Long-time crypto miner confesses: “I was wrong about Ethereum,” predicts catastrophic crash of numerous crypto currency bubbles
06/20/2017 / By Ethan Huff / Comments
Long-time crypto miner confesses: “I was wrong about Ethereum,” predicts catastrophic crash of numerous crypto currency bubbles

So-called “cryptocurrencies” are becoming a dime a dozen these days, with new blockchain platforms popping up on the regular. But how stable are they? One long-time investor says not very, admitting in a recent blog post that popular systems like Ethereum aren’t legitimate stores of value like many people think they are, and that once the bubbles burst it will be a total catastrophe for investors who don’t really know what they’re doing.

Similar in many ways to Bitcoin, Ethereum is an open-source, public, blockchain-based distribution platform that facilitates the exchange of items of value – in this case, decentralized applications. Bitcoin represents an actual currency of exchange, whereas Ethereum functions more as a system of exchange, with the “currency” being programming code and other digital assets.

While Bitcoin “miners” dig up bitcoins to be exchanged in a peer-to-peer electronic cash system that runs on its own unique blockchain, Ethereum miners dig up “Ether,” a form of digital currency often referred to as a token that helps fuel the network. These tokens are what gives Ethereum a perceived sense of value, though even seasoned Ethereum investors are starting to question its long-term viability.

“I do admit I didn’t see this Ethereum bubble coming,” writes an Ethereum investor who goes by the screen name of “WhalePanda” on Medium.com. “Ethereum’s sole use case at the moment is ICOs” (Initial Coin Offerings, which serve as “a fundraising tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value“) and token creation.

Brighteon.TV

In other words, most of the transactions that take place using Ethereum are based on the future hope of another cryptocurrency coming into existence that will actually hold a store of value. It’s like gambling on something that isn’t even real yet, but that eventually could be. It’s a risky prospect and one that investors are thinking twice about as the bubble of hype and speculation surrounding the concept faces an inevitable burst.

“Ethereum is not a store of value,” WhalePanda admits. “It isn’t capped.”

If something exists digitally in limitless quantities, does it actually hold any value?

What he means by capped is that, unlike Bitcoin, which is said to be capped at 21 million coins total beyond which no more can be mined, there is currently no limit to the amount of Ethereum tokens that can be theoretically mined and sold. As a result, there’s no way to pinpoint the actual value of Ethereum beyond what greedy investors and speculators are willing to pay for it.

Unless Ethereum tokens are capped at a fixed amount – especially because they’re intangible, representing little more than digital ones and zeros beaming through a computer screen – it’s difficult to determine what this particular blockchain instrument is actually worth. And that’s the problem with the speculative nature of cryptocurrencies: Nobody can say for certain what they’re worth, and where they’ll land after all the dust has settled.

“At one point it will crash, hard,” WhalePanda warns, suggesting that the trigger could be anything from bugs in the system to hacking to network splits, and even something as “silly” as ICOs underperforming and creating sell pressure that results in a crash.

“It’s not a question of ‘if,’ it’s a question of ‘when’ … Usually when a bubble like this pops we could easily see 70-80% loss of value (for reference: Bitcoin went from $1,200 to $170 after 2013-2014 bubble).” (RELATED: To keep up with the latest developments in Bitcoin and other cryptocurrency technology, stay tuned to Bitcoin.Fetch.news)

Sources:

BlockGeeks.com

Medium.com

TechCrunch.com

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This article may contain statements that reflect the opinion of the author
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