Date
21 September 2018
Vitalik Buterin, co-founder of Ethereum Foundation, says the blockchain and cryptocurrency industry will have to settle for slower growth pace. Photo: Bloomberg
Vitalik Buterin, co-founder of Ethereum Foundation, says the blockchain and cryptocurrency industry will have to settle for slower growth pace. Photo: Bloomberg

Blockchain sector shifting to less heady growth: Buterin

The blockchain industry may have passed the period of explosive growth, an expert says, adding that he feels the sector is now close to hitting a ceiling.  

“There isn’t an opportunity for another 1,000-times growth in anything in the [blockchain] space anymore,” Vitalik Buterin, co-founder of Ethereum, told Bloomberg.

In an interview at an Ethereum and blockchain conference in Hong Kong, Buterin said over the weekned that “the blockchain space is getting to the point where there’s a ceiling in sight.”

“Growth in Bitcoin and other cryptocurrencies in the blockchain community through its first six or seven years was dependent on marketing and trying to get wider adoption,” he said.

But now, that strategy is “getting close to hitting a dead end,” Buterin said, noting that “if you talk to the average educated person at this point, they probably have heard of blockchain at least once.”

Like Bitcoin, Ethereum is a distributed public blockchain network. Ether, the cryptocurrency whose blockchain is generated by the Ethereum blockchain network, was the star cryptocurrency in 2017, surging 8,700 percent in price.

But the unit witnessed a sharp fall in recent months, slumping over 80 percent from a January high of around US$1,400. The market has seen a dramatic decline in total market capitalization of all cryptocurrencies this year.

Ether is used as “gas” to pay for transactions on decentralized applications running on the Ethereum blockchain network, as Bloomberg noted. The Ethereum network has also given rise to the initial coin offering (ICO) market, where startups issue their own cryptocurrency in exchange for money to build their business.

Ether plunged to as low as US$200 following Buterin’s commentary. As of 10 am Monday, Sept. 10, Hong Kong time, Ether was trading at US$201.7, according to CoinMarketCap.com.

Bitcoin, the largest cryptocurrency by market cap, is trading at US$6,346, down over 60 percent from its January high.

Buterin, the Canadian programmer and writer primarily known as a co-founder of Ethereum, is widely recognized as a leader and pioneer in the blockchain industry.

In the conference, Buterin explained that the days of explosive growth in the blockchain industry have likely come and gone, and the next step for the industry should be getting people who are already interested in cryptocurrencies to be involved in a more in-depth way, “to real applications of real economic activity.” 

Last week, Ether, Bitcoin, and other digital coins came under fresh selling pressure after a Business Insider report suggested that Goldman Sachs is suspending plans to open a cryptocurrency trading desk, a move that was perceived as a weakening of institutional support for crypto units.

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