Ether cryptocurrency, a victim of blockchain success

Ether has slid 20 percent in value, taking a further hit from comments made by Vitalik Buterin, co-founder of Ethereum, which powers the cryptocurrency. (AFP)
Updated 23 September 2018
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Ether cryptocurrency, a victim of blockchain success

  • Ether has slid 20 percent in value, taking a further hit from comments made by Vitalik Buterin, co-founder of Ethereum, which powers the cryptocurrency
  • Buterin has previously spoken about ‘scalability’ probably being the number one challenge facing the sector

LONDON: For all the attention afforded bitcoin, it is its rival ether that is hitting the headlines, with the popularity of its blockchain technology Ethereum driving concerns that have sent investors fleeing.
Virtual currencies have struggled across the board this month after US investment banking giant Goldman Sachs pulled back from its plans to open a trading desk for bitcoin, damaging sentiment for the entire sector.
Ether has slid 20 percent in value, taking a further hit from comments made by Vitalik Buterin, co-founder of Ethereum, which powers the cryptocurrency.
Earlier this month, the 24-year-old Russian-Canadian programmer told Bloomberg that “the (Ethereum) blockchain space is getting to the point where there’s a ceiling in sight.”
A blockchain is essentially a ledger for recording transactions, which is both open to all who use it but extremely secure, and has enabled the rise of cryptocurrency trading.
A multimillionaire thanks to Ethereum, Buterin has previously spoken about “scalability” probably being the number one challenge facing the sector.
Unlike bitcoin’s blockchain, which carries out transactions involving only the cryptocurrency, Ethereum can host different virtual tokens and also enable certain digital applications and so-called smart contracts.
Such programs can for example automatically trigger payments without the use of a third party when pre-defined conditions are met, such as winning a sports bet.
Ethereum is also home to two-thirds of initial coin offerings (ICOs), essentially a fundraising tool for companies which issue the tokens against cryptocurrencies much like issuing shares on a stock market.
An explosion in the number of ICOs in 2017, two years after ether’s launch, resulted in the cryptocurrency’s price rocketing 160 times in value over a 12-month period.
The craze surrounding ICOs has also caused congestion to Ethereum’s network, contributing to ether’s price collapse beginning in January.
“The more it’s demanded, the more likely you are to clog the network,” said Jerome de Tychey, president of Asseth, an association promoting the use of Ethereum.
A clogged Ethereum results in higher charges for clients wanting their transactions prioritized — and average fees briefly hit a record $5.50 in July according to bitinfocharts.com. Generally, though, fees fluctuate around a few cents.
Delays to a planned overhaul of Ethereum’s scalability have meanwhile likely discouraged some investors from using the blockchain, according to de Tychey.
Naeem Aslam, an analyst at traders Think Markets, said Buterin “isn’t doing the job which he is supposed to do” — that is, to make companies “trust the technology and provide them (with) what they need.”
The plunge in the value of ether has indeed been dramatic. Since the start of August, it has lost more than half its value.
Going back to May, the drop is 75 percent, with the total value of the virtual currency tumbling to about $23 billion from $82.5 billion.
Yet the huge drop has only taken ether back to its value of a little over a year ago, at some $220 for one token.
Another factor weighing on ether’s price has been the success of ICOs. The companies which raised funding in ether with ICOs now need to sell to them to cover operating expenses in fiat currencies.
According to sector analysts Diar the companies that raised funding before the price boom at the end of last year have sold off some 20 percent of their ether holdings since April, weighing on its price.


India court allows Vedanta to reopen controversial plant

Updated 16 December 2018
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India court allows Vedanta to reopen controversial plant

  • The city of Thoothukudi had been rocked by long-running protests over the plant
  • Protesters say it harms the environment and the health of those living near it, claims the company has long denied

NEW DELHI: An Indian copper smelter at the centre of a police shooting that left 13 protesters dead has been granted permission to reopen by the country's environmental court.
The Sterlite plant, owned by British mining giant Vedanta Resources, was closed after the bloody police crackdown in May on protesters who say the smelter is poisoning the air and water.
Vedanta Resources, owned by Indian-born billionaire tycoon Anil Agarwal, had appealed against the plant's closure by the state government of Tamil Nadu where it is located.
The National Green Tribunal, a federal authority which rules on environmental matters, ordered Saturday that the plant in Thoothukudi city could resume operation.
Sterlite CEO P. Ramnath on Sunday welcomed the decision.
"We are happy that all those affected by the closure will get back their source of livelihood and the town of Thoothukudi will revert to normalcy," he said in a statement on Twitter.
The Tamil Nadu state government has said it will appeal the decision in India's highest court.
The city of Thoothukudi, previously known as Tuticorin, had been rocked by long-running protests over the plant, one of the largest in India.
Protesters say it harms the environment and the health of those living near it, claims the company has long denied.
The demonstrations intensified in May after Vedanta sought to double the annual capacity of the plant.
On May 22, police opened fire on thousands of protesters, killing 13 people.
The plant was shuttered by the state government in the aftermath of the shooting.
The company denies all charges and maintains that it adheres to the best environmental standards.
The federal green court ordered Vedanta to spend one billion rupees ($13.9 million) over three years to assist local communities.
But it criticised the pollution regulators in Tamil Nadu, saying they stalled the case by tying up the company in paperwork.