- Cryptocurrency founder Richard Heart discussed EIP 1559 and Ethereum 2.0 with Insider.
- Heart said he could see ether falling to $1,700.
- He also explained the difference between bitcoin’s proof of work, ether’s proof of stake, and hex’s proof of wait.
Richard Heart has mixed feelings about this year’s flurry of upgrades to the network.
“I think EIP 1559 will be good for ether’s price,” the founder of the hex and pulse cryptocurrencies told Insider. “Ethereum 2.0 is horrible… I don’t know why they designed their system so poorly.”
Heart was referring to Ethereum Improvement Protocol 1559, a ‘hard fork’ that will destroy some ether tokens to reduce overall supply that rolled out on Thursday, and ethereum 2.0, which will restructure the network’s algorithm.
Both are designed to reduce the volatility of ether, the native cryptocurrency of the network. Ether has fluctuated in 2021, surging from $730 at the start of the year to almost $4,000 by May and then collapsing towards $2,000.
Heart said that, by burning coins, EIP 1559 will disincentivize miners from “dumping” cheap ether, reducing the environmental impact.
“It’ll reduce the negative externality of miners selling down on price because they’ll get less rewards,” Heart said.
However, he predicted that it will take about half a year before EIP 1559 begins to positively impact ether’s price. Ether had risen by around 4.7% in the 24 hours following the launch of the new protocol to around $2,727 on the Kraken exchange.
“The market may have already priced it in – these things are usually ‘buy the rumor, sell the news’ events,” he said.
Heart said the ethereum 2.0 upgrades, which aim to increase network efficiency, would really just add a layer of bureaucracy to the world of cryptocurrency.
“It costs you 32 ethereum to become a validator – that’s about $80,000 for the privilege of buying yourself a server network admin job,” he said. “Nobody likes that – so they give their coins to someone else and inject a middleman.”
Heart has gone on record to say that he thinks the crypto market is in a bear cycle – he predicted bitcoin will fall to $10,000 and dogecoin will fall to 2 cents. He said he could see ether’s price falling below $1,700 at some point during the next “8 or 9 months” of the current downward cycle.
“Elon Musk and Michael Saylor buy the top and then wonder why the price is going down,” he said. “Maybe we hit $3,500 in ether – maybe. But we could just start going down right now. Once you’ve got the biggest guys in, there’s nowhere to go but down.”
Lastly, Heart discussed the differences between the three algorithms central to cryptocurrency transactions – proof of wait, proof of stake, and proof of wait.
Proof of work is used to validate bitcoin mining. While it was considered revolutionary when the cryptocurrency was founded in 2009, proof of work is an energy-intensive process that causes environmental damage.
“Proof of work in bitcoin is used to make sure that what people are saying is the state of the network is accurate,” Heart told Insider. “It was a great breakthrough, but it only works by people putting a lot of money in in a way that has a lot of negative externalities – for example it burns electricity.”
Heart said proof of stake, which underpins his new cryptocurrency pulse, was a clear improvement on proof of work. Proof of stake relies on designated validators finding a consensus to approve transactions. Ethereum 2.0 will implement proof of stake for ether trades.
“You can replace proof of work with proof of stake – you still have to invest a lot of money, and you still have capital at risk, like having a performance bond,” said Heart. “We know proof of stake is awesome and it works – it has worked for years and years, for multiple projects that have billion-dollar plus valuations.”
Heart’s hex token determines block winners and mining rights using proof of wait, also known as proof of elapsed time. Many see this algorithm as a more efficient and less energy-intensive alternative to proof of work.
“Hex replaced bitcoin’s proof of work with proof of wait and added time-locking to monetize time,” Heart said. “Bitcoin would destroy the entire planet if it became valuable enough, because the amount of energy wastage needed to defend the network is in direct proportion to the value of the network.”
“That’s why proof of wait and proof of stake are evolutions that are superior to proof of work,” he added.