Vitalik thinks cryptocurrency volatility will stabilize like gold

Ethereum co-founder Vitalik Buterin was recently interviewed about the state of crypto markets and the future of blockchain technology. He predicted that the cryptocurrency market’s volatility would slow that of gold and stocks in the medium term – although he doesn’t know at what price.

The developer also talked about Proof of Work, Proof of Stake, and Bitcoin’s reluctance to adopt the latter.

Where will the encryption settle?

in an interview With blogger Noah Smith, Vitalik said he was surprised that the current cryptocurrency market did not start sooner than it did. And while the prices were high, he was sure they would eventually come down – he didn’t know when exactly.

“People seem to be reading a lot about the cyclical dynamic that cryptocurrency has always had and probably will continue for a long time,” he said.

Crypto has historically experienced four-year market cycles, in line with nearly four years half From the supply rate of issuance of bitcoin. While the minimum price of Bitcoin has risen steadily during each cycle, so has the percentage return of the asset on each boom.

As such, Smith asked Vitalik if this means Bitcoin is following one receptivity curve, where the market eventually saturates and mimics the stability of gold prices. Construction approved.

“I definitely think that in the medium term, cryptocurrencies will stabilize and will be volatile like gold or the stock market,” he predicted.

Although he doesn’t know where crypto will saturate, Vitalik said the asset class is answering more of his “existential questions” over time. In other words, as well-established use cases and the role of the market take hold, so does certainty about the potential limits of the cryptocurrency.

For example, Vitalik suggested that cryptocurrency could replace gold as a store of value and become the “Linux of Finance” in 2020, but it may not become mainstream. This scenario reduces the odds of “the cryptocurrency disappearing or taking control of it completely by 2042.”

In April, Vitalik He said He does not expect cryptocurrencies to replace traditional currencies.

There is no integration of bitcoins

Ethereum has been identified asmergerNext month – its permanent transition to the proof-of-stake consensus mechanism. The Ethereum Foundation says the upgrade will make Ethereum more efficient, secure, and scalable.

However, Bitcoiners historically defend Proof of work is necessary to ensure that the network remains reliably neutral and decentralized.

According to Vitalik, Proof of Work is harmful to the environment and less safe than Proof of Effort. Given the energy required to defend the network, miners must continually be rewarded with new coins to fund the security of the network.

In the case of Bitcoin, miners are rewarded almost entirely for their energy expenditure with newly released Bitcoin. As Bitcoin block support declines over time, miners will become more dependent on transaction fees to support security.

However, Bitcoin has a much smaller fee market than Ethereum, which means that it may not be able to maintain its current energy security in the future without support. This can leave him open to attack.

“If Bitcoin is actually attacked, I expect the political will to switch to at least a hybrid proof of stake will emerge quickly, but I expect it to be a painful transition,” Vitalik concluded.

In the post, Vitalik believes that the cryptocurrency volatility will stabilize as gold debuts on CryptoPotato.

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