The Decentralized Future: Why ETH Is Up.
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At the beginning of April, Crypto Briefing published an article that explored and discussed the reasons why the price of Ether (ETH) had experienced a near three-month slide, pushing it from its January high of $1,400 to little over $400.
However since publication, the downward trend has been reversed and from a nadir of $366, ETH is currently trading at over $700: a 91% increase according to CoinMarketCap. This global uptick comes despite the New York Times reporting that an ex-chair of the SEC believes that ETH may be operating as an unregistered security in the U.S.
The recovery of ERC-20 tokens has, of course, had a lot to do with the upward trend of the ETH price – but immediate proximate causes are thin on the ground.
In the past two weeks, the platform Chile’s National Energy Commission announced it was piloting a scheme to use the Ethereum network to record the country’s energy consumption; and just last week, the American tech-giant Amazon, which has a current valuation of nearly $800 billion, announced it would begin rolling out its own frameworks for users to build their own networks on Ethereum.
These are important developments, but surely not enough to drive such a dramatic recovery in the value of Ether. Which leads to another conclusion entirely…
The price of ETH is going up because the world believes in the Ethereum project.
In other words, the cryptocurrency economy has come to the conclusion that – at least for the foreseeable future – Ether is going to continue powering ICOs, and laying the foundation for distributed applications. Ethereum IS the decentralized future.
A successor did not emerge during the downturn. NEO has not yet shown its hand.
So for now, the world belongs to Ethereum.
And this is cemented by the news on Friday that Ethereum’s founder, Vitalik Buterin, has submitted a proposal for review that calls for the creation hybrid consensus model that integrates key aspects of Proof-of-Stake (PoS) with the Proof-of-Work (PoW) method it already uses – which could help solidify Ethereum’s position at the top of the… well, pyramid.
How Ethereum view the decentralized future.
Unlike other projects where a core team of developers propose, create and then implement updates or improvements, Ethereum enables anyone to propose changes, which have to then be agreed by the whole community.
Known as Ethereum Improvement Proposals (EIPs), they enable mass-participation in decisions that could fundamentally change the future of the network.
Vitalik’s proposal, known as EIP 1011, is big stuff: to date, no major network has managed to change the way it reaches consensus, and according to Ethereum’s core development team, it represents the first step in a drive to move the platform to a completely PoS model.
However, instead of just going ahead, Buterin’s proposal has to have the approval of the community before it can be implemented. It sounds noble, but this very democratic approach causes Ethereum frequent headaches.
At the same time as debate rages on whether to move to PoS consensus, the Ethereum community is also split on a controversial proposal – EIP 999 – which wants to restore a smart contract library that ‘accidentally’ self-destructed back in November and held hundreds of millions of dollars in Ether.
To its supporters, it’s a sensible approach to restore lost funds: but to its many opponents, it sets a dangerous precedent whereby decisions that are supposed to be immutable can be conveniently reversed. The decentralized future isn’t supposed to look back.
With the community almost equally split, the issue could become as divisive as when Ethereum dealt with the DAO crisis in 2016: an event which led to parts of the community splitting away to create Ethereum Classic.
Is it smart to let other people make the decisions for you? (Satoshi thought so.)
EIPs seem an ineffective way to make decisions. It’s not news that Buterin’s a smart guy. He was 19 when he published Ethereum’s whitepaper and he became one of the world’s leading authorities on cryptocurrency and blockchain before he was even 22.
Putting decisions to people who are not as clever as you seems a bad idea – especially, as with EIP 999, when it has the potential to split the community in two.
However, by using EIPs Ethereum is trying to embody the principle that lies behind blockchain technology, namely that centralization leads to error and inefficiencies, whereas a network made up of equals, with the correct technology, can come to better decisions and work more effectively together.
Back in 2008, when Satoshi Nakamoto penned the famous whitepaper proposing a decentralized financial system, he did so against a backdrop of crumbling banks and governments that – as centralized institutions – had caused a financial meltdown from poor decision-making and management.
More than anything else, Nakamoto’s paper is an attack on the idea that one person or organization can be trusted to make decisions for a community; and through the use of dApps and smart contracts, Buterin’s Ethereum was designed to better embody this idée than Bitcoin ever could.
So when companies like Amazon and Chile’s Energy Authority express support for Ethereum, they do so in a project that advocates – and through EIPs – practices genuine decentralization.
Ethereum is rising… and its creators, aware of its limitations, are looking to develop the project beyond the confines of its current code.
If they are successful, this Ethereum bull run could be the start of a bull marathon.
And the gateway to the decentralized future that its creators and adherents espouse could be closing for newcomers to the table.