The Ethereum founder also spoke about the current bearish market.
In brief
- Vitalik Buterin thinks crypto will eventually be immune to Musk’s influence
- He also acknowledged the boom-and-bust nature of the market.
- Unsurprisingly, Buterin remains hopeful about digital currencies.
Vitalik Buterin, the 27-year-old co-founder of Ethereum, told CNN this week that crypto markets won’t be in thrall to the market-moving power of Tesla CEO Elon Musk’s tweets for much longer.
Said Buterin: “Elon Musk tweeting is something that the crypto space has only been introduced to for the first time literally last year and this year. 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.”
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Buterin elaborated that while crypto is at the mercy of Musk’s tweets right now, it will “build up an immune system over time.”
Right now, no one Twitter user dominates the conversation around cryptocurrencies more than Elon Musk. The Tesla and SpaceX chief’s tweets about Dogecoin and Bitcoin have dramatically shifted the prices of the coins.
On Thursday, February 4 this year, one Dogecoin tweet from Musk led to a price surge of 40% in half an hour. The market-moving tweet? “Ur welcome,” with a picture of Musk’s face superimposed on a famous still from The Lion King of Rafiki holding Simba, in this case the Dogecoin Shiba Inu avatar, up to view his vast inheritance.
Then exactly one week ago, Musk shaved 15% off the price of Bitcoin when he tweeted an announcement that, due to concerns about the environmental impact of Bitcoin mining, Tesla would no longer be accepting payment in the currency.
In the CNN interview, Buterin addressed Musk’s love of Dogecoin as a sign of the Tesla and SpaceX CEO’s humanity, rather than any intention to mislead his followers.
Buterin explained: “The fact that he is a 100-plus billionaire and he runs Tesla and SpaceX and all these things doesn’t change the fact that ultimately he’s a human—and humans get excited about dog coins.” He added, “I don’t think that Elon has a kind of malevolent intent in any of this.”
Still, Musk’s latest U-turn on Bitcoin must have come as music to Buterin’s ears. Ethereum is the second-largest cryptocurrency by market capitalization with a market capitalization of $285 billion. Bitcoin comes in first at almost triple that: $717 billion, according to crypto data aggregator CoinMarketCap.
Currently both currencies use an energy-intensive proof-of-work consensus mechanism, which means that mining computers have to expend a lot of energy to solve the complicated cryptographic guessing games necessary to validate transactions.
Later this year, the planned upgrade to Ethereum 2.0 will switch Ethereum to a proof-of-stake consensus mechanism, meaning that the mining computers that stake the most ETH will validate the most transactions. The Ethereum Foundation claims that this will make the whole network 99.95% more energy efficient.
Buterin on the crypto bubble
Buterin remains optimistic about cryptocurrencies, despite bearish news from China this weekend that the state plans to crack down on crypto mining operations. The announcement followed Tuesday’s bad news from China, when three banking and payments associations released a joint statement warning investors away from crypto.
The string of bearish news wiped nearly a trillion dollars from the market; crypto’s market cap fell from $2.42 trillion on Tuesday to its current valuation of $1.61 trillion.
When CNN Business reporter Matt Egan asked Buterin if we’re in the middle of a crypto bubble, Buterin looked hesitant before answering, “I would say yes, but that obviously does not come with a prediction about when the bubble’s gonna end, because that’s notoriously hard to predict.”
