
How can Ethereum systematically scale better? - transitorykris
https://medium.com/@FEhrsam/scaling-ethereum-to-billions-of-users-f37d9f487db1
======
kbody
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.

~~~
jerguismi
Also what is certainly interesting is ethereums difficulty bomb, which should
activate later this year. Certainly gives interesting image on ethereums
development style, this was implemented to "force" the ethereum devs to
implent PoS before it activates. However as far as I understand, the only
thing that this forces ethereum devs to do is a hard fork that removes the
difficulty bomb somewhere this year.

[http://www.coindesk.com/ethereums-difficulty-bomb-smoke-
no-f...](http://www.coindesk.com/ethereums-difficulty-bomb-smoke-no-fire/)

~~~
pietjepuk88
There is only one type of difficult bomb for Ethereum (the ice age), and that
is already underway. As linked to in that article, block times would reach
about 30 s mid-August
([https://www.reddit.com/r/ethereum/comments/5izcf5/lets_talk_...](https://www.reddit.com/r/ethereum/comments/5izcf5/lets_talk_about_the_projected_coin_supply_over/)).

The difficulty bomb/ice age is _not_ to force the devs to implement PoS. The
reason the ice age(s) exist is to make sure minority chains eventually die.
Bitcoin does not have this problem as much, because the difficulty adjustment
is much slower, which easily results in hour long (or more) block times for
weeks/months for a minority chain. The difficulty adjustment on Ethereum is
much faster, so minority chains that arise after a protocol upgrading
hard/soft fork could hypothetically survive. To incentivize miners and users
to switch to the new chain, there needs to be some other mechanism in place,
which is the ice age. The ice age causes block times to keep rising
exponentially on the old chain (if no action is taken), so miners will
eventually lose their reward and users will not be able to make transactions
anymore. They move to the new chain (which postponed the ice age), and
eventually the cycle repeats itself.

This cycle has happened a few times already. Usually the fork would have
already happened by now, so the impending Metropolis fork is different in that
it's a bit late and the initial effects of the (ever worsening) ice age are
felt.

------
fiatjaf
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.

~~~
vertex-four
Unfortunately, most people don't understand what a blockchain _is_ , including
many people working on altcoins. This causes them to make buzzwordy statements
which are, to everyone else, nonsensical. "Code is law" being one of them.
"Property on the blockchain" being another.

~~~
simias
The lack of technical knowledge in the cryptocurrency community is staggering.
It's obvious that a huge number of people are attracted by the "get rich
quick" aspect of it all and they lack the basics to really understand the
trade-offs and the subtleties of the various blockchain "flavors" and tweaks.

So it turns into dumb cargo culting like "Proof of Stake is 100% proven not to
work", "Proof of Stake is 100% proven to work", "Lightning Network is going to
fix everything and bring world peace", "Lightning Network is going to ruin
everything and bring WW3" etc...

And you can't have any constructive discussion because if you try to argue for
or against a certain technical proposal you'll immediately be called a "paid
shill" or a "troll" regardless of your arguments. I've been lurking in the
bitcoin subreddits lately and it's really one of the least helpful and
constructive communities around. And it's a bit sad because on the technical
side the blockchain is pretty damn interesting.

~~~
nicksdjohnson
In all seriousness, you should lurk in the Ethereum subreddit instead.

We have our share of cheerleaders who take the black and white "this good,
that bad" position without evidence, but they're not dominant, and we have a
far larger proportion of developers who are interested in building cool
technology and are able to look objectively at the problems involved.

~~~
vertex-four
Ehh... I have quite similar issues with the Ethereum crowd. Nobody understands
in which situations they need distributed consensus on some state, and what
the other available solutions to various similar problems are. Blockchains
solve a very niche (but previously difficult-to-solve!) problem, and given
that they literally cost money to use, it's good to use other tools to solve
problems when you can.

------
Cshelton
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.

~~~
strgrd
[Hacker One:] Hi, I’m Kyösti Turunen.

[Hacker Two:] Hi, I’m Allan Makkonen.

(together) And we put things on the blockchain!

[One:] Today we’re going to a social media website on the internet. This
website is called thefacebook.com. It doesn’t have blockchain technology at
all, but you know what we're going to do? We’re going to put things on the
blockchain.

[Two:] Scale it up, make it interoperable!

[Mark Zuckerberg:] Thank... you?

(together) Put it on the blockchain!

[One:] I’m putting this messaging platform on the blockchain. It’s a
blockchain. It’s an immutable distributed ledger that uses mathematical proof-
of-stake tokens to democratize the transfer of knowledge.

[Two:] What a sad little micropayment platform. I know, I’ll put it on the
blockchain! Did you use this payment system before? I didn’t. Now it’s on the
blockchain. Its token-generated smart contracts offer nearly limitless self-
sovereignty over how users interop with their data.

[One:] I’m going to put the graph network on the blockchain.

[Two:] The cryptographic hash function is so pretty!

[One:] You like that Mark?

[Zuckerberg:] Fantastic.

(all together) Put it on the blockchain!

~~~
will_brown
Ever since the DAO went live on Etherium, simultaneously blockchain became law
and smart contracts replaced lawyers.

In short a complex scheme to get the world to sign a contract that reads:

"I hereby enter this contract - because I cant read the language the contract
is written - and unknowingly agree that I will agree to all future contracts,
and for good measure I'm going to give the other party to this contract access
to my money to expedite the next contract."

And that's why yesterday's Decentralized Autonomous Organization is today's
Initial Coin Offering...if people could understand the simple truth:

An ICO "crypto coin" is a receipt for crowdfunding an idea for a product. The
receipt/coin is not ownership/equity if the idea ever becomes a successful
company. Somehow because the receipts are held on a distributed ledger (block
chain) and called a "crypto coin" the receipt has somehow become something of
value speculators will buy and sell on a secondary market.

Once you understand this truth you understand why traditional brick and
mortars are getting interested in block chain technology, soon customers will
buy something at Walmart and as a receipt of the transaction Walmart will
issue a "crypto coin" on the blockchain and the customer will be able to sell
that in the secondary market and buy more product at Walmart.

~~~
kalleboo
> Ever since the DAO went live on Etherium, simultaneously blockchain became
> law and smart contracts replaced lawyers.

And once they had to fork Ethereum due to the bug in it, we learned that the
real replacement for laywers is miner consensus.

~~~
kalleboo
I can't edit now but thinking over it I guess the analogy would make miner
consensus the judges?

~~~
dullgiulio
Not really, thankfully we cannot put people in prison by mere majority.

People go to prison if they violate the law, not because 51 members out of 100
voted that someone is a bad guy.

Not even democracy works like that, where the majority rules (dictatorship of
the majority.) Or, at least, it should not. There are many checks and balances
that are definitely not captured by a simple distributed hash.

------
pgodzin
> 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

~~~
pdog
Open protocols are already much larger than closed systems. Look at email
(based on SMTP) and the internet (based on TCP/IP). This statement only
expects a successful new protocol to follow the same trend.

~~~
r00fus
Selection/survivor bias. For each SMTP there are probably 100 open protocols
that are by the roadside.

~~~
FabHK
Yes. Let's look at more examples:

 _Chat:_ Open: XMPP, Jabber, Adium, Tox, Jitsi. Closed: WhatsApp, Facebook
Messenger, Apple Messages, Line, Skype, WeChat.

 _Social:_ Open: ? pump.io, Diaspora? Closed: Facebook, Google+, LinkedIn.

 _App Stores:_ Open: F-Droid. Closed: Apple App Store, Google Play

 _Authentication:_ Open: FreeOTP. Closed: Authy, Google Authenticator

 _Office:_ Open: LibreOffice. Closed: Microsoft Office.

 _Cloud:_ Open: ? buddycloud, GitLab. Closed: iCloud, Dropbox, Google Drive,
Microsoft OneDrive.

 _OS:_ Open: Unixes. Closed: OS X, Windows

 _Browsers:_ Open: Firefox. Closed: Chrome, Safari, IE

 _Maps:_ Open: OpenStreetMap. Closed: Google maps, Apple maps

I realise these are mostly not "protocols" (depending on what layer we're
talking about). Nevertheless, can hardly say that "Open protocols are already
much larger than closed systems".

~~~
mintplant
This is a Bad Comment that tries to disguise itself as a Good Comment by going
for quantity over quality. Cherry picking, misinformation, and apples-and-
oranges comparisons can all be found here. For example:

> Google Authenticator

...is open source and based on open standards.

> Chrome

Chromium

> Safari

WebKit (originally derived from KHTML)

> Cloud: Open: ? buddycloud, GitLab. Closed: iCloud, Dropbox, Google Drive,
> Microsoft OneDrive.

The open and closed products here aren't even in the same spaces.

~~~
hdhzy
Google Authenticator, the one that you download from Play Store, is not open
source:

> These apps are not on the app stores, and their code has diverged from
> what's in the app stores, so patches here won't necessarily show up in those
> versions.

Source: [https://github.com/google/google-
authenticator/blob/master/R...](https://github.com/google/google-
authenticator/blob/master/README.md)

------
mempko
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.

~~~
zeroxfe
> 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".

This is an odd definition of distributed computing. Blockchains fall squarely
under the realm of "distributed consensus protocols", which are quite
fundamental to distributed computing.

------
deweller
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.

~~~
acover
What is needed to get to Facebook level?

Is there designs that sacrifice trust in results for performance?

~~~
gfody
I don't think you need a blockchain to decentralize something like Facebook.
You just want to verify that so-and-so did in fact make this comment and this
other person did in fact like it. That can all be ensured with asymmetric
encryption.

As for the size and scale of Facebook, it's only huge because it _is_
centralized. If you decentralize it then the social graph for you and your
friends is much, much smaller than all of Facebook. I imagine a p2p client
running on a cell phone would be fine.

~~~
fiatjaf
What do you think it is needed to decentralize Facebook?

I think it is a waste of mental effort just to think about something like
Facebook running on Ethereum when that is fine running on centralized servers
and there's so much more interesting uses of Ethereum (like probably a lot of
projects that are popping around, no one trying to be Facebook).

~~~
xorcist
> What do you think it is needed to decentralize Facebook?

I think it's called "the web". It was invented in the early 90s.

Basically blogs and news aggregators fulfill the same niche as Facebook, but
as a decentralized system where each user can be in full control of their
data. The only thing that is limited in comparison to storing everything with
one company is the possibilities for fine grained access control. The web
needs to be overwhelmingly public in order for search engines, timeline
aggregators and other services to arise.

There is nothing in Facebook that involves ordering transactions in a global
ledger.

~~~
fiatjaf
So why are people talking about running Facebook on Ethereum? Isn't that
madness?

~~~
acover
Ethereum decentralizes the server. There are advantages to being able to trust
a server without running it yourself.

~~~
xorcist
The web _is_ decentralized. That's the entire point of it. You don't need
permission from anybody to start serving web pages.

Don't take this as talking down cryptocurrencies. It's that Bitcoin is _as_
decentralized as the web that is the key innovation. That anyone can build
applications on top of it without asking for permission is unheard of in the
financial space.

There are many decentralized permissionless systems including e-mail for
messaging and IPFS for distributed storage. They do not generally need tokens
or proof-of-work to function.

(Sorry for substituting Ethereum above. Ethereum isn't really a good example
of a decentralized application as it is governed in full by a Foundation which
have all developers on payroll. It is not a multiple equal stakeholder project
yet.)

As to _why_ people are talking about Facebook on Ethereum, I don't think the
article suggested that. It merely offered Facebook as a generall ballpark to
which scale a popular application can reach.

------
buttershakes
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.

~~~
drcode
well... Vitalik so far seems pretty confident a sharding system is feasible,
and I would be loath to bet against Vitalik. Certainly he scares me a bit at
this point because he's already basically stated that he believes it's
impossible to implement blockchain sharding without erasure coding, so it
certainly doesn't look like sharding is going to be a simple undertaking.
[https://en.wikipedia.org/wiki/Erasure_code](https://en.wikipedia.org/wiki/Erasure_code)

~~~
woah
Vitalik's been talking about a sharding system around the corner for years
now. The team working on it seems to be more interested in the theory than the
practice of sharding. Additionally, any sharding design will probably have to
break some existing assumptions and contracts, making it a really hard fork. I
wouldn't be surprised if something else comes along offering a somewhat
ethereum-compatible system with sharding for those who are working on real
applications and need it.

~~~
naasking
> The team working on it seems to be more interested in the theory than the
> practice of sharding

As it should be for something that will need to be unbreakable and ultra-
reliable. I detect a tone of distaste for theory in your phrasing, which isn't
promising.

------
Animats
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.

~~~
theWatcher37
Maybe preface your comment with "I have never used or followed Bitcoin outside
of news articles".

~~~
prawn
I'm genuinely curious - can you explain why Animats is off-track?

~~~
campbelltown
Whether or not you agree with the model of token sales (most here don't)
Ethereum already hit it's scaling limits after hosting several hyped ICOs.
When the ICO bubble deflates or crashes, I suspect the ICO model is not going
away, but will look different. I can envision a world where tons of small
startups are chasing capital through small, niche-specific ICO funding rounds.
For this to be possible, Ethereum in it's present state needs to handle many
more transactions. For example, during the Status.im sale, the network was
unusable for 2 full days.

Similarly, many app developers have noted that gas fees are too high to
validate using the blockchain for their applications. Just making a profile on
ethlance.com is unnecessarily expense due to the gas cost. This results in
unrealized demand. When Ethereum scales to 8x transactions I have no doubt the
scaling debate will continue, as demand will have increased as well.

~~~
lambdadmitry
ICO model as we know _will_ go away because it's a scam. The only reason they
happen is that SEC is slow to prosecute what's basically an unregulated
securities selling. You can't sell securities on the basis of some pretty
landing and a few blog posts.

~~~
Frogolocalypse
I used to think that. By all accounts, it turns out i was wrong.

Personally i think these things are a technological response to the pervasive
AML/KYC laws that have been developed over the past 15-20 years that have been
put in place with little thought or oversight. They (and by they it is really
the US war on drugs) went after the source of that money. So the money
changed.

I really don't know how you put the toothpaste back in this tube.

~~~
lambdadmitry
> By all accounts, it turns out i was wrong.

By which accounts?

> So the money changed.

"The money" didn't change, it's just an elaborate scam. Look:

\- there are early ETH/BTC adopters who have a ton of ETH/BTC and not much of
financial sense

\- they bankroll recent ICOs (seriously, look at those "whales" at Status ICO)
without due diligence or any financial sense (like, Signal ICO'ed to 1/4th of
what FB paid for Whatsapp with what, a few hundred users? Built on unproven
platform? That's freaking crazy)

\- companies who did their ICO cash out to fiat. They can do that because a
ton of people believe the story of "buy you a bitcoin and get rich fast", buy
BTC/ETH and provide fiat on exchanges

\- in the end the whole bubble bursts, early adopters loose their (now almost
worthless) BTC/ETH and hundreds of thousands of people loose their
"investments" in BTC/ETH.

So it makes perfect sense from the financial standpoint to do ICOs right now
if you can get away with that. It doesn't mean that the process is somehow
"better", it's just more profitable because of a ton of hapless people that
can easily separated with their money.

> I really don't know how you put the toothpaste back in this tube.

Easily: just start jailing people for unregulated ICOs in the same way they
jail for unregulated securities trading.

~~~
Frogolocalypse
How? It is a torrent-level problem if you felt you had to address it. With
700-odd coins (last time i looked) who would you jail? America can prosecute
people in America, but how would you address this problem I crypto? Freeze
their assets? How?

I'm not being flippant. I really don't think that is going to be a successful
strategy. I can't see how that would work. It would take a pretty coordinated
effort in a time of very little trust.

I said it somewhere else in this thread. I remember reading about the
introduction of aml/kyc legislation right across the world at the direction of
the US. the Maldives tried to buck it and they got crushed. I couldn't think
of a way in our connected world that you could get out of it. I think this is
the logical progression of that restriction of freedom. For better or worse.
Like the concept of freedom i guess.

~~~
lambdadmitry
Regarding the number of coins: just go for the bigger ones, it's not exactly
new strategy (that's why you primarily go for drug lords instead of low-level
resellers).

Regarding the prosecution: the US has extradition agreements with a lot of
countries, so if ICO resulted in American citizens either buying coins (i.e.
securities) or offering them, than it's a fair game for the SEC and (possibly)
some real jail time in US prison. It's also pretty easy to freeze assets as
soon as they are converted to fiat, and they will be, because you can't buy a
Ferrari with BTC.

Even if it's a "logical progression", you got it backwards. We had an
unregulated securities marked before 1933; it went really bad for various
reasons. It turns out that peddling "securities" on the basis of rosy promises
(or blog posts in the case of ICOs) is bad and some regulation forcing
companies to open up is good.

~~~
Frogolocalypse
> go for

Like I said, how?

> that's why you primarily go for drug lords

Yes. By going after their assets. What happens when you can neither identify
nor seize their assets? You can't even identify the alleged perpetrators.

> Regarding the prosecution: the US has extradition agreements with a lot of
> countries

And if you don't even know the names of the people who own a crypto, how much
they own, let alone what country they live in? These things are stateless.
There is no coordination between countries because there's no way to even
identify where the coordination would occur.

> It's also pretty easy to freeze assets as soon as they are converted to fiat

And if you can transfer from any crypto to any crypto any time you like? That
facility already exists with shapeshift, and when atomic swaps become
available, that genie is never going to get put back in a bottle. You mean
freeze ALL cryptos? How do you think you could even attempt that, let alone
achieve it. You think that just because it's the US government they can make
something like this 'just happen'? It's like stating "US Dollars are to no
more be used for purchasing drugs!". Great statement. A little bit lacking in
the enforcement category.

> and some regulation forcing companies to open up is good.

These aren't companies. You can't force them to do anything.

> Even if it's a "logical progression", you got it backwards.

I don't think you've actually thought this through. Every one of your
suggestions is a non-answer that is trivial to circumvent even if it was
possible to build something to circumvent in the first place. Your opinion
seems be born out of a belief that just because it is the US government they
can do anything. But there isn't even a suggestion as to how any of this
'control' could be asserted, let alone achieved.

------
sputknick
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/](http://raiden.network/)

~~~
Jabanga
Raiden is an implementation of the payment/state channel network he refers to.

------
sudshekhar
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?

~~~
Jabanga
>Apart from decentralization, what else does ethereum offer over and above
this combination?

Reliability. PayPal can change its mind and remove the feature. An immutable
blockchain won't.

~~~
lambdadmitry
PayPal is _way_ more reliable than Ethereum at this point. What stops your
counterparty from ditching the "smart contract"? You might say that the
contract may lock some of their ETH, but ETH:USD fluctuates wildly so you
can't guarantee that the value of the contract for your counterparty won't
become less than the value of ditching it in a few hours. Moreover, if you
lock funds in the contract, you suddenly create a nontrivial cost for your
counterparty, reducing their willingness to enter that contract.

~~~
Jabanga
Your counterparty could ditch the smart contract if it's on PayPal too. The
actual terms of the contract are less likely to be changed if it's on
Ethereum. Insofar as you need USD in your contract, you're right that the
blockchain's advantages are diminished, since you need a trusted third party
to guarantee the USD even if you use a contract on the blockchain .

~~~
lambdadmitry
If it's on PayPal and it exists in the standard legal framework, the guarantor
is the government with all its power. You can go to court over the violated
contract and the counterparty will be fined/jailed if found guilty.

It's not about "verifiability", it's about enforcement. And for that you need
a capability to inflict violence. So unless people really want ETH-paid
militias/sheriffs, blockchain doesn't bring much to the table.

~~~
Jabanga
A blockchain's guarantee that the smart contract will remain in force is much
more powerful than a government's.

This is because a smart contract on a blockchain is much less likely to be
removed or have its terms changed than a smart contract on PayPal, even if the
latter is in the "standard legal framework" (which is a new condition you're
adding which wasn't part of the original premise, where we were comparing
smart contracts enforced by an automated protocol, not contracts in general).
This in turn is because political forces can change the standard legal
framework much more easily than they can change a blockchain's smart contract
terms.

You're certainly right that standard contracts, backed by government, can do
things smart contracts can't, but there are things that smart contracts can do
just as well as standard contracts (like enforce a contract where both parties
pledge collateral), and they will be more faithfully executed on a blockchain
than on PayPal.

You asked what advantage a blockchain provides over PayPal as a platform for
smart contracts. I gave you an answer.

------
ex3ndr
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.

------
louprado
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.

~~~
gst
> long term harm to the value of ETH

I don't see why this is a problem. The goal of the Ethereum developers is to
increase the utility of the network, not to artificially inflate the value of
ETH.

In fact for one of the future Ethereum upgrades it's planned to convert ETH
into a ERC20 token, so that it's at the same level as all the other tokens on
the network. It wouldn't even get a special status in terms of transaction
fees, as (IIRC) the plan is to allow miners to accept whatever tokens they
prefer for the gas payment.

See
[https://github.com/ethereum/EIPs/issues/28](https://github.com/ethereum/EIPs/issues/28)
and
[https://www.reddit.com/r/ethereum/comments/572v7t/eth_as_an_...](https://www.reddit.com/r/ethereum/comments/572v7t/eth_as_an_erc20_token/d8ohxxb/)

~~~
Jabanga
Neither of those links imply ether will lose its role as input for gas
payment. It simply lets ether be used by contracts in the same way tokens are,
which allows for greater abstraction of ether transactions.

Vlad Zamfir explicitly rejects any call for economic abstraction:

[https://medium.com/@Vlad_Zamfir/against-economic-
abstraction...](https://medium.com/@Vlad_Zamfir/against-economic-
abstraction-e27f4cbba5a7)

------
benchaney
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.

~~~
deegles
Nope, that's a low end estimate of writes.

"Every 60 seconds on Facebook: 510,000 comments are posted, 293,000 statuses
are updated, and 136,000 photos are uploaded."

[https://zephoria.com/top-15-valuable-facebook-
statistics/amp...](https://zephoria.com/top-15-valuable-facebook-
statistics/amp/)

~~~
benchaney
(510000 + 293000 + 136000) / 60 is about 15.5k, so slightly less than the
estimate in this article, although you are right that I was overstating the
amount of traffic that is read only.

~~~
deegles
Yes, but that's not counting things like post likes, FB Messenger, check-ins,
account creations, profile edits, logging and statistics, etc etc. I wouldn't
be surprised if they're in the millions of writes per second.

~~~
ndr
In a recent submission [0] they give some stats about their abuse system and
at ~47:35 they mention this system gets 1M requests per seconds, which doesn't
have to precisely coincide with write volume but suggests it's in the right
ballpark.

[0]
[https://news.ycombinator.com/item?id=14624802](https://news.ycombinator.com/item?id=14624802)

[1]
[http://events.techcast.com/bigtechday10/Garmisch-1345/](http://events.techcast.com/bigtechday10/Garmisch-1345/)

------
arisAlexis
I think people should look into NEO for some innovation

~~~
jjcm
What scaling benefits does NEO have over ETH/BTC?

------
discodave
Just to answer the question in the HN title "Replace it with a provably
correct distributed consensus algorithm like Paxos."

~~~
zeroxfe
Paxos requires trust between peers. The Blockchain is designed to tolerate
byzantine failures. These are very different problem spaces.

(/me worked on Paxos for about a decade.)

------
frozenport
>>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!

------
Philosopher
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?

------
philanthropist
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)?

