Having to trust people has no place in crypto.
This space has slowly been encroached on by investors and speculators but I like to think some still remember the fundamentals. And if you do have to trust people, decentralization is paramount. The Ethereum blockchain is neither decentralized, nor trustworthy.
Why you can’t trust the protocol:
The first thing we need to analyse here is the protocol itself. For a successful protocol to exist, the rules need to be set from the beginning and changes in rules need a governance system that lets the network, generally nodes, voice their opinion on any of said changes.
This means that unless there is agreement (and you can argue to if this should be on or off chain), no rules can be changed. With that in mind, surprise changes should be impossible right? There should be no way that a dev could push a change that would create a hard fork without any input from the community.
Well, with ETH, that happened in 2020. Infura (remember that name), the biggest ETH service provider, had an outage that knocked out most of exchanges APIs. To reiterate: a dev pushed a changed to the protocol, without consent, by “mistake”, that was enough to change the rules so that no one else could play. This is not about the change itself. This is about the fact that the power to do this IS THERE. This is possible due to the incredible centralization that Infura provides. They host nodes for clients, they host most of the nodes on ETH as a whole. The nodes provide the continuity of a chain. If you control the nodes, you control the network. The users are not in control. The conclusion to this is very simple, you can’t trust the protocol because it can be changed on you in an instant.
Sources:
https://i.imgur.com/S6xS1kD.mp4 here is the video of the admission they knew it wasn't scalable.
You can’t trust the Leaders:
So, if you can’t trust the protocol, you need to be able to trust the people in charge of it. The biggest players here are, without a doubt, ConsenSys and Vitallik. So let’s have a look at what they have been doing.
Remember Infura? The company that is basically the AWS of ETH? Well, ConsenSys thought it would be a great idea for decentralization to acquire Infura. This means, a part of a for profit company that holds a major stake on ETH has acquire the infrastructure that runs most of the blockchain. This is clearly a major problem due to the conflict of interest. It’s the same problem we have with the banking system encroaching into politics. There is no checks and balances when you control the money flow and the rules at the same time. You know what ConsenSys also owns? A little extention called METAMASK. Metamask is by far the most used browser wallet users use to interact with the ETH ecosystem. So ConsenSys owned the door, and now they own the police too. Furthermore, recently JPMorgan has said that ETH is better than BTC. This is a surprise following the group’s past attitude towards cryptocurrency in general.
But everything becomes clear when you realise that JPM holds a significant part of ConsenSys since earlier this year! What you are seeing it just another TradFi moving to control a huge part of today’s DeFi ecosystem. Which brings me to Vitalik. First of all I would like to address something that doesn’t seem to be very well known: Vitalik didn’t code ETH. The true programmer behind ETH is Gavin Wood. Someone that has left the project a long time ago and essential disavowed the protocol due to where it was headed. So what did Vitalik do? He is the writer of the white paper and he has been the face of the project. And optics matter, so this does give him a tremendous amount of influence. One of the most important parts he KNEW from the beginning that ETH would never be scalable, but they just needed to push something out to make money. I am not going to go over the moral core of Vitalik any further because I think morals are subjective as a whole and there is room for everyone to form their opinions on the man, so I will link all the resources I found and let you decide for yourselves, but for me, someone that has been involved in a scam regarding quantum mining and has actively tried to destabilize ETC out of spite by using his connections is not deserving of my trust.
Here you have the album. https://imgur.com/a/2Wfffy6
In conclusion, if you have an institution with this amount of power over an ecosystem that is not trustless, and that institution is actively seeking to further it’s goals by removing even more of the freedom you thought you had, they are not to be trusted.
Sources:
https://github.com/MetaMask/metamask-extension/blob/develop/LICENSE
https://thenextweb.com/news/consensys-acquires-infura-the-centralizing-tech-powering-ethereum-dapps
https://medium.com/bitcoinerrorlog/vitaliks-quantum-quest-9e6af6570f23
You can’t trust the monetary policy:
Since you can’t trust the protocol and can’t trust the leaders, you have a last line of defence: the monetary policy. If the protocol is bad and the leaders are self-serving, the monetary policy being fair and consistent would be the key to keep any users on the network. So is it fair and consistent? No, and it has never been.
I have spoken a little about the London Upgrade on my last post, so I will just summarize it here. Fees being burned absolutly only benefit the rich and stakers will screwing over all users. This is bad now, and will be even worse if ETH moves to PoS. With PoS there is no upkeep cost for the powers that be, making it extremely easy for the top to stay on top. This is fiat system vibes right there. But the problems and manipulations have been there since the beginning. From the pre-sale ETH was being controlled behind the scenes by insiders. Analysis from the pre-sale influx of BTC indicates insider trading from the get go.
These insiders are mostly unknown except for their wallets. However, tracking these wallets shows perfect price manipulation in order to cash out. And of course that would be the case when they own so much of the supply. Don’t forget that over 70% of ETH was premined for ICOs and pre-sales. So if you believe on humans being self serving, the monetary policy of the Foundation will never align with the small fish, but with the sharks. The users are there to fill the pockets of the whales and not much else.
Sources:
https://tomerstrolight.medium.com/the-problem-with-ethereum-part-2-a55f9170f7e7
https://medium.com/@hasufly/ethereum-presale-dynamics-revisited-c1b70ac38448
https://bitcoinist.com/ethereum-ico-pre-sale-address-dumps-320000-eth-in-3-months/
https://decrypt.co/48420/vitalik-buterin-sold-500000-ethereum-to-mike-novogratz-for-0-99-each
Conclusion:
To me it is pretty obvious that every step that has been taken so far has served the same goal: giving the big players power and profit at the expense of the user.
This means slowly walking into a fiat-like system. This means ETH will be no different than Wall Street. To me, there is a fundamental divide between the ideals of cryptocurrency and what ETH is and has been doing. Even small investors will miss the forest for the trees while they are making money. Some people also made money on every banking collapse. But you better be sure you are on that short list.
Don’t trust, verify.
