Edge of the Ether
Word on the Street
While most of you were enjoying your day off, Ethereum was working overtime, defending itself from a hit piece delivered by Jeremy Rubin.
For an industry that is known to speculate on media headlines, Rubin painted a bleak picture — “The collapse of ETH is inevitable” — and he got coverage from TechCrunch. The post was a recipe for mayhem, and did it deliver.
Not only was Rubin’s article denounced as FUD (fear, uncertainty, doubt) by various critics, but folks were simply looking for a translation… the post goes 20,000 leagues down the rabbit hole.
So when a redditor flat out stated “can someone explain this article to me?”, Vitalik Buterin answered. Granted, Vitalik has every reason to Defend The Wall (s/o GoT), though he (1) addresses that up front, and (2) is on our short list for folks we’d want to hear a rebuttal from.
After further review, Vitalik’s ruling on the field is…
1) Does Rubin’s main argument (ETH isn’t needed for fees) check out? Based upon Ethereum today — yes. And excluding one part of proof of stake, Rubin’s argument would hold if Ethereum wasn’t going to change.
But two proposals are on the table. Quoting Vitalik, both ensure that “there’s no way to de-facto take it [ETH] out of the loop” for fees. For those curious, both proposals involve burning ETH.
2) Could an alternative Proof-of-Stake consensus be used? Rubin proposed a hypothetical “Heterogeneous Deposit Proof Of Stake” — think HD-PoS. Vitalik explained that getting this right is a doozy. He looked into HD-PoS back in ’15 and found it “very hard (maybe impossible)”.
So, ETH is the only way to get transaction revenues. And because ETH tokens are needed for consensus, Ether isn’t flatlining anytime soon.
Before signing out… was this FUD-Gate?
People were quick to notice that Rubin is an advisor to Stellar Lumens (cough***, Ethereum rival cough***), questioning whether the article was a coordinated effort to deliver a knockout blow to the recently troubled network.
However, we’ll leave the speculation for the takers. Rubin already expressedthat his speech is not for sale, and from our view, his argument is on point — Vitalik essentially confirmed that Rubin raised a valid concern in a recent tweet.
(1) When it comes to patents, the consensus is clear: Blockchain, not bitcoin. And according to the latest tally from media outlet iPR Daily, the race to amass the most blockchain patents is razor thin.
As of August 10th, the top five patent holders are:
- Alibaba (90)
- IBM (89)
- Mastercard (80)
- Bank of America (53)
- People’s Bank of China (44)
If you like it, you better scramble to throw a patent on it — or at least try. Sure, the original crypto movement was inspired by open-source code and communal discussion, but good luck pitching that to a Fortune 500 CEO. Patents build defensive moats and bring in cash flows — a no brainer.
(2) By now, it should be clear that crypto is all about incentives. Some promote desired outcomes, others cause illegal wash trading. Bithumb exchange’s airdrop event triggered the latter.
Alex Krüger first spotted the activity, noting that ~$250M was traded on Bithumb each morning at 11AM Korean Time. With the promo running on a first come, first serve basis, all signs point to smart traders gaming the system to receive a payout ASAP.
What was up for grabs? By Krüger’s count, roughly $900,000 per day — $150,000 after subtracting fees. Traders will scrub away ~$4.5 million by the end of the 30-day promo.
(3) There’s betting the farm, and then there’s betting the farm… literally. Computing company Soluma is stretching for the latter with their latest maneuver — a 900 megawatt wind farm in the dunes of southern Morocco.
Breezing through the details:
- Stretched across 37,000 acres
- 36 megawatts by 2020
- 900MW in the next five years
- Grid integration by mid-2019
Bitcoin mining via renewables is more compelling than ever. Proof-of-work mining has received its fair share of flak due to energy use, but remember — it’s not as large a concern if carbon isn’t being burned during the process.
(4) The Far East demonstrated yet again why the region is the epicenter for blockchain activity. Not once, but twice, through two recent deployments of the tech:
Tsukuba, Japan: Tested an online voting system driven by (1) blockchain and (2) a country-wide ID system introduced in 2015. It was well received by Tsukuba’s mayor, though some voters dealt with password and submission goof ups. Two steps forward, one step backward.
Taiwan Medical University Hospital: Launched a healthcare platform that will use blockchain to improve record keeping. Siloed data stores turn patient referrals and transfers into massive headaches for staff. The 100+ clinics involved can now dodge any aches through a mobile app.