
Coinbase Co-founder: Ethereum Is the Forefront of Digital Currency - sethbannon
https://medium.com/the-coinbase-blog/ethereum-is-the-forefront-of-digital-currency-5300298f6c75#.7fy9o33bi
======
Uptrenda
I agree with mostly everything he said, to be honest. I've stuck with Bitcoin
now for the last 3+ years and interestingly, that was only -because- Bitcoin
made it so hard to do anything useful. I would need to learn how all kinds of
niche areas of cryptography worked and the fun of hopelessly trying to
outsmart Bitcoin's god-awful restrictions is what kept things fresh to me.

Sure, it did teach me a lot of obscure things about crypto + game theory, and
some of those things actually turned out to be quite useful. But I also can't
deny how much longer it takes to do the most basic things in Bitcoin and I
think that now we're progressing towards using blockchains to solve problems
outside of Bitcoin -- Ethereum seems more up to the task than Bitcoin.

That's not to put Bitcoin down though. There has definitely been some
tremendous innovations there recently: segregated witnesses and sidechains are
pretty cool. But I've also seen the community change significantly since I
first got involved and I'd argue most of those changes have been bad. For
example: /r/Bitcoin seems to have become a toxic echo chamber for irrational
hatred against former high contributing core members and almost any kind of
counter-views are censored which is honestly quite disturbing. Most of
Bitcoin's current media is also controlled by only a handful of individuals so
its very easy to manipulate the crowd into "consensus" but I won't even go
there.

I'll personally always love Bitcoin but I can't see that these problems can be
fixed at this point. The Bitcoin project was largely hijacked as far as I can
tell and since the crowd has been won there's no going back now.

~~~
madeofpalk
> /r/Bitcoin seems to have become a toxic echo chamber for irrational hatred
> against former high contributing core members and almost any kind of
> counter-views are censored which is honestly quite disturbing.

This is the main reason why I can't ever take bitcoin seriously - their
community just seems to have so much unconstructive hatred towards anyone who
ever says anything negative about bitcoin.

~~~
vertex-four
I can't take Bitcoin seriously because its community, at the same time, holds
strong anarcho-capitalist ideals, and supports various companies which are
trying to monopolise various forms of Bitcoin transaction.

For example, a physical "Bitcoin payment card" which can only be used with
terminals sold by one vendor with bitcoins stored on the same vendor's
servers. If that had taken off, it would quickly become nearly impossible to
replace - and yet Bitcoiners thought this was the best thing ever, instead of
applying critical thinking and realising it'd be possible to create a similar
system but open to any vendor you'd like. As long as it's not the Government
restricting your choice, it's not bad, right?

~~~
Uptrenda
Almost every company in the Bitcoin space at the moment is doing something
that's diametrically opposed to the core innovations behind Bitcoin. A good
follow-up to your payment card example: its long since been possible to do
peer-to-peer, decentralized cryptocurrency exchange without a third-party with
more than one kind of smart contract to allow this, yet because centralized
exchanges are easier to build and more profitable to run – they have become
the norm -- and the exchange just ends up "iterating" on security ;)

The Bitcoin eco-system is full of double-speak and immense cognitive
dissonance. It's a weird community where people purport to be about
decentralization, freedom, and security, when in reality the people support
almost the exact opposite by preferring centralized services with almost no
individual control or security. Most people don't even seem to notice that the
FinTech services that are run in the Bitcoin space have essentially become as
bad as the banks that Bitcoin sought to replace, and I don't mean bank as in
"your own bank, Bitcoin (tm)" – more the kind that opportunistically exploits
you for a profit because you have no better options.

Worst still: at least actual banks tend to have some amount of oversight in
how they're run, with some level of recoverability if something goes wrong.
With centralized, cryptocurrency FinTech the operator is essentially saying to
a crowd of hackers how much semi-untraceable, pseudo-anonymous assets they
have to irrevocably steal and since anyone can start a FinTech company based
on blockchains -- we've even had some companies that were run by people barely
out of high school. Truly, the fact that no one even questions this as a
security model for FinTech in the Bitcoin space is absurd. But they don't:
which is why its easy for me to predict at least 5 major FinTech hacks in the
Bitcoin space for 2017. I'll update this post when they happen.

~~~
awt
That a decentralized currency is a good idea does not necessarily imply that a
decentralized market of any kind is also a good idea.

Also, there are sane people in Bitcoin. Check out the bitcoin category of
Trilema.

------
educar
I am probably in the minority here on HN but I don't completely grok bitcoin
(granted I have not put in much effort to understand it). I have asked many of
my techie friends and none of them understand it either - I follow the
Einstein (?) principle. If you cannot explain it, you probably don't
understand it.

On top of this, there is now Ethereum and DAO which are also completely
incomprehensible to me. But the reason for this comment is that I totally
blown away that there are people out there who understand it and are willing
to fund this to record levels.

The context for this comment is that I ask myself this question about products
and startups all the time. Who uses them? Why are they gaining traction and
nobody I know even knows about them let alone use them... To conclude, I find
all this bitcoin talk very motivational - not everybody needs to understand
what you are building. You just need a passionate following of people who do.

~~~
JoshTriplett
At the highest level, Bitcoin is relatively easy to understand. There's a lot
of additional detail in the communications algorithm and the programmable
extensibility embedded in transactions (for instance, how multi-
party/escrow/conditional transactions work). But the concept of a proof-of-
work-based blockchain can be explained rather briefly.

As a miner, you have access to a pile of transactions that people want to
resolve. Take enough of those transactions to fill up a block, based on some
rules you want to follow (e.g. prioritize transactions that pay a transaction
fee, which you claim; prioritize transactions that have been waiting longer).
Add a transaction that gives you the current consensus mining fee out of "thin
air"; that's the only place new coins get injected into the system. Include a
hash of the previous block; that's what makes it a block _chain_. Then, via
brute force computation, come up with some additional data appended to the
transactions such that the double-sha256 hash of the data block (the sha256 of
a sha256 hash of the block) is smaller than a certain upper bound (determined
by the current consensus "difficulty"). Since you can assume the hash is
evenly distributed across all possible values, to compute a hash smaller than
a certain value requires brute-forcing enough hashes for one to land in that
range. This is equivalent to "find a hash that starts with a certain number of
0 bits", but "less than a certain value" allows increasing the difficulty
without doubling it.

Once you have a new block, tell other miners about it. Assuming you've
followed the "consensus" rules for difficulty, mining fee, transaction fees,
and similar, then the other miners will accept your block, and immediately
start trying to mine a new block starting from yours rather than starting from
the previous block. So, at that point, the consensus block chain includes your
block, which means all the transactions you included took place.

The rest of the complexity comes in with questions like "how do you advertise
a transaction you want to the miners", "how do miners communicate with each
other", "how does the consensus change over time", and "how can existing
clients handle new kinds of transactions that they don't natively understand".

~~~
dchuk
I mean no offense by this, but I'm in a similar boat to OP in terms of not
fully "getting" the tech of Bitcoin (despite being a very technical person)
and this explanation did not clear up anything for me. The density of
technologies and keywords and buzzwords every time someone tries to "simply"
explain Bitcoin is mind boggling.

~~~
StavrosK
People want to send money to others, so they go to their nearest accountant
and ask the latter to write their transaction down, so it's formalized. All
these accountants are in the same room and each one has a bunch of
transactions to write down, but they need to figure out how to write them down
a specific way.

When an accountant figures out how to write down the transactions he has at
the moment, he yells "HA! I got it!" and the transactions to everyone else in
the room, who goes "ugh, damnit", the accountant collects the fee from the
people whose transactions he wrote down, and the cycle begins anew.

------
lukev
I have been and remain intrigued by Ethereum, but there's one element that
always struck me as impractical.

All its advocates get very excited about all the complex automated things it
can do, which is admittedly very cool. But for the real world, I'm skeptical
that anything more complicated than a basic escrow could work. Once you're
talking about real, complex applications (like a DAO), what if there's a bug?
Even if bugs are rare, the potential implications when they do happen are so
severe that it still diminishes the value of the platform.

And the ability of members to "vote in" new code is no solution. Nobody in
their right mind is going to do that without a thorough code audit, which is a
pretty high friction interface to what is supposed to be a financial or
business instrument. It would inevitably devolve to trusting a relatively
small group of "experts", which rather defeats the point of the whole
enterprise.

Even worse, voting on updates is broken _by design_... a majority of
participants could collectively decide to screw over a minority and simply
steal their assets by voting in a code update.

~~~
newjersey
> Even worse, voting on updates is broken by design... a majority of
> participants could collectively decide to screw over a minority and simply
> steal their assets by voting in a code update.

Such is life though. It is not just ethereum. Bitcoin cannot survive a
majority attack. In the long run, I can't see how even a government can
survive a majority attack. One obvious solution to the problem is to try to
prevent any one bloc from gaining majority status. I'm sure there are more
elaborate solutions though and if any of them is elegant, I'd like to learn
about it.

~~~
lukev
Governments might not be immune from a sustained majority attack, but that's
the point... governments are large entities that (hopefully) operate at large
timescales and have some degree of inertia and stability.

In turn, governments provide recourse and security for smaller, constituent
systems (companies and individuals.) As long as the government remains intact
(or intact enough), it can be a an arbiter and enforcer between the smaller
entities (i.e, the entire legal system).

With Ethereum, _there is no arbiter_. There is only the exact code of the
contract. It is _entirely possible_ that the code is flawed in a way that is
disadvantageous to _all_ parties, such that they cannot change it, or that a
mistake was made that allows one or more parties to act in violation of the
"spirit" of the agreement.

Of course, some of these situations can be foreseen and accounted for (exit
clauses, consensus code updates, etc.) But not _everything_ can be foreseen,
and the irony is that the more situations are explicitly accommodated for, the
more surface area there will be for difficult-to-detect edge cases.

The legal system has built in resiliency, due to multiple fallback layers of
(hopefully) impartial arbiters to add a layer of empathy and judgement on top
of the strict letter of the law. It's not perfect, but it works.

Unless Ethereum can find some equivalent, I cannot see it taking over anything
but certain types of very well-understood transactions. Don't get me wrong,
that still has value... automated escrow, options & futures trading (etc.) is
huge. But until this problem is solved, effective DAOs are a pipe dream.

~~~
woah
Computer programming is so error prone, it's hard to see how it could ever be
used for critical applications.

~~~
timboslice
Can't tell if this is sarcasm or not

~~~
curious_guy_2
Not

------
drpancake
I'm convinced that Ethereum is going to suffer the same fate as Bitcoin.
Here's the cycle that will eventually play out:

(1) Relatively interesting technological breakthrough comes along. Promising
but questionable applicability to real-world problems.

(2) It attracts early, idealistic developers, some of whom are genuinely
talented. Rational debate is still possible at this point.

(3) The hype builds up and in turn attracts various groups: raging anarcho-
capitalists, developers of a mildly libertarian bent, get-rich-quick
enthusiasts and teenagers. The price continually bubbles and spikes as fresh
money comes in from speculators betting on the hype.

(4) The spiking price is misinterpreted as a signal that the technology is
going mainstream and is ready to be applied to real-world problems. Lots of
half-baked apps and companies are built. No actual traction is found (with the
notable exception of the dark web).

(5) Repeat (3) and (4) until the press and wider community no longer believe
the hype. Possibly rebrand to 'blockchains' or some other less toxic noun.

~~~
daoland
You've made a few jumps of imagination in there.

I'm actually convinced that Ethereum has something unique to offer
specifically to developers. Ethereum will be a common ground for a lot of high
value code and data between organizations, people, etc. A lot is possible in a
few lines of solidity, I've seen devs create working decentralized exchanges
in a few weeks. As you can see, the use of Ether here is just to ensure that
the code a user wants to execute on the EVM gets executed. Users need not have
to use it as a currency.

Ether's primary purpose is to secure the Ethereum network, not to be used as a
"currency" like Bitcoin. If someone gave me an ether every time the Ethereum
devs keep emphasizing this, I'd be very rich by now. If Bitcoin did a great
job at transferring value in the network without being slow and full all the
time, all the ancaps would have stuck to Bitcoin and would have left us in
peace.

The Bitcoin challenger is not Ethereum itself, it will be services like Maker
that are currently being built on top of Ethereum. Ether purpose is to secure
Ethereum so that services like Maker don't have to worry about the security
and scalability of the underlying blockchain and can focus on the EVM
abstraction and above.

~~~
drpancake
It's too late. Ether was already hijacked to become a trading instrument.

~~~
daoland
Only in the short term, It is well within the realm of possibility for a
purpose built token without counterparty risk like Ether to emerge on the
Ethereum network.

------
nemild
For anyone interested in getting started with Solidity in 20-30 mins, one of
the languages that Ethereum contracts can be coded in (some analogize this
language to JS, the other language is Serpent which is compared to Python),
you can see a quick primer I put together:

[https://learnxinyminutes.com/docs/solidity/](https://learnxinyminutes.com/docs/solidity/)

You can test your code here:

[https://ethereum.github.io/browser-
solidity/#version=soljson...](https://ethereum.github.io/browser-
solidity/#version=soljson-latest.js)

~~~
Hortinstein
thanks for putting this together, I came here looking for exactly this.

------
daoland
A few common misconceptions that I'd like to correct,

Ether is not in the currency business. It was emphasized multiple times by the
devs themselves. It so happens that Bitcoin is so slow and full that users are
flocking to use Ether as a currency even when Ether's inflation is uncertain.
This is an open network, we cant stop people from using it the way they want
it to.

Ethereum is not being built for financial apps only. It provides a VM that can
run code and store data. This can be used for any purpose that requires code
to be executed and data fields to be changed atomically in a secure way, the
users need to pay a fraction of a cent worth of Ether to run this code. That
means they dont have to be invested in Ether to be able to derive value from
the Ethereum network. You have to be invested heavily in Bitcoin to get value
from the Bitcoin network, especially after Bitcoin payments are such a dud.
Please dont rush to type that Steam started accepting Bitcoin recently.

Ether is not competition to Bitcoin. Bitcoin killer will be a new token on the
Ethereum network. There could also be a AirBnb killer and a Uber killer built
on the network too. These are companies that pride on being leaders in sectors
by writing only code. What if this code and data can exist as commons in the
Ethereum network that is global and has 100% uptime. Users pay a fraction of
cent worth of Ether to run transactions instead of a percentage cut. And these
users will transfer money between themselves for these transactions with the
token that killed Bitcoin, not Ether. It will take a while to kickstart a
reputation layer on Ethereum network but these usecases are a real
possibility.

There is a very good chance that these new tokens created on the Ethereum
network will surpass the total market cap of Ether very soon :O

~~~
DennisP
Ether's long-term inflation is uncertain, but its _maximum_ inflation is
known. It's 26% of the crowdsale amount per year, or about 22% of the initial
supply (so as the supply increases, the rate decreases). The devs have
reserved the right to lower the inflation rate when they transition to proof
of stake, but they've guaranteed not to increase it. That guarantee is
enforced by the community just like it is on Bitcoin, plus it's actually
written in the legal documents for the crowdsale.

Right now the ether inflation rate is under 20%. Bitcoin's inflation when it
had a $1 billion market cap was 33%.

As a currency, ether works just as well as bitcoin, but with higher throughput
and much less latency.

------
beaner
I agree with the overall sentiment of the piece. The one thing I disagree on
is the perception that there should be "killer apps" for bitcoin. I think this
perspective views Bitcoin as the the technological breakthrough, looking for
apps to be built on top of it. But really the technology is the Blockchain,
and Bitcoin (decentralized currency) is the "killer app".

Ethereum is different because in addition to being a currency, it is also a
platform. It needs "killer apps" to differentiate itself, otherwise it's just
a currency, and can be discarded like litecoin and doge. I think Fred has
given us reason to believe it will succeed in providing the ability for killer
apps to be built on top of it, but we still have to see. None exist yet. The
DAO has yet to do anything real.

Maybe just a detail, but it seemed like an important one to me.

~~~
daoland
Ether is not a currency like Bitcoin. Ethereum is a pure platform play that
enables multiple Bitcoin competitors to rapidly experiment and find the
product-market fit of crypto-currencies in the real world.

I believe there can be a crypto-currency with better properties than Bitcoin.

Once one of these Ethereum apps finds their hockey stick, Ether will continue
to play its role in securing the Ethereum network for this killer app which
removes the need for both Ether and Bitcoin to play the role of crypto-
currencies.

While you are distracted by one DAO, there are many other DAOs successfully in
operation on the Ethereum network. There is only one that made a lot of noise
because it had to, the others are silently building their products after
raising money from a passionate set of users.

~~~
dharma1
What other DAOs are there and how much have they raised?

The thing with tokens is that because Ethereum is so young, the companies
being built on top of it are by default super early stage, with no real
traction or product market fit to show. So anyone buying tokens at this stage
because they want a shared revenue stream of the companies profits, is making
very risky bets which have a high likelihood of failure (on average).

I think it's the lure of secondary markets for DAOs that is behind a lot of
the interest in, at least, The DAO - people buy the tokens early because there
is anticipation of the token prices going up relatively soon after the
crowdsale, fear of missing out etc.

I think a lot of it is driven by speculative motives rather than long term
investment in Ethereum companies themselves.

~~~
daoland
Yes, the bets are risky. It is an opportunity to rethink your portfolio like a
VC where few investments could return 10x easily and a lot will lose the
capital allocated to them.

I think this is better than buying IPO stock in public markets which are so
bad these days that only zombie companies are being listed and investors are
being screwed very regularly.

~~~
dharma1
Except you don't own equity - just a share of potential revenue. Most VC
returns come from exits - here you get none if the company is later sold

~~~
EdHominem
You can create whatever structure you want. There's no reason (other than that
it doesn't make good financial sense) that you couldn't sell special preferred
tokens, etc.

------
nickysielicki
> Ethereum may attempt to move to proof of stake. [...] I believe this risk is
> manageable because there would be extensive testing beforehand.

This is a really big cop-out. I follow Ethereum pretty closely and I believe
that the biggest threat to Ethereum's future is an attempt to move to proof-
of-stake.

If you spend a bit of time in the ethereum community you'll find that everyone
is _very_ excited to reap the benefits for getting-in-early on ethereum, and
they're very excited for the eventual switch to proof-of-stake so that they
can collect money. Everyone who is invested in Ethereum is doing so in order
to stake. This is terrible for the community, because who is ever going to get
excited to invest in meme-powered internet money that they _already_ missed
the boat on?

What kind of testing is able to account for that kind of social effect? (Or
maybe I'm just a stupid mathless Austrian.) Anyhow, that's just to talk about
the social effects, and I think there are many technical problems with proof-
of-stake beyond that... Let's not forget that there hasn't been a single
successful PoS cryptosystem yet.

I also think that there are big problems looming within the EVM, and to give
the article credit, that's mentioned and represented fairly in the article.
(forward search for 'Bit-thereum' in OP)

I'm prepared to be wrong about Ethereum, even excited at the prospect. but if
I was invested in a cryptocurrency it would be Bitcoin. I think that there are
currency wars looming and I think Bitcoin stands to gain a lot from that.
Bitcoin's big problems are overstated and will be solved in due time. It just
needs to live past the death of Moore's law.

~~~
vintermann
Have the problems with proof of stake been solved? As I recall, there was an
argument that proof of stake didn't prevent forks very well, since people
could hedge their bets and stake for both ends of the fork, and there would be
no downside to doing so.

~~~
DennisP
That's the "nothing at stake" problem. The Ethereum team claims to have solved
it.

I'm no expert but the basic idea is that stakers bet on which block will
become part of the chain, and the block that does is the one that gets the
most bets. Stakers start with small bets and progress to larger ones as the
bets converge. If you make a large bet on a block that doesn't get included,
you can lose substantial stake.

What makes this possible is GHOST, which makes the blockchain aware of forks
instead of just the final linear chain. (That's already part of Ethereum, and
is what enables the 15 second block times.)

There's more information at blog.ethereum.org.

------
nemild
Here are some general thoughts for those interested more in this topic:

\- Ethereum and Bitcoin both let you lock up the cryptocurrency and provide a
series of rules that are required before the money can be unlocked; this has a
lot of power, because unlocking can be done by a single party (a standard
payment use case), but also by a series of other people/groups or external
events (currency price, weather, etc)

\- The rules for unlocking cover a wide gamut from requiring several users to
agree (e.g., multisig like a multi key safe deposit box to voting for a
dividend), to requiring an external action to happen (e.g., unlocking if the
temp is below a certain amount on a given day for weather based insurance
contract); these actions replicate many current real world interactions like
an insurance contract, a voting mechanism for corporate governance, and escrow
(just to name a few); the OP has also written about Distributed Autonomous
Orgs (DAOs) on TechCrunch

\- A key benefit for letting these be programmatic is that they can cut out a
middle party (or at least reduce the dependence on this middle party with a
network of oracles) - cutting costs and reducing dependence on this third
party

\- Some key value props where this could help in the early days:

1) cross-country transactions, as the contract language is international
(legal systems can be hard to enforce across geographies)

2) Small amount transactions (as fixed costs may be high in a real world
contract today for each party)

3) contracts where middlemen have monopoly-based pricing

4) contracts where the middle parties have a low degree of trust (more likely
today, certain markets don't exist due to this reason)

5) Contracts in a country where legal systems are weak/expensive

\- For Bitcoin vs. Ethereum, many Bitcoin enthusiasts will argue that Bitcoin
provides a similar functionality, but Ethereum's high level languages are
generally much easier to write (I'll likely get some push back by partisans,
but Ethereum's Serpent and Solidity might be closer to JS/Python/C, while
Bitcoin's Forth-inspired/stack-based language is closer to a higher-level
assembly); there are also some specific differences like Bitcoin requires all
or nothing unlocking, is not turing complete, has restrictions on the
transaction byte size, and has some miners enforce transactions that only have
a few of the contract op codes, not all; still, some Bitcoin devs (like Gavin)
note that the surface area for security holes is significantly larger with
Ethereum

(See my other post for an introduction to the language)

~~~
daoland
One key difference is Ethereum is not being built only for writing code for
monetary transactions using Ether.

Ethereum is being built to store and run code in the EVM. Ether main use is
only to pay for gas so that any user of the network can execute the code.
Although in Bitcoin there is no point in writing code other than encode
conditions upon which monetary transfers can be done, this isn't Etheruem's
main goal.

An example of a non-monetary use case is - A concert ticket issuer could issue
tickets on the Ethereum network. When users want to resell, they need not rely
on a re-seller and instead can do a direct exchange on a decentralized
exchange. They will pay a few cents worth of Ether as fees to run code that
triggers this exchange to get the guarantee that the tickets are not
counterfeit. After a quick confirmation the ownership of the tickets is
updated on the blockchain. The exchange of money between these users can be in
USD itself directly without any conversions to Ether.

It is non-monetary consumer use cases like these that drives the Ethereum team
to bring the transaction confirmation times to the current 15 seconds and even
lower in the near future.

~~~
DennisP
In practice I wouldn't say that's ether's main use. If you add up the total
gas fees so far, it'll probably amount to less than the $150 million in ether
raised for TheDAO, the $5.5 million raised for Digix, etc. And if you look at
the code samples on ethereum.org, one is for a crowdfunding app that raises
funds in ether.

And of course, if you're paying miners with ether, then ether better be a
functioning currency or it's a worthless payment.

You're certainly right that Ethereum has lots of uses beyond simple value
transfer, but if you want to transfer USD instead of ether, you need to trust
someone to back tokens with USD, and trust governments not to shut them down
over KYC issues.

~~~
daoland
The devs are so badass, they constantly mention that they will allow miners to
accept any currency for gas fees if it is feasible. Most of us who have some
Ether are comfortable with this move too, ironically our hedge for this
scenario is to hold some Bitcoin.

Because, Ethereum will prosper not when Ether has a high market cap, only if
it can become robust enough to provide a decentralized platform to run code
for a variety of apps and services.

~~~
DennisP
True but they're not planning for currency-agnostic fees before they move to
proof of stake, which will require ether for staking.

It might not be a done deal, either. A few weeks ago Vlad Zamfir, the lead
researcher for PoS, tweeted that he thought agnostic fees were a dumb idea,
because they'd be too much trouble for miners.

A lot of contracts are easier to write if you assume a single currency. If
you're doing that you have to pick one, and ether seems like the obvious
choice.

I mostly agree with your last sentence but a high market cap doesn't reduce
Ethereum's robustness either; in fact it makes it more secure.

------
zmanian
Ethereum is an cryptocurrency retailer and exchange platform. Coinbase should
support cryptocurrencies where there is customer demand and backed by credible
technical teams. Bitcoin and Ethereum both meet that criteria.

I wish Coinbase had a stronger set of technical advisors. Fred and Brian seem
to rarely meet with the engineering and research community. Charlie Lee is
pretty strongly on crytocurrency technology but just one person.

------
current_call
This article is FUD, but then so is this post. People on both sides have huge
incentives. And don't be deluded into thinking there aren't sides. The wealth
at stake and the ability to dodge banks makes it impossible to be deeply
invested in this and not have an agenda.

Here are the paragraphs where I thought the FUD was most obvious. Worth
looking over.

 _Developer mindshare is the most important thing to have in digital currency.
The only reason these networks (Bitcoin, Ethereum) and their tokens (bitcoin,
ether) have value is because there is a future expectation that people will
want to acquire those tokens to use the network. And developers create the
applications which drive that demand. Without a reason to use the network,
both the network and its currency are worth nothing._

 _In contrast, Bitcoin has had a leadership vacuum since Gavin Andresen
stepped aside after other core developers did not get on board with his (in my
opinion rational and convincing) arguments to increase the block size. “Core
developers” as they now stand are also relatively fragmented._

 _Beyond a leadership vacuum, Bitcoin’s “leadership” is less clear and toxic.
Greg Maxwell, technical leader of Blockstream which employs a solid chunk of
core developers, recently referred to other core developers who were working
with miners on a block size compromise as “well meaning dips_ __s.” A second
discussion board needed to form on reddit, /r/btc, because of censorship on
the original /r/bitcoin. The content on the Bitcoin discussion boards feels
like squabbling while Ethereum’s is talking about relevant issues and new
ideas. In summary, Ethereum leadership (and as a result its community) is
moving forward while things need to get worse before they can get better in
Bitcoin.*

 _What is very real, though, is the possibility that Ethereum blows past
Bitcoin entirely. There is nothing that Bitcoin can do which Ethereum can’t.
While Ethereum is less battle tested, it is moving faster, has better
leadership, and has more developer mindshare. Developers → apps → users →
network success. First mover advantage is challenging to overcome, but at
current pace, it’s conceivable._

Also, I still don't understand why I'd want a programming language in my
currency.

~~~
pmorici
You might disagree with his viewpoint but that isn't FUD. This is a very even
handed description of what is going on.

~~~
toomim
Agreed. This article projects no actual Fear, Uncertainty, Doubt, so it's not
FUD.

~~~
current_call
Fear of being left behind. Uncertainty about the future of Bitcoin. Doubt in
the community.

------
tommynicholas
Everyone is 100% allowed to and encouraged to change their mind, but it's no
surprise that this is penned by Fred not Brian given Brian's quite firm stance
on non-btc digital currencies ~ a year ago. I felt it was out of line at the
time, although his comment (which mostly mentioned Ripple and altcoins) has
turned out technically to be true, the idea that innovation in digital
currencies was "done" and Bitcoin needed to be the focus was pretty crazy.

Ethereum is exciting - my dad, a lawyer who doesn't know you can use the
internet at our house, is excited about it. It makes sense how you would use
it. I hope it continues up and to the right!

~~~
volker48
I think people get excited because they see the word contract and they know
what that word means. In the case of Ethereum it probably doesn't mean what
they think since smart contracts in Ethereum are a programming language.

~~~
tlrobinson
A non-smart contract is just written in a more ambiguous programming language
that needs to be interpreted by $500/hour lawyers instead of CPUs.

------
pithic
Might Fred Ehrsam have some personal interest in Etherium, being a former
Goldman Sachs trader (Etherium having been co-founded by Goldman Sachs alum
Joseph Lubin)?

~~~
wyck
More likely Coinbase just started accepting ethereum trades because bitcoin is
stalling and 2-3 other strong platforms(aka competitors) already offer it.

His basic point was related to bitcoin being not great "beyond store of value
and speculation.", and how etherium is magically going to avoid that with
killer apps.... sure...that is bubble speak for solving problems that don't
actually exist.

~~~
billions
I think you hit the nail on the head: he has a vested interest and ethereum
presents a runway for coinbase.

IMO Bitcoin's problem, as depicted by this thread, is complexity, which
ethereum adds more of instead of less. Make money work first, then create
specialized verticals after.

------
kem
So... honestly asking here, but why isn't the blockchain length a problem in
the long run? Whenever I've read about this there's a bunch of handwaving and
change of subject, but I admit I've not read that much.

~~~
zaphar
Nothing about the merkle tree that blockchains are built on prevents you from
truncating the chain in certain circumstances. The truncated piece can still
be verified against an un-truncated chain for auditing purposes. So it would
be possible for a smaller section of the network to keep the full chain while
a larger segment of the network can keep truncated chains of a smaller size.

You can configure the allowable size as well so any particular node on the
network can decide how much of the chain they prefer to keep around.

------
aakilfernandes
Glad to see Coinbase moving in this direction. I'm hoping they'll become a
consumer friendly portal for the (hopefully many) assets that will trade on
Ethereum.

------
bunkydoo
Ethereum is definitely cool, but I stand by Bitcoin as the best solution for a
"public sector" crypto

------
Cyph0n
I'm new to Bitcoin development and cryptocurrencies in general. Can anyone
give a quick intro to Ethereum's scripting system and why it's such a big
deal?

~~~
aakilfernandes
I'm not an expert on Bitcoin's scripting language, but here's a few main
takeaways

* Ethereum allows shared state between transactions, Bitcoin doesn't. That means one application can state "The price of Eth is $10USD" and a totally unrelated application can reference that value. The result is that each application provides an API that all other applications can call.

* Both Bitcoin and Ethereum have a stack based scripting language. However Ethereum also has a higher level language that compiles to the stack based language. That means you can right reasonably readable code without OP codes. Functional program is so much mentally easier than writing a stack

* Ethereum (unlike Bitcoin) is Turing complete. It can have code that loops and recurses based on the state of the chain

~~~
PeCaN
> Ethereum (unlike Bitcoin) is Turing complete. It can have code that loops
> and recurses based on the state of the chain

Yikes. Turing-completeness is the last thing I want in a contract language.
These things should be _provable_ and _total_. Allowing arbitrary computation
opens up a whole new can of worms.

~~~
cantankerous
This was my first reaction. Why does a contract language need to be Turing
Complete? Trustless contracts + Turing tarpits seems like a big turn off to
me.

------
Animats
Has DAO really raised $150M, or is that just the market cap of a pre-mined
cryptocurrency after some limited buy-in?

~~~
nadaviv
The DAO had $150m worth of ETH exchanged for DAO tokens "invested" in it.

I say "invested" because there is no actual investment with "The DAO".
"Investors" are free to withdraw their funding back at any point before a
proposal voting takes place. This is basically a risk-free proposition -
"invest" your funding now to join on the buzz train, and take your money back
at any point if you don't like the proposals being proposed. A majority vote
within "The DAO" cannot actually vote for an investment with the entire
funding available for "The DAO".

Technically speaking, until after some proposal wins a majority vote, no money
actually changes hands... the investors are still in full control of their
money and should still be considered the owners of it - not "The DAO".

For this reason, I think that calling this "the biggest crowd-funding ever" is
incredibly misleading. There is no commitment and no risk, unlike how
crowdfunding usually works.

~~~
reddytowns
It's not as simple as you make out. In order to get their ether out they need
to go through a complex process that takes 48 days:

[https://daowiki.atlassian.net/wiki/display/DAO/Step-by-
Step%...](https://daowiki.atlassian.net/wiki/display/DAO/Step-by-
Step%3A+Splitting+the+DAO)

I think a large portion of the investors would be unwilling to do this and
simply sell their The DAO tokens on an exchange, thereby keeping their
ethereum locked up in The DAO

~~~
nadaviv
I was unaware of the 48 days delay. Thanks for the link.

So, there is some risk in terms of temporarily lost liquidity, but I would
still stay that comparing this to a traditional crowdfunding where investors
actually lose control over their funds is nonsensical.

------
anonbanker
Arcade City[0] created an Uber-killer in Ethereum, and shut it down, because
the rocket ship took off too fast.

Ethereum enables the killing of giant-killers.

0\. [http://arcade.city](http://arcade.city)

~~~
dharma1
I really don't see Ethereum killing Uber or AirBnB, but I'd be happy to be
proven wrong.

The reason people use Uber or AirBnB is because of

1) trust

2) network effects (you need a LOT of users for these things to be useful)

3) great, fast, simple UX

None of which Ethereum or Ethereum companies have yet, and even if Ethereum
becomes popular, Uber clones on ETH face the same uphill battle as any other
company trying to take on Uber.

It doesn't really matter for the average user what the underlying tech is, if
it's powered by a decentralised cryptocurrency or not.

------
mrfusion
I got excited and installed an etherum wallet. I transferred two BTC to it but
now my etherum Wallet says my balance is two ether!

That sucks I'm out 900$ on this thing. :-(. Any ideas?

~~~
shawabawa3
Are you serious? I hope not.

Bitcoin and Ethereum are not stored on the same blockchain and are not
compatible or directly convertible.

Your only chance of getting the bitcoins back is to try to create the same
wallet address on the bitcoin network (I'm not sure if the backup seed strings
are compatible, may not be possible)

~~~
mrfusion
I really don't understand how it happened. I used shapeshift.io. I put a
ticket in with them at least. Waiting to hear back.

~~~
shawabawa3
Ah it sounded like you just tried to transfer bitcoin straight to the ether
account.

Hope their support sorts it out for you

------
miseg
Is Ethereum a "dangerous" technology to play with? With regards to contracts
that might be deemed illegal.

------
andrewfromx
i re-read [http://techcrunch.com/2016/05/16/the-tao-of-the-dao-or-
how-t...](http://techcrunch.com/2016/05/16/the-tao-of-the-dao-or-how-the-
autonomous-corporation-is-already-here/) to brush up on DAO before reading
this one.

------
melvinmt
What a coincidence, I just bought ETH today with BTC from my Coinbase account.

Does this mean I can hold ETH in a Coinbase wallet soon?

~~~
adrianmacneil
You can hold ETH in a Coinbase exchange account today. Support in their
consumer wallet is coming in the next few months.

------
_pmf_
Bitcoin-Scammers need a new playing field; that's how I read everything
related to crypto currencies now.

------
smaili
Are there any exchanges right now that allow purchasing of Ethereum?

~~~
jarsin
gemini, coinbase exchange (gdax), kraken, poloniex, etc

First 3 allow direct purschas with USD

~~~
pYQAJ6Zm
Kraken also carries ETH/EUR, with low SEPA fees. Quite handy.

------
aws_ls
I respect Ethereum project and people behind it, but am not convinced.

For loops: I am tired of seeing _Turing complete_ , to mean just _for loops_ ,
I thought, HN crowd busts jargon, so I am just going to say _for loops_. I
think Bitcoin makes minimal use of the resources on the Blockchain, hence the
minimalistic script, which can be used for multi-sig as a condition to move
coins. Which the creators felt is sufficient, and the actual _contract_ could
live (run) outside. Now imagine if there are 1000 Dapps (distributed apps in
Ethereum world) running and all of them have for loops. Now for every block
which is written, it will have the overhead to run all these for loops. And
each of these for loops are going to run on each of the full nodes. That is
the ones which are trying to mine a block. I think, this is a huge overhead.
As if PoW based mining is not a computing burden already.

I know they are exploring PoS for mining. But I think PoS is better for closed
Blockchains, with limited stake holders. Example the settlement layer which
the Big Banks are exploring using a closed Blockchain, obviously can do with
PoS as all blocks can be signed by all stake holders.

Dapp: I don't clearly understand why Dapps need to live on the Blockchain. As
there core logic is bound to be bloated, and should live outside the
Blockchain, to conserve resources. Bitcoin being a single app on the
Blockchain i.e a crypto currency app, is facing scaling issues. Imagine a
diverse range of Dapps all living on the Blockchain!

Scaling: Admittedly there is a dispute going on in Bitcoin land over scaling.
And I have been gobbling up points on all sides for months now. And IMHO the
issue is very complicated. When I started out, I shared the view point that
they should increase the block size. But, I don't know, recently, I am
beginning to see the point of the core developers. I see merits in the
argument of decentralized nature being preserved. Also attempts like Seg-Wit
(again note they are pushing things outside the block, again making it as
minimal as possible, contrary to the Dapp philosophy).

Look at it this way, if Ethereum had come first, Bitcoin would be a single
Dapp on it. And with all its problems. Ethereum is just out, and most likely
it will evolve in the direction of the first successful Dapp. As of now, IMHO,
its an idealistic platform in search of a real (d)App. No disrespect. I trust
Butarin & co are a sincere bunch of guys, but they have a long road ahead
compared to Bitcoin.

Not a ponzi scheme: Lastly, I really hate to see a lot of folks casually
dismissing Bitcoin as a ponzi scheme. Kindly note that its creator has not
moved a single coin. The second guy who joined him has passed away. And I
think, Bitcoin has inherited the philosophy and spirit of its founder(s?) and
early devs, who had no idea what they are getting into. And were mainly doing
it to _finally_ have a successful crypto currency, after many failed attempts.

So overall, I don't buy the points of the Coinbase co-founder. He definitely
makes some good points. But IMHO he gets a lot of it wrong, and based on
presumptions (e.g. the world needs Dapps running on Blockchains), only some of
which I have explained above.

Edit: Typos & minor rephrase

------
nameless912
This is good for bitcoin.

