If it is up to bitcoin (BTC) maximalist Michael Saylor, there is a chance that ethereum (ETH) will implode in the same way as terra (LUNA). According to Saylor, Ethereum’s new Proof-of-Stake protocol is inherently unstable, inefficient, opaque and risky due to its fragile design.
#Bitcoin is engineered to be stable, robust, and increasingly secure & efficient over time based on Proof of Work and ASIC technology advances. Proof of Stake protocols are inherently unstable, inefficient, opaque, and risky due to their fragile design. https://t.co/j9FWNIH3MP pic.twitter.com/ZVq086tvfw
— Michael Saylor⚡️ (@saylor) December 14, 2022
Criticism of Saylor from Ethereum proponents
Keep in mind that Saylor is a known supporter of bitcoin and dislikes all other crypto. The video he refers to argues that Ethereum could collapse if the price drops so low that all stakers withdraw their ETH and none validators remain.
It would somewhat resemble a bitcoin mining ‘death spiral’ if all miners turn off their mining devices when the price drops too low. There are currently great concerns about this, although the video of course denies this. It is not yet possible to withdraw ETH from the staking contract, which should follow in the Shanghai update.
Of course, it didn’t take long for the Ethereum people to find Saylor’s message. With that came the reaction that Saylor and MicroStrategy should have bought ether instead of bitcoin. Then the company would be $ 0.6 billion in plus, instead of $ 1.6 billion in minus.
However, that’s an argument that doesn’t quite hold. If you reason like that, Saylor would have been better off buying dogecoin or Binance’s exchange token. After all, they have done even better than ethereum. Ultimately, investing is a long-term game and Saylor doesn’t seem interested in short-term gains.
Bitcoin Proof of Work
After switching from Proof-of-Work to Proof-of-Stake, Ethereum now consumes 99% less energy. Yet there are numerous initiatives to minimize the consumption of Bitcoin, for example by extracting energy from excess production.
After all, proof-of-work makes it possible for producers of sustainable energy to sell their overproduction at a rock-bottom price. If everything switches to a Proof-of-Stake system, this will no longer be possible and this potential source of income for sustainable energy producers will disappear.