Ethereum developer and co-founder Vitalik Buterin believes that over time the cryptocurrency market will become more stable and less volatile, like gold.
For Vitalik Buterin, the volatility of Bitcoin and cryptocurrencies has been strongly linked to an existential crisis and general uncertainty about the legitimacy of this market in the world. However, he noted that in the medium term, it is possible that the volatility that has so characterized cryptoassets will decrease considerably and that the crypto market in general will become more stable.
Buterin made the remarks during an interview with economics blogger Noah Smith, who quizzed him on the current state of the cryptocurrency market, as well as industry security, decentralized governance, and Ethereum’s transition from a Proof of Work consensus protocol to Proof of Stake, among other things.
During the interview, Buterin stated that the cryptocurrency market has always been immersed in a cyclical dynamic marked by an adoption curve and the halving the Bitcoin; a process that halves the network's block reward to reduce BTC issuance and occurs approximately every 4 years.
Cryptocurrency volatility will fall, says Vitalik Buterin
According to Buterin, cryptocurrencies “They will be as volatile as gold or the stock market”.
Over time, the blockchain developer said, cryptocurrencies could gain new use cases and make their way into new niches, which will eventually increase trust and stability in the market.
Buterin also noted that since its creation, Bitcoin has gone through several stages of volatility, with one of the most obvious being the existential crisis that the cryptocurrency saw in 2011 and which led to the price of BTC falling from $31 to $2 in just six months. Later, in 2014 and 2017, Bitcoin went through two other stages marked by high volatility, although each of these were much less than the previous one, the expert noted.
“After 2017, uncertainty shifted to whether or not (Bitcoin) would gain the levels of mainstream legitimacy necessary to support a higher price level, which is still roughly where we are in 2022.”, Buterin said.
Over the past year, Bitcoin has fluctuated in price between $17.710 and $68.780 per BTC, while gold has remained more constant, ranging between $1.714 and $1.994 per ounce over the same period.
Experts see the crypto market crash as a good thing for Bitcoin and cryptocurrencies
Although the current bear market is normal, we must not forget that Bitcoin and cryptocurrencies have been operating within a cyclical dynamic that will likely continue for a long time and that will bring us repeatedly higher prices and new declines for cryptoassets.
Buterin's advice in the face of the ups and downs of the crypto market is “remember the history of space and take a long-term view of things”.
Buterin also pointed out that when the market is bullish, many people believe in cryptoassets as “the new paradigm and the future”; while when the market falls, they call it “doomed and fundamentally flawed.” However, with each fall, a cleansing is triggered that eliminates unsustainable business models and strengthens those with a solid foundation.
This view is in line with what several cryptocurrency experts have expressed in recent months. Josef Tětek, Bitcoin analyst at Trezor, told Cointelegraph in June that the current crypto winter has driven rogue institutions out of the crypto space.
Other topics of interest that Vitalik Buterin discussed during his interview with Noah Smith were the energy consumption of Bitcoin and PoW networks and the alternative forms of organization that blockchain technology is enabling.
Main image from Fortune
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