Key Takeaways
Vitalik Buterin has shared his thoughts on ETH’s potential as a form of money in a podcast about “legitimacy.”
Buterin argued that legitimacy and social contracts control resources associated with blockchains like Ethereum.
He also said that NFTs have played a key role in giving Ethereum legitimacy.
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Is ETH money? Vitalik Buterin seems to think so.
Vitalik Buterin Discusses Ethereum’s “Legitimacy”
On the latest Bankless podcast, Buterin discussed Ethereum and “legitimacy,” following a March blog post the Ethereum co-founder had penned titled “The Most Important Scarce Resource is Legitimacy.”
Buterin argued that legitimacy is a type of unwritten social force that controls the way resources are allocated. Legitimacy, he said, falls under three categories: legitimacy by brute force, legitimacy by fairness, and legitimacy by process.
Legitimacy is the reason forked chains like Ethereum Classic and Bitcoin Satoshi Vision fail to overturn their forerunners, Bankless co-host Ryan Sean Adams asserted, to which Buterin agreed.
During the interview, Buterin shared his thoughts on ETH’s future as “ultra sound money.” He said:
“There’s a shift of legitimacy in thinking of ETH as a type of money of any kind.”
Buterin added that ETH was “gaining legitimacy” through the “ultra sound money” concept. He pointed out that ETH was primarily known as a tool for paying gas fees earlier in Ethereum’s lifetime, but its narrative has evolved in recent years. Answering to Bankless co-host on if it would be accepted as money like BTC, he said he thought it was “getting there.”
Many crypto followers have previously shared the view that they are bullish on Ethereum but not ETH, though that take is becoming less popular these days.
ETH’s recent rise has been helped by Ethereum researcher Justin Drake, who coined the term “ultra sound money” earlier this year. Drake popularized the meme in anticipation of the network’s forthcoming EIP-1559 update, making ETH a deflationary asset.
According to his calculations, the ETH supply may never exceed 120 million.
if capped-supply BTC is sound money 📢
decreasing-supply ETH is ultrasound money 🦇 pic.twitter.com/anu6QiZRcO
— Justin Ðrake 🦇🔊 (@drakefjustin) January 22, 2021
The World’s First “Triple-Point Asset”
In 2019, when ETH was trading at roughly $180, Hoffman described it as the world’s first “triple-point asset.” It can be used as a capital asset when staking on Ethereum, it’s consumable as it is used to pay for transactions, and it is a scarce store of value.
Interestingly, Buterin said that the NFT movement was “the thing that started giving Ethereum legitimacy” during his Bankless interview as it helped bring the network into mainstream consciousness. NFTs have had a breakout year with musicians, digital artists, celebrities, and other creators adopting the technology. At the same time, the DeFi space continues to grow with over $82.5 billion in total value locked.
According to data from Messari, Ethereum settled $1.5 trillion in transactions in the first quarter of the year.
Ethereum itself also has several major developments ahead this year. After EIP-1559, which is scheduled for Jul. 14, the network aims to ship “the merge” to Proof-of-Stake in the coming months. Buterin acknowledged Ethereum’s recent progress on Bankless, stating that the ecosystem is “growing up and reaching a point of maturity.”
The latest activity surrounding the network has been reflected in ETH’s price action: the second crypto is up 422% this year, outperforming Bitcoin and various other crypto assets. It crossed $4,200 for the first time yesterday.
Source: CoinGeckoInstitutional interest appears to be on an upward trend too, with the European Investment Bank issuing digital bonds on Ethereum, the ETH futures and options markets gaining pace, and high-net-worth investors adding to buying pressure with multi-million dollar ETH buys.
In other words, ETH is also “gaining legitimacy” among the whales.
Disclosure: At the time of writing, the author of this feature owned ETH, FLI, and several other cryptocurrencies.
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