![]() I would say, it’s not the other way around. Transaction costs zoom and the price soon follows. Then there is the strange link between ethereum’s (ETH) price and its transaction costs. If Ethereum PoS validation turns it into the equivalent of an interest-paying bond or equity and becomes a cash cow project, the question is, will its token value suffer from a lack a “sizzle?” Sizzle and crazy volatility is what crypto is all about, so what happens to an asset that loses that? To be announced (TBA). ![]() Speculators, many of which would call themselves investors, love a growth story and loathe the implications of a cash cow play and aren’t fans of the tax ramifications of income. Dividend-paying companies, particularly high dividend-paying companies, are very often companies that get lowly valuations. That makes sense but in equities, yields have a very loose and sometime contradictory effect on values. If staking a validator gives a great yield, this should support and raise the value of the token because that is how bonds work and in this model a validator is like a coupon paying bond. You might be tempted to think that cheaper execution will mean more work done and therefore a chain with a higher value and therefore a higher token price.Ī PoS validator gets paid for its maintenance of the blockchain and its queueing up to do so and this provides what amounts to a yield, because to qualify to be a validator it has to stake a big chunk of Ethereum. So what of the value of Ethereum as a token if all of a sudden it is doing a great job for much less cost? In the old world of computer software, database companies come and go and this will be the fate of most of the smart contract platforms. Over time most of these blockchains will likely wither away, unless they can add some new special sauce to their offering to give them unique and potent functionality. If they pull off the proof of stake fork smoothly and the transaction prices collapse, then it looks bleak for all the other “Ethereum killer” chains, in the same way as bitcoin cash (BCH) and bitcoin SB (BSV) simply have no hope in replacing bitcoin. However, the Ethereum team is one of the brightest group of developers out there, so if anyone can execute on such a difficult technical challenge it will be them, but as anyone who has sat in recent days wondering where Facebook went will know, there is no such thing as a technical hiccup that can’t happen. It is not hard to destroy technological dominance in one fail swoop with a couple of missteps. The fork could go horribly wrong, and the London fork demonstrates neatly the law of unintended consequences when it comes to software development. As the second biggest brand, Ethereum will remain the dominant smart contract platform until further notice, unless something goes horribly wrong with the proof of stake fork. ![]() This might seem counter intuitive but it is because the crypto market remains fixated by price not functionality and it is price action and the lure of exponential profits that claims the imagination of the userbase to a far greater extent than what utility the blockchain enables. While Ethereum’s token price is high it will continue to be the go-to chain. So the questions coming up are, if Ethereum takes a long time to go proof of stake, will it be eaten alive or will it remain the king of smart contract blockchains? This shift is meant to hugely drop transaction fees with the possibility of killing off all the parallel chains currently feeding off the crumbs of a super-expensive Ethereum transaction cost which are driving users to find alternatives to Ethereum’s extremely expensive fees. Įthereum already has a legion of “validators” already up and ready to run and they will replace miners by being in a pool of computers keeping the blockchain up to data in a system of queues that is meant to be much more energy efficient than the competitive proof of work system used by Ethereum now and beloved of Bitcoin. Know someone who has what it takes to make the next Forbes Blockchain 50? Nominate them here.
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