- Ethereum has a serious decentralization problem, even before merging with the Beacon chain and becoming a Proof of Stake blockchain.
- The Chinese Communist Party (CCP) may have a large stake in Ethereum through the Wanxiang group and several affiliated startups.
- A CCP company may have been the one to set up and fund the wallets for both the Ethereum Foundation and Vitalik Buterin on initial launch.
- The CCP is not a fan of crypto and blockchain technology and has implemented various measures to track and control its citizens.
- The CCP was also one of the largest ETH miners before the merge and may have a motive for coming after Ethereum.
Is the Ethereum network in danger of being manipulated soon?
An even better question would be: Is the network currently under manipulation? And if it was, would anyone know it?
According to a recent tweet from on-chain analyst and blockchain sleuth, @BoringSleuth on Twitter, Ethereum has had a very serious decentralization problem, even ages before merging with the Beacon chain and becoming a Proof of Stake blockchain.
It might even sound crazy, but there might be reason to believe that the Chinese Communist Party (CCP) has enough of a strong hold over Ethereum to harm the network, if it wanted to.
Proof Of Stake And The Dangers That Come With It
One of the main paradigms of blockchain technology is decentralization.
This property means that (most) blockchains are made up of nodes of several smaller computers, synced to one another and acting as a single entity.
Because of this, blockchains are several times more resistant to attack than centralized systems, because an attacker would have to target several thousands of computers scattered all over the world, to do any considerable damage.
This property is even stronger in Proof Of Stake (PoS) Blockchains, in which each of the participants of the network (called validators) can influence the network to some degree, depending on how much crypto they have staked.
In essence, the more crypto you stake, the more powerful your hold is over the network.
This is where it gets interesting.
How The Chinese Communist Party May Now Have A Huge Stake In Ethereum
According to a new tweet from Steven Nerayoff, an early adviser to the Ethereum network, Ethereum has some very strong decentralization problems, and some entities may hold insanely large amounts of the cryptocurrency’s supply.
Supporting Neyaroff’s narrative, @BoringSleuth also says that the Ethereum network might have a big problem:
@BoringSleuth says that the Chinese Communist Party, through the Wanxiang group (a CCP-affiliated company) and several others, may have somehow become the largest ETH holders, back when the Ethereum network was still a new project.
Here’s a quick story:
According to an earlier tweet from @BoringSleuth in July, Vitalik Buterin was the Chief Scientist for Wanxiang back in 2014.
This story also appeared in a post from Bloomberg, which stated that in 2015, while Vitalik Buterin was trying to get funding for Ethereum, he went to Shanghai to meet Deng Chao, an investment manager at Wanxiang.
Bloomberg’s post says that Deng Chao was impressed by the 21-year-old’s new idea, and persuaded his supervisor to buy around $500,000 worth of Ether.
Some quick math, shall we?
Recall that when Ethereum was originally introduced in 2015, its price ranged from around $0.74 to $0.42.
Assuming a max price of Ether around $0.75 at the time, Chao and Wanxiang would have been able to purchase about 670,000 ETH. For context, this is more than Bitfinex’s largest wallet holdings.
@BoringSleuth also alleges that it was Wanxiang that set up and funded the wallets for both the Ethereum Foundation, & Vitalik Buterin on initial launch, right after providing most of the funding it started with.
@BoringSleuth goes on to ask “Have you heard of Wanxiang before? Did you know this Chinese Auto manufacturer had such deep roots in Ethereum?”
Why All Of This Is Bad
Here’s a little history:
The Chinese Communist Party (CCP) was founded in 1921 and came to power in 1949 after the Chinese Civil War.
The CCP is also the sole ruling party of the People’s Republic of China (PRC), and single-handedly controls all political power in China, as well as the military, the economy, and the media.
Do you understand why this is bad news?
The Chinese government is not a fan of crypto and blockchain technology.
@BoringSleuth highlighted in his original tweet, that the CCP uses blockchain to track and control everything.
The on-chain sleuth mentions that the CCP has also implemented Social Credit Scores, CBDCs, and several other surveillance protocols that make it hard for citizens to access the level of monetary freedom offered by cryptocurrencies.
Aside from (indirectly) being one of the largest holders of Ethereum from the onset, @BoringSleuth highlights that the CCP was also one of the largest ETH miners (back when Ethereum was a Proof of Work blockchain), and accounted for more than 80% of all ETH mined before the merge.
This might be bad news for Ethereum and the crypto community at large.
This is because the CCP may already have a motive for coming after Ethereum. Even worse is how nobody knows how many affiliated companies have stakes in the Ethereum network, and how much Ether is actually staked.
Under the right circumstances, such an entity can choose to target and come after the second-largest cryptocurrency by market cap, and no one might be able to stop it.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.