Bitcoin fundamentalist Samson Mow has criticized Ethereum (ETH) as a “shitcoin” susceptible to capture by regulators.
In a series of tweets, Mow attacked what he called Ethereum’s “excruciating design choices”, saying the cryptocurrency was “designed for the sole purpose of pumping the token”.
“ETH’s problems are caused by the constant optimization of tokenomics rather than decentralization, security and resilience”, said Mow, a so-called Bitcoin maximalist.
“It looks like the fusion and [Power of Stake] PoS will lead to full regulatory capture by centralized exchanges and staking platforms, and there is no way out for them.
With a total market value of over $201 billion, Ethereum is the world’s second largest crypto asset after Bitcoin (~$411 billion), according to Coinmarketcap.
First offered by Vitalik Buterin in 2O13, Ethereum was originally created to complement and enhance Bitcoin. It has evolved into one of the most prominent blockchains in the crypto industry.
According to his website, Ethereum can be used to “codify, decentralize, secure, and trade just about anything.” The blockchain is gearing up for a major network upgrade called “Merge” on September 15, which is expected to reduce power consumption by 99%.
But the network had to face critical on a lack of “sufficient social decentralization” – fears sparked by recent US government sanctions against Tornado Cash.
Several entities have now blacklisted dozens of Ethereum wallet addresses, in line 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 of 32 ETH “as part of the protocol.” [in order to lockup supply and maximize tokenomics].”
“It 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. Stakeholders help secure the Ethereum network by storing data, processing transactions, and adding blocks to the blockchain.
“So now you have 66% of validators who have to comply with OFAC regulations. And the ETH they deposited to stake cannot be withdrawn because the withdrawal functionality has not been coded – at cause of tokenomics,” he added.
About four entities, including Binance and Coinbase, control 66% of Ethereum’s Beacon Chain, a new blockchain consensus layer, which coordinates a network of stakers, and introduced proof-of-stake. All must comply with US sanctions law.
In the event that entities comply, the Ethereum community may be forced to resort to a “user-activated soft fork,” or USAF, to keep the network decentralized. Mow, a former head of strategy at Blockstream, said even that seemed unlikely.
“Assuming all the stars magically align and there was a way for Ethereum users to cut Coinbase etc., what does that mean? That means minority stakeholders would have a mechanism to arbitrarily punish the majority. It won’t work in the long run,” he said, adding:
“And that’s why we call Ethereum a shitcoin. It’s an exercise in futility, riddled with atrocious design choices, and designed 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 Investopedia online dictionary.
They believe that all other digital currencies are inferior to bitcoin and go against the ideals envisioned by pseudonymous bitcoin founder Satoshi Nakamoto.
However, bitcoin has had problems handling the increase in transaction volumes, which has led to the urgency of other blockchain networks – like Ethereum – that could do so.
Observers say the leading cryptocurrency failed to grow as a “productive asset” and that maximalism as a growth strategy was ineffective.
Several factors have hindered BTC’s growth over the years, they say, including the inability to attract developers who create more usable protocols and applications on top of Bitcoin.
More recently, bitcoin’s maximalism began to drive away even developers who continued to work on the blockchain.
“A lead Bitcoin developer is now considering quitting the Bitcoin project over ‘toxic maxis.’ Cultural erosion has been happening slowly since 2017,” tweeted Muneeb Ali, the founder of Stacks, an open-source smart contract platform for Bitcoin.
“We need to revive the Bitcoin builder culture; keyboard warriors and podcasters are much less important.
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