1confirmation Founder supports Ethereum and Vitalik: ETH is being severely underestimated

Original title: Money, Blockchains and Social Scalability v2

Author: Nick Tomaino, Founder and General Partner of 1confirmation

Compiled by: Heilsmann, ChainCatcher

Editor's note: Recently, the community's dispute over Ethereum's Fud, Layer2 and the mainnet has been rampant. Nick Tomaino, founder and general partner of 1confirmation, posted a post to support Ethereum and Vitalik. He reexamined the role and potential significance of Ethereum as a trusted, neutral, Internet-native store of value from the perspective of social scalability, pointing out that while Bitcoin is actively accepted by mainstream financial markets and governments, ETH may also prove to be more socially scalable than BTC.

Social scalability refers to the ability of a system to allow more people to participate and achieve win-win results. This is also the main reason why the cryptocurrency market is now becoming the $2.9 trillion asset class. In this post, I will explain what it is and why it is important.

In 2017, cryptography expert Nick Szabo published an article titled Currency, Blockchain, and Social Scalability , describing Bitcoin as a social breakthrough, which is now a must-read article. Most people think that cryptocurrencies are purely technology and focus on technological scalability. But I agree with Saab that technological scalability does play a role in social scalability, but is not the main factor. The biggest winners will be those cryptocurrencies that achieve social scalability by being the most trustworthy and neutral and providing maximum practicality.

The social scalability of Bitcoin

Bitcoin is the first trusted, neutral, internet-native storage tool for value, useful to people in the United States, China, Russia, Brazil, and hundreds of other countries around the world. By “trustworthy neutrality” I mean fair, unbiased and not affected by minorities. Trustworthy neutrality is a social construction that is often rooted in technology but ultimately based on a variety of dynamic factors that influence human trust.

Trusted neutrality is obtained over time, but was initiated by humans at the beginning. Bitcoin is launched as an open source software that anyone can read, run, write and own it on a level playing field. Its launch is fair. There is no private transaction, nor is it attached to celebrities, companies or countries. The rules were clearly established from the outset and were not changed. The community discusses everything publicly on forums such as Bitcoin talk . To understand its spirit, read the articles by early Hal Finney .

The credible neutrality and practicality of Bitcoin are the main reasons for the development of the crypto industry to this day. Initially, it was a grassroots movement initiated by the pseudonym founder Satoshi Nakamoto. It did not belong to any individual or was under the jurisdiction of a certain region, providing a new product that anyone in the world can use. Today, it has grown into a $1.7 trillion asset, something some of the world's largest governments and companies are actively using as a store of value tools. The rules of the Bitcoin system are still difficult to change, which is one of the important reasons why it continues to be adopted.

Bitcoin’s growth is amazing, but the early cultural decisions made by the community – focusing solely on currency – limit the development of new Bitcoin developers and companies using it for more purposes than currency. Although extremists have been emphasizing the orthodoxy of Bitcoin for the past 15 years, decentralized systems still have huge opportunities to bring more freedom and progress to the world beyond currency.

Is social scalability really important?

Social scalability is an important factor in Bitcoin’s success, but in 2025, the importance of social scalability may be questioned. Today, by total market value, 4 of the top 9 cryptocurrencies are actually corporate coins (XRP, BNB, SOL, TRON). The total market value of these 4 currencies exceeds US$312 billion.

These tokens are very narrative, but have not yet gained reliable neutrality. Small teams launch these tokens from well-known jurisdictions (Silicon Valley, the United States and China) and allocate more than 50% of the tokens to insiders (founding teams and/or venture capital firms). They have highly coordinated marketing activities, insiders participate in government lobbying activities, and a large number of corporate-style top-down activities. These protocols have not yet proven to be elastic, secure, and single point failure resistance. They made aggressive trade-offs on performance at the expense of decentralization.

We can discuss their practicality – some would say that these 4 protocols are useful, but they have not enabled new use cases or wider adoption yet. In any case, the approach taken by these 4 protocols is very effective. It can also be said that they are very successful in obtaining value and have nothing to do with the so-called social scalability.

But in the long run, social scalability is very important and will bring $20 trillion in value growth over the next decade. That's why we insist on it here. Time will tell us the truth and things will change. If you do agree that social scalability is crucial and look at the facts, it is obvious that there are only two cryptocurrencies that are both reliable neutral and practical for achieving long-term social scalability: BTC and ETH.

BTC holds the throne, but ETH may also prove to be more socially scalable than BTC. The reasons are as follows:

Trusted neutrality of ETH

Similar to Bitcoin, Ethereum's trusted neutrality exists from the very beginning. Although Ethereum does not have a "fair issuance" like Bitcoin, only 9.9% of the supply is allocated to insiders, and anyone in the world can easily own ETH by sending BTC to an ICO address. There is no intra-trading with venture capital, and no celebrities, companies or states are involved.

Ethereum also initially started with a Proof of Work (PoW) chain and has been adopting PoW for the first seven years to ensure a more balanced allocation before moving to Proof of Stake (PoS). You don't need to own or purchase ETH to participate in consensus and get rewards at the beginning, just contribute your computing resources. Early token holders of native PoS chains dominate token rewards, and the PoW to PoS transition is unique and undervalued. It helped Ethereum reach a large number of diverse stakeholders in its early stages, and also enabled a wider population to participate in consensus and receive ETH rewards today.

The founder of Ethereum is Vitalik Buterin. Some opponents would question Vitalik's leadership and argue that the fact that a known founder has a lot of power undermines credibility neutrality. But in fact, Vitalik's leadership is transparent and real, and he laid the cultural foundation of Ethereum by emphasizing credibility neutrality.

You won't see Vitalik peddling investment stories and chasing money, attention and power like many of the main characters in the crypto circle. For more than a decade, he has been the most capable person in the industry, but he refuses to do so. Instead, he does things his own way, emphasizing values ​​such as resistance to censorship, inclusion and transparency, focusing mainly on setting the best technical architecture and values ​​for builders in the long term.

In fact, Bitcoin and Ethereum are governed the same way. Making changes to the protocol requires rough consensus from miners, users and developers, so Ethereum changes are much slower than expected by many VC types. But in the long run, this helps achieve more reliable neutrality, a trade-off that Ethereum leadership has made consciously.

The Ethereum mainnet currently has 4 execution clients (Geth, Nethermind, Besu and Erigon) and 5 consensus clients (Prysm, Lighthouse Teku, Nimbus and Lodestar) actively maintained. Client diversity and single point failure avoidance

Always the focus of attention. In addition, mainnet and L2 EVM environments have become the most trusted development environments for developers and companies.

Today, Michael Saylor's entities own a much larger supply of BTC than the ETH that Vitalik and the Ethereum Foundation have. Bitcoin leaders are aligning with governments faster by supporting politicians and lobbying. This may be the result of Bitcoin going further than Ethereum and attracting a wider range of stakeholders, which looks like it may benefit Bitcoin.

But the risk of Michael Saylor and the government lobbying to harm credibility neutrality is real, and Vitalik and EF, by contrast, resist the urge to respond to the market environment by chasing investment narratives. Ethereum leadership focuses on builders, and Ethereum is now much larger than any individual or group. The most important person to Ethereum's future may be these unknown builders.

The practicality of Ethereum

Ethereum has dominated developers’ attention since Bitcoin introduced trusted, neutral, internet-native storage tools to the world, and is the birthplace of every major new crypto use case that surpasses currency, which significantly introduce newcomers to the crypto space. Ethereum is home to specific use cases such as decentralized finance (DeFi), non-fungible tokens (NFT), forecast markets, decentralized social networks, decentralized identity, real-world assets (RWA), stablecoins, etc. All these new use cases provide Ethereum’s trusted, neutral, store of value features by distributing EVM wallets and ETH.

Some of these use cases start with the Ethereum mainnet and are currently gradually shifting to L2 chains built on Ethereum. Developers prefer a trusted developer environment that provides them with more control and better economic benefits than L1, which is exactly what the Ethereum L2 architecture provides. Developers built on L2 or L3 can not only gain more sense of participation, but also enjoy the security of Ethereum and the network effect of EVM, and expand the consensus that ETH is a trusted, neutral and Internet-native store of value storage tool. Developers of certain use cases may be more inclined to stay on the main network, after all, the liquidity advantage of the main network is that L2 cannot provide. Both results are beneficial for ETH.

There has been a lot of debate about whether L2 adds value to ETH or damages the value of ETH by eroding the main network costs. Standard Chartered recently lowered its ETH price target from $10,000 to $4,000 based on Coinbase's L2 Base's reason to eat away from mainnet fees. This view ignores the overall situation.

The main benefit of L2 is not to contribute costs to the main network, but to expand the consensus of Ethereum as a trusted, neutral, Internet-native storage tool by distributing EVM wallets and ETH . The ETH supply can be reduced according to the use of the Ethereum ecosystem (including the mainnet and L2), a feature that has made ETH more deflated than BTC, which is a good feature. But the cost is not the main advantage of the application and L2.

Ethereum dominates stablecoins, RWA and NFT use cases

Ethereum is now the main ecosystem for new developers and large companies (such as JPMorgan Chase, BlackRock, Coinbase, Robinhood, etc.) to tokenize assets. Its ecosystem is expanding from crypto-native assets such as NFT and Token to the fields of US dollar, treasury bonds, stocks, bonds, private credit, real estate, etc. Regardless of whether these activities occur on the main network or on L2, and how much L2 pays to the main network in the end, it will affect the scale of ETH destruction. But even when all of these activities occur on L2 and L2 pays very little to the mainnet, the adoption of these use cases will expand the consensus that ETH is a trusted, neutral, internet-native store of value tool.

Opportunities over $100 trillion

Trusted neutral, Internet-native storage tools are the largest market opportunity in the world today. The total market value of gold is about $20 trillion, and the global M2 (broad money supply) is about $100 trillion, so it can be said that this is a market opportunity of more than $100 trillion.

Cryptocurrencies that enable social scalability through trustworthiness neutrality and practicality are best able to seize this opportunity. The narrative surrounding this is not strong at the moment, but I have learned in the fields of life and crypto that often the stronger the narrative, the further away from the truth (and vice versa). Those who stay focused and not tempted by the chase craze will be rewarded.