Ethereum 2.0 launches(twitter.com)
twitter.com
Ethereum 2.0 launches
https://twitter.com/ethereum/status/1333743998637400073
633 comments
Eth2 dev here, maintainer of https://github.com/prysmaticlabs/prysm, one of the implementations currently running the blockchain written in Go. This has been a monumental effort. There are 3 other implementations in mainnet, and consensus is running perfectly. Few other protocols in blockchain have more than one dominant implementation. The beauty of eth2 comes from its efficiency in signature aggregation: https://twitter.com/technocrypto/status/1330150362427387910. This tweet thread summarizes the importance of the technology used.
Congrats to you and everyone else! Really cool stuff here :)
I remember Satoshi's old posts where he claimed that Bitcoin Core was the only viable full implementation of the Bitcoin protocol since it had too many quirks to be efficiently standardized and reimplemented. I wonder if that's still true.
It would be disingenuous to claim that the Bitcoin protocol is only defined by the consensus layer.
Then, if you require P2P protocol compatibility, I would say this issue shows that nobody really cares about alternate implementations: https://github.com/btcsuite/btcd/issues/1661
When Btcd was first released, it was pretty capable, and had lots of development. But it has fallen behind, which makes sense. Why would anybody take the risk of trusting that an alternate implementation when it doesn't decide what bitcoin is, in the end? You may have to patch bitcoind a bit to get your desired interface, but that is much less work than maintaining a full P2P and consensus layer.
It is also dangerous to use you a non-standard crypto library. Check this vulnerability, which was caused by LND relying on the btcd project's library: https://lists.linuxfoundation.org/pipermail/lightning-dev/20...
Then, if you require P2P protocol compatibility, I would say this issue shows that nobody really cares about alternate implementations: https://github.com/btcsuite/btcd/issues/1661
When Btcd was first released, it was pretty capable, and had lots of development. But it has fallen behind, which makes sense. Why would anybody take the risk of trusting that an alternate implementation when it doesn't decide what bitcoin is, in the end? You may have to patch bitcoind a bit to get your desired interface, but that is much less work than maintaining a full P2P and consensus layer.
It is also dangerous to use you a non-standard crypto library. Check this vulnerability, which was caused by LND relying on the btcd project's library: https://lists.linuxfoundation.org/pipermail/lightning-dev/20...
> Then, if you require P2P protocol compatibility, I would say this issue shows that nobody really cares about alternate implementations
Does that? What I see here is bitcoind adding a new feature that isn't yet implemented in btcd. The new feature uses a different extension mechanism in the p2p protocol (a new message to signal knowledge of a new feature vs using the existing version message bits in the main p2p handshake). That new version of bitcoind also hasn't yet been released, but I'd imagine that btcd will land a fix sooner to permit unknown message types being sent from its PoV.
> Check this vulnerability, which was caused by LND relying on the btcd project's library
Incorrect. The btcsuite libraries we use weren't related to the bug at all. Instead, the bug was introduced by _new_ code which attempted to convert between the fixed 64-byte signature encoding used in the LN Protocol, and the variable sized encoding used in the base Bitcoin protocol. The resulting signatures _were_ valid ECDSA signatures, but didn't adhere to an additional constraint that the Bitcoin system places on this signatures from a mempool policy standpoint. The signatures themselves were still valid from the PoV of Bitcoin consensus, in that they would be included in blocks.
Does that? What I see here is bitcoind adding a new feature that isn't yet implemented in btcd. The new feature uses a different extension mechanism in the p2p protocol (a new message to signal knowledge of a new feature vs using the existing version message bits in the main p2p handshake). That new version of bitcoind also hasn't yet been released, but I'd imagine that btcd will land a fix sooner to permit unknown message types being sent from its PoV.
> Check this vulnerability, which was caused by LND relying on the btcd project's library
Incorrect. The btcsuite libraries we use weren't related to the bug at all. Instead, the bug was introduced by _new_ code which attempted to convert between the fixed 64-byte signature encoding used in the LN Protocol, and the variable sized encoding used in the base Bitcoin protocol. The resulting signatures _were_ valid ECDSA signatures, but didn't adhere to an additional constraint that the Bitcoin system places on this signatures from a mempool policy standpoint. The signatures themselves were still valid from the PoV of Bitcoin consensus, in that they would be included in blocks.
> Why would anybody take the risk of trusting that an alternate implementation when it doesn't decide what bitcoin is, in the end?
bitcoind doesn't decide what Bitcoin is either: a recent consensus issue introduced for a period of times in _newer_ versions caused it to potentially fork off the "actual" chain. In this instance, btcd was unaffected along with many other implementations and earlier versions of bitcoind.
bitcoind doesn't decide what Bitcoin is either: a recent consensus issue introduced for a period of times in _newer_ versions caused it to potentially fork off the "actual" chain. In this instance, btcd was unaffected along with many other implementations and earlier versions of bitcoind.
This is still true (and is just as true of Ethereum, whether the devs on that project think of it as true or not). There is at least one instance in the past where the network has forked based on the (unspecified) behavior of bitcoind, and a couple more close calls where such forking behavior was properly reported and fixed before triggering.
If there is any way in which different implementations of consensus-critical code behave differently for the same inputs, it can be used to split the network. If you are running a node implementation other than the majority hash-rate reference client, you open yourself up to be potentially vulnerable during the fork. This remains just as true, if not more so with staking instead of proof-of-work.
You can do things to protect yourself like run ALL implementations and shut down if a fork is detected, although properly setting that up is nontrivial and in the end what value is gained? It very, very, VERY rarely makes sense to have multiple reference implementations of consensus code.
If there is any way in which different implementations of consensus-critical code behave differently for the same inputs, it can be used to split the network. If you are running a node implementation other than the majority hash-rate reference client, you open yourself up to be potentially vulnerable during the fork. This remains just as true, if not more so with staking instead of proof-of-work.
You can do things to protect yourself like run ALL implementations and shut down if a fork is detected, although properly setting that up is nontrivial and in the end what value is gained? It very, very, VERY rarely makes sense to have multiple reference implementations of consensus code.
There are a number of alternative full node implementations, such as btcd.
also: https://bcoin.io/
Hey, I tried figuring out what the most recent official Ethereum wallet is, but the wallets which the website lists all seem like third-party ones.
The previous official wallet's repository says "Mist and Ethereum Wallet have been deprecated.".
Is it true that the Ethereum foundation isn't providing a wallet software anymore?
Why is that?
I would consider it as quite unsolvable as a user to determine which of the 24 third-party wallets is the most trustworthy, hence I'd prefer to just use one developed by the same people as Ethereum.
The previous official wallet's repository says "Mist and Ethereum Wallet have been deprecated.".
Is it true that the Ethereum foundation isn't providing a wallet software anymore?
Why is that?
I would consider it as quite unsolvable as a user to determine which of the 24 third-party wallets is the most trustworthy, hence I'd prefer to just use one developed by the same people as Ethereum.
Honestly, I'm in the same boat. I have the full Bitcoin, Litecoin, and Dogecoin core clients installed and with a full blockchain on my PC. With Ethereum, I always found the base client much buggier than the others (browser-based apps do that). And now, it's just 'pick one of these 24 random wallets'. Really?
I went from mining Ethereum and even releasing a minimal mining GUI for folks who wanted to support PortableApps.com to feeling uneasy about it. I don't even have an ETH client on my PC now, so I can't even access the fraction of an ETH I own. I'll probably ditch ETH donations to PortableApps.com as well.
I went from mining Ethereum and even releasing a minimal mining GUI for folks who wanted to support PortableApps.com to feeling uneasy about it. I don't even have an ETH client on my PC now, so I can't even access the fraction of an ETH I own. I'll probably ditch ETH donations to PortableApps.com as well.
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Sorry for the tangent but isn't litecoin and dogecoin one and the same now? Why separate clients?
Nope one was started as a joke and the other one, the founder sold literally his entire holdings at the top of the market for $600/LTC, 8x current price (and ran away to an island somewhere, I assume) years ago, leaving the foundation on the brink of bankruptcy - the bankruptcy claim which to be fair they denied in 2019. Smart man!
Honestly I'm surprised the coin is still around after that. What exactly does LTC bring to the table to support it's position as a top 5 cryptocurrency?
Not sure where you get your facts, but Litecoin all-time-high was around $360. The founder, Charlie Lee, stayed and is still a visible and active advocate for litecoin to this day.
My bad, I was wrong about the peak price (this was just from memory, and that was almost 4 years ago -- however no excuse for not looking it up).
I was, however, right about everything else. Lee sold all his coins, made a giant pile of money, the value of the coin collapsed to literally fractions -- and has yet to come anywhere close to a recovery.
If Elon sold 100% of his Tesla shares and "stayed a visible and active advocate for electric cars" I'm not sure you'd be as bullish.
I was, however, right about everything else. Lee sold all his coins, made a giant pile of money, the value of the coin collapsed to literally fractions -- and has yet to come anywhere close to a recovery.
If Elon sold 100% of his Tesla shares and "stayed a visible and active advocate for electric cars" I'm not sure you'd be as bullish.
> I was, however, right about everything else.
No, he didn't run away (he's still very active in the community: https://twitter.com/SatoshiLite) and the foundation wasn't on the brink of bankruptcy.
About the only thing you were right about is that he sold his coins. (According to him the reason was so he could be financially secure and able to focus on the project instead of feeling incentivized to pump the price)
No, he didn't run away (he's still very active in the community: https://twitter.com/SatoshiLite) and the foundation wasn't on the brink of bankruptcy.
About the only thing you were right about is that he sold his coins. (According to him the reason was so he could be financially secure and able to focus on the project instead of feeling incentivized to pump the price)
It is not and never was
They use the same mining hardware, but they are not the same chain.
With the advent of hardware wallets, and so many competing wallets/interfaces out there (tailored to different user bases), I feel it makes little sense for the Ethereum Foundation to pour their own (human) resources into this. They will support the ecosystems as necessary though, e.g. Metamask got funding way back in 2016.
> I feel it makes little sense for the Ethereum Foundation to pour their own (human) resources into this.
Well, they received $ 18.3 million in crowdfunding [1], so I would dare to say it's not only "their" resources but also the resources of the community which they're spending, isn't it?
Given that the central thing a user needs to use a cryptocurrency is the wallet it would seem a bit weird to collect $ 18M from their users to develop a cryptocurrency and then not develop the software which the users need to use the currency?
I mean they're a non-profit organization, if they don't hand anything out for the $ 18.3 M then they have profited quite a bit by taking in money but not delivering effectively usable goods from it?
[1] https://en.wikipedia.org/wiki/List_of_highest-funded_crowdfu...
Well, they received $ 18.3 million in crowdfunding [1], so I would dare to say it's not only "their" resources but also the resources of the community which they're spending, isn't it?
Given that the central thing a user needs to use a cryptocurrency is the wallet it would seem a bit weird to collect $ 18M from their users to develop a cryptocurrency and then not develop the software which the users need to use the currency?
I mean they're a non-profit organization, if they don't hand anything out for the $ 18.3 M then they have profited quite a bit by taking in money but not delivering effectively usable goods from it?
[1] https://en.wikipedia.org/wiki/List_of_highest-funded_crowdfu...
It’s odd to accuse the Ethereum Foundation of not delivering and it would be hard to back that claim.
Developing yet another Ethereum wallet when there are so many on the market would be a waste. It’s better for the foundation to provide a list of high quality wallets that already exist.
Developing yet another Ethereum wallet when there are so many on the market would be a waste. It’s better for the foundation to provide a list of high quality wallets that already exist.
> It’s odd to accuse the Ethereum Foundation of not delivering and it would be hard to back that claim.
It's actually quite easy: I opened the websites of all the 24 wallets they list and checked the imprint of each. None says it was developed by the foundation.
> Developing yet another Ethereum wallet when there are so many on the market would be a waste.
> It’s better for the foundation to provide a list of high quality wallets that already exist.
What would you think of me if I raised $18M to build a non-profit children's hospital and then used it to instead build a website which lists children's hospitals which were built by other people, most of which being for-profit companies, some even proclaiming themselves as registered in shady tax-haven countries, and most not even clearly showing where their company is registered?
It's actually quite easy: I opened the websites of all the 24 wallets they list and checked the imprint of each. None says it was developed by the foundation.
> Developing yet another Ethereum wallet when there are so many on the market would be a waste.
> It’s better for the foundation to provide a list of high quality wallets that already exist.
What would you think of me if I raised $18M to build a non-profit children's hospital and then used it to instead build a website which lists children's hospitals which were built by other people, most of which being for-profit companies, some even proclaiming themselves as registered in shady tax-haven countries, and most not even clearly showing where their company is registered?
The Ethereum Foundation's purpose is to fund and coordinate the building of the protocol and infrastructure surrounding it. That does include funding of wallet developers which it has done in the past but it's better for the ecosystem and decentralization if there are lots of high quality wallets instead of one default wallet everyone uses.
A better analogy would be, it's a fully-functioning hospital but they don't provide their own shuttle service, you have to arrange transportation to the hospital yourself.
They delivered ETH1 on July 30 2015, with several clients including Geth which is still popular today. That covered their promise to presale investors. They also made the Mist wallet/GUI, which was ultimately abandoned because competitors were better.
Now they've delivered the first part of ETH2 today.
Now they've delivered the first part of ETH2 today.
I guess I shouldn't have put the "human" in parentheses. I did give an example of how the EF is spending their money on development of the ecosystem though, hoping that'd make it clear what I meant. I even chose a grant to a wallet as the example.
I personally prefer the role of the EF as a facilitator more than monolithic employer. And they can (and do) do facilitate in more ways than just handing out grants. It's just they experience has shown that helping out this way for wallet development (or even more generically software development) works better.
To add, they did start out providing the software as you say. After a certain point though, their efforts were outpaced by community effort or business opportunities arising in the Ethereum ecosystem. At this point it took a while for them to figure out what new role to take on with their ("our") funds, eventually settling on what they're doing now.
I personally prefer the role of the EF as a facilitator more than monolithic employer. And they can (and do) do facilitate in more ways than just handing out grants. It's just they experience has shown that helping out this way for wallet development (or even more generically software development) works better.
To add, they did start out providing the software as you say. After a certain point though, their efforts were outpaced by community effort or business opportunities arising in the Ethereum ecosystem. At this point it took a while for them to figure out what new role to take on with their ("our") funds, eventually settling on what they're doing now.
Thanks for your further reply! :)
> It's just they experience has shown that helping out this way for wallet development (or even more generically software development) works better.
Does it really work better from the perspective of a user though?
Because as a user I am now sitting in front of 24 websites which look equally "meh" in terms of trustworthiness (fancy design and huge claims), each of them trying to get me to hand out money to their software (that's what a wallet is about!), and almost all of them seemingly being for-profit companies which avoid listing their address.
A single 1 well-known website (EDIT: I meant wallet, not website) of a non-profit would "work better" for me as a user in terms of trusting my choice to keep my money safe. (If I had any, not buying ETH in this situation :)
> To add, they did start out providing the software as you say. After a certain point though, their efforts were outpaced by community effort or business opportunities arising in the Ethereum ecosystem.
Do you notice that you're actually arguing in favor of my point? :)
You say that their efforts were "outpaced", i.e. they failed. That's not a good thing to yield for $ 18 M :(
> It's just they experience has shown that helping out this way for wallet development (or even more generically software development) works better.
Does it really work better from the perspective of a user though?
Because as a user I am now sitting in front of 24 websites which look equally "meh" in terms of trustworthiness (fancy design and huge claims), each of them trying to get me to hand out money to their software (that's what a wallet is about!), and almost all of them seemingly being for-profit companies which avoid listing their address.
A single 1 well-known website (EDIT: I meant wallet, not website) of a non-profit would "work better" for me as a user in terms of trusting my choice to keep my money safe. (If I had any, not buying ETH in this situation :)
> To add, they did start out providing the software as you say. After a certain point though, their efforts were outpaced by community effort or business opportunities arising in the Ethereum ecosystem.
Do you notice that you're actually arguing in favor of my point? :)
You say that their efforts were "outpaced", i.e. they failed. That's not a good thing to yield for $ 18 M :(
How does being a non-profit make their product more secure?
(I have no clue how to reply when the depth is reached)
> Because as a user I am now sitting in front of 24 websites which look equally "meh" in terms of trustworthiness (fancy design and huge claims), each of them trying to get me to hand out money to their software (that's what a wallet is about!), and almost all of them seemingly being for-profit companies which avoid listing their address.
Yes, I guess that's definitely a disadvantage of the ecosystem growing so much. It's great that that happened, but it also means that the EF does not control everything anymore. They cannot advertise just one solution with so many out there, lest they rub someone the wrong way. But they also can't say nothing either. And then it just becomes very confusing with this information overload for beginners (though I think "list of 24 websites" is a bit of an exaggeration; it's not _that_ bad imo [0])
I don't think this is entirely new in the world of software though. Generally you then get to things like looking for advice on forums or word-of-mouth, and then there's a guy like me saying "if you're a beginner only wanting to make transactions on Ethereum, get a Ledger Nano X hardware wallet and use their Ledger Live application". And "if you then want to move on interacting with dApps, use Metamask and connect it to your Nano X".
> A single 1 well-known website of a non-profit would "work better" for me as a user in terms of trusting my choice to keep my money safe. (If I had any, not buying ETH in this situation :)
Well, you would definitely know cryptocurrency is a bit different than a website securing your funds. Someone needs to hold onto the private keys. If you're looking for something similar to a bank, then get something similar to a bank (Coinbase?). But this difference (custodial services, private keys, hardware wallet) definitely adds to the barrier one needs to overcome to get started. I would also argue that "1 well-known website" (or 1 major client implementation that then becomes the defacto standard) does not quite fit into the whole "decentralization" aspect of cryptocurrencies, but not everyone cares as much about that.
> Do you notice that you're actually arguing in favor of my point? :)
You could look at it that way I guess ;) Progress is a function of money, and the EF has more to attend to than just software/wallet development. They could certainly blow through all their ("our") money in a year building a super fancy wallet. Or, as has happened, spend a little to jump start the ecosystem, and then comes along not one but multiple better wallets _for free_! None of "your" money was spent on developing these. Seems like a good deal to me, as now "your" money can be spent jump starting other awesome things that no one is paying much attention to yet.
[0] https://ethereum.org/en/wallets/
> Because as a user I am now sitting in front of 24 websites which look equally "meh" in terms of trustworthiness (fancy design and huge claims), each of them trying to get me to hand out money to their software (that's what a wallet is about!), and almost all of them seemingly being for-profit companies which avoid listing their address.
Yes, I guess that's definitely a disadvantage of the ecosystem growing so much. It's great that that happened, but it also means that the EF does not control everything anymore. They cannot advertise just one solution with so many out there, lest they rub someone the wrong way. But they also can't say nothing either. And then it just becomes very confusing with this information overload for beginners (though I think "list of 24 websites" is a bit of an exaggeration; it's not _that_ bad imo [0])
I don't think this is entirely new in the world of software though. Generally you then get to things like looking for advice on forums or word-of-mouth, and then there's a guy like me saying "if you're a beginner only wanting to make transactions on Ethereum, get a Ledger Nano X hardware wallet and use their Ledger Live application". And "if you then want to move on interacting with dApps, use Metamask and connect it to your Nano X".
> A single 1 well-known website of a non-profit would "work better" for me as a user in terms of trusting my choice to keep my money safe. (If I had any, not buying ETH in this situation :)
Well, you would definitely know cryptocurrency is a bit different than a website securing your funds. Someone needs to hold onto the private keys. If you're looking for something similar to a bank, then get something similar to a bank (Coinbase?). But this difference (custodial services, private keys, hardware wallet) definitely adds to the barrier one needs to overcome to get started. I would also argue that "1 well-known website" (or 1 major client implementation that then becomes the defacto standard) does not quite fit into the whole "decentralization" aspect of cryptocurrencies, but not everyone cares as much about that.
> Do you notice that you're actually arguing in favor of my point? :)
You could look at it that way I guess ;) Progress is a function of money, and the EF has more to attend to than just software/wallet development. They could certainly blow through all their ("our") money in a year building a super fancy wallet. Or, as has happened, spend a little to jump start the ecosystem, and then comes along not one but multiple better wallets _for free_! None of "your" money was spent on developing these. Seems like a good deal to me, as now "your" money can be spent jump starting other awesome things that no one is paying much attention to yet.
[0] https://ethereum.org/en/wallets/
Just use Metamask!
Thanks, what distinguishes it from the other 23?
Metamask is built by ConsenSys, the largest (and oldest?) company developing on Ethereum, and was founded by Joe Lubin (co-founder of Ethereum).
In my book that's not too far off from an "official" ethereum wallet.
https://consensys.net/about/
In my book that's not too far off from an "official" ethereum wallet.
https://consensys.net/about/
It has the highest dapp compatibility
> It has the highest dapp compatibility
Mmh thanks, well security is more relevant to me, but I nevertheless went to their website.
Apparently it's a browser plugin. That's a big security no-no from my side, too much attack surface - sorry.
Mmh thanks, well security is more relevant to me, but I nevertheless went to their website.
Apparently it's a browser plugin. That's a big security no-no from my side, too much attack surface - sorry.
What you really want is a hardware wallet(trezor) that hooks into metamask. That way you have the usability of the plugin without the risk that it can take all your money
Thanks.
Hardware wallets are extremely insecure IMHO:
The people who sell them - and many people in their supply-chain! - are handed the very dangerous combination of:
A) Being able to hard-code software into the silicon whose source code you will be completely unable to inspect unless you own an electron microscope and a very large amount of knowledge on hardware reverse engineering. What if the hardware forces the PRNG to be predictable so they can remotely know my crypto's private keys without any internet connectivity whatsoever?
B) Knowing 100% for sure that the device they sell will be used to store money. They don't need to first find victims, they know ALL of their customers can be. It's like writing "MONEY INSIDE" on your house IMHO. Better use a general purpose PC whose vendor doesn't know what it'll be used for.
Hardware wallets are extremely insecure IMHO:
The people who sell them - and many people in their supply-chain! - are handed the very dangerous combination of:
A) Being able to hard-code software into the silicon whose source code you will be completely unable to inspect unless you own an electron microscope and a very large amount of knowledge on hardware reverse engineering. What if the hardware forces the PRNG to be predictable so they can remotely know my crypto's private keys without any internet connectivity whatsoever?
B) Knowing 100% for sure that the device they sell will be used to store money. They don't need to first find victims, they know ALL of their customers can be. It's like writing "MONEY INSIDE" on your house IMHO. Better use a general purpose PC whose vendor doesn't know what it'll be used for.
Trezor is open source, and you could generate your recovery seed on a computer and import it onto your hardware wallet. I believe Ethereum and some other cryptocurrencies prefer to use deterministic signatures on transactions, so in theory it's possible to check that all of the signatures generated by the hardware wallet match the expected deterministic signatures so you can know that the wallet isn't secretly leaking information through the signatures it's generating.
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I am incredibly happy about this. It's the first step for a major cryptocurrency towards ledger security that does not damage the environment via mining.
I always hated how wasteful and energy-inefficient mining is. Staking reduces energy costs by many, many orders of magnitude. With lightweight clients in development, it is possible to validate chain using Raspberry Pi.
I hope (but don't expect) that some time in the next 10 years Bitcoin will follow. If not, it's just so much CO2 that could have been avoided.
I always hated how wasteful and energy-inefficient mining is. Staking reduces energy costs by many, many orders of magnitude. With lightweight clients in development, it is possible to validate chain using Raspberry Pi.
I hope (but don't expect) that some time in the next 10 years Bitcoin will follow. If not, it's just so much CO2 that could have been avoided.
Eventually Proof of Work WILL kill Bitcoin - but I have to admit this may be decades out in the future.
Right now, most of the mining is financed via inflation. But as this comes to an end, eventually, the cost of mining will be borne by anyone making transactions on the network through tx fees.
Somebody has to pay the electricity bill on all these ASICs.
EDIT: One could try to argue that high transaction costs are not a problem because nobody wants to trade bitcoin, people just hodl it. Cool. But if that's what people will do, then the money raised through transaction fees will not be enough to support a sufficient hash rate to protect the network.
I wrote about all this two years ago already: https://www.konstantinschubert.com/2018/11/28/proof-of-stake...
Right now, most of the mining is financed via inflation. But as this comes to an end, eventually, the cost of mining will be borne by anyone making transactions on the network through tx fees.
Somebody has to pay the electricity bill on all these ASICs.
EDIT: One could try to argue that high transaction costs are not a problem because nobody wants to trade bitcoin, people just hodl it. Cool. But if that's what people will do, then the money raised through transaction fees will not be enough to support a sufficient hash rate to protect the network.
I wrote about all this two years ago already: https://www.konstantinschubert.com/2018/11/28/proof-of-stake...
Define 'kill'. ETC has been 51% attacked multiple times and it still exists. It's very possible some people are going to mine btc on their personal hardware even in 2100.
The only caveat is the difficulty adjustment algorithm, as it's potentially possible for btc to become stuck at an extremely high difficulty.
For 'kill' as in 'stops being big and important' I think it's going to happen relatively soon, mostly agreeing with your article. Bitcoin already lost its past domination in users and total fees paid to ethereum, the only missing part is for eth to actually monetize that by fully switching from PoW to PoS. When eth stakers start making even billions annually while btc buyers lose billions annually to mining, btc losing its first place is only a matter of time. After that, PoW is going to be widely discredited and viewed as obsolete.
For 'kill' as in 'stops being big and important' I think it's going to happen relatively soon, mostly agreeing with your article. Bitcoin already lost its past domination in users and total fees paid to ethereum, the only missing part is for eth to actually monetize that by fully switching from PoW to PoS. When eth stakers start making even billions annually while btc buyers lose billions annually to mining, btc losing its first place is only a matter of time. After that, PoW is going to be widely discredited and viewed as obsolete.
Everything I know about cryptocurrencies makes me think you and parent are completely right, and PoW cannot work without inflation (or even with very low inflation, that does not justify the cost of running hardware in the absence of transactions). Just relying on transaction fees should lead to downward spiral of use, where fees are way too high to maintain use, or network security is too low to protect value.
I'd like to hear from Bitcoin proponents where we are wrong in our thinking. What assumptions are incorrect? Is there a flaw in economic reasoning? If not, what is being done with Bitcoin to address this existential risk for Bitcoin?
I'd like to hear from Bitcoin proponents where we are wrong in our thinking. What assumptions are incorrect? Is there a flaw in economic reasoning? If not, what is being done with Bitcoin to address this existential risk for Bitcoin?
There's actually research out of Princeton, that says blockchains destabilize if the rewards are dominated by fees.
https://www.cs.princeton.edu/~arvindn/publications/mining_CC...
https://www.cs.princeton.edu/~arvindn/publications/mining_CC...
No, it's very short sighted and wrong: their whole analysis from 2016 depend on a high variance of rewards, which completely ignores the reality of 2017 clogged mempool where miners chose the highest tx fee.
Selfish mining is possible, at least for a short period of a time, but sunk costs are eventually sunk costs and you compete for the next block.
Selfish mining is possible, at least for a short period of a time, but sunk costs are eventually sunk costs and you compete for the next block.
Why would mining be anything but selfish? The only reason miners are operating is because they expect a reward that is greater than their expenses.
That means block rewards plus TX fees need to be greater than the cost of running the network. Block rewards are effectively a tax on existing holders through inflation of supply, but that will go to zero in the long run. As the rewards decreases, TX fees will need to increase, which means the average TX will rise. This will increasingly make using BTC prohibitively expensive unless the block size is increased so as to allow more TX per block.
But if the scenario should arise where revenue no longer covers the costs of being a miner, the whole economic model breaks down. This could even get to the point where going rogue, and attempting to exploit the network with the hash power, could become more profitable for a miner.
That means block rewards plus TX fees need to be greater than the cost of running the network. Block rewards are effectively a tax on existing holders through inflation of supply, but that will go to zero in the long run. As the rewards decreases, TX fees will need to increase, which means the average TX will rise. This will increasingly make using BTC prohibitively expensive unless the block size is increased so as to allow more TX per block.
But if the scenario should arise where revenue no longer covers the costs of being a miner, the whole economic model breaks down. This could even get to the point where going rogue, and attempting to exploit the network with the hash power, could become more profitable for a miner.
I think you do not understand "selfish mining": it's a technical term for a miner trying to take the lead over the existing blockchain, but only in some very specific cases outside normal mining. It's predicted by game theory - google for it, it's interesting!
The rest of your analysis is correct: as rewards decrease, TX fees may increase. You can also see that due to competition for the limited tps, as seen in 2017.
But this is also exactly why the scenario discussed in the paper is implausible: miners get to pick the transactions with the highest fees for inclusion in the next block. If your transaction is not urgent, you pay the minimum and wait. Eventually, it will be processed - if the expected delay (given the mempool) is not to your liking, you can update the fee with RBF.
But again, it means there will be little variance - just a smooth adjustment, meaning the required condition this whole paper is based on is dead wrong.
About the economic model breaking down, you make 2 mistakes: 1) you fail to account for difficulty adjustments made just for this situation, but even people who do often forgot 2) when revenue no longer covers costs (as say for a factory), the company doesn't immediately give up and fire everybody.
It's industrial organization 101, and due to the difference between short term and long term.
Of course, there is less friction and fewer rigidities with software, and mining equipment could be deployed differently if it was still CPUs or GPUs.
But the genius of ASICs having no alternative use means it can't happen (except maybe switching to another coin with the same algorithm)
Overall, regardless of the situation and what you throw at it, there's no situation I can see where the economic model break - except maybe if miners are tracked and executed on sight by the army? But even then, all it would do is move the mining to another country - or lead to bribes!
The rest of your analysis is correct: as rewards decrease, TX fees may increase. You can also see that due to competition for the limited tps, as seen in 2017.
But this is also exactly why the scenario discussed in the paper is implausible: miners get to pick the transactions with the highest fees for inclusion in the next block. If your transaction is not urgent, you pay the minimum and wait. Eventually, it will be processed - if the expected delay (given the mempool) is not to your liking, you can update the fee with RBF.
But again, it means there will be little variance - just a smooth adjustment, meaning the required condition this whole paper is based on is dead wrong.
About the economic model breaking down, you make 2 mistakes: 1) you fail to account for difficulty adjustments made just for this situation, but even people who do often forgot 2) when revenue no longer covers costs (as say for a factory), the company doesn't immediately give up and fire everybody.
It's industrial organization 101, and due to the difference between short term and long term.
Of course, there is less friction and fewer rigidities with software, and mining equipment could be deployed differently if it was still CPUs or GPUs.
But the genius of ASICs having no alternative use means it can't happen (except maybe switching to another coin with the same algorithm)
Overall, regardless of the situation and what you throw at it, there's no situation I can see where the economic model break - except maybe if miners are tracked and executed on sight by the army? But even then, all it would do is move the mining to another country - or lead to bribes!
Regarding point (2), it's not "giving up" for a miner to shut down the equipment temporarily. It can even be done automatically.
Mining is competitive. A miner who shuts down while revenue is less than electricity cost, and starts up again when fees rise, will outcompete a miner who just leaves everything running even while taking losses.
Mining is competitive. A miner who shuts down while revenue is less than electricity cost, and starts up again when fees rise, will outcompete a miner who just leaves everything running even while taking losses.
These researchers really need to re-evaluate their assumptions:
>Figure 2: Illustration of Mining Gaps. Miners will only mine when the instantaneous expected reward exceeds the instantaneous cost
This makes no sense, rational actors generally consider discounted future cash flows, not just instantaneous reward. Perhaps the quality of the paper is explained by the researchers following this strategy and only working on 15th and 30th of every month (when their salaries are remitted to their bank account representing an instantaneous reward).
>Figure 2: Illustration of Mining Gaps. Miners will only mine when the instantaneous expected reward exceeds the instantaneous cost
This makes no sense, rational actors generally consider discounted future cash flows, not just instantaneous reward. Perhaps the quality of the paper is explained by the researchers following this strategy and only working on 15th and 30th of every month (when their salaries are remitted to their bank account representing an instantaneous reward).
Discounted cash flow applies to capital like asics, but energy used for mining is instantaneous cost. When the expected revenue from mining is lower than expected power expenses mining makes zero sense.
Not necessarily, the paper itself shows motivations other than direct revenue for discovering a block (IE ability to withhold a block and selfish mining strategies).
> We also assume that miners always have space to include all available transactions.
This is also a pretty bad assumption. In reality the bitcoin mempool is almost always non-zero as bitcoin has smaller and/or less frequent blocks than many other cryptocurrencies.
> We also assume that miners always have space to include all available transactions.
This is also a pretty bad assumption. In reality the bitcoin mempool is almost always non-zero as bitcoin has smaller and/or less frequent blocks than many other cryptocurrencies.
PoW can work fine with the inflation rate going to zero, and without relying on transaction fees.
All it needs is a constant (or an eventually constant) block reward.
An effective zero inflation is already achieved when the new emission merely balances the amount of coins getting lost.
Sorry but this is a ridiculously stupid reasoning. You're relying on coins being lost (unknown amount) to counteract rewards and closing there's no inflation due to that.
This also assumes that miners will be holding enough bitcoin that price increases alone will not only pay for their operations but also cover a reasonable interest in their holdings. It's not logical to think this will happen. And even of it does, you'll be left with only a handful of miners.
This also assumes that miners will be holding enough bitcoin that price increases alone will not only pay for their operations but also cover a reasonable interest in their holdings. It's not logical to think this will happen. And even of it does, you'll be left with only a handful of miners.
I think your second paragraph is wrong, since the parent suggests that a block reward will still be paid through newly minted coins.
So the amount of value getting lost must be equal or greater the electricity bill for mining.
I see your point but doesn’t sound like a great pitch.
I see your point but doesn’t sound like a great pitch.
Bitcoin might fall into obsolescence, but it won’t be because it is mined. It simply isn’t as useful as ETH. I firmly believe that DeFi, which is based upon ETH’s smart contracts and distributed EVM concept, is the future of the finance and investing universe, even with its many issues today.
Flash loans/minting, for example, have turned the markets into the ultimate meritocracy. Anyone - rich or poor - can access up to hundreds of millions of dollars instantly to execute any profitable transaction, no human review or approval necessary. Liquidity pools, introduced by Uniswap, solved many of the problems and risks associated with holding thinly traded assets. Smart contracts have enabled any new project’s tokens to instantly have real value, because in most cases new tokens can only be released to the market by locking ETH into the contract in exchange for the new tokens.
These innovations, along with those that are coming, enable a shockingly large number of new opportunities in the finance world to a much larger audience than ever before. It might be a few years before security, market manipulation protections, etc. are mature enough for mass adoption. But the opportunities that DeFi enables will drive demand for ETH, in a way that today’s Bitcoin simply cannot.
Flash loans/minting, for example, have turned the markets into the ultimate meritocracy. Anyone - rich or poor - can access up to hundreds of millions of dollars instantly to execute any profitable transaction, no human review or approval necessary. Liquidity pools, introduced by Uniswap, solved many of the problems and risks associated with holding thinly traded assets. Smart contracts have enabled any new project’s tokens to instantly have real value, because in most cases new tokens can only be released to the market by locking ETH into the contract in exchange for the new tokens.
These innovations, along with those that are coming, enable a shockingly large number of new opportunities in the finance world to a much larger audience than ever before. It might be a few years before security, market manipulation protections, etc. are mature enough for mass adoption. But the opportunities that DeFi enables will drive demand for ETH, in a way that today’s Bitcoin simply cannot.
> Anyone - rich or poor - can access up to hundreds of millions of dollars instantly to execute any profitable transaction, no human review or approval necessary
What does this mean? If I'm poor (or rich), why not borrow hundreds of millions of dollars to make some highly speculative trade? If it goes well, I win big; if it goes tits up, the lender loses big (not me).
I'm certain that's an uncharitable reading of your comment - please take it in the spirit of "this is what I'm asking you to explain to me in simpler terms," not as an argument.
What does this mean? If I'm poor (or rich), why not borrow hundreds of millions of dollars to make some highly speculative trade? If it goes well, I win big; if it goes tits up, the lender loses big (not me).
I'm certain that's an uncharitable reading of your comment - please take it in the spirit of "this is what I'm asking you to explain to me in simpler terms," not as an argument.
Flash loans let anyone borrow a large amount of crypto with no collateral, provided the loan amount plus a fee is returned in the same transaction it is borrowed in. No collateral is required because there is no risk (assuming no exploits).
This means you can't take the highly speculative trade, you can only go for a sure thing. But if you do have a sure thing, you can borrow as much currency as the lender can provide.
This means you can't take the highly speculative trade, you can only go for a sure thing. But if you do have a sure thing, you can borrow as much currency as the lender can provide.
Yes, and gas fees for failed transactions ensure you can’t just take unlimited shots at it either. However, if you are monitoring the markets and your code, connections to the network, etc. are fast enough, you can make a fortune using flash loans. A few days ago I found a trade where someone made $17k on a single trade [1] with the only necessary capital being a ~$170 transaction fee. They took a $250k flash loan that they successfully arbitraged. Smaller amounts are made all day every day.
[1] https://etherscan.io/tx/0xfd35e99cbbefea68874391a14ddb09a289...
[1] https://etherscan.io/tx/0xfd35e99cbbefea68874391a14ddb09a289...
So the loan and the return is a single "transaction" (in db terms)?
What sort of situation could this be used in? I'm having a hard time truly imagining use without any risk of transaction rollback.
What sort of situation could this be used in? I'm having a hard time truly imagining use without any risk of transaction rollback.
They are primarily used for arbitrage transactions. Token swaps on decentralized exchanges are instant - there is no order book. So you can compose a single transaction that involves many exchanges, swaps involving different tokens, flash loans, etc. If the transaction ends with a profit after the loan is paid back, at the market prices that exist at the time the transaction is executed, the flash loan occurs, and profits are collected by the person that created the transaction. If it does not end with a profit, then the transaction is reverted as if it never existed.
How would that work, though? It sounds like guaranteed arbitrage? But does arbitrage work as a trading strategy? I thought markets quickly become too efficient for that?
It is guaranteed arbitrage. There is no risk to the lender, and the only risk to the person that initiated the transaction is that slippage will occur that makes the trade unprofitable, which would cause the transaction to revert, which would cause them to lose the transaction fee for having attempted the transaction.
The markets are not currently too efficient for that, and never will be. In fact Uniswap’s entire design depends heavily on arbitrageurs balancing out the markets between itself and other exchanges.
The markets are not currently too efficient for that, and never will be. In fact Uniswap’s entire design depends heavily on arbitrageurs balancing out the markets between itself and other exchanges.
Wow this sent me down a rabbit hole.
How are the transactions composed, with a smart contract/s, in combination with Dex API’s?
How are the transactions composed, with a smart contract/s, in combination with Dex API’s?
Flash loans are composed using a smart contract. So basically you create a smart contract that will call all the DEX/loan platform/other contract functions necessary to obtain the loan, carry out swaps and pay it back. You then deploy that contract.
Then you would have a separate program running on your client machine to scan for market opportunities, and when it spots one, have that program send a transaction to your deployed smart contract to initiate the loan and set into action whatever logic you programmed into the smart contract that will yield a profit.
Yes, it’s quite a rabbit hole indeed. It is hard to believe that something like this is even possible, let alone profitable, but it really can be. I have seen single flash loan transactions yield up to $46k in profits. That profit is irrevocably delivered back to you in a couple of seconds.
Then you would have a separate program running on your client machine to scan for market opportunities, and when it spots one, have that program send a transaction to your deployed smart contract to initiate the loan and set into action whatever logic you programmed into the smart contract that will yield a profit.
Yes, it’s quite a rabbit hole indeed. It is hard to believe that something like this is even possible, let alone profitable, but it really can be. I have seen single flash loan transactions yield up to $46k in profits. That profit is irrevocably delivered back to you in a couple of seconds.
Yea it’s really quite wild and an exciting application of the ‘programmable money’ concept. Did some more reading. Thanks for the rundown.
flash loans makes markets more efficient:
https://blog.instadapp.io/six-percent-instant-return/
https://blog.instadapp.io/six-percent-instant-return/
The false premise you're using is that smart contracts provide more utility than sound economic policy does.
I don’t think that “sound economic policy” would, for example, have major banks offering flash loans. There are many things that can only be achieved through decentralization. Policymakers and banks alike have a serious interest in remaining gatekeepers, and would never enable many of the DeFi functions.
On the other hand, if flash loans are not sound economic policy, doesn't that imply they won't prevail? Evolution will weed them out.
How does sound economic policy differ from visual economic policy?
So what happens after Ethereum finishes migrating to proof of stake and has lower inflation than Bitcoin?
The problem is not what the inflation rate is at any given moment, but that it can be changed so easily, like the very switch to ETH 2 is an example of.
The inflation curve in Bitcoin is considered sacred. In Ethereum, it's developer whim and EIP approval.
The inflation curve in Bitcoin is considered sacred. In Ethereum, it's developer whim and EIP approval.
It was known from the start that the PoW phase is just a temporary development phase, with no parameters set in stone. Eth2 has a deterministic inflation schedule that depends on total amount of stake.
def calc_annual_reward(total_staked_eth):
return math.exp(31556926 / 384 * 64 / 31622 / total_staked_eth ** 0.5) - 1
Have you checked out rsk? It lives on top of bitcoin and apparently does smart contracts.
https://www.rsk.co
https://www.rsk.co
Is anything built on top of rsk up and running at this time?
From what I can understand from their official dashboard, the answer is no: https://stats.rsk.co
RSK MainNet launched about 3 years ago. Currently, most blocks have no transactions, with 0 gas spent.
RSK MainNet launched about 3 years ago. Currently, most blocks have no transactions, with 0 gas spent.
I think the most interesting development is the increasing amount of Bitcoin being wrapped in Ethereum, somewhat validating the store of value idea, I could see it giving Bitcoin some legs
But... is it like sports memorabilia at that point, the value is all perception rather than utility and could one day just.. collapse
But... is it like sports memorabilia at that point, the value is all perception rather than utility and could one day just.. collapse
I think the wrapped BTCs, especially the decentralized approaches to it, are clever links that allow for the transfer of BTC value over to the Ethereum ecosystem.
It's a way of selling BTC for other tokens, extracting and removing its value over time, and instead investing it into DeFi and similar.
It's a way of selling BTC for other tokens, extracting and removing its value over time, and instead investing it into DeFi and similar.
Interesting! How are they wrapped? Do ppl trade bitcoin on ethereum without actually using the bitcoin blockchain?
They trade a token, sometimes called a stablecoin, that represent BTC as its underlying value.
Primarily two extremes for how this is done: Centralized, like WBTC (https://coinlist.co/help/what-is-wrapped-bitcoin-wbtc), and decentralized, like tBTC (https://defirate.com/tbtc/)
Primarily two extremes for how this is done: Centralized, like WBTC (https://coinlist.co/help/what-is-wrapped-bitcoin-wbtc), and decentralized, like tBTC (https://defirate.com/tbtc/)
Besides the extremes, there's the pragmatic in the middle - interoperability in general. RenVM supports Bitcoin and many other coins on multiple hosts, not just Ethereum (eg. Polkadot):
https://renproject.io
https://mainnet.renproject.io
https://renproject.io
https://mainnet.renproject.io
I'm not convinced RenVM is really in the middle in its current state. Currently the core team holds all of the keys for the over $300M in Bitcoin stored by their project [0]. I'd take wbtc, which is held by a consortium of well known custodians in the space over that any day.
[0] https://www.theblockcrypto.com/daily/76787/ren-bitcoin-walle...
[0] https://www.theblockcrypto.com/daily/76787/ren-bitcoin-walle...
>Eventually Proof of Work WILL kill Bitcoin - but I have to admit this may be decades out in the future.
I always thought the hardwired reward for mining, namely, X btc every 10 minutes, is the cause of Bitcoin's wasting electricity.
The electricity used is roughly proportional to the hashrate, which in turn is roughly proportional to the price of btc -- until the next halving, which I think is more than one year but less than 2 years from now.
These halvings of the reward every 2 years (which occur on a schedule set before Bitcoin was launched all those years ago) will some time in the next 10 years (which is 5 halving, representing a reduction in the reward by a factor of 2 * 2 * 2 * 2 * 2 == 32) or 12 years bring the Bitcoin network's electricity usage down low enough that a reasonable person will no longer avoid Bitcoin out of worry that it is bad for the global climate.
Note that this mining reward doled out every 10 minutes is not a transaction fee. E.g., neither of the transacting parties (i.e., neither the sender nor the receiver) pays it.
So tell me again what will eventually kill Bitcoin.
I always thought the hardwired reward for mining, namely, X btc every 10 minutes, is the cause of Bitcoin's wasting electricity.
The electricity used is roughly proportional to the hashrate, which in turn is roughly proportional to the price of btc -- until the next halving, which I think is more than one year but less than 2 years from now.
These halvings of the reward every 2 years (which occur on a schedule set before Bitcoin was launched all those years ago) will some time in the next 10 years (which is 5 halving, representing a reduction in the reward by a factor of 2 * 2 * 2 * 2 * 2 == 32) or 12 years bring the Bitcoin network's electricity usage down low enough that a reasonable person will no longer avoid Bitcoin out of worry that it is bad for the global climate.
Note that this mining reward doled out every 10 minutes is not a transaction fee. E.g., neither of the transacting parties (i.e., neither the sender nor the receiver) pays it.
So tell me again what will eventually kill Bitcoin.
If the hash rate goes down as you predict, then the network will become insecure. Double-spending attacks will destroy the trust in the network and people will stop relying on it.
> Eventually Proof of Work WILL kill Bitcoin [..]
> Right now, most of the mining is financed via inflation. But as this comes to an end, eventually, the cost of mining will be borne by anyone making transactions on the network through tx fees.
> Somebody has to pay the electricity bill on all these ASICs.
This is just wrong.
If the award available to miners decreases due to lack of inflation they will use less power-consuming hardware.
If that still results in loss due to electricity cost then miners will leave the market until the amount of miners in the market is equal to the amount of tx-fees available.
In other words: This is a market with supply and demand. If one decreases the other also goes down until they're balanced. It won't just make the market disappear!
So even if almost nobody was willing to pay any tx-fees and there was no inflation then Bitcoin would still be running. It may just move back to running in the background on consumer hardware which was bought for other purposes instead of having giant mining data centers.
This also means that mining isn't going to infinitely waste energy:
The demand for energy cannot go higher than the offer of tx fees / block reward.
So there is a finite upper boundary to Bitcoin's power consumption. I think a finite upper boundary is enough to justify its existence, the precise value of such a constant is arbitrary so you might as well not waste your time in arguing if it is too high or too low and instead be happy that there IS a boundary :)
> Right now, most of the mining is financed via inflation. But as this comes to an end, eventually, the cost of mining will be borne by anyone making transactions on the network through tx fees.
> Somebody has to pay the electricity bill on all these ASICs.
This is just wrong.
If the award available to miners decreases due to lack of inflation they will use less power-consuming hardware.
If that still results in loss due to electricity cost then miners will leave the market until the amount of miners in the market is equal to the amount of tx-fees available.
In other words: This is a market with supply and demand. If one decreases the other also goes down until they're balanced. It won't just make the market disappear!
So even if almost nobody was willing to pay any tx-fees and there was no inflation then Bitcoin would still be running. It may just move back to running in the background on consumer hardware which was bought for other purposes instead of having giant mining data centers.
This also means that mining isn't going to infinitely waste energy:
The demand for energy cannot go higher than the offer of tx fees / block reward.
So there is a finite upper boundary to Bitcoin's power consumption. I think a finite upper boundary is enough to justify its existence, the precise value of such a constant is arbitrary so you might as well not waste your time in arguing if it is too high or too low and instead be happy that there IS a boundary :)
You're just explaining the steps of the parent's scenario. The chain must keep accumulating work faster than any adversary could keep up with or everyone's money is at risk because the state never fully finalizes.
everyone's money is not at risk -- only the people who are transacting. There are also tools to know a estimate a good number of confirmations needed.
Everyone's money is the result of transactions, all transactions are at risk of being reorged, so everyone's money is at risk.
Those tools don't work in this chain death scenario of dwindling hash rate.
Those tools don't work in this chain death scenario of dwindling hash rate.
> all transactions are at risk of being reorged
Satoshi's coins are always uneffected in case of a reorg. So if everyone else's who have never transacted since the reorg.
Chain reorg's are usually temporary even in chains with low security budget.
Satoshi's coins are always uneffected in case of a reorg. So if everyone else's who have never transacted since the reorg.
Chain reorg's are usually temporary even in chains with low security budget.
Personally I like the approach the Cardano community has taken, working towards interoperability with pow and pos
https://medium.com/@schwartz4live/invitation-for-community-d...
Congrats to the Eth folks though, this really was a big undertaking.
https://medium.com/@schwartz4live/invitation-for-community-d...
Congrats to the Eth folks though, this really was a big undertaking.
I just don't see it. Bitcoin could be forked to no longer use PoW if it became an existential threat.
Migrating from PoW took about 2-3 years for Ethereum, required massive changes to economic model, and developing all new clients. Ethereum leadership is still somewhat centralized, so this did not lead to multiple competing forks.
Doing the same for Bitcoin would be very hard, and if it simply follows Ethereum's footsteps, then it is unclear why even use Bitcoin.
But -- I hope we see this fork sooner rather than later. Bitcoin miners will have no economic incentive to capture back the CO2 produced.
Doing the same for Bitcoin would be very hard, and if it simply follows Ethereum's footsteps, then it is unclear why even use Bitcoin.
But -- I hope we see this fork sooner rather than later. Bitcoin miners will have no economic incentive to capture back the CO2 produced.
I disagree that it would be (technologically) hard for Bitcoin to transition to a PoS (disregarding that we don't have yet conclusive proof if any PoS model actually works long time).
Ethereum is built to a spec. That's why the different client developers had to coordinate their work. This is not the case with Bitcoin. There, the official client is the de-facto spec you have to comply with if you develop another client.
The bigger problem is that the current narrative of Bitcoin heavily discourage hard forks.
Transitioning to PoS would be a social task with Bitcoin, not a technical one. Also note that Ethereum was promised from the beginning to transition to PoS, they just didn't expect to take this long.
Ethereum is built to a spec. That's why the different client developers had to coordinate their work. This is not the case with Bitcoin. There, the official client is the de-facto spec you have to comply with if you develop another client.
The bigger problem is that the current narrative of Bitcoin heavily discourage hard forks.
Transitioning to PoS would be a social task with Bitcoin, not a technical one. Also note that Ethereum was promised from the beginning to transition to PoS, they just didn't expect to take this long.
Its a social task they already failed with the segwit fiasco. PoS would probably be worse
What do you mean "failed"? Segwit was activated. After lots of infighting and after a hard fork for a new chain occurred but it activated on the chain that has the bigger hashrate as of today.
If the Bitcoin developers would push for a POS hard fork I would expect the chain to split into a POS and POW version but which version would become the canonical Bitcoin would be up for debate.
If the Bitcoin developers would push for a POS hard fork I would expect the chain to split into a POS and POW version but which version would become the canonical Bitcoin would be up for debate.
ETH2 has been in discussions and development for more than 3 years.
ETH is still on PoW and will continue to be on PoW for many more years.
ETH is still on PoW and will continue to be on PoW for many more years.
Bitcoin will continue to use PoW while the main chain transaction fees are enough to buy adequate security for the network. This could be a very long time, or indefinite if it continues on it’s current trajectory. And if it does, then some governments will almost certainly take an interest in mining as a way to generate revenue from available energy, as Venezuela is already doing.
Except Bitcoin is controlled by developers who have effectively promised to never fork.
What's your take on off chain solutions like lightning as a solution to the high tx fees?
It doesn't solve the fundamental cost problem with Proof of Work:
- If people pay high effective tx fees, it's shit because, well, it's expensive.
- If people pay low effective tx fees (through lightning or block size increase or whatever) then, as soon as inflation ends, the money won't be enough to pay for a sufficient hash rate.
- If people pay high effective tx fees, it's shit because, well, it's expensive.
- If people pay low effective tx fees (through lightning or block size increase or whatever) then, as soon as inflation ends, the money won't be enough to pay for a sufficient hash rate.
Writing to the block should be expensive. But there won't be a problem because it'll only be used to settle Lightning Network transactions very infrequently, and could be massive amounts... not for small transactions.
Sure, but that’s a scenario where the usage of bitcoin is high and the total amount of money on tax fees is small compared to the market cap of bitcoin.
This means hash rate will be low compared to the market cap, and the necessary capital for a double spend attack may be worth it.
Maybe it’s all less of an issue because bitcoin will develop a network of trust that can replace the block chain.
But then, why not go with something like Stellar right away.
This means hash rate will be low compared to the market cap, and the necessary capital for a double spend attack may be worth it.
Maybe it’s all less of an issue because bitcoin will develop a network of trust that can replace the block chain.
But then, why not go with something like Stellar right away.
What about BCH, where they're increased the block size so many smaller transaction fees can still build up to a large reward for miners?
Sure that works, but AFAIK it's a far cry from the decentralization we were promised in the white paper.
Lightning Network
There is no way Bitcoin will switch to PoS.
The very core of Bitcoin is PoW.
The very core of Bitcoin is PoW.
More importantly, there will never be more than 21 Million Bitcoin. That is the primary value it serves (beyond censorship resistance) it is not inflationary...
any scaling solution or consensus change that doesn't retain this important feature wouldn't be bitcoin, just another fork. potentially could go from PoW as long as supply is not inflatable it could still be considered Bitcoin (depending on whether users switched to the new version or not)
any scaling solution or consensus change that doesn't retain this important feature wouldn't be bitcoin, just another fork. potentially could go from PoW as long as supply is not inflatable it could still be considered Bitcoin (depending on whether users switched to the new version or not)
That doesn't follow. The very core of Ethereum is also PoW, and they're migrating to PoS.
In case there's ambiguity here, I think GP means "core to the ideals" of Bitcoin, not the core of its implementation.
GP is correct. The Bitcoin community is fiercely conservative, and a proposal to switch from PoW to PoS would be met with about as much scorn as a proposal to increase the total supply.
Ethereum, on the other hand, has never had any strong attachment to PoW -- quite the opposite, really. Switching to PoS has been a major goal since the early days of the project.
GP is correct. The Bitcoin community is fiercely conservative, and a proposal to switch from PoW to PoS would be met with about as much scorn as a proposal to increase the total supply.
Ethereum, on the other hand, has never had any strong attachment to PoW -- quite the opposite, really. Switching to PoS has been a major goal since the early days of the project.
Okay, yeah, I agree with that. Thanks.
Not true, many think PoS is coming to BTC in the future, or at least a hybrid. (Note: not the near future)
> It's the first step for a major cryptocurrency towards ledger security that does not damage the environment via mining.
What about Ripple/XRP or Stellar? I mean, I'm not a fan of it but they've been doing a non-proof-of-work chain since 2012.
What about Ripple/XRP or Stellar? I mean, I'm not a fan of it but they've been doing a non-proof-of-work chain since 2012.
We can just use renewable energy sources long term. Really don't understand the obsession some people have with the energy requirements of bitcoin mining - please compare these with the energy requirements of the financial systems it replaces.
Bitcoin solves the need for third parties in the financial system. That's it, it's not meant to be some eco currency - never was.
Where's the validation that the current financial system needs to have its energy needs reduced? Bitcoin cuts out the energy requirements of all the countless third parties, for a start.
POS is a joke.
Bitcoin solves the need for third parties in the financial system. That's it, it's not meant to be some eco currency - never was.
Where's the validation that the current financial system needs to have its energy needs reduced? Bitcoin cuts out the energy requirements of all the countless third parties, for a start.
POS is a joke.
> please compare these with the energy requirements of the financial systems it replaces.
I don't have numbers (I suspect it's impossible to do a true apples-to-apples comparison), but I feel like Bitcoin still likely fails by this metric. I recall reading a year or so ago that Bitcoin was using the same amount of electricity as a small developer nation. I expect the other financial systems use more than that in total, but consider that these other financial systems handle orders of magnitude more transaction volume, and include a lot more services than Bitcoin does.
> We can just use renewable energy sources long term.
Renewables aren't free. It costs time, effort, and energy to build the infrastructure (solar panels, windmills, etc.), not to mention caustic chemicals for some of these, which do have negative environmental effects. Maintenance has costs, as does eventual replacement. The land required to house these production farms also is not free.
Yes, the energy produced by renewables is obviously much much cleaner than that produced by other means, but they still have costs.
I don't have numbers (I suspect it's impossible to do a true apples-to-apples comparison), but I feel like Bitcoin still likely fails by this metric. I recall reading a year or so ago that Bitcoin was using the same amount of electricity as a small developer nation. I expect the other financial systems use more than that in total, but consider that these other financial systems handle orders of magnitude more transaction volume, and include a lot more services than Bitcoin does.
> We can just use renewable energy sources long term.
Renewables aren't free. It costs time, effort, and energy to build the infrastructure (solar panels, windmills, etc.), not to mention caustic chemicals for some of these, which do have negative environmental effects. Maintenance has costs, as does eventual replacement. The land required to house these production farms also is not free.
Yes, the energy produced by renewables is obviously much much cleaner than that produced by other means, but they still have costs.
Why is POS a joke?
The SEC has come out to say that BTC and ETH 1.0 are most likely not violating US securities laws. By moving to proof of stake ETH has lost that stamp of approval. In addition some people argue that POS is violating security laws. Large institutions are far less likely to adopt a cryptocurrency that might run into legal trouble down the line.
https://www.invigorlaw.com/sec-says-cryptocurrencies-bitcoin... https://medium.com/blockchain-at-berkeley/does-proof-of-stak...
https://www.invigorlaw.com/sec-says-cryptocurrencies-bitcoin... https://medium.com/blockchain-at-berkeley/does-proof-of-stak...
> It's the first step for a major cryptocurrency towards ledger security that does not damage the environment via mining.
Not true. Cardano has been operational with PoS since early 2020. And it’s staking process is much more straightforward and user friendly.
Not true. Cardano has been operational with PoS since early 2020. And it’s staking process is much more straightforward and user friendly.
Solar powered mining operations in the orbit are much more likely.
sorry but this doesn't make any sense to me. POW is providing a service - it is securing billions of dollars in decentralized value.
It doesn't damage the environment if used with solar power or an energy source that isn't damaging to the environment. In other words, it isn't necessary that it damages the environment.
Is it wasteful when you use the elliptical machine or tread mill? It is a tragedy that energy is being wasted in such magnitude in gyms around the world?
It doesn't damage the environment if used with solar power or an energy source that isn't damaging to the environment. In other words, it isn't necessary that it damages the environment.
Is it wasteful when you use the elliptical machine or tread mill? It is a tragedy that energy is being wasted in such magnitude in gyms around the world?
Whenever someone mentions smart contracts I'm instantly reminded of that Jean Luc Picard quote:
"I don't know how to communicate this, or even if it is possible to do so... but the question of justice has concerned me greatly of late. And so I say to any creature who may be listening: There can be no justice, so long as laws are absolute. Life itself is an exercise in exceptions."
"I don't know how to communicate this, or even if it is possible to do so... but the question of justice has concerned me greatly of late. And so I say to any creature who may be listening: There can be no justice, so long as laws are absolute. Life itself is an exercise in exceptions."
I have to say that I'm happy that Ethereum does not do on-chain governance for this very reason. It more or less follows the IETF principle of "rough consensus". [0]
As far as smart contracts are concerned; they're hardly "contracts", but you probably already knew that. Even Vitalik Buterin regrets calling them that way [1].
[0]: https://en.wikipedia.org/wiki/Rough_consensus
[1]: https://twitter.com/VitalikButerin/status/105116093269977088...
As far as smart contracts are concerned; they're hardly "contracts", but you probably already knew that. Even Vitalik Buterin regrets calling them that way [1].
[0]: https://en.wikipedia.org/wiki/Rough_consensus
[1]: https://twitter.com/VitalikButerin/status/105116093269977088...
I think of it this way:
- Every system will be gamed, no exceptions.
- It is impossible for the architects of any system to imagine all the ways it will be gamed.
That's why it's not possible to create fixed laws that are just. Inevitably someone will find a hack that turns the intent of the law around while remaining true to its letter.
This seems to be what dooms both pure libertarian capitalist schemes and pure socialist command economy schemes. In the former case there is not enough structure to contain exploits and no recourse when someone finds a good scam. In the latter case it's impossible for central planners to imagine the results of their plans when they are exposed to opportunistic economic agents. The fatal flaw in both ideologies is their dogmatism. It causes them to fail to adapt when flaws and exploits in the rule system are inevitably found.
- Every system will be gamed, no exceptions.
- It is impossible for the architects of any system to imagine all the ways it will be gamed.
That's why it's not possible to create fixed laws that are just. Inevitably someone will find a hack that turns the intent of the law around while remaining true to its letter.
This seems to be what dooms both pure libertarian capitalist schemes and pure socialist command economy schemes. In the former case there is not enough structure to contain exploits and no recourse when someone finds a good scam. In the latter case it's impossible for central planners to imagine the results of their plans when they are exposed to opportunistic economic agents. The fatal flaw in both ideologies is their dogmatism. It causes them to fail to adapt when flaws and exploits in the rule system are inevitably found.
Any political or economic system built on the expectation that people won't be assholes to each other (and work with others to be assholes) is a flawed system.
Ethereum is also built on the assumption that:
- people aren't assholes
- all involved parties can audit blockchain transactions
- all involved parties are programmers and can audit a contract written in an esoteric programming language
- all involved parties voluntarily agree to be bound by these contracts despite the fact there's no way they can be enforced
- people aren't assholes
- all involved parties can audit blockchain transactions
- all involved parties are programmers and can audit a contract written in an esoteric programming language
- all involved parties voluntarily agree to be bound by these contracts despite the fact there's no way they can be enforced
> all involved parties voluntarily agree to be bound by these contracts despite the fact there's no way they can be enforced
Maybe I'm misunderstanding, but I don't think ETH contracts count on humans doing anything.
Maybe I'm misunderstanding, but I don't think ETH contracts count on humans doing anything.
If you "don't have humans doing anything", then Ethereum is just a very slow and inefficient API and protocol layer.
However, if you want to use services or exchange goods, then people are involved.
A simple example: person A requests goods or services from person B. According to Ethereum website, "Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed." Person B provides goods/services. Person A says no goods or services were provided. The assumed guarantees turn out to be fiction.
Here's a real world example. A typical contract between a supplier and a chain store common in many parts of the world goes something like this:
- supplier provides goods on a continuous basis
- the chain store pays for goods once every three months
In the real world this contract is enforceable by, well, centralised laws of the respective countries. If the chain store reneges on payment, it can be taken to court and forced to pay.
In case of "smart" contracts, well, keep sending goods for three months in the hope that you get paid.
However, if you want to use services or exchange goods, then people are involved.
A simple example: person A requests goods or services from person B. According to Ethereum website, "Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed." Person B provides goods/services. Person A says no goods or services were provided. The assumed guarantees turn out to be fiction.
Here's a real world example. A typical contract between a supplier and a chain store common in many parts of the world goes something like this:
- supplier provides goods on a continuous basis
- the chain store pays for goods once every three months
In the real world this contract is enforceable by, well, centralised laws of the respective countries. If the chain store reneges on payment, it can be taken to court and forced to pay.
In case of "smart" contracts, well, keep sending goods for three months in the hope that you get paid.
As far as I understand it, that's not the sort of thing Ethereum contracts would cover. The contract is just an computer agreement between trustless systems to run code. Vitalik Buterin has said he regrets the term "smart contracts" because of the usual meaning of the word contracts:
https://twitter.com/VitalikButerin/status/105116093269977088...
> To be clear, at this point I quite regret adopting the term "smart contracts". I should have called them something more boring and technical, perhaps something like "persistent scripts".
> I do think that persistent scripts controlling assets compete with the legal system on some margins, but so do locks on doors. So IMO it's wrong to equate them with a specific philosophy of law privatization.
https://twitter.com/VitalikButerin/status/105116093269977088...
> To be clear, at this point I quite regret adopting the term "smart contracts". I should have called them something more boring and technical, perhaps something like "persistent scripts".
> I do think that persistent scripts controlling assets compete with the legal system on some margins, but so do locks on doors. So IMO it's wrong to equate them with a specific philosophy of law privatization.
> The contract is just an computer agreement between trustless systems to run code.
Then, as I said, it's just a very slow and ineffecient API and protocol.
However, to quote ethereum's marketing material [1]
--- start quote ---
Ethereum allows you to move money, or make agreements, directly with someone else. You don't need to go through intermediary companies.
Commerce guarantees
Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed.
--- end quote ---
This directly involves people. With all the issues described above.
On their dapps page [2] currently:
- Foundation. Buy, trade, and sell unique digital artwork and fashion from some incredible artists, musicians, and brands.
- PoolTogether. Buy a ticket for the no-loss lottery.
- Augur. Bet on outcomes of sports, economics, and more world events.
etc. etc.
All this involves people and the belief that they will honor their end of the deal.
[1] https://ethereum.org/en/what-is-ethereum/
[2] https://ethereum.org/en/dapps/
Then, as I said, it's just a very slow and ineffecient API and protocol.
However, to quote ethereum's marketing material [1]
--- start quote ---
Ethereum allows you to move money, or make agreements, directly with someone else. You don't need to go through intermediary companies.
Commerce guarantees
Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed.
--- end quote ---
This directly involves people. With all the issues described above.
On their dapps page [2] currently:
- Foundation. Buy, trade, and sell unique digital artwork and fashion from some incredible artists, musicians, and brands.
- PoolTogether. Buy a ticket for the no-loss lottery.
- Augur. Bet on outcomes of sports, economics, and more world events.
etc. etc.
All this involves people and the belief that they will honor their end of the deal.
[1] https://ethereum.org/en/what-is-ethereum/
[2] https://ethereum.org/en/dapps/
All useful contracts in real world are dependent on humans, unless the machines can make and deliver a pizza, with extra cheese and no pineapples.
No, there are completely mechanical contracts being executed every day.
This is why human resolution layers such as Kleros exist. You can rely on human juries to resolve certain conflicts that automation could not possibly handle. The system relies on game theory to disincentivize dishonest jurors. Whether it will hold in practice remains to be seen, but a few (~100 for Kleros I think, there are also other solutions such as Aragon but I'm less familiar with them) cases have been dealt with succesfully so far.
True, but on the other hand if you have options or futures contracts, you expect them to execute as specified. That's the sort of thing mainly running on Ethereum.
I think the big reason this happens is because smart contracts are immutable at the lowlevel. Once it's declared, it's done. I think this is very good for auditability and security. But yeah, that quote is dead on. It's not quite as hot at a higher level, because things go wrong (bugs, malfeasance, mistakes, etc).
I think the current lowlevel framework is fine, because it's allowing different projects to explore how to introduce flexibility back into the system at a higher level -- but because it's being done at the level of a project within the Ethereum ecosystem, each approach can live & die on it's own, without risking the entire ecosystem on one approach.
The main set of coding patterns I've seen all center around deploying contracts which act as an "upgradable proxy" -- an immutable frontend contract, which can be redirected to point to another contract that does the actual work.
This "redirect" usually can only be done via txn signed by an "admin" account, which may be a single anon -- or it may be something more complex, like MakerDAO or Aave.com, where any updates are proposed by the dev team, but have to be approved by on-chain governance votes. Said votes in turn literally have $$$ staked on-chain to properly motivate them to make things work. There are also time-locks on many of these updates, giving users a last chance to run for the hills if governance does something malicious / stupid.
The nice thing about that structure is that it also allows governance to let in updates which compensate users for mistakes or exploits at a meta-level, all without violating the underlying immutability of the smart contract bytecode.
---
It's a pretty rapidly evolving space, and I'm sure what I described won't resemble the final form in even a few years.
I think it's really great to see that there is a way to introduce justice and flexibility on top of an immutable system, rather than making the system itself become mutable. This allows the immutability of the lowlevel system to act as a source of trust between anonymous groups, that they have to act within some immutable set of ground rules, while then re-introducing the flexbility on top, so humans can act like humans when mistakes occur.
I think the current lowlevel framework is fine, because it's allowing different projects to explore how to introduce flexibility back into the system at a higher level -- but because it's being done at the level of a project within the Ethereum ecosystem, each approach can live & die on it's own, without risking the entire ecosystem on one approach.
The main set of coding patterns I've seen all center around deploying contracts which act as an "upgradable proxy" -- an immutable frontend contract, which can be redirected to point to another contract that does the actual work.
This "redirect" usually can only be done via txn signed by an "admin" account, which may be a single anon -- or it may be something more complex, like MakerDAO or Aave.com, where any updates are proposed by the dev team, but have to be approved by on-chain governance votes. Said votes in turn literally have $$$ staked on-chain to properly motivate them to make things work. There are also time-locks on many of these updates, giving users a last chance to run for the hills if governance does something malicious / stupid.
The nice thing about that structure is that it also allows governance to let in updates which compensate users for mistakes or exploits at a meta-level, all without violating the underlying immutability of the smart contract bytecode.
---
It's a pretty rapidly evolving space, and I'm sure what I described won't resemble the final form in even a few years.
I think it's really great to see that there is a way to introduce justice and flexibility on top of an immutable system, rather than making the system itself become mutable. This allows the immutability of the lowlevel system to act as a source of trust between anonymous groups, that they have to act within some immutable set of ground rules, while then re-introducing the flexbility on top, so humans can act like humans when mistakes occur.
All things considered, is this truly less complicated than a hand written handshake contract? The real solution is risk mitigation through deposits and payment plans.
Put another way: how good is a smart contract if it’s easy to create a deceptive one?
Put another way: how good is a smart contract if it’s easy to create a deceptive one?
From a technical perspective, yeah, I'd say it's a bit more complicated.
But establishing agreement with another human means I have to establish a common language with them, then work out what we're agreeing to, then establish some set of mutual trust between us (usually involving some form of identity verification, even if it's a "who are you on twitter?" level of thing). And then we perpetually have to track that the other person's incentives haven't changed outside of the contract in such a way that violating it would be more profitable. The effort involved in all of that scales very poorly, especially from the service provider's perspective.
On the other hand, if someone wishes to operate in good faith, their incentive is to make the smart contract as simple as possible, and as amenable to independent verification from outside parties (as well as theorem provers).
And no one has to worry about establishing mutual trust with the other person, or that they'll just change their mind in the future. Even if a contract is upgradable, if you only choose to work with ones that are either immutable, or require a timelock / voting period before changes take effect, you (collectively all the consumers of the contract) know your margin of safety.
And that margin of safety is provided because you can trust the base layer is itself immutable and secured. Whereas with risk mitigation through bonds etc, who is the trusted third party we mutually agree to hold our deposits? how do each of us trust that third party isn't in league with one of us? (I trust the "Certified Bank of Nigeria In England", but do you?).
That's the core bit that a smart contract platform like Ethereum provides -- a base layer for establishing mutual trust in objective terms. You can build whatever manner of agreements on top of such a base layer, but if the base layer isn't there, each separate agreement (expensively) requires the two parties find some common ground.
But establishing agreement with another human means I have to establish a common language with them, then work out what we're agreeing to, then establish some set of mutual trust between us (usually involving some form of identity verification, even if it's a "who are you on twitter?" level of thing). And then we perpetually have to track that the other person's incentives haven't changed outside of the contract in such a way that violating it would be more profitable. The effort involved in all of that scales very poorly, especially from the service provider's perspective.
On the other hand, if someone wishes to operate in good faith, their incentive is to make the smart contract as simple as possible, and as amenable to independent verification from outside parties (as well as theorem provers).
And no one has to worry about establishing mutual trust with the other person, or that they'll just change their mind in the future. Even if a contract is upgradable, if you only choose to work with ones that are either immutable, or require a timelock / voting period before changes take effect, you (collectively all the consumers of the contract) know your margin of safety.
And that margin of safety is provided because you can trust the base layer is itself immutable and secured. Whereas with risk mitigation through bonds etc, who is the trusted third party we mutually agree to hold our deposits? how do each of us trust that third party isn't in league with one of us? (I trust the "Certified Bank of Nigeria In England", but do you?).
That's the core bit that a smart contract platform like Ethereum provides -- a base layer for establishing mutual trust in objective terms. You can build whatever manner of agreements on top of such a base layer, but if the base layer isn't there, each separate agreement (expensively) requires the two parties find some common ground.
followup - shout out to https://defisafety.com/, which is attempting to curate lists of projects with publically performed audits, to make it easier to assess quality of their code (and how closely code adheres to human statements). it's nascent, but IMO a good step forward.
That's one reason why any reasonable smart contract includes an unconstrained everybody-signs spend path.
At least for any contract in which "everybody" is reasonably defined, known upfront, and finite.
At least for any contract in which "everybody" is reasonably defined, known upfront, and finite.
Having worked with Ethereum, especially the low level bytecode, one of the changes I'm most excited for that I don't see mentioned a lot is the addition of eWASM support for nodes. There's many problems with the two dominant smart contract languages Solidity and Vyper, for instance bloated codegen that had to be patched otherwise complex contracts size could not be deployed[0], or more theoretical concerns such as soundness, semantics and correctness. Part of the problem is because of no coherent shared intermediate representation and developers writing backends from scratch, and lots of reinventing of the wheel[1]. There's an ongoing project[2] to create an LLVM backend for EVM but the stack based nature is at odds with LLVM IR's bias towards register-based architectures. (EVM doesn't even have a separate stack for return addresses to implement subroutines cleanly!)
The switch to eWASM would greatly improve security, efficiency and perhaps allow a diversity of languages to be used on Ethereum. It should be a matter of exposing the appropriate primitives to call other contracts, generate log events, write to the store and so on.
[0] For instance, see a PR that reduces codegen from 55K to 1.6K bytes on an innocuous contract https://github.com/vyperlang/vyper/pull/1488
[1] I'm guilty of it too; https://github.com/ActorForth/evm-assembler/blob/master/docs...
[2] https://github.com/etclabscore/evm_llvm
The switch to eWASM would greatly improve security, efficiency and perhaps allow a diversity of languages to be used on Ethereum. It should be a matter of exposing the appropriate primitives to call other contracts, generate log events, write to the store and so on.
[0] For instance, see a PR that reduces codegen from 55K to 1.6K bytes on an innocuous contract https://github.com/vyperlang/vyper/pull/1488
[1] I'm guilty of it too; https://github.com/ActorForth/evm-assembler/blob/master/docs...
[2] https://github.com/etclabscore/evm_llvm
Fwiw there is a proposal to add a return stack to the EVM:
https://github.com/ethereum/EIPs/blob/master/EIPS/eip-2315.m...
Your evm-assembler looks pretty interesting. It's crossed my mind before to write an evm Forth, just for fun, and the lack of a return stack so far has dissuaded me.
https://github.com/ethereum/EIPs/blob/master/EIPS/eip-2315.m...
Your evm-assembler looks pretty interesting. It's crossed my mind before to write an evm Forth, just for fun, and the lack of a return stack so far has dissuaded me.
It's more than a proposal at this point, it's been accepted into the next network upgrade, Berlin, and has been implemented in all major clients for a while now.
That's fantastic, thanks!
Looking close enough at Solidity was what turned me off the Ethereum ecosystem back in the day: https://news.ycombinator.com/item?id=14810008
eWASM does look interesting, though!
eWASM does look interesting, though!
I've done a small bit of dabbling on solidity. Is there a place to get started on this new proposal? Or still too raw for the less experienced? I'll check your links but in case they don't cover that question.
I guess it's not mentioned a lot as it's still ~2 years away in Phase 2, AFAIK.
What's the current status of eWASM?
Seems like there's discussion of scrapping the whole phase 2 "execution environments" and just allowing heterogenous execution on rollups.
Seems like there's discussion of scrapping the whole phase 2 "execution environments" and just allowing heterogenous execution on rollups.
Can anyone give a TLDR of what is significant about Ethereum 2.0 for those of us who don't follow this stuff much?
As blockchain tech goes, Ethereum always seemed the most interesting.
As blockchain tech goes, Ethereum always seemed the most interesting.
Multiple aspects. PoS offers much, much stronger security than PoW while being about 4000x cheaper to run and sustainably decentralized. Sharding (along with rollups) allows for a truly global scale platform - over 100k TPS, potentially 1M, while still running on normal computers in people's homes. PoS is a requirement for sharding, as dividing security under PoW would make each shard too easy to attack.
Last but not least, full eth2 turns eth into a positive yield asset, a share in ethereum (real income depends on fees paid by users - ethereum already dominates).
https://cryptofees.info/
To not overhype, the current launch is really an incentivized testnet only for PoS itself - real ethereum still runs on PoW as it was. It's important because it shows that after long delays eth2 is finally starting to happen, and because consensus itself is like a car that can drive without transporting anything or anyone - not very useful at the moment, but changes required to make it useful are relatively small compared to building the car from the ground up.
Last but not least, full eth2 turns eth into a positive yield asset, a share in ethereum (real income depends on fees paid by users - ethereum already dominates).
https://cryptofees.info/
To not overhype, the current launch is really an incentivized testnet only for PoS itself - real ethereum still runs on PoW as it was. It's important because it shows that after long delays eth2 is finally starting to happen, and because consensus itself is like a car that can drive without transporting anything or anyone - not very useful at the moment, but changes required to make it useful are relatively small compared to building the car from the ground up.
> PoS offers much, much stronger security than PoW
Uh, why do you say that?
The security of PoS in fact ought to be much LOWER than the security of PoW:
The goal of requiring proof of work is that you cannot just send multiple versions of the same transaction into different areas of the network to double-spend your money - because you need to commit work for producing a block, and due to consuming energy you can't fake that.
Well, you can compute two (or more) blocks in parallel, but then you'll spend half of your available CPU (or ASIC nowadays) cycles on each block, thus cutting your speed in half. So the non-malicious competitors on the network will produce more blocks meanwhile because they're not splitting their computation power, and thus your fake blocks will get invalidated because they're on the shorter chain.
With PoS on the other hand you can create as many fake blocks as you want and spam them to the network. The only security is the hope that the random network topology arbitrarily results in the double-spending blocks arriving at the targets under attack after the other blocks arrive.
But if you run thousands of nodes on the cloud and thus have better network connectivity than the victims you can make your double-spend blocks arrive first at the victims.
So:
- PoW: Relies on physical limits, you need to have physical hardware and physical energy to conduct an attack.
- PoS: Relies on the network connectivity of the attacker being hopefully worse than the connectivity of the non-malicious network. Who can guarantee that? Nobody.
Uh, why do you say that?
The security of PoS in fact ought to be much LOWER than the security of PoW:
The goal of requiring proof of work is that you cannot just send multiple versions of the same transaction into different areas of the network to double-spend your money - because you need to commit work for producing a block, and due to consuming energy you can't fake that.
Well, you can compute two (or more) blocks in parallel, but then you'll spend half of your available CPU (or ASIC nowadays) cycles on each block, thus cutting your speed in half. So the non-malicious competitors on the network will produce more blocks meanwhile because they're not splitting their computation power, and thus your fake blocks will get invalidated because they're on the shorter chain.
With PoS on the other hand you can create as many fake blocks as you want and spam them to the network. The only security is the hope that the random network topology arbitrarily results in the double-spending blocks arriving at the targets under attack after the other blocks arrive.
But if you run thousands of nodes on the cloud and thus have better network connectivity than the victims you can make your double-spend blocks arrive first at the victims.
So:
- PoW: Relies on physical limits, you need to have physical hardware and physical energy to conduct an attack.
- PoS: Relies on the network connectivity of the attacker being hopefully worse than the connectivity of the non-malicious network. Who can guarantee that? Nobody.
Security deposits of attackers in ethereum are slashed, up to 100%, in case of an attack. The value at stake can potentially grow into hundreds of billions, much more than any PoW chain can hope to accumulate in mining revenues in its entire existence.
Last but not least, there's no way to delete PoW attacker's gpus, but hostile stake is always going to be slashed. Asic pow chain can be forked - once - to a gpu pow, but that's it, and after that there's no recourse to sustained attacks. This property virtually guarantees that no attack against PoS with slashing is ever going to happen.
https://vitalik.ca/general/2020/11/06/pos2020.html
Last but not least, there's no way to delete PoW attacker's gpus, but hostile stake is always going to be slashed. Asic pow chain can be forked - once - to a gpu pow, but that's it, and after that there's no recourse to sustained attacks. This property virtually guarantees that no attack against PoS with slashing is ever going to happen.
https://vitalik.ca/general/2020/11/06/pos2020.html
> Security deposits of attackers in ethereum are slashed, up to 100%, in case of an attack.
What defends against the attacker configuring his nodes to just not relay the blocks which slash his deposits, by having a majority in the network connectivity, and thereby convincing victim nodes that he in fact is the victim of false slashing because the victims will only discover the slash-claims much after the attackers "valid" blocks?
Or in other words:
Isn't the slashing mechanism also reliant upon mere hope that the network topology randomly happens to be in favor of non-malicious peers?
What defends against the attacker configuring his nodes to just not relay the blocks which slash his deposits, by having a majority in the network connectivity, and thereby convincing victim nodes that he in fact is the victim of false slashing because the victims will only discover the slash-claims much after the attackers "valid" blocks?
Or in other words:
Isn't the slashing mechanism also reliant upon mere hope that the network topology randomly happens to be in favor of non-malicious peers?
Not OP... but one big difference between PoW and PoS is that:
when a PoW block is mined, there's no way to know how much hidden equipment is out there mining a parallel chain, which could suddenly appear and take over with more accumulated work. You hope the malicious actor doesn't have 51%, but there's no way to actually prove that they aren't out there.
with PoS on the other hand, the set of validators who are voting on a block is known many blocks in advance. so say a malicious validator has X% of the voting power on a given block: he can't refuse to relay the other votes, because it will be obvious to all other nodes that he only speaks for X%, and what he's broadcasting lacks quorum, because the other (100-X)% votes are missing.
Whereas the other (100-X)% group will be actively broadcasting that they're slashing his stake; and if (100-X) has quorum, those votes will be accepted as valid by all the nodes on the network, regardless of what the malicious actor decides to broadcast.
TLDR: under PoW, silence is assumed to be absence of dissent, since number of miners out there is unknown. Whereas under PoS, silence still allows proving lack of quorum (since the voters are known well in advance), so censorship doesn't let a malicious validator legitimize their vote.
when a PoW block is mined, there's no way to know how much hidden equipment is out there mining a parallel chain, which could suddenly appear and take over with more accumulated work. You hope the malicious actor doesn't have 51%, but there's no way to actually prove that they aren't out there.
with PoS on the other hand, the set of validators who are voting on a block is known many blocks in advance. so say a malicious validator has X% of the voting power on a given block: he can't refuse to relay the other votes, because it will be obvious to all other nodes that he only speaks for X%, and what he's broadcasting lacks quorum, because the other (100-X)% votes are missing.
Whereas the other (100-X)% group will be actively broadcasting that they're slashing his stake; and if (100-X) has quorum, those votes will be accepted as valid by all the nodes on the network, regardless of what the malicious actor decides to broadcast.
TLDR: under PoW, silence is assumed to be absence of dissent, since number of miners out there is unknown. Whereas under PoS, silence still allows proving lack of quorum (since the voters are known well in advance), so censorship doesn't let a malicious validator legitimize their vote.
If the attacker has 2/3 of the entire stake then the only option is to manually coordinate a fork to a chain without his censorship, allowing protocol penalties to run its course. A direct analogue of an asic PoW fork in case of a sustained attack.
>and thereby convincing victim nodes that he in fact is the victim of false slashing because the victims will only discover the slash-claims much after the attackers "valid" blocks?
It's not possible for 'false slashing' to occur, because slashing requires presenting conflicting votes.
>Isn't the slashing mechanism also reliant upon mere hope that the network topology randomly happens to be in favor of non-malicious peers?
topology doesn't matter in this case, 2/3+ consensus is asynchronous. 2/3 of stake is required to finalize blocks, so the attacker would finalize his own chain without slashing.
There are some ideas about 99+% proof consensus which rely on topology and nodes being online (which means they can observe that censorship is happening) but it's not currently implemented. Eventually I expect it to happen, making attacks a practical impossibility, by coupling asynchronous 2/3+ consensus guarantee with synchronous 99+% guarantee, effectively automatically coordinating anti-censorship forks.
https://vitalik.ca/general/2018/08/07/99_fault_tolerant.html
>and thereby convincing victim nodes that he in fact is the victim of false slashing because the victims will only discover the slash-claims much after the attackers "valid" blocks?
It's not possible for 'false slashing' to occur, because slashing requires presenting conflicting votes.
>Isn't the slashing mechanism also reliant upon mere hope that the network topology randomly happens to be in favor of non-malicious peers?
topology doesn't matter in this case, 2/3+ consensus is asynchronous. 2/3 of stake is required to finalize blocks, so the attacker would finalize his own chain without slashing.
There are some ideas about 99+% proof consensus which rely on topology and nodes being online (which means they can observe that censorship is happening) but it's not currently implemented. Eventually I expect it to happen, making attacks a practical impossibility, by coupling asynchronous 2/3+ consensus guarantee with synchronous 99+% guarantee, effectively automatically coordinating anti-censorship forks.
https://vitalik.ca/general/2018/08/07/99_fault_tolerant.html
You seem to assume that the attacker has control over the entire internet.
Ethereum has 11 000 nodes currently: https://www.ethernodes.org/
There are probably many botnets of IoT devices with 10x that many nodes, aren't there?
So a single botnet could probably ensure that a target victim has the majority of peer connections to the attacker.
There are probably many botnets of IoT devices with 10x that many nodes, aren't there?
So a single botnet could probably ensure that a target victim has the majority of peer connections to the attacker.
If a validator signs two blocks at the same height, they will be slashed, lose their tokens, and not be able to participate in consensus. They get slashed when anyone submits evidence of them doing this. This trivially solves the "nothing at stake" problem from 2014 that you wrote your long original comment about.
If I understand it correctly, you are now saying that someone would DDOS the entire gossip network, completely halting any more production of blocks so that their slashing doesn't go through?
We're not even talking about "nothing at stake", or anything having to do with PoS anymore. We're just talking about a massive DDOS of an entire network. Node operators in PoS networks, as well as Bitcoin, have ways of dealing with DDOS which are the same as how anyone deals with it, and I don't need to get into them here.
If someone was able to overcome these DDOS mitigations and completely prevent a PoS network from receiving any legitimate transactions, they could do this to Bitcoin as well.
If I understand it correctly, you are now saying that someone would DDOS the entire gossip network, completely halting any more production of blocks so that their slashing doesn't go through?
We're not even talking about "nothing at stake", or anything having to do with PoS anymore. We're just talking about a massive DDOS of an entire network. Node operators in PoS networks, as well as Bitcoin, have ways of dealing with DDOS which are the same as how anyone deals with it, and I don't need to get into them here.
If someone was able to overcome these DDOS mitigations and completely prevent a PoS network from receiving any legitimate transactions, they could do this to Bitcoin as well.
> They get slashed when anyone submits evidence of them doing this.
Who will record this "evidence" to the blockchain? Anyway there will be two versions of the blockchain. In one of them attacker's stake was not slashed and there is no any "evidence" of his malicious actions.
Who will record this "evidence" to the blockchain? Anyway there will be two versions of the blockchain. In one of them attacker's stake was not slashed and there is no any "evidence" of his malicious actions.
The "evidence" is two blocks, with the same block height, both signed by the attacker.
Not sure what these two versions of the blockchain you're talking about are. Signing two blocks at the same height with the same chain id is the slashable offense. It doesn't matter what's in them.
If the attacker wants to have his own blockchain off in the corner where he has all the money, nobody cares.
Not sure what these two versions of the blockchain you're talking about are. Signing two blocks at the same height with the same chain id is the slashable offense. It doesn't matter what's in them.
If the attacker wants to have his own blockchain off in the corner where he has all the money, nobody cares.
> Not sure what these two versions of the blockchain you're talking about are.
Really?! One version is "Vitalik's fork" and another one is "non-Vitalik's fork". Which one of them is a valid chain? Any idea?
Assume the attacker is Vitalik and there an "evidence" of his attack. Who will dare to slash him? Vitalik won't include this evidence into "Vitalik's fork". If Vitalik wants to have his own blockchain, nobody cares, isn't it?
Really?! One version is "Vitalik's fork" and another one is "non-Vitalik's fork". Which one of them is a valid chain? Any idea?
Assume the attacker is Vitalik and there an "evidence" of his attack. Who will dare to slash him? Vitalik won't include this evidence into "Vitalik's fork". If Vitalik wants to have his own blockchain, nobody cares, isn't it?
This is completely untrue and has been since 2014. The solution is that validators are "slashed" and lose their tokens if they have been found to sign two blocks at the same height.
What has happened in 2014? Is that a time when brain-washing campaign in crypto-media has been started? "Slashing" is not a solution to this problem.
Vitalik Buterin came up with a solution for the nothing-at-stake problem: https://blog.ethereum.org/2014/01/15/slasher-a-punitive-proo...
Also, I'm not sure why you and the other commenter are so argumentative about this. There are several PoS networks out there such as Cosmos, Tezos, etc, holding more than a billion dollars. If there was an issue, someone would have hacked them by now.
Also, I'm not sure why you and the other commenter are so argumentative about this. There are several PoS networks out there such as Cosmos, Tezos, etc, holding more than a billion dollars. If there was an issue, someone would have hacked them by now.
> Vitalik Buterin came up with a solution for the nothing-at-stake problem
Is that a link to an article from a peer reviewed academic journal?
> There are several PoS networks out there such as Cosmos, Tezos, etc, holding more than a billion dollars. If there was an issue, someone would have hacked them by now.
I'll give you a hint: "slashing" is not a thing that sustains security of these networks.
Is that a link to an article from a peer reviewed academic journal?
> There are several PoS networks out there such as Cosmos, Tezos, etc, holding more than a billion dollars. If there was an issue, someone would have hacked them by now.
I'll give you a hint: "slashing" is not a thing that sustains security of these networks.
Where did he claim it was a peer reviewed journal?
Don't you think this claim should be supported by some reputable secondary source?
Thanks for answering questions I’ve had for a long time about POS. Do you have any links to share on the subject?
Google "nothing at stake problem".
Why did you not add "Who can guarantee that? Nobody." to the PoW description as well?
Exactly. As they say, first step is always the hardest. The switch from PoW to PoS was monumental and I'm glad they took the time to execute so well. This is a great step forward for Ethereum
It's not the first proof of stake blockchain, but it's the first that allows hundreds of thousands of nodes to fully participate, while also having high security and rapid finality. This is only possible because of math that was developed three years ago.
https://twitter.com/technocrypto/status/1330150362427387910
In proof of stake, mining equipment and electricity consumption is replaced by the cryptocurrency itself. You put up your currency as a bond, get rewarded more for running the network, and lose your bond if you misbehave.
The other big advance for ETH2 will be sharding, so each node doesn't have to process every transaction. But that's not the part that launched today.
https://twitter.com/technocrypto/status/1330150362427387910
In proof of stake, mining equipment and electricity consumption is replaced by the cryptocurrency itself. You put up your currency as a bond, get rewarded more for running the network, and lose your bond if you misbehave.
The other big advance for ETH2 will be sharding, so each node doesn't have to process every transaction. But that's not the part that launched today.
So will this be a new currency or will existing ETH switch to it?
It is powered by proof of stake, which means no asic miners, and possibly quicker blocks.
A new virtual machine for smart contracts (EWASM instead of EVM) giving better contract analysis options, and possibly higher sync speeds due to optimisations.
Also, sharding - so multiple jndependent blockchains, that should fix the scalability.
If I’m not mistaken, this release is not yet a full blown new chain, but just a partially functional one, designed to test stabiloty and safety.
Disclaimer - I’m a bit out of loop, so I meay be slightly wrong somewhere.
A new virtual machine for smart contracts (EWASM instead of EVM) giving better contract analysis options, and possibly higher sync speeds due to optimisations.
Also, sharding - so multiple jndependent blockchains, that should fix the scalability.
If I’m not mistaken, this release is not yet a full blown new chain, but just a partially functional one, designed to test stabiloty and safety.
Disclaimer - I’m a bit out of loop, so I meay be slightly wrong somewhere.
The VM for smart contract is not set.
The roadmap has changed for the phases after this launch so that Eth1 contracts and the Eth1 chain can run on Eth2 so that the past years of Eth1 development are not thrown away.
Reading on the roadmap: https://ethereum-magicians.org/t/a-rollup-centric-ethereum-r...
Disclaimer, this roadmap is valid as of today Dec 1st 2020 but it might have change a couple of months from now.
The roadmap has changed for the phases after this launch so that Eth1 contracts and the Eth1 chain can run on Eth2 so that the past years of Eth1 development are not thrown away.
Reading on the roadmap: https://ethereum-magicians.org/t/a-rollup-centric-ethereum-r...
Disclaimer, this roadmap is valid as of today Dec 1st 2020 but it might have change a couple of months from now.
Ah, good to know, thanks. I was a bit out of the loop for the past year.
I wouldn't mind staying with EVM, since EWASM doesn't seem to offer much significant improvement (static jumps only, really).
I wouldn't mind staying with EVM, since EWASM doesn't seem to offer much significant improvement (static jumps only, really).
I think ewasm is a bit up in the air, may come along at some point but i think the developer tools built up on the evm (and dev knowledge of evm) isnt going to be quickly replaced.
Beginning of switch from Proof of Work to Proof of Stake consensus, which will end the mining process for Ethereum and switch to securing the network by locking up funds, drastically reducing the amount of energy used to secure the network. As a side effect of the consensus change, the amount of transactions per second will scale massively. There is not universal agreement among blockchain enthusiasts that Proof of Stake is as secure as Proof of Work, but many currencies such as Cosmos and Polkadot have already implemented Proof of Stake without security issues.
any idea on the increase in transactions per second/month/some time period? The things that have stopped me from getting into btc/eth are:
- scaling issues (it can't be used as a currency if this isn't fixed) - power issues (would be nice if we didn't create a huge pointless energy sink if we could avoid it) - the amount of footguns in ethereum (I think the language is too permissive)
It looks like this solves at least 2 of the three!
- scaling issues (it can't be used as a currency if this isn't fixed) - power issues (would be nice if we didn't create a huge pointless energy sink if we could avoid it) - the amount of footguns in ethereum (I think the language is too permissive)
It looks like this solves at least 2 of the three!
At least 1000 transactions per second if not more. In terms of language security, it is possible to use a verified subset of the language in order to avoid bugs, as you can with any Turing-complete language. Few currently do, however.
Thanks -- yeah the language thing I guess is much harder to change, but I can protect from that by just sticking to relatively simple transactions, or maybe if some sort of professional review/audit agency would spring up...
There are basically two big things in Ethereum's scaling roadmap. One is sharding, so each node only has to process a fraction of all transactions. Initially there will be 64 shards, but it's designed to allow up to 1024. As individual nodes get more powerful, both the number of shards and the amount processed by each shard increases, for quadratic scaling.
The other part, which is on Ethereum mainnet already, is a layer-2 idea called rollups, which store transactions on chain in a very compressed format without losing security guarantees. There are several rollup systems, capable on today's Ethereum of doing 1000 to 9000 simple tx/sec.
Once both systems are live, total capacity will be 20K to 100K tx/sec, not counting the quadratic improvements.
On the research side, there's also work to make data validation more efficient by replacing merkle trees with something more compact, like polynomial commitments. That would add another 10X factor to rollup scaling.
Regarding footguns, people are working on more rigorous languages than Solidity that still compile to the EVM. So far their compilers aren't as solid so they don't get much production use yet.
The other part, which is on Ethereum mainnet already, is a layer-2 idea called rollups, which store transactions on chain in a very compressed format without losing security guarantees. There are several rollup systems, capable on today's Ethereum of doing 1000 to 9000 simple tx/sec.
Once both systems are live, total capacity will be 20K to 100K tx/sec, not counting the quadratic improvements.
On the research side, there's also work to make data validation more efficient by replacing merkle trees with something more compact, like polynomial commitments. That would add another 10X factor to rollup scaling.
Regarding footguns, people are working on more rigorous languages than Solidity that still compile to the EVM. So far their compilers aren't as solid so they don't get much production use yet.
Thanks for the summary of the current state of the art -- last I looked at this sharding/federated-chain stuff was still only research grade for bitcoin as a whole. If Ethereum is ready to productize that's amazing news.
Anything more than ~3000 tx/sec will be a game changer and maybe ethereum will finally deliver on the promise of usability as currency.
Anything more than ~3000 tx/sec will be a game changer and maybe ethereum will finally deliver on the promise of usability as currency.
You can check out the current roadmap here
https://ethereum.org/en/eth2/#roadmap
https://ethereum.org/en/eth2/#roadmap
Not tldr, but explanation https://m.youtube.com/watch?v=3x1b_S6Qp2Q
Congrats to the dev team and ethereum community. This is a monumental step for the future of crypto.
Can someone explain how block timing works in proof-of-stake systems? As I understand it, with proof-of-work the mining difficulty increases or decreases to maintain that each block is found in roughly the same amount of time. In proof-of-stake is there also a mechanism to regulate the time for each block to be added to the blockchain?
[deleted]
No, as far as I understood the time between blocks in a PoS chain is basically just a timer (e.g. 10 seconds). There is no need to adjust that dynamically because there is no "race" to solve a problem. I guess it is even more predictable if it is not dynamically adjusted.
But that does have to be enforced via incentives/cryptography, and with reference to a clock.
Well it is enforced by the protocol on which all node agree and there needs to be a mechanism for syncing clocks across nodes (also defined by the protocol) but they exist, e.g. https://ieeexplore.ieee.org/document/8946264
Not 100% sure what ETH is using here but there is a mechanism.
If someone would want to fake timestamps, they would need to deviate from the protocol and would thus not be on chain.
Not 100% sure what ETH is using here but there is a mechanism.
If someone would want to fake timestamps, they would need to deviate from the protocol and would thus not be on chain.
You are simply raising the fundamental difficulty with blockchains. How do you know what is the true chain in an adversary environment (the internet)? You gave us the question and no answer
Validation of the longest chain, agreed upon by the protocol which the nodes are running. This is the absolute fundamental of this technology. This is not new and it has been working for more than a decade.
* which the majority of nodes are running
That's not how the technology networks. That naive implementation would leave you wide open for sybil attack
This is incorrect. The difficulty is PoS adjusts to meet the target block time just like it does in PoW.
I have to suspect that you are wrong. Can you provide a source? There is no mentioning of difficulty in the spec, instead there are predefined slot times:
https://github.com/ethereum/eth2.0-specs/blob/dev/specs/phas...
Here is how they sync: https://ieeexplore.ieee.org/document/8946264
Assuming they describe the BeaconBlocks mentioned here: https://github.com/ethereum/eth2.0-specs/blob/dev/specs/phas...
Also, which effect would an increased difficulty have?
https://github.com/ethereum/eth2.0-specs/blob/dev/specs/phas...
Here is how they sync: https://ieeexplore.ieee.org/document/8946264
Assuming they describe the BeaconBlocks mentioned here: https://github.com/ethereum/eth2.0-specs/blob/dev/specs/phas...
Also, which effect would an increased difficulty have?
This might be as good a place as any to ask, since I'm completely out of the loop on the scene: Are there any successful crypto schemes that use human effort (labour) instead of capital/computing effort? Something like Captcha or Mechanical Turk, hopefully something generally useful to society at large. Solving problems that computers can't (yet).
It would seem to be a way to avoid the rich-get-richer aspect because hiring people wouldn't make sense - they'd get more value going it alone, so existing capital has reduced influence.
It would seem to be a way to avoid the rich-get-richer aspect because hiring people wouldn't make sense - they'd get more value going it alone, so existing capital has reduced influence.
Gold?
But then you're basically describing normal currency backed by the nation state. The state can basically print its own money because it backs up its currency with state power - whether it be enforcing laws and governmental institutions, enforcing taxation to force citizens to use its currency, funding military defensive/offensive operations, provide various welfare services to citizens to create a safety net for the economy, and using monetary policies to modulate its growth. And every one of the activities I've listed above is achieved through human labor.
Obviously there is no nation that backs its currency value for an objectively "good" common cause - every nation probably only thinks within her interest for most of the time. If you want to create such an institution which can print money backed by the values you like - then the answer is much more political than technical, and the crypto algorithms alone wouldn't help you in achieving that.
Obviously there is no nation that backs its currency value for an objectively "good" common cause - every nation probably only thinks within her interest for most of the time. If you want to create such an institution which can print money backed by the values you like - then the answer is much more political than technical, and the crypto algorithms alone wouldn't help you in achieving that.
I don't see the direct connection sorry. With currency, gold, etc, it can be stolen or controlled in ways a blockchain currency cannot.
I was merely talking about replacing proof of work with a human step rather than something computed. Intellectual labour (such as to plug our gaps in AI) moreso than physical. Answer a quiz when you buy a coffee or sit there for a few hours to mine coins while analysing a corpus. Something like that.
I saw that some exist, I don't know how relevant they are.
I was merely talking about replacing proof of work with a human step rather than something computed. Intellectual labour (such as to plug our gaps in AI) moreso than physical. Answer a quiz when you buy a coffee or sit there for a few hours to mine coins while analysing a corpus. Something like that.
I saw that some exist, I don't know how relevant they are.
Why would anyone use such a system? For poor people the motivation is clear. However, who's going to contribute the resources required to make it run, if the whole point of the system is to disadvantage those with the resources?
> hopefully something generally useful to society at large
If it is useful then it won't be secure because it would be free to "hash". The mechanism has to be costly. Proof-of-work is in many ways proof-of-waste. If tomorrow we find out that hashing is profitable then everyone can start hashing and be able to attack the chain for free (subsidized by the usefulness). Only the hash power above the useful level can add security.
If it is useful then it won't be secure because it would be free to "hash". The mechanism has to be costly. Proof-of-work is in many ways proof-of-waste. If tomorrow we find out that hashing is profitable then everyone can start hashing and be able to attack the chain for free (subsidized by the usefulness). Only the hash power above the useful level can add security.
Whoa, according to AllNodes, Expected ROI for Eth2 stakeholders is 16.6%, which easily beats out almost any other DeFi interest bearing account (typically ~10%)!
APR depends on total staked amount, and decreases as staked Eth increases. You can see the chart here: https://launchpad.ethereum.org
Now that the launch has succeeded, I will stake some of my Eth. As more people do that, APR will fall.
Now that the launch has succeeded, I will stake some of my Eth. As more people do that, APR will fall.
Edit: this complaint is null now!
Poo, minimum 32 ETH or at current prices $19k. This reinforces my dislike of staking. Only making the already rich richer. Keeping lesser ETH holders out of the profit.
But who am I kidding; if I magically had 32 ETH to stake I'd probably feel differently.
Poo, minimum 32 ETH or at current prices $19k. This reinforces my dislike of staking. Only making the already rich richer. Keeping lesser ETH holders out of the profit.
But who am I kidding; if I magically had 32 ETH to stake I'd probably feel differently.
You can use staking pools as well to stake less than 32 Eth.
It's the same concept as PoW. If you have a lot of money, you can buy ASICS and stake for yourself (making you richer). If you don't, you'll join a mining pool and earn money relative to your hash power.
PoW makes the rich richer as well, that's life.
With PoS, you have at least skin in the game (your stake).
:facepalm: thanks you totally negated my complaint. Awesome, I appreciate it!
What staking pools are available? I found Rocketpool but have no visibility of other options.
In crypto there's this concept of delegation and also pooling. This allows folks with smaller holdings to be exposed to the benefits of staking.
Can this be done non-custodially?
i.e. can an ETH holder somehow delegate a pool to be able to stake with that ETH but not spend it?
i.e. can an ETH holder somehow delegate a pool to be able to stake with that ETH but not spend it?
Yes, take a look at Rocket Pool:
https://www.rocketpool.net/
The trick is that as the pool leader, you have to put up a 16 ETH stake and other participants pool together to make up the other 16 ETH.
If you misbehave as the pool leader, your 16 ETH is the first to get slashed.
They published a blog post this week talking about how they are pushing back their roadmap until the Eth1/Eth2 merge, though.
Their proof of concept was working great on testnets.
https://www.rocketpool.net/
The trick is that as the pool leader, you have to put up a 16 ETH stake and other participants pool together to make up the other 16 ETH.
If you misbehave as the pool leader, your 16 ETH is the first to get slashed.
They published a blog post this week talking about how they are pushing back their roadmap until the Eth1/Eth2 merge, though.
Their proof of concept was working great on testnets.
No or people could use that to bypass slashing.
Oooh, gonna be some fun trust scams in PoS world :-D
So probably somewhere between 5~6%, maybe i should convert some of my Tezos to eth in the future.
In the longer term, yes. Plus you can use eth2 in defi (e.g., for lending) to generate additional yield.
No you can't.
You can't do anything with Eth2 that is locked. Some pool staking services offer a token for each ETH staked, but you can not use the staked ETH.
You can't do anything with Eth2 that is locked. Some pool staking services offer a token for each ETH staked, but you can not use the staked ETH.
I was referring to longer term developments, in case this is unclear.
Using staked ether in the defi ecosystem will be possible once withdrawal and smart contract functionality is enabled. Until then, there are liquid staking services that offer eth2 derivatives that can be used in defi, as you point out.
Using staked ether in the defi ecosystem will be possible once withdrawal and smart contract functionality is enabled. Until then, there are liquid staking services that offer eth2 derivatives that can be used in defi, as you point out.
You can always take out a loan against your stakes eth2
yEarn is offering ~17% APR on stablecoins, but of course the risk profile is vastly different.
One question - why didn't Bitcoin drop to zero? I know, VHS survive and Betamax didn't, but unlike Betamax, Ethereum is pretty popular for everything, not just for low-class commodity speculation.
This ecosystem is rapidly developing and changing; I think there's still plenty of time for BTC/ETH/LTC/XRP/etc to all exist anywhere from [0,∞).
The narrative that is often pushed forward is that they have different use cases. Bitcoin is a limited-supply store of value (analogous to precious metals). BTC blockchain isn't well suited for quick transactions, but it is the blockchain that is the most robust and secure. Ethereum, being Turing complete, provides an ecosystem on which other applications can be built.
The narrative that is often pushed forward is that they have different use cases. Bitcoin is a limited-supply store of value (analogous to precious metals). BTC blockchain isn't well suited for quick transactions, but it is the blockchain that is the most robust and secure. Ethereum, being Turing complete, provides an ecosystem on which other applications can be built.
Bitcoin is the gateway into crypto. Check the marketcap, and all the pairs are tied to BTC on most major exchanges. It's also the most secure and has the largest community. It's use case is different than Ethereum's.
>>It's also the most secure and has the largest community.
Ethereum's mining fees exceed Bitcoin's:
https://cryptofees.info/
That would mean it has better long-term security prospects than Bitcoin, as security is proportional the revenue earned by validators.
Ethereum's mining fees exceed Bitcoin's:
https://cryptofees.info/
That would mean it has better long-term security prospects than Bitcoin, as security is proportional the revenue earned by validators.
That's misleading. If you factor in mining rewards, Bitcoin has much higher fees per transaction. A total of $18,000,000 more per day spent on validating Bitcoin transactions than what that website claims.
In the case of Bitcoin, mining rewards decline geometrically, at a rate of 50% every 4 years. Mining fees are what any cryptocurrency with an inflation rate that rapidly declines to zero/close-to-zero depends on for security on any appreciable time scale.
That's why I said that Ethereum's long-term security prospects are better. Its mining fees have exceeded Bitcoin's and with the multi-pronged efforts to further scale Ethereum - that are vastly more promising than Bitcoin's - there is a high likelihood of these fees further increasing their gap with Bitcoin's.
That's why I said that Ethereum's long-term security prospects are better. Its mining fees have exceeded Bitcoin's and with the multi-pronged efforts to further scale Ethereum - that are vastly more promising than Bitcoin's - there is a high likelihood of these fees further increasing their gap with Bitcoin's.
There still isn't a lot of real-world use of crypto. Even all the DeFi stuff on Ethereum, while innovative, is derivatives on speculative crypto assets.
As long as speculation is the main thing going on in crypto, BTC is king, since it is purely speculative, has the best name recognition, and doesn't try to hide that fact.
As long as speculation is the main thing going on in crypto, BTC is king, since it is purely speculative, has the best name recognition, and doesn't try to hide that fact.
This is a big deal to me. I'm watching keenly to see when the crypto market makes the turn out of niche market space and into the mainstream. Perhaps Eth2 is one of the starting blocks that is needed...
Agree on all point. Especially with Ethereums great innovations in marketing. Sadly their technical innovations are lacking beyond smoke and mirrors
how about getting a higher interest on your savings account using defi on your usdc? Isn't this a real world use case?
That's as much of a use case as "get rich from dogecoin". Both of them are based on speculation. The "high interest" is just a derivative that shapes the speculation a certain way. Underlying it is still people speculating on cryptocurrency.
It's different from a conventional bank account, because there the returns are (theoretically) coming from the bank loaning it to entrepreneurs to buy factory and farming equipment and create value.
It's different from a conventional bank account, because there the returns are (theoretically) coming from the bank loaning it to entrepreneurs to buy factory and farming equipment and create value.
The difference from "get rich from dogecoin" is that there is no downside(aside from smart contract risk).
You could however be morally against earning interest through others speculating. In that case you could still earn better interest by just by being USDC-sUSD LP on curve.fi.
You could however be morally against earning interest through others speculating. In that case you could still earn better interest by just by being USDC-sUSD LP on curve.fi.
Less is more.
What distinguishes Bitcoin from most cryptocurrencies is that a) It has a (relatively) simple goal -- sound money -- and thus less attack surface; and b) Its community is fiercely conservative, to the point that major changes to Bitcoin (e.g. increasing the total supply) are completely off the table. These properties inspire confidence, making Bitcoin a much safer bet than any other cryptocurrency.
What distinguishes Bitcoin from most cryptocurrencies is that a) It has a (relatively) simple goal -- sound money -- and thus less attack surface; and b) Its community is fiercely conservative, to the point that major changes to Bitcoin (e.g. increasing the total supply) are completely off the table. These properties inspire confidence, making Bitcoin a much safer bet than any other cryptocurrency.
Bitcoin isn't valuable because of its technical properties, just like gold isn't valuable because of its physical properties.
Both are valuable because of their universally recognized scarcity and value. If you want to put your wealth in a SoV cryptocurrency, Bitcoin is the clear schelling point.
Ether will remain competitive with BTC, it may even flip it in market cap, but I doubt Bitcoin will ever go away.
Both are valuable because of their universally recognized scarcity and value. If you want to put your wealth in a SoV cryptocurrency, Bitcoin is the clear schelling point.
Ether will remain competitive with BTC, it may even flip it in market cap, but I doubt Bitcoin will ever go away.
Bitcoin is valuable because of its value?
Just like USD :)
You must pay taxes in USD. BTC and USD are really not comparable.
You must pay for Bitcoin transaction fees with BTC, same idea different scale, I guess.
I don't think taxes justify the value of a state currency, otherwise the value would fluctuate wildly when close to tax season.
I don't think taxes justify the value of a state currency, otherwise the value would fluctuate wildly when close to tax season.
One thing I haven't been able to figure out about proof of stake is this:
if one entity somehow manages to control over half to the total ETH tokens, does this enable an attack analogous to bitcoin's 51% problem (which happens when one miner controls over half of the network's raw cpu power)?
if one entity somehow manages to control over half to the total ETH tokens, does this enable an attack analogous to bitcoin's 51% problem (which happens when one miner controls over half of the network's raw cpu power)?
Yes
Yes. But thats the point of PoS. Why would someone who owns >50% of something want to destroy it? Literally hurting yourself more just to hurt others a lesser amount.
Correct me if I'm wrong, but if you own > 50% and get the ability to reverse transactions, it can still go undetected. So it's possible to hurt others without hurting yourself.
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It definitely doesn't go undetected, as the conflicting transactions would have to be in blocks both forking from a common block, both signed by the attacker, which is a slashing condition that would burn their staked ether.
How would it go undetected? The people whose transactions are being reversed would definitely notice, as would anyone else paying close attention to said transactions.
In theory yes, but in practice the people most involved (holding large stakes) would pull out of the system en masse, crashing the value and (probably) the whole network with it. Same with BTC. In theory anyway.
What if those people had more to lose by pulling out than pretending nothing happened as long as the 51% attacker does not abuse it "too much"?
Also, it would be kind of visible and hard to hide. With sufficient high profile stake holders, this would be very unlikely to happen and even harder to hide.
Ok, but suppose someone owns 50% of the tokens. Doesn't this mean the system is de facto centralized. Even if the majority holder behave well, how is it better than a centralized solution?
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Someone (very rich) could bet even more money on that thing falling..?
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If a large government decides it's a problem, would they hold it or destroy it?
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No. The required amount is greater than 2/3 (67%) not greater than 1/2 (51%) on PoS for Ethereum.
Also, see this tweet from Vitalik: https://twitter.com/VitalikButerin/status/130129808602782105...
So even if there was a successful first attack from some organised body that's all the time they get.
Also, see this tweet from Vitalik: https://twitter.com/VitalikButerin/status/130129808602782105...
So even if there was a successful first attack from some organised body that's all the time they get.
Correct me if I'm wrong, but you would only need greater than 2/3 of the amount of Ether currently staked, not 2/3 of the total amount of Ether. The amount of staked Ether probably would be less than 10% of the total issued Ether, maybe much less as staking rewards go down.
Correct it is of the staked Ether not total supply. It's an important detail of course and easily missed, a good way for future people stumbling across here to think about it is that any attack only involves those participating in consensus. For Bitcoin consensus is mining. For the beacon Ethereum chain consensus is staking, therefore only staking Ether is relevant.
So the endgame is that someone owns 99% of all ETH and everyone just accepts it because it's not a threat? Why have a blockchain at all?
Great explanation. One interesting aspect of PoS is that attackers really only have 1 shot, and will get slashed or lose their assets. In PoW, you in theory can keep attacking again and again.
> The required amount is greater than 2/3 (67%)
I'm not sure that's correct (the tweet doesn't get into any details so I went to ethereum's website https://ethereum.org/en/developers/docs/consensus-mechanisms...)
> The threat of a 51% attack still exists in proof-of-stake but it's even more risky for the attackers. To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money but it would probably cause ETH's value to drop. There's very little incentive to destroy the value of a currency you have a majority stake in. There are stronger incentives to keep the network secure and healthy.
The keypoint seems to be that if your attack fails your stake gets destroyed so besides the positive incentives (a good stable network working for all) this system also relies on punishing failed attacks.
I'm not sure that's correct (the tweet doesn't get into any details so I went to ethereum's website https://ethereum.org/en/developers/docs/consensus-mechanisms...)
> The threat of a 51% attack still exists in proof-of-stake but it's even more risky for the attackers. To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money but it would probably cause ETH's value to drop. There's very little incentive to destroy the value of a currency you have a majority stake in. There are stronger incentives to keep the network secure and healthy.
The keypoint seems to be that if your attack fails your stake gets destroyed so besides the positive incentives (a good stable network working for all) this system also relies on punishing failed attacks.
A 51% staker who attempted to reverse transactions on ETH2 would be automatically penalized by the destruction of their stake. The network would keep running and the end result would be a large sudden deflation of ETH. On PoW this would be like an attacker's mining rig burning down.
A 51% staker who just censored transactions could hold out longer. If the problem were severe, the community would have to decide whether they want to manually fork off the attacker. The equivalent for PoW would be changing the hash function.
Gaining 51% can be more expensive to do on PoS than on PoW. If 10% of the tokens are staked, you need to accrue another 10% of the total market cap. On PoW, if the annual inflation rate is 2%, the hardware is good for two years, and half the mining cost is electricity, then the total value of mining equipment is only 2% of the market cap, and that's how much you'll have to spend to get 51%. (If miners are rentable, then much less for a brief attack.)
A 51% staker who just censored transactions could hold out longer. If the problem were severe, the community would have to decide whether they want to manually fork off the attacker. The equivalent for PoW would be changing the hash function.
Gaining 51% can be more expensive to do on PoS than on PoW. If 10% of the tokens are staked, you need to accrue another 10% of the total market cap. On PoW, if the annual inflation rate is 2%, the hardware is good for two years, and half the mining cost is electricity, then the total value of mining equipment is only 2% of the market cap, and that's how much you'll have to spend to get 51%. (If miners are rentable, then much less for a brief attack.)
Imagine somehow a single party gets 66% of all ETH, enough for them to execute the equivalent of a "51% attack".
The community will notice and can decide to do a hard fork of the network where they "delete" the attackers coins.
So the network would have experience a hickup, but the hacker has lost billions of dollars worth of ETH and can't attack anymore.
This is different from Proof of Work & Bitcoin. If an attacker gets 51% of the "mining power" (physical hardware), there's nothing the community can do to "delete" their hardware.
The community will notice and can decide to do a hard fork of the network where they "delete" the attackers coins.
So the network would have experience a hickup, but the hacker has lost billions of dollars worth of ETH and can't attack anymore.
This is different from Proof of Work & Bitcoin. If an attacker gets 51% of the "mining power" (physical hardware), there's nothing the community can do to "delete" their hardware.
Vitaliks recent blog post is probably the best place for a quick overview of Pos/PoW attack costs and why PoS looks to be a more secure approach https://vitalik.ca/general/2020/11/06/pos2020.html
I think PoS is much more likely to get wider adoption than PoW with the rest of the Ethereum ecosystem, FWIW. Glad Ethereum is making the switch.
This is one of the biggest news for tech and finance in 2020.
It is big news but we will only see the full effect in 2022 or so.
Can someone ELI5 for current ETH holders? Will it split like Etherium Classic?
No, it's not splitting.
Check out https://ethereum.org/en/eth2/
"What is Eth2?
Eth2 refers to a set of interconnected upgrades that will make Ethereum more scalable, more secure, and more sustainable. These upgrades are being built by multiple teams from across the Ethereum ecosystem."
Check out https://ethereum.org/en/eth2/
"What is Eth2?
Eth2 refers to a set of interconnected upgrades that will make Ethereum more scalable, more secure, and more sustainable. These upgrades are being built by multiple teams from across the Ethereum ecosystem."
A very, very concise brief is it's a concurrent (happening at the same time) network upgrade from PoW (proof of work) to PoS (proof of stake). The new chain called the beacon chain will operate alongside the "old" one until a full cut-over happens some time in the future. Predicted 1-2 years.
Short answer: no, there's only one Ethereum and one ETH asset
Long answer: The beacon chain _will_ run in parallel until the two chains are merged. Until that time, ETH in the Beacon Chain isn't transferable, so effectively not a separate asset.
However, exchanges are offering Eth2 staking derivatives which they're branding as "ETH2". But it should be remembered that this is a derivative, not a separate M0 asset.
Long answer: The beacon chain _will_ run in parallel until the two chains are merged. Until that time, ETH in the Beacon Chain isn't transferable, so effectively not a separate asset.
However, exchanges are offering Eth2 staking derivatives which they're branding as "ETH2". But it should be remembered that this is a derivative, not a separate M0 asset.
Well, the expectation is that compliant clients will only respect transactions on Eth2 at some point and will no longer consider new blocks on Eth1 valid.
At any point in time, of course, any node or set of nodes can declare a fork in the chain to be invalid and reorganize on another chain. That's what happened with Ethereum Classic and it could happen again. I think less likely unless there's a vulnerability discovered in Eth2, though.
Also less likely because in some ways the Ethereum Classic incident helped cement Ethereum's place by scaring off all the ideologues and keeping the participants who were more pragmatic.
At any point in time, of course, any node or set of nodes can declare a fork in the chain to be invalid and reorganize on another chain. That's what happened with Ethereum Classic and it could happen again. I think less likely unless there's a vulnerability discovered in Eth2, though.
Also less likely because in some ways the Ethereum Classic incident helped cement Ethereum's place by scaring off all the ideologues and keeping the participants who were more pragmatic.
Is it still deflationary?
Wondering if I should invest in the coin itself (which makes sense for deflationary coins) or a company doing something with it (which makes sense for an inflationary coin)
Wondering if I should invest in the coin itself (which makes sense for deflationary coins) or a company doing something with it (which makes sense for an inflationary coin)
This is a term thrown around a lot. "Deflationary" has different meanings in different contexts.
Conventional economists use "deflation" to mean "price deflation" -- that is, the price of goods, on average, decreases over time, as denominated in the currency in question.
Austrian (heterodox) economists often use the term "deflation" and "inflation" to refer to changes in the money supply, rather than prices.
In the crypto space, people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply; or more specifically whether the marginal change in supply is decreasing.
For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
For 2, no, Ethereum is not deflationary, the supply increases linearly, so the supply is always increasing.
For 3, yes, Ethereum is deflationary, because the supply increases linearly, which means the marginal change in supply tends to zero.
Your question about investments seems to be following the implication that if 3 is true, then 1 must be true, since they both use the word "deflationary". That may be the case, but I would hesitate to think that a mechanical system can guarantee an increase in value.
Conventional economists use "deflation" to mean "price deflation" -- that is, the price of goods, on average, decreases over time, as denominated in the currency in question.
Austrian (heterodox) economists often use the term "deflation" and "inflation" to refer to changes in the money supply, rather than prices.
In the crypto space, people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply; or more specifically whether the marginal change in supply is decreasing.
For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
For 2, no, Ethereum is not deflationary, the supply increases linearly, so the supply is always increasing.
For 3, yes, Ethereum is deflationary, because the supply increases linearly, which means the marginal change in supply tends to zero.
Your question about investments seems to be following the implication that if 3 is true, then 1 must be true, since they both use the word "deflationary". That may be the case, but I would hesitate to think that a mechanical system can guarantee an increase in value.
> people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply
People use "deflationary" for hard-capped supplies, "disinflationary" for uncapped supplies that have yearly inflation rate going down toward 0 (such as with a pure linear emission), and "inflationary" for emissions whose yearly inflation rate stay above some constant greater than 0.
People use "deflationary" for hard-capped supplies, "disinflationary" for uncapped supplies that have yearly inflation rate going down toward 0 (such as with a pure linear emission), and "inflationary" for emissions whose yearly inflation rate stay above some constant greater than 0.
>For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
It does make sense if you compare a less inflationary currencly to more inflationary currencies. It's risk free in the sense that the USD exchange rate will keep up with inflation of the USD in the long term.
It does make sense if you compare a less inflationary currencly to more inflationary currencies. It's risk free in the sense that the USD exchange rate will keep up with inflation of the USD in the long term.
This is confusing definitions again. Are you using "inflationary" here to refer to the supply of the currency? If so, then sure, but 1) refers to price inflation/deflation, which is not a predictable thing.
So you can compare how "inflationary" currencies are by 2 & 3, but not by 1 -- that's not a mechanical effect. Even the most stringent monetarist in the world wouldn't at a minimum factor in monetary velocity into the value equation. And monetary velocity is a behavioral thing that can be mediated both by availability of current and future capital as well as liquidity preferences of individuals viewed in aggregate.
So you can compare how "inflationary" currencies are by 2 & 3, but not by 1 -- that's not a mechanical effect. Even the most stringent monetarist in the world wouldn't at a minimum factor in monetary velocity into the value equation. And monetary velocity is a behavioral thing that can be mediated both by availability of current and future capital as well as liquidity preferences of individuals viewed in aggregate.
BTC (2%) and ETH (4.5%) are both inflationary right now and have never been deflationary. BTC will be inflationary until about 100 years from now. ETH is a bit more complex but in about a year when it switches from proof of work to proof of stake the inflation will drop to <1%. When EIP-1559 is implemented next year then most of the transaction fees are burned which will likely drop the inflation rate into the negatives which will turn Ethereum into a deflationary asset.
Deflation = value of money increases.
Inflation = value of money decreases.
Sargos seems to be confusing 'inflation' and 'monetary inflation' (increase in money supply).
Inflation = value of money decreases.
Sargos seems to be confusing 'inflation' and 'monetary inflation' (increase in money supply).
In the crypto world inflation/ deflation refers to change in supply.
So it's another area where cryptocurrency enthusiasts just decided to change the meaning of some words? Like they did with fiat?
I don't think the words deflation/inflation are linked to money. A ball can deflate, which has nothing to do with the value of the ball or money.
I thought BTC had a hardcoded cap of 21M coins? How could its supply change?
You forgot USD (30%)
ETH was never deflationary.
As a matter of fact, knowing how many ETH will be produced over a given period of time is a question I never managed to get a satisfactory answer to.
There's probably an algorithm buried somewhere in the code, but it's likely not a simple one.
As a matter of fact, knowing how many ETH will be produced over a given period of time is a question I never managed to get a satisfactory answer to.
There's probably an algorithm buried somewhere in the code, but it's likely not a simple one.
On PoW, it's currently 2 ETH per block, with a little bit extra for occasional "uncle blocks." This is fixed but has been reduced a couple times by hard forks.
For PoS, issuance is a formula depending on the amount staked. How that works out: https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/eth-2.0...
If you want to dig into the actual formula, it's explained here: https://benjaminion.xyz/eth2-annotated-spec/phase0/beacon-ch...
Until PoW migrates to PoS, probably in about a year, they'll operate in parallel and we'll have both rewards added together.
A final factor is an upcoming change to the way transaction fees work, which will burn most of the fees instead of awarding them to validators. That will reduce net issuance further, possibly even taking it negative.
For PoS, issuance is a formula depending on the amount staked. How that works out: https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/eth-2.0...
If you want to dig into the actual formula, it's explained here: https://benjaminion.xyz/eth2-annotated-spec/phase0/beacon-ch...
Until PoW migrates to PoS, probably in about a year, they'll operate in parallel and we'll have both rewards added together.
A final factor is an upcoming change to the way transaction fees work, which will burn most of the fees instead of awarding them to validators. That will reduce net issuance further, possibly even taking it negative.
The point I was trying to make - apologies for not making it clearer - is that from the point of view of the ETH{insert favorite fiat currency here} market figuring out what the how the supply will behave is hard, and therefore hard to price.
Maybe, but I didn't have that formula handy and found it with a couple minutes of googling, so it's not that hard.
In any case, by the time the full transition to PoS is complete, one thing that will be easy for the market to know is that issuance will be substantially lower than BTC, and possibly negative depending on transaction fees.
In any case, by the time the full transition to PoS is complete, one thing that will be easy for the market to know is that issuance will be substantially lower than BTC, and possibly negative depending on transaction fees.
At the current fee level and price eth is going to be deflationary after mining is gone (fees are going to be burned except for a small fraction).
https://cryptofees.info/
https://cryptofees.info/
Not in a literal sense. ETH is still awarded (and can be adjusted as it can on the PoW chain) but plateaus around 10MM ETH staked. The more people that use the network the more ETH that's being burnt due to gas (operation, practically 'network') fees.
So Ether's (in/de)flationary behaviour is a consequence of multiple factors: network consensus participation (mine or stake), network utilisation (burn due to gas fees for using the Ethereum VM), and network parameters (block or epoch reward)
So Ether's (in/de)flationary behaviour is a consequence of multiple factors: network consensus participation (mine or stake), network utilisation (burn due to gas fees for using the Ethereum VM), and network parameters (block or epoch reward)
It depends on what definition of inflation/deflation you use.
Some people, Austrians define any change in the amount of base currency as inflation/deflation. This is the traditional definition.
However the normal everyday usage of inflation/deflation talks about the 'General Price Level', usually measured with things like GDP Deflator, or CPI. Some way of trying to measure the general price level. All of those measures are imperfect.
By the first definition, both Bitcoin and ETH are inflationary but only slightly so.
By the second definition it is very hard to say because we don't really have a way to measure it.
Some people, Austrians define any change in the amount of base currency as inflation/deflation. This is the traditional definition.
However the normal everyday usage of inflation/deflation talks about the 'General Price Level', usually measured with things like GDP Deflator, or CPI. Some way of trying to measure the general price level. All of those measures are imperfect.
By the first definition, both Bitcoin and ETH are inflationary but only slightly so.
By the second definition it is very hard to say because we don't really have a way to measure it.
Is it still too early to estimate new application costs and performance improvements? Has anyone seen any statistics or comparisons yet? it will be interesting to see how this affects the efficiency of the platform and what this means for the adoption of other platforms.
It's too early, because right now the proof of stake chain doesn't run user transactions. It's just running in parallel, while teams do the work required to migrate the virtual machine to it.
is there a way to buy Ethereum 2.0 and how would holders of old Ethereum convert to v2.0
Good
I don't understand this.
I don't understand any of it.
I don't understand cryptocurrencies.
I don't understand what problems they really solve.
> "Ethereum is open access to digital money and data-friendly services for everyone – no matter your background or location. It's a community-built technology behind the cryptocurrency ether (ETH) and thousands of applications you can use today."
I can do all these things already.
> Ethereum is a technology that lets you send cryptocurrency to anyone for a small fee. It also powers applications that everyone can use and no one can take down.
I don't have this need ever, to be frank. Who really does, looking at the larger population?
> It's the world's programmable blockchain.
I don't understand what this means. What does this do for real-life applications?
What problem / which problems are being solved here?
I don't understand any of it.
I don't understand cryptocurrencies.
I don't understand what problems they really solve.
> "Ethereum is open access to digital money and data-friendly services for everyone – no matter your background or location. It's a community-built technology behind the cryptocurrency ether (ETH) and thousands of applications you can use today."
I can do all these things already.
> Ethereum is a technology that lets you send cryptocurrency to anyone for a small fee. It also powers applications that everyone can use and no one can take down.
I don't have this need ever, to be frank. Who really does, looking at the larger population?
> It's the world's programmable blockchain.
I don't understand what this means. What does this do for real-life applications?
What problem / which problems are being solved here?
I feel that no one is using crypto currency for it's original intended purpose, and in the way it would benefit the citizens of the world the most - as liquid currency for regular & cross-border transactions.
Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid. But alas.
Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid. But alas.
>Everyone just seems to want to use it like gold, to store wealth or speculate with.
Except ethereum has a decentralized composable financial ecosystem gaining traction as we speak with over $15b locked up.
[1]https://blog.coinbase.com/a-beginners-guide-to-decentralized... [2]https://defipulse.com/
Except ethereum has a decentralized composable financial ecosystem gaining traction as we speak with over $15b locked up.
[1]https://blog.coinbase.com/a-beginners-guide-to-decentralized... [2]https://defipulse.com/
Iran is using btc to settle international trade transactions[1]. Using a gold backed coupon for settling trade has been talked about for a really long time by a bunch of people. If you're confused why people are speculating about crypto they might know something you don't. The rewiring of the global economy off of the USD _is_ coming, the USD introduces counter-party risk (albiet small for most people) and if btc can avoid that its an improvement.
1 https://news.bitcoin.com/iran-bitcoin-sanctions-inflation/#:....
1 https://news.bitcoin.com/iran-bitcoin-sanctions-inflation/#:....
> in the way it would benefit the citizens of the world the most - as liquid currency for regular & cross-border transactions.
Hawala has succeeded in performing that role for centuries.
Hawala has succeeded in performing that role for centuries.
Yes but Hawala it is the anti-thesis of crypto. Crypto is born out of the dream of cyberpunks to have a trustless society.
That's funny, Bruce Schneier has written something on that topic.
https://www.schneier.com/essays/archives/2019/02/theres_no_g...
https://www.schneier.com/essays/archives/2019/02/theres_no_g...
Cypherpunks*
https://en.m.wikipedia.org/wiki/Cypherpunk
https://en.m.wikipedia.org/wiki/Cypherpunk
That's why it's no surprise that crypto has mostly sucked at a role that Hawala has been filling just fine.
Well, it's very useful for LARGE and semi-clandestine cross-border transactions, but yes it's not a liquid currency. It's more of a separate economy.
It's just programmable money so it's really the beginnings of a new financial system that is a bit divorced from our current one. It's not panacea for the world financial problems, but it's cool and fun.
It's just programmable money so it's really the beginnings of a new financial system that is a bit divorced from our current one. It's not panacea for the world financial problems, but it's cool and fun.
> Everyone just seems to want to use it like gold, to store wealth or speculate with. This is stupid.
Isn't this to be expected when there's no way to balance the currency value by adjusting the supply dynamically?
Isn't this to be expected when there's no way to balance the currency value by adjusting the supply dynamically?
Ethereum is very different from Bitcoin, so this comment is offtopic, and it's tackling a different problem space, but if you are really interested, I'm reading the Bitcoin Standard book, and I can recommend it if you really want to understand what problem Bitcoin solves. There's no simple answer, only learning about the history of money and monetary theory from a non-Keynsian view.
https://www.amazon.com/Bitcoin-Standard-Decentralized-Altern...
https://www.amazon.com/Bitcoin-Standard-Decentralized-Altern...
It has nothing to do, absolutely nothing, with non-Keynsian history of money. Keynes didn't even write about history of money. Keynes in is book even assumed the gold standard for the most part anyway.
As somebody who studies history of economics and history of economic of thought the Bitcoin community has taken up very strange ideas about money and some views that are simply wrong.
Bitcoin is a basically a quasi-commodity and behaves much in the same way.
As somebody who studies history of economics and history of economic of thought the Bitcoin community has taken up very strange ideas about money and some views that are simply wrong.
Bitcoin is a basically a quasi-commodity and behaves much in the same way.
I'm not looking for links to books.
I'm looking for an explanation in plain English that shows why any of this matters.
I'm looking for an explanation in plain English that shows why any of this matters.
In simple terms. The currencies, and related technologies al deal with the problem of transferring of money/services between parties where no centralized trust/power exists.
This is, in the words of their proponents to prevent abuse by the trusted party:
Credit card companies blocking transfers to legitimate companies on the basis of pressure from the US gov.
Banks printing money and devaluing currency of currency holders, etc.
Bailouts/handouts to undeserving private companies with public money.
Often mentioned that this freedom comes at the price of making it easier for bad guys to receive payments for various bad things, increasing their income, increasing the scope of the damage they do.
If you write a program on the eth blockchain, no party can one change the way the contract was written or execute. What is written is what it does. You can't change the TOS later or something similar. They are called contracts for this reason.
They prevent screw-overs in TOS that you have to "accept" or similar shenanigans that big corps use to screw you over, over time.
This is, in the words of their proponents to prevent abuse by the trusted party:
Credit card companies blocking transfers to legitimate companies on the basis of pressure from the US gov.
Banks printing money and devaluing currency of currency holders, etc.
Bailouts/handouts to undeserving private companies with public money.
Often mentioned that this freedom comes at the price of making it easier for bad guys to receive payments for various bad things, increasing their income, increasing the scope of the damage they do.
If you write a program on the eth blockchain, no party can one change the way the contract was written or execute. What is written is what it does. You can't change the TOS later or something similar. They are called contracts for this reason.
They prevent screw-overs in TOS that you have to "accept" or similar shenanigans that big corps use to screw you over, over time.
> In simple terms. The currencies, and related technologies al deal with the problem of transferring of money/services between parties where no centralized trust/power exists.
When does that really occur in every day life?
I understand that a seller can scam me (send a brick) or I could revoke my payment and scam the seller.
But that problem is never solved?
> Credit card companies blocking transfers to legitimate companies on the basis of pressure from the US gov.
Technology is never going to fix societial problems. Paying with dollars or crypto -> if the USA says no, and you still pay you can get fined or worse.
> Banks printing money and devaluing currency of currency holders, etc.
To keep currencies afloat and thus society operational / functioning, you mean?
> Bailouts/handouts to undeserving private companies with public money.
Technology is never going to solve human problems like that. This is not a technology problem.
When does that really occur in every day life?
I understand that a seller can scam me (send a brick) or I could revoke my payment and scam the seller.
But that problem is never solved?
> Credit card companies blocking transfers to legitimate companies on the basis of pressure from the US gov.
Technology is never going to fix societial problems. Paying with dollars or crypto -> if the USA says no, and you still pay you can get fined or worse.
> Banks printing money and devaluing currency of currency holders, etc.
To keep currencies afloat and thus society operational / functioning, you mean?
> Bailouts/handouts to undeserving private companies with public money.
Technology is never going to solve human problems like that. This is not a technology problem.
It seems like the benefit of not having to trust world governments or their currencies isn't that compelling for most people, who I presume almost universally already participate in said social contracts.
I certainly trust world governments more than some random Internet community. Who's to say the whole thing isn't a scam? Has this tech been independently audited?
If you can break this scheme you can steal billions of dollars worth of currencies right now. If that is not independently audited by all evil hackers out there I don't know what is :)
It's possible to create a secure scheme that is still a scam.
What guarantees do we have that the developers/maintainers won't push changes to their own benefit? Presumably they already have given themselves a bunch of starting capital that everyone else's buy-in props up, like bitcoin.
What guarantees do we have that the developers/maintainers won't push changes to their own benefit? Presumably they already have given themselves a bunch of starting capital that everyone else's buy-in props up, like bitcoin.
> If you write a program on the eth blockchain, no party can one change the way the contract was written or execute. What is written is what it does. You can't change the TOS later or something similar. They are called contracts for this reason.
Did things change since the days of the DAO hack?
Did things change since the days of the DAO hack?
I've heard of Ethereum "distributed apps". Is that different than currency, what is a use case for a distributed app?
Generally it's about eliminating counterparty risk. Compare Coinbase (centralized) with Uniswap (decentralized).
Coinbase users put their trust in a custodian. That custodian has the ability to steal from them or be stolen from. That's how MtGox went down in flames.
Uniswap users don't have to custody their funds with anyone to trade. They can use whichever they want.
Coinbase's platform can change on the whims of the company. Users have to accept this if they want to continue using the platform.
Uniswap is nothing more than a handful of small contracts which are unalterable and public. If you don't like, fork it. Don't like the official frontend? You can fork that too. Some wallets just build uniswap directly into the app. And since you don't have to sign up to use uniswap, the experience is completely seamless.
Now there's a lot more you can do with decentralized applications, but this should help get the point across.
Coinbase users put their trust in a custodian. That custodian has the ability to steal from them or be stolen from. That's how MtGox went down in flames.
Uniswap users don't have to custody their funds with anyone to trade. They can use whichever they want.
Coinbase's platform can change on the whims of the company. Users have to accept this if they want to continue using the platform.
Uniswap is nothing more than a handful of small contracts which are unalterable and public. If you don't like, fork it. Don't like the official frontend? You can fork that too. Some wallets just build uniswap directly into the app. And since you don't have to sign up to use uniswap, the experience is completely seamless.
Now there's a lot more you can do with decentralized applications, but this should help get the point across.
I'm afraid it doesn't. From my understanding, bitcoin and other currencies are just numbers or strings, correct? There are ways to check them on your computer/device to make sure that they are valid, but that is running code locally. With a distributed app, is the code passed around, or is it executed in a distributed way as well? The "forking the official frontend", is that something you just run on your machines or is it run in a distributed manner somehow?
>With a distributed app, is the code passed around, or is it executed in a distributed way as well?
The latter. The contracts are deployed to the blockchain itself. The output of the code is secured by ethereum's consensus rules.
>The "forking the official frontend", is that something you just run on your machines or is it run in a distributed manner somehow?
The front end is something that runs locally.
The latter. The contracts are deployed to the blockchain itself. The output of the code is secured by ethereum's consensus rules.
>The "forking the official frontend", is that something you just run on your machines or is it run in a distributed manner somehow?
The front end is something that runs locally.
> prevent abuse by the trusted party
Actually eliminating this problem by using a cryptocurrency requires 2 crucial aspects:
1. The transaction being performed would have to be stateable and checkable 100% as an eth contract. Thus, if the deal is: I mail you my old iphone, and once I receive it, you shall gain a bunch of digital value, then.. how? How do you put in an eth contract that the iphone is real, not stolen, not broken? How do you protect against someone mailing you a brick? If the entire transaction cannot be _completely_ described in the contract, there are still third parties and plenty of room for scams. As far as I can tell (and I'm no expert, so I'm writing this mostly to check if my assumptions are wrong - plenty of knowledgable folks in the thread), bitcoin, ethereum et al make this _worse_: Normally if you send me a literal brick in a box, I don't have to file in court, I can just make some pictures and make a claim with the payment processor. Yes, this can be abused, but right now, today, this is more of a help than a hinder: They _DO_ prevent the 'mail a brick in a box' scams relatively well. With ethereum and such, if we code in the contract that the money will be transferred once DHL or UPS or whatnot signs off that the package was signed for, then what the heck do I do if you mail me a brick in a box? The kinds of middlemen (courts, governments, payment processors, transaction broker, etc) that can help me out are precisely the middle men that systems like ethereum are trying to eliminate!
2. That Joe Random knows how to program eth contracts and inherently knows how to ensure that the contract code seems like it has no leaks. Given that teaching someone to program is difficult, that there are many folks who don't seem to have a knack for it, and that there are lots of stories about faulty contracts that resulted in massive financial loss, I don't see how Joe Random gets to do this. Thus, Joe Random will need to rely on trusted parties: A programmer for the contract, or a website that shows standard contracts, or a security consultant that will review the contract code Joe Random wrote to ensure it is sound. If that consultant wants to scam Joe, how does Joe stop this? One could make overtures that eth itself will solve this (by using it to convey that a whole boatload of parties all sign off on 'You can trust Jane Consultant, she knows her stuff', but now you're just encoding a web of trust, which you can do just as well for current systems ('You can trust paypal, they know their stuff and will fairly treat chargebacks and complaints' [1]).
Combine the two and I'm left with the idea that the problem eth tries to solve is real, but that it is just the technical part of a more complicated solution - a solution whose human parts are not obviously solved.
In other words, yeah, eth as a concept seems misguided and mostly useless to me. But I'm sure I'm missing something.
[1] PayPal isn't particularly trusted. But that's just proof of the current system working: It's not hard to figure that out, and to get an in-depth analysis of what paypal will and won't do for you if you get scammed.
Actually eliminating this problem by using a cryptocurrency requires 2 crucial aspects:
1. The transaction being performed would have to be stateable and checkable 100% as an eth contract. Thus, if the deal is: I mail you my old iphone, and once I receive it, you shall gain a bunch of digital value, then.. how? How do you put in an eth contract that the iphone is real, not stolen, not broken? How do you protect against someone mailing you a brick? If the entire transaction cannot be _completely_ described in the contract, there are still third parties and plenty of room for scams. As far as I can tell (and I'm no expert, so I'm writing this mostly to check if my assumptions are wrong - plenty of knowledgable folks in the thread), bitcoin, ethereum et al make this _worse_: Normally if you send me a literal brick in a box, I don't have to file in court, I can just make some pictures and make a claim with the payment processor. Yes, this can be abused, but right now, today, this is more of a help than a hinder: They _DO_ prevent the 'mail a brick in a box' scams relatively well. With ethereum and such, if we code in the contract that the money will be transferred once DHL or UPS or whatnot signs off that the package was signed for, then what the heck do I do if you mail me a brick in a box? The kinds of middlemen (courts, governments, payment processors, transaction broker, etc) that can help me out are precisely the middle men that systems like ethereum are trying to eliminate!
2. That Joe Random knows how to program eth contracts and inherently knows how to ensure that the contract code seems like it has no leaks. Given that teaching someone to program is difficult, that there are many folks who don't seem to have a knack for it, and that there are lots of stories about faulty contracts that resulted in massive financial loss, I don't see how Joe Random gets to do this. Thus, Joe Random will need to rely on trusted parties: A programmer for the contract, or a website that shows standard contracts, or a security consultant that will review the contract code Joe Random wrote to ensure it is sound. If that consultant wants to scam Joe, how does Joe stop this? One could make overtures that eth itself will solve this (by using it to convey that a whole boatload of parties all sign off on 'You can trust Jane Consultant, she knows her stuff', but now you're just encoding a web of trust, which you can do just as well for current systems ('You can trust paypal, they know their stuff and will fairly treat chargebacks and complaints' [1]).
Combine the two and I'm left with the idea that the problem eth tries to solve is real, but that it is just the technical part of a more complicated solution - a solution whose human parts are not obviously solved.
In other words, yeah, eth as a concept seems misguided and mostly useless to me. But I'm sure I'm missing something.
[1] PayPal isn't particularly trusted. But that's just proof of the current system working: It's not hard to figure that out, and to get an in-depth analysis of what paypal will and won't do for you if you get scammed.
You will not get a satisfactory answer.
Cryptocurrencies will only make sense in cataclysmic scenarios or for very niche use cases. Trust systems (of which money is one) work well (some times very well) 99.99% of the time.
It’s certainly been useful to some people for gambling - but that use case could’ve been satisfied with a video game, or a physical casino.
Cryptocurrencies will only make sense in cataclysmic scenarios or for very niche use cases. Trust systems (of which money is one) work well (some times very well) 99.99% of the time.
It’s certainly been useful to some people for gambling - but that use case could’ve been satisfied with a video game, or a physical casino.
Only in cataclysmic scenarios? I'm sorry to inform you, but in such scenarios most probably cryptos won't work either, as they all depend on proper working of the internet.
It doesn't even need to be a Madmax situation: just imagine a war between the US and China, with one of the involved causing an prolonged interruption in the communications between the two countries, as they have significant numbers of nodes/miners in most blockchains.
I'm afraid blockchains actually depend on the normal functioning of society with all its governmental structures in more ways than most crypto enthusiasts are ready to admit.
It doesn't even need to be a Madmax situation: just imagine a war between the US and China, with one of the involved causing an prolonged interruption in the communications between the two countries, as they have significant numbers of nodes/miners in most blockchains.
I'm afraid blockchains actually depend on the normal functioning of society with all its governmental structures in more ways than most crypto enthusiasts are ready to admit.
Yea my wording might not have been on point.
I was thinking of an economic or political collapse where technology otherwise remains more or less intact.
Anyway, we agree that it’s a niche scenario.
I was thinking of an economic or political collapse where technology otherwise remains more or less intact.
Anyway, we agree that it’s a niche scenario.
The US and Canada could block each other and it wouldn't affect Ethereum at all. Everyone in the world including those two countries could still use it.
I guess it depends on what you mean by cataclysmic scenarios. I can’t imagine many cataclysmic scenarios with working electricity and internet, to say nothing of mass-produced phones/personal computers.
I was thinking more in terms of a political or economic event where trust systems collapse but technology remains working.
The world needs a form of money that is not under the control of any one sovereign power or group of sovereigns. Understanding this may necessitate reading some books, but in short, sovereigns have historically proven to be untrustworthy, so a trust-free form of money is a powerful notion.
Of all the world ills I can think of, none are caused by money as means of exchange or by trust systems more broadly. Crypto isn’t going to do anything for global warming or for rampant inequality caused by the unstoppable compounding growth of big capital (in fact it may do the opposite).
The premise that trust systems have failed humanity is flawed. I am willing to be persuaded otherwise but I doubt this will come from reading “a couple books” because as it stands I firmly believe that the idea is complete nonsense.
The premise that trust systems have failed humanity is flawed. I am willing to be persuaded otherwise but I doubt this will come from reading “a couple books” because as it stands I firmly believe that the idea is complete nonsense.
This book is the best summary that I can give you to being persuaded. Bitcoin's price movement is just a market signal that there's something deeply wrong and unfair with the current financial system. The more you learn about it, the more you can profit from the huge value transfer that's going on in front of your eyes. If you want a link, I suggest hope.com as well (as I could suggest many others, but what's important is that the ROI of learning about the reason for Bitcoin is huge).
> Bitcoin's price movement is just a market signal that there's something deeply wrong and unfair with the current financial system
Sorry but this sounds like the conspiracy drivel commonly heard in crypto circles. To a reasonable person, Bitcoin's price movement is a market signal of people speculating and trying to become richer - simple as. Occam's Razor, and all that.
Sorry but this sounds like the conspiracy drivel commonly heard in crypto circles. To a reasonable person, Bitcoin's price movement is a market signal of people speculating and trying to become richer - simple as. Occam's Razor, and all that.
That's true of every asset in the world. But it doesn't explain why Bitcoin is the best performing asset in the history of humankind for more than 10 years now. Bitcoin as a software is very simple, you can code it in a day in a high level language. But if you don't take the time to go deep on monetary history to see why a money takes over another (or not), you'll miss out on huge gains.
All reasonal people start as Bitcoin skeptics BTW, that's fine.
All reasonal people start as Bitcoin skeptics BTW, that's fine.
[deleted]
> Crypto isn’t going to do anything for global warming
Actually this is a pretty good example of a problem that quadratic funding has a good chance of helping with. It's really hard to coordinate all nations on Earth but not actually that hard to coordinate people from all over the Earth. https://wtfisqf.com/
Actually this is a pretty good example of a problem that quadratic funding has a good chance of helping with. It's really hard to coordinate all nations on Earth but not actually that hard to coordinate people from all over the Earth. https://wtfisqf.com/
so instead of sovereign powers, we should hand our monetary policy to the neo-nobility that is large stakeholders (PoS) or the sovereign granted patents in ASIC mining in PoW coins? I feel like we're just shifting who to trust and not the fact that we all have trust; haven't even touched the whole idea of having to on-ramp/off-ramp fiat on central exchanges with sovereign backed currencies.
One could argue that Ethereum like any other cryptocurrency is under the strict control of the development team, though.
Such team undergoes way less scrutiny than any trading firm or sovereign nation, probably.
Such team undergoes way less scrutiny than any trading firm or sovereign nation, probably.
This may not be the case with any crypto currencies soon. The entire asset class is already way beyond 'let the geeks play with it' stage. It's taxed,it can be seized and banned all together,if that's what governments want. Not quite the freedom tbh..
sure, I can agree, but surely a form of money that fluctuates like crazy and needs people to read books about it to understand it is not going to convince the people that need this kind of system the most.
I would like to see a scenario where not one but several sovereign fiat currencies have utterly failed and yet ETH is still useful.
louwrentius(1)
I am not arguing either way about the need for crypto currencies, but don't you think its an unfair thing to ask for a new technology [1]? Not everything can be explain in simple terms, not if you really want to explain those things. Sometimes it takes time to figure out the language to explain stuff.
[1] I know this thing is more than a decade old, but new and old are very distorted terms in technology and honestly only become apparent post facto.
[1] I know this thing is more than a decade old, but new and old are very distorted terms in technology and honestly only become apparent post facto.
You need to put in a little effort to learn new things. Your comments are not going to age well. Your comments will read like somebody complaining/rejecting email in the early 90's.
If you present complexity, people assume you're smart, and give you their money to invest.
[deleted]
As for Ethereum itself:
It is basically a distributed computing platform designed to handle money, idea is you make a program that handles money, and it runs in a decentralized manner, this way noone can interfere with it, for example you could make a program that tells the users the password to login on a dissident newspaper if they donate something, since it is decentralized the government would have a harder time taking it down. (that is just a simple example, people doing all sorts of stuff with this)
It is basically a distributed computing platform designed to handle money, idea is you make a program that handles money, and it runs in a decentralized manner, this way noone can interfere with it, for example you could make a program that tells the users the password to login on a dissident newspaper if they donate something, since it is decentralized the government would have a harder time taking it down. (that is just a simple example, people doing all sorts of stuff with this)
I read a lot of difficult words that I can't relate to.
What does this mean for the average citizen in America or Europe?
Also, I read this:
> Ethereum clients use a listener (TCP) port and a discovery (UDP) port, both on 30303 by default. > If you need to run JSON-RPC, you'll also need TCP port 8545. Note that JSON-RPC port should not be opened to the outside world, because from there you can do admin operations.
Sounds like quite easy to block by any government.
Or just cut off internet access at all.
What does this mean for the average citizen in America or Europe?
Also, I read this:
> Ethereum clients use a listener (TCP) port and a discovery (UDP) port, both on 30303 by default. > If you need to run JSON-RPC, you'll also need TCP port 8545. Note that JSON-RPC port should not be opened to the outside world, because from there you can do admin operations.
Sounds like quite easy to block by any government.
Or just cut off internet access at all.
"Just cut off internet" indeed would work... but it would work for a lot of things.
But saying that is same saying that a normal bank is useless because the government can just "just cut off the power" and thus the bank servers would be down.
And indeed in some siege situations, that would be possible, but Ethereum never promised to be siege-proof.
As for what it means to the average citizen in America or Europe? Well, one of the popular uses of Ethereum is gambling, that in some places is legal, in some others is not. Another use is create business that can't operate in some jurisdictions for whatever reason (for example because sanctions, or just plain old outdated laws that were forgotten).
But saying that is same saying that a normal bank is useless because the government can just "just cut off the power" and thus the bank servers would be down.
And indeed in some siege situations, that would be possible, but Ethereum never promised to be siege-proof.
As for what it means to the average citizen in America or Europe? Well, one of the popular uses of Ethereum is gambling, that in some places is legal, in some others is not. Another use is create business that can't operate in some jurisdictions for whatever reason (for example because sanctions, or just plain old outdated laws that were forgotten).
> Well, one of the popular uses of Ethereum is gambling,
You are really selling this to me...
You are really selling this to me...
A government can do a lot of things, and if you have Mao in command.
However, if you want to have a somewhat modern society taking away basic things like internet and power is very difficult. You can maybe to that for some individuals, but doing it for all is very tricky.
The argument that, its not 100% possible to prevent all ways for a government to do something, then you should do it at all, is a terrible argument.
However, if you want to have a somewhat modern society taking away basic things like internet and power is very difficult. You can maybe to that for some individuals, but doing it for all is very tricky.
The argument that, its not 100% possible to prevent all ways for a government to do something, then you should do it at all, is a terrible argument.
Why not just engage in this conversation in good faith? It's very unbecoming to act as if you're a neutral party who can't understand tech jargon, then drop a dense paragraph about TCP/UDP to back up your point.
Now route your Ethereum node through the Tor network
I first used it to pay a contractor in Argentina, since then I stick with the store of value hypothesis. It’s like gold but easier to hold and trade without having the government devalue it by printing more dollars. Or put another way, why does a dollar have value?
We already have solutions for paying people in other countries.
Why would I use this one?
I read a lot of difficult words I don't understand. It doesn't explain anything to me.
Why would I use this one?
I read a lot of difficult words I don't understand. It doesn't explain anything to me.
Argentina at the time had an official rate that was 4 to 1 the black market rate. If I used the official methods I'd be paying the contractor 25% of what I promised. In the US, this is not a large issue, but there are many countries where the gov't can manipulate their currency and exchange rates.
Today’s (normal)money system is complex and still many of it is not transparent to the public. Ethereum is trying to build something with more transparency but also tries to create a space in which people can experiment with funding. ( see quadratic voting experiments)
There are lots of hoops I would need to jump around if someone would send be US dollars. Those would be frozen in my bank account, I would need to get an official papers (contract or something like this), translate it to the local language, notarize it and prove that those moneys are not from laundering stuff. And even then I might be denied to get those money if those papers were unconvincing.
With Bitcoin it just works with 0 issues. Also I don't need to pay taxes which is good thing as I don't like this government and don't want to fund it.
With Bitcoin it just works with 0 issues. Also I don't need to pay taxes which is good thing as I don't like this government and don't want to fund it.
> I don't understand cryptocurrencies.
People buy cryptocurrencies and hope the price rises and they can dump it back into the USD it has always been valued in, before everyone else does the same.
Since spamming forums to inflate the price doesn't work as it did a decade ago, in order to prevent them crashing to the floor, all kinds of nonsense white elephant use-cases have to be imagined/invented.
We all understand cryptocurrencies. (You're just not supposed to admit it out loud.)
People buy cryptocurrencies and hope the price rises and they can dump it back into the USD it has always been valued in, before everyone else does the same.
Since spamming forums to inflate the price doesn't work as it did a decade ago, in order to prevent them crashing to the floor, all kinds of nonsense white elephant use-cases have to be imagined/invented.
We all understand cryptocurrencies. (You're just not supposed to admit it out loud.)
Same could be said about the stock market. Lots of companies aren't in profit and would die without the ability to dump shares and without speculators (and indeed the government itself - the ultimate speculator) propping it all up. Many of them die anyway, sometimes right after raising fresh capital from suckers who believed in their vision.
We've been here before in tech with the dotcom bubble. Lots of noise, nonsense and white elephants. Most projects will crash and burn, some will go on to change our daily lives.
We've been here before in tech with the dotcom bubble. Lots of noise, nonsense and white elephants. Most projects will crash and burn, some will go on to change our daily lives.
It is deceptive to say 'I don't understand' when what you mean is 'I disagree.'
Your central argument is: 'You offer a service to everyone. I already have that service. Therefore you are not creating value'
Your central argument is: 'You offer a service to everyone. I already have that service. Therefore you are not creating value'
I don't even understand if they even provide a real service.
But - for the sake of argument - if they do, I don't see the unique selling points.
But - for the sake of argument - if they do, I don't see the unique selling points.
Crypto is easy to transfer and keep and has more lasting value in countries that are facing hyperinflation, often moreso than USD. This particularly applies to Venezuela, which is exerting extra pressures and taxes in foreign currencies.
Venezuelan here, to scape from inflation I buy USD. I dont need anything else other than that green bill or a zelle transfer. Bitcoin is pretty much useless in venezuela and the few people who uses it, also uses it to buy "cheaper" currency exchange of VES/USD since its literally just a bunch of corrupts and drugdealers trying to wash their USD so you usually get more VES per 1USD/BTC than per 1 USD
PS: bitcoin holder since 2014, so im not here with anti crypto propaganda
PS2: i find it weird that noone here talks about USDT
PS: bitcoin holder since 2014, so im not here with anti crypto propaganda
PS2: i find it weird that noone here talks about USDT
louwrentius(3)
Honestly, the selling point is it is a demonstration of global consensus. whether that is useful as a service is debatable I suppose.
1. with crypto you go on dark net and pay some people to drop illegal chemical substances somewhere and message GPS coordinates of that drop place to you
2. you can break into computer network of large company, encrypt their data with ransomware and get ransom in crypto
I'm not specially a believer in cryptocurrencies, but it's probably the best way to implement micropayments, which will solve the biggest problem we have on the internet: monetization of content and of effort (think open source), which today is mostly sustained by ads.
> What problem / which problems are being solved here?
I think mostly it's for people don't want the government/Federal Reserve fiddling with the value of their money.
Personally, I think monetary policy is an incredibly valuable and important tool, but I recognize that trusting the powers that be to wield it properly is a bit naïve of me.
I think mostly it's for people don't want the government/Federal Reserve fiddling with the value of their money.
Personally, I think monetary policy is an incredibly valuable and important tool, but I recognize that trusting the powers that be to wield it properly is a bit naïve of me.
> What problem / which problems are being solved here?
I guess all crypto-currency is an attempt at digital cash. I.e. the ability to send "money" between people who do not trust each other digitally; with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc.
Why people want to solve this problem through a scheme of chained hash-values and mining (which I guess is just padding the data you compute hash-values from until it hits a certain number of 0's at the end), is still unclear for me.
I guess all crypto-currency is an attempt at digital cash. I.e. the ability to send "money" between people who do not trust each other digitally; with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc.
Why people want to solve this problem through a scheme of chained hash-values and mining (which I guess is just padding the data you compute hash-values from until it hits a certain number of 0's at the end), is still unclear for me.
> I.e. the ability to send "money" between people who do not trust each other digitally;
How does a cryptocurrency actually solve the lack of trust?
From the few things I do understand, I think it doesn't at all.
I think this article by Bruce Schneier is interesting: https://www.schneier.com/essays/archives/2019/02/theres_no_g...
> with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc.
I don't have a need for that kind of secrecy. I understand the Silk Roads of the world would like it though. But that doesn't sell cryptocurrencies to me.
If you need to hide stuff from the government, there are bigger problems that cryptocurrencies can't solve, as I can tell.
How does a cryptocurrency actually solve the lack of trust?
From the few things I do understand, I think it doesn't at all.
I think this article by Bruce Schneier is interesting: https://www.schneier.com/essays/archives/2019/02/theres_no_g...
> with secrecy/privacy in manner which cannot be taken away by states/governments/banks etc.
I don't have a need for that kind of secrecy. I understand the Silk Roads of the world would like it though. But that doesn't sell cryptocurrencies to me.
If you need to hide stuff from the government, there are bigger problems that cryptocurrencies can't solve, as I can tell.
> How does a cryptocurrency actually solve the lack of trust?
I said it was an attempt, I'm not sure it solves it..
> If you need to hide stuff from the government
All governments are not good. The US government for instance "froze" (basically took) all the money WikiLeaks had, and made it impossible to send them money through traditional banking systems. So crypto-currencies have already been important in funding an organization that uncovered war-crimes; which is a good thing.
Not all secrecy/privacy is criminal behavior, sometimes it is actual journalism. I guess we have seen so little journalism in the last few years we barely remember what it looks like.
I said it was an attempt, I'm not sure it solves it..
> If you need to hide stuff from the government
All governments are not good. The US government for instance "froze" (basically took) all the money WikiLeaks had, and made it impossible to send them money through traditional banking systems. So crypto-currencies have already been important in funding an organization that uncovered war-crimes; which is a good thing.
Not all secrecy/privacy is criminal behavior, sometimes it is actual journalism. I guess we have seen so little journalism in the last few years we barely remember what it looks like.
Although I do harbor an iota of skepticism of states and banks, enough to entertain the idea that cryptocurrencies could possibly maybe a-little-bit a point, the general public does not at all. I feel like the biggest thing standing in the way of cryptocurrencies is that the general public (not just me) needs a reason to use them other than “You don’t really trust banks to store your money, do you?”
> the ability to send "money" between people who do not trust each other digitally
How is this solved with crypto? I bought a few things with crypto that they were never delivered, so I got scammed. Yes, crypto helps the part receiving money, not the part sending money. This is not a solution, it's just moving the problem to the other side.
How is this solved with crypto? I bought a few things with crypto that they were never delivered, so I got scammed. Yes, crypto helps the part receiving money, not the part sending money. This is not a solution, it's just moving the problem to the other side.
The problem is payment processors deciding who you can and cannot give money to. Crypto currencies solve this problem by not requiring traditional payment processors to make an exchange of value between parties.
Thus, a new problem is born. Governments regulate what securities people can buy or exchanges simply deny you services. then you're back to your former problem. Most people participating are doing so with fiat on-ramps.
>What problem / which problems are being solved here?
Lets say I want to transfer some assets to a guy without anyone knowing from any internet connection. There is a demand for this global service.
Crypto-currency faciliates this. You buy crypto with your normal currency. Transfer. Switch back to normal currency. Yes you've endured some volatility in price but the whole operation was done in an hour or so.
So legit business will set up as "Bitcoin Banks" allowing people to trade in and out of them.
It's truly "digital cash".
Lets say I want to transfer some assets to a guy without anyone knowing from any internet connection. There is a demand for this global service.
Crypto-currency faciliates this. You buy crypto with your normal currency. Transfer. Switch back to normal currency. Yes you've endured some volatility in price but the whole operation was done in an hour or so.
So legit business will set up as "Bitcoin Banks" allowing people to trade in and out of them.
It's truly "digital cash".
so basically, we're inefficiently reinventing payment processing with the added tax burden of buying/selling securities?
Well for what's it worth I've only ever needed it once. I was moving out of China and wanted to take my money with me. It was really hard to get this done, there are tons of capital restrictions and the banks literally wouldn't help me out.
So I put all my money in the BTC blockchain in China and pulled it out in the EU. The other option was to get it in cash and physically bring it over the border, which I considered riskier.
So I put all my money in the BTC blockchain in China and pulled it out in the EU. The other option was to get it in cash and physically bring it over the border, which I considered riskier.
>reinventing
No reinventing -- this tech doesn't require a middleman. Unprecedented.
No reinventing -- this tech doesn't require a middleman. Unprecedented.
> Yes you've endured some volatility in price
Not if you use stablecoins like Dai :)
Not if you use stablecoins like Dai :)
Ethereum is a platform for decentralized computing. It's like a web server that is always on, never goes down, and you only pay for exactly what services you use (and no more). It is also uncensorable and perfectly immutable - which as a consequence is very useful for money. So one of the high-value services Ethereum supports is moving money and applications around money. This "money" is sometimes referred to as "tokens", which are like digital equity, bonds, currency, but are very hard to put in a single bucket and kind of operate like all of them at once. One interesting aspect is they are bearer instruments, meaning no one can seize them from you.
It's an alternative financial system that anyone can hack on and no one can prevent you from using. Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand. But there is a sizable community of programmers around the world that value a completely open, transparent, hackable, and protocol-oriented financial system. Its network effects have allowed it to be greater than the sum of its parts, and novel financial applications continue to be constructed on it.
It's an alternative financial system that anyone can hack on and no one can prevent you from using. Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand. But there is a sizable community of programmers around the world that value a completely open, transparent, hackable, and protocol-oriented financial system. Its network effects have allowed it to be greater than the sum of its parts, and novel financial applications continue to be constructed on it.
> Many, especially on HN, quickly lose their Hacker ethos and revert to being state worshippers when it comes to the monetary system, for reasons I don't fully understand.
Neither do I.
I believe it's sour grapes: they missed up on crypto following the advice of people/websites they trusted (given the negative outlook on HN since 2009), and it's becoming harder and harder to justify their past mistakes.
So it turns into cognitive dissonance.
Said differently, just like how it's hard for someone to understand something when them making a living depends on NOT understanding it, they must keep not understanding to justify their past mistakes.
Eventually, I think it will turn into a Ballmer-esque throwing chairs, and calling it a cancer, before coming to terms with reality.
Neither do I.
I believe it's sour grapes: they missed up on crypto following the advice of people/websites they trusted (given the negative outlook on HN since 2009), and it's becoming harder and harder to justify their past mistakes.
So it turns into cognitive dissonance.
Said differently, just like how it's hard for someone to understand something when them making a living depends on NOT understanding it, they must keep not understanding to justify their past mistakes.
Eventually, I think it will turn into a Ballmer-esque throwing chairs, and calling it a cancer, before coming to terms with reality.
You might want to start here, focusing on the transformation of ethereum's ecosystem [0]
>ETH 2.0 is finally here and will transform Ethereum as we know it. But what is the philosophy underpinning ETH 2.0? And what is Ethereum building towards? It all starts with the idea that Ethereum is the foundation of a social contract for the global economy.
>Ethereum is a global public good that is open, borderless, neutral, transparent, and censorship-resistant.Ethereum provides a system of property rights, rules, and economic opportunity for anyone in the world with an internet connection. With Ethereum users and builders are sovereign and able to determine their own economic destinies.
>This is important in an age of declining trust in institutions where many people don’t have access to stable systems of property rights or economic opportunity. With this in mind ETH 2.0 was designed with five key principles:
- Simplicity - Long-term stability - Sufficiency - Defense in depth - Full light-client verifiability
>Simplicity - Allows ETH 2.0 to minimize development costs, reduce its attack surface, and clearly convince users that protocol parameter choices are legitimate because they’re easier to understand (key for credible neutrality).
>Long-Term Stability - Although Ethereum so far has favored evolution over stability, ETH 2.0 is designed with the idea that once built, there should be little need to change it for long periods of time - a necessity for Ethereum to serve as public infrastructure.
>Sufficiency - Blockchains must be powerful enough for it to be possible to build trust minimized layer2 protocols on top of it. In order to achieve this blockchains must include an expressive programming language, scalable data availability and computation, and fast block times.
>Defense in Depth - Blockchains must work well under a variety of possible security assumptions. A key way to achieve this is to design the system so that it is as decentralized as possible to prevent faults, collusions, and attacks. And in the case where harmful collusion does take place, it’s important to make it extremely expensive for those colluding and easy for non-colluding participants to recover the system.
>These are the core reasons underlying Ethereum’s shift to Proof of Stake.
>Full Light-Client Verifiability - Many users will only interact with Ethereum through light clients. Thus it’s important for those users to be able to verify that the data in the full system is available and valid, even under a 51% attack (under certain assumptions).
[1] Ethereum is on course to settle $1 trillion in one year more than double the transaction volume of Bitcoin.
[0] https://twitter.com/RyanWatkins_/status/1333588739277414401 [1] https://cointelegraph.com/news/ethereum-set-to-become-first-...
>ETH 2.0 is finally here and will transform Ethereum as we know it. But what is the philosophy underpinning ETH 2.0? And what is Ethereum building towards? It all starts with the idea that Ethereum is the foundation of a social contract for the global economy.
>Ethereum is a global public good that is open, borderless, neutral, transparent, and censorship-resistant.Ethereum provides a system of property rights, rules, and economic opportunity for anyone in the world with an internet connection. With Ethereum users and builders are sovereign and able to determine their own economic destinies.
>This is important in an age of declining trust in institutions where many people don’t have access to stable systems of property rights or economic opportunity. With this in mind ETH 2.0 was designed with five key principles:
- Simplicity - Long-term stability - Sufficiency - Defense in depth - Full light-client verifiability
>Simplicity - Allows ETH 2.0 to minimize development costs, reduce its attack surface, and clearly convince users that protocol parameter choices are legitimate because they’re easier to understand (key for credible neutrality).
>Long-Term Stability - Although Ethereum so far has favored evolution over stability, ETH 2.0 is designed with the idea that once built, there should be little need to change it for long periods of time - a necessity for Ethereum to serve as public infrastructure.
>Sufficiency - Blockchains must be powerful enough for it to be possible to build trust minimized layer2 protocols on top of it. In order to achieve this blockchains must include an expressive programming language, scalable data availability and computation, and fast block times.
>Defense in Depth - Blockchains must work well under a variety of possible security assumptions. A key way to achieve this is to design the system so that it is as decentralized as possible to prevent faults, collusions, and attacks. And in the case where harmful collusion does take place, it’s important to make it extremely expensive for those colluding and easy for non-colluding participants to recover the system.
>These are the core reasons underlying Ethereum’s shift to Proof of Stake.
>Full Light-Client Verifiability - Many users will only interact with Ethereum through light clients. Thus it’s important for those users to be able to verify that the data in the full system is available and valid, even under a 51% attack (under certain assumptions).
[1] Ethereum is on course to settle $1 trillion in one year more than double the transaction volume of Bitcoin.
[0] https://twitter.com/RyanWatkins_/status/1333588739277414401 [1] https://cointelegraph.com/news/ethereum-set-to-become-first-...
Is that $1 trillion only ETH transactions, or it is counting the huge number of other "coins" (tokens) or assets implemented as ETH smart contracts that act like mini-ledgers? (I'm assuming the latter.)
Eth and stablecoins if I remember correctly
The main thing that's being enabled by "blockchain" is a way for mutually distrustful parties to agree on a timeline of events. That's it. But it has huge implications.
The trust factor requirement is removed from the physical infrastructure and operators.
For bitcoin and most cryptocurrencies, this is used for a ledger of value transactions.
Now we have an way to transfer ownership and value. What the internet did for information transfer, we now have for value transfer.
Ethereum generalizes this with a virtual machine that can run arbitrary computation and store arbitrary state.
A trustless global value transfer machine that requires no PII (which could be regulated, and added as a requirement in compliant applications, of course), central point of trust, or custodian of data. Where the security layer between the service/application/protocol and the end-user is abstracted away and taken care of by the Ethereum ecosystem.
In the phase we're in right now, a lot of applications are related to finance. There is both transformation of traditional finance[0], and the new sector of "defi" that IMO is here to stay and grow but is in the early half of a huge bubble that will burst hard).
That aside, this is enabling a new way to structure ownership, applications and anything between. If blockchain-based currencies and smart contract platforms end up as Orweillan tools of control, or liberating and improving our society, is mostly lot up to developers, teams, and users.
I hope more people get it.
But not not too many too soon, because the infrastructure wouldn't handle it. Eth2 improves on that by magnitudes, so this news is a crucial step.
[0]: Source: Working at a digital asset service provider with some bigger and more well-known financial institutions as clients, and friends in the industry.
The trust factor requirement is removed from the physical infrastructure and operators.
For bitcoin and most cryptocurrencies, this is used for a ledger of value transactions.
Now we have an way to transfer ownership and value. What the internet did for information transfer, we now have for value transfer.
Ethereum generalizes this with a virtual machine that can run arbitrary computation and store arbitrary state.
A trustless global value transfer machine that requires no PII (which could be regulated, and added as a requirement in compliant applications, of course), central point of trust, or custodian of data. Where the security layer between the service/application/protocol and the end-user is abstracted away and taken care of by the Ethereum ecosystem.
In the phase we're in right now, a lot of applications are related to finance. There is both transformation of traditional finance[0], and the new sector of "defi" that IMO is here to stay and grow but is in the early half of a huge bubble that will burst hard).
That aside, this is enabling a new way to structure ownership, applications and anything between. If blockchain-based currencies and smart contract platforms end up as Orweillan tools of control, or liberating and improving our society, is mostly lot up to developers, teams, and users.
I hope more people get it.
But not not too many too soon, because the infrastructure wouldn't handle it. Eth2 improves on that by magnitudes, so this news is a crucial step.
[0]: Source: Working at a digital asset service provider with some bigger and more well-known financial institutions as clients, and friends in the industry.
> I hope more people get it.
I really didn't.
Why should I care about any this?
How can you explain this to an average person in the street?
I really didn't.
Why should I care about any this?
How can you explain this to an average person in the street?
No one told you you should care. It's not like I go rant in the Apple Big Sur release how I can't relate to any of it, you know?
On a personal level I to have no need or want of cryptocurrencies, but the stated benefits are not for first world, white, city dwellers with ready access to the existing monetary system.
- Someone lives somewhere that the U.S refuses to bank with (Sanctions)
- Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?)
- Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example)
These are examples where one could build processes around something like Ethereum, with the understanding that you are primarily just adding another input to the existing system but with the trade-offs being more access and lower fees but also less protections and greater risk.
- Someone lives somewhere that the U.S refuses to bank with (Sanctions)
- Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?)
- Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example)
These are examples where one could build processes around something like Ethereum, with the understanding that you are primarily just adding another input to the existing system but with the trade-offs being more access and lower fees but also less protections and greater risk.
> - Someone lives somewhere that the U.S refuses to bank with
Cryptocurrencies won't solve this problem. If that happens, there are much bigger issues.
> - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?)
Let's be honest. The whole blockhain / cryptocurrency was never about that ever.
> - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example)
I think there are more than plenty online sites where people can pay for that kind of content without any problems.
I just don't understand any of this.
Cryptocurrencies won't solve this problem. If that happens, there are much bigger issues.
> - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?)
Let's be honest. The whole blockhain / cryptocurrency was never about that ever.
> - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example)
I think there are more than plenty online sites where people can pay for that kind of content without any problems.
I just don't understand any of this.
That's fine, you don't have to use it. A lot of people do prefer to use it for payments and receive payments in it though. They don't want a middle-man bank and would rather their transactions were trustlessly sent and received.
At it's core cryptocurrency is a way to bypass banks if one was so inclined. Specifically currencies like Monero allow a person to send and receive payments completely anonymously, hence its increased usage on darknet markets.
At it's core cryptocurrency is a way to bypass banks if one was so inclined. Specifically currencies like Monero allow a person to send and receive payments completely anonymously, hence its increased usage on darknet markets.
That's a nice argument against cryptocurrencies.
They enable darkweb sites like Silk Road and it's successors.
They enable darkweb sites like Silk Road and it's successors.
Yeah, but so does cash in the physical world. We shouldn't abolish cash tho.
Just because something can be used for "bad" doesn't mean it shouldn't exist. The internet also could be considered an enabler for sites like Silk Road, but its not gona get shut down for that reason.
So... the follow up question is, "Are there any good use cases?"
Yes, the biggest that comes to mind is it allows people who may be doing nothing wrong a payment system that cant be stoped. For example, someone of X religion could still make purchases in a society where religious freedom isn't allowed by its governing body.
May not be a concern for you today, but having the option for it is 100% I will support.
Just because something can be used for "bad" doesn't mean it shouldn't exist. The internet also could be considered an enabler for sites like Silk Road, but its not gona get shut down for that reason.
So... the follow up question is, "Are there any good use cases?"
Yes, the biggest that comes to mind is it allows people who may be doing nothing wrong a payment system that cant be stoped. For example, someone of X religion could still make purchases in a society where religious freedom isn't allowed by its governing body.
May not be a concern for you today, but having the option for it is 100% I will support.
> Yeah, but so does cash in the physical world. We shouldn't abolish cash tho.
Cash I understand, it has benefits. Crypto doesn't, it only seems to have drawbacks and facilitate crime.
Cash I understand, it has benefits. Crypto doesn't, it only seems to have drawbacks and facilitate crime.
So does physical cash. Perhaps we should outlaw it.
> Let's be honest. The whole blockhain / cryptocurrency was never about that ever.
I'm not sure why you think this. "Banking the unbanked" was a huge Bitcoin mantra back in the day. If anything, it's disappeared more recently as speculation has taken over and the narrative has moved from "p2p cash" to "store of value".
I'm not sure why you think this. "Banking the unbanked" was a huge Bitcoin mantra back in the day. If anything, it's disappeared more recently as speculation has taken over and the narrative has moved from "p2p cash" to "store of value".
> - Someone lives somewhere that the U.S refuses to bank with
We are already starting to see this with Venezuela. The easiest way to get USD equivalents to certain people there is via USDC, which is being worked on with the Treasury Department and Federal Reserve.
"According to the company’s blog post, the Treasury Department and the Federal Reserve deposit funds seized by the U.S. into a bank account in the U.S. tied to the Guaidó government, which converts the funds into USDC that Circle then sends to Airtm." - https://www.coindesk.com/circle-usdc-venezuela-airtm
We are already starting to see this with Venezuela. The easiest way to get USD equivalents to certain people there is via USDC, which is being worked on with the Treasury Department and Federal Reserve.
"According to the company’s blog post, the Treasury Department and the Federal Reserve deposit funds seized by the U.S. into a bank account in the U.S. tied to the Guaidó government, which converts the funds into USDC that Circle then sends to Airtm." - https://www.coindesk.com/circle-usdc-venezuela-airtm
Tell me how someone living in Rural Africa can get any useful access to the Ethereum blockchain, without accepting a significant loss of expected benefits.
Frankly, if we're going to be broadly racist and otherwise discriminatory about this, I would say that Ethereum and other blockchain systems are vanity projects for first world, white, city dwellers, with very little relevance for the rest of the world.
Frankly, if we're going to be broadly racist and otherwise discriminatory about this, I would say that Ethereum and other blockchain systems are vanity projects for first world, white, city dwellers, with very little relevance for the rest of the world.
Well I have plenty of friends in Argentina, and Ethereum is helping them live through hyperinflation.
Their currency is plunging, their banking system is corrupt, so these are their options:
1. Trade Pesos for USD on black market exchanges. Hide cash in safes & under mattresses 2. Purchase Dai or other stablecoins. Keep money in multi-signature vaults, earning interest through lending protocols.
Plus, cryptocurrencies allow many of them to work for foreign companies and get paid directly in stablecoins.
Their currency is plunging, their banking system is corrupt, so these are their options:
1. Trade Pesos for USD on black market exchanges. Hide cash in safes & under mattresses 2. Purchase Dai or other stablecoins. Keep money in multi-signature vaults, earning interest through lending protocols.
Plus, cryptocurrencies allow many of them to work for foreign companies and get paid directly in stablecoins.
USD isn't that great because there's so much counterfeiting
100% agree.
I come from a country with strong currency controls, US/EU sanctions, no access to international credit cards or money, and an almost 1000% inflation rate. No one cares about crypto currencies, everyone wants hard cash US Dollars, money you can actually use on the streets and hold in your hands. You don't want money that adds another layer of indirection and confusion that you somehow need to trust will get you groceries next time you go to the shops.
I come from a country with strong currency controls, US/EU sanctions, no access to international credit cards or money, and an almost 1000% inflation rate. No one cares about crypto currencies, everyone wants hard cash US Dollars, money you can actually use on the streets and hold in your hands. You don't want money that adds another layer of indirection and confusion that you somehow need to trust will get you groceries next time you go to the shops.
Just to be clear, these reasons are:
- To commit a crime
- Not a real use case (If someone has no access to normal financial infrastructure, including Venmo and similar, how would they ever use crypto)
- To avoid processing fees by paying higher fees?
- To commit a crime
- Not a real use case (If someone has no access to normal financial infrastructure, including Venmo and similar, how would they ever use crypto)
- To avoid processing fees by paying higher fees?
TIL its a crime to live in Iran
Living somewhere the US has sanctions against isn't a crime.
Advice: if you don't understand, never invest.
About your other points: I see no benefit whatsoever in investing my own time trying to teach you about cryptocurrencies.
Think about it as a secret. Act as it doesn't exist and both our lives will be better.
About your other points: I see no benefit whatsoever in investing my own time trying to teach you about cryptocurrencies.
Think about it as a secret. Act as it doesn't exist and both our lives will be better.
>I can do all these things already.
While I understand why you are confused you must understand that many people can't do what you can do and it's not guaranteed you will be able to do it in the future either. Just look at the situation in Venezuela for example. Even in SE Asia loads of people are still unbanked with no way of changing that.
While I understand why you are confused you must understand that many people can't do what you can do and it's not guaranteed you will be able to do it in the future either. Just look at the situation in Venezuela for example. Even in SE Asia loads of people are still unbanked with no way of changing that.
Then I don't understand this keen interest in crypto by Americans and Europeans.
I think this is not why there is such a hype around cryptocurrencies.
I think this is not why there is such a hype around cryptocurrencies.
I went to order a book recently. At the bottom of the shopping cart it reads: "Note: We have been deplatformed by our credit card processor. To complete your order, please print or otherwise make a copy of the information on this page and mail it with your cash, check, or money order to:" and then their address.
I don't live in a third world country, but I do think cryptocurrency would help in this situation.
I don't live in a third world country, but I do think cryptocurrency would help in this situation.
Because they want to get rich quick
It’s digital money. You buy things with it.
voxl(2)
I can do all these things already.
Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it.
What problem / which problems are being solved here?
I don't understand what this means. What does this do for real-life applications?
If it's mine, why can't I just transfer the shares straight to you for the listed price (Currently $567.60)? Because there is no platform digital trustless value transfer that will ensure that we both get what we want: Me getting the money, and you getting the shares.
In your example, that middle-person verifies that what you are purporting to sell, TSLA stock, is in fact TSLA stock. They provide value by way of quality assurance and recourse if fraud is involved.
How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?
If I buy something directly from another person on Facebook Marketplace or Craigslist, I'm not going to pay full retail price, even if the item is unused, because I'm giving up any form of recourse if the item is defective that I would have received had I purchased directly from the manufacturer.
How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?
If I buy something directly from another person on Facebook Marketplace or Craigslist, I'm not going to pay full retail price, even if the item is unused, because I'm giving up any form of recourse if the item is defective that I would have received had I purchased directly from the manufacturer.
How can I be sure what you're selling me is in fact what you say it is? And if it's not, what recourse do I have?
For your example of FB marketplace/Craigslist, you want an Escrow service with a way to have you or a 3rd party validate you're not getting ripped off. That type of service exists via cryptographic primitives in both Bitcoin and Ethereum allowing a transaction to be blocked if there is something fraudulent.
Bitcoin wastes an obscene amount of energy for a theoretical maximum of seven transactions per second globally. How is that even remotely scalable?
Today's big Ethereum news is the launch of new tech that eliminates that energy wastage, without sacrificing security or decentralization.
It also lays the groundwork for scaling tech that will vastly increase the transactions per second.
It also lays the groundwork for scaling tech that will vastly increase the transactions per second.
I'm not a Bitcoin advocate, I just recognize the value the invention provided and I recognize that this whole cryptocurrency space relies on it being successful for long enough for anything else usurp it. If Bitcoin got hacked right now, everything crashes with it.
Compared to Bitcoin, there are consensus mechanisms that are a lot faster (3 orders of magnitude), cheaper (almost free transaction cost), near instant finality (seconds, not 1 hour) and leave almost zero carbon footprint. They just haven't been proven out at scale yet.
Compared to Bitcoin, there are consensus mechanisms that are a lot faster (3 orders of magnitude), cheaper (almost free transaction cost), near instant finality (seconds, not 1 hour) and leave almost zero carbon footprint. They just haven't been proven out at scale yet.
> there are consensus mechanisms that are a lot faster (3 orders of magnitude)
Correct me if I'm wrong, but this still falls far short of like, VISA.
Correct me if I'm wrong, but this still falls far short of like, VISA.
Yes, and the production launch of that new consensus mechanism is what happened today on Ethereum. It runs on a minimum of 16K nodes, and last I checked had about 60% more than that.
> Up until the invention of Bitcoin, there was ZERO scalable way for me @joeblau to send you @louwrentius money the way I send an email. By that, I mean the only thing I need to rely on is a protocol (like SMTP) and you'll receive it.
Maybe because it's not a need most people have?
> The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer"
This still means nothing to me. I can't relate to this.
> Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. (they take cuts and fees..)
So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.
Maybe because it's not a need most people have?
> The problem is that money (paper money/currency) is not the only thing that has value which human beings transfer among each other. We share music, art, poetry, equity in companies, ideas, code, etc. What Ethereum does is take the idea of "Digital trustless money transfer" and expands it to "Digital trustless value transfer"
This still means nothing to me. I can't relate to this.
> Let's say I own TSLA stock and I want to sell it to you. I can't, without going through a middle-person. (they take cuts and fees..)
So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.
It's fine to criticize a technology and saying that you don't understand what problem it solves, but responding to every comment, even those that make clearly valid points, with "means nothing to me" and "not a problem for me" without any counterarguments is quite rude. These people are taking the time to answer your questions.
For example, intermediaries such as brokerages and banks taking money from your investments and selling your data (and order flow in the case of trading) is clearly inefficient and unnecessary, even if you don't care about it personally.
For example, intermediaries such as brokerages and banks taking money from your investments and selling your data (and order flow in the case of trading) is clearly inefficient and unnecessary, even if you don't care about it personally.
They make a pretty common point. Nobody around e.g. me has an ability to have even a glimpse of understanding what eth/crypto is except for speculation and low-tech fraud, and then for me "sharing value like art and album via crypto as a futuristic mean to share digital values" is bird-gibberish nonsense. General population will never be too smart on average to benefit from this "whatever".
The same is true about the majority of the workings of the internet, or the electrical engineering that built their phones or dozens of other things people use everyday without understanding. How is that relevant in this case?
Because laypeople know what benefit the internet or their phones provide. No layperson knows what the benefit of cryptocurrency is.
> laypeople know what benefit the internet
Yes that's true now, but what about in 1997? That's what year it is in Ethereum now.
Yes that's true now, but what about in 1997? That's what year it is in Ethereum now.
Well to be fair, transferring information instantly was pretty great even in 1997.
Well to be fair, transferring money instantly would be pretty great for 2020.
I mean, the only way I can pay rent to my landlord in 2020 is by having my bank send them a physical check that takes 5d to arrive (during which time no-one gets any interest), or then use multiple Zelle payments since I have an artificial cap that is lower than my rent.
I mean, the only way I can pay rent to my landlord in 2020 is by having my bank send them a physical check that takes 5d to arrive (during which time no-one gets any interest), or then use multiple Zelle payments since I have an artificial cap that is lower than my rent.
You'd think so but that wasn't a popular idea in 1997. Most people really didn't see much of a use for the internet.
Hell laypeople until the mid 2000s still didn't grasp what the Internet could be other than it was a stock market bonanza. Sounds familiar...
But crypto proponents describe use cases, not inner workings. Use cases for telecom were obvious much earlier that the internet itself, thousands of years of lost messages and messengers.
So uh, this remote sound transmitter seems like it might find niche use in the classical music orchestra space, but we don't see the talk-to-friends use case working out. Who would want to talk to their friends that often?
Maybe because it's not a need most people have?
This still means nothing to me. I can't relate to this.
So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly
>Maybe because it's not a need most people have?
There was no internet before 1969, clearly that's because no one needed it.
>This still means nothing to me. I can't relate to this.
This is clearly a difficult subject but its ok, not everyone is smart enough to understand
>So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.
Now you're just trolling.
There was no internet before 1969, clearly that's because no one needed it.
>This still means nothing to me. I can't relate to this.
This is clearly a difficult subject but its ok, not everyone is smart enough to understand
>So it's about not wanting to pay transaction fees for buying stock. Hmm, doesn't really sell it to me, quite frankly.
Now you're just trolling.
Why am I paying fees if there's no middle-person?
Assuming you mean transaction fees on the Bitcoin and Ethereum (or similar) networks:
Transaction fees are an important economic inventive for persons or organizations who run the “nodes” that make up the network. The hardware, electricity, and maintenance by humans needed to run those nodes cost money, and running them is not an altruistic endeavor. One of the goals is to make a profit; staking/mining rewards and transaction fees make that possible.
Transaction fees are an important economic inventive for persons or organizations who run the “nodes” that make up the network. The hardware, electricity, and maintenance by humans needed to run those nodes cost money, and running them is not an altruistic endeavor. One of the goals is to make a profit; staking/mining rewards and transaction fees make that possible.
Aren't transaction fees economic incentives for persons or organizations who run banks that make up the "nodes" of our current network? So everyone is now a bank? Or rather, anyone can choose to run a bank? But then as time passes some banks will get big, and it becomes impractical for anyone else to choose to run a bank, but now the New Big Banks are not accountable to any government as they (technically) are today...
I'm skeptical because I read this and it sounds like using technology to create a system with even less accountability and whose outcomes, however horrific, will be justified by "That's just how the system works; I don't know what to tell you."
I'm skeptical because I read this and it sounds like using technology to create a system with even less accountability and whose outcomes, however horrific, will be justified by "That's just how the system works; I don't know what to tell you."
Yes, it allows anyone in the world with the means and know-how to become part of the “banking infrastructure”, i.e. to run one/more nodes that make up the network. This is the most fundamental and important aspect of the technology.
Wait, but then we went full-circle again.
What problem is cryptocurrency solving then?
What problem is cryptocurrency solving then?
Ethereum (or Bitcoin) is not controlled or regulated by a single entity or group of entities with exclusive membership.
The software behind it is open source and anyone with the know-how can contribute to its improvement.
Anyone with the means and know-how can be part of the network, i.e. operate one/more nodes on the network. With e.g. Ethereum 2.0 (ETH2) the bar is much lower in terms of hardware and electricity costs. For example, I’m running an ETH2 node at home on an Intel NUC (Core i3) with the BIOS set to “low power mode”; its power draw is hovering around 10 Watts, and it would be around 4 Watts if I wasn’t also running a non-mining ETH1 node on the same box (presently necessary as the ETH2 network transitions away from being an ETH1+ETH2 hybrid).
Pretty much anyone with a computer can setup a wallet and near instantly send/receive funds to anyone else in the world who also has a wallet. There is no red tape and no regulation/interference (in the tech itself, that is; your local government may have some laws).
There is the difficulty of acquiring cryptocurrency with USD, CNY, etc. But in most places it’s not that difficult to setup an account with an exchange; or you can arrange for a direct transfer if you know someone who is willing to swap crypto for cash (just be aware of local laws).
The software behind it is open source and anyone with the know-how can contribute to its improvement.
Anyone with the means and know-how can be part of the network, i.e. operate one/more nodes on the network. With e.g. Ethereum 2.0 (ETH2) the bar is much lower in terms of hardware and electricity costs. For example, I’m running an ETH2 node at home on an Intel NUC (Core i3) with the BIOS set to “low power mode”; its power draw is hovering around 10 Watts, and it would be around 4 Watts if I wasn’t also running a non-mining ETH1 node on the same box (presently necessary as the ETH2 network transitions away from being an ETH1+ETH2 hybrid).
Pretty much anyone with a computer can setup a wallet and near instantly send/receive funds to anyone else in the world who also has a wallet. There is no red tape and no regulation/interference (in the tech itself, that is; your local government may have some laws).
There is the difficulty of acquiring cryptocurrency with USD, CNY, etc. But in most places it’s not that difficult to setup an account with an exchange; or you can arrange for a direct transfer if you know someone who is willing to swap crypto for cash (just be aware of local laws).
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The fees are a business decision, not a technical requirement.
1. Middle-people are a technical requirement. That's the point.
2. What happens if I send BTC without paying the middle-people a fee?
If the recipient doesn't typically receive it in seconds (and there's a public log of every sent and received 'message') let's stop making stuff up like bitcoin makes sending money like sending an email.
2. What happens if I send BTC without paying the middle-people a fee?
If the recipient doesn't typically receive it in seconds (and there's a public log of every sent and received 'message') let's stop making stuff up like bitcoin makes sending money like sending an email.
It depends.
* you can mine your own transaction if you have the ability
* you can use a layer 2 state channel network like lightening (bitcoin/litecoin) or raiden (ethereum) to exchange value without a miner.
* if you are worried about fees, there are networks like EOS which don't have have them.
* there is at least 1 ethereum wallet that will pay your fees for you.
* if you use monero, the miner can't distinguish your transaction from anyone else's, so there's little to worry about with regard to selective censorship.
* if a bitcoin/ethereum miner does censor you, it doesn't mean your transaction doesn't get processed because there are other miners.
Hope this info is helpful.
* you can mine your own transaction if you have the ability
* you can use a layer 2 state channel network like lightening (bitcoin/litecoin) or raiden (ethereum) to exchange value without a miner.
* if you are worried about fees, there are networks like EOS which don't have have them.
* there is at least 1 ethereum wallet that will pay your fees for you.
* if you use monero, the miner can't distinguish your transaction from anyone else's, so there's little to worry about with regard to selective censorship.
* if a bitcoin/ethereum miner does censor you, it doesn't mean your transaction doesn't get processed because there are other miners.
Hope this info is helpful.
Hi, here is most simple explanation what it does:
Simple solution for illegal/semi-legal activities. Think some goods, money laundering (try to transfer money to North Korea, Iran) even to your relative.
Also, there are some privacy minded individuals as well who would like to pay for things like VPN, domains, servers who don't want to get their account tied to theirs credit card.
Speaking of Ethereum, think of it like digital money + some js function which can be executed on demand. It allows you to make scams like bitconnect. In other words casino / gambling. Really hard to do legally but very easy to deploy casino function to Ethereum. Those markets are huge.
Simple solution for illegal/semi-legal activities. Think some goods, money laundering (try to transfer money to North Korea, Iran) even to your relative.
Also, there are some privacy minded individuals as well who would like to pay for things like VPN, domains, servers who don't want to get their account tied to theirs credit card.
Speaking of Ethereum, think of it like digital money + some js function which can be executed on demand. It allows you to make scams like bitconnect. In other words casino / gambling. Really hard to do legally but very easy to deploy casino function to Ethereum. Those markets are huge.
Yes, buying weed and VPN accounts is the good use of censorship-resistant money. Unfortunately there's also the bad uses like, you know, any kind of extortion (especially ransomware), fraud, scams.. oh you even mentioned the scams! :)
It makes me sad, because I expected a comment like this to be the highest on HN.
In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use. In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid. Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life.
As an example, already, anyone in the world can buy property in the US: https://realt.co/
What the web did for infomation, Ethereum will do for value.
In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use. In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid. Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life.
As an example, already, anyone in the world can buy property in the US: https://realt.co/
What the web did for infomation, Ethereum will do for value.
For me at least, "Imagine the possibilities!" is not an answer to the question, "What's it good for?" Indeed, my experience is that it's almost an anti-answer.
For example, in the mid-aughts I was talking with the CEO of a well-funded "semantic web" company about joining. I liked the people and the tech was cool, but I just couldn't figure out how it would turn a profit. His answer was similar to yours, a "what couldn't they do?" answer. Turns out they never found an answer, and got acquired for their technology without ever turning into a real business.
As somebody who used to write software for financial traders, it's not clear to me that removing clearing houses is a step forward. They provide important services. And I'm even more skeptical that allowing randos to trade in opaque, unregulated assets is a good idea. Music industry actors, for example, have decades of experience in creative accounting and screwing people over. Real estate has a strong caveat emptor tradition, and property management companies are not exactly a watchword for fair dealing. So from you description, I'm mainly imagining people all over the world getting fleeced with no practical legal recourse.
As best I can tell, the cryptocurrency space seems hell-bent on rediscovering why strong markets and government oversight exist in the first place. The only demonstrated market advantage Bitcoin has in a decade of operation is in light financial crime like money laundering, capital control evasion, ponzi schemes, ransom payments, and outright theft.
I do hope these technologies turn out to be useful for something. But the "imagine the possibilities" routine worked much better when there was less of a track record. Now I'd rather examine the actualities.
For example, in the mid-aughts I was talking with the CEO of a well-funded "semantic web" company about joining. I liked the people and the tech was cool, but I just couldn't figure out how it would turn a profit. His answer was similar to yours, a "what couldn't they do?" answer. Turns out they never found an answer, and got acquired for their technology without ever turning into a real business.
As somebody who used to write software for financial traders, it's not clear to me that removing clearing houses is a step forward. They provide important services. And I'm even more skeptical that allowing randos to trade in opaque, unregulated assets is a good idea. Music industry actors, for example, have decades of experience in creative accounting and screwing people over. Real estate has a strong caveat emptor tradition, and property management companies are not exactly a watchword for fair dealing. So from you description, I'm mainly imagining people all over the world getting fleeced with no practical legal recourse.
As best I can tell, the cryptocurrency space seems hell-bent on rediscovering why strong markets and government oversight exist in the first place. The only demonstrated market advantage Bitcoin has in a decade of operation is in light financial crime like money laundering, capital control evasion, ponzi schemes, ransom payments, and outright theft.
I do hope these technologies turn out to be useful for something. But the "imagine the possibilities" routine worked much better when there was less of a track record. Now I'd rather examine the actualities.
You touched on the core problem with cryptocurrency, and it is not a technology problem.
The problem is that cryptocurrency and the community around it is absolutely crawling with scams to the point that it's hard to find things that are not scams. Bad drives out good. Even if the tech works perfectly and can be made to scale, if the ecosystem is full of scams it will never be used for anything but scams and black/grey market applications. Anyone not looking to scam will run away.
Contrast with the stock market. There are scams, sure, but the majority of stocks are not scams. If you bought stocks at random you have at least >50% odds of buying stock in a real and honest business of some kind. If you participate in cryptocurrency stuff at random I'd say you have a >90% chance of being scammed... probably closer to 99%.
All the ad-hoc regulations and institutions around conventional finance are the outcome of a multiple century long Red Queen's race between productive economic activity and noise. Noise includes scams, frauds, bubbles, and other forms of undesirable action or emergent behaviors in markets that get in the way of productive economic activity. That hodge-podge of adaptations is almost certainly sub-optimal, but you're not going to do better by just ignoring the problem domain and offloading everything onto individual market participants. That means every market participant has to operate their own SEC and investigative journalist outfit to have any chance of not being scammed. Not going to happen.
A recurrent fallacy of techno-libertarians and techno-utopians is to vastly underestimate human avarice and opportunism. The people designing these systems are usually fairly honest, so they have a hard time imagining what sociopaths and con artists will do with the things they create. If you create anything that offers even the tiniest chance at making money or obtaining some form of status or power, it will be DDOSed with fraud and con artistry of every kind.
Edit: I am not totally bearish on this stuff and I see valid uses for it, but I don't think it's as broadly world changing as its evangelists do.
The problem is that cryptocurrency and the community around it is absolutely crawling with scams to the point that it's hard to find things that are not scams. Bad drives out good. Even if the tech works perfectly and can be made to scale, if the ecosystem is full of scams it will never be used for anything but scams and black/grey market applications. Anyone not looking to scam will run away.
Contrast with the stock market. There are scams, sure, but the majority of stocks are not scams. If you bought stocks at random you have at least >50% odds of buying stock in a real and honest business of some kind. If you participate in cryptocurrency stuff at random I'd say you have a >90% chance of being scammed... probably closer to 99%.
All the ad-hoc regulations and institutions around conventional finance are the outcome of a multiple century long Red Queen's race between productive economic activity and noise. Noise includes scams, frauds, bubbles, and other forms of undesirable action or emergent behaviors in markets that get in the way of productive economic activity. That hodge-podge of adaptations is almost certainly sub-optimal, but you're not going to do better by just ignoring the problem domain and offloading everything onto individual market participants. That means every market participant has to operate their own SEC and investigative journalist outfit to have any chance of not being scammed. Not going to happen.
A recurrent fallacy of techno-libertarians and techno-utopians is to vastly underestimate human avarice and opportunism. The people designing these systems are usually fairly honest, so they have a hard time imagining what sociopaths and con artists will do with the things they create. If you create anything that offers even the tiniest chance at making money or obtaining some form of status or power, it will be DDOSed with fraud and con artistry of every kind.
Edit: I am not totally bearish on this stuff and I see valid uses for it, but I don't think it's as broadly world changing as its evangelists do.
Exactly. It's the same vicious circle you see with bad neighborhoods, or with community sites that take freedom of expression as their north star. 4chan, for example, was once a noble attempt at a free speech zone, but it has long been known as a wretched hive of scum and villainy. As you say, bad drives out good.
I would also like to address the 'scarcity' claim - when cryptos are being churned out like in the last few years they're hardly scarce anymore ...
Excellent point. The coinmarketcap.com site lists 3882 cryptocurrencies. That makes the "Bitcoin's limited supply means permanent value" talking point ridiculous. They list 91 things with "Bitcoin" in the title, 6 of which are in the top 100 by monetary supply, and all 6 notionally have at least $100m in circulation.
So long as everybody knows what the "real" Bitcoin is, it doesn't present a problem, anymore so than existence of the Liberian dollar renders USD unusable.
It presents a problem for anybody who thinks scarcity will contribute to the value of a digital currency.
Bitcoin is scarce. Applying the term scarcity across multiple cryptocurrencies means you have no idea what you’re talking about.
Not at all. From a market perspective, Bitcoin is not scarce in the same sense that gold or diamonds are scarce. If people want to buy into cryptocurrency, Bitcoin is far from their only option. As this whole discussion around Ethereum makes clear, other cryptocurrencies are viable. As I mentioned earlier, other Bitcoins are clearly viable.
Yes, the number of Bitcoins in a given fork has a limit, assuming whoever controls that for keeps it that way. But that doesn't matter much if market demand is such that other forks or entirely new coins become viable.
Yes, the number of Bitcoins in a given fork has a limit, assuming whoever controls that for keeps it that way. But that doesn't matter much if market demand is such that other forks or entirely new coins become viable.
it's like saying gold isn't scarce because there are other metal compounds. you're not making sense at all. if you want to interpret scarcity this way - feel free, but be informed that pretty much everyone else will look at you weird.
No, it's like saying gold isn't scarce because anybody with a bee in their bonnet can launch "Gold 2.0" and create their own supply. Which is definitely not true for gold, but is demonstrably true for cryptocurrencies.
I grant that crypocurrency fans will look at me weird, which I'm fine with. But economists (and most others) won't, because they understand that substitutability [1] affects scarcity.
[1] https://en.wikipedia.org/wiki/Substitute_good
I grant that crypocurrency fans will look at me weird, which I'm fine with. But economists (and most others) won't, because they understand that substitutability [1] affects scarcity.
[1] https://en.wikipedia.org/wiki/Substitute_good
Well if you believe any fork of bitcoin is bitcoin I have lots of cheap bitcoin to sell to you.
There’s an attribute that you can’t substitute - chain difficulty. I’ll let you figure out the rest.
There’s an attribute that you can’t substitute - chain difficulty. I’ll let you figure out the rest.
I don't really see how something like Realt is any different from owning a REIT. You still have to trust that the property actually exists. AFAIK there is no way for a blockchain to "own" property in the U.S. so there must be some shenanigans going on with a corporation owning it and agreeing to pay out the returns to token holders.
At this point it seems like you've just recreated being a shareholder in a REIT except without all the legal protections.
At this point it seems like you've just recreated being a shareholder in a REIT except without all the legal protections.
You can already buy shares of things, crowdfund, buy real estate, invest in REITs, and a million other financial instruments.
Since real estate is a physical thing, it needs to interface with the legal system, the recorder of deeds, etc.
The goal of all this is to circumvent the legal system, but it will never happen for anything physical. Won't even happen for ownership of music groups if anyone ever hopes to use a court.
Since real estate is a physical thing, it needs to interface with the legal system, the recorder of deeds, etc.
The goal of all this is to circumvent the legal system, but it will never happen for anything physical. Won't even happen for ownership of music groups if anyone ever hopes to use a court.
> In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use.
Does this sentence actually mean anything?
> In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid.
What does this mean in concrete terms?
> Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life.
Who wants this?
Does this sentence actually mean anything?
> In the most basic terms, this will remove clearing houses for transactions of assets. In the long term this will lead to novel types of assets, and make ownership extremely liquid.
What does this mean in concrete terms?
> Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy. Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life.
Who wants this?
> ”Does this sentence actually mean anything?”
In more traditional software engineering language, it means “you can run stored procedures on an incredibly slow and limited distributed database.”
Also those stored procedures are immutable, written in a language with more holes than Swiss cheese, and you have to use a scammy cryptocurrency to pay for the privilege of running these unsafe programs. The adherents call this “web 3.0” in some kind of ironic joke because it’s nothing like the web.
In more traditional software engineering language, it means “you can run stored procedures on an incredibly slow and limited distributed database.”
Also those stored procedures are immutable, written in a language with more holes than Swiss cheese, and you have to use a scammy cryptocurrency to pay for the privilege of running these unsafe programs. The adherents call this “web 3.0” in some kind of ironic joke because it’s nothing like the web.
> Also those stored procedures are immutable, written in a language with more holes than Swiss cheese...
You're probably referencing this fuck up: https://en.wikipedia.org/wiki/The_DAO_(organization)
The huge advantage of smart contracts is that they are supposed to be trustless - you don't need to necessarily trust your business partners because contract is set in stone ... code and will be executed exactly as agreed beforehand.
In reality, you move your trust in your understanding of the code. But then when 18 000+ (probably highly technical) people investing $50 million don't spot the bug in the code, then it calls the whole "trustless" concept into question.
You're probably referencing this fuck up: https://en.wikipedia.org/wiki/The_DAO_(organization)
The huge advantage of smart contracts is that they are supposed to be trustless - you don't need to necessarily trust your business partners because contract is set in stone ... code and will be executed exactly as agreed beforehand.
In reality, you move your trust in your understanding of the code. But then when 18 000+ (probably highly technical) people investing $50 million don't spot the bug in the code, then it calls the whole "trustless" concept into question.
You don't have to go back that far in time, 'hacks' and bugs in 'smart' contracts happen almost every day. Here's a recent $7M loss: https://cointelegraph.com/news/yield-generating-stablecoin-p... and here's a $89M loss less than a week ago: https://decrypt.co/49657/oracle-exploit-sees-100-million-liq...
It's not even the first time that the 'Compound' smart contract has been 'hacked', but that doesn't stop fools from putting more money into it again.
All these fuck ups are called 'hacks', but actually the code is working exactly as intended, it's just that there are so many ways to write smart contracts incorrectly that it's more than likely they all have hidden bugs, just waiting to be exploited.
It's not even the first time that the 'Compound' smart contract has been 'hacked', but that doesn't stop fools from putting more money into it again.
All these fuck ups are called 'hacks', but actually the code is working exactly as intended, it's just that there are so many ways to write smart contracts incorrectly that it's more than likely they all have hidden bugs, just waiting to be exploited.
Have any ethereum "hacks" ever been prosecuted?
It seems like there would be a reasonable argument that taking value from a contract as defined by code (even if not the intention of the programmer) is not theft.
But would be very interesting to see how a court interprets this.
It seems like there would be a reasonable argument that taking value from a contract as defined by code (even if not the intention of the programmer) is not theft.
But would be very interesting to see how a court interprets this.
That doesnt sound like an $89 million loss just unexpected liquidations in loan contracts governing that amount of money
"I'd like my investment bank to be an immutable, unfixable piece of code that's a sitting duck target for hackers"
-- nobody ever (except Ethereum ideologists)
-- nobody ever (except Ethereum ideologists)
Because no code in the financial sector has ever screwed up. Oh wait...
https://en.wikipedia.org/wiki/2010_flash_crash
Oh Oops...
https://en.wikipedia.org/wiki/Knight_Capital_Group
https://en.wikipedia.org/wiki/2010_flash_crash
Oh Oops...
https://en.wikipedia.org/wiki/Knight_Capital_Group
Exactly. Now imagine how bad it would be if the code handling this kind of money was on Ethereum where bugs are forever and failures irrevocable.
Now compare financial loss from bugs/hackers in smart contracts to financial loss from deception on the part of bankers, brokers, company execs, etc - the exact kind of fraud that's much harder to perpetrate with smart contracts. I'd wager the second number is and always will be orders of magnitude larger.
Enron alone was responsible for ~$74bn of loss.
Enron alone was responsible for ~$74bn of loss.
There's plenty of fraud going on with smart contracts and blockchains in general, and everyone knows it. In fact, it offers newer and easier ways to commit fraud. How many ICOs walked away with their investors' money? How many exchange and smart contract 'hacks' were actually insider jobs?
Just because crypto currency is a smaller market than traditional finance doesn't mean it's more honest. I'd imagine the % of fraudulent transactions in ethereum is worryingly high.
Just because crypto currency is a smaller market than traditional finance doesn't mean it's more honest. I'd imagine the % of fraudulent transactions in ethereum is worryingly high.
It's important to differentiate here.. fraud by deception is only partly mitigated - if some slick sales droid convinces you to dump your life savings into a dodgy ICO, that's really not all that different to what Bernie Madoff did.
The critical difference is that the smart contract lets you peek under the covers. If the contract allows for its owners to do things to your tokens, that will be plainly visible in the code, regardless of what the owner says. The owners can lie about it, but the lie can be seen by all and sundry. The creators of the token mathematically cannot do anything the contract doesn't allow them to do.
The critical difference is that the smart contract lets you peek under the covers. If the contract allows for its owners to do things to your tokens, that will be plainly visible in the code, regardless of what the owner says. The owners can lie about it, but the lie can be seen by all and sundry. The creators of the token mathematically cannot do anything the contract doesn't allow them to do.
>How many ICOs walked away with their investors' money?
A sucker is born every day, this has little to do with the underlying tech though.
A sucker is born every day, this has little to do with the underlying tech though.
> Now compare financial loss from bugs/hackers in smart contracts to financial loss from deception on the part of bankers, brokers, company execs, etc
But be sure, in doing so, to compare them as a share of total transactions made through smart contracts vs. the total involving 'bankers, brokers, company execs, etc.'
But be sure, in doing so, to compare them as a share of total transactions made through smart contracts vs. the total involving 'bankers, brokers, company execs, etc.'
Turing completeness in layman's terms means you can write programs on it.
Traditionally a computer that most people are familiar with is a single machine, like PC or the device we can hold in our hands. Etherium is a swarm of millions of computers that anyone can add to the swarm.
When people claim Ethereum is turing complete, it means that anyone can launch a program into it, and the "swarm" runs the program. But which node's output is the truth? Without some mechanism in place, a bad actor could claim to have computed an output that serves them greedily.
Ethereum has baked in protocols so that the distributed result of millions of nodes running a program reaches a stasticial consensus.
Being turing complete means that any computable program can run on Ethereum.
So you can imagine writing a program that, say, runs an auction, or performs escrow for contractors, or whatever. You could run doom on it, albeit at an extremely low framerate because you need the swarm to validate each frame.
I hope this explanation helps.
Edit: I swear autocomplete is becoming more forceful over time.
Traditionally a computer that most people are familiar with is a single machine, like PC or the device we can hold in our hands. Etherium is a swarm of millions of computers that anyone can add to the swarm.
When people claim Ethereum is turing complete, it means that anyone can launch a program into it, and the "swarm" runs the program. But which node's output is the truth? Without some mechanism in place, a bad actor could claim to have computed an output that serves them greedily.
Ethereum has baked in protocols so that the distributed result of millions of nodes running a program reaches a stasticial consensus.
Being turing complete means that any computable program can run on Ethereum.
So you can imagine writing a program that, say, runs an auction, or performs escrow for contractors, or whatever. You could run doom on it, albeit at an extremely low framerate because you need the swarm to validate each frame.
I hope this explanation helps.
Edit: I swear autocomplete is becoming more forceful over time.
> When people claim Ethereum is turing complete, it means that anyone can launch a program into it, and the "swarm" runs the program. (...) Ethereum has baked in protocols so that the distributed result of millions of nodes running a program reaches a stasticial consensus.
Usually the reason to run something on more than one computing unit is to achieve additive gains - like getting results faster, or processing more data in the same amount of time. This however sounds like a million computers computing the exact same thing. Why would one want to do that? It's a serious question - I'm having trouble imagining a generic use case.
Usually the reason to run something on more than one computing unit is to achieve additive gains - like getting results faster, or processing more data in the same amount of time. This however sounds like a million computers computing the exact same thing. Why would one want to do that? It's a serious question - I'm having trouble imagining a generic use case.
This is to achieve consensus - the N nodes running the smart contract will ideally replace the central authorities that we implicitly trust.
This enables trustless transactions, which gets rid of a lot of business red tape and unlocks productivity.
This enables trustless transactions, which gets rid of a lot of business red tape and unlocks productivity.
Only for a really weird technical definition of "trustless". You have to trust that the smart contract does what's intended, in the way you think it does so. So you need to either trust someone who knows the relevant programming language to audit it, or learn enough to audit it yourself. VS legal contracts, where you have to trust a lawyer to audit the contract but at least have the benefit of laws and bar association ethical rules to constrain the lawyer's behavior. Either way, in practice most people will have to trust someone to safely use any smart contract.
The way I understand smart contracts and them being trustless is that they are effectively an escrow.
So yes, each person participating has to do their own due diligence but once the smart contract is live, it is immutable and therefore trustless since it's just code.
So yes, each person participating has to do their own due diligence but once the smart contract is live, it is immutable and therefore trustless since it's just code.
> This however sounds like a million computers computing the exact same thing. Why would one want to do that?
It is what it sounds like, and it isn't ideal. In order for the Ethereum network to reach an agreement on the result of a computation, multiple nodes need to do the computation to check each other. How do you decide how many nodes need to do the computation for it to be accepted by the network? That's not an easy question to answer. The simplest and safest way is to require 100% of nodes to do the computation. Safely getting that % down from 100 to increase the throughput of the network is a problem actively being worked on.
As for a generic use case, think of Ethereum as something like AWS Lambda that happens to have native support for transacting assets.
It is what it sounds like, and it isn't ideal. In order for the Ethereum network to reach an agreement on the result of a computation, multiple nodes need to do the computation to check each other. How do you decide how many nodes need to do the computation for it to be accepted by the network? That's not an easy question to answer. The simplest and safest way is to require 100% of nodes to do the computation. Safely getting that % down from 100 to increase the throughput of the network is a problem actively being worked on.
As for a generic use case, think of Ethereum as something like AWS Lambda that happens to have native support for transacting assets.
Can you provide an example where a smart contract needs unbounded loops or unbounded recursion? Do you really need Turing completeness to begin with?
seibelj(2)
Why does any of this require ethereum?
We have all kinds of markets already, ones that are much faster, more liquid and more efficient than any blockchain-backed exchanges.
There's nothing stopping a recording artist from incorporating and listing shares on any traditional exchanges, or you from making a new exchange.
Literally the only things Ethereum adds are decentralization and no way to dispute or reverse transactions, but for 99% of users those are ANTI-features.
We have all kinds of markets already, ones that are much faster, more liquid and more efficient than any blockchain-backed exchanges.
There's nothing stopping a recording artist from incorporating and listing shares on any traditional exchanges, or you from making a new exchange.
Literally the only things Ethereum adds are decentralization and no way to dispute or reverse transactions, but for 99% of users those are ANTI-features.
> There's nothing stopping a recording artist from incorporating and listing shares on any traditional exchanges
There absolutely is: it is almost unimaginably expensive and administratively complicated, hence the only entities to IPO these days are companies valued in the tens of billions, who have exhausted all other options for raising capital privately and need to raise at least hundreds of millions or billions more.
I’m no expert on Ethereum or blockchain generally, but the potential for low-friction micro-investing in small businesses, artists or even individuals seems highly compelling to me.
There absolutely is: it is almost unimaginably expensive and administratively complicated, hence the only entities to IPO these days are companies valued in the tens of billions, who have exhausted all other options for raising capital privately and need to raise at least hundreds of millions or billions more.
I’m no expert on Ethereum or blockchain generally, but the potential for low-friction micro-investing in small businesses, artists or even individuals seems highly compelling to me.
The issue I have with this is that those regulations still exist.
For a recording artist to raise funds in this way still requires that they deal with all the administrative complications - laws just tend to not be enforced very frequently in this new space.
If Jay-Z launched Jay-Zcoin and raised $100M, the SEC and IRS are going to be poking around his finances and looking for any place he violated the law and imposing fines.
I think a lot of the "potential business models" for ethereum that people discuss may be (sometimes) technically robust, but the are also usually extremely fragile politically.
For a recording artist to raise funds in this way still requires that they deal with all the administrative complications - laws just tend to not be enforced very frequently in this new space.
If Jay-Z launched Jay-Zcoin and raised $100M, the SEC and IRS are going to be poking around his finances and looking for any place he violated the law and imposing fines.
I think a lot of the "potential business models" for ethereum that people discuss may be (sometimes) technically robust, but the are also usually extremely fragile politically.
Of course tax laws still apply, as they should.
But Jay-Z raising $100M is the wrong use-case example; he’s already a superstar and already wildly rich so doesn’t need investors, or can easily get them the old fashioned ways (eg record company advance) if he does.
A more apt one is a little-known up-and-comer raising $20k, as they currently might on Kickstarter or Patreon, but possibly using the smart-contract features of Ethereum to link the provision of rewards to some programmed metric like number of Spotify plays.
But Jay-Z raising $100M is the wrong use-case example; he’s already a superstar and already wildly rich so doesn’t need investors, or can easily get them the old fashioned ways (eg record company advance) if he does.
A more apt one is a little-known up-and-comer raising $20k, as they currently might on Kickstarter or Patreon, but possibly using the smart-contract features of Ethereum to link the provision of rewards to some programmed metric like number of Spotify plays.
To trust a currency, you must trust the institutions that manage that currency. You have no control over it.
To trust a cryptocurrency, you must trust the algorithm that runs it. It's fully auditable and predictable.
It still takes me several business days to complete an ACH transaction in the US, and requires I trust the banking system. Transferring cryptocurrencies happen much faster and don't require the same kind of trust or centralized management.
What you see as anti-features are good reasons why they won't replace the dollar yet, but they still have a place in the market.
To trust a cryptocurrency, you must trust the algorithm that runs it. It's fully auditable and predictable.
It still takes me several business days to complete an ACH transaction in the US, and requires I trust the banking system. Transferring cryptocurrencies happen much faster and don't require the same kind of trust or centralized management.
What you see as anti-features are good reasons why they won't replace the dollar yet, but they still have a place in the market.
The US ACH system is extremely slow and still involves nightly batch jobs.
Many other countries have systems that allow for nearly immediate person-to-person money transfer without blockchains: https://en.wikipedia.org/wiki/Faster_Payments_Service This is not a good argument for cryptocurrency.
Regarding "trusting" an algorithm: in the real world you also have to trust the implementation, and the configuration, and eventually humans involved in the transaction. How often do we see some big data breach on HN? Very rarely has any cryptographic algorithm been broken, but often one of the other links in the trust chain has broken.
Many other countries have systems that allow for nearly immediate person-to-person money transfer without blockchains: https://en.wikipedia.org/wiki/Faster_Payments_Service This is not a good argument for cryptocurrency.
Regarding "trusting" an algorithm: in the real world you also have to trust the implementation, and the configuration, and eventually humans involved in the transaction. How often do we see some big data breach on HN? Very rarely has any cryptographic algorithm been broken, but often one of the other links in the trust chain has broken.
> Very rarely has any cryptographic algorithm been broken, but often one of the other links in the trust chain has broken.
The whole point of Ethereum is to reduce/eliminate those links in the trust chain.
The whole point of Ethereum is to reduce/eliminate those links in the trust chain.
>To trust a cryptocurrency, you must trust the algorithm that runs it. It's fully auditable and predictable.
What happens when Ethereum 2 inevitably hits a security bug, much like the ones Ethereum 1 hit that led to the DAO hack/theft (some might say... worked exactly as coded)?
What happens when Ethereum 2 inevitably hits a security bug, much like the ones Ethereum 1 hit that led to the DAO hack/theft (some might say... worked exactly as coded)?
Compare it to traditional security. If you want to steal a few dollars you just need a sharp bit of metal and an easily frightened shopkeeper.
Of course when you leave, the shopkeeper (assuming you didn't murder them) can use a phone to inform the authorities. Then a manhunt begins involving resources like police and their cars, radios, guns, protocols, legal justice system, forensic investigators etc.
Is the sharp piece of metal a bug? Is the patch just more force, monitoring and authority?
Edit: And is the cost and risk of trusting an algorithm comparable to the human cost and risk in maintaining current securities "authenticity", which is basically a might is right system?
Of course when you leave, the shopkeeper (assuming you didn't murder them) can use a phone to inform the authorities. Then a manhunt begins involving resources like police and their cars, radios, guns, protocols, legal justice system, forensic investigators etc.
Is the sharp piece of metal a bug? Is the patch just more force, monitoring and authority?
Edit: And is the cost and risk of trusting an algorithm comparable to the human cost and risk in maintaining current securities "authenticity", which is basically a might is right system?
>We have all kinds of markets already, ones that are much faster, more liquid and more efficient than any blockchain-backed exchanges.
You are talking probably from a developed country point of view. For those like me who lives in a developing country none of those are accessible for everyone, only for a few percentage of the society. Cryptocurrencies solves a lot of problems for people in oppressed countries or with a lot of terrible regulations and high inflation rates.
You are talking probably from a developed country point of view. For those like me who lives in a developing country none of those are accessible for everyone, only for a few percentage of the society. Cryptocurrencies solves a lot of problems for people in oppressed countries or with a lot of terrible regulations and high inflation rates.
What’s the difference between realt.co and REITs?
https://en.m.wikipedia.org/wiki/Real_estate_investment_trust
https://en.m.wikipedia.org/wiki/Real_estate_investment_trust
The difference is presumably the digital contract, that is written in a programming language that only a handful of people on earth can understand, where a programming error can make your money disappear, such that you have no recourse in the court system.
Another difference is the pyramid scheme incentives in the cryptocurrency tech, causing everyone who's bought into it to be incentivised to talk about how great it is.
Another difference is the pyramid scheme incentives in the cryptocurrency tech, causing everyone who's bought into it to be incentivised to talk about how great it is.
Please don't comment on subjects you know nothing about and are clearly ignorant and show no desire to actually learn.
"In the long term this will lead to novel types of assets, and make ownership extremely liquid. Imagine using your phone to buy shares in a recording artist you just discovered, and selling those shares when they win a grammy."
I'm sorry but I really totally fail to see what is appealing about this future hellscape where literally every aspect of our lives is transacted, monetised and profitable. What is good about this? Why is this something to aim for?
I'm sorry but I really totally fail to see what is appealing about this future hellscape where literally every aspect of our lives is transacted, monetised and profitable. What is good about this? Why is this something to aim for?
I highly recommend "A Blank Slate of State" by Chris Burniske: https://unchainedpodcast.com/chris-burniske-a-blank-slate-of...
He makes the same argument that I think you're making, that these new types of "more accessible" financial markets in crypto can corrupt people if they only use it to seek out money for money's sake.
TLDR: it's a tool, that can be used for good or for bad, but like any tool it's better to have it than not.
He makes the same argument that I think you're making, that these new types of "more accessible" financial markets in crypto can corrupt people if they only use it to seek out money for money's sake.
TLDR: it's a tool, that can be used for good or for bad, but like any tool it's better to have it than not.
I see the opposite happening, as rent-seeking models like that of the recording industry are replaced.
Also, this regards the music an artist makes and sells, not every aspect of their life.
Also, this regards the music an artist makes and sells, not every aspect of their life.
I don't see how Ethereum or any "digital currency" solve the real world problems that will still exist. Sure, the big players in the recording industry can treat artists badly. But a service is provided, which is doing all business and marking side of things that most artists don't want to bother about.
The idea of recording companies will still exist. Maybe somehow the big incumbents get caught out by the change to a "digital economy", but all that will happen is new ones will appear, and will end up doing exactly the same as the old ones.
Digital distribution was supposed to free artists from record companies. Now it is consolidated to a few large companies like Spotify and Apple because musicians don't want to run and market their own digital store front.
The idea of recording companies will still exist. Maybe somehow the big incumbents get caught out by the change to a "digital economy", but all that will happen is new ones will appear, and will end up doing exactly the same as the old ones.
Digital distribution was supposed to free artists from record companies. Now it is consolidated to a few large companies like Spotify and Apple because musicians don't want to run and market their own digital store front.
Star Trek was a prophetic vision of the future. Except we aren't meant to be running a federation of planets. We are the Ferengi.
> In the case of Ethereum, digital scarcity secured by a blockchain enables a turing complete state machine that the world can use
This sentence is completely opaque to me. I have no idea what you are trying to say.
> In the most basic terms, this will remove clearing houses for transactions of asset
So I will be able to go to Starbucks, buy a cup of coffee, pay for it with Ethereum and not involve my bank?
> Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life.
I can currently buy shares in companies I work for. Why is Ethereum different (other than I don't understand it)?
This sentence is completely opaque to me. I have no idea what you are trying to say.
> In the most basic terms, this will remove clearing houses for transactions of asset
So I will be able to go to Starbucks, buy a cup of coffee, pay for it with Ethereum and not involve my bank?
> Imagine building a stream of passive income based on the shares you've earned in projects you've worked on throughout your life.
I can currently buy shares in companies I work for. Why is Ethereum different (other than I don't understand it)?
No KYC
Offline account creation
Instantly liquid programmable assets
Programmable banking
Financial censorship resistant
Micro finance
Anyone can use it, it’s surprisingly simple
You could create your own company+shares if you want and they can be instantly available on any market. Ever tried trading a penny stock, or an international stock? It takes forever to open an account at a brokerage where they may or may not allow you to trade certain types of assets, or at certain times. Trades can be reversed and assets confiscated. It’s a million times easier with crypto. Yes it’s a “dark forest” for now (buyer beware) but there are some legitimate platforms like aave and uniswap. Install metamask and check it out! Feels incredibly futuristic to me
Offline account creation
Instantly liquid programmable assets
Programmable banking
Financial censorship resistant
Micro finance
Anyone can use it, it’s surprisingly simple
You could create your own company+shares if you want and they can be instantly available on any market. Ever tried trading a penny stock, or an international stock? It takes forever to open an account at a brokerage where they may or may not allow you to trade certain types of assets, or at certain times. Trades can be reversed and assets confiscated. It’s a million times easier with crypto. Yes it’s a “dark forest” for now (buyer beware) but there are some legitimate platforms like aave and uniswap. Install metamask and check it out! Feels incredibly futuristic to me
> No KYC
I don't know what KYC is but I'm not US based. Sounds like some fee that's peculiar to US banking environment (which I have heard is extraordinarily bureaucratic).
>Instantly liquid programmable assets
Another example of opaque blockchain jargon. Maybe it makes sense, but not as a way to convert the sceptical.
>Programmable banking
I can currently program transfers to happen regularly every month on a certain date, or every tuesday or on soem other timebased trigger. This pretty much covers my personal needs. Everything else I want to double check before approving. I program for a living. Looking around at my family, I don't see anyone capable of writing a simple Python program in order to e.g. pay a bill and my wife has a PhD.
> Financial censorship resistant
Is this a feature? Don't we as a society want a way to control e.g. drug lords and tax evaders moving their money around?
I have never tried buying penny stocks or any type of stock, but is it really such a big deal that you have to wait a day or week before you can place your bets? And that your bets are limited to the roulette and not the blackjack?
I don't know what KYC is but I'm not US based. Sounds like some fee that's peculiar to US banking environment (which I have heard is extraordinarily bureaucratic).
>Instantly liquid programmable assets
Another example of opaque blockchain jargon. Maybe it makes sense, but not as a way to convert the sceptical.
>Programmable banking
I can currently program transfers to happen regularly every month on a certain date, or every tuesday or on soem other timebased trigger. This pretty much covers my personal needs. Everything else I want to double check before approving. I program for a living. Looking around at my family, I don't see anyone capable of writing a simple Python program in order to e.g. pay a bill and my wife has a PhD.
> Financial censorship resistant
Is this a feature? Don't we as a society want a way to control e.g. drug lords and tax evaders moving their money around?
I have never tried buying penny stocks or any type of stock, but is it really such a big deal that you have to wait a day or week before you can place your bets? And that your bets are limited to the roulette and not the blackjack?
KYC = know your customer = anti money-laundering. Yes, it is bureacratic, and it can be a pain for regular, non-money-laundering customers. With crypto, you can instantly create an account offline and trade around the globe.
As far as programmable banking, I meant it in the sense that people can create "bank apps", aka contracts. It goes way beyond simple routing of funds, since it's turing complete.
Financial censorship is a feature, since the finance industry does exclude people and countries. For example, in the US you need to have a $1M net worth or something to be an "accredited investor" which grants you certain privileges. Ethereum doesn't make such distinctions - you can interact with and create any financial product/contract (depending on its rules). Brokerages also regularly halt trading, and make you answer a bunch of questions before trading certain financial products. There are 2 sides to the financial censorship coin so I'm not going to pretend this is always a great feature.
I'm focusing on finance because so far it is the main use case for ethereum. There are a lot of decentralized financial products and derivates now, that even trade in a "USD"-backed crypto (USDC, DAI). Honestly, it all works pretty well, but its not without its downsides and pitfalls.
One of my favorite things about the whole thing is that it gets rid of ACCOUNT CREATION. It's so nice to visit a website/app and just approve it with your wallet. It's the ultimate SSO - there is no email verification crap, its all so instant and frictionless to play with financial products that would otherwise be a bureacratic maze. It's even easier than logging into hacker news.
As far as programmable banking, I meant it in the sense that people can create "bank apps", aka contracts. It goes way beyond simple routing of funds, since it's turing complete.
Financial censorship is a feature, since the finance industry does exclude people and countries. For example, in the US you need to have a $1M net worth or something to be an "accredited investor" which grants you certain privileges. Ethereum doesn't make such distinctions - you can interact with and create any financial product/contract (depending on its rules). Brokerages also regularly halt trading, and make you answer a bunch of questions before trading certain financial products. There are 2 sides to the financial censorship coin so I'm not going to pretend this is always a great feature.
I'm focusing on finance because so far it is the main use case for ethereum. There are a lot of decentralized financial products and derivates now, that even trade in a "USD"-backed crypto (USDC, DAI). Honestly, it all works pretty well, but its not without its downsides and pitfalls.
One of my favorite things about the whole thing is that it gets rid of ACCOUNT CREATION. It's so nice to visit a website/app and just approve it with your wallet. It's the ultimate SSO - there is no email verification crap, its all so instant and frictionless to play with financial products that would otherwise be a bureacratic maze. It's even easier than logging into hacker news.
Anti-money laundering regulations are a good thing to me. I want this, even though it means I had to get a passport made for my 4-year old son so that the bank could see he actually existed and his account total of $50 was not being used by some ukrainian oligarch.
I also think it's ok to put in some speed bumps and force a tiny bit of due diligence before allowing people to gamble away their savings. I'm assuming there is a different risk profile to trading Kazakstani stocks as compared to German stocks, and I think people should be made aware of what they are getting into.
I also think it's ok to put in some speed bumps and force a tiny bit of due diligence before allowing people to gamble away their savings. I'm assuming there is a different risk profile to trading Kazakstani stocks as compared to German stocks, and I think people should be made aware of what they are getting into.
Wirecard and Volkswagen are German companies, you can buy their stock easily.
>I don't know what KYC is but I'm not US based. Sounds like some fee that's peculiar to US banking environment (which I have heard is extraordinarily bureaucratic).
KYC stands for Know Your Customer, basically anti-money laundering regulations. Banks need to have a decent grasp on whether or not the money they're working with was "earned" legitimately.
>Is this a feature? Don't we as a society want a way to control e.g. drug lords and tax evaders moving their money around?
See above :)
Disclaimer: I think cryptocurrencies are a spillover from a couple decades of inflationary monetary policy from the fed causing people to seek yield in more and more esoteric forms. I also think they're stupid.
KYC stands for Know Your Customer, basically anti-money laundering regulations. Banks need to have a decent grasp on whether or not the money they're working with was "earned" legitimately.
>Is this a feature? Don't we as a society want a way to control e.g. drug lords and tax evaders moving their money around?
See above :)
Disclaimer: I think cryptocurrencies are a spillover from a couple decades of inflationary monetary policy from the fed causing people to seek yield in more and more esoteric forms. I also think they're stupid.
> I don't know what KYC is
KYC = Know Your Customer
> but I'm not US based
When sufficiently large sums of money are involved, it's hard to conduct legal business and not play by US rules. Swiss banks discovered this, at considerable expense to themselves and their customers. Cryptocurrency exchanges are going through the same discovery process right now, in both the legal and the philosophical sense.
> > Instantly liquid programmable assets
The unfortunate property of the liquidity of cryptocurrency assets is that they have a tendency to get siphoned away or evaporating in ways not anticipated by their owner.
> > Financial censorship resistant
> Is this a feature? Don't we as a society want a way to control e.g. drug lords and tax evaders moving their money around?
That's precisely one of the questions at stake here. Some folks appear to pine for the benevolent overlordship of the likes of, say, Ross Ulbricht.
KYC = Know Your Customer
> but I'm not US based
When sufficiently large sums of money are involved, it's hard to conduct legal business and not play by US rules. Swiss banks discovered this, at considerable expense to themselves and their customers. Cryptocurrency exchanges are going through the same discovery process right now, in both the legal and the philosophical sense.
> > Instantly liquid programmable assets
The unfortunate property of the liquidity of cryptocurrency assets is that they have a tendency to get siphoned away or evaporating in ways not anticipated by their owner.
> > Financial censorship resistant
> Is this a feature? Don't we as a society want a way to control e.g. drug lords and tax evaders moving their money around?
That's precisely one of the questions at stake here. Some folks appear to pine for the benevolent overlordship of the likes of, say, Ross Ulbricht.
>Instantly liquid programmable assets
Since nobody really answered this one I'll explain it.
Let's say you create 1,000,000 Blah-Tokens. Problem: your new asset has 0 liquidity. Right? Because there isn't a market for it. If you get it listed somewhere, there still won't be a market until people start placing buy and sell orders. So, can ethereum fix this? Yes! With an automatic market maker like uniswap. Put your 1M fresh tokens in a pool alongside some ETH. We'll say this pool will obey the law xy=k, x and y being the two tokens. We'll also say that the exchange rate shall be x/y.
Now anyone can come along and transact with you and the liquidity is already there! No order book is required. The price is quoted and tokens are added/removed from pool in accordance with xy=k. You get a fee for being nice enough to supply the liquidity. Oh, and anyone can supply their own tokens and split the fees with you. Wa-la.
Since nobody really answered this one I'll explain it.
Let's say you create 1,000,000 Blah-Tokens. Problem: your new asset has 0 liquidity. Right? Because there isn't a market for it. If you get it listed somewhere, there still won't be a market until people start placing buy and sell orders. So, can ethereum fix this? Yes! With an automatic market maker like uniswap. Put your 1M fresh tokens in a pool alongside some ETH. We'll say this pool will obey the law xy=k, x and y being the two tokens. We'll also say that the exchange rate shall be x/y.
Now anyone can come along and transact with you and the liquidity is already there! No order book is required. The price is quoted and tokens are added/removed from pool in accordance with xy=k. You get a fee for being nice enough to supply the liquidity. Oh, and anyone can supply their own tokens and split the fees with you. Wa-la.
So liquidity here means whether there is a demand for my Blah-tokens, whether people are willing to buy it for their hard earned cash, gold bars, coffee beans or whatever.
How does Ethereum help create a demand for my Blah-tokens? I can already open a web-shop that sells Blah-tokens. I'm fairly sure the demand will be very low, though. Please explain further how an 'automatic market maker like uniswap' will create demand for my Blah-tokens.
How does Ethereum help create a demand for my Blah-tokens? I can already open a web-shop that sells Blah-tokens. I'm fairly sure the demand will be very low, though. Please explain further how an 'automatic market maker like uniswap' will create demand for my Blah-tokens.
You should probably read up on how automated market makers work. It's going to take a long time to get to the interesting parts if you just guess randomly and expect people to correct you.
It doesn't create demand, it just makes it liquid which would otherwise be a tremendous hurdle.
Liquid markets enable demand though.
Liquid markets enable demand though.
How might we create a digital commodity that is:
1) Consistent with a specific set of ideals (anyone can issue, what happens on the network is a matter of individual responsibility, establish economic incentives to funnel people into good behavior, finders keepers, etc.)
2) Obfuscated enough that it’s not immediately regulated into oblivion by the existing financial system
Many people on this site subscribe to the ideals in #1, thus the fervor. The CFTC has decided to do away with #2 (in the states) but it took them over a decade.
1) Consistent with a specific set of ideals (anyone can issue, what happens on the network is a matter of individual responsibility, establish economic incentives to funnel people into good behavior, finders keepers, etc.)
2) Obfuscated enough that it’s not immediately regulated into oblivion by the existing financial system
Many people on this site subscribe to the ideals in #1, thus the fervor. The CFTC has decided to do away with #2 (in the states) but it took them over a decade.
> what happens on the network is a matter of individual responsibility
That sounds like the opposite of solving trust.
That sounds like the opposite of solving trust.
Indeed. I don’t agree with all of these principles. I’m just stating what I’ve observed.
Imagine an extremely slow CPU, where every opcode cost money to run. Imagine you could deploy code to this machine, and it would be guaranteed to execute in a publicly verifiable way, and nobody could change it or modify it (unless you get several influential people to agree to a fork that changes the rules).
I think that's basically Ethereum.
Oh, also imagine that instead of costing money directly, you instead have to pay somebody to run their car engine at full speed while up on blocks in a garage. Oh, and if they ever stop revving their car engine, somebody else might rev their engines faster/more and then they can steal all your money.
Edit: Apparently ETH 2.0 has reduced the amount of pointless engine-revving.
I think that's basically Ethereum.
Oh, also imagine that instead of costing money directly, you instead have to pay somebody to run their car engine at full speed while up on blocks in a garage. Oh, and if they ever stop revving their car engine, somebody else might rev their engines faster/more and then they can steal all your money.
Edit: Apparently ETH 2.0 has reduced the amount of pointless engine-revving.
This is a bit like saying that nobody needs a Linux desktop because Windows is good enough. Some people just care more than you do about certain principles, even if caring about those principles means that they have to endure a lower "quality" product.
Most blockchains are strictly inferior to a modern financial system when it comes to things like speed and cost of transferring small sums of money - which is the use case that most people have. But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments.
Does anyone else need it? Right now, I think the answer is "no". But nobody really needed a Linux desktop either, and 25 years on we have Chromebooks and Android.
Ethereum allows you to upload complex scripts to it, where those scripts are executed by a variety of different nodes which compare results and ensure that the script was executed faithfully. Do I personally need this? Probably not, no. There's a competitive market in cloud hosting and very few circumstances where I would be afraid that Amazon, Google, or Microsoft is going to tamper with my computation, or refuse to execute it. But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance. Maybe at some point we will want to use blockchain systems to maintain audit trails or even to coordinate our computations.
If these systems can prove robustness and reliability over a long period of time, maybe it makes sense to write the rules for multi-party computations as Ethereum scripts, and it becomes a ubiquitous low-level part of the stack. Maybe everyone ends up having an Ethereum account and we use it in place of the current payment system. Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux.
Most blockchains are strictly inferior to a modern financial system when it comes to things like speed and cost of transferring small sums of money - which is the use case that most people have. But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments.
Does anyone else need it? Right now, I think the answer is "no". But nobody really needed a Linux desktop either, and 25 years on we have Chromebooks and Android.
Ethereum allows you to upload complex scripts to it, where those scripts are executed by a variety of different nodes which compare results and ensure that the script was executed faithfully. Do I personally need this? Probably not, no. There's a competitive market in cloud hosting and very few circumstances where I would be afraid that Amazon, Google, or Microsoft is going to tamper with my computation, or refuse to execute it. But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance. Maybe at some point we will want to use blockchain systems to maintain audit trails or even to coordinate our computations.
If these systems can prove robustness and reliability over a long period of time, maybe it makes sense to write the rules for multi-party computations as Ethereum scripts, and it becomes a ubiquitous low-level part of the stack. Maybe everyone ends up having an Ethereum account and we use it in place of the current payment system. Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux.
I don't understand why this topic is in any way relatable to the Linux vs. Windows discussion, even as an analogy.
> But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments.
That's not a good example to justify any of this, in my opinion.
> But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance.
Such as?
I don't read anything I can relate to.
> Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux.
I think that's just false equivalence.
> But, if you are running Wikileaks, blockchain payments are superior because the credit card companies can't decide to stop processing your payments.
That's not a good example to justify any of this, in my opinion.
> But there are situations in which it is difficult to get multiple parties to agree on a trustworthy host for data and applications, and current political trends point toward that problem growing in significance.
Such as?
I don't read anything I can relate to.
> Who knows? These scenarios are unlikely, but then nobody in 1995 would have believed that in 2020 both the majority of the world's servers and the world's most popular personal computing devices would run Linux.
I think that's just false equivalence.
> That's not a good example to justify any of this, in my opinion.
It's a real example from recent history, where technology A was able to solve a problem that technology B could not. This should affect one's belief in the merits of technology A.
> Such as?
During the recent US election, Facebook has struggled to present itself as a neutral broker of information. There were occasions in which it appears that Facebook charged higher or lower rates to different parties for political advertisements. All of the major social media companies are now facing politically-motivated attacks, where political actors are attempting to undermine confidence in the neutrality and efficacy of moderation, ad allocation, and recommendation algorithms. There is a plausible argument that open, verifiable computing networks could be a useful tool in dealing with such situations.
I put the emphasis on plausible because the standard for plausibility is not especially high. There are plenty of other solutions to this problem. I personally think that this is sufficient to make Ethereum interesting.
> I think that's just false equivalence.
What is false about it? My statement about how Linux was perceived in the early-mid-90s is definitely true. The key difference between Linux and its competitors was that it was an open system that could not be controlled by a single private actor, which was a serious concern given Microsoft's dominance of the OS market (which led to their antitrust trial). Ethereum has broadly similar positioning as a provider of computing services, whose only competitive advantage is that it cannot be controlled by a single private actor.
It's a real example from recent history, where technology A was able to solve a problem that technology B could not. This should affect one's belief in the merits of technology A.
> Such as?
During the recent US election, Facebook has struggled to present itself as a neutral broker of information. There were occasions in which it appears that Facebook charged higher or lower rates to different parties for political advertisements. All of the major social media companies are now facing politically-motivated attacks, where political actors are attempting to undermine confidence in the neutrality and efficacy of moderation, ad allocation, and recommendation algorithms. There is a plausible argument that open, verifiable computing networks could be a useful tool in dealing with such situations.
I put the emphasis on plausible because the standard for plausibility is not especially high. There are plenty of other solutions to this problem. I personally think that this is sufficient to make Ethereum interesting.
> I think that's just false equivalence.
What is false about it? My statement about how Linux was perceived in the early-mid-90s is definitely true. The key difference between Linux and its competitors was that it was an open system that could not be controlled by a single private actor, which was a serious concern given Microsoft's dominance of the OS market (which led to their antitrust trial). Ethereum has broadly similar positioning as a provider of computing services, whose only competitive advantage is that it cannot be controlled by a single private actor.
Have you ever tried to cash a foreign check? Not that easy... You have to go to the bank to do it unlike any regular check... Also it is easier to move large amount of crypto then cash (even when both are digital.
In my opinion, moving a large amount of money using crypto currencies, legally and without risks, it not easy for most people. I would say it's a lot harder than going to the bank and letting them manage the transactions database.
Cryptos are not considered currencies under the current laws so I dont see how it would be a problem, legally....
The programmable part is most interesting and unknown. Payments can be made to go to one party or have built in alternatives if they die prior to transfer. Payments can also require specific documentation or have a time limit for transfer. How exactly this might most commonly be used is all conjecture, but there are many possibilities and few built in limits.
Oddly enough making payments programmable also introduced some of the first bugs in payment programming which raises many issues with the whole concept. In any case, it is all moving forward very fast.
Oddly enough making payments programmable also introduced some of the first bugs in payment programming which raises many issues with the whole concept. In any case, it is all moving forward very fast.
I too don't need any of the features that cryptocurrency brings. However, cryptocurrencies are making substantial headway on solving the hardest class of problems that humans face: coordination problems. Common examples include the Tragedy of the Commons and collusion [1].
Vitalik has written some surprisingly approachable pieces on the various problems that cryptocurrencies face. It's not too much of a leap to see how these problems appear in non-cryptocurrency contexts. The value I see in cryptocurrencies is that they must develop robust/antifragile solutions to the coordination problems that have plagued society forever. Even if some problems can't be solved, then there are mental tools for making sense of what's going on.
[1]: https://vitalik.ca/general/2019/04/03/collusion.html [2]: https://vitalik.ca/general/2020/08/20/trust.html
Vitalik has written some surprisingly approachable pieces on the various problems that cryptocurrencies face. It's not too much of a leap to see how these problems appear in non-cryptocurrency contexts. The value I see in cryptocurrencies is that they must develop robust/antifragile solutions to the coordination problems that have plagued society forever. Even if some problems can't be solved, then there are mental tools for making sense of what's going on.
[1]: https://vitalik.ca/general/2019/04/03/collusion.html [2]: https://vitalik.ca/general/2020/08/20/trust.html
So, I believe you're thinking about this in the classic sense of security, transactions, and decentralizations. It's actually better to think of Ethereum as an ATM that replaces bank tellers - i.e. a fundamental technology shift.
Forget about decentralization/transactions for a second and let's take an example of your company transitioning your 401k to another plan. Think of all the people moving this money, all the legal process that it has to go through, all the find print that must be followed, etc. There's a TON of work to move a 401k and the process typically takes months. What if I told you that you could transfer your 401k plan, without the additional overhead of people, and you could do it in seconds? That's Ethereum.
Let's take another example of buying a house. If you've ever gone through this process it takes months to finish, theres tons of middlemen (bank loan process, approval, selling the loan, lawyers to secure the property, real estate agents, etc). What if I told you that you could buy a house, without this overhead, in seconds? That's Ethereum.
The bottom line is our current financial system is based on an army of lawyers, middlemen, banks etc. and large transactions take time and money to solve. With a concept like Ethereum you just don't need any of that, you can transfer large amounts of value instantly and you don't need this army of people.
It is frankly the difference between horses and cars. It's a technological shift that makes previously impossible actions possible.
Forget about decentralization/transactions for a second and let's take an example of your company transitioning your 401k to another plan. Think of all the people moving this money, all the legal process that it has to go through, all the find print that must be followed, etc. There's a TON of work to move a 401k and the process typically takes months. What if I told you that you could transfer your 401k plan, without the additional overhead of people, and you could do it in seconds? That's Ethereum.
Let's take another example of buying a house. If you've ever gone through this process it takes months to finish, theres tons of middlemen (bank loan process, approval, selling the loan, lawyers to secure the property, real estate agents, etc). What if I told you that you could buy a house, without this overhead, in seconds? That's Ethereum.
The bottom line is our current financial system is based on an army of lawyers, middlemen, banks etc. and large transactions take time and money to solve. With a concept like Ethereum you just don't need any of that, you can transfer large amounts of value instantly and you don't need this army of people.
It is frankly the difference between horses and cars. It's a technological shift that makes previously impossible actions possible.
>What does this do for real-life applications?
You can lend dollars on ethereum for 4% APR at the moment. That's a good reason to use this even for someone not interested in other functions. The interest comes from borrowers, who are mostly speculators going long on crypto.
https://compound.finance/markets
USDC is tokenized dollar that can be swapped to/from dollars in a bank account on coinbase. Recently it was even used by the US Treasury to transfer dollars to Venezuela.
You can lend dollars on ethereum for 4% APR at the moment. That's a good reason to use this even for someone not interested in other functions. The interest comes from borrowers, who are mostly speculators going long on crypto.
https://compound.finance/markets
USDC is tokenized dollar that can be swapped to/from dollars in a bank account on coinbase. Recently it was even used by the US Treasury to transfer dollars to Venezuela.
What happens with these loans if the recipient defaults on repayment?
Loans are overcollateralized and collateral is automatically liquidated once the collateral ratio falls below the liquidation threshold. Eg. for eth as collateral the liquidation threshold is 75%, meaning $75 borrowed for $100 in collateral.
Compound itself has survived multiple violent price crashes and lenders didn't lose anything.
To be clear, you mean that I can borrow $75 by giving $100 first, then pay back the $75 with interest and get back my $100?
Why don't I use my $100 directly instead?
There are a few cases outside the blockchain where you get loans although you already have the cash (e.g. for tax reasons), but I don't understand how it makes financial sense in this case, if everything happens on the blockchain with no other incentive.
Maybe another direct question would be: as a lender, for which risk are you getting paid some interest?
Why don't I use my $100 directly instead?
There are a few cases outside the blockchain where you get loans although you already have the cash (e.g. for tax reasons), but I don't understand how it makes financial sense in this case, if everything happens on the blockchain with no other incentive.
Maybe another direct question would be: as a lender, for which risk are you getting paid some interest?
>Why don't I use my $100 directly instead?
Because it's not $100 in dollars, but $100 worth of eth or something else. Borrowed dollars can be used to buy something else, hoping the price of that something rises.
>as a lender, for which risk are you getting paid some interest?
It's theoretically possible for prices to fall fast enough so that the liquidated value of the collateral isn't enough to pay the debt. I don't think rewards are risk adjusted at all. More like same people that could provide dollars are likely to speculate on cryptocurrencies themselves, or take part in more risky and active yield generating schemes.
Because it's not $100 in dollars, but $100 worth of eth or something else. Borrowed dollars can be used to buy something else, hoping the price of that something rises.
>as a lender, for which risk are you getting paid some interest?
It's theoretically possible for prices to fall fast enough so that the liquidated value of the collateral isn't enough to pay the debt. I don't think rewards are risk adjusted at all. More like same people that could provide dollars are likely to speculate on cryptocurrencies themselves, or take part in more risky and active yield generating schemes.
Ok I guess I was missing the basics on overcollateralization, https://www.investopedia.com/terms/o/overcollateralization.a... answers my question, it was actually not blockchain-specific.
As another commented pointed out, the collateral is seized. Default risk is very low because there is more collateral than debt.
There's also special loans with 0% collateralization which amazingly have even less risk than the type described above. Those are called flash loans and take advantage of ethereum behavior that allows mini-rollbacks in the time before a block is finalized. So you borrow millions of dollars in the span of about ten seconds, and if it doesn't get payed back then it gets reverted. Very powerful if you're smart enough to use it properly.
There's also special loans with 0% collateralization which amazingly have even less risk than the type described above. Those are called flash loans and take advantage of ethereum behavior that allows mini-rollbacks in the time before a block is finalized. So you borrow millions of dollars in the span of about ten seconds, and if it doesn't get payed back then it gets reverted. Very powerful if you're smart enough to use it properly.
> I don't understand this.
At least you are honest.
At least you are honest.
In person, I can exchange information with someone without anyone interfering.
In person, I can exchange value (e.g.: chocolate for firewood) without anyone interfering.
Online, I can exchange information without anyone interfering (using encryption).
Online, I cannot exchange value without anyone interfering.
Exchanging value at a distance is complicated, because there’s so many different laws, bank APIs, apps, regulations, etc etc. We use middle-man services to simplify these problems for us — but they charge hefty fees. There’s delays, and arbitrary restrictions. All these complications also introduce additional risk (compared to exchanging the value in person).
A single, perfect global bank, or a perfect standard for all banks to follow, would allow me to exchange value online without anyone interfering. However, such a thing isn’t likely to happen.
Cryptocurrencies, if executed well, offer a real pathway to “I can exchange value online without anyone interfering.”
In person, I can exchange value (e.g.: chocolate for firewood) without anyone interfering.
Online, I can exchange information without anyone interfering (using encryption).
Online, I cannot exchange value without anyone interfering.
Exchanging value at a distance is complicated, because there’s so many different laws, bank APIs, apps, regulations, etc etc. We use middle-man services to simplify these problems for us — but they charge hefty fees. There’s delays, and arbitrary restrictions. All these complications also introduce additional risk (compared to exchanging the value in person).
A single, perfect global bank, or a perfect standard for all banks to follow, would allow me to exchange value online without anyone interfering. However, such a thing isn’t likely to happen.
Cryptocurrencies, if executed well, offer a real pathway to “I can exchange value online without anyone interfering.”
This also applies to storing value.
See what happened to Greece in 2010, where many individuals lost large amounts of cash stored in their bank accounts. This would not happen with Ethereum. If you hold 10 ETH, you’ll continue to hold 10 ETH until it’s transferred elsewhere (or you lose your keys).
See what happened to Greece in 2010, where many individuals lost large amounts of cash stored in their bank accounts. This would not happen with Ethereum. If you hold 10 ETH, you’ll continue to hold 10 ETH until it’s transferred elsewhere (or you lose your keys).
Ethereum and other blockchain systems are very foundational, they do not need to care about real-life applications. You probably also don't understand what your central bank is doing, while it supports all your financial transactions. The good news is that the new version of Ethereum is at least more climate friendly.
I’m really surprised to read this far down without anyone mentioning DeFi.
Decentralized finance is already happening. You can take out loans against your Ethereum or borrowing or lend already without a bank or an intermediary like LendingClub.
The orchestration of money and being able to program money is limitless without the intermediary is huge. True peer to peer financial instruments are now possible.
Decentralized finance is already happening. You can take out loans against your Ethereum or borrowing or lend already without a bank or an intermediary like LendingClub.
The orchestration of money and being able to program money is limitless without the intermediary is huge. True peer to peer financial instruments are now possible.
My issue with these kind of questions is that they're hardly ever done in good faith, and they show over and over again whenever crypto is brought up on HN.
Crypto has its good uses, and I've relied on it for my livelihood before (and even wished it wasn't just used as a speculation vehicle) when traditional banking couldn't meet my needs, so it's a very Americentric/Eurocentric thing to assume it's only ever good to speculate on and buy drugs on the Dark Web.
That's it- that's its killer app, it's an alternative to existing money transfer and store of value mechanisms, anything else like "smart contracts" or reduced carbon footprints from better Proof-of-Stake implementations are a nice bonus and worth developing, of course.
Crypto has its good uses, and I've relied on it for my livelihood before (and even wished it wasn't just used as a speculation vehicle) when traditional banking couldn't meet my needs, so it's a very Americentric/Eurocentric thing to assume it's only ever good to speculate on and buy drugs on the Dark Web.
That's it- that's its killer app, it's an alternative to existing money transfer and store of value mechanisms, anything else like "smart contracts" or reduced carbon footprints from better Proof-of-Stake implementations are a nice bonus and worth developing, of course.
Could you expand on a scenario where "traditional banking couldn't meet your needs," but crypto was able to?
I know someone who needed to do a small task for someone overseas, for $50 or so. An international wire transfer would have taken $35 out, and both parties would have had to go to their banks and fill out paperwork. With PayPal, the other party could have just claimed fraud after the task was done and reversed the transaction. With cryptocurrency, the transaction was sent instantly with a fee of less than a dollar, and settled within 20 minutes.
https://twitter.com/arbingsam/status/1333669126125068289
Heres one novel idea I have just seen in my twitter feed for a yearn strategy[1].
You deposit tokens to the yearn contract which employs different strategies to lend/spend those tokens in ways that generate profit for everyone participating in the contract.
This strategy is taking up the rest of the bets that trump wont be re-elected on a decentralised prediction market (blah blah see crypto is all gambling). This ability to be able to program collectively program money is fascinating (and is scary with bugs, but with time hopefully becomes more robust).
[1]https://yearn.finance/vaults
Heres one novel idea I have just seen in my twitter feed for a yearn strategy[1].
You deposit tokens to the yearn contract which employs different strategies to lend/spend those tokens in ways that generate profit for everyone participating in the contract.
This strategy is taking up the rest of the bets that trump wont be re-elected on a decentralised prediction market (blah blah see crypto is all gambling). This ability to be able to program collectively program money is fascinating (and is scary with bugs, but with time hopefully becomes more robust).
[1]https://yearn.finance/vaults
I don't entirely understand this, but am I gathering that it's holding money for a "bet," similar to paying into a horsetrack and then going back to collect if your horse wins? Or is it an escrow where, during the time the money is held, it "generates profit" (invested elsewhere?) and then pays a return to those who contributed later?
fwiw - I don't have a yearn account, and am consequently unable to view your yearn link.
fwiw - I don't have a yearn account, and am consequently unable to view your yearn link.
So yeah, it places a bet on augur, buying as many shares as it can for "no trump wont be elected" which are currently around 90c and will resolve to $1 in January when biden is sworn in. The reason it isnt $1 yet is because some people are buying the other side of the market for whatever reason. It seems like an obvious bet really, so the strategy is to pool everyones money, take the bet, and then after the market resolves pay back the winnings to the pool.
This particular strategy is just a bet. but other strategies would involve borrowing assets and lending them out to gain interest like you mention. You could say "i can do that myself, what is gained by pooling" and there are two things: 1 you dont have to manage this, the strategy keeper manages their strategy and takes a small fee to do so, and 2 you would be in competition with the pool, less lenders means higher rates so it makes sense to pool the lending.
They get increasingly complex involving taking insurance, lending, borrowing, producing tokens, burning tokens, etc. all from other decentralised protocols, it all gets stitched together across platforms. Money lego is a phrase often used, but really its more like `npm install insurance`
Ah sorry about the link, didnt realise (btw you dont need a yearn account, there is no accounts on these platforms, but you probably do need a web3 wallet like metamask. you have a wallet and that is your account across all platforms, so you hold your user data with you, and can have as many identities as you like for each platform).
Another link to read more on yearn specifically is Andre's blog (creator and one of the lead devs) https://andrecronje.medium.com/ it is one of the interesting projects as it is growing organically, with a mix of public and anon devs, with no specific management, and no VC investment behind it (like some other defi projects), just people coming together an building interlinking code as public goods.
This particular strategy is just a bet. but other strategies would involve borrowing assets and lending them out to gain interest like you mention. You could say "i can do that myself, what is gained by pooling" and there are two things: 1 you dont have to manage this, the strategy keeper manages their strategy and takes a small fee to do so, and 2 you would be in competition with the pool, less lenders means higher rates so it makes sense to pool the lending.
They get increasingly complex involving taking insurance, lending, borrowing, producing tokens, burning tokens, etc. all from other decentralised protocols, it all gets stitched together across platforms. Money lego is a phrase often used, but really its more like `npm install insurance`
Ah sorry about the link, didnt realise (btw you dont need a yearn account, there is no accounts on these platforms, but you probably do need a web3 wallet like metamask. you have a wallet and that is your account across all platforms, so you hold your user data with you, and can have as many identities as you like for each platform).
Another link to read more on yearn specifically is Andre's blog (creator and one of the lead devs) https://andrecronje.medium.com/ it is one of the interesting projects as it is growing organically, with a mix of public and anon devs, with no specific management, and no VC investment behind it (like some other defi projects), just people coming together an building interlinking code as public goods.
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I've talked about it in length before here in HN comments (feel free to look into my comment history) but paraphrasing: I live in Venezuela, so many things people take for granted are unfeasible/outright impossible for me to get access to. I have a PayPal account but no useful international bank account, and as I refuse to keep any significant amounts of money there, that money needs to go somewhere, and physical cash comes with its own issues too.
Remember Bowie talking about the internet in '99 "I think we're actually on the cusp of something exhilarating and terrifying.... Its an alien life form, just landed."[1]
Many of us feel the same about programmable money. It seems pretty interesting, unexplored, and has exciting, scary potential. It seems like a great place to build community groups openly, fairly, freely(in the libre sense). It reminds me of being a kid in the 90s dialing up to the internet and discovering peoples homepages and forums, sharing ideas and playing with new ways of organising and working together, playing and having fun. The ethereum dev community is inspiring to me.
But you dont have to agree that it is world changing, thats ok. I think there is value in it and will work to prove you wrong! We're all on the same side in the end.
[1] https://www.youtube.com/watch?v=LaHcOs7mhfU
Many of us feel the same about programmable money. It seems pretty interesting, unexplored, and has exciting, scary potential. It seems like a great place to build community groups openly, fairly, freely(in the libre sense). It reminds me of being a kid in the 90s dialing up to the internet and discovering peoples homepages and forums, sharing ideas and playing with new ways of organising and working together, playing and having fun. The ethereum dev community is inspiring to me.
But you dont have to agree that it is world changing, thats ok. I think there is value in it and will work to prove you wrong! We're all on the same side in the end.
[1] https://www.youtube.com/watch?v=LaHcOs7mhfU
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It's a credibly neutral ledger that guarantees access to any one in the world indefinitely.
Moreover, why is ETH not mooning already with the new release? I thought not enough "mooning" was the main problem alt-coins solved ...
Maybe it's not useful to you, maybe if you kept an open mind you could find some use!
1. There is $14.17B of value locked in DeFi, so it's clearly useful to someone(and scams don't account for the majority of it).
2. USD is not my primary currency, I'm fortunate my employer agrees to pay me in USDC. The fees are usually around $1.5, previously when I used PayPal fees used to be 5.5% deducted from my side.
3. I keep most of my money in USD, which earns interest around 8% APY monthly on yearn.finance/earn. Contrast with the savings account on my bank which gives me 3%.
I don't trade, I don't speculate. I own a small amount of ETH to pay for fees. If you are from TradeFi you will find it much more useful!
1. There is $14.17B of value locked in DeFi, so it's clearly useful to someone(and scams don't account for the majority of it).
2. USD is not my primary currency, I'm fortunate my employer agrees to pay me in USDC. The fees are usually around $1.5, previously when I used PayPal fees used to be 5.5% deducted from my side.
3. I keep most of my money in USD, which earns interest around 8% APY monthly on yearn.finance/earn. Contrast with the savings account on my bank which gives me 3%.
I don't trade, I don't speculate. I own a small amount of ETH to pay for fees. If you are from TradeFi you will find it much more useful!
Have you ever been refused service by a bank because of where you are from?
Have you ever had your property nationalized?
Have you ever had to leave everything behind and start from scratch somewhere else?
Have you ever lost your savings because the government tried to print its way out of debt?
Maybe you enjoy the privilege of living in a country where these are very unlikely to happen. Most people don't.
Have you ever had your property nationalized?
Have you ever had to leave everything behind and start from scratch somewhere else?
Have you ever lost your savings because the government tried to print its way out of debt?
Maybe you enjoy the privilege of living in a country where these are very unlikely to happen. Most people don't.
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I am sorry to say this, but it will not fly.
Amateur spaghetti code, even in a good language like Go, will not scale, by definition.
Certain design decisions for achieving scalability should have been adopted from the day one. Basically, it is all the principles behind FP and Erlang - share nothing, in the first place.
Scalability comes from being pure functional. This is the main conclusion from last 30 or 40 years of CS research.
Stateless and share-nothing applies to protocols and services too.
This is why so many failed with so called micro-services - only stateless will work.
Things of the scale of Ethereum require deep CS knowledge. Just being overconfident and too cocky is not enough.
Amateur spaghetti code, even in a good language like Go, will not scale, by definition.
Certain design decisions for achieving scalability should have been adopted from the day one. Basically, it is all the principles behind FP and Erlang - share nothing, in the first place.
Scalability comes from being pure functional. This is the main conclusion from last 30 or 40 years of CS research.
Stateless and share-nothing applies to protocols and services too.
This is why so many failed with so called micro-services - only stateless will work.
Things of the scale of Ethereum require deep CS knowledge. Just being overconfident and too cocky is not enough.
They don't even have sound theory to how the network will work. I think bad code is the last of their problems
Who uses it?
Uses what? Ethereum? Proof of Stake?
Ethereum is the most heavily used blockchain by far and powers all of DeFi which comprises of digital versions of most of the traditional finance tools. It also powers the entire NFT/collectible space which is used by many games, the NBA, and MLB. The interesting experiments such as quadratic funding and decentralized autonomous organizations are also homed on Ethereum. There's some good overviews out there if you're genuinely interested.
Ethereum is the most heavily used blockchain by far and powers all of DeFi which comprises of digital versions of most of the traditional finance tools. It also powers the entire NFT/collectible space which is used by many games, the NBA, and MLB. The interesting experiments such as quadratic funding and decentralized autonomous organizations are also homed on Ethereum. There's some good overviews out there if you're genuinely interested.
So.. it’s used for sports gambling?
Actually, this might be a very good use case for crypto currencies. Guaranteed payout, based on a triggered scenario.
Actually, this might be a very good use case for crypto currencies. Guaranteed payout, based on a triggered scenario.
Guaranteed payout on triggered scenario is one of the big promises of smart contracts.
* Sports betting where the contract itself pays you the winnings.
* Insurance where everyone pools together as peers, and the contract arbitrates payouts (think simple-to-arbitrate things at first, like flight insurance or credit default swaps).
* Financial contracts like futures and options, but with arbitrary asset classes.
* Open hedge funds where someone trusted manages a large portfolio, and the contract awards them with a pre-defined bonus based on performance.
As long as an asset can be represented digitally, it can be awarded based on arbitrary, turing-complete conditions, and any programmer in the world can write those conditions with no permission from any bank and with no legal team.
Money legos.
* Sports betting where the contract itself pays you the winnings.
* Insurance where everyone pools together as peers, and the contract arbitrates payouts (think simple-to-arbitrate things at first, like flight insurance or credit default swaps).
* Financial contracts like futures and options, but with arbitrary asset classes.
* Open hedge funds where someone trusted manages a large portfolio, and the contract awards them with a pre-defined bonus based on performance.
As long as an asset can be represented digitally, it can be awarded based on arbitrary, turing-complete conditions, and any programmer in the world can write those conditions with no permission from any bank and with no legal team.
Money legos.
[deleted]
Why did ETH drop then?
Because Bitcoin touched an all time high and proceeded to plummet $1700+ immediately afterwards, dragging all other cryptos along with it.
I wonder why all other cryptos follow bitcoin up and down, though.
If this thread is any indication, most investors don't understand nuances of cryptocurrencies, just Bitcoin and "not-bitcoin".
As projects like Ethereum continue to develop, I imagine it will diverge from Bitcoin more.
It should also be noted that Bitcoin has been highly correlated to the SP500 this year, despite being a completely different asset class.
As projects like Ethereum continue to develop, I imagine it will diverge from Bitcoin more.
It should also be noted that Bitcoin has been highly correlated to the SP500 this year, despite being a completely different asset class.
I think it's because Bitcoin is kind of the 'de facto' cryptocoin. It's the easiest to exchange. Most exchanges exchange to/from bitcoin, not directly between altcoins.
They don't always. Bitcoin is the Sun in the crypto solar system - it provides the primary source of value. Many (maybe most) traders trade crypto like Eth against BTC (how many sats is Eth worth?) as opposed to USD or fiat. Check out a chart of Eth sats over time.
Ah cool. Makes sense.
It really doesn't other than that in the simple minds of investors all cryptos are essentially the same (i.e. tied to Bitcoin) regardless of their respective business ecosystem, technical attributes, usage, etc.
Basically, my small stash of XLM nearly trippled in value in the last weeks. The same keybase handhout has floated between 50$ and 230$ in the last year or so. Most of the price changes have very little to do with the amount of progress/change in the Stellar ecosystem; which actually is not that bad given that some non scammy people are trying to use it for real stuff and they've made some nice progress moving the platform and OSS forward. Actual merit has done little to nothing for the value of XLM. But somebody coughs in the Bitcoin ecosystem and it suddenly jumps by a few hundred percent.
Pretty much any time there's a change in value for XLM it is because something is going on with Bitcoin. Eth2 is a bit more widely used but it seems to have similar issues differentiating itself from Bitcoin.
The ecosystem is basically being driven by so-called crypto experts circle jerking bitcoin to new highs and lows via extremely biased web sites passing themselves off as independent blogs/news channels that are pretty much crooks for hire willing to write whatever in exchange for crypto. Most of that BS is so detached from reality at this point that it's hard to see any patterns other than some whales moving bitcoin around to influence the value of bitcoin and orchestrating lots of hype around this so they get to dump after their pump at exactly the right time.
Basically, my small stash of XLM nearly trippled in value in the last weeks. The same keybase handhout has floated between 50$ and 230$ in the last year or so. Most of the price changes have very little to do with the amount of progress/change in the Stellar ecosystem; which actually is not that bad given that some non scammy people are trying to use it for real stuff and they've made some nice progress moving the platform and OSS forward. Actual merit has done little to nothing for the value of XLM. But somebody coughs in the Bitcoin ecosystem and it suddenly jumps by a few hundred percent.
Pretty much any time there's a change in value for XLM it is because something is going on with Bitcoin. Eth2 is a bit more widely used but it seems to have similar issues differentiating itself from Bitcoin.
The ecosystem is basically being driven by so-called crypto experts circle jerking bitcoin to new highs and lows via extremely biased web sites passing themselves off as independent blogs/news channels that are pretty much crooks for hire willing to write whatever in exchange for crypto. Most of that BS is so detached from reality at this point that it's hard to see any patterns other than some whales moving bitcoin around to influence the value of bitcoin and orchestrating lots of hype around this so they get to dump after their pump at exactly the right time.
Yes I noticed that too. Have you also noticed that BTC itself also sort of tracks general market sentiment (irl I mean). Lots of dumb money around.
I mean, it really shouldn't make sense, because Bitcoin is a completely separate currency from ETH... but it's still way too deeply connected to 'anything crypto' in people's minds, it seems.
Why would it make more sense to price it in USD?
Bitcoin is the de facto base currency for all cryptocurrency exchanges.
Bitcoin is the de facto base currency for all cryptocurrency exchanges.
Not really anymore. If for example you look at the ETH markets, the top 12 trading pairs by volume are with national currencies, and the first market with ETH/BTC is down at the 13th spot.
https://www.coingecko.com/en/coins/ethereum#markets
https://www.coingecko.com/en/coins/ethereum#markets
Let the party begin.
Are we starting with this even here? Is there really no corner of the Internet that's immune to this bullcrap?
I've always wondered if someone could make a browser plugin to filter anything involving cryptocurrency out of web sites like HN, /. or reddit? Having to read about all this every day contributes to unnecessary anxieties and stressors some folks don't need.
I really don't see cryptocurrency pop up that often on HN or Reddit. It's usually only when a big event happens, like this post about the most actively used network launching their 2.0 update that's been in the works for the past 3-4 years.
I feel like both communities generally do a good job of moderating away inconsequential cryptocurrency posts.
Does seeing a fintech post on HN once in a blue moon (and choosing not to read it) really cause you that much anxiety?
I feel like both communities generally do a good job of moderating away inconsequential cryptocurrency posts.
Does seeing a fintech post on HN once in a blue moon (and choosing not to read it) really cause you that much anxiety?
Well not me personally. I mean some of the commenters on this thread seem to be a bit irritated and the clashing that turns up afterwards in the comments, which seems relatively unproductive. It would be nice to have a way to kind of give netizens a choice on what they want to see, similar to Reddit.
As they say, ignorance is bliss.
As they say, ignorance is bliss.