Ethereum creator Vitalik Buterin saw the crypto crash coming

Vitalik Buterin says government regulation "is always a concern" and that it is important to listen to regulators and try to do the best to address their worries.

May 21, 2021 / 11:49 AM IST
Vitalik Buterin, the creator of Ethereum. (image Source: Twitter)

Vitalik Buterin, the creator of Ethereum. (image Source: Twitter)

Vitalik Buterin, the 27-year-old crypto billionaire and the co-founder of ethereum, talked about a possible cryptocurrency crash just a day before the market rout.

In an interview to CNN Business on May 18, Buterin said that he believed cryptocurrencies were in a bubble though it was "notoriously hard to predict" when this bubble may burst. "It could have ended already," Buterin said. "It could end months from now."

The next day, the crypto market dived, taking down several cryptocurrencies. Buterin's in-house currency ether also dropped as much as 40 percent to around $1,900, the lowest since early April, according to Coindesk data.

From an all-time high of $4,400 in early May, ether had sharply declined, wiping out a huge chunk of Buterin's wealth too. "We've had at least three of these big crypto bubbles so far," Buterin told the publication. "And often enough, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn't there yet."

Talking about Tesla and SpaceX chief's on-again off-again love affair with crypto that often triggers price fluctuations, Buterin said that Musk tweeting about crypto "is something that the crypto space has only been introduced to for the first time literally last year and this year."

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"I think it's reasonable to expect a bit of craziness. But I do think that the markets will learn. Elon is not going to have this influence forever," he added.

On March 24, for instance, the Tesla chief tweeted saying that one could purchase a Tesla with bitcoin. This cheered the crypto market, giving it the assurance that an institutional giant like Tesla is backing the game.

On May 13, Musk reversed the decision of Tesla selling vehicles in exchange for bitcoins, sending tremors in the crypto world leading to a fall in digital currency prices.

"It just seems much harder and much less realistic to do anything like that," Buterin said. "At the same time, governments do have a lot of power to make it more painful to participate in the crypto sector," he said, adding that it was important to listen to regulators and try to do the best to address concerns.

China barring its financial and payment institutions from providing crypto services was one of the big reasons for cryptocrash.

Addressing climate concerns around cryptocurrency, the Russian- Canadian programmer said ethereum was looking to switch from the "proof of work" model of mining cryptocurrency to "proof of stake."

"I definitely think [those concerns] are real," he said. "The resource consumption is definitely huge. It's not the sort of thing that's going to break the world by itself, but it's definitely a significant downside."

If bitcoin would continue with the same technology, there was a big risk it would get left behind, Buterin said.
Moneycontrol News
first published: May 21, 2021 11:02 am

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