
Ethereum pre-sale hits 12.7M$, still 27 days to go - simonebrunozzi
http://blogs.wsj.com/moneybeat/2014/08/05/bitbeat-ethereum-presale-hits-12-7-million-tally/
======
IkmoIkmo
I'm a pretty big proponent of bitcoin and enthusiastic about 2.0 applications.
But I've got serious doubts about Ethereum. For one it's still pretty much
vaporware, little has been released and there's a ton of hype that puts style
over substance. For example you'll hear 'turing complete' used 500 times in
any piece about Ethereum, but speaking to core developers it turns out that
this isn't really significant at all.

Besides this there have been some doubts about the development and governance
of Ethereum. Let's be clear. Bitcoin is mostly developed by developers funded
by the foundation which has a total budget of about $1.5m a year for 2013 and
has been doing this for half a decade. Ethereum has already raised as much
money as the BF spends in a decade on development, legal, lobbying, evangelism
etc. In short, they've got way more money than they need.

And then there have been some complaints about how the team handled things,
e.g. an investment round they tried to do earlier but failed. And how there's
no real reason to need such a large amount of expensive ethers for actual
development purposes, particularly not a long time before actual development
start.

Don't get me wrong, not trying to hate on the team. But I can't find a good
reason why people buy ethers like they do. They're supposed to be for
development, not as an investment, and we really don't need so many of them.
It's the equivalent of Google selling developer Google Glasses for $10k a
piece, and regular joes buy 10 of em 'just to hold as an investment, who knows
it might take off.' It's ridiculous. Only then it was a pre-order, and there'd
be no way to start developing for it, the team behind it is talented but
unproven, and in a classic hype scheme the price goes UP over time, not down,
despite it being already overpriced and sold as an investment instead of as a
dev-resource.

~~~
joeyspn
> For one it's still pretty much vaporware, little has been released and
> there's a ton of hype that puts style over substance.

This is vaporware for you?
[https://github.com/ethereum](https://github.com/ethereum)

You've got a 100% working testnet and hundreds of interesting apps/projects
with released code in GitHub. Obviously the Ethereum team is not going to
release "all the code" immediately if they want to keep the first-mover
advantage. It's just about keeping a competitive advantage before clones start
popping up like mushrooms. (common sense)

> But I can't find a good reason why people buy ethers like they do. They're
> supposed to be for development, not as an investment, and we really don't
> need so many of them.

I know a lot of people like me are buying ETH for time-to-market reasons. We
already have toy-ether in the testnet, but this is a whole different thing.
Believe it or not, there's a lot of people building things for ethereum. If
you are serious about launching something on top of Ethereum, and like the
idea, why not support the final stage of development? This is a crowdfunding
campaign. That's all.

Obviously there's a bunch of other people just trying to get some ether for
speculation. This is normal, and can't be prevented, just like in bitcoin
(march'13 & november'13, remember?).

I'm not recommending to buy ether to anyone unless they believe in the project
and want to see a team pushing the boundaries of cryptocurrencies development.

~~~
synctext
> there's a lot of people building things for ethereum.

Are you sure it's ready? There seem to be critical pieces missing in the
execution model. Specifically, arbitrary code execution by strangers.

From the white-paper:
[http://www.gavwood.com/Paper.pdf](http://www.gavwood.com/Paper.pdf) "the
Ethereum Virtual Machine (EVM) is a quasi-Turing- complete machine; the quasi
qualification comes from the fact that the computation is intrinsically
bounded through a parameter, gas, which limits the total amount of com-
putation done."

This all sounds very interesting and novel. You buy credits for hosting, this
goes further then using Bitcoins to rent bare metal servers. It's integrated
in the architecture.

Reading on in that whitepaper. "The machine does not follow the standard von
Neumann architecture. Rather than storing program code in generally-accessible
memory or storage, it is stored separately in a virtual ROM interactable only
through a specialised instruction."

Quite exotic and no re-usage of existing code. What does that mean for IO and
networking? Are you allowed to create TPC/IP listen sockets? This is
undefined.

Moreover, "For the release series, we use a more complex proof-of-work. This
has yet to be formally defined, but involves two components; firstly that it
concerns the evaluation of programs on the EVM."

The developers aims for an ASIC-proof proof-of-work system and link it to
their arbitrary code execution ability (EVM). However, they are still working
on this.

Conclusion, it is an unproven research prototype.

~~~
drcode
> What does that mean for IO and networking?

If you're asking these kind of questions you're a few steps removed from
appreciating the purpose and intent of ethereum... though you certainly are
asking the right kinds of questions. I think this presentation would clear
things up for you a bit more
[https://www.youtube.com/watch?v=GJGIeSCgskc](https://www.youtube.com/watch?v=GJGIeSCgskc)

------
lifeisstillgood
I'm now officially joining patio11 on the "bitcoin - wtf!" Side of the fence.

Someone is pre-selling a cryptocurrency in bitcoins at 2000 of our coins to 1
bitcoin. Stop! No-one same is converting hard cash to bitcoin in order to
speculate on this. Their kick starter round is not x million in bitcoin it's
"oh look I have some bitcoin that massively appreciated in value, but is
painful to sell. How do I take my free money and grow it?"

It's another bitcoin like tulip mania. No matter how nice an idea a
cryptocurrency is, it's not worth millions at pre-launch.

Caveat: I may be made to look a fool by the irrationality of crowds

~~~
chatmasta
To be fair, Ethereum is not strictly a cryptocurrency, in the sense that its
exclusive purpose is not payments. Sure, coins will have value convertible to
fiat currency, but that value will be derived from cost of various
applications built on the protocol. The primary purpose of Ether is to be the
"fuel" for these applications.

So, high interest in the crowd sale likely derives not from speculation on the
value of ether/USD exchange rates, but rather on the value of the cash flow
across the many _applications_ being developed on the protocol. As long as
developers build these applications, people use them, and they facilitate
money changing hands in the form of Ethers, then each Ether will have a set
value. Unlike with Bitcoin, consumers will also have a _reason to spend_
Ethers, as they will be the only accepted exchange mechanism of Ethereum
applications.

Encouragingly, this will likely act as a self fulfilling prophecy. Investors
in Ethereum are motivated to see the ecosystem of decentralized apps develop,
so they will build them, and they will use their Ethers. The big problem I
could foresee is that because the real value of an Ether will derive from the
aggregate value of the Ether "app economy," investors may want to wait before
spending their Ethers. But I suspect this will be mitigated by the fact that
the apps will only accept Ether as payment.

Ethereum will be successful as a protocol once it gets its "killer app." At
that point, there will be no turning back and the value will skyrocket. Surely
the market cap will be more than $12.7mm. In fact, by writing this comment
I've just convinced myself to invest.

~~~
vidarh
> as they will be the only accepted exchange mechanism of Ethereum
> applications.

So if it is successful, there will be an immense potential in cloning the
applications and provide alternative means of payment overlaid on an
"Ethereum2".

~~~
citrik
The fear of clones diminishing the value of Ethereum seems odd to me,
considering we have many alt coins that are derived from BTC but none have
come close to supplanting BTC. Once the technology is openly available it
might be easy to spool up a clone, but then marketing and gaining mindshare
are needed and they are much more difficult.

~~~
aaron-lebo
On the other hand, Bitcoin had a couple years before any real clones sprung up
of it. Ethereum will have clones on launch day.

Marketing and mindshare do come into play, but Ethereum is facing different
dynamics.

~~~
_up
And if i undestand this correctly, a "clone" could simply have better
exclusive app deals.

------
Jd
Reposting my review of Ethereum from Quora:

Ethereum has been described by core developers as oil to Bitcoin's gold. it is
similar to other metacoins in that it acts as superlayer that empowers the
blockchain, that is something like when Javascript was added onto HTML.

It empowers an immense number of custom applications on top of the blockchain,
for purposes as diverse as contracts, derivatives, custom currencies, and
filesharing. As Robert Ver said recently in Miami, if it works it is at least
as innovative as Bitcoin itself.

Enthusiasm is high because, unlike Bitcoin, there is immediate use value for
ether within the Ethereum network. All of the applications built in ethereum
consume amounts of ether along with their computational cycles.

For folks looking at things from a macroeconomic standpoint, this makes
Ethereum perhaps the most interesting of the new cryptocurrencies, because
among other things. there is immediate use value for ether outside of trading,
mining, and the other standard features of the first generation of
cryptocurrencies.

Is it Bitcoin 2.0? Time will tell.

[http://www.quora.com/Reviews-of-Ethereum](http://www.quora.com/Reviews-of-
Ethereum)

~~~
asdf333
correct me if I'm wrong but the oil analogy breaks down when you look at the
fact that there is nothing special about ethereum. it was conjured from thin
air and can be conjured even more easily the second time. oil runs out and its
not easy to make more.

ethereum running out? no worries! just create a new currency ethereum2, issue
100billion and use the blockchain to power more apps.

In fact you could just have several ethereum clones going at once.

~~~
servowire
This does seem valid, in a way. But is the same not true about Bitcoin then?
I'm confused.

~~~
granaldo
There are indeed many clones of Bitcoin. Look here at
[https://www.coingecko.com/](https://www.coingecko.com/)

Those stats determine where most of the resources have been focused on. Each
coins have their own agenda, goal, and different group of community backing
it.

------
chipsy
My analysis of Ethereum:

It's economically limited. Ignoring the implementation, we could
conservatively say that some interesting web applications are convertible into
the "Dapp" form. Right now, these applications are presented as free to the
user(free sign-up, free service) and the cost burden lies almost entirely on
the service provider, while on Ethereum the user must pay some of the
computation cost of their own transactions.

Why is this a problem? Surely everyone can have their personal devices mine
and produce ether and then the cost of everyday use is hopefully negligible.
But even if that were plausible, there's enough of a power differential
between personal devices and large server farms that the latter is going to
have a huge cost advantage. From this advantage market forces will seek ways
to leverage out a monopoly within the Ethereum platform - to enable spammers,
extract tolls, mine for personal information, or any other conceivable
mechanisms of earning a profit by crushing competition. It's the position
Bitcoin is facing now with the mining pool monopoly. There will be a market
and it will have a price, but it won't be a huge, global one, not if it's an
essentially centralized system doing centralized things underneath an
inefficient blockchain layer.

In summary, currency design is hard. Proof-of-work mining basically favors
capital pooling by letting the richest buy their work - although they may add
some measure of anonymity, the resulting power dynamics are identical to those
of gold. Changing the proof metric to another computationally-focused one only
changes the cost basis, not the bottom line. As such I'm very sour on proof-
of-work today as a decentralization tool. I would consider proof-of-stake or
other metrics to be in a fundamentally different category, although they also
need answers for the distribution problem.

~~~
DennisP
Proof-of-stake could end up being part of Ethereum, and the team is putting a
lot of thought into it. For example:

[https://blog.ethereum.org/2014/07/05/stake/](https://blog.ethereum.org/2014/07/05/stake/)

[https://blog.ethereum.org/2014/01/15/slasher-a-punitive-
proo...](https://blog.ethereum.org/2014/01/15/slasher-a-punitive-proof-of-
stake-algorithm/)

~~~
jaekwon
That's a big if. Vitalik is mostly looking at PoW ATM.

------
brador
Is there any way to verify these have really been sold? Is there any third
party involved that can verify? Something doesn't feel right and we know
Cryptocurrency users are suckers for juicy hype trains.

But I do like the concept of p2p distributed servers.

~~~
joeyspn
> Is there any way to verify these have really been sold? Is there any third
> party involved that can verify?

What do you mean? Just look at the blockchain address where the funds are
being deposited [0]. I've done several buys and all of them showed up
instantly...

[0]
[https://blockchain.info/address/36PrZ1KHYMpqSyAQXSG8VwbUiq2E...](https://blockchain.info/address/36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2)

~~~
IkmoIkmo
Sold to actual developers.

It could be that the team sells ethereum to itself with their own bitcoin. The
transaction shows up on the blockchain but nothing happened. They both owned
the ethereum and bitcoin before and after the transaction exactly the same.

~~~
DennisP
They've posted terms of sale promising not to do that. It's possible that
they're committing fraud by taking money under false pretenses, but I'm
guessing not. They're well-known people with good reputations and a team of
lawyers advising them.

~~~
IkmoIkmo
Oh for sure, I'm not investing in them because as a developer I'm not looking
for ethers, especially not at such a price level when developers ought to be
able to develop on a testnet for free. My decision has nothing to do with the
extent I trust them to be honest, there's absolutely no indication that
they're dishonest.

I just wanted to say that the fact something is on the blockchain is
meaningless in and of itself because at near zero-cost you can create trades
with yourself. That doesn't mean I'm saying they do this or implying it.
Again, no reason for me to suspect it, just arguing the point it's possible.

~~~
DennisP
You can develop on the testnet for free right now. The ether currently for
sale are for the production network, and won't be available until launch.

------
thinkingkong
How difficult is it to actually create a new cryptocurrency? With 14
cryptocurrencies currently floating around, isnt the value of one over the
other simply a branding problem?

Edit: I had no idea there were >150\. That's astounding.

~~~
nullc
A lot of the things raising headline generating amounts of money have not even
created a new cryptocurrency.

E.g. Look at "Bitshares" by some of the same people behind ethereum— raised
money on a whitepaper. When its "investors" later needed liquidity to cash out
their investments they did some search and replace on a a copy of Bitcoin to
create a "cryptocurrency" which implemented none of their whitepaper features
but which would be redeemable for shares in the future system (if it ever
comes into existence)...

It's in some ways optimal to _not_ create a cryptocurrency for these
investment stunts: if they create something then there is something concrete,
something with flaws and limitations, something which (hopefully!) is
constrained by internal consistency, security considerations,
implementability, etc. But if it exists primarily as marketing then there is
no limit to the qualities which it can be claimed to have...

~~~
woah
Unfortunately for Ethereum, they have already coded 3 reference clients.

~~~
b1db77d2
Which for something that's meant to be maintaining consensus is a fairly
stupid move.

~~~
aaron-lebo
What you mean by this? Why would having multiple implementations, each having
some input by core devs, be a bad thing?

~~~
b1db77d2
In a decentralized consensus every single node must have the same behavior,
handle errors the same way, make the same decisions based on the same core
rules. Experience with Bitcoin has taught us that nobody is currently capable
of duplicating the Bitcoin behavior perfectly. Many have tried such as
bitcoin-ruby (ruby) and btcd (go), but they are plagued by almost constant
issues of them having different states and getting forked off the network.

Starting with three different languages, three different codebases is absolute
madness.

~~~
obscuren
Madness? Tackling problems (consensus, protocol, etc) early on a "stupid
move"? You believe that copying bugs (as something you'll have to do if you
want to create a new btc node from scratch) is something we should strive for?
Having another client to fall back to if there's a bug in one of the others
is, again, "a stupid move"?

"Many have tried such as bitcoin-ruby (ruby) and btcd (go), but they are
plagued by almost constant issues of them having different states and getting
forked off the network."

This is _exactly_ why you should have multiple, clean room implementation from
the start.

Oh btw, we've already got consensus with 3 full nodes for quite a while.

~~~
b1db77d2
Getting consensus with 3 nodes is easy. Keeping it is the hard part.

You'll no doubt find that your daemons don't behave the way you'd expect cross
platform, cross architecture.

Come back to this post when you fork, and tell me again that I'm talking
nonsense.

------
bottled_poe
Can someone please direct me to where the node software is described (or even
better the source code)?

~~~
RoboTeddy
Overall description:
[https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-
Pa...](https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-Paper)

Here's a Python client:
[https://github.com/ethereum/pyethereum](https://github.com/ethereum/pyethereum)

~~~
jc123
I believe the C++ client is the most fully developed:
[https://github.com/ethereum/cpp-ethereum](https://github.com/ethereum/cpp-
ethereum)

(It also has link to the yellow paper.)

------
amalag
I think mining based crypto-currencies are not the way forward. Consensus
based protocols like are far more practical.

~~~
DennisP
I've yet to find documentation describing those protocols clearly. Do you have
any links?

(Of course there were consensus protocols already in distributed systems
research, but generally they've relied on having a known set of nodes.)

~~~
oillio
There is also Maidsafe: [http://maidsafe.net/](http://maidsafe.net/)

They are building a distributed file store system. They use consensus
algorithms to ensure data integrity. There is a specification for a crypto-
currency on top of that.

I do not believe the consensus algorithm has been fully implemented, but what
they have looks promising. The documentation is not great, but here is a link
to more technical detail about how data is stored in the system:
[https://github.com/maidsafe/MaidSafe-
Vault/wiki/Documentatio...](https://github.com/maidsafe/MaidSafe-
Vault/wiki/Documentation)

------
TomGullen
As far as I can tell there will be a total of 10^18 ethers in total. At this
stage, 1 BTC ($600 USD) for ~2,000 ethers seems like a really high price for
something that hasn't been launched yet.

~~~
kolinko
This is no longer true. They modified the algorithm, and right now the amount
of ether produced will depend on the amount of ether sold in a presale.

In other words - nobody knows now how much ether will there be.

~~~
TomGullen
Ah ok. Personally not comfortable buying any until I know the total supply
available, or a better idea of the total supply.

------
midas
What happens to all the bitcoins that are being sent in now if ethereum fails?
In startups, investors almost always have a liquidation preference, which
means that if things go south they get their money back first (or at least
what's left of it).

I haven't heard any mention of this and I'm wondering how this is structured?
If the ethereum founders were able to fail spectacularly and still walk away
as millionaires that'd be quite a perverse incentive structure!

~~~
grubles
Here is your answer from Vitalik Buterin himself:
[http://www.reddit.com/r/Bitcoin/comments/2bssfx/ethereum_sca...](http://www.reddit.com/r/Bitcoin/comments/2bssfx/ethereum_scam/cj8q962)

~~~
midas
Yikes! Thanks for sharing.

It's a bad sign for the crypto community that the market doesn't demand better
terms. You can debate price forever but nobody should argue for misaligned
incentives.

I'd prefer projects like this go one step further and destroy the bitcoin
invested up-front. It doesn't make sense to do ex post (now in this case), but
ex ante it signals a commitment to the new coin and a genuine bet on its
future value.

Full disclosure: I hold some bitcoin, so other people destroying theirs might
benefit me ever so slightly :)

------
rglover
If this works it's a great idea and will serve a wonderful purpose. I'm a big
supporter of Bitcoin (and my own buy in came long after I was aware of it),
but Ethereum doesn't seem baked enough to warrant throwing (at the current
price) 1 BTC at something that isn't fully operational. Definitely something
to keep an eye on, though.

------
tomp
Weirdly enough, opening this page locks my Google Chrome at 100% CPU, and it
keeps going even after I close it, until I actually restart Chrome.

------
gexla
Just the amount of funding generated for this has to be a good sign for its
success. They just funded a ton of development hours. Or I suppose they could
just run with it. Do they have any further incentive to see this thing take
off? Is there any penalty for disappearing with the Bitcoin?

~~~
jamespitts
The incentive for seeing this through is huge, potentially far greater than
the millions in bitcoin already raised.

If the early technical backers succeed in getting the ethereum platform widely
adopted, their fuel holdings will soar in value. They will also be in a
terrific position to layer new businesses on top of their work.

Meanwhile, the rest of us get a very powerful new set of tools to build
applications with.

~~~
nullc
I'm curious as to what sort of applications you would be building (e.g.
blockchain consensus systems cannot do I/O without using trusted parties) and
why you're not already building them in the Bitcoin space.

As far as funding, mastercoin, counterparty, bitshares, and others have raised
millions in pre-sale funding without a whole lot to show for it (some of them
having already since abandoned their projects just to do the funding cycle
again). While things being created would certantly be good, some skepticism is
warranted.

~~~
Cyther606
So what if Ethereum is lackluster from a technology standpoint? That isn't the
point of Ethereum. The point is to raise a large amount of BTC.

Not every potential Bitcoin contributor, Vitalik included, is OK with pouring
their heart out into furthering the cause of Bitcoin, while having a
grotesquely small personal BTC stash compared to early adopters of Bitcoin who
did relatively _nothing_ to earn theirs. Unfairness breeds unfairness, and
hyped up Bitcoin IPOs are the natural result.

You don't need $20M to make a cryptocurrency. Case in point: Counterparty. I
don't know why you brought them up seeing as they didn't do an IPO at all.
Counterparty is actually an excellent counter to Ethereum's marketing. They've
been around for roughly as long as Ethereum has been marketing itself as
"Bitcoin Evolved", but as opposed to Ethereum, Counterparty has in that
timeframe actually produced a working decentralized Bitcoin stock market and
derivatives exchange with a marketing and development budget of roughly zero.

~~~
nullc
> Unfairness breeds unfairness, and hyped up Bitcoin IPOs are the natural
> result

So because someone can't manage to get paid to do $arbitrary_thing and get
their choice of $arbitrary_payment it's okay for them do do things that
violate the normal bounds of good and honest conduct and run some sketchy
investment scheme?

I don't buy it. If you need to get paid and can't get paid to do what you want
to do, perhaps you should consider doing something else? We don't all get what
we want at all times.

> compared to early adopters of Bitcoin

Vitalik was involved in Bitcoin as early as just about anyone else. His
bitcointalk account predates mine— for example.

------
EGreg
How are they raising the funds? Can others do it?

------
Kiro
How do I buy it?

~~~
IkmoIkmo
It's NOT an investment. It's a developer resource, e.g. if you're a programmer
or company looking to build an ethereum project. If you don't even know how to
buy it (i.e. you haven't a clue what ethereum is, that they have 1 website
with all their information and their fundraiser) you shouldn't buy it because
you're probably not a developer.

In the same way you wouldn't buy a developer-license for the new Google
Android version, or a developer-license for Google Glass. Ethers are the de
facto dev-license, they're what's necessary to actually utilize the ethereum
network. You don't need one.

I love bitcoin and crypto can be a great investment, but ethereum isn't it.
And I'm quoting the people trying to sell you this thing. They've said
themselves it's not an investment.

~~~
Kiro
Thanks a lot. You just prevented me from making a big mistake. :)

------
obscuren
Hi guys I'm one of the core developers and will I'll answer some the
questions. There seems to be some misguided information and claims that are,
fortunately, not true.

> but speaking to core developers it turns out that this isn't really
> significant at all. I'm one of the 3 core developers and I'm pretty certain
> I've not met or talked to you, and I can't imagine the other two making such
> claims either.

> Ethereum has already raised as much money as the BF spends in a decade We
> are a different tech but so happen so share and exist in the same space.
> Comparing us to the BF or Bitcoin in general is just downright wrong. You're
> comparing apples to oranges.

> For one it's still pretty much vaporware, little has been released I've been
> relentlessly working on this for the past 7-8 months and so has Gav &
> Vitalik. All 3 of us have made remarkable progress if I may say so. Right
> now we have 3 clean room implementations with 99.99% consensus and operate
> on the same testnet blockchain. Vaporware? I beg the differ.

* Go - myself * C++ - Gavin * Python - Vitalik

The Go, C++ and Python implementations have full interoperability. A 4th,
Java, implementation is being developed by Roman but hasn't got full consensus
yet.

> Obviously the Ethereum team is not going to release "all the code"
> immediately All of our code is available on GH actually
> ([https://github.com/ethereum](https://github.com/ethereum))

> Are you allowed to create TPC/IP listen sockets? This is undefined. We have
> been _very_ explicit regarding I/O (in any form), it's simply not allowed,
> period.

> Specifically, arbitrary code execution by strangers. I'm not sure if you're
> familiar with the model we're using but arbitrary execution isn't a problem
> considering we do not allow any form of I/O.

The arbitrary code, or contracts, are "triggered" by sending it a transaction.
Once triggered it will run according to a set of rules that have to be
goverend at all time. It's part of the consensus engine; it's "all in or
nothing". Once mined, the miner will announce the new block, node's will
verify the transactions and execution and can accept or reject based on their
findings.

> Obviously it's not vaporware but there are many discussions about their
> implementation behind the scenes such as "Ethereum “Dagger” PoW function is
> flawed" Vlad is currently working on the PoW. For code see
> [https://github.com/ethereum/mining](https://github.com/ethereum/mining)

I don't mind a good bit of scepticism but the amount of false claims and
downright incorrect information that some of you have been posted really is
below the HN standard. Most (if not all) of the answers are available online,
just put a bit of research in to it.

------
ckdarby
wow this just made me so much money ._.

~~~
wmf
How?

