“The spiciest Vitalik tweet I’ve ever read”
You read the headline.
This is the tweet the Bankless founder, Ryan Sean Adams, is referring to:
...is it spicy though?
Sure, that last part is - but what in the world are they even arguing about?
Alright, buckle up - it's about to get nerdy.
Currently, Ethereum (founded by Vitalik) is in the midst of making the switch from Proof of Work (PoW), to Proof of Stake (PoS).
Sounds confusing (and it is), but they're just two different methods of processing crypto transactions.
In this here tweet thread, Nick and Vitalik are rowing over whether or not the PoS method makes a cryptocurrency a security.
(And in the crypto world, everyone wants their coin to be seen as a commodity, not a security).
We wrote about the differences between securities and commodities, in depth - here and here.
But in short, a commodity can't be changed by a single entity, whereas a security can.
E.g. Gold might go up and down in price, but no one can actually change what gold is - so it's considered a commodity.
Whereas, if Tim Cook decided tomorrow, that Apple was going to stop selling tech products and start selling homes, that would make it an entirely different company - so it's a security secure.
Commodities have a leg up over securities, because they receive lighter regulation and less government oversight.
So, can a cryptocurrency that uses PoS to process transactions be changed by a single entity?
Apparently not.
If the wider community isn't in agreement on a proposed change, it will automatically be rejected by the computers (or 'nodes') running the blockchain.
(Just like Bitcoin and its PoW method).
This is a factor that may help push Ethereum towards being classed as a commodity.
BUT! We have a sneaking suspicion there were some crossed wires here...
It looks as though ol' Nicky Payton may not have been taking a swipe at the PoS method as a whole - but at the fact that the Ethereum developer team has the ability to make the switch, from PoS to PoW, in the first place.
That's a small entity, making changes to the 'thing' itself, which could suggest it's a security.
The argument that the Bitcoin community make is that, while BTC was tweaked and updated after it was first released, it's stayed largely unchanged for years now - and has no plans to do so in the future.
So it's widely assumed it will eventually be classed as a commodity.
And until another coin can reach that same cruising altitude, they're not about to let anyone else into the club.
Ok, that's it. That's the story.
Does your brain hurt?
We need an Advil.
