ParVitalik Buterin Wishes Ethereum More Scarce | Parity Grants Wishity Grants Wish

Vitalik Buterin Wishes Ethereum Were More Scarce | Parity Grants Wish

Vitalik Buterin, the 23-year-old creator of Ethereum, has recently stated that he may have created too much Ether.

Having a talent not only for programming but for also understanding and explaining decentralized technologies, Vitalik Buterin has contributed to the crypto community both as a writer, having co-founded Bitcoin Magazine, and as a developer, having participated in many projects until finally settling down as the main developer of Ethereum.

His recent statement about the scarcity of Ether comes in line with concerns about the ICO market: “I’m concerned a lot of these token models aren’t going to be sustainable”. There is indeed a flood of digital tokens being created and the majority of them are based on the Ethereum Blockchain (ERC20).

“It is an established fact that ninety percent of startups fail. And it should also be an established fact that 90 percent of these ERC20s on CoinMarketCap are going to go to zero.”

Vitalik gave some interesting insights last month at the ETHWaterloo hackathon as well. He said that digital tokens are in their early phases, where there is still a lot of experimentation going on, and some of them aren’t yet based on fundamental economic principles. “There are some good ideas, there are a lot of very bad ideas, and there’s a lot of very, very bad ideas, and quite a few scams as well.” He named this current phase of development as “tokens 1.0” and that we will evolve to “tokens 2.0” as projects mature in quality.

He also emphasized the centralization of development in ICO projects as a serious flaw and that, although the infrastructure that supports the ERC20 tokens is decentralized, the projects in themselves are run by closed groups of developers and are not really Decentralized Autonomous Organizations.

Plans For Scarcity

In order to create scarcity, Vitalik is contemplating the idea of imposing fees on applications built on the Ethereum Blockchain. Those fees would then burn, or destroy, Ether tokens over time. He further stated: “If the token is being burned, then you have an economic model that says the value of the token is the net present value of basically all future burnings,”. Without this, “it’s just a currency that goes up and down. It feels kind of like voodoo economics and the price of the token isn’t really backed by anything,” and “That’s a very spooky thing.”.

Another way to limit the supply is to shift the confirmation of transactions from a proof-of-work to a proof-of-stake model where stakers receive the network fees only. This might happen as early as the end of this year according to Vitalik.

Ethereum Problems

It seems Vitalik’s intention for Ethereum scarcity might have come to fruition, although not for a good reason. A major vulnerability found on the Parity wallet has frozen hundreds of millions of dollars of Ethereum.

This is the second time a problem like this happens with Parity. Last July, 150,000 Ether (worth $30 million at the time) was reported by the company as stolen. The bug that caused it was then solved, or so it was thought. The new vulnerability affects multi-signature wallets that were deployed after July 20, the date the bug was “solved”. It still unclear, but ICOs that were held after that date may also be impacted. Although there are no reports of lost or stolen coins, some estimates say that 500,000 Ether ($154 million) funds are frozen.