There are many Ethereum fallacies that dissenters continually cite as reasons for why Ethereum should fail. Here I will attempt to “strong man”, as opposed to “straw man”, the 3 Ethereum fallacies I read most often. Then, I will offer my explanations for why these arguments do not stand up to scrutiny or fact.
- “Ethereum has an unlimited supply”
Unless they are confused, no one is actually arguing that Ethereum literally has an unlimited supply. Clearly, a currency with an unlimited supply has no value. Dissenters are merely pointing to the uncertainty of Ethereum’s supply in its current form. Dissenters mean to suggest that future inflation levels are unknowable and that without that certainty Ether is a poor “store-of-value”. So what dissenters should be saying is, “Ethereum has future inflation rate uncertainties.” But numerous data points show that there is no reason to think Ethereum’s inflation will increase in future protocol upgrades. Vitalik et al have pointed out numerous times that PoS will have much lower issuance rates. It is true that Ethereum does not currently have a limit on supply, but that isn’t necessity for a currency to have value. Civilizations have been using fiat currencies for millennia and none of them have a limited supply. The absence of a set limit for a currency does not mean it is unlimited.
It is important to remember that Bitcoin’s inflation rate only applies to its current form which people falsely consider unchangeable. It was only recently that Bitcoin would have increased their blocksize to 2MB if the B2X fork had not been called off. It is likely Bitcoin will go through many protocol changes in the next 123 years before all 21 million Bitcoins are mined.
2. “Ethereum is not immutable”
Dissenters mean to say a much more complex set of arguments that have to do with disagreements in ideology leading to the DAO hardfork, but often summarize them by saying Ethereum is “not immutable”. As a statement, claiming Ethereum is “not immutable” is misleading. Just like an “unlimited currency”, a protocol without immutability is worthless. If it were possible for someone to renege on transactions or contracts, Ether would have no value. In reality, it is not possible to renege on transactions and the Ethereum blockchain is truly immutable. The best way to prove this is the hardfork itself. If Ethereum was mutable, the hardfork would not have been necessary. On a mutable chain, transactions involved with a bug or hack could be easily reversed with no hardfork required.
In practice, this is less about immutability and more generally about the inherent characteristics of a hardfork. Hardforks are rule changing by nature. Any chain that can hardfork is capable of changing the rules and people will always disagree with a split from the status quo. The DAO debate and the Bitcoin scaling debate have some often overlooked similarities. In both cases a split in the community arose based on ideological differences. In the case of BCH many people in the community felt that Blockstream et al was holding Bitcoin back for personal gain by limiting the blocksize. Consequentially, part of the community forked away from the core Bitcoin chain to adopt a different rule-set with bigger blocks. The Ethereum split changed rules that allowed DAO investors to recoup their funds, but this does not somehow jeopardize the immutability of the protocol. It is nothing more than sensationalist and dishonest to suggest that the DAO fork was more than a one-time anomaly.
3. “Ethereum is not meant to be money”
It is true that Ethereum is designed to be a protocol for smart-contracts and, in a sense, a “world computer”. However, a necessity for a cryptocurrency to function is that it must be a cryptocurrency. It turns out that Ether is a quite efficient currency relative to Bitcoin and even Bitcoin Cash. Ether is faster and cheaper to transact. Dissenters argue that Ether cannot possibly accomplish being a cryptocurrency and a “world computer” at once. Meanwhile, Ethereum is processing record high transaction volumes for any cryptocurrency. What else is there to say?
As you can see from numbers 1 and 2 the arguments are quite misleading and it is easy to see how someone new to the space could be confused. It is not coincidental that dissenters continually use these arguments. People are emotional about their money and they don’t want to see other coins taking any of their market share. In writing them here, it is my hope that some of this confusion will be impeded or cease altogether.