Bitcoin VS Ethereum | Hacker News Reader

Bitcoin VS Ethereum

theinvestorspodcast.com

63 pointsOlshansky60 comments

I've been avoiding the altcoin zoo as much as possible, but Ethereum is worth looking at. It fixes key features of bitcoin (12 second vs 10 minute transactions) though smart handling of stale blocks, actual memory hard mining algorithm (unlike Litecoin that didn't turn to be) and adds a whole new dimension to the blockchain with the built-in VM and computer. Just Google the DAO incident for some amusing and interesting reading.

Proof of stake should IMHO NOT be mentioned, doing so is very misleading. Ethereum doesn't use it, and if a suitable algorithm was ever developed, any coin could switch to it in the same way as Ethereum will.

Peercoin was proof of stake five years ago.

And the algorithm used has weaknesses and undesirable properties (nothing-at-stake-problem), which is why it's not used elsewhere.

Here's some introductory reading: https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ

It also relies on centrally signed checkpoints in order to survive stake grinding attacks. I'm pretty sure such a solution would not be considered acceptable for Ethereum. https://download.wpsoftware.net/bitcoin/alts.pdf

Downside is that Ethereum doesn't have a cap on number of coins, which means it has high inflation (20% a year right now). Also, Ethereum uses A LOT of disk space, over 1GB is added every month.

Storing the entire state history isn't really needed though. I'm not sure how much inflation is a concern given the volatile exchange rate of any coin. It can't arbitrarily change either, so it's not quite like fiat money.

To put it into perspective, the USD has an inflation rate of 2% a year, according to the feds target.

For 2017 it is 14.75% [1]. The bigger question is to what it may change in the future. Vitalik has stated that it will be lower / closer to zero, but who knows. The only given is that it will change.

[1] https://ethereum.stackexchange.com/questions/12501/what-is-e...

Updated typo: 14.75%, not 1475..

You made a typo and are off by a factor of 100.

It seems quite relevant to me - the ethereum foundation has a reference implementation of PoS and is planning to begin a partial transition within 6 months. It's clearly roadmapped, and much development has been done already, unlike the vague assertion that "other coins would switch to it"

I'd love to read this article, but the website is absolutely broken for me on Chrome -- HTTPS issues.

Same on ff

It works with 'Reader view'

Same here. Also Chrome.

http://i.imgur.com/p9VdBM9.png

same here. reader view is good (tested with firefox)

Same. Getting HTTPS issues.

Likewise. I disabled uBlock and HTTPS Everywhere but still no luck.

Edit: If you're on Mac, Safari with Reading mode works.

Same. Opera.

For those having trouble with the site: https://gist.github.com/jdpedrie/9b841e73c8a674be2e9d69072bd...

Somewhat readeable version (with hyperlinks): http://docdro.id/uW83epK

Same here on Chrome. I tweeted @JamesMeirowsky who is their Director of Engineering. Hopefully they'll fix it.

The author's assertion that "nobody uses Bitcoin Script" is a bit silly - EVERY transaction uses Bitcoin Script, just a very simple one, for addresses [1]. The next most popular scripts implement multisig. OpenTimestamps also uses a simple script to commit a hash in a transaction. Currently uncommon uses are HTLC's which allow you to spend based on a zk-SNARK [2], and the Lightning network.

I would actually say a bigger difference is that Bitcoin state is limited to a set of unspent transaction outputs with value (UTXO set), whereas Ethereum allows the script to store arbitrary state in its output.

On a side note, Proof of Stake is a really cool feature if it works, but Ethereum doesn't have it, only the promise that it would hardfork to it if a viable solution is found.

[1] https://en.bitcoin.it/wiki/Script

[2] https://bitcoincore.org/en/2016/02/26/zero-knowledge-conting...

(and yeah, I had to use Fx reader mode to parse the jumble of text at all)

I agree, that was poor wording on my end... Thank you for the clarification.

I should have said that it's very limited and much more difficult to use than Ethereum's smart contracts.

I also wanted to avoid going into a deeper discussion that would involved the potential adoption of segwit, which would enable lightning networks and a bunch of other sidechains.

> I should have said that it's very limited and much more difficult to use than Ethereum's smart contracts.

I think the biggest issue with Bitcoin Script is that only a subset of scripts is considered "standard" [0] and only standard transactions are propagated by the network. If you can find a miner that accepts non standard TX then it's fine and blockchain already contains some interesting transactions (like lottery [1]).

[0]: https://bitcoin.stackexchange.com/questions/21123/which-scri...

[1]: https://curiosity-driven.org/bitcoin-contracts#multilottery

I've seen wallet code that is hardcoded to handle only common scripts. That'll certainly get you to your MVP faster without needing to implement the whole script engine.

Posts such as this still don't address a large concern:

What assurances are there about the "political" (for lack of a better term) controlling entities around the coin? For instance, Bitcoin is susceptible to a 51% attack to destroy opposition, and Ethereum has already shown they will do so in the DAO use case.

For this reason, I stick to fiat, even though I look forward to cryptocurrencies maturing even more.

Any coin can be subverted if the majority of the userbase agrees so - that's a fork.

Note that for fiat currencies, this is true, too. It's even worse, because usually it's 51% of the issuing national government, which might be a much smaller group that the total users.

The problem is that one user (entity) could gain 51% of hashing power, not majority of the user base.

There is a huge speculative bubble going on in the cryptocoin world. Check out the history of the largest non-Chinese exchanges Poloniex and Bitfinex before getting involved. They have created billions of dollars in equity in just a couple months mostly in useless altcoins.

Can you pay your taxes with bitcoin or ethereum?

No. Can you pay your taxes with stock or houses?

Are stocks and houses aspiring to someday replace fiat currency?

Are Bitcoin and Ethereum?

If you listen to the technoliberterians on the respective subreddits, BTC and ETH will destroy all fiat and central banking. The realists realize that is highly unlikely.

Thank you, this is exactly what my rhetorical question was aiming for. If BTC/ETH are investments, fine... that is a world away from currency.

I have no doubt they will eventually be used as a class of currency. Thinking they will replace/destroy fiat currencies that have been around for hundreds of years is a bit of a stretch though.

At this point, I think we need to define a "currency". I googled it, and wikipedia (what else?) told me that:

"Currency in the most specific use of the word refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins."

Also in Investopedia:

"Currency is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade."

CCs are circulating as a medium of exchange; emissions and transactions are [dis]proven by automated government (consensus of participants, iirc). What's the difference? In that uncommon "government", consisting of real demos this time?

Destroying and replacing are very much orthogonal to each other.

No, but you can use bitcoin or ethereum to avoid paying taxes.

You can avoid paying taxes in any currency, including USD; it's still illegal regardless.

Tax fraud can be done in dollars and euros too, it's maybe just a bit harder. Still fraud.

You can only pay your taxes with the currency the taxing authority takes the tax in. But this does not prevent me from paying for my taxes with my labor; I just have to convert my labor into that currency first. The fact that you can't pay taxes in bitcoin or ethereum is not particularly distinguished from the fact that you can't pay for your taxes in goats, paintings, or the cleaning of clothes, nor is it particularly distinguished from the fact you can't pay United States taxes in Euros.

> But this does not prevent me from paying for my taxes with my labor; I just have to convert my labor into that currency first.

So BTC/ETH are going to become currencies like the dollar or euro and not a painting or a goat which they are equivalent to now? Is that your position?

You are either being mendacious, or not tall enough for this ride. I assume the first.

I cannot pay my taxes with dollars or yen either. I have to use Euros.

Can you pay your taxes with Euros in the United States?

Can you pay your taxes in USD in EU?

Anything ("real" or digital or anything at all) can be assigned a value by anybody. This value is also self assigned - if you don't think a laptop is worth 700USD like the maker says it is, you might not want to buy it.

A US dollar bill is at the end of the day just a piece of paper - that is assigned a value (that constantly changes) by the market.

The real question is if the currency has any value to a substantial amount of people. Obviously currency is useless if only two people in the world can use it. However as BTC is now over 2000USD/coin and you can use many payment processors (including stripe), I'd be inclined to say that it does indeed have value - and a use; your assignment of value to BTC may be lower.

> A US dollar bill is at the end of the day just a piece of paper - that is assigned a value (that constantly changes) by the market.

Ultimately, the U.S. dollar is backed by the U.S. Military. What is bitcoin backed with?

Ultimately, the U.S. dollar is backed by the U.S. Military

What does this even mean?

That if the US economy crashes and dollars become worthless, the military will plunder a few countries for resources to restore it?

I think he means that the USD is valid currency for all debts, public and private, and this law is enforced by the US gov't.

However stealing anything is illegal (in most countries).

A weakness to BTC could be that it's hard to enforce that...

- The US economy crashing isn't necessary for the military to be used to plunder other countries for resources. The rich and powerful interests in most american countries will coalesce around US interests or face direct or indirect coups until they do, creating a neocolonial system where the dollar is enriched through the resources of other nations.

- It means that more countries will keep USD as a major if not primary reserve currency.

- it also means that we can ensure that oil trade is denominated in USD, which also directly keeps the value of the dollar high.

- it means that we can create a special relationship with Saudi Arabia which allows some degree of control over global oil markets

- it means that we can e.g. devistate countries ideal for Iranian exports in order to prevent the development of competitive markets

What do you by saying USD is backed by the Military? I'm sure what you mean by that? I guess if another country owes the US money the military could "go and collect"? What about in country?

If you mean legally - I believe stealing anything in the US is illegal, this would include BTC. The effectiveness of the government to enforce punishment for stealing BTC could be a valid weakness.

I would say people.

Math

Transaction fees are the equivalent of taxes in Bitcoin, and until the final coin is mined in 2140, everyone pays a tax in the form of inflation.

I know this isn't what you meant -- you're almost certainly asking a rhetorical question intended to point out a limitation of cryptocurrencies in general -- but participants do pay taxes to keep the Bitcoin infrastructure running.

Here are the negatives of Ethereum:

1) Inflation rate is HIGH, 15% a year right now and it has no cap on the number of coins that can be created.

2) Ethereum's blockchain takes up A LOT of space. Over 1GB is added every month.

I think Ethereum's implementation of (now hybrid) Proof of Stake has the potential for some serious disruption (and thus investor fear) when it will happen:

http://www.coindesk.com/ethereums-big-switch-the-new-roadmap...

What? If anything, proof of stake will increase investor interest, because any holder of Ethereum can potentially win the lottery, where the probability of winning is determined by how much Ethereum one holds.

I'm talking about risk. PoS is likely to have many more security issues than Proof of Work does. Other things could break, too, because of it. We may see other attacks such as the one that led to the big fork (ETH vs ETC), and so on.

Reply on news.ycombinator.com