Blockchain Project

Austrian Economist Explains Why He Is Pessimistic About Blockchain Project

Tuur Demeester, the Austrian economist, explained in a 50-pointer thread explained why he has been overly pessimistic about the blockchain project.

A majority of those pointers referred to the Ethereum team’s earlier promises of improving the main chain of the blockchain scalability.

Ethereum Can’t Scale?

For example, Tuur touched upon a peer review report by Ethereum Casper or sharding whitepaper, a solution which was proposed to scale the mainnet in 2014.

As the Austrian economist indicated, the review concluded that the Ethereum Casper Protocol was a theoretical solution that can neither offer the Ethereum blockchain nor solve its scalability problems.

In another instance, Tuur recounted followers that the Ethereum developers were exploring a 2nd layer solution, which is similar to that of Bitcoin’s Lightning Network. Though, he doubted whether main-chain issued ERC20 type tokens would be suitable with Ethereum’s 2nd layer or not.

Proof of Stake Solution

Vitalik Buterin, the Ethereum founder, proposed another scalability solution in 2017. However, it had to do with a whole infrastructural overhaul of the project. He suggested that Ethereum should transit from being a PoW to PoS project.

In Proof-of-Work, each miner needs to compete with other miners in the network for solving a mathematical problem by offering its computing power. The higher the computing power is, the better is the probability of miners to solve the issue and get their hands on the block reward.

On the other side, Proof-of-Stake protocol allocates the right to mine for those having more coins. The rich miners take away a transaction fee rather than a block reward in return.

Demeester stated –

”Keep in mind that [PoS] is not a new concept at all. PoW actually was one of the [biggest] innovations that made Bitcoin possible, after PoS was deemed impractical because of censorship vulnerability.”

He further added –

“This was criticized by P2P and OS developers as a reckless notion, given that amat contracts are actually a de nova cryptographic protocol. In other words, it’s playing with fire.”

Tuur Demeester also made references to the reports mentioning Ethereum being a supercomputer in the world, having perfect censorship resistant solution.