Coinbase Co-founder: Ethereum Is the Forefront of Digital Currency
medium.com
medium.com
Sure, it did teach me a lot of obscure things about crypto + game theory, and some of those things actually turned out to be quite useful. But I also can't deny how much longer it takes to do the most basic things in Bitcoin and I think that now we're progressing towards using blockchains to solve problems outside of Bitcoin -- Ethereum seems more up to the task than Bitcoin.
That's not to put Bitcoin down though. There has definitely been some tremendous innovations there recently: segregated witnesses and sidechains are pretty cool. But I've also seen the community change significantly since I first got involved and I'd argue most of those changes have been bad. For example: /r/Bitcoin seems to have become a toxic echo chamber for irrational hatred against former high contributing core members and almost any kind of counter-views are censored which is honestly quite disturbing. Most of Bitcoin's current media is also controlled by only a handful of individuals so its very easy to manipulate the crowd into "consensus" but I won't even go there.
I'll personally always love Bitcoin but I can't see that these problems can be fixed at this point. The Bitcoin project was largely hijacked as far as I can tell and since the crowd has been won there's no going back now.
This is the main reason why I can't ever take bitcoin seriously - their community just seems to have so much unconstructive hatred towards anyone who ever says anything negative about bitcoin.
For example, a physical "Bitcoin payment card" which can only be used with terminals sold by one vendor with bitcoins stored on the same vendor's servers. If that had taken off, it would quickly become nearly impossible to replace - and yet Bitcoiners thought this was the best thing ever, instead of applying critical thinking and realising it'd be possible to create a similar system but open to any vendor you'd like. As long as it's not the Government restricting your choice, it's not bad, right?
The Bitcoin eco-system is full of double-speak and immense cognitive dissonance. It's a weird community where people purport to be about decentralization, freedom, and security, when in reality the people support almost the exact opposite by preferring centralized services with almost no individual control or security. Most people don't even seem to notice that the FinTech services that are run in the Bitcoin space have essentially become as bad as the banks that Bitcoin sought to replace, and I don't mean bank as in "your own bank, Bitcoin (tm)" – more the kind that opportunistically exploits you for a profit because you have no better options.
Worst still: at least actual banks tend to have some amount of oversight in how they're run, with some level of recoverability if something goes wrong. With centralized, cryptocurrency FinTech the operator is essentially saying to a crowd of hackers how much semi-untraceable, pseudo-anonymous assets they have to irrevocably steal and since anyone can start a FinTech company based on blockchains -- we've even had some companies that were run by people barely out of high school. Truly, the fact that no one even questions this as a security model for FinTech in the Bitcoin space is absurd. But they don't: which is why its easy for me to predict at least 5 major FinTech hacks in the Bitcoin space for 2017. I'll update this post when they happen.
Also, there are sane people in Bitcoin. Check out the bitcoin category of Trilema.
The community isn't one person.
As the parent stated, they have intense hatred for anyone with a different opinion, even the very people who developed bitcoin.
A dysfunctional community indeed, and this extends to the leadership. This is my main reason for having divested a lot of money out of bitcoin. I still believe it will succeed in becoming an important part of the international payments infrastructure, but it will be in spite of its own community and it will likely take a lot longer because of it.
I do believe that for cryptocurrencies, it is bitcoin or bust, though. If bitcoin burns you won't be able to sell the world on another one. Also, I don't believe that the thing other cryptocurrencies are 'fixing' are improvements, but rather detriments. Bitcoin is attractive because of the fixed supply and the decentralized structure, Satoshi brilliantly got those right, even though they are at the same time some of the hurdles to its success.
Hal Finney, the very first recipient of a Bitcoin transaction claimed, quote:
"Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient." [1]
And Satoshi Nakamoto stated:
"Piling every proof-of-work quorum system in the world into one dataset doesn't scale." [...] "Bitcoin users might get increasingly tyrannical about limiting the size of the chain so it's easy for lots of users and small devices." [2]
Did you have anyone else in mind? Perhaps Mike Hearn and Gavin Andresen? It's a matter of historical record that these two believe gigablocks will assuredly cause Bitcoin P2P nodes to become confined to datacenters. Their gigablocker quotes follow:
Gavin Andresen: "there will be big companies spending lots of engineering dollars on their own highly optimized versions of bitcoin. I bet there will be alternative, secure-and-trusted, very-high-speed network connections between major bitcoin transaction processors. Maybe it will just be bitcoin transactions flying across the existing Visa/MasterCard/etc networks" [3]
Mike Hearn: "probably 2 or 3 racks of machines" [4]
Gavin Andresen: "No, it's completely distributed at the moment. That will begin to change as we scale up. I don't want to oversell BitCoin. As we scale up there will be bumps along the way. I'm confident of it. Why? For example, as the volume of transactions come up--right now, I can run BitCoin on my personal computer and communicate over my DSL line; and I get every single transaction that's happening everywhere in the world. As we scale up, that won't be possible any more. If there are millions of bitcoin transactions happening every second, that will be a great problem for BitCoin to have--means it is very popular, very trusted--but obviously I won't be able to run it on my own personal computer. It will take dedicated fleets of computers with high-speed network interfaces, and that kind of big iron to actually do all that transaction processing. I'm confident that will happen and that will evolve. But right now all the people trying to generate bitcoins on their own computers and who like the fact that they can be a self-contained unit, I think they may not be so happy if BitCoin gets really big and they can no longer do that."
Amir Taaki, author of libbitcoin and one of the most ardent early adopters of Bitcoin is further in strong disagreement with Gavin and Mike, and always has been! So this notion that the "original people" are being hated on, is just false. Read the libbitcoin manifesto [5], or the "Political Neutrality is a Myth" interview [6].
After Gavin and Mike's push for radically reshaping Bitcoin from a P2P currency into a DatacenterCoin failed (multiple times), this whole issue culminated in Gavin exclaiming that Craig Wright must be Satoshi Nakamoto, "beyond a reasonable doubt"! Which may have had at least something to do with the fact that Craig claimed to be running Bitcoin with 340GB blocks on his (also confirmed fake) "supercomputer". But of course the Craig and Gavin show had been meticulously timed to coincide with a major industry conference. Had it not been for astute cybersleuths cracking the case within minutes of it making the media rounds, we could've seen Gavin reclaim the throne with the help of an utter conman.
Yes, some people are ticked at these guys, as they should be. It's a remarkably (!!!) hostile environment that we've been dealing with for over 18 months, as the current lead developer Wlad so aptly puts it:
"Day in, day out, there is trolling, targeted attacks, shilling on social media targeted toward us. I don’t know of any other project like this. I’ve seen developer teams in MMOs under similar pressure from users; but possibly this is even worse. There, there are avid disagreements about how the game rules should be changed, here people get worked up about changes affecting a whole economic system. And the people attacking are, in many cases, not even users of the software." [7]
[1] https://bitcointalk.org/index.php?topic=2500.msg34211#msg342...
[2] https://bitcointalk.org/index.php?topic=1790.msg28917#msg289...
[3] https://bitcointalk.org/?topic=3118.0
[4] https://en.bitcoin.it/w/index.php?title=Scalability&oldid=35...
[5] http://nakamotoinstitute.org/libbitcoin-manifesto/
[6] http://cointelegraph.com/news/bitcoins-political-neutrality-...
[7] https://laanwj.github.io/2016/05/06/hostility-scams-and-movi...
> cause Bitcoin P2P nodes to become confined to datacenters.
Someone paid a Russian hacker to DDOS the Bitcoin Classic nodes, and what we learned from that was that the nodes in datacenters are the only ones which can't be trivially knocked off the internet. If you want resiliance, get nodes in as many datacenters of different sovereign jurisdictions as possible. The nodes running on home connections are an illusion.
(at least until home internet connections come with DDOS mitigation tools)
BTW, this too is a misconception: "and what we learned from that was that the nodes in datacenters are the only ones which can't be trivially knocked off the internet"
Right, because you didn't learn to run Tor hidden service nodes. You also didn't learn to proxy your connection over SSH. No, that would make too much sense. What you learned was that you had to physically relocate your node to a datacenter. Golf clap.
> If you want resiliance, get nodes in as many datacenters of different sovereign jurisdictions as possible. The nodes running on home connections are an illusion.
Welcome to 2013?
> Your suggestions don't stop the address published to the p2p network from being flooded.
bitcoind -?
-externalip=<ip>
Specify your own public address
-onion=<ip:port>
Use separate SOCKS5 proxy to reach peers via Tor hidden services
(default: -proxy)
-onlynet=<net>
Only connect to nodes in network <net> (ipv4, ipv6 or onion)You should go to /r/btc instead. It has a much better culture, and no censorship.
On top of this, there is now Ethereum and DAO which are also completely incomprehensible to me. But the reason for this comment is that I totally blown away that there are people out there who understand it and are willing to fund this to record levels.
The context for this comment is that I ask myself this question about products and startups all the time. Who uses them? Why are they gaining traction and nobody I know even knows about them let alone use them... To conclude, I find all this bitcoin talk very motivational - not everybody needs to understand what you are building. You just need a passionate following of people who do.
Not to mention that the creator of Ethereum is 22 years old.
What dumb things do you hear about happening in the bitcoin world, 900 billion dollar bank heists? wait that was distinctly not on bitcoin's network
Just wondering what you were referring to, since the value transfer works without anyone caring about the drama
It would work if everyone turned off their computers and the hashrate dropped to one
except then I would turn on my computers and earn all the bitcoin instead, which nobody else wants to happen when they can be earning more bitcoin than I
I think it is pretty clever and the network works very well. Your criticism is about its future scalability?
Transferring bitcoin right now, has worked just as well as it worked back in 2012. You send it from one address, to another address, and it gets there in the same time period.
You could ignore all the drama for the last four years and your transaction would still work. Just as much as you ignore all the board meetings that VISA has, that SWIFT has, that the engineers at FEDwire have.
The scaling issue is a fun thought experiment, but it really doesn't matter for you actually using bitcoin. Which promise are you criticising? How bitcoin is supposed to compete against the US dollar?
I've got the cast and crew of the Panama Papers over in cryptocurrency now, and it works really well, while people are still questioning what bitcoin even does. 2012 is over, shit still works.
If you are worried about the network scaling, there are criticisms to be had. The network works very well for me, I don't consider that handwaving. I consider Blockstream to be delusional people, it has nothing to do with the network, it works really well if you've tried to use it, even during one of those "stress tests".
However, did you know that the hashrate and transaction throughput are almost entirely unrelated? Hashrate is correlated to the value of the coin that can be kept secure, not to the number of transactions per second that can be processed.
And the data agrees with me: http://imgur.com/a/7Qjpa
He said that the hashrate relates to how much BTC you can keep safe, which is provably true.
Let's say you control 10% of all hash power. Satoshi's paper helpfully maps out that the likelihood of you being able to pull off a double spend if I wait for 5 confirmations is 0.1%. If you were to mine honestly over 5 blocks, your expected reward is 12.5 BTC from block rewards (plus some more from fees). If you attempt to attack me, the total reward is my transaction value plus 5 blocks' worth of block rewards, so 125 BTC. At 0.1% chance of success, you need to win 12500 BTC from your double spend attack, so if you sent me less than 12375 BTC, I know that after five blocks you have no economic incentive to try to double spend.
For a fixed block count before accepting the transaction (5 blocks in this example), the higher the hash power you control, the higher the probability of success for your attack, and the less money you need to double spend for the attack to be economically rational. Inversely, and precisely the GP's point, the higher the hash power, the more money you can safely transact.
Bitcoin CAN support a much higher transaction rate with ZERO increase in mining resources. All we need is (1) more transactions and (2) a block size increase. Let it be clear: the only "dumb" thing is not the system itself, but Bitcoin developers who have not yet agreed on increasing the block size.
Secondly, seeing the mining resources as spent only validating transactions is failing to see the whole picture. Miners sustain a system that is already a net benefit to the economy. Venture capitalists invested more than $1 billion into at least 729 Bitcoin companies which created thousands of jobs. Is all this worth the 150+ megawatt of (practically all) clean energy used by miners? Hell yes! This argument (and others) is explained in detail in:
Which is not forthcoming because of idealogical arguments and entrenched interests.
Sometimes it takes days for a transfer to enter the blockchain proper. I'd say that isn't working very well.
Bitcoin is nice, but the real geniality of it is the blockchain.
and the blockchain only works because nodes only agree over the updates as they rewarded in bitcoin for doing so. if they cease agreeing then they cease getting useable bitcoin.
hodor
there really aren't two sides to the blockchain without bitcoin debate. nobody in the history of computational science has ever found a way to get computers to verifiably agree. an incentivized network is the only solution right now. its great that people want to attempt this without the fungible digital currency reward, but no other consensus method has been found since the beginning of time
As a miner, you have access to a pile of transactions that people want to resolve. Take enough of those transactions to fill up a block, based on some rules you want to follow (e.g. prioritize transactions that pay a transaction fee, which you claim; prioritize transactions that have been waiting longer). Add a transaction that gives you the current consensus mining fee out of "thin air"; that's the only place new coins get injected into the system. Include a hash of the previous block; that's what makes it a block chain. Then, via brute force computation, come up with some additional data appended to the transactions such that the double-sha256 hash of the data block (the sha256 of a sha256 hash of the block) is smaller than a certain upper bound (determined by the current consensus "difficulty"). Since you can assume the hash is evenly distributed across all possible values, to compute a hash smaller than a certain value requires brute-forcing enough hashes for one to land in that range. This is equivalent to "find a hash that starts with a certain number of 0 bits", but "less than a certain value" allows increasing the difficulty without doubling it.
Once you have a new block, tell other miners about it. Assuming you've followed the "consensus" rules for difficulty, mining fee, transaction fees, and similar, then the other miners will accept your block, and immediately start trying to mine a new block starting from yours rather than starting from the previous block. So, at that point, the consensus block chain includes your block, which means all the transactions you included took place.
The rest of the complexity comes in with questions like "how do you advertise a transaction you want to the miners", "how do miners communicate with each other", "how does the consensus change over time", and "how can existing clients handle new kinds of transactions that they don't natively understand".
Every 10 minutes a miner finds the answer to a problem, and collects as many high fee paying transactions that will fit into a block of 1mb, awards himself 25btc and collects the fees. Miner broadcasts this block. Other nodes receive it,verify its validity and relay it.
Work then begins on finding the next block by miners.
When an accountant figures out how to write down the transactions he has at the moment, he yells "HA! I got it!" and the transactions to everyone else in the room, who goes "ugh, damnit", the accountant collects the fee from the people whose transactions he wrote down, and the cycle begins anew.
On Bitcoin, there's one table with two columns: username and balance. You have read access to this table and you can call a stored procedure that transfers some of your balance to another user.
On Ethereum, you have developer rights. It has the same username/balance table as Bitcoin, but you can also create your own tables and write your own stored procedures, which can be called by other users.
Of course this is a drastic simplification of both systems, and misleading in some ways, but it's the best quick explanation I've come up with.
I'm getting obsessed with Ethereum because it's amazing to me that, for example, I can write two pages of backend code plus an html/javascript front end, and I've got a crowdfunding system which I can deploy for free, run indefinitely with zero downtime, and have it moving money around without getting anyone's permission at all. (Or it could be an auction, casino, currency or derivatives exchange, vault, etc.)
So who actually pays for the runtime - is it the work the miners do? If not, what is the mining work used for exactly?
Consider a block chaining system without proof of work: I want to send some bitcoin so I broadcast a signed message to the network saying "send 10 bitcoin to dandare". But let's say I also send another message to the network saying "send 10 bitcoin to <my other address>" at the exact same time.
Now what happens is the chain forks. Some people consider transaction #1 canonical and some people consider transaction #2 canonical, but they can't both go in the same chain because they conflict. So now your blockchain has a split at the end of it, how do you decide which one is the real one?
Well, everyone in the network is incentivized to add their transactions to the 'real' chain, because obviously everyone wants their own transactions to be real. So if either chain gets a small edge in 'realness' everyone will pile into that one, looking out for their own self-interest.
In the absence of proof of work, no chain ever becomes any more 'real' than any other, because there is no effort in adding to the chain. Me with just my laptop can keep extending the one that I want to win indefinitely, and roughly 50% of the time it'll come out how I want.
Proof of work solves this, by making the network 'invest' computational effort to extend a chain. Because it takes enormous computational resources, no single actor can significantly or reliably influence which chain is going to win. And as each additional block is chained on after the one containing a given transaction, it becomes exponentially more difficult for another 'side chain' to catch up.
This means that if you wait until about 3 blocks after the transaction I sent you, you can have a very high degree of confidence that the chain you are looking at is and always will be the canonical bitcoin blockchain. In order for that to become untrue, someone would have to find two consecutive solutions to the proof of work problem in the same time it takes the entire bitcoin network to find 1.
The consensus work is expensive, and we pay them for it mainly by minting new coins. In effect we're taxing all the coin holders by inflating the currency.
To run a specific transaction, you pay a transaction fee, which also goes to the miners. They could just ignore our transaction, so we pay them a little to run it.
So basically it's the users who pay the running costs of an application. Every time they call a method in a script, they have to include a small payment to the miners.
Generally these payments are pretty small but as computers go, Ethereum is a very expensive one, since every operation or stored byte is replicated on thousands of computers. You're not going to be doing a lot of computation or storing bulk data. But simple business rules are easily affordable.
Right, as you and your friends have demonstrated.
There are people that understand it. 7 years in and you have decided not to. That's all it comes down to.
No, HN is generally bad for discussion of bitcoin.
> I have asked many of my techie friends
An introductory whitepaper [1] was written by bitcoin's creator in 2008. That's probably still the best place to start.
[1]: http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-a...
These groups may only slightly overlap.
Etherium is not this
This reminds me of the old "How did X get elected? I don't even know one person who would vote for X!" It speaks much more about the individual than the public. I feel the same way when I hear about the latest SaaS/Social-whatever.
Same with Bitcoin. You acquire it, you use a piece of software called 'the wallet' to store it and you either share your 'Bitcoin address' with someone to send Bitcoin your way or they give you their address for you to send the btc to.
That's really it in a nutshell :)
https://www.lewrockwell.com/2013/12/gary-north/bitcoins-vs-g...
All its advocates get very excited about all the complex automated things it can do, which is admittedly very cool. But for the real world, I'm skeptical that anything more complicated than a basic escrow could work. Once you're talking about real, complex applications (like a DAO), what if there's a bug? Even if bugs are rare, the potential implications when they do happen are so severe that it still diminishes the value of the platform.
And the ability of members to "vote in" new code is no solution. Nobody in their right mind is going to do that without a thorough code audit, which is a pretty high friction interface to what is supposed to be a financial or business instrument. It would inevitably devolve to trusting a relatively small group of "experts", which rather defeats the point of the whole enterprise.
Even worse, voting on updates is broken by design... a majority of participants could collectively decide to screw over a minority and simply steal their assets by voting in a code update.
Such is life though. It is not just ethereum. Bitcoin cannot survive a majority attack. In the long run, I can't see how even a government can survive a majority attack. One obvious solution to the problem is to try to prevent any one bloc from gaining majority status. I'm sure there are more elaborate solutions though and if any of them is elegant, I'd like to learn about it.
Proof of work is a different kind of majority though.
https://en.wikipedia.org/wiki/Gerrymandering_in_the_United_S...
In turn, governments provide recourse and security for smaller, constituent systems (companies and individuals.) As long as the government remains intact (or intact enough), it can be a an arbiter and enforcer between the smaller entities (i.e, the entire legal system).
With Ethereum, there is no arbiter. There is only the exact code of the contract. It is entirely possible that the code is flawed in a way that is disadvantageous to all parties, such that they cannot change it, or that a mistake was made that allows one or more parties to act in violation of the "spirit" of the agreement.
Of course, some of these situations can be foreseen and accounted for (exit clauses, consensus code updates, etc.) But not everything can be foreseen, and the irony is that the more situations are explicitly accommodated for, the more surface area there will be for difficult-to-detect edge cases.
The legal system has built in resiliency, due to multiple fallback layers of (hopefully) impartial arbiters to add a layer of empathy and judgement on top of the strict letter of the law. It's not perfect, but it works.
Unless Ethereum can find some equivalent, I cannot see it taking over anything but certain types of very well-understood transactions. Don't get me wrong, that still has value... automated escrow, options & futures trading (etc.) is huge. But until this problem is solved, effective DAOs are a pipe dream.
This is true bitcoin cannot survive a majority attack. But the amount of resources needed to form a majority attack would be better used to just mine bitcoin.
Attacking the network for the sake of attacking it would be very expensive and would basically devalue BTC, which I'm assuming would remove any initial incentive.
> Suppose that the majority of miners
Doesn't the "majority of miners" being in on it mean the same thing as "allocating computing resources"?
Plus the way that "The DAO" operates is going to be crazy. Basically people submit proposals of things they want the DAO to build, then "The DAO" "hires" contractors to build it (A roundabout way of investment). So Slock.it would be a contractor of "The DAO", but could theoretically be replaced.
But Slock.it is a DAO itself. So basically the chain would look at minimum something like this.
"The DAO" <-> "Proposal" <-> "Contractor Agreement" <-> Slock.it
Bear in mind that "The DAO" and Slock.it are managed by distributed consensus. And what if a company was a contractor to >1 DAO?
Add in all of smart contracts contained in each DAO, the amount of interconnected unmodifiable software that will run these organizations will become staggering. Attempting to design something to be fault free in a normal network is insane, but then you add possibilities for social faults in voting and consensus.
I am sure something like Ethereum will be the future. But the current state is extremely alpha to be handling that sort of financial power.
EDIT:
To prevent a takeover many ethereum contracts will implement an exit strategy, like splitting the minority into a new contract.
"The DAO" <-> "Proposal" <-> Slock.it
The idea is that the DAO 'hires' a contractor, which is Slock.it in this case, which can have all sorts of legal rights/protections/etc. and is a corporation in the physical sense. It gets hired by this nebulous entity, so instead of working for another corporation or individual, it gets hired by the DAO.
The voting problem is a more obvious flaw. There seems to be a naive optimism on the part of certain developers that simple voting rules will surface the best quality viewpoints. This is fine in hackernews, but is not OK for open source software development.
All Ethereum transactions can be proven to halt.
That does of course mean Ethereum isn't really Turing complete, just an approximation.
There's a limit to the number of "cycles" spent on each program in proportion to how much funding they have. It's like a smaller version of the halting problem where you only have to say if a program will halt in five seconds or not.
Turing machines are a theoretical construct, be careful when trying to reason about the real world based on them.
(1) Relatively interesting technological breakthrough comes along. Promising but questionable applicability to real-world problems.
(2) It attracts early, idealistic developers, some of whom are genuinely talented. Rational debate is still possible at this point.
(3) The hype builds up and in turn attracts various groups: raging anarcho-capitalists, developers of a mildly libertarian bent, get-rich-quick enthusiasts and teenagers. The price continually bubbles and spikes as fresh money comes in from speculators betting on the hype.
(4) The spiking price is misinterpreted as a signal that the technology is going mainstream and is ready to be applied to real-world problems. Lots of half-baked apps and companies are built. No actual traction is found (with the notable exception of the dark web).
(5) Repeat (3) and (4) until the press and wider community no longer believe the hype. Possibly rebrand to 'blockchains' or some other less toxic noun.
I'm actually convinced that Ethereum has something unique to offer specifically to developers. Ethereum will be a common ground for a lot of high value code and data between organizations, people, etc. A lot is possible in a few lines of solidity, I've seen devs create working decentralized exchanges in a few weeks. As you can see, the use of Ether here is just to ensure that the code a user wants to execute on the EVM gets executed. Users need not have to use it as a currency.
Ether's primary purpose is to secure the Ethereum network, not to be used as a "currency" like Bitcoin. If someone gave me an ether every time the Ethereum devs keep emphasizing this, I'd be very rich by now. If Bitcoin did a great job at transferring value in the network without being slow and full all the time, all the ancaps would have stuck to Bitcoin and would have left us in peace.
The Bitcoin challenger is not Ethereum itself, it will be services like Maker that are currently being built on top of Ethereum. Ether purpose is to secure Ethereum so that services like Maker don't have to worry about the security and scalability of the underlying blockchain and can focus on the EVM abstraction and above.
I do disagree with your assertion in (1), which is that Bitcoin's applicability to real-world problems was questionable. From the beginning, it was clear to me that at least the technology behind Bitcoin could easily become Money 2.0. Unfortunately, I failed to take into account the social/governmental/financial factors.
Running arbitrary decentralized code on a shared public ledger... I have to admit that this is pretty damn cool and I feel confident that there will be some useful projects or developments that will eventually emerge from this technology, but at the moment there aren't any obvious problems that this technology solves better than the existing centralized solutions. I saw a lot of talk about "autonomous corporations" in previous Ethereum threads, but it seems pretty clear that these entities are not capable of much autonomy beyond shuffling around eth between other Ethereum wallets/entities.
https://learnxinyminutes.com/docs/solidity/
You can test your code here:
https://ethereum.github.io/browser-solidity/#version=soljson...
Ether is not in the currency business. It was emphasized multiple times by the devs themselves. It so happens that Bitcoin is so slow and full that users are flocking to use Ether as a currency even when Ether's inflation is uncertain. This is an open network, we cant stop people from using it the way they want it to.
Ethereum is not being built for financial apps only. It provides a VM that can run code and store data. This can be used for any purpose that requires code to be executed and data fields to be changed atomically in a secure way, the users need to pay a fraction of a cent worth of Ether to run this code. That means they dont have to be invested in Ether to be able to derive value from the Ethereum network. You have to be invested heavily in Bitcoin to get value from the Bitcoin network, especially after Bitcoin payments are such a dud. Please dont rush to type that Steam started accepting Bitcoin recently.
Ether is not competition to Bitcoin. Bitcoin killer will be a new token on the Ethereum network. There could also be a AirBnb killer and a Uber killer built on the network too. These are companies that pride on being leaders in sectors by writing only code. What if this code and data can exist as commons in the Ethereum network that is global and has 100% uptime. Users pay a fraction of cent worth of Ether to run transactions instead of a percentage cut. And these users will transfer money between themselves for these transactions with the token that killed Bitcoin, not Ether. It will take a while to kickstart a reputation layer on Ethereum network but these usecases are a real possibility.
There is a very good chance that these new tokens created on the Ethereum network will surpass the total market cap of Ether very soon :O
Right now the ether inflation rate is under 20%. Bitcoin's inflation when it had a $1 billion market cap was 33%.
As a currency, ether works just as well as bitcoin, but with higher throughput and much less latency.
Ethereum is different because in addition to being a currency, it is also a platform. It needs "killer apps" to differentiate itself, otherwise it's just a currency, and can be discarded like litecoin and doge. I think Fred has given us reason to believe it will succeed in providing the ability for killer apps to be built on top of it, but we still have to see. None exist yet. The DAO has yet to do anything real.
Maybe just a detail, but it seemed like an important one to me.
I believe there can be a crypto-currency with better properties than Bitcoin.
Once one of these Ethereum apps finds their hockey stick, Ether will continue to play its role in securing the Ethereum network for this killer app which removes the need for both Ether and Bitcoin to play the role of crypto-currencies.
While you are distracted by one DAO, there are many other DAOs successfully in operation on the Ethereum network. There is only one that made a lot of noise because it had to, the others are silently building their products after raising money from a passionate set of users.
The thing with tokens is that because Ethereum is so young, the companies being built on top of it are by default super early stage, with no real traction or product market fit to show. So anyone buying tokens at this stage because they want a shared revenue stream of the companies profits, is making very risky bets which have a high likelihood of failure (on average).
I think it's the lure of secondary markets for DAOs that is behind a lot of the interest in, at least, The DAO - people buy the tokens early because there is anticipation of the token prices going up relatively soon after the crowdsale, fear of missing out etc.
I think a lot of it is driven by speculative motives rather than long term investment in Ethereum companies themselves.
They've got a more definite revenue plan: DAO token holders get transaction fees from transfers of the gold-backed tokens Digix plans to issue. For various reasons I don't think this is going to work out very well for Digix DAO holders in the long term, but it's an interesting experiment.
I think this is better than buying IPO stock in public markets which are so bad these days that only zombie companies are being listed and investors are being screwed very regularly.
This is a really big cop-out. I follow Ethereum pretty closely and I believe that the biggest threat to Ethereum's future is an attempt to move to proof-of-stake.
If you spend a bit of time in the ethereum community you'll find that everyone is very excited to reap the benefits for getting-in-early on ethereum, and they're very excited for the eventual switch to proof-of-stake so that they can collect money. Everyone who is invested in Ethereum is doing so in order to stake. This is terrible for the community, because who is ever going to get excited to invest in meme-powered internet money that they already missed the boat on?
What kind of testing is able to account for that kind of social effect? (Or maybe I'm just a stupid mathless Austrian.) Anyhow, that's just to talk about the social effects, and I think there are many technical problems with proof-of-stake beyond that... Let's not forget that there hasn't been a single successful PoS cryptosystem yet.
I also think that there are big problems looming within the EVM, and to give the article credit, that's mentioned and represented fairly in the article. (forward search for 'Bit-thereum' in OP)
I'm prepared to be wrong about Ethereum, even excited at the prospect. but if I was invested in a cryptocurrency it would be Bitcoin. I think that there are currency wars looming and I think Bitcoin stands to gain a lot from that. Bitcoin's big problems are overstated and will be solved in due time. It just needs to live past the death of Moore's law.
Right now, a couple groups of people are trying to make the fastest ASIC so that they can convert electricity into money, using their proprietary efficient converter.
But if everyone can get the same efficient converter, suddenly it's viable for anyone that can produce cheap electricity with a stable internet connection. And there are far more people/countries who are able to compete on the cost of electricity than there are people/companies who are able to compete on making the best SHA-256 ASIC. This tends towards decentralization.
You sound like that guy back in the 1800's who predicted that everything that can be invented has been invented.
It's possible for that to happen, but why do you think it will happen now?
I'm no expert but the basic idea is that stakers bet on which block will become part of the chain, and the block that does is the one that gets the most bets. Stakers start with small bets and progress to larger ones as the bets converge. If you make a large bet on a block that doesn't get included, you can lose substantial stake.
What makes this possible is GHOST, which makes the blockchain aware of forks instead of just the final linear chain. (That's already part of Ethereum, and is what enables the 15 second block times.)
There's more information at blog.ethereum.org.
- Ethereum and Bitcoin both let you lock up the cryptocurrency and provide a series of rules that are required before the money can be unlocked; this has a lot of power, because unlocking can be done by a single party (a standard payment use case), but also by a series of other people/groups or external events (currency price, weather, etc)
- The rules for unlocking cover a wide gamut from requiring several users to agree (e.g., multisig like a multi key safe deposit box to voting for a dividend), to requiring an external action to happen (e.g., unlocking if the temp is below a certain amount on a given day for weather based insurance contract); these actions replicate many current real world interactions like an insurance contract, a voting mechanism for corporate governance, and escrow (just to name a few); the OP has also written about Distributed Autonomous Orgs (DAOs) on TechCrunch
- A key benefit for letting these be programmatic is that they can cut out a middle party (or at least reduce the dependence on this middle party with a network of oracles) - cutting costs and reducing dependence on this third party
- Some key value props where this could help in the early days:
1) cross-country transactions, as the contract language is international (legal systems can be hard to enforce across geographies)
2) Small amount transactions (as fixed costs may be high in a real world contract today for each party)
3) contracts where middlemen have monopoly-based pricing
4) contracts where the middle parties have a low degree of trust (more likely today, certain markets don't exist due to this reason)
5) Contracts in a country where legal systems are weak/expensive
- For Bitcoin vs. Ethereum, many Bitcoin enthusiasts will argue that Bitcoin provides a similar functionality, but Ethereum's high level languages are generally much easier to write (I'll likely get some push back by partisans, but Ethereum's Serpent and Solidity might be closer to JS/Python/C, while Bitcoin's Forth-inspired/stack-based language is closer to a higher-level assembly); there are also some specific differences like Bitcoin requires all or nothing unlocking, is not turing complete, has restrictions on the transaction byte size, and has some miners enforce transactions that only have a few of the contract op codes, not all; still, some Bitcoin devs (like Gavin) note that the surface area for security holes is significantly larger with Ethereum
(See my other post for an introduction to the language)
Ethereum is being built to store and run code in the EVM. Ether main use is only to pay for gas so that any user of the network can execute the code. Although in Bitcoin there is no point in writing code other than encode conditions upon which monetary transfers can be done, this isn't Etheruem's main goal.
An example of a non-monetary use case is - A concert ticket issuer could issue tickets on the Ethereum network. When users want to resell, they need not rely on a re-seller and instead can do a direct exchange on a decentralized exchange. They will pay a few cents worth of Ether as fees to run code that triggers this exchange to get the guarantee that the tickets are not counterfeit. After a quick confirmation the ownership of the tickets is updated on the blockchain. The exchange of money between these users can be in USD itself directly without any conversions to Ether.
It is non-monetary consumer use cases like these that drives the Ethereum team to bring the transaction confirmation times to the current 15 seconds and even lower in the near future.
And of course, if you're paying miners with ether, then ether better be a functioning currency or it's a worthless payment.
You're certainly right that Ethereum has lots of uses beyond simple value transfer, but if you want to transfer USD instead of ether, you need to trust someone to back tokens with USD, and trust governments not to shut them down over KYC issues.
Because, Ethereum will prosper not when Ether has a high market cap, only if it can become robust enough to provide a decentralized platform to run code for a variety of apps and services.
It might not be a done deal, either. A few weeks ago Vlad Zamfir, the lead researcher for PoS, tweeted that he thought agnostic fees were a dumb idea, because they'd be too much trouble for miners.
A lot of contracts are easier to write if you assume a single currency. If you're doing that you have to pick one, and ether seems like the obvious choice.
I mostly agree with your last sentence but a high market cap doesn't reduce Ethereum's robustness either; in fact it makes it more secure.
Ethereum can be used to represent the ownership of any item (property title, ticket, claim for fiat currency). Some will inject a third-party you need to trust (a custodian who holds dollars), while others may not (the digital ticket as @daoland highlights). You can also define ownership broadly, where it might be as simple as the "ownership" (right) to vote (e.g., corporate governance decision, poll, etc). While it's not the primary use today, I could see tradeable tokens to represent various real world rights (to land, to tickets, to voting) being an area for much further experimentation.
I do think there's a question if confirmation times need to be low on the blockchain itself (with its attendant risks) - as Lightning in Bitcoin shows an example where this is injected on top. This really is a broader debate about what should live at the lowest layers of a blockchain stack and what should be higher up (disclosure, I specialized in networking, and so see some parallels to the debates in the early years of the networking stack). Another interesting area for exploration is what should live on the blockchain, and what should live off, given the cost of blockchain storage.
I wish Coinbase had a stronger set of technical advisors. Fred and Brian seem to rarely meet with the engineering and research community. Charlie Lee is pretty strongly on crytocurrency technology but just one person.
Here are the paragraphs where I thought the FUD was most obvious. Worth looking over.
Developer mindshare is the most important thing to have in digital currency. The only reason these networks (Bitcoin, Ethereum) and their tokens (bitcoin, ether) have value is because there is a future expectation that people will want to acquire those tokens to use the network. And developers create the applications which drive that demand. Without a reason to use the network, both the network and its currency are worth nothing.
In contrast, Bitcoin has had a leadership vacuum since Gavin Andresen stepped aside after other core developers did not get on board with his (in my opinion rational and convincing) arguments to increase the block size. “Core developers” as they now stand are also relatively fragmented.
Beyond a leadership vacuum, Bitcoin’s “leadership” is less clear and toxic. Greg Maxwell, technical leader of Blockstream which employs a solid chunk of core developers, recently referred to other core developers who were working with miners on a block size compromise as “well meaning dipss.” A second discussion board needed to form on reddit, /r/btc, because of censorship on the original /r/bitcoin. The content on the Bitcoin discussion boards feels like squabbling while Ethereum’s is talking about relevant issues and new ideas. In summary, Ethereum leadership (and as a result its community) is moving forward while things need to get worse before they can get better in Bitcoin.*
What is very real, though, is the possibility that Ethereum blows past Bitcoin entirely. There is nothing that Bitcoin can do which Ethereum can’t. While Ethereum is less battle tested, it is moving faster, has better leadership, and has more developer mindshare. Developers → apps → users → network success. First mover advantage is challenging to overcome, but at current pace, it’s conceivable.
Also, I still don't understand why I'd want a programming language in my currency.
Here is my attempt; feel free to skip it.
Bitcoin apps aren't innovative.
The Bitcoin scripting language is restrictive. Ethereum has been successful.
Nothing. (It may or may not be so.)
The restrictiveness of Bitcoin's scripting language is a legacy issue, and the scripting language is very important.
Bitcoin is amazing to some, but not all.
Bitcoin hasn't innovated for seven years, but Ethereum is innovating right now.
Ethereum is the future of digital currency.
Bitcoin's scripting language is restrictive and hard to use.
Ethereum is easy for developers to use.
Ethereum looks more familiar.
Ethereum can do things bitcoin can't.
Ethereum has everything in the same protocol, which is better than layers.
Ethereum has better developer resources.
Bitcoin applications aren't innovative.
Ethereum has lots of new innovative applications and more to come.
A digital currency is only as good as its applications. The creator of Ethereum is a good leader and a nice person.
The leader of Bitcoin left and the remaining people don't work together.
Bitcoin developers and figureheads are mean and petty.
Bitcoin isn't growing and that's bad.
The Ethereum developers are innovative.
Bitcoin isn't changing quickly and that's bad.
Ethereum is faster and provides money to more miners.
Nothing (It may or may not be so.)
Ethereum hasn't had any large schisms or internal conflict.
Ethereum allows you to do more than you currently can in Bitcoin.
There are security risks, but it isn't Ethereum's fault.
Proof of stake is awesome.
Nothing. (It may or may not be so.)
Nothing. (It may or may not be so.)
In summary, Ethereium may replace Bitcoin because it is innovating faster, has a nicer community, and has a better developer community. (This is the thesis!)
I am neutral
Digital currencies are rapidly changing.
Technology is great.
And now we've located the thesis! What is very real, though, is the possibility that Ethereum blows past Bitcoin entirely. There is nothing that Bitcoin can do which Ethereum can’t. While Ethereum is less battle tested, it is moving faster, has better leadership, and has more developer mindshare. First mover advantage is challenging to overcome, but at current pace, it’s conceivable.
In summary, Bitcoin is restrictive, inferior, stagnant, and has a community that is fragmented, lacking innovative developers, filled with mean people, and has no leader. That's the message this blog post deliberately sends. However, none of these arguments are valid. Being restrictive is not a bad thing in itself. Being simple isn't a bad thing. Being stable isn't a bad thing. Calling a community fragmented does not make it so. Developers don't matter; digital currency is valuable because it's a way of storing and exchanging value, not because of related software. How much someone in the community cusses doesn't mater. That Gavin is gone doesn't matter. Calling a community leaderless does not make it so. The people who have bitcoin matter, because the point of a digital currency is to store and exchange value.
Why the same hash table for two different things? Why the same block chain for two different things?
Actually, I think you're looking at it wrong. It's not a programming language in your currency. It's a currency in your programming language.
Ethereum is exciting - my dad, a lawyer who doesn't know you can use the internet at our house, is excited about it. It makes sense how you would use it. I hope it continues up and to the right!
His basic point was related to bitcoin being not great "beyond store of value and speculation.", and how etherium is magically going to avoid that with killer apps.... sure...that is bubble speak for solving problems that don't actually exist.
IMO Bitcoin's problem, as depicted by this thread, is complexity, which ethereum adds more of instead of less. Make money work first, then create specialized verticals after.
You can configure the allowable size as well so any particular node on the network can decide how much of the chain they prefer to keep around.
One is because a lot of data is redundant, more on that later.
And two because storage becomes abundant. i.e. in 1995 1mb of daily storage would be a big deal, it'd cost a few thousand dollars to store a year's worth of data. Today 365mb of storage hardware costs about 1 penny. Today the blockchain adds at most 50gb of annual data, which costs about $1.5 of retail harddrive hardware per year, in a few years that'll drop down dramatically, too. So abundance of storage, if it outpaces blockchain growth, isn't that big of a problem.
The exact numbers are a bit hand-wavey, I agree, because a lot of this is new stuff and dependent on a lot of uncertainties. e.g. the growth of storage abundance is relatively known (although far from certain), but it must be compared to the rate of adoption and the rate of block size increases, both of which are relatively unknown, to know whether storage tech outpaces storage needs.
But data redundancy is the main argument, not abundance of storage.
i.e. if I have a list of transactions, where I send you $1 and you send me back $1 a trillion times, we could either store a trillion transactions in a trillion days, one per day, which would be a massive file... or we could store the last 10 years of transactions (just 3650 transactions) and have a for all intents and purposes 100% safe and accurate idea about our balances. Most of that data just isn't necessary to store.
At some point you can say, 1 year ago there was a certain balance on the blockchain, this balance is correct, hasn't been contested, and would need billions of dollars spent on energy to 'correct' by double spending the transaction and then mining 1 year of blocks while keeping up with new blocks, i.e. a virtual impossibility, so we can trust that 'snapshot' of the blockchain. Then we can throw away all the data before that, use that snapshot as a sort of 'balance', and then build a new chain from there. This means that for practical purposes, you can keep the blockchain limited to say a year's worth of data, or say X transactions back in time, if you wanted to.
So what'd happen is that a few parties, e.g. large businesses and universities, would store all data for posterity, research etc... while most participants would only store a small chunk of data.
It's more complex that that but that's the basic gist of the story.
It's already implemented in one of the independent clients (written in Rust), and they plan to add it to the official client before the storage size gets too unwieldy.
In the long term they also have plans for sharding, so any given node doesn't even have to store the entire current state. That's more of a research problem but they seem to be making progress on it.
* Ethereum allows shared state between transactions, Bitcoin doesn't. That means one application can state "The price of Eth is $10USD" and a totally unrelated application can reference that value. The result is that each application provides an API that all other applications can call.
* Both Bitcoin and Ethereum have a stack based scripting language. However Ethereum also has a higher level language that compiles to the stack based language. That means you can right reasonably readable code without OP codes. Functional program is so much mentally easier than writing a stack
* Ethereum (unlike Bitcoin) is Turing complete. It can have code that loops and recurses based on the state of the chain
Yikes. Turing-completeness is the last thing I want in a contract language. These things should be _provable_ and _total_. Allowing arbitrary computation opens up a whole new can of worms.
Proof of Burn in the Bitcoin world means making up an address (such as "1CounterpartyXXXXXXXXXXXXXXX...") which is essentially impossible to ever be associated with an actual key so there's no chance of recovering the funds sent there.
Proof of Burn in the Ethereum world means writing a contract and publishing the source code such that it can be verified to match the contract address living on the chain. A minimal proof of burn would be this "contract Burn {}" an empty contract that does nothing but receive funds, can never be destroyed, is controlled by nobody and all of this can be verified publicly.
The difference is subtle but important.
edit- btw, yes you can also send funds to address 0x0 but this still leaves open the possibility of a hard fork giving new meaning to that address in the future. my example is meant to be a demo of the difference mostly.
I say "invested" because there is no actual investment with "The DAO". "Investors" are free to withdraw their funding back at any point before a proposal voting takes place. This is basically a risk-free proposition - "invest" your funding now to join on the buzz train, and take your money back at any point if you don't like the proposals being proposed. A majority vote within "The DAO" cannot actually vote for an investment with the entire funding available for "The DAO".
Technically speaking, until after some proposal wins a majority vote, no money actually changes hands... the investors are still in full control of their money and should still be considered the owners of it - not "The DAO".
For this reason, I think that calling this "the biggest crowd-funding ever" is incredibly misleading. There is no commitment and no risk, unlike how crowdfunding usually works.
Somewhat related: "Ethereum Contracts Are Going to Be Candy for Hackers" http://vessenes.com/ethereum-contracts-are-going-to-be-candy... HN discussion: https://news.ycombinator.com/item?id=11725624 (192 points, 6 days ago, 83 comments)
https://daowiki.atlassian.net/wiki/display/DAO/Step-by-Step%...
I think a large portion of the investors would be unwilling to do this and simply sell their The DAO tokens on an exchange, thereby keeping their ethereum locked up in The DAO
So, there is some risk in terms of temporarily lost liquidity, but I would still stay that comparing this to a traditional crowdfunding where investors actually lose control over their funds is nonsensical.
Ethereum enables the killing of giant-killers.
The reason people use Uber or AirBnB is because of
1) trust
2) network effects (you need a LOT of users for these things to be useful)
3) great, fast, simple UX
None of which Ethereum or Ethereum companies have yet, and even if Ethereum becomes popular, Uber clones on ETH face the same uphill battle as any other company trying to take on Uber.
It doesn't really matter for the average user what the underlying tech is, if it's powered by a decentralised cryptocurrency or not.
What about customer service? Who mediates when there's a problem with the driver or rider? Who vets and background checks the drivers?
That sucks I'm out 900$ on this thing. :-(. Any ideas?
Bitcoin and Ethereum are not stored on the same blockchain and are not compatible or directly convertible.
Your only chance of getting the bitcoins back is to try to create the same wallet address on the bitcoin network (I'm not sure if the backup seed strings are compatible, may not be possible)
Hope their support sorts it out for you
Does this mean I can hold ETH in a Coinbase wallet soon?
First 3 allow direct purschas with USD
For loops: I am tired of seeing Turing complete, to mean just for loops, I thought, HN crowd busts jargon, so I am just going to say for loops. I think Bitcoin makes minimal use of the resources on the Blockchain, hence the minimalistic script, which can be used for multi-sig as a condition to move coins. Which the creators felt is sufficient, and the actual contract could live (run) outside. Now imagine if there are 1000 Dapps (distributed apps in Ethereum world) running and all of them have for loops. Now for every block which is written, it will have the overhead to run all these for loops. And each of these for loops are going to run on each of the full nodes. That is the ones which are trying to mine a block. I think, this is a huge overhead. As if PoW based mining is not a computing burden already.
I know they are exploring PoS for mining. But I think PoS is better for closed Blockchains, with limited stake holders. Example the settlement layer which the Big Banks are exploring using a closed Blockchain, obviously can do with PoS as all blocks can be signed by all stake holders.
Dapp: I don't clearly understand why Dapps need to live on the Blockchain. As there core logic is bound to be bloated, and should live outside the Blockchain, to conserve resources. Bitcoin being a single app on the Blockchain i.e a crypto currency app, is facing scaling issues. Imagine a diverse range of Dapps all living on the Blockchain!
Scaling: Admittedly there is a dispute going on in Bitcoin land over scaling. And I have been gobbling up points on all sides for months now. And IMHO the issue is very complicated. When I started out, I shared the view point that they should increase the block size. But, I don't know, recently, I am beginning to see the point of the core developers. I see merits in the argument of decentralized nature being preserved. Also attempts like Seg-Wit (again note they are pushing things outside the block, again making it as minimal as possible, contrary to the Dapp philosophy).
Look at it this way, if Ethereum had come first, Bitcoin would be a single Dapp on it. And with all its problems. Ethereum is just out, and most likely it will evolve in the direction of the first successful Dapp. As of now, IMHO, its an idealistic platform in search of a real (d)App. No disrespect. I trust Butarin & co are a sincere bunch of guys, but they have a long road ahead compared to Bitcoin.
Not a ponzi scheme: Lastly, I really hate to see a lot of folks casually dismissing Bitcoin as a ponzi scheme. Kindly note that its creator has not moved a single coin. The second guy who joined him has passed away. And I think, Bitcoin has inherited the philosophy and spirit of its founder(s?) and early devs, who had no idea what they are getting into. And were mainly doing it to finally have a successful crypto currency, after many failed attempts.
So overall, I don't buy the points of the Coinbase co-founder. He definitely makes some good points. But IMHO he gets a lot of it wrong, and based on presumptions (e.g. the world needs Dapps running on Blockchains), only some of which I have explained above.
Edit: Typos & minor rephrase