It was another one of those weeks. Crypto prices hit rock bottom around $186 billion. Goldman Sachs backs away from it plans to offer a crypto trading desk. Vitalik Buterin tells Bloomberg how little he thinks of Ethereum. Technical analysts give us little hope for getting bullish anytime soon.
But that was before The New York Department of Financial Services approved Gemini and Paxo cryptocurrency exchanges. Both GUSD and PAX are based on the Ethereum ERC-20 token and backed by physical dollars custodied in FDIC-insured U.S. bank accounts. This insulates investors for whatever else may be rocking the wider crypto market. This development alone is a step forward for investors and regulators.
The most negative news of the week appeared in a Forbes article, written by Pawel Kuskowski titled: “How To Stop Ether Going To Zero: Defusing The ‘Difficulty Bomb’. The negative slant of the title alone reflects the mindset of the crypto market these days. It hard to expect anything else with the market having lost a tidy $600 billion in value this year.
Pawel’s strength is his ability to spell out a core unknown to Ethereum’s immediate future. That is if ETH developers will solve the much talked about Difficulty Bomb with modifying Proof of Work or moving to Proof of Stake. This is hardly a new issue but Pawel does a solid job explaining how either choice still produces uncertainty. As for the price of ETH, uncertainty is no friend.
So the question becomes simply this. If Vitalik Buterin and his group fail to solve the Difficulty Bomb and ETH goes to zero, won’t this produce a similar result on virtually every other ERC-20 token built on the Ethereum platform? The answer is so apparent that is makes you want to liquidate your investment position even at current depressed levels.
Unfortunately, there is no immediate answer to this riddle. That doesn’t mean that we should cut and run from crypto. Let’s take some of this week’s developments and apply the principles of a reasonable person.