Ethereum News Update
To many crypto-enthusiasts, blockchain is synonymous with decentralization. A growing number of powerful entities, however, think the two are separable, and that may give Ethereum an edge over Bitcoin.
Why, you ask? Well, Bitcoin has a political mission carved into its DNA. Its core aim is to disrupt the financial industry by cutting out banks in the payments space and eliminating central banks in the monetary space. It wants unfiltered, uncompromised decentralization.
This isn’t necessarily true for Ethereum-based tokens.
You’ve probably heard about companies raising money through initial coin offerings (ICOs). Most of them take place on Ethereum’s blockchain, yet they don’t have to adhere to the principles of decentralization. They can have traditional power structures.
What this means is that Ethereum is decentralized, but its offspring are not.
I thought about this on Sunday when one of China’s financial regulators said blockchains need more centralization.
His name is Zhang Ye, and as the head of the technology division in China’s Securities Regulatory Commission, he is a key figure in the government’s relationship with blockchain startups.
Speaking at a blockchain conference in Beijing, he made a pretty novel argument against decentralization:
“Blockchain’s advocates for absolute decentralization have no solid ground, because [blockchain] itself is a software developed in a centralized way. So is the public key infrastructure, which remains an important feature adopted by blockchain…The key is to explore how to achieve decentralization through a centralized infrastructure.”
(Source: “Blockchain Needs Centralization, Says Chinese SEC Official,” CoinDesk, March 6, 2018.)
While I’m not sure I agree with Mr. Ye, companies and governments are sure to sympathize with his logic. Decentralization means anarchy, after all. Whether or not you believe anarchy is a good thing, you have to admit that governments want nothing to do with it.
It would be easy to brush this story aside by saying, “Oh well, that’s just China. Of course they want more centralization!”
That would be a mistake.
Regulators are wary of Bitcoin, particularly of its ambitions to replace fiat currencies. But they don’t seem as averse to Ethereum. At Davos, for example, the mantra was “blockchain, not Bitcoin,” which is tantamount to a ringing endorsement for Ethereum.
Ethereum prices are downcast at the moment because no one knows how the regulatory chips will fall. If you zoom out to the 10,000-foot perspective, though, you can see that regulators might favor a decentralized platform which allows the creation of centralized products.
As such, we remain bullish on ETH prices. Our $1,500 Ethereum price forecast for Q2 is unchanged, as is our $2,500 price target for the end of 2018.