Comment by drpancake | Hacker News Reader

Comment by drpancake | Hacker News Reader

I'm convinced that Ethereum is going to suffer the same fate as Bitcoin. Here's the cycle that will eventually play out:

(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.

You've made a few jumps of imagination in there.

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.

It's too late. Ether was already hijacked to become a trading instrument.

Only in the short term, It is well within the realm of possibility for a purpose built token without counterparty risk like Ether to emerge on the Ethereum network.

Yes, other than your second premise in (1), you nailed Bitcoin's trajectory to a 'T'. As someone who entered the developers in (2) back in early 2011, I watched this painful transition to 3 and 4 repeat itself until 2014, at which point I basically left due to the toxic composition of the community (it was the get-rich-quick types and scammers, often overlapping, that truly devastated the community). It makes me incredibly sad that such a promising technology has suffered this fate. Ah well, being money, I suppose that becoming corrupted was its destiny from the beginning.

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.

Agreed. Ethereum seems like a pretty cool iteration on what bitcoin was able to achieve, but just like with bitcoin we're left with a gigantic deficit when we subtract real-world-applicability from the incredible levels of hype.

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.

I agree. I think another fundamental flaw with (current) cryptocurrencies is that they are all too computationally expensive to replace a simple, trust-based system. If you look at it from an economic perspective, the incurred losses from a trust based system (caused by it's inevitable and sporadic abuse) are probably still smaller than the costs caused by a (theoretically) abuse free system like ethereum. That being said, there might be corner cases where these additional costs are sufficiently small to make a blockchain-like solution viable - for example for very low volume but very high value transactions, like a settlement of financial contracts (bonds, etc.), ie. for any transaction, where an abuse of the system is extremely costly.

Hopefully bitcoin will keep being the wild west of speculation and endless arguments. Ethereum seems to downplay its value storage capability. It needs 1-2 killer apps to become popular, but imho it should never market itself as a value store.

A cryptocurrency needs to happen. Today or in the future economic incentives will drive politics out of money.

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