Long Ethereum Thesis - (Part 2) Bubble or Not




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Proof of work vs. Proof of Stake

Proof of work is how transactions get processed on Crypto networks. Ethereum CEO plans on moving away from this to a proof of stake.

I will not go into this in detail but this is one of the reasons why i prefer Ethereum over other cryptos.

Briefly, miners currently use large amounts of computing power to solve problems. Once the problem is solved, they are rewarded.

In the future, Ether will owned by a validator who will use their own Ether to validate transactions. I.e. Individuals who have more access to coinage are more likely to get more fees.

They will then a nominal interest on this. My understanding is it is 2%-15%.

This should encourage a gradual accumulation of coins and a potential bubble could form. If leverage becomes accessible then this will be even more the case.

This creates a fixed income type product. Its nominal value may never diminsh due to the cap in coinage.

Because of this, a reinforcing cylce(ala Sorros) could apply here.



Possible Risks and Exit Theses

Of course, these things may not apply if forces more powerful than us determine that it is not to be.

 So here are a few exit points where I will no longer be holding on to the thesis. This lis is of course not exhaustive and I will be constantly be looking out for reasons that I am wrong. 


  • Etherum uses proof of work, and price does not seem to be gradually increasing due to the low amount of interest
  • Bitcoin sudden adaptation of alt coins in their network
  • Hard forks due to global disagreements
  • Too much Ethereum in the hands of too few(due to the risk of forks)
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