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Ethereum Thinks it Can Change the World. It's Running Out of Time To Prove It. (technologyreview.com)

Posted by msmash on from the elephant-in-the-room dept.

The blockchain system has daunting technical problems to fix. But first, its disciples need to figure out how to govern themselves. From a report: The handful of idealistic researchers, developers, and administrators in charge of maintaining its software are under increasing pressure to overcome technical limitations that stymie the network's growth. At the same time, well-funded competitors have emerged, claiming that their blockchains perform better. Crackdowns by regulators, and a growing understanding of how far most blockchain applications are from ready for prime time, have scared many cryptocurrency investors away: Ethereum's market value in dollars has fallen more than 90% since its peak last January.

The reason Devcon (the annual "family reunion" organized by the Ethereum Foundation; this year's edition was held in October) feels so upbeat despite these storm clouds is that the people building Ethereum have something bigger in mind -- something world-changing, in fact. Yet to achieve its goal, this ragtag community needs to crack a problem as complicated as any of the toe-curling technical challenges it faces: how to govern itself. It must find a way to organize a scattered global network of contributors and stakeholders without sacrificing "decentralization" -- the principle, which any cryptocurrency community strives for, that no one entity or group should be in control.

21 of 150 comments (clear)

  1. Never Going to Work by SirAstral · · Score: 4, Insightful

    The currency issue is religious/political.

    You are never going to institute a currency that cannot be fiddled with by the powers that be. One of the cornerstones of Crypto Currency is a static rate of inflation. They it can be easily stolen by hacking exchanges, or taken possession of by authority. It's volatility is directly linked to the currently established and highly manipulated currencies that people use to exchange them with.

    Investors only care if it gets them money, governments only care if it gets them spend and traceability, and Central Bankers only care if they have direct control over it's production and distribution.

    Right now, the only thing going on is the wait... when the Central Bankers find a cryptocurrency they like and can control like they do fiat currencies then we will finally have a cryptocurrency that has some traction. Until then... this is all "expensive" novelty shop antics.

    1. Re: Never Going to Work by SirAstral · · Score: 4, Insightful

      based on what evidence?

      Cryptos are mined, which means over time more and more are added to the available pool. How does this fact fit into a "deflation mode"?

      Inflation has a basic component... "amount of x". It is a key principle of supply and demand. More supply = less value. Less supply = more value. Demand has the same model in the opposite direction. If there are only 1000 coins in the market a demand for only 1 of them means its value is low. If there is a demand for 2000 of them then the value is high. Now... if the market flood with 1 million... the value AND demand for 1 or 2000 is low & low.

    2. Re: Never Going to Work by omnichad · · Score: 2

      The supply is constantly increasing, but the rate of increase is slowing constantly. I don't know economic, but I don't think that classifies as inflationary, since the value of the currency is designed to go up over time. Inflation isn't just the injection of more supply, but enough supply to inflate the value of the currency.

    3. Re: Never Going to Work by SirAstral · · Score: 4, Insightful

      As long as the pool grows, regardless of the rate of growth it creates inflation.

      Look at Venezuela and it's hyper inflation. What is growing? The amount of money. Everyone is a millionaire down there but only in the way everyone with $10k are penny millionaires in the USA.

      " Inflation isn't just the injection of more supply,"
      Correct, but the injection of more supply always guarantee's inflation. Just because OTHER factors can also increase or even LOWER inflation does no mute the basic fact that adding more X to the pool increases inflation.

      What you and the other commenters are missing is that you think just because another mechanism can create deflation that somehow can mean that this does not create inflation.

      It's simple as explain int he supply and demand model.

      If there are 1000 coins and 10 more are created then inflation of 1% just occurred. This inflation may not be immediately felt by everyone but it is there. Additionally, if the demand for a lot of things fall, and cause deflationary effects of 2% that means that deflation was 1%. But if those 10 coins were not added then deflation would have been 2%. This is oversimplified for educational purposes but makes it clear that just because overall inflation is based on multiple things... adding currency to a pool is always inflationary and will never not be, no matter how many other factors offset that inflation.

    4. Re: Never Going to Work by SirAstral · · Score: 2, Informative

      No, you are just trying to turn my argument into something else and you are getting upset that I am not biting.

      I don't care what you think, I only care about the facts. You can sit around the prognosticate all you want, it means nothing in the context of my comment.

      Adding more currency creates inflation no matter how many fallacies you use to say otherwise. You are the one blathering about theory. It is very simple math to understand that increasing supply of currency decreases its value and thereby creates inflation. It's not theory, its just a plain as day fact just like gravity. I can't help you if you cannot accept that.

    5. Re:Never Going to Work by Waffle+Iron · · Score: 3, Informative

      Wait until the next financial crisis. Crypto will work. Your bank cards may not.

      I'm sure that people like you back in the 1920s would have said:

      "Wait until the next financial crisis. Gold will work."

      Except that it didn't. To keep the financial system afloat, they simply outlawed gold. They can do the same with cryptocurrency.

    6. Re: Never Going to Work by ceoyoyo · · Score: 2

      "Most cryptocurrencies are designed"

      First four words of my post. Yes, if any currency gets broken, whether through magic quantum computers or good old counterfeiters, all bets are off.

      Your second paragraph doesn't really make sense. One of the distinguishing factors of most cryptocurrencies is that the supply of new tokens is designed to be limited, and to approach that limit asymptotically (logarithmically usually). You can't hold up regular currencies, where the rate of printing new currency is purposely set to encourage a small amount of inflation, and claim that means crypto currencies that are specifically designed to avoid this possibility are going to do the same.

      Yes, most economists regard a small amount of reliable inflation to be a good thing, for a variety of reasons. Yes, this is a criticism of cryptocurrencies that are designed to have net deflation in operation.

    7. Re:Never Going to Work by jellomizer · · Score: 2

      Crypto currencies for your day to day purchases will need to find a way to cut down its price variation.
      If I had 20 bitcoins in 2003 I could buy a Pizza, in 2016 I could buy a house. in 2018 you can buy a car. If I had 20 US Dollars in 2003 I could buy a 2 large pizza with 4 toppings, in 2016 I can buy two large Pizza's with 2 toppings, in 2018 I can still buy 2 large pizzas with a 2 toppings (but they may skimp a little on the cheese)

      When is a good time to buy a currency? Who knows with the variance you could had payed at the peak, thus have lost your money, or you got it a good price, but now you are afraid to sell it because its value could go up much more.

      During the last financial crisis, the value of the dollar dropped, but not by a huge amount. It will take decades of assault to make it worthless to a point where the USD is no good.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    8. Re: Never Going to Work by Anonymous Coward · · Score: 2, Informative

      SirAstral you seem to be missing something very fundamental, which is why you're getting trashed here. Inflation is a currency having less buying power today than it had yesterday. That's it. There are many sources of inflation, only one of which is the creation of more currency. Similarly, deflation is a currency having more buying power today than it had yesterday. That's it. There are many sources of deflation, only one of which is the destruction of currency.

      What you should be saying is that the creation of a currency always creates inflationary *pressure* on that currency. That pressure could, however, be dwarfed by deflationary pressure from another source. Such as a growth in the population of people who desire to use the currency.

    9. Re: Never Going to Work by stinerman · · Score: 2

      Don't feel bad. You're right and he's wrong. Inflation is not simply the amount of money in circulation. No one outside of a few cranks believes this. Properly understood (and Wikipedia properly understands) "In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time."

      The amount of money in circulation is related to inflation but it is not itself inflation.

    10. Re: Never Going to Work by omnichad · · Score: 3, Insightful

      I did state that I am only talking about 1 element did I not?

      Go look up the definition of inflation. It never describes one element. It talks about entire systems.

    11. Re: Never Going to Work by Baloroth · · Score: 2

      As long as the pool grows, regardless of the rate of growth it creates inflation.

      That effect alone creates inflation, yes. But your original comment claimed that (and I quote)

      One of the cornerstones of Crypto Currency is a static rate of inflation.

      which is just completely untrue. Not only because the amount of new crypto mined in for e.g. Bitcoin (and most coins) decreases over time (which is the opposite of a "static rate of inflation"), but additionally the loss of coins due to private keys being destroyed or lost means there is a strong deflationary effect on all crypto (for instance, it's estimated that about as many Bitcoins have been lost as their are to be mined). Moreover, inflation doesn't directly depend on the raw quantity of a currency, it's the purchasing power of the currency. In that sense, crypto has been extremely deflationary for much of it's life, as the value (in nominal USD) has increased massively. Again, claiming a "static rate of inflation" is a "cornerstone of crypto currency" is just... wrong.

      --
      "None can love freedom heartily, but good men; the rest love not freedom, but license." --John Milton
  2. Buh-bye Speculators by bill_mcgonigle · · Score: 4, Insightful

    The best thing to happen to the future of fintech is all these speculators running for the doors. Back to where things were in 2015 would be just dandy, so serious developers can get back to making real, workable solutions. For some reason crypto caught fire before most people working on it thought things were ready for primetime - that was quite unfortunate because it got regulations interested in a nascent technology. It's like the USPS got hold of SMTP in 1986 and decided to take it over. :/ Quite a setback.

    --
    My God, it's Full of Source!
    OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
    1. Re:Buh-bye Speculators by ewibble · · Score: 3, Insightful
      And that trust-less society is one that is incredibly inefficient. Just stop and think what would happen if society didn't enforce any trust.

      Go to the supermarket, well the food maybe poison, you should have to test it yourself. How would you test well you couldn't ask someone they could be lying, you would have to do your own research to determine those test food safety. That would be all everybody would be doing checking that everybody else is not lying.

      Install software? did you read the source and then compile the source yourself? did you check the compiler and compile that too? did you get an electron microscope and check the hardware your software is running on? what about that electron microscope you sure someone didn't mess with that?

      Society runs on trust, that is one reason I believe people don't read terms and condition, they trust that they are reasonable, imagine the total time used if everybody read all the terms and conditions, and constantly checked for update for every site they visited, all the software they ran, and service they used.

      It is usually better to trust and sometimes get screwed over than never trust.

  3. Blockchain and the Standard Model of Physics by thragnet · · Score: 5, Funny

    Dissociated Press (DP) — FOR IMMEDIATE RELEASE

    Physicists identify new fundamental particle

    May herald a new particle family and restructuring of the Standard Model

    Geneva, Switzerland — December 3, 2018

    Keywords: hypino, shinyon, blockchain

    High energy particle physicists at the CERN (Conseil Européen pour la Recherche Nullité) facility have confirmed the existence of the long-conjectured hypino (hy-PEE-no). It is thought to be the first member of a new class of particles known as shinyons (SHY-nee-ons), distinct from bosons and fermions.

    Unlike other subatomic particles, hypinos carry no charge, and have neither rest nor relativistic mass. Their only defining quantum property is spin. Hypinos are thought to be the fundamental unit of marketing hyperbole. To date, hypinos are the only known members of the proposed class of shinyons, which are of especial interest to tech investors and holders of the MBA degree. Dr. Martin Waugh, of the Institute for Advanced Squander, further posits that the hypino may be the carrier of the so-called “weak-minded force”, a mutual repulsion between fools and their money. It is theorized that, upon sufficiently accelerated spin, hypinos transform into super-excited hyperinos, detectable only by Chief Information Officers.

    The discovery of the hypino is recounted by Drs. Robert Crawford and Robert Jensen as follows:

    “It was a Friday afternoon, and we and our colleagues were returning from a long lunch. Maintenance on the Large Hadron Collider (LHC) was scheduled to start Saturday morning, and the apparatus would be unavailable for two months. We were in a ‘what the hell’ kind of mood, so we thought we'd take a fantasy shot, just for grins and giggles.

    “We had a few leftover Higgs Bosons from 2012 on the shelf, so our lowly lab technician, Garth Dennis, breech-loaded them into the beast , set up a blockchain for the target, positioned the extremely sensitive Swindleometer at the intended point of collision, energized the superconducting electromagnets, and let it rip. Upon collision, the blockchain shattered into a shower of the elusive hypinos. Examination of the debris field revealed that the blockchain and all of our cash were gone! Apparently the hypinos were entangled with our funding.”

    There may be natural sources of hypinos. The strongest natural emitters appear to be located in Redmond, Washington, and Armonk, New York.

    1. Re:Blockchain and the Standard Model of Physics by thragnet · · Score: 2

      Glad to hear that your total humorectomy was successful ! My best wishes for your continued good health.

  4. Running out of time? by 110010001000 · · Score: 2

    Why? Does the source code explode if the value of Ethereum goes to 0? It is just software.

  5. As a currency governance isn't the main problem by UnknowingFool · · Score: 4, Interesting

    If Ethereum wants to be a currency, 15 transactions per second is the technical problem they have to overcome. It's better than Bitcoin but still not fast enough.

    --
    Well, there's spam egg sausage and spam, that's not got much spam in it.
  6. Crypto to fiat money is like torrents to HTTP by jdoeii · · Score: 4, Interesting

    When the torrent protocol was invented some people believed it could be the new internet. It's obvious by now that it's never going to happen. Torrents are just harder to use than HTTP. They maybe can save some money in bandwidth costs at the expense of being less reliable and harder to use. In practice they offer only one real advantage to HTTP - by the nature of being distributed they allow for the illegal distribution of copyrighted content.

    The same thing with the blockchain. The distributed transaction is alway more expensive than the centralized one if compared apples to apples, no exceptions. BlCh offers just one real feature: by the nature of being distributed it allows for circumvention of regulations. And that's the only sustainable use case that was discovered in 10 years of its use. All other use cases are nothing but marketing, FOMO, or fraud.

    As for ETH changing the world, here is a question I usually ask when meeting a crypto enthusiast: "Loan me a 10 ETH for two weeks. We will write a digital contract that I'll return 15. Except, when the contract comes to term I will have no money in my purse. What are you going to do?".

  7. One thing that would help by themusicgod1 · · Score: 2

    Would be for an ethereum client to be available in the debian ecosystem. At least from the debian perspective, ethereum is dependencies piled on top of dependencies, none of whom have been properly vetted, and some of which have recently been shown to be actively malicious.

    --
    GENERATION 26: The first time you see this, copy it into your sig on any forum and add 1 to the generation.
  8. Disgusting waste of energy on a planetary scale. by Script+Cat · · Score: 4, Informative

    What could we have done with 40 tWh of energy?!
    It takes 15,000 kWh produce one ton of aluminum. That was 2.6 Gigatons of aluminum we could have had. We got stupid hash codes instead. This is 460,000 times the yearly world production of aluminum.

    We wasted the energy of 460,000 times (not tons fricken times) the yearly world production of aluminum last year on Bitcoin and Ethereum!

    Bitcoin energy use:
    https://digiconomist.net/bitco...

    Ethereum energy use
    https://digiconomist.net/ether...

    Aluminum produced / year
    http://www.world-aluminium.org...

    Energy to produce aluminum:
    https://agmetalminer.com/2015/...