
What does $100 Ether mean? - fabiant7t
https://medium.com/humanizing-the-singularity/what-does-ether-100-mean-bb58522f781e
======
djh_
The author talks about making Ethereum more humane and user-friendly, but
jargon like "The Internet of Agreements" and "Humanizing the Singularity"
makes me think he's mostly interested in becoming a thought-leader through
Branding™. Those terms and his bombastic language in general will not help
bring Ethereum to the masses like he claims to want to do.

Also, the idea that Ethereum at $100 implies this amazing decentralized future
is simply wrong, because that also implies that Ethereum at $1 didn't mean
anything. Instead his argument should center around the many different
businesses, products and experiments being built on the platform.

~~~
RichardHeart
I think Vinay has great insights into gun control, the hexayurt, and some
other topics, however, on ETH, I think he's totally in error. I'd be happy to
livestream chat him about it.

~~~
leashless
What do you think I'm missing about ETH?

Insufficient political radicalism?

~~~
RichardHeart
Crypto is a hard space. Most people's startups have lost them money compared
to what they would have made had they just bought btc and held. Other's have
left the btc ship with predictions of failure (Falkvinge, Hearn) and their
doom predictions haven't yet and perhaps may not come true. I feel that many
the great mind is lost to boredom with boring old BTC, the crypto you can
actually buy things with. This makes me sad, for surely BTC is not yet where
anyone would like it to be. The braindrain has a cost.

Massive amounts of braindrain have funneled into ETH, and not just dev's but
dollars. It's like 21 inc. They failed so hard that they pivoted into a
payments layer. I literally paid them a 6 percent fee to send some BTC to
their founder. I could have just sent him btc directly, but then they wouldn't
have a profit model right?

Thus. Time and money can be wasted. I believe that much of ETH is such a
waste. And even worse, it's actually a risk magnet that convinces others to do
unsafe things, like tie millions of dollars up in smart contracts, that are
quite unsmart.

Bitcoin's not exciting enough, so let's iterate all the xyz thing but with
bitcoin ideas. They nearly all fail, so then we're on to, lets have shorter
block times, or lets tie proof of work to something that's not electricity,
like storage or selfies. Then there's the "smart" layers like colored coins,
branded tokens, and mastercoin, and ETH which layers on itself.

So the situation is, everyone wants to get rich, but you can only get rich in
crypto if you A. start with lots or B. Get in really early. Since most people
don't start with lots, and most people aren't "early" to BTC, they venture
into altcoin land, also known by a diminutive term I won't use here. You could
C. ico, pump and dump as well.

Thus everyone wants to get in early, and get in on the pump, few want to work
with boring, slow, nearly impossible to change BTC, corners get cut, and sheep
get shaved.

The growing pains BTC had cost a couple orders of magnitude less financial
harm?

Value comes from scarcity + demand. Open source software is by definition not
scarce. Thus if a cryptocurrency has value, it's not it's code that its the
value, it's the network effect of users using it that prevents other copies
from outcompeting them at lower fees. Thus for any cryptocurrency token to
have lasting value, it must derive that value from something external to it's
bad ass code.

Take a look at how many things you can buy with BTC that you can't with ETH,
that is the value, that is hard to replicate, hard to penetrate. Even lower
volatility due to giant order books is a plus. Thus, when I see open source
projects try to make money on the quality of their code, they're missing out
on where the value comes from.

Now, could ETH be amazing, sure. Would it be amazing if the tokens were worth
$1 or 10 cents, or 1 cent? Probably, the same way tcp packets are amazing, and
worth pretty damn little.

SO when people hop on the pump, on a currency that is only hitting 1 metric,
the pump one, it's dangerous and risky.

Then there's the risk that your'e enticing dev's to write smart contracts,
when smart contracts are hard to write. And you're giving them all the tools
they need to hang themselves.

Then there's the risk that you say lots of things that are inaccurate, which I
guess I'll just tackle in a giant post next, lol.

~~~
leashless
So you like Bitcoin?

I don't mind Bitcoin. But it's 10 years old. I was warning them in November
2013 about getting their political act together and innovating.
[https://youtu.be/P-7JIQKbm5U](https://youtu.be/P-7JIQKbm5U) is me keynoting
in London on just this topic.

What do you see the next move as being?

------
cjslep
They forgot the feature where if a smart contract doesn't go the way they want
it, they create a default-opt-in hard fork of the currency.

Sorry if I don't trust the "small group of legends" more than the government.

~~~
nugget
I am a fan of Ethereum but I wish they (and other alt-coins) would be honest
about the fact that there is very much a central authority at work; in
Ethereum's case, it's a small network of developers and mining pools. That's
not necessarily bad, but let's at least be honest about it. Admit that central
authorities have a role to play (and may take many different forms). Recent
events clearly reflect, to me at least, that the value of a blockchain doesn't
depend upon the lack of a central authority (indeed, investors may feel safer
with a steady hand on the wheel) or immutability (Ethereum violated supposed
rule #1 and look at how the market has voted, i.e. ETH/ETC price variance).

~~~
erikpukinskis
In what way is a voluntary network of independent miners a central authority?

~~~
nugget
The top 5 ETH pools control about 75% of the hash rate. Buterin (for whom I
have lots of respect) and others have routinely commented that centralization
is a problem in both PoW and PoS systems. In both systems, the problem is "the
rich get richer" (as PoW is essentially "proof of stake" in the form of
expensive hardware and electricity).

But more to the point, look at what happened with ETH and ETC. The Ethereum
Foundation could have decided to hard fork without any particular % of
support. Consensus was needed for price support, not to complete the fork.
Let's say they forked with only 25% support. The new fork retains the ETH
brand. The old chain rebrands (i.e. ETC). The market then votes on how much
they value the old versus the new. Now look at ETH/ETC since the fork: the
market is saying that they feel more comfortable with a known, trusted
authority (i.e. small group of developers with trademarks and a conference
schedule) than they do with true democratized first principles of immutable
code. I'm not a righteous zealot, I agree with what ETH did and would have
done the same thing; I am just calling it out for what it is.

Humans love to collect, horde, and trade items: puka shells, tulips, dot com
stocks. Speculation is hard-wired into the human DNA. At some points, asset
prices become hopelessly disconnected from the value and utility of the
underlying asset. I think the initial rush into crypto was healthy because it
funded (and continues to fund) hundreds of full-time researchers who can push
the field forward. But at some point the speculative fever becomes a disease
that can hurt more than it helps. The sooner we develop real-world
applications based on public blockchains as an anchor-point to reality, the
better.

~~~
nicksdjohnson
> And my point was that if you look at ETH/ETC, the market is saying that they
> feel more comfortable with a known, trusted authority (i.e. small group of
> developers with trademarks and a conference schedule) than they do with true
> democratized first principles of immutable code.

But the fork wasn't a referendum on the governance model of Ethereum. If you
picked ETC, you get your liberterian utopia - but you also get a chain where
someone made off with 10% of the Ether supply.

~~~
nugget
Pre-fork ETH owners didn't necessarily have to pick one over the other. Miners
had to allocate their resources between the two chains (but could split their
bets, and some did so). Pre-fork ETH owners ended up with both chains in a
kind of 2-for-1 special.

Every market transaction since then has been a referendum on which model the
market prefers. Ultimately, the market price dictates a LOT of down-stream
behaviors, e.g. some miners will switch back and forth between ETH and ETC
(and other alt-coins) based on hourly yield.

~~~
nicksdjohnson
But that's completely beside the point: the point is that you can't have the
libertarian-utopia-chain without also getting the hacker-got-away-with-his-
loot chain.

~~~
kolinko
Well yeah, you can't have a libertarian-utopia chain. You can only have a
libertarian chain.

------
leashless
Hi I'm the original author of the piece and I'll be around for the next couple
of hours to answer questions. Glad to see such a lot of debate here already!

------
lumberjack
The problem with smart contracts is that they are only 100% trustless as long
as all the input data is already present on the blockchain.

Even something banally simple as "if such and such win the world cup deposit
earnings there" cannot be 100% trustless. How does one overcome this problem?

I don't think smart contracts can overcome this problem while remaining 100%
trustless.

~~~
7373737373
"Trustless" is a terrible meme, as the term is misleading and the
implementation of the concept is impossible. The truth is:

There is no cloud, just other people's computers.

Smart contracts can make trust relationships explicit.

By using a blockchain system, you entrust a network - which you may have no
control over - with application state. If you rely on such a network, you
indirectly also rely on the network infrastructure and operators' social and
economic incentives.

~~~
leashless
I agree that our terminology is often terrible. "Smart contract" could well
have been "conditional payment" which for most purposes is clearer.

Do you know about [http://erights.org](http://erights.org) ? They are good -
great - on terminology.

~~~
rabbyte
if we're going to simplify language then call it what it is: a program. the
only reason they're called contracts is because they were theorized within the
context of future financial instruments, smart contract is a historical
artifact for a kind of automated thing that might have one day appeared in
many forms, but now we know. calling them programs would have been more
immediately accessible to programmers which is clearly where the weight is
shifting, contract should have been reserved for the DSL lawyers use to write
programs. ¯\\_(ツ)_/¯

~~~
cslarson
Yes I think this is right and we lose something when we limit to finance or
legal terminology.

------
RichardHeart
I think it means a lot of people are going to lose a lot more money than $1
Ether would have meant.

1\. The halting problem states you can't predict what a turing complete
program will do, until you run it. This means to some degree, that you can't
predict what your "smart" contract will do, until it does it. Thus turing
completeness causes security to be far, far harder than non turing
completeness. This is how you lose the millions of dollars as the DAO did
after it passed audits.

2\. Competing implementations of consensus code in different languages greatly
increases breakdown of consensus. (more millions have been lost over this, and
it created a fork at about 10 percent the value of the old chain.)

3\. You can buy things with bitcoin. What can you buy with ETH? If you can't
buy anything with a currency, it's not a currency.

Thus, human resolved chain rollbacks? Check. Failed consensus between
implementations? Check. Passed audit yet totally failed smart contracts?
Check. No place to spend them? Check. New tokens given out all the time
forever? Check.

Every dollar that goes into bad ideas is taken directly from the good ideas.
Smart contracts can never be smart until oracles are solved. Oracles aren't
solved. ETH has all the technical odds and history stacked against it, however
some how, the people that bought them aren't dumping.

There's a saying that the market can stay irrational longer than you can stay
solvent.

~~~
benchaney
> The halting problem states you can't predict what a turing complete program
> will do, until you run it. This means to some degree, that you can't predict
> what your "smart" contract will do, until it does it. Thus turing
> completeness causes security to be far, far harder than non turing
> completeness. This is how you lose the millions of dollars as the DAO did
> after it passed audits.

The Halting Problem states that you can't create a general purpose algorithm
for predicting what an arbitrary program in a Turing Complete language will
do. This is very different.

~~~
RichardHeart
"The naïve Ethereum people think they've cleverly sidestepped this with the
notion of "gas" but actually all they're doing is cheating with this messy
kludge: because simply saying "we'll arbitrarily make the program stop running
at some point" does not make "smart contracts" written in Ethereum "decidable"
\- as we've seen, these contracts can still blow up / go wrong in other ways
before they run out of gas."
[https://www.reddit.com/r/btc/comments/4p0gq3/why_turingcompl...](https://www.reddit.com/r/btc/comments/4p0gq3/why_turingcomplete_smart_contracts_are_doomed/)

~~~
benchaney
This comment is simply incorrect. The gas limits do make smart contracts
decidable. It is a mathematical fact. Bringing the idea that things have gone
wrong with Ethereum as proof to the contrary is completely absurd. Things have
also gone wrong with Bitcoin [1]. Is it undecidable now too?

[1]
[https://en.wikipedia.org/wiki/Mt._Gox](https://en.wikipedia.org/wiki/Mt._Gox)

~~~
makomk
Indeed. All you have to do is test every possible input, in much the same way
that any computation on a real computer is technically decidable because the
limited amount of RAM means that it can only have a finite number of states.
Neither of those limits actually makes solving the problem feasible in
practice.

~~~
benchaney
>Neither of those limits actually makes solving the problem feasible in
practice.

That's the point. Theoretical limitations has no bearing on solving the
practical problem. That is why RichardHeart's original point [1] is wrong.

[1] The halting problem states you can't predict what a turing complete
program will do, until you run it. This means to some degree, that you can't
predict what your "smart" contract will do, until it does it. Thus turing
completeness causes security to be far, far harder than non turing
completeness. This is how you lose the millions of dollars as the DAO did
after it passed audits.

~~~
jude-
Pretty sure the parent was saying the opposite. Testing every possible input
is infeasible, since the number of possible inputs (and number of possible
states) is HUGE.

~~~
benchaney
That is not the opposite of what I said. That is a reason why what I said is
true.

~~~
jude-
Parent said "Neither of those limits actually makes solving the problem
feasible in practice." This is correct, since the input space is too huge to
feasibly explore. Yes, it is technically correct that there are a finite
number of states that your laptop can be in. No, it does not mean that I can
practically enumerate all possible states my code can be in.

Formal verification will be necessary in practice. This is not an ideal
outcome either, since (1) you have to formally specify the problem you're
trying to solve and (2) the proof that the code meets the specification can
easily be bigger than the program, by many orders of magnitude. Even this does
not guarantee that bugs won't happen, since there's no guarantee that your
specification accurately describes the problem you're solving.

------
rabbyte
as someone who's been involved since the beginning, the only thing $100 means
is there are enough people invested that the real work can begin where
developers and teams can take the time to learn how to build for it without
worrying it'll disappear tomorrow. that assurance counts for something, but
beyond that do -not- consider this a "production ready" platform. There will
be failure. There will be losses. treat this as a place to experiment and
dabble in the future but don't strive for world domination, let success build
naturally. fuck the hype.

------
erikpukinskis
> By all and any standards, this is a success beyond anything dreamt of when
> the project started

I doubt this is true. When Bitcoin came out I think a lot of people realized a
whole new game was afoot. An autonomous ledger was demonstrated and the race
was on to create the autonomous everything else. An autonomous application
host was the obvious brass ring, and whoever got it seemed assured to spark a
market at least as big as Bitcoin.

I can't imagine Vitalik was thinking anything other than "if this works, it
will be huge." That's a big if, but I think the stakes were clear.

------
djtriptych
This guy Vinay Gupta really has a gift for writing about technology. Lots of
clear technical concepts without resorting to jargon, bright syntax and style,
and never pedantic.

~~~
leashless
Thank you!

Much practice. I am old (45)

~~~
djtriptych
I'm getting old (36) but I don't write about tech enough. Time to start a blog
:)

------
45h34jh53k4j
Bitcoin has had several drastic price corrections in its life. We are yet to
see this from Ether. I suspect the fall will be greater if it starts >$100.

Of course, we will look back on this in 5 years and think $100 ETHER was
cheap!

~~~
avaer
If everyone agreed this was "of course", Ether would be more than $100 today.

------
evanvanness
If you want to stay up to date on Ethereum, I've heard there's a fantastic
weekly email newsletter that's worth reading:
[http://www.weekinethereum.com](http://www.weekinethereum.com)

------
brighton36
This guy is a raving lunatic, you can see him spouting total gibberish here:
[https://www.youtube.com/watch?v=A3p-RUtGejI](https://www.youtube.com/watch?v=A3p-RUtGejI)

~~~
rabbyte
This guy is an ad hominem attention seeker, you can see him spouting total
gibberish anywhere he appears.

------
mavdi
Should've bought more last year... way more. But I guess everyone says that
now.

~~~
madamelic
Hey, I knew about Bitcoin when it was $20.

You could buy now and dump it when it hits $900 - $1000. It will.

As far as I am concerned, the current iteration of *coin are just pump and
dump basically.

~~~
erikpukinskis
What do you think about the idea that people in failed states with unstable
currencies would want to store their wealth in Bitcoin? Or the idea that
people would want to use it for international money transfers?

"Just pump and dump" implies you don't believe legitimate uses underlie the
coin.

~~~
paulmd
> What do you think about the idea that people in failed states with unstable
> currencies would want to store their wealth in Bitcoin?

It's a stupid idea because there's always two parties to any transaction.

You know why they don't just store their wealth in dollars? Because nobody is
insane enough to sell them dollars for a worthless piece of paper.

Bitcoin works the same way. How much Bitcoin would you give for a Zimbabwe
Dollar during hyperinflation? Obviously none.

So you have yet another hard currency that nobody can get ahold of. What's the
point, again?

> Or the idea that people would want to use it for international money
> transfers?

I buy things internationally all the time. It works pretty great, it costs me
nothing and it costs the recipient 4.4% plus a fixed $0.30 per sale.

Plus if they try and screw me over somehow I get all my money back and try
someone else, and they get slapped with a big-ass chargeback fee for being an
asshole. How much are the chargeback fees in the Bitcoin model? Who do I call
to get my money back?

Also, I can tell you for sure that Bitcoin costs quite a lot in fees to buy,
sell, or trade. Each transaction is what, $0.50 in fees nowadays?

Insofar as Bitcoin represents a single world currency, the problem is that on
a macro level this isn't a good idea. Separate currencies that can
inflate/deflate (i.e. "appreciate" and "depreciate") are a way to levellize
structural imbalances, and without this relief valve you can end up with total
collapse instead of just workers who are upset that an iPhone costs $1000.
Inflation is good, it reflects a growing economy, it's only when it turns into
hyperinflation that this is problematic.

For a microcosm of this problem, you can see the ongoing problems with the
structural imbalances between Greece and the high-earning German economies
over the last 10 years. If they had currencies that could appreciate and
depreciate, Greek labor would be very cheap on the international market. But
since they're stuck in the Euro together, they can't do that.

The growth function for the money supply probably isn't optimal either, for
these reasons. The ability to adjust the supply is critical for controlling
both inflation and deflation, under various circumstances.

~~~
hopeless_case
> Insofar as Bitcoin represents a single world currency, the problem is that
> on a macro level this isn't a good idea.

I don't think a scenario in which bitcoin became the single currency that the
world used is very likely to happen.

I suspect what is going to happen is that bitcoin is going to be the world's
first Electronically Tradable Liquid Asset (ETLA) that is frictionless and
uncensorable. Its going to legitimize the concept of a much wider class of
ETLAs being acceptable as money. Any company stock that has high price
stability could function as money if we had a platform whereby people could
trade fractional shares of stock at low fees.

This is going to take away the ability of central banks to manipulate the
money supply. If a given country's CB tried to print money to cause inflation,
the population would figure it out quickly and the price of ETLAs in that
currency would immediately rise.

~~~
paulmd
> I don't think a scenario in which bitcoin became the single currency that
> the world used is very likely to happen.

What I mean is the concept of it becoming an international currency where
people actually transact business in it directly, instead of it being a
commodity that needs to be converted to and from a local currency.

As such there will always inherently be exchange fees for international
transaction, just like when you pay a fee for a credit-card transaction in a
foreign currency. You're paying a middleman to hold those currencies so you
can convert on-demand.

What I'm jabbing at here is the idea that there are "no fees" in Bitcoin,
which is a point often used by its advocates.

The transaction fee is actually absurdly high nowadays - the average
transaction fee is now above $1 [0]. For all the effort spent complaining
about credit card fees - this is a totally absurd price, you only break even
with the standard credit card fee at $23 dollars or more. Just from the
transaction fees.

And of course every time you use a middleman of some kind they will
(naturally) take their own cut. Buy Bitcoin? The exchange takes their cut. Buy
something from a retail store? Bitpay takes their cut. Of course that's how
capitalism works, but you pay that on top of the transaction fees.

Some people have the idea that somehow Bitcoin becomes the currency that you
only make big transactions in, and transactions will happen off-chain somehow.
But that necessarily involves a lot more middlemen taking their own cuts. Even
if that's automatic, you know someone's gonna get paid.

> This is going to take away the ability of central banks to manipulate the
> money supply. If a given country's CB tried to print money to cause
> inflation, the population would figure it out quickly and the price of ETLAs
> in that currency would immediately rise.

Yeah, governments are going to love having a complete ledger of everyone's
transactions. No more tax evasion, no more drug trafficking. We're halfway
there with electronic clearing as it is - this will finally get rid of that
pesky untraceable cash once and for all. Can't wait. /s

Bitcoin isn't anonymous, it's pseudonymous. As long as you're transacting
something in real life, or exchanging it for another currency it's relatively
easy to track you down. And you can easily track back through multiple
transactions. When I hand you a cash bill - that's it.

Anyway, any cryptocurrency that gets adopted by a country would certainly
include the ability to control the rate at which currency is issued. If
governments wanted their currency to be tied to a commodity which they had no
control over, they would never have left the gold standard.

Also, the whole "coin mining" thing is really pointless with a national
currency. The point of the distributed ledger is that you don't have to trust
someone. But really the government can trust themselves, and centralized
systems have tons of advantages over distributed ledgers. For starters,
massively greater transaction rates, also it's trivial to correct mistakes, or
debit people as needed.

We could call it a "bank account". And then to authorize a transaction, a
physical token you carry could communicate with this bank account to
cryptographically authenticate you. We could call that a "chip and pin card".
No warehouses full of graphics cards doing useless hashes are needed in this
groundbreaking new system.

Now Ethereum? That's actually fairly cool in its own way. It's certainly not
changing the world right now but these are the early days. I question its
utility versus any other cloud computing - at the end of the day there is no
"cloud", only someone else's computer - but hooking that directly to what's
basically pre-authenticated chip-and-pin transactions is fairly cool in its
own way.

We could replace a lot of the useless Etherium hashing with "first person to
submit a valid block wins" though - so basically you are paying someone to
watch for conditions X,Y,Z to be met. Getting rid of the mining and going with
first-watcher-to-submit-a-validated-transaction would incentivize speed and
efficiency over doing math that doesn't matter. But again, that is probably
something where you could serve millions of people with one big server.

In comparison, Bitcoin is just digital gold, it's a whole lot of sound and
fury but at the end of the day it just sits there and does nothing (except
burn electricity).

But hey, everyone agrees it has value and therefore it does. It's just not
actually backed by anything, the math itself is relatively pointless (unless
you happen to need a giant hashtable of course).

[0] [https://themerkle.com/average-bitcoin-transaction-fee-has-
ex...](https://themerkle.com/average-bitcoin-transaction-fee-has-exceeded-1/)

------
akhilcacharya
It means my Eth miner friends are filthy rich :) :(

------
joeblau
> On the head end of the blockchain there is a sort of roulette wheel.

This is interesting. Where Bitcoin seems to reward miners based on solving NP
hard problems, Etherium is just handed out randomly?

~~~
wmf
No, Ethereum and Bitcoin both use proof of work (for now).

~~~
joeblau
But does BTC randomly reward the miners like ETH does as being described in
this post?

~~~
rocqua
Both BTC and ETH don't actually reward randomly. Instead, everyone is just
trying a large amount of 'solutions' until one works. The first to find and
distribute such a solution is said to have 'mined' such a block and gets to
add his reward into the record by modifying that block.

Because there is no way to know the true solution, everyone is just guessing
so in the end it is random chance that determines who gets to mine a block,
but those who spent more effort have proportionally more chance to win.

~~~
leashless
Bigger computers equals faster search, which we could explain to non techies
as buying more lottery tickets. I try never to explain mining to a general
audience. It's too low level for a clean semantic mapping between what they
want to know about, and how it all really works.

~~~
count_zero
Maybe this analogy would work:

Imaging a million haystacks with a million different keys scattered within
them. There is a lock which only one of those keys can open; it is difficult
to find the key, but when you do, anyone can easily verify it is correct by
turning it in the lock. Once a key has been found, a new lock is created and
the process starts again.

The more robots (mining power) you have to search for the key, the more likely
it is that you will find it before competing machines do.

~~~
rocqua
Besides explaining how we are looking for a nonce, I find it both difficult as
well as elucidating to explain how whomever mined a block is rewarded.

The main point of block-chain is decentralization. It is thus important to
emphasize that there isn't a central authority that rewards the mining of a
block, but instead that the miner includes his reward in the block. It is also
important (though less relevant) that the challenge of mining a block is a
mathematical result of the last block. It too arises without a central
authority.

Moving to even less relevant and yet interesting thing is that not all miners
need be mining the same block. This is already the case for the 'reward' they
are mining, but miners are free to exclude a transaction from their mining
attempts. This then begets the matter of fees as a secondary incentive for
mining besides the block reward.

