Ethereum Creator Vitalik Buterin Says Cryptocurrency Crashes Like Terra (LUNA) Are Good For Crypto – Here’s Why
The creator of Ethereum (ETH), Vitalik Buterin, suggests that a decline in the prices of cryptoassets has benefits.
Buterin says in an interview with former Bloomberg Opinion columnist Noah Smith that the price drop is “good” for revealing weaknesses.
“I think that price drops are good at revealing problems that were always there from the beginning. Unsustainable business models tend to succeed during booms because everything goes up, so the money people have available goes up, and so things can be temporarily propped up by a constant influx of new dollars.”
The Ethereum creator says the collapse of the original token of stablecoin issuer Terra (LUNA) is an example of price crashes that reveal unsustainable business models.
“During crashes, as we saw with Terra, this model no longer works. This is most true in extreme situations like high leverage and Ponzis (2017 veterans will remember ‘BIT-CONNE-EEE-ECT!!!’).
But it’s also true in more subtle ways like how protocol development is easy to sustain during bull markets, but when prices crash the often newly expanded teams are hard to sustain financially.”
The founder of the alleged Ponzi scheme, Bitconnect, was indicted by a grand jury in a US court in February this year.
According to Buterin, the volatility of cryptoassets will decrease in the “medium term” to a level similar to traditional assets.
“I definitely think that in the medium term, cryptocurrencies will settle down and just be about as volatile as gold or the stock market.”
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