that the markets will learn. Elon is not going to have this influence forever.&#8221;<br \/>\nThe Tesla billionaire also repeatedly pumped up dogecoin, a cryptocurrency that started as a joke, before poking fun of it during his Saturday Night Live appearance earlier this month.<br \/>\nButerin chalked up Musk&#8217;s dogecoin fascination to an innocent interest.<br \/>\n&#8220;The fact that he is a 100-plus billionaire and he runs Tesla and SpaceX and all these things doesn&#8217;t change the fact that ultimately he&#8217;s a human &#8212; and humans get excited about dog coins. That&#8217;s just a thing that humans get excited about,&#8221; Buterin said. &#8220;I don&#8217;t think that Elon has a kind of malevolent intent in any of this.&#8221;<\/p>\n<p><img decoding=\"async\" alt=\"Vitalik Buterin, the co-creator of ethereum, says governments can&amp;#39;t completely stop blockchain but they can make it harder for people to access.\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210518150319-01-vitalik-buterin-file-large-169.jpg\"><\/p>\n<h3>Buterin: Please stop gifting me random coins<\/h3>\n<p>Another dog coin that humans get excited about is Shiba Inu, which was started as a joke that plays off dogecoin (yes, a parody of a parody).<br \/>\nShiba collapsed by about a third last week after Buterin donated what was at the time worth a billion dollars to a Covid-19 relief fund in India. The selloff underscored the lack of liquidity in some of these alt coins.<br \/>\n&#8220;The challenge with these dog coins is that the markets for them are still fairly thin,&#8221; Buterin said. &#8220;There is not actually a way to sell a billion dollars of Shiba coin and get more than a couple of million dollars out of hit.&#8221;<br \/>\n<img decoding=\"async\" alt=\"Ethereum&amp;#39;s 27-year-old creator is now a billionaire\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210504085749-vitalik-buterin-file-restricted-large-169.jpg\"><br \/>\nButerin also recently announced plans to burn, or remove from circulation, 90% of his Shiba holdings, which had been gifted to him. In the transaction hash, Buterin said he didn&#8217;t want to be a &#8220;locus of power of that kind.&#8221; During the interview, Buterin stressed he doesn&#8217;t want &#8220;random people&#8221; who create coins to give him coins for &#8220;marketing&#8221; purposes.<br \/>\n&#8220;First of all, I don&#8217;t really know or understand many of these projects well. So, I can&#8217;t endorse them,&#8221; he said. &#8220;I see in my wallet that I have like a few thousand dollars of something called free coin. I don&#8217;t know what free coin is.&#8221;<br \/>\nButerin urged people who want to &#8220;do something warm and fluffy&#8221; with coin supply to donate it to charity directly. <\/p>\n<h3>Governments can make life difficult for crypto<\/h3>\n<p>The latest crypto crash was triggered in part by concerns about a crackdown in China. A trio of Chinese finance and banking watchdogs said Tuesday that financial institutions and payment companies should not participate in any transactions related to cryptocurrency, nor should they provide crypto-related services to clients.<br \/>\nSpeaking before the China news, Buterin acknowledged that regulation &#8220;is always a concern,&#8221; though fears of outright bans have faded.<br \/>\n<img decoding=\"async\" alt=\"Bitcoin mining in China could soon generate as much carbon emissions as some European countries, study finds\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210407140217-02-bitcoin-mining-china-file-restricted-large-169.jpg\"><br \/>\n&#8220;It just seems much harder and much less realistic to do anything like that,&#8221; Buterin said. &#8220;At the same time, governments do have a lot of power to make it more painful to participate in the crypto sector.&#8221;<br \/>\nEven though the blockchain is decentralized and &#8220;governments can&#8217;t completely take them down,&#8221; Buterin said government can block or limit access.<br \/>\n&#8220;It&#8217;s important to listen to regulators to try to do our best to address concerns,&#8221; Buterin said, adding that the risk is the relationship between crypto and regulators becomes &#8220;more confrontational than it needs to be.&#8221;<\/p>\n<h3>Buterin is &#8216;very confident&#8217; ethereum fees will tumble<\/h3>\n<p>Billionaire Mark Cuban complained to The Defiant in February that ethereum is being limited by &#8220;ridiculous&#8221; transaction costs, a problem that is inhibiting its growth.<br \/>\nButerin acknowledged transaction fees are &#8220;very high right now&#8221; and that the ethereum blockchain can only process between 20 and 50 transactions per second despite very high demand.<br \/>\nBut the ethereum inventor said he&#8217;s &#8220;very confident&#8221; costs will come down because of a major technical makeover underway that will allow it to rapidly scale up.<br \/>\nEthereum is moving away from Proof of Work, the original algorithm in blockchain technology, toward a newer concept called Proof of Stake. In short, the upgrade will mean that the more ether a miner owns, the more mining power they have.<\/p>\n<h3>The climate problem<\/h3>\n<p>At the same time, the switch to proof of stake will allow ethereum to cut its energy usage by between 1,000 and 10,000 times, Buterin said.<br \/>\n&#8220;We go from consuming the same energy as a medium-sized country to consuming the same energy as a village,&#8221; he said.<br \/>\nBitcoin, on the other hand, runs on proof of work &#8212; a key difference that Buterin argues legitimizes the environmental worries around bitcoin.<br \/>\n&#8220;I definitely think [those concerns] are real,&#8221; he said. &#8220;The resource consumption is definitely huge. It&#8217;s not the sort of thing that&#8217;s going to break the world by itself, but it&#8217;s definitely a significant downside.&#8221;<br \/>\nButerin added that it&#8217;s not just the power consumption of bitcoin miners, but the hardware required to do the mining. <\/p>\n<ul><\/ul>\n<p>That&#8217;s why Buterin said there will be more calls within the bitcoin community to either switch to proof of stake, or move towards a hybrid, as it evolves and adapts to technological progress.<br \/>\n&#8220;If bitcoin sticks with its technology exactly as it is today,&#8221; he said, &#8220;there&#8217;s a big risk it will get left behind.&#8221;<br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2021\/05\/20\/investing\/vitalik-buterin-ethereum-billionaire\/index.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New York (CNN Business)The crypto crash of the past few days has shocked investors around the world. Vitalik Buterin isn&#8217;t among them &#8212; even though [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":114677,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Ethereum&#039;s 27-year-old founder says we&#039;re in a crypto bubble. 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