“Ethereum is a Shitcoin at risk of regulatory capture”, says Bitcoin Maxi Samson Mow

Bitcoin fundamentalist Samson Mow criticized Ethereum (ETH) as a “shitcoin” prone to capture by regulators.

In a series of tweets, Mow attacked what he called Ethereum’s “cruel design choices,” saying the cryptocurrency was “engineered for the sole purpose of pumping the token.”

Regulatory capture

“ETH’s problems are caused by constant optimization for tokenomics over decentralization, security and resilience,” so Mow, a so-called Bitcoin maximalist.

“It looks like the merger and [Power of Stake] PoS will lead to complete regulatory capture of centralized exchanges and betting platforms, and there is no way out for them.”

With a total market capitalization of more than $201 billion, Ethereum is the world’s second largest crypto asset after Bitcoin (~$411 billion), according to Coinmarketcap.

First proposed by Vitalik Buterin in 2O13, Ethereum was originally created to supplement and improve Bitcoin. It has evolved to become one of the most important blockchains in the crypto industry.

According to the website, Ethereum can be used to “codify, decentralize, secure and trade just about anything.” The blockchain is preparing for a major network upgrade called “Merge” on September 15, which is expected to reduce energy usage by 99%.

But the network has met criticism over a lack of “sufficient social decentralization” – fears prompted by the recent US government sanctions against Tornado Cash.

Several entities have now blacklisted dozens of Ethereum wallet addresses, in compliance with the sanctions.

Why Ethereum is a shitcoin

Samson Mow said Ethereum’s centralization problems started with the decision to require users to stake a minimum of 32 ETH “as part of the protocol [in order to lockup supply and maximize tokenomics].”

“It pretty much made PoS as centralized as possible … plus they don’t have the Bitcoin culture of not your keys, not your coins,” he charged. Stakers help secure the Ethereum network by storing data, processing transactions, and adding blocks to the blockchain.

“So now you have 66% of validators that have to comply with OFAC regulations. And the ETH they’ve staked can’t be withdrawn because the withdrawal functionality wasn’t coded – because tokenomics,” he added.

About four entities, including Binance and Coinbase, control 66% of Ethereum’s Beacon Chain, a new consensus layer on the blockchain, which coordinates a network of stakers, and introduced proof-of-stake. All are expected to comply with US sanctions law.

In the event that the entities comply, the Ethereum community may be forced to resort to a “user-activated soft fork,” or USAF, in order for the network to remain decentralized. Mow, a former chief strategy officer at Blockstream, said even that seemed unlikely.

“Assuming all the stars magically align and there was a way for Ethereum users to cut Coinbase, etc., what does that mean? It means that the minority stakeholders will have a mechanism to arbitrarily punish the majority. It’s not going to work in the long run,” he said, adding:

“And this is why we call Ethereum a shitcoin. It’s an exercise in futility, full of horrible design choices, and engineered for the sole purpose of pumping the token.”

Bitcoin error

Bitcoin maximalists believe that BTC is the only crypto-asset that will be needed in the future, according to the online dictionary Investopedia.

They believe that all other digital currencies are inferior to bitcoin, and that they fall contrary to the ideals as envisioned by the pseudonymous bitcoin founder Satoshi Nakamoto.

However, Bitcoin has struggled to handle increased transaction volumes, leading to the emergency of other blockchain networks – such as Ethereum – that can do so.

Observers say that the top cryptocurrency has failed to develop as a “productive asset” and that maximalism as a strategy for growth was ineffective.

Several factors have hindered the growth of BTC over the years, they say, including the inability to attract developers who build more usable protocols and applications on top of Bitcoin.

Recently, bitcoin maximalism has begun to drive away even those developers who continued to work on the blockchain.

“A Bitcoin core developer is now thinking of leaving the Bitcoin project due to ‘toxic maxis’. The cultural erosion was happening slowly since 2017,” tweeted Muneeb Ali, the founder of Stacks, an open source smart contract platform for Bitcoin.

“We need to revive the Bitcoin builder culture; the keyboard warriors and podcasters are far less important.”

For Be[In]Crypto’s Latest Bitcoin (BTC) Analysis, click here.

Disclaimer

All information on our website is published in good faith and for general information purposes only. Any action the reader takes on the information contained on our website is strictly at their own risk.