Are we witnessing the beginning of the end for Ethereum? The project’s creator Vitalik Buterin has admitted that there is not enough funding to complete project plans, including no solution on switch to PoS. Currently the project is running a type of PoW and it’s not clear how the switch to PoS would be done (so how can you trust it building apps using real valuable funds?) and Vitalik has posted a confusing/contradicting array of ideas on how to move forward. http://www.coindesk.com/ethereum-bitcoin-decline-9-million-funding-shortfall …
I feel it’s pretty obvious from
@VitalikButerin‘s post on Ethereum that the project has lost its way. Shoulda built on top of Bitcoin… https://blog.ethereum.org/2015/09/28/the-evolution-of-ethereum/ …
Now he is talking about raising money through organizing conferences, getting sponsorships and donations and through selling educational packages. But those are very different things to creating an altcoin and there are no assurances those things would actually make any money. Also, that would distract time from the actual project.
As the price of ether should continue to slump towards the cost of actually performing the computations involved there is an obvious solution; save Ethereum by merge-mining with the Bitcoin network (and use Satoshis instead of ether), to take advantage of the security.
@nanok “Save” eth (from what?) by making it vuln to 0-cost attacks by mining pools run by religious fundamentalists? https://www.reddit.com/r/Bitcoin/comments/o6qwx/lukejr_attacks_and_kills_coiledcoin_altcurrency/ …
But there is only one strong PoW (Bitcoin’s, the copies/forks are uninteresting in that respect), and killing a weak one has no bearing on BTC, on the contrary – it points to the fact that there can be only one very strong blockchain (per algorithm).
To save Ethereum from being lethally legally or technically attacked, it needs to be properly decentralized, or piggyback on BTC. The fact that Ethereum is supposed to switch to some unknown technology in the future is a weakness, and all the arguing against PoW as being “wasteful” puts Ethereum’s current use of PoW in a strange light (especially as the system is designed as a “world computer” where every node has to do the same computations – talk about wasteful…)
Bitcoin’s Proof-Of-Work solution turns power into value/security. I admire Ethereum but trying to create a (secure) Proof-Of-Stake is like wishing for magic (at least as secure as Bitcoin).
I think Vitalik has been trying to spread himself too thin, and that he should refocus on a single task. He’d win time by accepting that there’s no real alternative to Bitcoin’s Proof-Of-Work (as-of-yet).
Vitalik replied the following,
@nanok I have a blog post to prove a lot of the anti-PoS stuff wrong, but will prove with code first, words second
which I commented;
Looking forward to that code (although I’ll believe it when I see it). Still question is why want a PoS system?
@nanok to save society from wasting $300m per year and wrecking the envirinment? I fail to see why it’s so hard for ppl to grasp this…
@VitalikButerin You can not have security without cost, and Bitcoin provides tremendous value for that cost. Read this post with the title “Nothing Is Cheaper Than Proof Of Work”: http://www.truthcoin.info/blog/pow-cheapest/ containing the following very suitable quote:
“I previously wrote a post on proof of work (PoW) and mining. The first half generated great interest but (apparently) failed to be universally persuasive. For example, CCRG (Ethereum’s multi-million dollar funded “research” organization) consists almost entirely of academics theorizing about proof of stake (PoS). So here I will expand on that first half, in the hope that less “work” by people with legitimate potential is “wasted” on these defunct ideas (and fewer journalists / empty-suit-“investors” are distracted from Bitcoin’s value proposition as the internet money).”
If Vitalik can achieve the same level of security as in Bitcoin without that cost he is truly a magician (but more likely a dreamer). Also; Bitcoin miners can be environmentally friendly by choosing to use renewable hydropower, place their operations in chilly locations, run efficient chips, recycle materials and they can even take advantage of the excess heat in adjacent grow houses or to warm any space in a chilly environment. If the heat is harvested there is no waste at all involved, as long as all other parts of the production chain are green.
Bitcoin’s PoW is actually very efficient in it’s simple design, converting power (energy/time) into security. Any open decentralized system would gravitate towards having it’s participators compete to convert that energy into security (for the reward) in the most efficient way (because of the competition). This is the genius of Satoshi Nakamoto’s invention. Please understand it. It has more to do with economics than technology. You cannot discount human behaviour (greed). Humans will “work” (building and using their machines) if there is profit to be made.
Other worrisome things in his post includes plans for funding security audits (sufficient auditing should have been done already, and sufficient funding for audits should have been secured – that does not instill confidence in a system the creator are encouraging people (hey, banks) to build commercial applications upon), but also the fact the not even the research for HOW a Proof-Of-Stake system would be secure is finished. Jeff Garzik pointed out that in a project where 20 dApps were built on Ethereum not even one of them could be proven to be safe (not leaking it’s assets). Why embark on this large journey and collect all those funds if you don’t even know how to build it in the first place?
A proof-of-stake system rewards those who already have, the already rich, by design. No point. That’s the idea with the current fiat/FRB-QE-inflation-system. We want to move to a better idea.
Also, not even Peercoin, the original so called “proof-of-stake” has solved the PoS problems (they are still using Proof-Of-Work for important parts of the system), and relies on checkpoints (i.e. it’s not properly decentralized). There’s been no examples of PoS coins running in a true decentralized way. Here’s a comparison of a typical PoS coin (Neucoin) compared to Bitcoin – and it just doesn’t work. Also, in the long run any PoS coin would create a 51% threat out of the largest single “staker”, if you think about it.
Here’s another debunking of the possibility of PoS, from Bitfury: http://bitfury.com/content/4-white-papers-research/2-proof-of-stake-vs-proof-of-work/pos-vs-pow-1.0.2.pdf
The above link summarized into one sentence;
Unlike proof of work, proof of stake consensus is not objective; the state of a PoS system cannot be reliably determined by new users based solely on protocol rules and a list of blocks and other network messages obtained from peers.
Only Proof-Of-Work has been proven to be secure (even in theory) as it’s based on the competition among peers in an open decentralized system using real-world hardware. Peers can come and go as they see fit and trust the longest chain as proof of what has happened (the chain with the most amount of work, if we’re being technical). In this way the Bitcoin network creates provably unique digital assets that humans can value through supply and demand. For a PoS coin to succeed in the long run it can’t be just “sorta” secure, it needs to be exactly as secure as Bitcoin, or more so.
Also, a network where you have someone promising that a switch (a fork) will happen, relying on everybody to follow suit is not decentralized at all. In effect this is a kill/master switch in the hands of Vitalik Buterin. It’s irresponsible to encourage a lot of people and businesses to build on such an insecure foundation.
I have edited (clarified) the context around the word “master switch” in this text, as that concept is open to interpretation. I’ve also removed one comment asking for “formal proof” that Ethereum can’t “work”. This post is not about disproving every future possibility, it’s about pointing to the current status of Ethereum. But mainly I decided that commenting is better done at other places online (like Reddit etc), as I don’t want to get bogged down deciding which comments to approve here (I already got some fan boy-type comments containing no arguments but only personal attacks, and that’s just boring and time-consuming to deal with).
UPDATE (Oct 7) – wait… actually, backtrack that – maybe it is too late. Rootstock looks exactly like what I’ve been wishing for, without the troubles of actually moving Ethereum and it’s investors onto the main chain. Things move fast in Bitcoin speed.
UPDATE (Oct 14) – Brave New Coin weighs in on the subject, simultaneously explaining the term “maximalism” which is often used by Ethereum fans.
UPDATE (Nov 3) – I’ve added the text ‘The Bitcoin Formula‘ to this blog for more explanations on how Bitcoin achieves it’s value and why there is no point in trying to copy its mechanism.