Summary
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PlanB Criticizes Ethereum’s Core Mechanics: Bitcoin analyst PlanB has labeled Ethereum a “shitcoin,” criticizing its centralized structure, significant pre-mined supply (over 72 million ETH), reliance on Proof of Stake (PoS) instead of Proof of Work (PoW), and flexible supply schedule, coinciding with ETH’s falling price and market dominance.
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Counterarguments Highlight Ethereum’s Utility and Decentralization: Supporters defend Ethereum by pointing to its dominant role in processing stablecoin volume (reportedly exceeding Visa in 2024) and hosting the majority of tokenized real-world assets (RWAs). Some argue Ethereum is becoming less centralized over time, contrasting it with Bitcoin’s increasing accumulation by large entities.
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Ongoing Debate and Development: The criticism comes amidst a broader debate about the impact of Ethereum’s switch to PoS, with some viewing it as detrimental, while Ethereum developers continue to propose technical upgrades like exploring RISC-V to improve performance and scalability.
Prominent Bitcoin analyst PlanB, known for developing the Stock-to-Flow (S2F) model, has recently directed sharp criticism toward Ethereum.
This critique coincides with a notable downturn in both Ethereum’s market price and its overall share of the cryptocurrency market capitalization since the year began.
The core of PlanB’s argument challenges fundamental aspects of Ethereum, the second-largest cryptocurrency, specifically its Proof of Stake (PoS) consensus mechanism and its initial coin distribution.
Allegations of Centralization, Pre-Mining, and PoS Drawbacks
PlanB brought attention to these issues by referencing a 2022 statement from Ethereum co-founder Vitalik Buterin, where Buterin had questioned the predictive certainty of the S2F model for Bitcoin.
PlanB used this as a springboard to critique Ethereum, highlighting the ETH/BTC trading pair’s fall to a multi-year low.
He characterized Ethereum unfavorably, pointing to what he views as its centralized nature, the pre-mining of a significant portion of its initial supply, its reliance on PoS instead of Proof of Work (PoW), and its adaptable supply issuance policy.
“Shitcoins like ETH, that are centralized & premined, have PoS instead of PoW, and switch supply schedules at will, are harmful,” PlanB stated, asserting that such cryptocurrencies warrant scrutiny.
This perspective is not unique to PlanB.
Ethereum’s transition to PoS via Merge has drawn criticism from some industry figures, who argue that while it drastically cut energy use by over 99%, it diminished the network’s fundamental value proposition.
For instance, Meltem Demirors of Crucible Capital described the shift as a potentially costly strategic error, suggesting it diluted Ethereum’s network integrity and impeded advancements in related hardware like GPUs.
Arguments for Ethereum: Stablecoin Volume and RWA Dominance
In contrast to these criticisms, defenders highlight Ethereum’s expanding utility.
Analyst Danny Marques emphasized the network’s significant role in processing stablecoin transactions, noting that the volume handled on Ethereum in 2024 surpassed that of payment giant Visa.
Supporting this, a Bitwise report indicated nearly $14 trillion in stablecoin transactions processed across various blockchains, compared to Visa’s $13 trillion, with over half of the total stablecoin supply residing on the Ethereum network.
Furthermore, investor Wise observed that Ethereum hosts a majority (56%) of the value represented by tokenized real-world assets (RWAs), including stablecoins.
Decentralization Dynamics: Contrasting Views on ETH and BTC
Countering the centralization critique, investor AllThingsEVM.eth proposed that Ethereum is progressively becoming more decentralized over time, contrasting it with Bitcoin, which they argue is trending toward increased centralization due to growing accumulation by institutions and nation-states.
This perspective raises questions about Bitcoin’s future decentralization as mining rewards diminish and large entities potentially gain more control over the network.
Ongoing Development Efforts Aim for Enhanced Performance
Despite the debate surrounding its fundamentals, Ethereum continues to evolve technically.
Co-founder Vitalik Buterin recently suggested exploring the replacement of the current Ethereum Virtual Machine (EVM) with RISC-V architecture.
This proposed technical upgrade aims to enhance the performance and scalability of smart contracts executed on the network while striving to maintain compatibility with the vast ecosystem of existing contracts.
Also Read: Indicators Point to Potential Ethereum Upside Three Bullish Factors Emerging
*Disclaimer*: We at Bitcoinleef.com present you with the latest information in the crypto market. However, this information should not be regarded as financial advice and viewers should consult their financial advisors before investing.
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