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Vitalik Buterin claims cryptocurrency is in a bubble but does not know when it will burst, and he believes Ethereum has a “possibility” of overtaking Bitcoin in the future.
Ethereum creator Vitalik Buterin believes that cryptocurrency is in a bubble and that the energy controversy raging around Bitcoin mining necessitates that it accept technical reform.
Buterin told CNN on Tuesday that “We’ve had at least three of these big crypto bubbles so far,” and that it should have stopped months ago or months from now.
The 27-year-old did not say if the recent collapse, which brought Bitcoin down to about $30,000, was an indication that the crypto boom was coming to an end, but he did say:
“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.”
Elon Musk’s declaration of his reservations about Bitcoin’s power use was one factor in the price drop. According to Philip Gradwell, Chief Economist at Chainalysis, some institutional buyers might be concerned about cryptocurrency’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.”
Via the upcoming transition to ETH 2.0, Ethereum is transitioning from a Proof-of-Work (PoW) consensus algorithm to a Proof-of-Stake (PoS) consensus algorithm. It would significantly reduce Ethereum’s energy demand, with Nimbus reporting that PoS will be up to 99 percent more energy efficient. Buterin stressed the importance of the change, saying:
“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.”
Though Buterin’s evaluation of Musk’s Twitter antics would certainly be divisive, Bitcoiners may welcome it. He observed that this is a relatively recent phenomena in the cryptocurrency room, and that Musk’s effect would wane with time. “I think it’s reasonable to expect a bit of craziness,” he said. “But I believe the markets will learn. Elon will not be able to wield such power indefinitely.”