Vitalik Buterin Says Ethereum Could Be Deflationary After Migration

Speaking to Naval, Vitalik Buterin spoke about his personal past and the future of Ethereum. As a highlight, he stated that the issuance of Ethers (ETHs) could turn negative after the migration to Proof-of-Stake (PoS). In other words, this would make Ethereum deflationary, which could rise in value as supply declines.

Having created Ethereum at the age of 19, Buterin says he started programming very early, at just 10 years old. His hobby was programming one game, playing it until he was tired and then another.

Finally, the creator of Ethereum also makes technical comments about the evolution of blockchain technology. In addition to explaining the concept of sharding, Buterin also claims that Ethereum in its current state could support up to 5,000 transactions per second, just with the evolution of second-tier solutions.

Programming at age 10

Besides being the main name behind Ethereum, another surprising point is that Vitalik Buterin was only 19 years old when the project was launched. Buterin explains how he started so early and says he started programming at the age of 10.

“I grew up programming games for myself to play. I would make a game, play it until I got tired, then I would make another game, and then I would play it until I got tired.”

Buterin also says his parents were very helpful. In addition to buying several programming books, they also sent him to programming and math classes. Such an incentive has paid off as today, Ethereum is the second largest cryptocurrency in the world, with a capitalization of BRL 1.7 billion.

Future of Ethereum and cryptocurrencies

Buterin explains the difference between centralized and decentralized networks, noting that in the former, you only send a transaction to a single computer. In decentralized systems, such as cryptocurrencies, such a transaction is sent to “100,000” computers for verification.

Going further, the creator of Ethereum explains the concept of sharding, a feature that promises to increase the speed of these decentralized systems.

“The system randomly picks 1,000 of these 100,000 computers. Those 1,000 computers perform the verification and the transaction is accepted.” explains Vitalik Buterin, “Instead of all 100,000 computers scanning, there are only 1,000 computers scanning.”

After this, Buterin also explains that this number can vary. Instead of 1%, 0.1% of all computers could be used. However, he notes that this implementation poses other challenges, such as the need for more powerful nodes to process so many transactions.

Buterin also comments on a feature called “stateless customers” (stateless clients) they are working on. The goal would be to reduce the disk space that Ethereum occupies, allowing the system to remain decentralized, or even increase decentralization, by removing this barrier.

Deflationary Ethereum?

After the introduction of EIP-1559, Ethereum started burning some of the transaction fees. For short periods, the incineration was greater than the issuance of new coins, decreasing the total supply.

Despite being vague in his explanation, Vitalik Buterin points out that Ethereum will be deflationary after the migration to Proof-of-Stake. After all, although in theory the burns will be lower due to the lower rates, the rewards per block are also reduced.

“Once we have the Proof-of-Stake (PoS), the forecast is that we will even have a negative issuance. So ETH could be quite unique in that sense.”

If they can hold a negative issue for long periods, such as months or years, it can have a major impact on the price of Ether. After all, in addition to reducing the supply, it will also attract investors who are currently satisfied with a maximum supply, as in the case of Bitcoin.

However, it’s worth remembering that the use of the network – and possibly the burning of ETH – is largely dependent on third parties. Especially by the DeFi and NFTs sectors today. Therefore, it is necessary to believe that these continue to generate volume on the network.

Source: Live Coins