The whole blockchain festival doesn't make sense to me. Every blockchain must have a coin attached to it, otherwise there's no incentive to people to watch the blockchain and invest resources in securing it. Bitcoin was about money, not "distributed consensus", that was just a way to achieve money. Now when people talk about blockchains as being the solution to the distributed consensus problem they forget about the money part of it.
The most bizarre phenomenon I've seen was Tezos, a coin whose value proposition was that of solving governance through the same blockchain it would use to manage its coins. The creator of Tezos was talking about governance as a consensus problem that could be solved in the same way money was solved by Bitcoin ("everybody must agree, right?") without realizing there were two different concepts of "consensus" being used.
You forgot to mention another scaling effort/idea, one which I think is the most important, not only to Ethereum but any blockchain:
Blockchain Interoperability.
It can even be the same protocol (Ethereum) or across different protocols (Bitcoin).
Much of the enterprise world right now is throwing A LOT of development efforts at blockchain ideas, however they are all separated, private chains, they aren't just working on the Ethereum public chain (Homestead). However the development efforts of those companies will benefit the public chains, which is crucial.
But I think at this point the idea of having a single public chain to rule over everyone is gone. The future will have millions of blockchains.. an internet of blockchains with some underlying protocols to transact across chains. This is where you will get your scale.
Take the FaceBook example. What if the users of FaceBook, i.e. the FB clients, implemented a blockchain to support all functionality through FB (payments, sharing, likes, messages, etc.)? It would basically be away for users to control their own data, separate from the applications that use them (Own your data). But for brevity, this chain would just be the FB chain, which could interop with any number of chains if needed, but this chain would be scaled by the clients that use it. You could even have social verifiers to implement a POS (proof-of-stake) in this FB chain which could stake an asset of some sort on assuring things shared on the network are real (fake news). But that's off point.
The whole idea of this new internet of blockchains is mostly about users having complete control/self-sovereignty over their data/individual. Many users won't even know that underlying the apps they use, their data and how they interact with other users is powered by the blockchain.
Smart contracts, and all these thousands of tokens, in essence, given an underlying protocol that doesn't exist yet, will be the universal API that can connect everything in a trustless way.
> And since these systems are open rather than proprietary, we’ll see applications bigger than Facebook.
I think this vastly overestimates how much the vast majority of people care about this
The blockchain to me is fundamentally flawed way to look at distributed computation. It really isn't distributed computing because there is a shared agreed and singular "truth". Truly distributed systems must deal with inconsistency instead of trying to keep a consistent transactional view of the world. I'm not sure I want it to scale.
The innovation of the blockchain is that it allows people to lend their computers to what looks like a singular system. However, as oulined by this document, the cost is huge in both time and burning the CPU oil.
I also don't believe in the transactional spot trade view of the world. It is a narrow way of viewing cooperation and markets. Unbreakable contracts are frightening. Everyone who deals with contracts between peers knows that contracts could be broken and are always negotiable. Unbreakable contracts just seems like a viscous tool for people who have move power over those with less. Because among equals, contracts are meant to be broken, changed, re-negotiated.
It is important to note that not all of the on-chain solutions are cumulative.
Say that increasing the gas limit and swapping virtual machines does get you an 8x improvement each. After both are implemented, you don't don't have a 64x improvement, you have an 8x improvement.
All that raising the gas limit does is increase the maximum number of transactions per block. It doesn't matter how fast you can process those transactions if the gas limit is too low to fit all of those transactions into a block.
Ethereum is useful and novel and I am a fan. But we are a long, long way from being able to run something like Facebook on it. The "optimistic launch" dates are extremely optimistic.
It's very far from being able to scale to where it needs to. I think it remains to be seen if the system can be transitioned to a highly scalable one, it seems to me that we need to think from the ground up how to achieve the scale necessary. It's just a really really hard problem, it's not an afterthought, or a secondary goal.
Not having scalability keeps the hype going. If current cryptocoin technology could support VISA-scale volumes, it would be obvious that the need for high transaction capacity wasn't there. With transaction volumes limited to a few transactions per second worldwide, it's possible to claim that there's pent-up demand waiting to be unleashed, justifying excessive valuation.
Why doesn't he mention Raiden? Won't that solve most of this? Also I've heard rumors that Raiden is close to being ready? It's supposed to provide multiple orders of magnitude increase in transactions per second. http://raiden.network/
Couple of questions:
- Assume paypal implements a smart contract system. Users have an option to keep their contracts public or encrypt them with their password/random secret key. Defining a contract is like specifying a template. Deploying the contract locks up the requisite sum from the concerned parties. The contract distributes this sum according to its logic, when triggered. Since we don't have mining/redundant copies of data, paypal can afford to charge lower transaction fees overall. The system is altogether more efficient and user privacy is ensured via encrypting the contract to ensure nobody except the owner sees them.
Apart from decentralization, what else does ethereum offer over and above this combination?
- Despite trying pretty hard, I have been unable to understand the valuations of cryptocurrencies.
According to my understanding, bitcoin is a commodity rather than a currency. Like gold, its value resides in how much value people put on it (unlike currencies, which have to be accepted all across their native country). However, unlike gold, bitcoin has no intrinsic value i.e the amount of money somebody would give to just hold onto it for eternity.
So the value of bitcoin should be estimated from [value of transactions that happen on the network / number of bitcoins in circulation]. However, most of the transactions happening on the blockchain (IMO) are transactions between cryptocurrencies (eth->bitcoin->eth..). The few that happen in the real world (buying goods/services) are hindered by the continuously changing market value of bitcoin/eth.
In this catch-22 (speculation hinders transactions, which makes it tougher to do fair valuation, which encourages speculation), how do we reach a consensus on the value of bitcoin?
Main problem is completely non-user friendly of crypto currencies. Bitcoin is a very simple thing - you have a wallet, number of transactions in your wallet and button to send funds to someone else. Bitcoin was like this since day 1. Ethereum right now is not usable at all. How i suppose to explain it to my mother? In default client always distract me from counting money and sending money. First screen - smart contracts? Okey... how to use it? Even hello world is 20 screens of documentation and involves many weird things like copying "compiled code" or visually comparing hashes. And in couple of years there are no useful applications on ethereum - so why bother to learn things? If you are working in some organization that needs/wants to use blockchain - sure, open sources of ethereum, start your own nodes over kubernetes and try to implement something. But your work will never go to a any public ledger - there are no reason to do so.
Does anyone have an opinion if new tokens (aka altcoins) created by ERC20[1] are exacerbating Ethereum's network congestion ? My initial reaction is that ERC20 is a parasite vector that will cause long term harm to the value of ETH.
Altcoins, to some extent, all compete for speculative dollars. For all I know 80%[2] of the top 800 coins on coinmarketcap.com are ERC20 issued tokens. That means a lower price for ETH due to competition and therefore a lower incentive for the miners who can instantly start mining another currency. Which leads to further latency, less liquidity, and further price depression.
[1] ERC20 is a protocol for issuing new tokens on the Ethereum blockchain.
[2] Does anyone have a source ? This was a wild guess.
A user only needs to create a transaction if they upload something. The 175k Facebook requests per second that they compare to is mostly just people looking at stuff, which wouldn't require a transaction.
I think people should look into NEO for some innovation
Just to answer the question in the HN title "Replace it with a provably correct distributed consensus algorithm like Paxos."
>>Conclusion >>Everything will be tokenized and connected by a blockchain one day.
WHAT? The guy just explained how the system is thousands of times off from where it should be!
So he mentions hard problems in game theory and computer science which have never been solved... with maybe a handful of people working on them... and he thinks it will get done some time before the end of next year?
I have a question that I hope someone can answer for me. I've owned about a dozen or so digital currencies as far back as 2012. Ethereum is one I am still trying to understand. My question is this - How does the functionality of Ethereum (it's blockchain and all that comes with it), convert to the valuation of one ETH being worth $300, or $500, or $100, etc.? How will ETH (the digital currency) be used that will give it these valuations? I understand other currencies. Take Ripples XRP for example; the more banks that are transacting with XRP, the higher the demand is for XRP, which equates to a higher valuation of XRP. So how does Ethereum and ETH get their values? Can companies use Ethereums service without increasing the demand for ETH (digital currency)?
I have hard time believing that a knowledgeable person would have numbers on the scaling improvement column on the scaling efforts list. "3-10x" for ditching EVM for WASM which is at a concept phase, "2-8x" for parallel processing of transactions
Even Vlad would laugh at that column. The whole thing feels like a desperate "don't panic sell" when people realize the state of Ethereum's scaling since today its blockchain is increasing at a rate of 1GB/day.
I personally hope Ethereum's fans start to be more honest with themselves and do some critical thinking. There are some horrible echo-chambers (/r/ethereum /r/ethtrader) that are traps for newcomers.
The closer scaling solution is Raiden (funnily one of the core devs is the one made the infamous hacked DAO contract) which is quite the challenge unless they intend to support a limited subset of Ethereum's capabilities, but they are working on it and looks alive.
Apart from that which is a year or so away, Sharding is way off like the list says and will be a huge challenge.