Sentiment Flippening: Why This Bitcoin Expert Doesn’t Own Ethereum

Ethereum, undraw

We at Bitcoinist covered the lack of decentralization of the Binance Smart Chain. And, at the moment, the BSC is Ethereum’s main competition. That sparks a question, inquiring minds want to know: how decentralized is Ethereum? Not enough, according to author, investor, YouTube star, and Bitcoin expert Preston Pysh.

In a recent Twitter thread explaining why he doesn’t own ETH, Pysh started with: “First, I don’t trust the decentralization of the ETH protocol.” It’s no secret that Ethereum’s creator Vitálik Buterin and a few key developers have almost complete control over the project, but, is that the only thing that makes Ethereum a semi-centralized affair? Not according to Pysh.

ETH to BTC price chart on Bittrex | Source: ETH/BTC on TradingView.com

Running nodes and PoS in Ethereum

The author says that the process for running an Ethereum node is “not straightforward,” and that the project’s community often says that a “full node is a “spectrum,” of decentralization.” And then proceeds to describe how in November of last year the node operator Infura went down and exchanges had to temporarily stop processing Ethereum-related transactions.

Then, Pysh goes for the jugular. According to him, the Proof-of-Stake consensus mechanism that Ethereum 2.0 is planning to use, “is just like the existing fiat system.” He explains this further, “If you have a bunch of money, you stake those positions and then you have more influence over the incentives of the overall protocol.

Related Reading | 3 Trends Show Ethereum Is On Track For Strong Growth in 2021

That’s the main argument against all the newer blockchains that reject the Proof-of-Work model that Bitcoin uses. The system they came up with, PoS, clearly favors the rich and powerful and creates “gatekeepers and kingmakers.

Yeah, but, what about all the innovations?

You can say whatever you want about Decentralized Finance (DeFi) and the NFT craze, but the fact of the matter is that most of those experiments are happening on the Ethereum blockchain. And experimentation is good for the crypto ecosystem. It keeps it exciting and it can spark the next big thing. 

What does Pysh say about this? That DeFi is also happening on the Bitcoin blockchain. As an example, he uses, “Hodl-Hodl is a platform that enables P2P lending & borrowing and it doesn’t have a native token.

This might be Pysh’s weakest point, but he brings reinforcement by quoting Lyn Alden’s “An Economic Analysis of Ethereum” essay. In that piece, she’s brutal. She qualifies the whole Ethereum DeFi space as:

A big operating system powered by crypto tokens, for the purpose of moving around… crypto tokens.

A healthy banking system in the real world would consist of people depositing money, and the banks making various loans for mortgages and for business financing, to generate real-world utility.

Plus, the competition in the smart contracts space is tremendous. To illustrate that, Pysh lets “one of the greatest investors of all time” speak: 

Yeah, but, what about the rise in Ethereum’s price?

The facts are the facts: Ethereum’s bull run continues and Bitcoin’s price has been consolidating for months now. To explain this, Pysh recommends to, “go back and look at what happened during the summer of 2017. This was analogous in the previous Bitcoin bull market to what we are seeing right now.” 

Related Reading | Expert Expects Bitcoin “Decoupling” From Stocks But Not For The Reason You Think

At that time also, during Bitcoin’s consolidation period, “ETH aggressively outperformed BTC.” And he means it. The relationship between Ether and Bitcoin has never been so skewed towards the former, not even now. In fact, as the charts show, it’s not even close. 

To conclude, Preston Pysh says

The author admits he’s biased towards Bitcoin, and that he can’t see the future and wouldn’t know what it holds for Ethereum. Regardless, Pysh thinks that Bitcoin is a better solution for the problem at hand, “Sound, censorship-resistant money, w/ timeless decentralization.” And that with a, “100 trillion + bond market that’s already priced to collapse,” a massive influx of money is coming to Bitcoin. It’s not coming to Ethereum, because it’s “controlled by tech gatekeepers.

He finishes with well-wishes and an invitation, “I highly encourage you to think for yourself and invest YOUR money the way YOU see fit.  Happy investing.”  

Hear, hear.

Featured Image by Katerina Limpitsouni on unDraw - Charts by TradingView
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