In a Twitter feud that started a whole week ago in regards to the various failures of the Ethereum infrastructure, the controversy quickly devolved to discussing poor wealth distribution within cryptocurrency communities and exactly how ICO’s or Initial Coin Offerings create that.
Whenever a cryptocurrency is introduced, it hosts an ICO for funding and development purposes where it sells tokens of its cryptocurrency to investors to have the currency up-and-running. The mechanism of your ICO may vary and a lot ICO’s are actually subject to their great number of controversy due to scams and securities law violations.
The debate and that has emerged on Twitter is actually Ethereum’s ICO paved the path for the skewed and unequal distribution of ETH tokens amongst the community. Andrew, or @cyber_hokie, argued that once Ethereum was being launched, the 11 million Ethereum tokens were distributed with “transparency and understanding amongst founders and initial developers”, while 60 million of such tokens were purchased by presale participants making use of their fiat money, accruing risk but pc technology they deemed in. This mechanism was pitted against traditional blockchain mining, including seen in Bitcoin, where initial coins are mined “for annually with no competition [thus] accruing 5% from the total supply forever“.
Vitalik Buterin, the co-founder and Chief Scientist at Ethereum retweeted this argument, therefore showing he, on some level, agreed using the argument that any publicised and open token sale is fairer than issuing mining rights.
On the opposite hand, popular Twitter user and cryptocurrency expert, Matt Odell, argued that 71 million from the total 107 million total ETH were premined after which sold in the public. The Bitcoin system, he argues, is often a permissionless distribution system, where every Bitcoin holder was successful for their Bitcoin by mining or using fiat money to hold on to Bitcoin. This is more fair, in Odell’s opinion, like it is a “voluntary and permissionless” system.
This are usually argued the other way, arguing that on the Ethereum launch, individuals that purchased ETH tokens used their fiat money to invest in Ether. These tokens wasn’t “premined”, according to Buterin, who states:
The genesis block was literally generated by scanning the bitcoin blockchain for transactions that represented purchases of ETH. There’s even a python and JS script to accomplish it, and that is how people would acquire the genesis