The Problem with Ethereum | Hacker News Reader

The Problem with Ethereum

tomerstrolight.medium.com

440 pointsmyth_buster316 comments

There's plenty wrong with Ethereum, but casting miners as 'the working class' is a flawed analogy. The mercantile class would be closer to the mark. Notably, their hashing power is based in real world economic power and they extract an annuity from capital expenditure on mining operations and hardware.

I also question whether miners are really providing the labour power, as you might expect the working class to do. They build the roads and keep the lights on but the means of production of value is (or ought to be) the services provided by those writing functionality that makes the network useful, i.e. the smart contract writers. Whether one thinks smart contracts on Ethereum have any value is another question but that was at least the vision.

A move to proof-of-stake does not remove the role of miners/validators. Validators will still earn a reward from validating blocks. So it's not as if this 'class' is being disenfranchised totally.

Finally the social class analogy entails disjointness of classes, this is certainly not the case for miners, many of whom are major token holders, and some of whom are involved in governance (of course by miners we are taking about the humans controlling the mining rigs not the computers themselves)

The miners, collectively, is also the group with the power to hard fork or not. So in some sense, they're the ruling class and the core developers are just proposing the changes to them.

This is a general misconception about how consensus works in blockchains. Miners can choose whether or not to adopt a "soft fork". A soft fork can't violate any existing rules, it can just introduce new rules.

A hard fork is allowed to violate existing rules, and gives you more flexibility in what can be changed. And miners do not have the power to decide whether or not a hard fork will happen. A hard fork is determined by the users, who have to upgrade their software.

If the software updates automatically, then the power of hard forking lies with the developers, who could just push the new code out via an automatic update.

Not correct. The software update that goes to the uses but if miners dont mine for the hard fork, then the user cant use it. Its a technical reality that they could update anyway and at least some miners would mine for them but that would just be causing a chain fork and 2 different chains. The miners have the power to decide where they mine. And user have the power to decide on which chain they operate on. They both have power with their choice. But the choice for user is limited to chains that actually exist. For for now only ETH and ETC exists but if there is demand for more chains because a significant portion of people disagree with the progress then more chains can fork off. This however requires miners who are willing to mine on a forked chain.

The power is split but the constant "fights" between the different parties (miners/users) is the reasons these fist-gen (PoW/PoS) blockchains can not be efficient. There is and forever will be a misaligned interest between the two parties which drives up prices and slows down progress.

Software's auto-update feature is completely irrelevant to consensus. It obviously does not define who has the power at all. To update is always voluntary. Software devs dont technically have any power they have influence.

Any chain can exist with a single miner on it, and anyone can be that miner. Users do not need the consent of miners to execute a hardfork and migrate to a new chain. Miners do not control or determine hard forks.

This has been demonstrated empirically numerous times in crypto history, most notably the moment that >80% of the hashrate openly supported a hardfork that subsequently failed because it did not have user support.

Your node software decides what fork you run on. If someone can push an update to your software without your consent, they can choose to put you on a fork and you may not even realize it happened. This is why most full node software (including bitcoin and Ethereum) does not support automatic updates.

https://news.ycombinator.com/item?id=28142675

> The software update that goes to the uses but if miners dont mine for the hard fork, then the user cant use it. ... The miners have the power to decide where they mine.

This is based on the assumption that miners would rather choose to abandon their business as a matter of principle than mine on the most profitable chain, and also somehow convince any future, unaffiliated prospective miners to also do the same. How could they ever achieve that? Miners don't control where the financial incentives are.

You should probably read the the whole post not just one part and then assume something I never said.

The power is split between miners and user. A majority from both parties are required to determine where the network goes the rest are somewhat forced to follow. If no such majority can be found the network can fork and both chains can be profitable for miners. I never said miners are in control, I disagreed with the parent who said users are in control - big difference.

What I am saying is that only users can determine which chain is profitable for miners. Miners only have a choice in the sense that they can choose to sacrifice profits on principle, which is not really a choice in the same sense as the kind of choice that users have.

The miners do have the power to hard fork - they can choose to run a node that implements the fork

> A hard fork is determined by the users, who have to upgrade their software.

Who are 'the users' here? Light clients? Users of wallets? None of these have the power to adopt a fork, soft or hard. The collective action of the miners (or validators) defines which chains still retain liveness. For example in the hard fork between Ethereum Classic (ETC) and Ethereum (ETH) ETC was able to exist only because miners chose to to mine it. This in turn did give non-mining users the choice of how to distribute their demand and create extrinsic value for the ETC token. I wouldn't say this gives non-mining users any control over a hard fork since it happens after-the-fact.

> If the software updates automatically, then the power of hard forking lies with the developers

I don't know of a node distribution for Ethereum that works this way.

The core developers have power as in knowledge and power as in authority, the later being the traditional form of political power.

Anyone who runs a full node can decide any set of rules they want to follow. You can incentivize miners to mine on your fork by providing block rewards. If you pay people to do something, at least some of them will.

The ETC fork would have been successful at any non-zero support level from people with the ability to mine. And since any CPU can mine (just inefficiently), any fork can get a mining baseline. That may not give you a ton of security but it works.

People who run full nodes are the ones that decide hard forks.

Thanks for responding. So you are saying full nodes are the users? They can provide connectivity but full nodes that don't mine can't continue a fork (where fork is any fork including the original) without there being people willing to mine that fork. So that's why I think miners have the ability to fork.

> The ETC fork would have been successful at any non-zero support level from people with the ability to mine.

It would be economically irrational for people to send transactions to a fork with a single miner since that miner could unilaterally rewrite any transactions as they see fit. This is why I think miners have the ability to control forking.

Forking a coin is free. Anyone can fork any coin at any time. Most miners will mine whatever makes money, but some may mine for a possible future payout or altruistic reasons.

A fork is generally considered successful if it carries economic value. That is decided by the amount of users transacting in the currency. Working exchanges are a requirement for this, but not enough (as has been experimentally demonstrated).

Ah, I should have known better. I was misinterpreting from the article linked in the article where it says (about a fork), "Miners, exchanges, and node operators also had to agree to update their software."

The reality is that people sit together and try to make a deal that all parties agree on simply because disruption and uncertainty is not in the interests of any of the parties. This doesn't change the fact that the parties do not have aligned interests and therefore its a constant fight everything is slow and expensive because of that.

Kinda funny how this problem was solved before ETH even existed simply by removing the incentive for the hardware operator. No block rewards and no fees to collect aka no reason to fight over it. The only people who run the hardware without getting paid for it are the people who want to use it. They have aligned interest like a fast and cheap network and fast update cycles. And ofc no one who has to pay for the hardware and energy has any interest in PoW.

It is necessary for some miners to choose to use the post-fork software in order for it to work, but miners take on the task of mining due to financial incentives, and the users ultimately control those incentives. Miners only have a choice in the sense that they could collectively choose to abandon their profits as a matter of principle.

> There's plenty wrong with Ethereum, but casting miners as 'the working class' is a flawed analogy.

Agreed.

Marx's working class consists of those who do not own means of production, and are therefore compelled to sell their labour.

Miners do not lack means of production; they operate expensive mining machinery. That machinery continues to run, and earn money for the miner, even while the miner sits on the beach. Selling their labour really isn't a good model for what's going on. Miners are just ordinary capitalists, exploiting a market opportunity.

And there's a fixed amount of mining labor to be done, requiring far less than 1% of the current effort spent. So why are the pay cuts a problem? (Especially if you chart payout in USD.)

The two class cycles

workers cycle: Commodity(labor) -> Money -> Commodity(food, housing bills)

Capitalists cycle: Money -> Commodity(means of production) -> Money(profit/surplus value)

At least that is the bit that kind of sticked to me and made me realized in the west you want to do the second cycle. Earn money by selling labor, live life as a cheap ass for a while use savings to become a asshole landlord.

Unfortunately, the second option becomes more and more difficult for most people. With increasing costs of living, saving enough money for investments often times seems impossible.

> use savings to become a asshole landlord

Being an asshole is not a requirement for landlords, nor is it exclusive to them. Oppressed workers can be assholes too!

An oppressed class has every right to be a asshole.

To their oppressors, perhaps. But if they are also assholes to everyone else then they are just assholes and the oppression has nothing to do with it.

I think the working class in crypto would be the nocoiners.

Of course this is kind of reductive and silly but I see the analogy as taking Ethereum as Money (abstracted labour power), there are those who have to put said labour power into the system, and those who don't. This too: "But the ruling class now feels that’s too much because it amounts to a lot of value for the work. So the ruling class changes the rule of 5 Eth per block to 4 Eth per block.", mirrors the contradiction of wages and surplus value in the capitalist mode of production. The thing is regardless of the form of abstracted labour power, those who hold large sums of a commodity are free to buy lots and make an easy turnover in the market world, resulting in easy power in most societies as well.

"Something here seems awfully similar to the system that crypto-currency was meant to fix. It was meant to eliminate rulers. It was meant to make everyone accountable for their actions. It was meant to reward the intelligent, the hard working and the capable, and not reward the incompetent, or the makers-yet-breakers of promises. However, this repeat of the broken old system seems to be playing out again."

One response is that the promise was not well thought through. The idea was to replace "rulers" (human beings who make decisions to take care of a system) and "law" (written rules interpreted by humans) with code. But (a) code is written by humans who make mistakes; (b) the world changes, and systems need to update to respond to that; (c) somebody has to be responsible for dealing with a and b. As a result, currencies need central organizers to look after them. And those central organizers need to be motivated, i.e., paid. Old-fashioned currencies have sovereigns to back them, and the sovereigns are paid by the monopoly of taxation and/or the ability to issue money. Inefficient, but it works.

From this perspective, bitcoin et al. look like technical solutions to social problems. In particular, bitcoin is designed to have nobody taking care of public goods problems on its behalf. That's a flaw![1]

[1] https://wyclif.substack.com/p/thought-bubble-defending-bitco...

(b) is why Bitcoin core development has stagnated[*]. And that's fine if people just want it to be like gold, however Ethereum doesn't aspire to not evolve.

(c) I actually disagree with. Decentralized governance is a very interesting subject, and some cryptos like Tezos are governed quite decentralized in many ways.

Right now I'm really confident in how Ethereum is governed, with the "old-fashioned" open-source development model, where everyone can participate, but core devs have the final say. However, decentralized governance may be something they implement in the future.

[*] Slightly harsh, see comments below.

> some cryptos like Tezos are governed quite decentralized in many ways.

Whenever crypto enthusiasts tell me about DeFi governance, I get excited about the possibilities.

Then, I actually take a look at some of the group decisions, and literally all of them are crypto/coin-related, and don’t deal with any /real/ or human problems…

I'd recommend looking at Project Catalyst out of the Cardano ecosystem.

Of course the proposals are still heavily focused on internal/ecosystem development but there's an increasing focus on building platforms for people in developing regions as well. There has generally been a heavy focus on improving connectivity and access to affordable financial services within the African continent however recently there's been slowly growing focus on other regions with large unbanked or under-banked populations.

With the amount of money that is allotted via the treasury for the Cardano ecosystem, Catalyst (and eventually proper on-chain governance when it evolves into that) has funding to comfortably run it's 6 week cadence funding rounds indefinitely at a rate of 15 million USD per round once it finished scaling up. As the network grows the scale will likely increase but regardless I think with the focuses the community has (particularly thanks to West Africa Decentralised Alliance) we'll see increasing focus on improving infrastructure and access in developing regions.

And while you could argue that many of the solutions proposed have some net positive effect flowing back to the ecosystem, generally the focus has been on connecting people rather than driving traffic to the network.

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Sorry if that got a little long winded. It's a cool project+community and we've been working really hard to avoid the toxic coin maximalist & self-centred behaviour that's become so incredibly common in the space.

Come on. I wish ADA well, but Charles is one self-centered person and the community has erected a cult around him and is super toxic against other projects. After BTC maxis, ADA has the most religious maximalists I would say.

As someone who started learning about Cardano recently and has listened to some of Charles' broadcasts on YouTube, I'm not really sure what you're referring to. To me he seems happy to celebrate success in other crypto platforms, has some strong opinions and a libertarian bent, but of course is building Cardano according to his own vision.

BTC maximalists are quasi-religious in my experience but Cardano just seems to recognize the inevitable ascension of the blockchain and is building for that future, very similar to Ethereum.

Maybe he's full of it; I've encountered other comments criticizing him but none that were deifying.

I agree that Charles is self-centred and that there is a cult of personality around him to a certain degree but it really depends on which part of the community you are in as to whether it's "this is an influential person in the space so let's listen" or "our god king is speaking".

The Project Catalyst community, the official IOG developer discord, and even the Cardano subreddits (r/Cardano, r/Cardano_ELI5, r/CardanoDevelopers, etc) to a less extent aren't caught up in this cult mentality so much. When Charles says something stupid, innapropriate, or unbecoming, people are not afraid to address it in these spaces. On r/CryptoCurrency or on twitter it's a different story but Twitter is a cesspool (especially for any cryptocurrency) and while we try to call out the zealots on r/CC, it's not particularly easy.

In those dedicated Cardano spaces though, there is a marked effort to avoid the cult mentality and redirect that energy towards focusing on actual projects.

Very few people (in these communities) have the belief that somehow Cardano is going to be the dominant cryptocurrency or is going to "take over the world" so to speak. There is a strong belief that the project will be successful and a strong ecosystem is forming around it but not that it renders other chains irrelevant or that it must grow at any cost including via the minimisation or attacking of other networks. The general consensus is that it will make a strong showing and settle into a reasonably solid position in the greater financial ecosystem where it'll be intertwined with and coexisting with legacy financial systems and the other major cryptocurrency networks.

TLDR: Every topic/space has zealots unfortunately but looking at their core communities I've found Cardano to be generally fairly resistant to this behaviour. It's not a perfect community by any means but out of all the communities I'm involved in, I've seen more people in the Cardano ecosystem go out of their way to walk others away from maximalist behaviour or zealotry than any other community. I've been around for quite a while and I've seen how the different communities have evolved so I like to believe I've gotten a reasonably comprehensive view of the communities but no person can see everything and in the end this is all anecdotal experiences.

> I'd recommend looking at Project Catalyst out of the Cardano ecosystem.

Could you maybe provide some examples of these /real/ problems they want to focus on? No DYOR, since you seem to be actually involved in the project.

Providing banking services for under-banked regions is yet again, for the crypto. Avoiding KYC is not a feature; I would argue that developing countries need robust infrastructure that incorporates societal laws, for positive outcomes.

Fair request. I'll pull the ones off the top of my head.

Catalyst just recently funded a proposal for a decentralised pharmaceuticals project that is initially basing out of Southern(?) African nations (primarily SA atm I believe). Initially I believe it is focused on aggregating the information and technology necessary for some common life saving medications. The end goal is to provide easy access to process knowledge so as to reduce the barriers of entry for local organisations to start (or improve) production of and access to medications. This project is definitely a bit of a long shot and it'll need more funding than what it got so far but provided their regular reporting looks good, odds are they'll be able to come back for additional funding rounds until they can ramp up to a sustainable model. IDK if it'll work but I wish them the best.

Another proposal was funded to attempt rolling out food traceability solutions in I think Western Africa to help farmers get easier access to global markets (rather than being stuck selling to a megacorp that then resells for much higher).

Additionally, the next funding round has a category dedicated to projects that are focused on micro-finance on the African continent (think Kiva loans) which has the potential to significantly improve the lives of farmers and people starting small businesses.

I would go into the other Project Catalyst projects more but Catalyst is still in it's early stages (scaling up is happening but it won't be at 100% until the end of the year) so there aren't a tonne of funded projects overall yet. There were some other projects that didn't get funded but they generally had issues that need to be resolved before they are really even worth discussing. We are still ironing out some of the issues with the whole process so it's been a bit of a bumpy road so far.

Also of note is World Mobile. They are in the same space and are rolling out a decentralised ISP network in Tanzania focused on providing at least basic wifi connectivity to rural villages.

Of course all of these projects are generally aiming to produce some kind of income at the end of the day but that's not inherently a bad thing as it promotes making the projects sustainable (rather than relying on outside funding). Additionally one of the goals with these projects is to try and jump start or otherwise stimulate the economies they are targetting so approaching from a business approach rather than a purely altruistic approach could potentially yield better results.

Also they all generally use cryptocurrency/decentralised tech in some capacity but it's not like the cryptocurrency itself is the focus. The community has a cryptocurrency focus so it's common to see people approach the solutions from that perspective.

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> I would argue that developing countries need robust infrastructure that incorporates societal laws, for positive outcomes.

I agree and generally that's been the consensus in the community as well. The overwhelming theme has been to try and be as non-disruptive (in a negative sense) as possible. Progress is slow if it's to be successful in most cases and the last thing you want to do is to cause upset in the local communities. As an anecdote, at least in the Catalyst community all the projects I've seen that are "boots on the ground" type projects have had a strong focus on doing things by the books and not accidentally stepping on any toes along the way.

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I hope that addresses everything. If you have any questions let me know. I'm a bit strapped on time so I may not be on HN for a day or two but I'll eventually be around and I'll respond when I can.

Thanks for that comment, looks like a really interesting project, I'll read more about it!

Tezos for example has the problem of missing liquidity. So they voted for protocol level liquidity called liquidity baking. A little bit of inflation is used to incentivise liquidity providing. It's an experiment but it shows the power of governance. See https://liquidity-baking.com/ for current liquidity.

For sure it will always be voted on something that is good for the chain or for the token. When its good publicity for a chain to vote for charity-baking you could solve human problems.

Maybe take a look at Proof of Humanity? proofofhumanity.id. Real world problem (poverty) being tackled by crypto via a DAO. Very early days yet, but fascinating to watch as it evolves.

“Proof of Humanity, a system combining webs of trust, with reverse Turing tests, and dispute resolution to create a sybil-proof list of humans.”

This is their mission, and the rest of the website focuses on ID and such services. Not one mention of poverty alleviation.

The connection here is that sybil-proofing is a (the?) major bottleneck to cryptoeconomic UBI schemes.

That’s like saying SSN (or other gov issued ID) solves poverty.

Are you serious?

Well you have uniswap's vote on the educational fund. Which IIRC was about allocating money to lobby for crypto.

https://app.uniswap.org/#/vote/1/1

Yes, so you’re proving my point? Sure, it’s about lobbying, but in defense of crypto (Previously known as: DeFi Political Defense Fund), to keep their crypto ball rolling.

yes, indeed. I just thought this case is slightly different, they chose to go out and do politics (true, over crypto nonetheless). But I feel that normally, all the proposals are about the protocol itself, changes rates, etc and this case it's about interacting with other humans.

How would you change that?

> (b) is why Bitcoin core development has stagnated. And that's fine if people just want it to be like gold, however Ethereum doesn't aspire to not evolve.

How stagnated is Bitcoin development? Yeah it is not progressing super fast, but I think it is still progressing. Taproot has been accepted by miners and will be activated this year. Improvements are being done.

As Bitcoin is the biggest crypto by market gap, I think risk-aversiveness is a good thing. While I was initially a big blocker, now I think that going without a hard fork was probably quite a good idea. Bitcoin still works nicely and I still use it a lot, now I just use LN transactions in addition to onchain txes.

I just find it unbelievable that after a decade of the smartest people moving into the crypto space, the best crypto solution is the first one, created by a single person 13 years ago.

It makes Bitcoin look like an anti-technology.

True, Taproot is looking promising. Yet, it's the only major change since 2017, I don't think they're moving fast enough.

And what's the next major improvement on the cards for Bitcoin after Taproot? I haven't heard much, and that is worrying in and of itself IMO.

I'm not sure we should treat the base money of the internet the same way we do tech startups - to "move fast and break things". I would like to know that my BTC is stored in a network backed by code that is secure with slow and steady progress.

There's certainly a good middle ground between moving slowly and moving quickly, I think Ethereum has found that middle ground.

Half of this article is complaints about how Ethereum is moving too slowly with the PoS transition. They're certainly not of the "move fast and break things" mindset.

eth feels like wild west of script kiddies writing javascript to manage billions of USD. far from being middle ground, it's quite the opposite of btc's "let's not ruin the foundation even if we'll be called unnecessarily conservative" stance.

in fact, i would even argue that btc's stance is closer to middle ground as they are clearly working towards making it easier to run all sorts of wild experiments in the upper layers while protecting and minimizing what's going on in the base layer.

> the base money of the internet

You can't. Be serious.

What percentage of internet transactions are performed in Bitcoin? 1%? 0.1%?

Way less than that.

I agree. Bitcoin is a better store of value, Ethereum is a better tech stack for innovation. They serve different purposes and so should have different development schedules and risk aversion.

https://bitcoinops.org/. bitcoin is far from stagnant, there's a ton of research and development going on, it's just not being treated as "move fast and break things" kind of project.

it is really sad state of affairs when you only consider something as not stagnant when it's constantly putting people's money at tremendous risk.

at least the market seems to understand it.

Decentralized governance is interesting like nuclear fusion: it's 30 years away and always will be. Real governance requires somebody to take the time and effort to think about solutions to public goods problems. In other words, governance is a public good. Decentralizing it just results in underprovision.

Except nuclear fusion isn't 30 years away anymore. A ton of progress has been made in plasma physics. There's a good chance we'll see an energy-positive reactor by the end of this decade.

HB11?

Also SPARC, ITER, whatever Lockheed is working on, and probably others.

> Decentralized governance

Do you mean voting? Has been around since ancient Greece.

I do not. Direct democracy, as practiced by Athens, would be a better example. Worked OK for Athens for a while. Athens had probably 30,000 citizens. No modern state has tried replacing representative democracy with direct democracy, for reasons nicely explained by Benjamin Constant (https://oll.libertyfund.org/titles/constant-the-liberty-of-a...).

There is nothing wrong with technical solutions to social problems per se. For example, sovereigns tend to spy on their citizenry, and the technical solutions of cryptography and steganography help mitigate that, albeit in a limited way.

The problem with Bitcoin at al is that they propose wrong solutions to ill defined social problems. Absolutely no real macroeconomic insight was put in the initial bitcoin halving block reward. Later adopters invested it with magic ability to forever stop "inflation", ill defined as taxation through monetary expansion. What resulted was a highly speculative asset that even 10 years later shows no signs of macrostability and is prone to losing 50% of its value in a single trading day. The social costs of using such a monetary unit day to day would be orders of magnitude higher than any reasonable inflation.

Another ill defined problem was financial privacy. In most cryptos, there is no way to socially cooperate to reliably limit financial privacy of bad players. What you get is an excelent system for teleporting a wad of cash across borders - if you can stomach the volatility. And it just so happens there is a substantial "market" that requires this laundry service and would gladly pay 10% or so to transform illicit gains into "crypto investements".

A solution looking for a problem, basically.

Also, humans or not, in any given system, there will be people in position to analyze and take advantage of subtle / indirect / emergent effect of that system. Be it better brains, more funding to try strategies, it will happen.

Is that a bad thing? Maybe that's how systems become more efficient.

Depends on which side you're on. The big smart may again take advantage of the rest.

The eternal challenge - improving efficiency in systems while ensuring that those efficiency gains are fairly distributed among participants...

Now in that view, it's possible that crypto currencies and/or Blockchainish project may raise the floor for everybody (in the case absolutes matter).

Ah the story of organic matter.

Isn't the issue that there are people in control of these new currencies, new people who are sometimes frightening?

it's funny that this appeared today. i've recently been musing about whether or not a technical and political migration of the bitcoin ecosystem from proof of work to a consensus model that simulates the proof of work economy in a clean way, complete with a socio-economic solution that does not leave miners and their associated/secondary economy out in the cold, could be an idealized model for migrating the global economy off of fossil fuels.

There are a number of articles claiming various percentages of Bitcoin mining from renewables, but this is probably the most balanced quote:

"Commonly cited estimates range from 39% to 73% renewable energy. Jesse Morris, CEO of non-profit Energy Web says most estimates find 20% to 50% of bitcoin is powered by renewable energy, but all available numbers are based on self-reported data, which is unverifiable. 30 June 2021"

My inner optimist is satisfied that the renewable percentage is constantly growing.

Does anyone know of any sources that attempt to look at the marginal energy source rather than the average energy source?

For example, a region might have 50% of its power from hydro and 50% from gas, but 0% of new power plants are hydro and 100% are gas. In such a world, adding a new electricity consumer to the grid causes 100% gas emissions, even though "50% of power is clean hydro." The proper attribution really ought to be the causal attribution, which typically means looking at the marginal source of power rather than the average.

I know this is a complicated topic. Entire PhD theses have been written on modeling the emissions impact of EVs, and there's a healthy debate of how to best calculate the 'causal' impact.

as long as there are any dirty megawatts, any clean bitcoin mining energy could be replacing it, assuming it is physically close enough to existing electric power grids.

all bitcoin mines are is a proof of investment for the purposes of divvying up entries in a decentralized periodic lottery where the probability of winning is proportional to ones investment in equipment and energy.

is it really truly impossible to efficiently simulate this (specifically the economics, so that existing players don't revolt) while maintaining decentralization in the consensus algorithm?

it seems like there could be a technical solution, but the harder problem is building political consensus in a decentralized world... sort of like getting the global economy off of fossil fuels...

I personally enjoy the absurd concept of decentralization that crypto proponents have while centralizing the governance and law of global monetary policy. If you wanted to create a global government, this is where you would start. It takes financing to enact laws and the board directing the dominant coin are defacto legislators of this new world order.

gold is law (as in, overwhelmingly subject to physics laws) and it has survived for millenia. Whatever social problems caused people to move away from it, after some time they kept going back

Seems like one of the core arguments of this is that the the core devs have pushed the difficulty bomb multiple times because they've missed their original timelines for switching to PoS without any repercussions.

It seems to me that this is actually the correct thing to do. I'd rather the core devs take their time and iron out the issues instead of being incentivized to play fast and loose with a system that manages billions.

Agreed. The article feels a bit like it's salty about a very complex software project behaving like a very complex software project.

My understanding of the changing of the rules "as you go" is that it's based on the reality being faced by the system. Bitcoin's proof-of-work is simultaneously one of it's strengths and one of its weaknesses, and Ethereum has chosen to move from PoW to PoS because of the belief that it's the right path to follow in attempting to solve the problems the system is facing in reality.

I don't think the "working class" vs. "ruling class" analogy is particularly fitting. However, to continue the analogy, the profitability of Ethereum mining (from what I've heard) would have allowed pretty much all of the early "working class" to have climbed the social ladder to "ruling class" if they held onto some percentage of their earnings (you know, like "savings" or "investments" in this real-world analogy). If the "working class" believed in the longevity of the project they've chosen to work for, wouldn't they see the investment opportunity? Otherwise they're just there for the immediate profit, and there's no long-term contract or agreement that's been broken. The system is evolving, like what happens in the real world.

> As a Bitcoiner... > We wouldn’t dare... > We would never... > doesn’t have a ruling class to take advantage of other classes

Bitcoin Cash, Bitcoin Gold, Bitcoin Satoshi Vision. Take off the rose-coloured glasses, "your community" isn't sunshine and roses either.

Personally, I think PoW may be what brings Bitcoin down in the long-term.

>Bitcoin Cash, Bitcoin Gold, Bitcoin Satoshi Vision. Take off the rose-coloured glasses, "your community" isn't sunshine and roses either.

I think this is unfair. These are splinter communities. It's like critiquing Ethereum's community by pointing at Ethereum Classic and Binance Smart Chain.

>Personally, I think PoW may be what brings Bitcoin down in the long-term.

I pretty much agree with this part. I think it'll probably cause very serious issues for it over the next decade. I predict they'll actually eventually move off of PoW or drastically alter the PoW algorithm, but only after many years of infighting and stubborn refusal to consider the possibility.

> It's like critiquing Ethereum's community by pointing at Ethereum Classic

That's exactly what the article did.

Don't get me wrong; I think the article is very unfair and awful in many ways. I just thought that particular counter-argument wasn't valid. I think their point about ETC can't really be compared to the Bitcoin community splinters, since the point is about the DAO hack rollback. The block size debates were very controversial and heated, but not to the degree of the DAO hack incident.

Ethereum is the cryptocurrency I personally like the most, but I do find supporters tend to downplay just how controversial that incident was.

Yeah, Ethereum's development isn't a simple project that can be rushed, it's massively complicated.

This road map comes to mind: https://twitter.com/VitalikButerin/status/133392262085774540...

It's very outdated now, that's not the point. The point is that every circle on the road map is a very complicated project in and of itself that needs tons of research, development and testing to be implemented properly. Just the code itself is thousands of commits.

Absolutely, not to mention Eth just rolled out a major update last week. This rambling, bizarre article boils down to a few very basic, extremely played out arguments.

Argument 1: Proof of stake concentrates wealth more than proof of work.

You can make that argument, but POS advocates have for a long time argued that proof of work mining has more economies of scale than proof of stake and therefore the opposite is actually true. Equating proof of work miners to the working class & stakers or developers as wealthy elites or rulers is so massively cringe it's tough to even read.

Argument 2: Ethereum is in active development, is planning to switch to proof of stake, has things like difficulty bombs, and therefore is somehow dishonest.

Decentralized blockchain communities come to consensus around different values and philosophies. Eth has for a long time been a community which values consistent iteration and improvement around fundamental aspects of the protocol. The transition to proof of stake has been known for years and years. There's nothing dishonest about any of this. If anything the community has been asking for faster iteration to solve high transaction fees and improve usability. Bitcoin's development stagnation works fine for bitcoin. Ethereum is clearly making the right move in continuing to improve the base protocol. Which as you mention is a huge, extremely complicated undertaking.

The article goes on to some cognitive dissonance about how Ethereum doesn't deliver on promises despite the fact that it just delivered a major protocol update last week... might as well throw in the dao hack and icos and whatever else in there and see if anything sticks. I guess with nothing to develop or build, bitcoin maxi's have a lot of time to ramble incoherently about Ethereum. And they probably always will.

While reading the article all I could think about was that it sounded like it was written by a bitcoin maximalist, so many things were framed in bad faith that it makes it difficult to take for granted that it is an honest attempt at discussing the issues surrounding Ethereum, especially when it is basically rehashing things that have been discussed many times before. It makes me wonder how this got to the top of HN, maybe an enemy of an enemy is a cryptocurrency skeptic's friend or something.

Thank you for taking the time to type this. The topic of PoW vs PoS is very misunderstood and I see a lot of dishonesty in online forums.

I am very optimistic about Ethereum. It is not perfect but it is massively and consistently improving. The past few years, all crypto innovation was incubated within the Ethereum community.

I'll preface that I somewhat dislike how Ethereum has established their PoS consensus. The lack of first class support for delegated staking poses a problem IMHO as it requires handing control of your coins over to a third party considering this is the only option for people without 32ETH(102k USD) that they can tie up. I also have opinions on locking periods but until we see some extended battle tests proving where the sweet spot is (I'm for no-lock staking personally), I won't consider this a major issue. These aren't criticism of PoS itself but rather critiques of this particular implementation.

---

Now that that is out of the way, I don't necessarily believe that Argument 1 is inherently true (I know you aren't necessarily supporting it but I figured I'd throw my 2p in).

Ultimately Proof of Stake is just moving from a system with an external resource to one with an internal resource. This theoretically allows you to largely divorce the system from the harsh realities of the outside world (whose rules those external resources are bound to). By isolating the system you can better structure the rules of the game (from a game theory perspective) without being influenced or bound to rules from the outside system. Of course this isolation is only as strong as the network (larger market cap makes attacks harder) but generally once the network reaches scale it is largely independent of the outside world.

How a system influences the distribution of wealth ultimately depends on those rules in the system and by PoS largely granting the system the ability to decide those rules for itself, you can theoretically design a system with an expected steady state at or around the middle class at which the system can help lift those with less wealth up and weigh those with more wealth down. Balance it incorrectly and you run into issues one way (concentration of wealth) or another (lack of staking support opening up risks for attack) but theoretically it can be done right.

One of the key features of that balance is that wealth is worth the same whether it is held by many people or one person. It should be just as viable for a thousand people to lend 100 dollars as it is for a firm or wealthy individual to lend 100k with both groups exposed to the same amount of risk all other things the same.

Various mechanisms of the network including staking (including delegation), access to a democratically controlled treasury, first class support for governance primitives, and other such features are essential for making such a system work. Proof of Stake on its own may generally provide an accrual of wealth but in combination with the other forces on the network it should be perfectly viable to create a network that promotes distribution towards a reasonable steady state (with deviations due to merit of the individuals or just outright luck and not maintaining such deviations long term).

---

/rant

I'm generally pretty cynical but no matter how hard I dig into it, I can't find a reason why PoS shouldn't be one of the last pieces of the puzzle to produce such a system and if it's even just a chance I think it's exceptionally valuable that we pursue it. Or maybe I'm just a crazy Crypto-LibSoc. ¯\_(ツ)_/¯

>The lack of first class support for delegated staking poses a problem IMHO as it requires handing control of your coins over to a third party considering this is the only option for people without 32ETH(102k USD) that they can tie up.

You should take a look at RocketPool. It is a project that will introduce decentralized staking pools allowing people with >0.01 ETH to trustlessly stake (except for smart contract risk, of course).

Support for delegated staking is already here, it's just not widely used yet. The trick is that you specify a contract address as your validator's exit address, and that contract keeps track of who has partial "ownership" of the validator and thus is allowed to withdraw their fraction of the stake after the validator exits.

Lido for example, a staking provider, already keeps their new deposits in custody of a contract like this.

But hasn't dPOS shown that people don't care that much about governance and will just hand their coins to someone, anyone who promises to reward them? The current crop of dPOS coins leaves a very stale taste in my mouth as they all seem to be run by an oligarchy of validators who conspire to let no one else in.

Staking services like RocketPool just bring the idea to ETH but if you were early, you can stake on your own.

This is clearly NOT a complicated roadmap. Any even small sized social app for photo sharing is much much bigger.

But then you don't have time bomb any more, is the point. And you don't have code is law any more.

If you will hard fork every time it's convenient, you don't have anything stable.

If they did it once, that would be one thing. But now it's happening semi regularly.

Difficulty bomb is pretty much a marketing lie by now.

>If you will hard fork every time it's convenient

Creating a hard fork isnt easy as you make it out to be

There's a little more to the argument:

> This time the working class has their pay reduced from 4 Eth to 3 Eth per block, a 25% pay cut. Miners now earn 40% less per block than at the time of the community’s constitution, which promised that code was law, and which the ruling class later said they would break only once, for what was an especially good reason. But the code is law promise has now been broken so many times people expect it to occur at regular intervals and even worry that “progress” is slowing down if there aren’t frequent enough hard forks (to break that promise yet again).

The way that's written like Ethereum owes the miners a job strange. Ethereum isn't a work program for miners to manage mining hardware. Ethereum functions on proof-of-work and needs some people to sell their compute time and electricity. Miners aren't doing a generous service that would be useful outside of Ethereum that should be encouraged any further than Ethereum's specific needs.

With PoS, the pay for miners is planned to be cut from 3 eth all the way down to 0, and that's great that Ethereum will become more efficient in that it no longer needs so much compute time spent on it. Ethereum will switch to needing stakers to provide a service to it that they're paid for, but if people designing Ethereum knew a way to not require that while still staying decentralized, then that would also be a great upgrade.

> The way that's written like Ethereum owes the miners a job strange

I think it's fair that if you've purchased specialized mining equipment, you expect the ROI you were promised. Doesn't seem strange.

> Ethereum functions on proof-of-work and needs some people to sell their compute time and electricity

So compensation for work. If not 'workers', you could call them 'investors', or perhaps 'sole traders', or 'merchants', not sure what the best analogy would be. To be fair, I don't necessarily put them in the same class as people making socks in a sweat shop on slave wage. The down-trodden Ethereum miner is not someone I lose sleep about.

> I think it's fair that if you've purchased specialized mining equipment, you expect the ROI you were promised. Doesn't seem strange.

ROI was never promised. Ethereum has always had a "Minimum Necessary Issuance" policy. Keeping issuance constant would be deviation from the policy, reducing it when possible is in line with the policy. From the docs:

> Ethereum's Monetary Policy is defined by the rewards that are paid out by the protocol at any given time. Ethereum's current yearly network issuance is approximately 4.5% with 2 Ether per block and an additional 1.75 Ether per uncle block (plus fees) being rewarded to miners.

> Ethereum does not have a fixed supply because a fixed supply would also require a fixed security budget for the Ethereum network. Rather than arbitrarily fix Ethereum's security, Ethereum's monetary policy is best described as "minimum issuance to secure the network".

> Ethereum has had a history of reducing issuance to these estimated minimums and the network has never increased issuance. The move to proof-of-stake is also part of Ethereum's effort to reduce issuance to minimum amounts without sacrificing security.

> I think it's fair that if you've purchased specialized mining equipment, you expect the ROI you were promised. Doesn't seem strange.

* It uses GPUs.

* ROI in terms of ethereum is basically irrelevant. Real ROI depends on the bouncy crazy chart.

* Was there not enough warning before the changes?

> It uses GPUs.

Many miners buy purpose built servers for crypto mining.

> Was there not enough warning before the changes?

That's the main plaint of the article, and reiterated multiple times. The article claims that the prices was dropped with 2 of the forks, each time it was promised (including at the very beginning) that changes would never be made. Each fork seemed to be of gain to the people who were part of the ICO, but at an income loss to miners. There were several broken promises of no further forks.

Miners for Ethereum are incredibly profitable and benefit enormously from side-channel MEV (miner extractable value) payouts that tip them for transaction ordering. In doing so, they extract value from users making trades. In addition, a reduced issuance in crypto tends to lead to the underlying asset appreciating in value, as noted by the Bitcoin stock-to-flow model in the wake of each halvening.

The "code is law" is not some universal absolute. Blockchains have always been forkable. But a chain can't have a contentious fork without a cost and it becomes costlier and riskier to do later in a chain's life.

My understanding of MEV was "Maximum Extractable Value", and to clarify: MEV is the process by which a miner takes advantage of their ability to view pending transactions so they can "front-run" (add their own transactions ahead of) the transactions of others, bumping up the costs for the transactions that come after theirs, thus "extracting maximum value" from their privileged position.

Using the original article author's analogy, the "working class" are adding their own percentage to the retail price and taking those profits home.

MEV began as Miner Extractable Value, but a lot of people are adopting Maximum so that they can keep the same acronym for proof of stake.

They typically don't have the on-chain analysis or skill to reorder the transactions in the highest extractable way, so people bid for these opportunities through side channels they signal the miner to do (off-chain) based on the mempool (backlog) of transactions. Miners profit from this activity and in some cases these profits exceed the 2ETH per block issuance. The class analogy is strained and doesn't fit at all. These are only possible because Ethereum has a rich application layer (and if anyone is 'working class' it's the users, devs and dapps on the chain). But these profits more than made up for any offset in EIP1559 losses.

Also, Ethereum Classic has been 51% attacked and then reversed transactions a few times. So not sure if author is recommending ppl avoid altcoins entirely?

Honestly, that's where the article becomes totally bizarre. ETH is now worth in fiat 3000x more than in 2015, and miner's expenditures are in fiat. So instead of cutting mining rewards by say 95%, it got cut by 25% and that's somehow evil?

Miners don't earn 40% less, they earn 180000% more than back then. Of course not individual miners, but as a "working class".

This argument is so old that it's almost endearing to see people arguing about it time and time again. Code isn't law, and it never was. Consensus is. This is true for all blockchain-based cryptos.

Miners are free not to upgrade every time a new protocol version is proposed. Why do they upgrade then? If consensus was established around the older set of rules, that would be it. But instead there's consensus around the newer rules. And that's simply because miners individually decide that the newer rules are better, for whatever reason.

Another point that's underemphasized in the piece: forkable governance with voluntary participation is very different from the scenarios that go with a "ruling class".

Correct, the bomb is meant to be moved. It is more like a carrot/stick. It is the gadget that allows the devs to turn off the lights on the miners when they are ready to turn them off. Having a forced migration knob is a good thing.

Why have this fake deadline at all then? That sounds like it is playing fast and loose with the system, since it practically requires a nontrivial action to postpone.

The point of the difficulty bomb isn't to put a deadline on the developers, it's to prevent a situation where node operators get complacent and stop updating their nodes.

It forces node operators to come to consensus on whether to fork alongside the developers or to fork in a different direction. It removes the option of doing nothing and letting the Ethereum chain stagnate.

For the same reason congress keeps passing appropriation bills without fixing the problem that makes them keep on having to pass appropriation bills.

The actual core idea seems to be that the core devs can do whatever they want without cooperation from miners, which is... the opposite of true.

Miners were very opposed to EIP-1559 and in the end when the talks failed they mostly just ignored them. It's kind of true.

Not true at all. There was never any real consensus among miners on this front.

As a very large miner, I was always for 1559 because I understand the underlying mechanics.

The miners who I watched were just kind of bandwagon on the theme of "wait, I'll earn less cause you're burning my fees"?

Which in reality isn't entirely the case (price and usage have gone up, along with the lack of wallet support).

The Community calls didn't reach agreement with miners, and the fact that they kept protesting it is why the Ethereum Foundation decided to move the ETH 2 timeline forward.

https://cryptobriefing.com/ethereum-miners-protesting-eip-15...

>As a very large miner, I was always for 1559 because I understand the underlying mechanics.

I don't know what mechanics you think others didn't understand. Your profitability has dropped and the move is basically moving miners' profit to the largest holders (e.g. everyone who pushed for the change). It's not like the fees have dropped since EIP-1559 if that's something you thought the change will bring for some reason.

LOL! Pretty sure those community calls did not include ALL miners. With regards to the rest, it is all political theater.

The mechanics I'm referring to are in the 50+ page document that I read, that I'm sure most people (miners) are not even aware of: https://hackmd.io/@timbeiko/1559-updates/https%3A%2F%2Fhackm...

As for profitability changes, that's almost impossible to measure right now. There is too many variables. One is that there isn't any wallet support for 1559 yet (MM came out today and is apparently, um, lacking). People are still over paying for transactions. Difficulty + price changes + pool luck + changes in hardware stability also make things nearly impossible to track accurately. I have a margin of error, but it doesn't look too bad right now actually.

They brought the miners onto the weekly cat herders (the name for core dev weekly sync) meeting they hold. I watched the stream. They listened to the feedback, some other miners that were for it including Stakefish were present. The arguments weren't strong at all from the miners that were opposed and in the end, they dropped it.

It isn't quite that simple. There is a whole bunch of game effects happening here that add a lot of complexity to a statement like that.

One key one is price, another is that most miners barely understand how the network works and therefore couldn't exert any force even if they wanted to.

Pools concentrate the force, but miners can move to whatever pool they like the best (usually the most profitable... which is where the main store of wealth is)...

disclosure: large scale eth miner

Every software project ever has been behind schedule

> working class — a group that does the work the community needs to operate it.

It would be more correct to call miners a Merchant Class. They exploit capital to make profit. Like merchants of old, they take risks that regulations (real-world and the "ruling class") won't impede profit.

Hardware gets outdated quickly as mining difficulty rises, so a timely exit is not difficult - wait until cards die, or offload them ebay.

> As a Bitcoiner I find these actions intolerable and unacceptable

Bitcoin has also forked, many times. Bitcoin Gold for example restored the ability to mine with GPUs. The "ruling class" decided that unless you had access to custom hardware, you could not be part of the "working class".

>Hardware gets outdated quickly as mining difficulty rises,

People can and still do mine Ethereum with the cards they did 5 years ago, and the difficulty is irrelevant to whether your hardware is outdated or not.

If you run your mining rig in the Ukraine with stolen electric power, yes you can do that.

According to the nicehash calculator (which is fairly accurate) even with the really expensive electricity (0.34euro/kwh) in Germany you'll net 1.31 euro a day with a 1080 (released May 2016).

https://www.nicehash.com/profitability-calculator/nvidia-gtx...

> Bitcoin has also forked, many times.

This is a false comparison.

The bitcoin blockchain maintains the original monetary policy of bitcoin, which is effectively set in stone.

That is not true of Ethereum, and that is the purported problem with Ethereum.

If nearly half the text is bolded, what’s the purpose of the boldface? I feel like there’s a 51% font attack brewing within the article.

Regarding the content, the class allegory itself can go the other way as well: the core developers can be thought of as the workers, the miners are the owners of means of production etc.

The one point that’s relevant is the rule-making: the DAO hack hard fork has proven that Ethereum’s boasts of decentralization are dubious at best.

+1 for 51% font attack

Looks more like the zebra striping for tables: its there just so that you can differentiate paragraphs

A lot of comments here criticise the analogies made in the post. While the criticism might be correct, I feel this is like missing the forest because of the trees..

Etherium, and most crypto-currencies for that matter, were initially made to fix a broken financial system, where banks unjustly control too much wealth, and changes the rules so that they will always control too much wealth.

Etherium does not fix this, it merely copies this system, with all its flaws(and some new ones). That is why etherium is pointless. It does not provide value to society, as it utterly fails to solve the problem it identified.

There is no other crypto-currency that does solve this problem, but then I guess some of them never tried to in the first place.

>made to fix a broken financial system, where banks unjustly control too much wealth...

I don't think that's quite what you mean to say. The function of banks is to manage wealth. That's their one job. It's like blaming them for being too much of what they are.

Bitcoin has not eliminated banks, it's just created new ones called bitcoin exchanges, online wallets, etc. The only reason they don't function even more like banks (paying interest on deposits, making loans, etc) is because coins are predominantly used more like assets than like currency so there's not much of a market for financial-like services.

> Etherium, and most crypto-currencies for that matter, were initially made to fix a broken financial system

No?

Buterin argued to the bitcoin core developers that Bitcoin and blockchain technology could benefit from other applications besides money and needed a more robust language for application development that could lead to attaching real-world assets, such as stocks and property, to the blockchain.[15]

It's like you're trying to describe Ethereum from what bitcoin fanboys have told you.

But the only kind of application that would even theoretically benefit of running on the Blockchain is a finance application, and it's not better at that than the current system. In fact, it's worse.

The whole idea of "code is law" is deeply flawed, and I think the hard forks prove that. The problem then is that smaller financial injustices that do not get the attention of the core Devs, will go unchecked and unfixed forever.

The idea of zero trust financial applications is intriguing, but in practice "zero trust" means "trust Vitalik", and to be honest, I trust my current bank more than I trust some random dude in the internet, thank you very much. (Not that I'm a fan of my current bank, they suck, just slightly less than any alternative I'm aware of)

I know some people develop other kinds of applications too, but I completely fail to see the point of running (for example) a video game on the Blockchain other than the novelty..

> But the only kind of application that would even theoretically benefit of running on the Blockchain is a finance application

People have lots of theories of what other kinds of applications benefit from running on a blockchain. These are at various stages of being proven out. One that seems promising is attributing ownership to digital assets. But there are other theories too. This is all very new and speculative and it might all go nowhere, but it definitely isn't accurate that only financial applications would theoretically benefit.

I think that you're confusing money and finance. In addition to being money (like Bitcoin), Ethereum is clearly doing a lot in the space of finance - that's the whole point of DeFi (it's also supported by what Vitalik said according to your own comment).

It’s odd to me that everyone seems to believe different things with regard to what the creators of these cryptocurrencies originally intended for the technology. I don’t think Ethereum has failed at being a different entity than banks where a central authority can make arbitrary decisions.

At the end of the day, Ethereum is still community driven. In my opinion the main benefit of Ethereum and other blockchain technologies is transparency. Everyone can choose to go over the books and anyone can check discrepancies in the blockchain if some parties try to cheat. The beauty of this is that because there’s no formalized government, value can be generated by global consensus and currencies can be picked up and dropped based on whether the contributors are faithfully serving the community.

> There is no other crypto-currency that does solve this problem

Perhaps the best thing a cryptocurrency can do is be neutral, and let society sort its own equality out. Like gold-backed currency, only global and instant.

No smart contracts, no de-fi, no staking, no miners, no new coins or coins burned on a timer. Just extremely divisible coins that can be sent completely without fees.

And there is a coin like this; Nano. Their community has the full expectation of being always fee-less. It even solved the spamming problem, at least to a point of 'good enough', without adding fees.

I'm not sure there's much reason, to my mind, to try and add more stuff on top of that. Expecting a crypto currency to be both widely adopted and solve inequality is - possibly - just too tall an order.

I think you and many crypto enthusiasts and crypto skeptics miss the forest because of the trees too

What happened to accepting things as they are simply because it's obvious the market can bear it?

The ideology and sales pitches of that ideology are not really relevant. These are platforms. No different than Shopify being a platform. You build on them, extract value, walk away. Who cares if Shopify - for example - said "our platform is decentralized and fixes clean water in Africa" and it didn't. Who cares? Does it still allow you to extract value? Yes? That's the whole equation. Figure it out at Harvard Business School a decade from now, or figure it out now.

Well, maybe it is time to think about whether currency is really the killer usecase for crypto. I used to but not anymore. ETH is much more useful as a global, standardized back-end technology for finance, so I'm kinda sad the "ultrasound money" trope is catching on, IMO that's what BTC should try to be.

Oh, and BTW, it's called "Ethereum". Not "Etherium".

It’s hard to listen to the opinion of someone who can’t even spell Ethereum.

Miners are most definitely not the working class and they're not doing any useful work. This sounds harsh because most individual miners aren't hostile in any way - but if miners were a one entity, there would be no exaggeration at all.

Collectively, paying miners is like paying the mob to not destroy the system, as they are only group with the power to do so. Without miners at all attacks would be impossible. 51% attacks on ETC show that the threat is real.

The working class are users - people using and building on ethereum. Their wealth is continuously drained by the mob, but there is hope - a wall staffed by militia is being slowly erected. It's called proof of stake, and once finished, the mob can finally be told to fuck off. In the meantime the absolute value of protection money paid to the mob has grown several times, making it possible to reduce the protection payments percentage rate without impacting security of the people.

Miners are not doing any useful work is incorrect, they are securing the system.

The system does not need to be secured in a way that burns the energy of Argentina.

There are networks running right now that use the energy of a windmill to provide secure transactions, and more of them, processed in under a second, with no fee at all.

That's not vaporware; that's current reality. All Bitcoin miners are doing is perpetuating a system that has been very groundbreaking but is now obsolete in every way.

I agree that what they are doing is highly inefficient, however they are doing it.

The cost of burning electricity in PoW mining is very visible. The opportunity cost of locking up coins in stake is hidden. However, the economic cost is still there. If a process truly provides a particular good or service for unconditionally lower costs then it will dominate the market. We shall see if that happens in crypto.

Yeah folks don't seem to realize every monetary system requires 'sacrifice' for its security (whether this is lock-up of capital, work etc.)

The market most efficiently determines whether [& which] to sacrifice (e.g. computation or capital lock-up) is worthwhile.

The market has not efficiently determined that though.

_Objectively_ better alternatives to Bitcoin are around for at least the last five years.

No one can realistically argue that it's better to have a system use 6 million times more energy, cost infinitely more, and require waiting 16 minutes for a confirmation compared to less than a second.

"The market" is chock-full of inertia, vested interests, propaganda, sunk costs, and technical ignorance. There are literally thousands of cryptocurrencies - and the majority are scams. What has "the market" done to protect people?

I say all this to do my part to improve "the market", but my estimation of the market's ability to efficiently determine its arse from a hole in the ground is low.

Other examples of "the market's efficiency" include tobacco companies responsible for killing millions making bank for decades by fudding science, energy companies fudding data for decades to burn the planet while making billions, monopolies, duopolies, externalised costs, racketeering, collusion, collateral damage, etc etc etc.

>_Objectively_ better alternatives to Bitcoin are around for at least the last five years.

If you truly think this way, you're deluding yourself & this is where I stop reading.

Everything has tradeoffs. There's no 'objective' better.

> Everything has tradeoffs. There's no 'objective' better.

Yes there is.

Every chess move has advantages and disadvantages, yes. But some are objectively better.

Every algorithm has advantages and disadvantages. But some are objectively better.

Believing that nothing can be objectively better than Bitcoin, and calling people who disagree delusional, is less than useful.

Chess is an abstract game in a tightly bounded universe. Economics (which includes monetary economics) is concerned with open systems in the real world. The two are not even remotely comparable.

You might benefit--expand your mind--by reading some classical economists' thoughts on such things.

> There's no 'objective' better.

Maybe look up 'efficiency'. If we can achieve the same outcome at different costs, then the method that achieves said outcome incurring the least cost is objectively better than the others.

Then Viking raiders were "securing England" and getting Danegeld in return for their useful, hard work of _not_ raiding and pillaging.

This is overlong and pretty florid, but its conclusion (that a long record of forked changes, each being good for big ETH holders but bad for miners, is roughly equivalent to the self-dealing of wealthy insiders in the traditional financial world) doesn't seem wrong.

The distinction he makes between miners and holders seems totally arbitrary in my view, it's not like the miners aren't also holders. The more you mine the more you hold.

Why is it wrong? Ethereum has had the plan to move to proof of stake for years, and the purpose of the network is to serve its users not to enrich miners. We pay miners for security. That's great, but if we find a cheaper way to do security, there's nothing wrong with choosing a different security solution.

Anyone who thought differently when crypto appeared was most likely young and naive. If a system deal with effort credit, some will find ways, whatever rule you think they follow, to get more credit for less effort.

There s no solution, it s the basic of energy limitation: you have an enormous incentive to conserve energy until we can get so much more than we require with so little spending that it becomes irrelevant. But then, we ll find ways, probably, to spend so much energy that we ll reach the limit again.

A bit like in the 2000s when you kept doubling your disk drive space every year and still kept filling it at exponential rate :D

Miners are contractors. They have no stake in Ethereum's long-term success unless they become ETH holders as well.

Ether's price has risen exponentially. It doesn't make sense (and isn't necessary) to pay miners exponentially higher amounts of money to do the same job, thus the issuance reductions.

Making sense isn't equivalent to being justifiable. Imagine a FAANG telling their devs, "We're reducing your options, but that's okay because our stock price has gone up."

I don't see any inherent moral issue with writing an employment contract that way. Of course as a developer, I would heavily discount the value of options designed to work like that - which Ethereum miners should have been doing this whole time.

Software development is a pretty free market as far as labor markets go. If a developer doesn't like the terms of the contract they're offered, they can bail and work somewhere else.

With Ethereum, their "Minimum Necessary Issuance" social contract has been very clear in the docs since the beginning of the project.

That this gets upvoted to #2 speaks poorly of HN. Why on earth are we still talking about the DAO? This is a collection of tired, irrelevant arguments that entirely ignores product-market fit and a large, vibrant community of developers.

[edit] ah, of course. a bitcoin maximalist. how dare there be an alternative use-case for crypto that involves people using it. the thing bitcoin has going for it is a large community of peripheral people believing it will be the global reserve currency (it wont).

There are enough bitcoin maximalists afraid of ethereum to upvote this. They know very well that eth flipping btc is the 'emperor's has no clothes' moment - instantly all memes about btc being a store of value, 'hard money' and similar turn into jokes, and what remains is btc itself: an unbacked inflationary coin, in which the only way to make money is at the expense of someone else.

At this point, the only thing that can stop the flippening after the merge is a government ban that specifically impacts ethereum (like they tried with the PoW-only exemption amendment).

Uhmm.. what product market fit? And why is proof of steak good?

Proof-of-steak is quite satisfying to pass.

And since I'm committing to this literal shitpost, the proof-of-steak misspelling is entirely appropriate to the amount of salt in the article.

$100B+ invested across hundreds of decentralized apps, with exponential user growth, is absolutely product market fit - https://defillama.com/chains

Nothing about that says product-market fit beyond the speculative use case - which I would agree does show spectacular product-market fit since it is proven there are tons of people willing to speculate and crypto provides an asset class with attributes that people are really craving (poor regulation, high risk and volatility, etc.)

I prefer, nay, demand proof of cake!

That is just an emotionalistic assertion. You aren't interacting with the actual content of the article.

It's literally the exact same arguments from 3 years ago. 3 years ago there were very few real apps/users on ethereum. At that time, ether was mostly a pet rock like bitcoin with smart contracts attached. That's simply not true anymore.

There is ether (the asset) and etheriumn (the chain), while usage of the latter accrues value to the former, the latter is what's important (and not the former). All that matters for these platforms is usage. There are other good level 1's with traction from users/developers (terra/solana specifically).

The idea that there's going to be only 1 blockchain for value transmission or that users really care about highly technical points about decentralization are laughable. People care about the apps, use-cases, and [jpegs of rocks](https://opensea.io/).

> As a Bitcoiner I find these actions intolerable and unacceptable. I know none of them would ever be accepted in Bitcoin.

This sums up the whole piece in my view. Bitcoin development stagnated years ago exactly because nobody involved wanted to change/hard fork it to implement improvements.

For people who want a Bitcoin-like Ethereum with no DAO fork or staking there's Ethereum Classic.

https://github.com/bitcoin/bitcoin/commits/master

I wouldn’t consider that stagnate.

How many hardforks has the core bitcoin project seen in the last five years?

Bitcoin has been incapable of doing a hardfork for whatever reason for a while.

That's why it will disappear sooner or later. If you don't evolve, you die.

> How many hardforks has the core bitcoin project seen in the last five years?

Can you elaborate on this - why would the core project care how many times it's forked? The forks shouldn't affect the core project at all, that's the whole point of having a fork in the first place. Or alternatively, if you like and use the fork, then you aren't on the core bitcoin chain anymore. Either way the main BTC chain doesn't care.

>why would the core project care how many times it's forked?

Some changes (eg. to the block reward schedule) are only possible on a hard fork as it makes the main chain incompatible with the pre-fork chain.

That's the philosophical difference between the projects: ETH is not afraid of hard forks and to this date, they have been uncontested. BTC never considers a hard fork and has had at least two major contested ones.

Do you have some technical definition for "contested" or are you using it as a generic term to describe how the forks were perceived by the rest of the community?

Sure, it's just moving very slowly after the block size civil war. I remember the early years when the talk was about interesting developments instead of just the value.

Bitcoin has chosen consistency with its original principles over "innovation." A good choice, in my book.

What we should think of as constituting sound money has not changed since 2008.

That is what bitcoin is supposed to be - sound money.

Ethereum is supposed to be something else - and it makes sense for Ethereum to "innovate" much more than bitcoin does.

> That is what bitcoin is supposed to be - sound money.

Bitcoin can't be used as money in most cases as transactions are too expensive and slow. It has failed its primary function. Instead of doing something about it, the notion of using bitcoin like money has been abandonded and it's merely a "store of value". That's until people stop valuing it.

Is cash money? What percentage of your transactions are settled in cash?

Money and payment settlement systems are not the same thing, although you could be forgiven for believing that. I use a credit card for 99% of my transaction volume, and credit cards are not money. The fact that the notional value of the transaction is denominated in dollars doesn't mean I am actually using dollars as the medium of exchange--the exchange is facilitated by a clearinghouse and my individual transaction may not even result in a transfer of money (actual dollars) between parties, if there is an offsetting transaction (or chain of transactions) within the same settlement period.

> Bitcoin has chosen consistency with its original principles

Bitcoin was originally invented as a "peer to peer electronic cash system". The fees have made it impossible to use it as such for quite some time.

Despite the tagline from the whitepaper, it's always been clear to me that bitcoin was an Austrian-style sound money system and could not scale to be a network for small payments. I think bitcoin has remained consistent with the original vision and design.

It takes a lot to build a community.

The way that article portrays it ties more into an allegory. Let's not forget that every participant is there voluntarily, and if they are genuinely suffering, they will choose to move on. Ethereum is a powerful connecting force that brings trust within the internet.

> Ethereum is a powerful connecting force that brings trust within the internet.

I've got a bridge to sell you when you're ready

Off Topic:

In case anyone is not familiar with the phrase : "I've got a bridge to sell you when you're ready"

(1) A con artist who sold a bridge. https://en.wikipedia.org/wiki/George_C._Parker

Not to be confused with :- (2) Rumoured that the wrong 'London' bridge was sold to Arizona (vs Tower Bridge) https://www.history.com/news/how-london-bridge-ended-up-in-a...

It could be argued that both apply - but I'm not getting into that argument !

Luckily I can afford the bridge having bought Ethereum years ago.

Luckily I can afford the bridge having bought Baseball Cards years ago

ouu not a bad attempt with the dash of humour included, but overall little tasteless here. you'll improve at this ;)

I think if anything the crypto-experiment has revealed is that an uncaring, cold machine doesn't meet the needs of the human condition. A person fat-fingers his life savings to null, a thief socially engineers someone's money, a bug causes assets to be trapped, etc. It's clear we need a better system that can service our imperfections.

and things like social wallets and trust networks as a response to those issues are emerging as the best way forward, less seed phrases and hardware wallets with tiny buttons. connecting with friends is the best security. turns out ethereum is a social network with a very fast uptake worldwide.

it shows us that community and support for one another is the Layer 0 that these things are built on top of. code isnt law, people come first. if we stick with that it could work pretty well.

Unfortunately we live in an uncaring cold machine (the natural universe), which is ignored or hand-waved away at our mortal peril.

This article actually explains certain aspects of Crypto way better than actual articles that try to explain Crypto.

E.g., I've been wondering why a certain Bitcoin podcaster, who is very popular, has never mined a Bitcoin. He/she talks all day about "stacking Sats", but he/she only buys them. Reading this article made me realize that he/she might see him/herself as a member of the ruling class.

Bitcoin mining isn't something you can do on your own anymore. Unless you're accidentally located at a place with the cheapest electricity you'll have no chance.

Not to mention the ASICs, by the time end-users can acquire them they're usually outdated.

> I've been wondering why a certain Bitcoin podcaster, who is very popular, has never mined a Bitcoin

The people actually mining Bitcoin don't have time for podcasts.

Podcasts, Youtube, media in general are mostly dominated by people who don't actually do other work, because creating content for those platforms is extremely time-consuming.

It's actually the opposite: even that podcaster is probably not wealthy enough to successfully mine a bitcoin. Bitcoin mining requires a big business and not even one that is easy to start wherever you happen to be; you have to have access to cheap electricity.

Everything wrong with crypto is the notion you can make a global reserve currency impervious to special interests. It’s going to be gamed by the people at the top, they will use all and any leverage to change the code to favor them more. They will extract the value from the system like they have every other system and the easiest part is that stakeholders like you and me don’t get any vote. You can’t decouple monetary policy from governance, it just isn’t sustainable. Fiat will always be better for the stability of finance and governance bc citizens (stakeholders) perceive or have a tiny lever of control. Crypto gives you no control as a citizen, and you will become discontent with the impotence of your lawmakers to pay for laws having no sway over the system preventing them from spending. Keynes hasn’t been disproven yet and so deflationary currencies are pretty much insanity, the business people will turn every deflationary coin into their own inflationary piggy bank. History proves me right.

National governments the world over will gladly ban crypto before raising income taxes. They have backed themselves into this corner with the central banks and they won’t be able to resist its ease.

>Everything wrong with crypto is the notion you can make a global reserve currency impervious to special interests

This ain't binary. Ain't yes or no.

Also.. why do you assume crypto is gunning for 'global reserve currency'?

Crypto enables all types of experiments toward reducing the insider-asymmetry nature of central control control (e.g. political whim money printing, political whim monetary policy)

>Fiat will always be better for the stability of finance and governance bc they perceive or have a tiny lever of control

Political, centrally controlled money shifts economic risk from away from markets/market participants (the most efficient distributed value-computation we have) onto politically-determined populations.

example: fiat policy shifted 2008 wall street bankruptcy risk away from markets onto ordinary people who're being inflated-away & exploited by the Cantillion Effect.

The only reason Michael Saylor is telling people to mortgage their house and sell their stonks to buy BTC is because he and a bunch of other whales are gunning to make BTC the world reserve currency. You see this mentality everywhere and it is the only way these coins are going to go to the moon. Not to mention a lot of these people are libertarians who see this as their way to “fix” the problems of central banks.

Certainly our politics leads to the socialization of corporate risk, but crypto is subject to the same politics only with a much smaller pool of voters. Spending on any community at this global scale will be looked at as pork and the needs of disenfranchised will calcify further. Again, it’s code and it’s not immutable. The mechanisms of distributing crypto clients will betray the interests of the common citizen. There is no leverage for commoners, only special interests.

Inflation could be used to redistribute wealth for greater equity and the worlds wealthiest see this threat which I think is the only reason crypto has their attention.

>but crypto is subject to the same politics only with a much smaller pool of voters

Anyone can change the crypto you use if you don't like the mechanisms or decisions.

Most can't change their choice of government/monetary policy.

Market selection pressure works very well historically. We don't have this without crypto.

>The mechanisms of distributing crypto clients will betray the interests of the common citizen. There is no leverage for commoners, only special interests.

I'm not sure what you're getting at here. Unclear.

>Inflation could be used to redistribute wealth for greater equity and the worlds wealthiest see this threat which I think is the only reason crypto has their attention.

Are you aware of the nature of inflation? Of where new money supply 1st hits? of the set of special interests aware of & open-market-front-running impending inflation before it's unanimously decided on? Doesn't seem like it.

> Most can't change their choice of government/monetary policy.

> Anyone can change the crypto you use if you don't like the mechanisms or decisions.

> Market selection pressure works very well historically. We don't have this without crypto.

Even with Crypto you don't have this. Crypto is not legal tender, no one has to accept your dogecoin for debts and the only way you can use it is by traversing exchanges with sufficient volume. Network effect is the strongest power here and corporations will coalesce around a handful of coins and all other coins that don't benefit their political interests will be subject to exchange fees which is a non-trivial headwind. Your proclamation about market selection pressure works great in a vacuum, but ignores the reality of our laws and how cartels work.

> I'm not sure what you're getting at here. Unclear.

51% attack without any overt subterfuge. A slow boil of legally bribing and buying the means to define the policy of and to distribute client code which benefits the cartel of exchanges, brokers and miners over the retail user. Once the cartel has sufficient dominance, they can tighten the screws and extract wealth from the retail user.

>Are you aware of the nature of inflation? Of where new money supply 1st hits? of the set of special interests aware of & open-market-front-running impending inflation before it's unanimously decided on? Doesn't seem like it.

Yes. Yes. Can you ask that again in words I might understand?

This article is about ethereum, not BTC.

> fiat policy shifted 2008 wall street bankruptcy risk away from markets onto ordinary people who're being inflated-away

Do you have any evidence at all about this or are you just parroting Austrian mantras?

Nobody* is trying to make ether a global reserve currency. People are trying to do useful things with the ethereum blockchain.

* Ok not nobody. But this is not the focus of the project at all.

> Something here seems awfully similar to the system that crypto-currency was meant to fix. It was meant to eliminate rulers. It was meant to make everyone accountable for their actions. It was meant to reward the intelligent, the hard working and the capable, and not reward the incompetent, or the makers-yet-breakers of promises. However, this repeat of the broken old system seems to be playing out again.

Was it? Most of these goals were definitely not talked about when Bitcoin was first invented, and to this day I wouldn't say this is the list the vast majority of people in the crypto space would come up with if you asked them what the point of cryptocurrency is.

If something is hard in theory, it's 10x harder in implementation. Complex systems have a lot of 'unknown unknowns' that can't be forecasted. Ethereum is $300B+ live network so every small change takes time to research, test, and implement. Migrating from PoW to PoS is like swapping out the engine of an airplane in mid-air.

If you ask the cryptocurrency subreddit, the best thing to do with any money you have[1] is to buy ETH at any price and stake it (i.e. lock it in and receive interest until ETH 2.0 is released). I find that absolutely mindblowing given all the complexity you're pointing out + the fact that there is no date and no clear explanation of what happens to the funds in the event of failure. And on top of this the fact that most people are doing the staking through exchanges because they don't have the required 32 ETH to do it themselves, it looks like a giant disaster waiting to happen.

And somehow Ethereum is one of the most positively viewed cryptocurrencies out there. I don't get it.

[1] This is only a mild exaggeration.

ETH2 is going to happen sooner or later… The beacon chain already works in production so it seems inevitable the devs will merge mainnet onto it. Not completely convinced about their 2021/2022 timeframe.

All the validator deposits are public data; how would they be destroyed? The funds will have to be unlocked at some point, people will demand it.

> The funds will have to be unlocked at some point, people will demand it.

This seems contrary to everything crypto claims to be about. "Just trust them, surely you'll get the money back"

I believe in them to deliver eventually. Would you be interested to place a long bet?

Long story short - hype and broken promises. About security. About scalability. About proof of stake. About code is law. About the world computer. About deadlines and timetables. All the way to the very beginning of the project, although the author doesn't go there. Make the thing so damn complicated few can reason about it or see the time bombs hidden behind the marble pillars.

That's a recipe for a high priest class.

Still, the hoards eat it up. It's a testament to the power of complex, flawed ideas, marketed to the hilt, and the promise of riches if you stick with the leadership.

It's really a recipe for a technology religion.

My prior with respect to the ability for ethereum to deliver "the merge" to switch to proof of stake was recently reevaluated dramatically upward, after the recent London hard fork went through without a hitch. I was following it for awhile and there is (in my view) really no way to look at it except as an example of an extremely well run very large update to an enormous and complex system. The communication was good, the cadence of test rollouts was good, the testing setup with multiple testnets was good, the upgrade itself was a total non-event, which is honestly unbelievable to me, as someone who has worked on upgrading complex (but significantly less so) systems.

I still have a lot of questions about ethereum as a project (like: what are blockchains actually good for?), but this software project management stuff is way down the list of concerns for me. I certainly don't understand why people care about arbitrary deadlines and timelines. One advantage of open and permissionlessly developed software like this is not being beholden to a boss breathing down your neck about deadlines and timelines. Just build the software, it will be done when it's done.

Did Ethereum ever make a promise that "code is law"? The references I'm finding are all in Ethereum Classic docs.

Fair point to the author for finding the dynamic nature of Ethereum's progression not to their liking, but it's a real reach to portray it as some kind of class conflict parable.

I emphasize with the arguments here but I differ in my conclusion for two reasons.

1. I don't own just Ethereum, its not a boat that I'm riding in, its one of many gambles I'm making.

2. The Ethereum network has generated a ton of really good stuff (Smart Contracts, DEFI, NFTS, IPFS, ENS, etc) despite whatever governance problems it has.

Cryptocurrencies are far from mature. There is no guarantee eth and btc will still be valuable in 10 years. They could be replaced entirely by new chains with different software.

10 years ago I didn't think bitcoin would be here today. Yet, here we are.

If we waited for everything to be mature, then we wouldn't have used web browsers in the early days. I remember when people were afraid to put a credit card into a website.

Bitcoin and ETH won't get replaced for the same reasons we ended up with Hacker News, Facebook, Google, Apple, Ebay, Amazon... network effects are amazingly strong.

Bitcoiners use the phrase: "The next bitcoin is bitcoin."

It's hard to know when something is Facebook, Google, Apple, or Amazon vs. when it's MySpace, AOL, Palm, or pets.com!

If you put it that way, then that explains all of the failures before bitcoin, of which there were many 'digital cash' attempts.

Even when gambling, I don't gamble on a crooked table.

I've gambled a lot.

But honestly:

No playing field has been as level/fair as that of crypto.

The nature of crypto means 'The house' is more transparently verifiable & cost-efficient than.. anything else.

Be it tokens, prediction markets, nft markets etc.

It seems to be the one place where disconnected individuals anywhere on earth with little but an internet connection can get a decent seat at the economic table.

IPFS isn't connected to Ethereum as far as I know.

> The Ethereum network has generated a ton of really good stuff (Smart Contracts, DEFI, NFTS, IPFS, ENS, etc) Did you miss out the word "exluding" at the beginning of that list?

> No moral questions are seriously considered about whether changing this rule is a breach of the promise made at the time of the constitution of the community.

This is patently untrue. These questions literally split the community. The majority chose a direction and moved on.

There are good points here, but I think analogizing the situation into a class struggle within a society is both confusing and specious. Ethereum is not a civilization: it's a piece of FinTech.

Author is looking for perfection in what is essentially a Wild West.

I also think it’s asking the wrong questions in a way. Whether Bill Gates should have made billions or not whether he should be in charge and corporate structure is largely irrelevant to Silicon Valley crushing it.

Fairness equitability and consistency would be nice but is not compulsory at all

Bitcoin itself isn't the Wild West, and that's part of what the author is saying.

> Excuses are made and explanations are given as to why in this particular case an exception needs to be made to the “Code is Law” promise

I really wonder what Ethereum investors think of this. A "precedent" was made. Crypto has yet to come to the real test with governments, courts and the physical laws of humans. With Bitcoin, it can be stipulated that changing the network is impossible or unheard of; but that's not the case for Ethereum.

It doesn't help, also, that the network is being "processed" by a few elites (or pools of wealth) that could be, potentially, identified and made to obey the "government/s".

This is not the case of Bitcoin where the introduction of KYC for mining will require a hard-fork. Bitcoin (the core chain) has never undertook a hard-fork (which is why a lot of Bitcoin forks are out there).

>This is not the case of Bitcoin where the introduction of KYC for mining will require a hard-fork.

That's not true, introducing full kyc for transactions only requires 51% of hashrate.

>It doesn't help, also, that the network is being "processed" by a few elites (or pools of wealth) that could be, potentially, identified and made to obey the "government/s".

A direct opposite is true. PoW is extremely vulnerable to a government takeover. Even in the worst case, buying majority of hashpower requires few billions at most - which is well within the ability of many countries.

More practically, overwhelming majority of mining is done by registered companies in impossible to hide industrial warehouses, making them trivial to regulate and force to do kyc. Total fees are very low on bitcoin now, meaning it's more profitable to mine even empty blocks (due to kyc requirement) in a place with cheap electricity than try to mine with transactions in a place with more expensive electricity. Additionally, America is notorious for trying to enforce its jurisdiction globally, so eg. European miners processing kycless American transaction may find themselves in an American prison. Even if their countries won't extradite them, all it takes is a vacation in a wrong country. Chinese ban on mining has ironically made miners-enforced kyc a much more likely prospect. Other countries are much more likely to cooperate with America and jointly force miners to enforce kyc.

Contrary to PoW, PoS can function purely anonymously - invisible home nodes instead of big industrial warehouses. External attack by buying enough stake is impossible - there's simply not enough for sale over any realistic periods of time. Regulation is infeasible because legal escape is in theory possible even if only one tiny place in the world remains without forced kyc - there's no need for GWs of power, just some power and internet. Even in countries where it's illegal, hiding a home node is realistic - using tor, vpns and similar, making enforcement very hard.

Hopefully kyc laws on block generation aren't actually enforced as that would significantly impact adoption, however, if they were actually to happen, you are going to see bitcoin miners enforcing kyc while eth2 PoS continues unchanged.

Forcing a KYC on miners will trigger a hard-fork on the Bitcoin chain. It doesn't matter where miners keep mining, the end users are going to determine the strongest chain (via price) and thus the KYC miners will either shutdown operations or move to a KYC-free environment.

Hard fork to what? Gpu PoW? That doesn't work in an adverse environment, considering it would start from zero (gpu mining is almost going to disappear after mining eth ends). In fact existing asic miners could easily rent enough gpus just to kill the new fork by not allowing any transactions.

In fact when LukeJr made a threat of a PoW fork during the segwit activation drama, Chinese miners said they secured enough gpus to kill the fork when it starts.

Why would that require a hard fork? It doesn't seem like it would need to be done on chain at all...

Majority should decide. Majority decided. Majority will decide. I completely agree with this.

bitcoin maximalism is the worst. wealth will tend to concentrate over time anyway (parteo distribution) and a "ruling class" will emerge on bitcoin. miner's voting with hash power is not the future of cryptocurrency governance. If bitcoin does not evolve to allow this effectively it will be regulated out of common use.

It's possible to experiment and build decentralized governance models directly into blockchains see e.g. https://polkadot.network/polkadot-governance/ (disclaimer not a shill I like the tech)

The problem: the libertarian ideology that inspired Bitcoin explicitly denies that there can be a ruling class because free markets are optimal, distributed, and stay free forever.

But a Pareto distribution is kind of the default wherever people interact. So a system needs to be deliberately constructed to counteract it, if that's its goal. And saying "praise the market" won't be enough.

Calling miners “the working class” is a misleading label no doubt chosen to instill sympathy. By that measure, factory owners in the industrial revolution were the working class.

Ethereum is and has always been the toy of Vitalik Buterin and his cronies. They control roughly 64% of all ETH. Everyone else is just share cropping suckers.

From what I've read and heard of Vitalik Buterin, he seems most unlikely to have "cronies". The reason Charles Hoskinson left the Ethereum Foundation is that Vitalik wanted it to be non-profit, whilst Charles wanted it to be commercial / for-profit.

Most of what I've heard of Vitalik paints him as having a saint-like aura (my own admittedly hyperbolic description). But then maybe we'd all appear that way if we had $billion resources at hand...

Vitalik is a saint in comparison to Hoskinson, but that doesn't mean Ethereum is sound money. It is what it is; lots of good innovation there, but sound money, it is not.

None of the cryptos are sound money ("money not liable to sudden appreciation or depreciation in value") except stablecoins on Ethereum. Bitcoin can easily lose 80% of its value in a month and no one would be surprised. Bitcoin is the biggest speculative bubble of all time. It absolutely has no utility (imagine if Bitcoin disappeared now - what would the world lose?).

The actual real exciting stuff regarding the cryptos is here: https://ethereum.org/en/dapps/

Bitcoin can be sound money after the price stabilizes, which will probably take decades if it ever happens. Nothing else in the world ever could be sound money except commodity money, like gold, but I'd argue that bitcoin is better.

Vitalik has less than 0.5% of all ETH, ~300K.

> Ethereum is and has always been the toy of Vitalik Buterin and his cronies. They control roughly 64% of all ETH. Everyone else is just share cropping suckers.

But they told me crypto would free us from centralized control! /s

None of the Cryptocurrencies are truly decentralized, at best, they are distributed. They all have devs with access to the repos and devs who can deploy changes. Especially Ethereum is firmly in the hands of Buterin and company.

Both depend on each other. Without miners, no currency, without code no mining, without very high algo difficulty, no safety.

Is there any network where the inflationary half-life of the currency is something like a week? I've been looking for something like that since I heard that Bitcoin was deflationary.

(I was excited about Eth until I learnt its currency had persistent value...)

This week with EIP-1559, ETH has been deflationary several times now... more fees have been burnt than emitted within a block. It is quite fascinating to watch.

https://etherchain.org/burn

Even with EIP-1559 ETH is not projected to be deflationary.

We're getting 0.15-1.1 ETH burned per block, while just the static reward is 2 ETH.

https://etherchain.org/burn

https://bitinfocharts.com/ethereum/

That's the average burned per block, he was talking about edge cases.

https://old.reddit.com/r/ethereum/comments/oyhzop/ethereum_b...

Are you saying you would like to purchase and use such a currency? Or would you like other people to purchase and use it?

No, I would like to mine it.

Imagine: a network where the only gains you get are from spending your money quickly. The anti-hodl. It would be completely worthless as a store of value or investment vehicle. Its only conceivable use would be as a fast and efficient transaction ledger.

Which is what I wanted out of blockchain to begin with! I'd be happy to support a network like that, even if my income was rapidly vanishing.

I work for fiat and this happens already ! You dont need crypto to have a working economy based on consumption and trade.

In fact, crypto is perceived it seems to be an absolute value stashing system where you collect your reward and store it for free until you want others to produce effort for you.

But I refuse to produce effort for a guy who spent his energy 50 years ago and just throw at me a few gold coins to do his bidding. He wants me to work, he needs to pretend to be doing something too.

> I work for fiat and this happens already ! You dont need crypto to have a working economy based on consumption and trade.

Yes but apparently you need crypto to have censorship-proof cheap transactions that finish quickly.

In theory, you can do that on a fiat currency. In practice, my transactions take days.

Well, you are basically thinking of freicoin which is the oldest bitcoin fork.

It died because you cannot start with the currency. It has to be a local community project. There are lots of complementary currencies on this planet but only regional currencies end up successful.

Cryptocurrencies are problematic because they don't foster a face to face community. The idea is that you are taking advantage of a sucker 1000miles away from you.

The most anti-hold coin would be Grin with its 1 Grin per second forever emission. About 2.5 years old, it has only reached 2.5% of its soft total supply [1].

[1] https://john-tromp.medium.com/a-case-for-using-soft-total-su...

Right... and who will be buying and using this money?

People who need fast, cheap, safe transactions rather than a value store.

If a VanishingCoin will lose half its value in a week, and I buy and sell it in a second, using it as a fast cheap safe transaction, then my cost will be at least equal to (1/2)^(1 sec/1 week) of the transaction. VanishingCoin will be outcompeted by SteadyCoin, which is just as fast, cheap and safe, and doesn't lose its value.

CirclesUBI and proof of humanity UBI

Both basic income projects. Proof of humanity ubi tokens are more easily tradeable and meant to provide Sybil resistance to eth projects, but circles has a nice self contained design which is probably more interesting as a form of basic income/ community currency.

Dogecoin is inflationary, but not to the extent you are looking for [1].

[1] https://en.wikipedia.org/wiki/Dogecoin#Currency_supply

Author declares themselves a "bitcoiner" and writes things like:

> PostNote: This article pairs well with my piece on Bitcoiners having integrity. What it boils down to is there is no integrity in Ethereum and nothing but integrity in Bitcoin

Which seems a little...

Ugh.

The social class metaphor is stretched pretty thin, but it can be interested to follow such threads and see where they lead. I suppose it's endlessly interpretable, but here's my take on bringing it down to earth.

- Different "classes" have different interests. (1)Miners. (2) Big, rich coin owners. (3) Rule makers and influencers. Group 2 & 3 overlap and might collaborate to screw miners.

- The author is thinks fundamentals/promises like "code is law" and such will gradually crack, because absolute adherence will be broken.

- Rule making is corruptible.

"sounds just like the corrupt fiat money system we’re trying to escape"

Sounds to me like you have arrived at "governance." The hope a lot of people had/have for crypto is that it replaces people, institutions and rules with explicit code. Coins would be governed by code instead of people, which works until it doesn't work.

Since this is already framed in a historical materialism sense... Imagine a society where all laws come from God, are engraved in stone and adjudicated with trials by duel, ordeal or some other way of leaving things in His mighty hands. This works until it doesn't. A currency crisis leaves 90% of people in debt slavery, and the army can't find enough recruits. A UFC champion is abusing trial by combat to get away with all crime and rob everyone. Stuff no one could have foreseen. One of the rules isn't perfect.

IRL, such societies will go one of two ways: (1) They have systemic instability, where the stone tablets can be broken and new rules adopted. Or, (2) they fudge. They have a complete and perfect constitution, and a supreme court that interprets it liberally like the US. Maybe they pretend to have a constitution even though one has never been written, like the UK. It turns out we can make that guy fight a bear instead of some poor prisoner.

There's a theoretical option 3: adhere. Play out the consequences whatever that requires. Maybe god wants everyone in debt slavery, and that ufc champion running around robbing old ladies.

Everything crypto seems to drive to the extremes. An obsession with perfect. There is no perfect.

Say smart contracts work great for collectible sneakers. Yes, it collapses when a judge rules to give a sneaker collection back to a guy that got robbed. Does that really make it worthless? Is an institution responsible for cancelling and issuing sneaker coin, on court order, really such a blasphemy?

> "The hope a lot of people had/have for crypto is that it replaces people, instititions and rules with explicit code"

My experience in crypto over the past two years has been exactly the opposite. The main issues facing the space today all have to do with governance: how do you get holders of gov tokens to vote rather than hold? how do you involve them in the evolution of your protocol? There are entire protocols being designed to allow "vote selling" to incentivize delegation for small owners.

Code is a tool to make sure laws are enforced. But the rules are increasingly being made and amended at the social/political layer.

It may not be democratic. it may not be fair. it may not be efficient. but it's a damn interesting experiment to watch evolve.

I don't think we disagree.

That's why I wrote had/have. Highly idealistic ideas for crypto have been a huge part of this whole thing. Predictably though, reality is bringing the ideas down to earth... and what you describe is what that means.

"Code is a tool to make sure laws are enforced", is far less idealistic than "code is law." More corruptible. More practicable. These can all be true at one.

I agree that its fascinating.

Cryptocurrency is so unfair. Who do these people think they are, trying to push upon us a new gold?

If a new value exchange mechanism is to be invented, it really ought to be one that doesn’t slyly concentrate billions of wealth into the hands of a few. There’s plenty ways of doing that already thank you very much.

> Who do these people think they are, trying to push upon us a new gold?

it is completely opt in, you don't have to participate.

which seems better than the money governments say we have to use (because they are in control of it and can use that power to maintain control of people).

> one that doesn’t slyly concentrate billions of wealth into the hands of a few.

lots of people in crypto very open to any ideas or suggestions you have to solving the matthew effect, non-coercive tax systems, and public goods funding. genuinely, any community currency design or trust system or consensus mechanism you can come up with people will be excited to try out. its a massive open design space right now and people want new ideas. lots of interesting discussions happening via orgs like https://www.radicalxchange.org/

The government is the people. If cryptocurrency is an end-run around the collapse-of or lack-of democracy then I get it, but we deserve better in the West.

I think making tools for transparency of financial information with privacy for the individuals is very beneficial to our democracies.

and I think tools that help people coordinate/unionise/collectivise around shared interests is good for all of us who are working people.

we dont have to be totally cynical and an accelerationist to believe there are flaws with government and money. I dont think the western democracies are collapsing, i feel like i have decent representation where i live. But i think things could be done better, ive also witnessed massive wastes of resources in local government, corruption and collusion. I dont think the systems we've inherited from pre-electricity society are going to be the absolute best we can ever come up with. this is hackernews, where people praise saas startups and hobbies and research on new gpus. but damn you if you think we can come up with better money or government.

I think people are just skeptical of the intentions of those of us working in the space (which is sensible) because of the money and the memes and the absurdity of the energy around the crypto space. but i dont understand why people are so doom and gloom about it, 99.9% of the people involved arent living in a bunker waiting for the collapse of society, generally the eth devs ive met are very positive and optimistic and like you say, believe we deserve better.

Human greed is the problem. How much of promising tech, starts out so innocent till big money becomes aware of it or those who want to make a quick dime, tarnish principled thinking and action.

Cryptocurrencies are just as bad as the fiat they replace. The problem with fiat is that people use it as a high score to measure their own status/rank.

But it is also needed to pay people. But people only work if they get paid. You run into the money shortage problem that caused so much trouble in 2008.

> By burning the working class’ money, the ruling class and wealthy class end up with a larger piece of the overall pie. It’s ingenious. Evil, but ingenious.

The arguments in the article would have carried more weight without the loaded language. Miners are more like banks in a fiat system rather than 'working class'. Pay cuts for middle-men means increase in efficiency of the system. Very evil indeed.

Early crypto adopters are freedom minded people. I have no problem with a new economic system where the wealthiest are the most freedom-oriented.

If crypto ever replaces the current monetary system, late adopters will have to fight for crumbles.

And that's OK; you support deception & violence, so you stay poor. That's cosmic justice.

So if I'm understanding you correctly, "late adopters" including people who don't have money for mining hardware/coins or don't even own a computer, just a phone - deserve to be poor because not buying in to crypto is supporting "deception and violence"? What's the logic here?

Strawman attack. I didn't mention mining; anyone can purchase crypto.

If you prefer to support the fiat thugs by holding into their tokens, be ready to pay the price.

The logic of Bitcoin maximalists who already revel in dreams that one day, they will relocate to remote islands or citadels while watching the world burn down.

Any human with a moral compass would shudder at the thought of a collapse of Western democracy, but not them: they giggle in anticipation of becoming the new ruling class or at least an exclusive society of mega-rich while those who doubted the Bitcoin religion will have to prostitute their daughters to the nouveau riche.

"Have fun staying poor" is their battle cry. In their twisted libertarian world view, people forced by hunger to toil day in, day out is not violence, but the state taxing incomes is.

Maybe it was relevant 3 years ago but imo at least 4 of his 6 points are not valid anymore

The only value argument of Etherium over Bitcoin is that you can have computation on the blockchain, which is a joke when you consider AWS and Azure exists. The rest are delusional details.

Could you explain precisely, how you might build a $350 billion plausibly neutral, open source, non-gated, cryptographically secure blockchain and smart contract platform with 100% uptime over 6 years on AWS and Azure?

The idea that anyone who is concerned (at least via analogy) about dealing with inflation by knee-caping wages wants to boost bitcoin is, frankly, hilarious.

Ah, baby's first step.

I lost interest in Eth when the “code is law” law was broken. I’m glad I did. I don’t believe proof of steak is the correct solution to the energy required for proof of work. To be clear, a lot of good insight has come from Eth, but I’m not ideologically bought in anymore.

Recently I have been exploring Chia as a farmer. Rather than the ruling class being a group devs and random early miners, the ruling class is a (soon public) corporation. At least a corporation has a clear legal structure of existence in a capitalist society. I see it as a sort of anchor between a purely cyber community and the actual world we subject ourselves to. I can buy shares in a corporation if I want to participate in the ruling class. The ruling class has legal agency to increase the value of its share price, which is the dual of it’s the underlying asset. Farmers still make less over time but the logistics are clearly laid out in detail, and TX fees kick in to supplement. Maybe it too will all go up in flames, but until it does I’m along for the ride. I believe we can sustain a proof of work system that is orders of magnitude more efficient than constantly running sha. And personally I feel “crypto” has had enough iterations that it’s about time to pick an innovative one and throw some labor behind it.

As far as I understand it, Chia suffers from the problem of just filling hard disks with useless data.

https://www.backblaze.com/blog/chia-analysis-to-farm-or-not-...

Filecoin is a more viable and useful option imho.

There are way more HDDs lying around needing to be used than GPUs, though. Storage is so much easier to come by. File coin has structural problems like you cant mine filecoin without first buying filecoin to stake…

> File coin has structural problems like you cant mine filecoin without first buying filecoin to stake

Why do you consider this a structural problem?

You can't use filecoin (or bitcoin, or eth or anything else really) without buying some too. That's not a structural problem.

If you fill disks full of junk, you're increasing the write wear on those disks. Despite the rumors, GPUs don't just wear out.

Disks can handle 1 entire disk write no problem. Not sure what disks you're thinking of...

> I don’t believe proof of steak is the correct solution

Please don't, it's bad enough for GPUs don't take my dinner too.

Chia seems completely brain-dead. Buying up HDs and SSDs to fill them with junk data and getting coins for that. In what universe does that make sense?

I'd rather support Bitcoin miners as they only cause an ASIC shortage, a SSD shortage is much worse for me.

A universe where tons of old storage gets thrown out. Why not reuse it?

I would imagine most Ethereum miners are pretty well off by now, so the "working class" analogy is really off.

Also "the ruling class" can not really force their rules on others.

Everybody participating in cryptocoins right now is hopefully aware that it is an experiment with uncertain outcomes. So the "promises were broken" thing doesn't really convince me, either. I don't think the users of Ethereum were promised a finished product.

"Code is law" also only applies if people accept the law. In the DAO case, people decided to change the law, or stick to Ethereum classic.

Article is legit, i just dont understand why most HN people are being hater about crypto, generally. Especially ETH

Oh boy, I see the crypto market is on the rise again so it's time for the HN crypto hot takes to grace our eyes yet again. We get it alright, crypto bad.

The great part about cryptocurrency is that if you don’t want it, don’t buy it - don’t read about it - don’t do anything. It is a purely voluntary system. If you want to avoid US Dollars, it’s essentially impossible for most people.

There is no problem with Ethereum.

Except if you want to buy a GPU today.

You're correct in the financial sense, but not socially.

I can't entirely opt out of crypto because people around me are making or losing (mostly losing) money it.

Mining also pollutes air that I breathe and accelerates climate change.

Regardless of whether you think these external effects are worthwhile, they exist and are unavoidable.

Except miners slurping up the entire limited GPU supply means I haven't been able to afford a proper graphics card for about 3 years now.

Who the hell cares.

Crypto people were warned repeatedly, since 2017 (and arguably even sooner), that this is all a scam and they should not put their money there.

They ignored those messages for years, put the money there anyway (because the number goes up), so, tough luck.

Articles "network XY is more decentralized than network YZ" are boring.

Because at some point the banks will fail and one of these ‘scams’ is going to be necessary for you to get along in life.

I’m sorry that this is the case; I really wish that the system we live in was sustainable, but it’s not, and it probably won’t be reformed before it’s too late. Maybe this is a matter of opinion, but it happens to be the most common opinion of people that have studied the matter without incentive to believe one narrative. I have never seen a well-informed defense by an independent writer that did not rely almost exclusively on appeal to authority.

There are opportunists. There are scammers. That’s not how this thing got started. We started this to mitigate an unstoppable problem. I personally never liked many economic aspects of the Bitcoin protocol, and dismissed it very early. I know many others that aped into mining a fortune based on much less understanding. I’m now willing to accept that it is the least bad of likely candidate solutions, and the reason for that is that all newer entrants cannot gain relevance without massive investment, which means owners from the old failing system.

I'm generally optimistic about cryptocurrencies, but these kind of catastrophe scenarios where cryptocurrencies play the role of savior have always seemed pretty silly to me.

If the US dollar collapses or experiences hyperinflation, and/or US banks all collapse, pretty much everything is going to be fucked everywhere, most likely. Especially because whatever's driving that catastrophe is probably disrupting lots of other things, as well. (A major war, for example. The global Bitcoin/Ethereum/etc. networks might become disconnected and fragmented in those scenarios. Let alone infrastructure for fiat exchanges or paying for things with cryptocurrency.)

I think these events are very unlikely to begin with, yet a lot of cryptocurrency maximalists speak as though they're likely or inevitable in the mid-term or near-term. But if they do actually happen, I think digital currencies are going to be the least of almost everyone's concerns at those times.

Actually this is exactly why there were so many people (like myself) on the Bitcoin test net, that never bothered with mainnet. Everything crashed, an entirely new political order was installed, and people just worried about other things.

But something has to come out of it all, and crypto seems like the most resilient possibility.

Here's some other articles on the problems with Ethereum:

https://github.com/libbitcoin/libbitcoin-system/wiki/Proof-o...

https://hugonguyen.medium.com/proof-of-stake-the-wrong-engin...

https://hugonguyen.medium.com/work-is-timeless-stake-is-not-...

https://medium.com/hackernoon/sharding-centralizes-ethereum-...

https://blog.lamden.io/turing-incompleteness-and-the-sad-sta...

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