Vitalik’s April Fool’s Ethereum Proposal Could Save the Cryptocurrency

The Ethereum proposal made by Vitalik Buterin on 1st of April certainly set a spark in open forums to discuss about the underlying economic aspects of the cryptocurrency. This later turned out to be an April Fools’ joke pulled by the Ethereum creator proposing a 120 million Market Cap on Ether. The topic however remain valid as some are concerned on the growing rate of new coins put into market circulation every day. Thus, some are in favor of putting a market cap on the total amount of Ethereum coins, while others oppose the idea.

Ethereum developer Nick Johnson who is opposing the proposal posted the following Tweet;

[The proposal] has degraded into a bunch of people arguing pseudo economics with each other, as if Ethereum were designed first and foremost to be an economy and not a computing system.

Views against the Ethereum proposal

Darryl Morris, an independent developer of Ethereum believes that using Ether as an investment tool given top priority, should not occur. Instead, main focus needs to be given to its ability to protect and secure the protocol;

Ether has a primary intrinsic purpose on the Ethereum protocol, that is, to be consumed as a resource with which to run calculations upon a computational machine.

Vlad Zamfir, a leading developer in Ethereum’s upcoming proof-of-stake consensus mechanism has an opposing view even before the proposal was put forward. According to him, using scarcity as an investment value addition is “stupid and annoying at best”;

I don’t think that we have the understanding required to actually meaningfully know what we would be consenting to.

Many question the fact of having a cap in issuance of Ether could mean higher costs in entry into the network. This conflicts with the proposition of low cost any one can join policy that was supposed to make the network more decentralized.

Views in favor of the Ethereum proposal

The research carried out by Buterin makes all above untrue in his view. He points out that transaction fees are not proportional to Ethereum price, instead shows the demand in the Ethereum platform;

Crypto can avoid being too inegalitarian through [the] emergence of new coins, not through any single coin being super-inflationary.

Buterin thinks even ERC-20 tokens launched on Ethereum could surpass Ether as tokens are not directly affected by inflation. He believes the transaction costs will provide adequate revenue to secure the blockchain. He also added the following;

And in the long run, if they’re not, then there’s the question of well, how valuable is the system that we’re building in the first place.

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