The headline makes it sound like Vitalik is warning that the entire industry could collapse soon, when the actual thing he said was just that if you invest all your money in a cryptocurrency you need to realize that it is possible for it to drop all the way to 0, so don't do that and instead invest responsibility with money you can afford to lose, which is a statement that I think everyone would agree with without thinking it is going to induce panic. (Essentially: this article is horrible clickbait.)
Check out the scams going on in the twitter thread below. I am quite impressed by how convincing it looks; it's very likely that people are falling for it.
Think he's trying to give a cautious warning but end up going binary 1 or zero. infinity or zero.
Most people who got into the market at good times in 2017 have not seen how insane the market has behaved in percentage term. Bitcoin went from $30 to zero before back then.
i starting to think of it like physical coins that goes out of circulation. wanna buy an old franc or roman coin, its worthless but people are trading it for its rarity; or it becomes cheap enough to be speculated again.
Whilst the reminder of not investing more than you are willing and able to lose cannot be repeated enough times, I do reckon it is important to put things into perspective: A very significant majority of traditional start-ups eventually fail, e.g. these articles from Forbes listing 90% (https://www.forbes.com/sites/neilpatel/2015/01/16/90-of-star...) and 80% (https://www.forbes.com/sites/ericwagner/2013/09/12/five-reas...), respectively. I consequently do not think a statement like this should be viewed as anything other than a simple and healthy reminder of how failure is inherent to entrepreneurship - something which naturally carries a risk for any investor. It is, however, also worth stressing how this, still largely unregulated, world attracts fraudsters. It is therefore not entirely unreasonable to assume an even greater percentage of projects will eventually hit 0 compared to traditional start-ups, and that investors thus ought to pay even closer attention to what they buy.
That usually only happens to scamcoins, especially when there's some sort of exit scam (see Monero Gold). So let's hope he's not talking about Ethereum..
He draws no distinction, and I believe that's his point.
"Reminder: cryptocurrencies are still a new and hyper-volatile asset class, and could drop to near-zero at any time. Don't put in more money than you can afford to lose. If you're trying to figure out where to store your life savings, traditional assets are still your safest bet."
He's not saying everything but the "real" cryptocurrencies. He's speaking to the industry, not just scams. Pretty clear he's including BTC, ETH, etc in his statement.
That's unfortunate. Because the people behind Bitcoin and Monero most definitely do not consider them comparable to or tantamount to shitcoins. Quite the opposite. They recognize that they are securing people's actual livelihoods and in some cases their very lives (privacy->safety).
To be honest, I actually already knew Vitalik was of that opinion. The fact people do not perceive what he (and other hypocrites) said as it is, is something I have also witnessed repeatedly. I wonder if that's why some of the greater philosophers in history mentioned that people see things exactly backwards.
What's he playing at here? The founder of a cryptocurrency should now full well the power they have saying words like this; I know he's young, and I know there's validity to the "don't invest more than you can afford to lose" but a statement like 'could drop to near zero' is almost BEGGING the market to go bearish when you're the founder of a currency.
Buy the rumor, sell the news has never been more apt than it is right now.
He may well want cryptos to reduce in value. Lots of people working in cryptos are more interested in the potential of the technology for creating social change than in making a fast buck from speculation, and the current high prices and high volatility are in some ways an obstacle to that.
Besides, he may feel some level of responsibility for the huge number of people who have lost money to token scams or who have borrowed money to 'invest' in cryptocurrencies and are currently hurting.
He's been making comments for a while now expressing concern over the direction the community is taking and the kinds of people who are who are becoming involved in the market. This latest comment seems to be in the same vein. I agree with him actually. Crypto is the Wild West of finance right now and, in spite of the legitimate promise shown by some of the tech, is the perfect breeding ground for fraud.
Either of those scenarios could send the markets down 85% within minutes or hours. In addition there are the usual systemic risks of 51% attacks, core infrastructure getting pwned, etc.
and 51% attacks do not require you to have 51% of all nodes on the network. Just 51% of all Active nodes on the network.
If someone finds a zero day exploit and manages to crash a large number of ethereum nodes they could do a 51% attack with a relatively small number of nodes.
That's incorrect. A 51% attack means an adversary having 51% or more of the hashing power (calculated as hashes generated per second) and using it to disrupt the normal operation of the blockchain.
A party with 51% of hashing power can single handedly create a blockchain that other nodes will accept over any competing chain, meaning they can rewrite history, or prevent any new transactions from being confirmed.
If consensus were based on number of nodes, the network could be easily Sybil attacked, given the cost of running what appears to be a node is next to nothing. It would also be difficult to make such a consensus protocol usable, as there's no efficient way to poll a large number of network nodes.
At this point, saying crypto will go to zero is like saying the internet will go to zero, meaning no one will use it. Yes, crypto can drop wildly but the only way they go to zero is if the energy they use for mining stops. Government intervention is not a threat since there are countries that are actively supporting it. The network effect is hard to overcome. Bitcoin and Ethereum are two that will weather just about everything. Also, both bitcoin and ethereum are development platforms which gives them staying power. The price might collapse but they will be around as long as people are willing to join the network to mine it and use it.
No- crypto has no intrinsic value. Energy used for mining doesn't give it value. It only has perceived value. If the crypto hype dies, it will drop to 0, even if plenty of people are mining still.
Look at anything we call money and you'll see it has 0 value on its own. As an example, we can't eat, seek shelter or get security from gold. You can say the same about just about everything that we call money. The value is in the trust that someone else will eventually give you something you want or need. In essence, money is transferable trust. So given this, we can use anything as long as we can trust it. Cryptocurrencies can certainly be used as liquid trust.
The big question is what will people trade for it.
A system of near instant global communication has no intrinsic value. Calculus has no intrinsic value. A token providing access to a borderless, Permission-less, decentralized, censorship resistant ledger has no intrinsic value. Double entry bookkeeping has no intrinsic value.
No one is using it to do anything other than hoard it hoping that the price goes higher than what they bought it at. That means it has no value outside of generating some hope that the price rises, which is very shallow and hardly valuable.
But that is not true. I end up using crypto to buy things online because some vendors I use give 25%+ discounts for buying using crypto. Saying "no one" uses it for commerce is just wrong.
I think the idea of contracts mindlessly enforced by a piece of silicon is a ill-conceived idea and quite a few people would agree with that. It sounds like a good idea at first glance, but it isn't. Various kinds of mistakes and errors happen all the time, situations change and unexpected events occur. This makes it necessary to deviate from what contracts says all the time and that is just not compatible with what something like Etherum is able to provide. But maybe I am just unaware of a good application of Etherum or a similar technology where setting things in stone is actually a good idea. What is the best existing use of Etherum, how does it benefit from its features and why is it not negatively affected by them?
