Vitalik Buterin: centralized stablecoin may become an essential determinant of the future hard fork

2022-08-12, 15:40

TL: DR

Vitalik Buterin, the co-founder of Ethereum has said that stablecoins may become an important determinant of future hard forks. He made this submission during the BUIDL Asia 2022 conference.Buterin allayed the misgivings about the effect on the much-awaited Merge saying it may not yet be an issue.He gave a time frame of five to ten years while also proposing the adoption of different stablecoins as a check on centralized actors. Keywords: centralized stablecoins, hard fork, merge, blockchain, version, protocol.

Introduction

Trustwallet.com

It is no longer news that the co-founder of Ethereum, Vitalik Buterin, said that centralized stablecoins such as USDC and USDT could become significant determinants in future hard forks. Buterin made this known while speaking at the BUIDL Asia conference in Seoul on Wednesday. He was a co-speaker at the event along with Illia Polosukhin, the co-founder of Near Protocol, to discuss Ethereum's upcoming Merge.

According to the Ethereum co-founder, centralized stablecoins could be a "significant" deciding factor in which blockchain protocol the industry will "respect" in hard forks. A hard fork occurs when a blockchain network's protocol undergoes a radical change, resulting in two versions. Typically, one chain is preferred over another:

"At the time of the merge, you will have two [separate] networks [...], and then you have exchanges, Oracle providers, stablecoin providers that are sort of deciding which one they respect."

Buterin explained that, at that point, there would be 100 billion USDT on one chain and 100 billion USDT on the other, cryptographically — and so they [stablecoins] need to stop respecting one of them.

Buterin, on the other hand, stated that he "had not seen any indication" that such a dispute would be a threat to Ethereum's upcoming Merge, citing that the centralized stablecoin issue is more about future hard forks. He said that in the next five to ten years, Ethereum might see more contentious hard forks, with centralized stablecoin providers wielding more power.

The Seoul Conference and Buterin's Hypothesis

Source: Beincrypto.com

BUIDL Asia 2022, hosted by KryptoSeoul, took place on August 4-5, providing the ultimate opportunity for developers, communities, and businesses worldwide to interact. BUIDL Asia, like the adorable Unicorn, is full of pleasant surprises and delights, connecting projects and builders from around the world and chains.

The day was jam-packed with big names like Vitalik Buterin, the founder of Ethereum, Illia Polosukhin's co-founder of Near Protocol, and Eli Ben-Sasson, the co-founder and president of StarkWare, to name a few.

Aside from discussing danksharding, verkle trees, and the upcoming Goerli testnet, Vitalik Buterin discussed how compression could help improve rollup efficiency. He also discussed zk-EVM implementations, others like zk-sync and Starkware, significant efficiency improvements, and the adoption of Optimism and Arbitrum. Vitalik reiterated the approach and principles guiding Ethereum's scaling along with the impending merger.

On this occasion, Buterin Vitalik was tempted to proclaim a fascinating thesis. According to him, centralized stablecoins could be important in determining which blockchain protocol will be more respected after the bifurcation event.

As a potential check on centralized actors, Vitalik proposed the adoption of different kinds of stablecoins, including decentralized ones such as DAI.

Growing Stablecoins Relevance and the Merge

For obvious reasons, the hypothesis assumed the form of a potential threat. The question then became whether stablecoins, with their growing relevance, could impact the upcoming Merge. Buterin stated that he sees no evidence of this. He believes that stablecoins will become an issue due to the ongoing changes. At this point, he postulated a timeframe for when he believes stablecoins will influence hard forks. This influence is expected to happen within the next five to ten years.

What Exactly Is a Hard Fork?

A hard fork, in essence, divides a blockchain into two, with a change in the blockchain's code resulting in two versions.

A hard fork produces two versions of the blockchain incompatible with one another. It means that nodes running the new blockchain version will not recognize transactions made on the old version and vice versa. For the hard fork to occur, all nodes on the blockchain must agree to the change.

In general, blockchain hard forks meet the needs of the community that uses/mines a specific cryptocurrency. They may be required due to flaws in older versions of the software, the addition of new functionalities, or disagreements among the cryptocurrency community about the future direction.

Indeed, many in the crypto world are looking forward to the Beacon Chain Ethereum 2.0 hard fork, which will deliver several upgrades to Ethereum 2.0, including the ability for nodes to run on mobile devices.

The Merge

The transition from a PoW (Proof of Work) to a PoS (Proof of Stake) consensus mechanism is a significant change since Ethereum's inception.

The Merge is set to take place after the successful integration of the Goerli testnet in mid-August, with Ethereum developers aiming for September 19 as the date of transition from the current PoW chain to the PoS chain.

Bottom line

Vitalik Buterin's hypothesis that stablecoins may be a deciding factor in the future hard fork is proof of the growing relevance of stablecoins. The ongoing bearish crypto market has placed stablecoins on the front burner of crypto permutations. The primary concern has been about the effect of Buterin's assertion on the much-awaited Ethereum's Merge. However, he has eased the fear by giving the timeframe of five to ten years before it starts taking effect.

Author: Gate.io Observer: M. Olatunji
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