In a series of tweets, Mow attacked what he called Ethereum’s “atrocious design choices,” saying the cryptocurrency was “engineered for the sole purpose of pumping the token.”
“It looks like the Merge and [Power of Stake] PoS will lead to complete regulatory capture by centralized exchanges and staking platforms, and there’s no way out for them.”
With a total market value of more than $201 billion, Ethereum is the world’s second-largest crypto asset after Bitcoin (~$411 billion), according to Coinmarketcap.
First proposed by Vitalik Buterin in 2O13, Ethereum was originally created to supplement and improve on Bitcoin. It has evolved to become one of the most important blockchains in the crypto industry.
According to its website, Ethereum can be used to “codify, decentralize, secure and trade just about anything.” The blockchain is gearing for a major network upgrade called the “Merge” on Sept. 15, which is expected to reduce energy use by 99%.
But the network has faced criticism over a lack of “sufficient social decentralization” – fears prompted by the recent U.S. government sanctions on Tornado Cash.
Several entities have now blacklisted dozens of Ethereum wallet addresses, in compliance with the sanctions.
Why Ethereum is a shitcoin
Samson Mow said Ethereum’s centralization issues started with the decision to require users to stake a minimum 32 ETH “as part of the protocol [in order to lockup supply and maximize tokenomics].”
“That pretty much made PoS as centralized as possible…plus they don’t have the Bitcoin culture of not your keys, not your coins,” he charged. Stakers help secure the Ethereum network by storing data, processing transactions, and adding blocks to the blockchain.
“So now you have 66% of validators that need to adhere to OFAC regulations. And the ETH they have deposited to stake can’t be withdrawn because the withdraw functionality wasn’t coded – because tokenomics,” he added.
About four entities, including Binance and Coinbase, control 66% of Ethereum’s Beacon Chain, a new consensus layer on the blockchain, which coordinates a network of stakers, and introduced proof-of-stake. All are expected to comply with U.S. sanctions law.
In the event that the entities comply, the Ethereum community may be forced to resort to a “user activated soft fork,” or USAF, in order for the network to remain decentralized. Mow, a former chief strategy officer at Blockstream, said even that seemed unlikely.
“Assuming all the stars magically aligned and there was a way for Ethereum users to slash Coinbase etc, what does that mean? It means the minority stakeholders would have a mechanism to arbitrarily punish the majority. That’s not going to work in the long run,” he said, adding:
“And this is why we call Ethereum a shitcoin. It’s an exercise in futility, riddled with atrocious design choices, and engineered for the sole purpose of pumping the token.”
Bitcoin maximalists believe that BTC is the only crypto asset that will be needed in the future, according to the online dictionary Investopedia.
They believe that all other digital currencies are inferior to bitcoin and that they fall afoul of the ideals as envisioned by pseudonymous bitcoin founder Satoshi Nakamoto.
However, Bitcoin has faced problems handling increased transaction volumes, leading to the emergency of other blockchain networks – like Ethereum – that could do so.
Observers say the top cryptocurrency has failed to develop as a “productive asset” and that maximalism as a strategy for growth was ineffective.
Several factors have hindered the growth of BTC over the years, they say, including a failure to attract developers that build more usable protocols and applications on top of Bitcoin.
More recently, bitcoin maximalism has started to drive away even those developers that continued to work on the blockchain.
“A Bitcoin core dev is now thinking of leaving the Bitcoin project because of ‘toxic maxis.’ The cultural erosion happened slowly since 2017,” tweeted Muneeb Ali, the founder of Stacks, an open-source smart contract platform for Bitcoin.
“We need to revive the Bitcoin builders culture; the keyboard warriors and podcasters are far less important.”