A little known fact about Ethereum

Ethereum co-founder Vitalik Buterin is a prominent critiс of bitcoin and other PoW coins. He doesn't like the Proof-of-Work algorithm with its limited scalability and bandwidth. He also saw signs of centralization and excessive mediation in bitcoin trading on CEXs and currency pairs with stablecoins.

Of course, a lot of counter-criticism was directed towards Ethereum and Vitalik personally. It was related to the excessive centralization of Ethereum, unlimited emission, and the lack of a well-thought out strategic plan for the network development. Critics said that the lack of a strategic plan resulted in swings from one algorithm to another, high commissions, and leaky smart contracts that are very easy to hack. But there is something much more important than this. There is something that Vitalik Buterin avoids talking about, a topic that he considers “taboo”. What type of topic is this?

When the altcoin market has developed enough, the technological model of cryptocurrencies began to be distorted by individual creators of new coins or their teams and gradually mutated towards controlled primitivism. The ideology of decentralized free money without a single emission center and intermediaries, which was laid in Satoshi Nakamoto’s Bitcoin white paper was sacrificed to a blatantly commercial model, in which the idea of decentralization functions as pretty cover. 

Although ideology has changed, the terminology stayed the same. At first, only decentralized coins with a gradual, uniform emission and a limited supply (like Bitcoin) were considered cryptocurrencies. Subsequently, coins with unlimited supply and pre-mining began to be called cryptocurrencies. Later on, people began to call tokens without their blockchain a cryptocurrency. Then the name "cryptocurrency" was appropriated for any assets, even with a private (closed) blockchain, where decentralization was out of the question. In the end, it came to the point that the blockchain itself ceased to be a mandatory option. For example, the first version of Ripple did not include its blockchain, and the community often joked that the co-founders “taped nominal blockchain to a coin”. Technological regression led to the fact that any analog of electronic money issued in a few minutes on a specialized platform now bears the proud name of “cryptocurrency”, distorting the original idea of crypto-anarchists and cypherpunks.

The savviest “startups” with entrepreneurial spirit realized that such quasi-decentralized crypto-assets can help them make good money. To achieve this it is enough to foresee certain veiled preferences for the coin’s creator in the form of pre-mining at the start, along with a usual set of technological features for any cryptocurrency and the construction of an ecosystem that takes your breath away. And if a good marketing strategy can direct a coin price “to the moon”, then it will be possible for founders to hit the jackpot. A typical example of this approach is the well-known Ethereum.

When the Ethereum Mainnet Network was launched, block #0 distributed 72,009,995 ETH to 8,903 addresses. Thanks to Ethereum’'s public blockchain, this fact, like all addresses and transaction amounts, can be easily verified using a blockchain explorer. The current supply as of November 2022 is over 122 million coins. That means that on July 30, 2015, the creators of the Ethereum project accumulated a huge number of coins in the form of pre-mine, which even now (over seven years) is almost 60% of the entire supply!!! There is no information about it either in the white paper, or in the marketing materials, or on the project website. Vitalik Buterin prefers not to discuss this topic during his interviews and conceals this fact.

The hidden pre-mine at block #0 puts an end to decentralization, neglecting the principles of openness and transparency of supply formation. In this background, all other ICOs, IEOs and IDOs, and other projects involving initial investments look many times more honest, because they do not hide pre-mine, but openly declare it in all documents as funds for their development fund.

Compared to Bitcoin Ethereum is an example of unfair play on the part of its team and Vitalik Buterin personally. This fact will continue to spoil the reputation of the project and its creators, regardless of how many more times Ethereum will change the algorithm or introduce something innovative. If the owners of pre-mined coins suddenly decide to quit and sell everything, this will depreciate the price of the asset. Thus, if one party has control of a significant amount of coins, it creates enormous risks for the entire project. Such risks no longer seem like something improbable or fantastic after the recent bankruptcy of FTX and the 96% depreciation of the FTT token.

You should always remember not to put all your eggs in one basket and do careful research on each new project in which you plan to invest. Old projects are also worth checking out. As can be seen in the example of Ethereum, even the most popular coins with the most prominent founders can hide skeletons in their cupboards.