Summary
Proof-of-stake is a lot more complex and prone to attacks than proof-of-work, when it comes to blockchain security.
Custodial stablecoins can basically “veto” any hard fork, making smart contract blockchains rather centralized in practice.
An analysis of partial decentralization when it comes to blockchains.
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Dennis Diatel Photography/iStock Editorial via Getty Images I’ve been asked a number of times for an update for my views on Ethereum since my January 2021 article on the topic.
In that prior article, I described Ethereum, explained areas where I was bullish, but also expressed my fundamental concerns with it. The overall tenor of the article was somewhat critical of Ethereum, which is why it received so much attention. In that article, I was also quite bullish on the proliferation of stablecoins in the coming years.
I don’t mean to pitch my content here, but for context, members of Stock Waves already know my updated views on Ethereum, because I’ve been providing updates on Ethereum pretty much every month since that initial article.
The summary of those many reports was that I frequently described problems with the Ethereum blockchain including DeFi hacks, centralization issues, unintended chain splits, NFT speculation and so forth, but that I have been rather tactically bullish in terms of price action for the intermediate term, once I initiated regular coverage in January. Here are some brief excerpts: For those that are watching it, a firm Ethereum price break over $1,400 should be pretty bullish for the protocol in the intermediate term, since it clears out overhead resistance. -January 31, 2021 Statistically speaking, ethereum and other alts could very well outperform bitcoin to the upside during the bull period of the cycle as they often do, but I’d be worried about a lot of digital assets, especially outside of bitcoin itself, on a down leg of the cycle in maybe 2022 or 2023. -February 14, 2021 The amount of ETH on exchanges has been in a downtrend since August 2020, similar to what’s happening with BTC. All else being equal, that’s bullish. -April 14, 2021 While I have concerns about Ethereum’s long-term design and shift towards Ethereum 2.0 (the very ability to change its monetary policy shows how impermanent the monetary policy is), it’s hard to be bearish on price action in the intermediate term. EIP 1559, which I wrote about favorably in my otherwise somewhat critical public piece on Ethereum back in January, should be pretty bullish for price when it goes into effect. And with Ethereum 2.0 staking in effect since December 2020, ETH tokens continue to leave exchanges and get locked up. Implementing EIP 1559 while delaying the shift towards Ethereum 2.0 (which is basically the plan at the moment) is actually kind of a perfect storm for price in a positive way for the year ahead. So, while I have higher conviction on BTC than ETH with say a 5-year view, the specific dynamics holding up ETH prices are pretty strong for the back half of this year. It would need to break above $2,900 to get interesting again, though. Right now it’s in a sideways consolidation. -June 6, 2021 Overall, Ethereum still remains under a persistent supply squeeze at the moment (one-way staking until Ethereum 2.0 is launched, with about 7.4 million locked-up ETH at the moment), so I remain somewhat tactically bullish on price despite being long-term cautious about some of the technical fundamentals, use-cases, competitors, etc. -September 5, 2021 I remain tactically bullish on ether in terms of price action despite some misgivings about the long-term risks and use-cases. My tactical bullishness is in part based on the Ethereum 2.0 lockup contract that continues to soak up a ton of ether (up to over 8 million now, which can’t come out), and as a consequence of that, ether continues to quickly get drawn down from exchanges even a bit faster than bitcoins are getting drawn down from exchanges. It’s a well-engineered supply squeeze. -October 31, 2021 And it seems my view on stablecoins from the original January 2021 article was accurate, since they increased from $33 billion at the time of writing to $140 billion in capitalization in under a year: Stablecoins are particularly important, in my view. I’m bullish on the amount of money locked up in stablecoins. It’s a space to watch, for both good developments and bad developments. […]
source Proof-Of-Stake And Stablecoins: A Blockchain Centralization Dilemma
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