Vitalik Buterin thinks crypto is in a bubble, but doesn’t have a prediction of when it will pop and he believes there is a “possibility” Ethereum will overtake Bitcoin in the future.
Ethereum founder Vitalik Buterin thinks crypto is in a bubble and that the energy debate swirling around Bitcoin mining requires it to embrace technological change.
Buterin spoke with CNN on Tuesday, and noted that “We’ve had at least three of these big crypto bubbles so far,” and added that it could have ended already, or it could end months from now.
The 27-year-old didn’t comment on whether the recent crash which sent Bitcoin down to around $30,000 was an indicator of the crypto bubble ending, but said:
“Often enough, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn’t there yet.”
One factor in the Bitcoin price rash was Elon Musk’s announcement of his concerns over Bitcoin’s power usage. Philip Gradwell, Chief Economist of Chainalysis, said other institutional buyers may also hold concerns over crypto’s “environmental impact, use cases, illicit activity, and regulation.”
Bitcoin may get left behind
Buterin told CNN that energy concerns over Bitcoin’s Proof of Work mining are justified.
“The resource consumption is definitely huge. It’s not the sort of thing that’s going to break the world by itself, but it’s definitely a significant downside.”
Ethereum is in the process of moving from PoW to a Proof-of-Stake, or PoS consensus algorithm, through the forthcoming transition to ETH 2.0. It will dramatically decrease Ethereum’s energy consumption, with Nimbus estimating PoS to be up to 99% more energy efficient. Buterin emphasized the importance of the transition, nothing that:
“We go from consuming the same energy as a medium-sized country to consuming the same energy as a village.”
Buterin added that the power consumption of Bitcoin mining and the hardware required would see increasing calls from its community to either switch to PoS, or move towards a hybrid.
“If Bitcoin sticks with its technology exactly as it is today, there’s a big risk it will get left behind.”
While that call will undoubtedly be controversial, Bitcoiners may welcome Buterin’s assessment of Musk’s Twitter antics. He noted that this is a relatively new phenomenon in the crypto space, and Musk’s influence will wane over time. “I think it’s reasonable to expect a bit of craziness,” he said. “But I do think that the markets will learn. Elon is not going to have this influence forever.”