Cryptocurrency founder’s grim ‘bubble’ warning after market crash

The world is going crazy over crypto, but the man behind one of the biggest currencies has issued a stark warning about the future.

The cryptocurrency world has been rocked this week, and as prices dive across the board even more everyday Australians are likely to be looking to make an investment.

It was once the domain of nerds, but now we’ve all read the stories about investors becoming overnight millionaires.

And, if you invested in the past week, you’ve likely been on a bumpy ride as the market spectacularly crashed – hitting almost all of the well known cryptocurrencies, and the millions of people who have bought them.

One person who has been perhaps hit hardest is crypto billionaire Vitalik Buterin.

The 27-year-old co-creator of ethereum, which crashed below $US1900 ($A2444) – a staggering drop of more than 40 per cent from Tuesday night – lost big time.

It rebounded to around $US2700 ($A3474) yesterday, but that’s still down sharply from the record high of $US4384 ($A5640) on May 11.

Vitalik Buterin, co-founder of Ethereum, is the youngest crypto billionaire. Picture: Supplied

The Russian-Canadian programmer’s closely watched public wallet stood at approximately $US870 million ($A1.12 billion) on Thursday morning, down from around $US1.1 billion ($A1.42 billion) the morning before.

In an interview with CNN Business overnight, he said he believed cryptocurrencies are in a bubble and it is “notoriously hard to predict” when it will pop.

“It could have ended already,” Mr Buterin said. “It could end months from now.

“We’ve had at least three of these big crypto bubbles so far. And often enough, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn’t there yet.”

However, he said he is encouraged by the “huge” progress the technology and applications have made in recent years.

Ethereum activity has skyrocketed in recent months because it is the network that backs the sale of many non-fungible tokens, or NFTs.

“It feels like crypto is close to ready for the mainstream in a way that it wasn’t even four years ago,” Mr Buterin said. “Crypto isn’t just a toy anymore.”

Who is Vitalik Buterin?

Born near Moscow, Mr Buterin moved to Canada when he was six. He learned about bitcoin when he was 17 from his father, who had a small software start-up, although he initially dismissed the concept, thinking it was doomed to fail.

Then, the Russian-Canadian programmer became curious about the decentralised payment system offered by cryptocurrency.

He wanted to buy into bitcoin but didn’t have the money so ended up writing blog posts in exchange for payment in crypto.

Mr Buterin is offhand when asked about his move into crypto and doesn’t court media attention, coming across as shy. He claims he was looking for his next obsession after quitting playing World of Warcraft. He co-founded Bitcoin Magazine when he was only 18.

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Vitalik Buterin started out young in the crypto game. Picture: Supplied

Initially he focused on power inequality

Blaming society’s sins on too much government power, he thought cryptocurrency could be a good way to correct that imbalance, he said.

“I saw everything to do with either government regulation or corporate control as just being plain evil. And I assumed that people in those institutions were kind of like Mr Burns (from The Simpsons), sitting behind their desks saying, ‘Excellent. How can I screw a thousand people over this time?’” he told Wired in 2016.

While it isn’t so black and white for him anymore, he does want to “empower the little guy”. “And personally I say screw the big guy. They have enough money already,” he said.

He dropped out of university to create ethereum

First up he wrote a white paper describing his idea.

Then when he first described his concept at a bitcoin conference, he received a standing ovation from the audience.

Ethereum’s coin, ether, was first launched in 2015 when Mr Buterin was just 21.

At the time, it was hailed as something that could stamp out corruption based on the systems it created.

Mr Buterin has still managed to score a university qualification too. He was granted an honorary doctoral degree from the University of Basel in Switzerland for his innovative work in the blockchain space and his contribution to the ecosystem.

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Ethereum is the biggest cryptocurrency behind bitcoin. Picture: iStock

Bitcoin was too basic

Part of the motivation to create ethereum was Mr Buterin thought bitcoin offered limited functionality, describing it as the difference between a simple calculator and a smartphone. The calculator does one thing well but people want more, he said.

“If you have a smartphone then on the smartphone you have a plot key calculator as an app. You have playing music as an app. You have a web browser as an app and pretty much everything else,” he told Business Insider.

He took this idea to ethereum to increase “the power of the system by making it more general purpose” and applying it to blockchains, the technology behind many cryptocurrencies.

There are some bizarre rumours floating around about him

Some rumours about Mr Buterin are complimentary, while some are just downright weird. Some claim he once ate a whole lemon without removing the rind, that he’s an android powered by the ethereum network and that he likes to wear mismatched Hello Kitty socks, reported Wired back in 2016.

There’s also ones like all he owns could fit in one suitcase, he learned to speak Mandarin fluently in a couple of months and he has to ability to add three digit numbers in his head twice as fast as the average person.

In the third grade he was placed in a class for the gifted

Mr Buterin said he experienced a lot of social exclusion as a result of being put into a class for the gifted.

“I remember knowing, for a while, for a long time, that I was kind of abnormal in some sense,” he told Wired. “When I was in grade five or six, I just remember quite a lot of people were always talking about me like I was some kind of math genius. And there were just so many moments when I realised, like OK, why can’t I just be like some normal person and go have a 75 per cent average like everyone else.”

He’s got a philanthropic attitude like Bill Gates. Picture: Supplied

His not a prolific tweeter unlike another billionaire

Unlike Elon Musk, he isn’t on Twitter much despite having 1.7 million followers.

Overall, ether prices have more than quadrupled this year soaring 375 per cent. Mr Buterin holds about 333,500 ether in his public wallet and despite price fluctuations he’s a billionaire.

The currency is currently worth $3405.56 in Australia.

Part of ethereum’s surge can be credited to the fact that it is the cryptocurrency of choice for purchasing NFTs – digital artwork, memes and other collectibles.

Ethereum is going more environmentally friendly

After Mr Musk pulled the plug on bitcoin being accepted by Tesla due to climate change concerns, it’s been announced that ethereum is just months away from slashing its carbon emissions.

The existing ethereum network uses about 5.13 gigawatts of power – around the consumption of Peru – but it estimates this will drop to 2.62 megawatts after changing the way it works.

He’s got a philanthropic attitude

Helping India through the COVID-19 crisis isn’t his first charitable act.

In 2017, he donated almost $US770,000 to the Machine Intelligence Research Institute, which works to ensure artificial intelligence technologies have a positive impact on humanity.

Then in 2018, he donated $US2.4 million to the Sense Research Foundation, which develops solutions for health issues associated with ageing and also gave $US1 million to charity for Ugandan refugees.