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The Problem with Ethereum

tomerstrolight.medium.com

141–150 of 321 posts

Re: The Problem with Ethereum

#141

Seems like one of the core arguments of this is that the the core devs have pushed the difficulty bomb multiple times because they've missed their original timelines for switching to PoS without any repercussions. It seems to me that this is actually the correct thing to do. I'd rather the core devs take their time and iron out the issues instead of being incentivized to play fast and loose with a system that manages…

But then you don't have time bomb any more, is the point. And you don't have code is law any more.

If you will hard fork every time it's convenient, you don't have anything stable.

If they did it once, that would be one thing. But now it's happening semi regularly.

Difficulty bomb is pretty much a marketing lie by now.

Re: The Problem with Ethereum

#142
bitcoin maximalism is the worst. wealth will tend to concentrate over time anyway (parteo distribution) and a "ruling class" will emerge on bitcoin. miner's voting with hash power is not the future of cryptocurrency governance. If bitcoin does not evolve to allow this effectively it will be regulated out of common use.

It's possible to experiment and build decentralized governance models directly into blockchains see e.g. https://polkadot.network/polkadot-governance/ (disclaimer not a shill I like the tech)

Re: The Problem with Ethereum

#143
Everything wrong with crypto is the notion you can make a global reserve currency impervious to special interests. It’s going to be gamed by the people at the top, they will use all and any leverage to change the code to favor them more. They will extract the value from the system like they have every other system and the easiest part is that stakeholders like you and me don’t get any vote. You can’t decouple monetary policy from governance, it just isn’t sustainable. Fiat will always be better for the stability of finance and governance bc citizens (stakeholders) perceive or have a tiny lever of control. Crypto gives you no control as a citizen, and you will become discontent with the impotence of your lawmakers to pay for laws having no sway over the system preventing them from spending. Keynes hasn’t been disproven yet and so deflationary currencies are pretty much insanity, the business people will turn every deflationary coin into their own inflationary piggy bank. History proves me right.

National governments the world over will gladly ban crypto before raising income taxes. They have backed themselves into this corner with the central banks and they won’t be able to resist its ease.

Re: The Problem with Ethereum

#144

If nearly half the text is bolded, what’s the purpose of the boldface? I feel like there’s a 51% font attack brewing within the article. Regarding the content, the class allegory itself can go the other way as well: the core developers can be thought of as the workers, the miners are the owners of means of production etc. The one point that’s relevant is the rule-making: the DAO hack hard fork has proven that Ethereu…

+1 for 51% font attack

Re: The Problem with Ethereum

#145
post #123

> Excuses are made and explanations are given as to why in this particular case an exception needs to be made to the “Code is Law” promise I really wonder what Ethereum investors think of this. A "precedent" was made. Crypto has yet to come to the real test with governments, courts and the physical laws of humans. With Bitcoin, it can be stipulated that changing the network is impossible or unheard of; but that's not…

>This is not the case of Bitcoin where the introduction of KYC for mining will require a hard-fork.

That's not true, introducing full kyc for transactions only requires 51% of hashrate.

>It doesn't help, also, that the network is being "processed" by a few elites (or pools of wealth) that could be, potentially, identified and made to obey the "government/s".

A direct opposite is true. PoW is extremely vulnerable to a government takeover. Even in the worst case, buying majority of hashpower requires few billions at most - which is well within the ability of many countries.

More practically, overwhelming majority of mining is done by registered companies in impossible to hide industrial warehouses, making them trivial to regulate and force to do kyc. Total fees are very low on bitcoin now, meaning it's more profitable to mine even empty blocks (due to kyc requirement) in a place with cheap electricity than try to mine with transactions in a place with more expensive electricity. Additionally, America is notorious for trying to enforce its jurisdiction globally, so eg. European miners processing kycless American transaction may find themselves in an American prison. Even if their countries won't extradite them, all it takes is a vacation in a wrong country. Chinese ban on mining has ironically made miners-enforced kyc a much more likely prospect. Other countries are much more likely to cooperate with America and jointly force miners to enforce kyc.

Contrary to PoW, PoS can function purely anonymously - invisible home nodes instead of big industrial warehouses. External attack by buying enough stake is impossible - there's simply not enough for sale over any realistic periods of time. Regulation is infeasible because legal escape is in theory possible even if only one tiny place in the world remains without forced kyc - there's no need for GWs of power, just some power and internet. Even in countries where it's illegal, hiding a home node is realistic - using tor, vpns and similar, making enforcement very hard.

Hopefully kyc laws on block generation aren't actually enforced as that would significantly impact adoption, however, if they were actually to happen, you are going to see bitcoin miners enforcing kyc while eth2 PoS continues unchanged.

Re: The Problem with Ethereum

#146

A lot of comments here criticise the analogies made in the post. While the criticism might be correct, I feel this is like missing the forest because of the trees.. Etherium, and most crypto-currencies for that matter, were initially made to fix a broken financial system, where banks unjustly control too much wealth, and changes the rules so that they will always control too much wealth. Etherium does not fix this, i…

> Etherium, and most crypto-currencies for that matter, were initially made to fix a broken financial system

No?

Buterin argued to the bitcoin core developers that Bitcoin and blockchain technology could benefit from other applications besides money and needed a more robust language for application development that could lead to attaching real-world assets, such as stocks and property, to the blockchain.[15]

It's like you're trying to describe Ethereum from what bitcoin fanboys have told you.

Re: The Problem with Ethereum

#147

Miners are most definitely not the working class and they're not doing any useful work. This sounds harsh because most individual miners aren't hostile in any way - but if miners were a one entity, there would be no exaggeration at all. Collectively, paying miners is like paying the mob to not destroy the system, as they are only group with the power to do so. Without miners at all attacks would be impossible. 51% at…

Miners are not doing any useful work is incorrect, they are securing the system.

Re: The Problem with Ethereum

#148

Earlier quoted context omitted.

Miners for Ethereum are incredibly profitable and benefit enormously from side-channel MEV (miner extractable value) payouts that tip them for transaction ordering. In doing so, they extract value from users making trades. In addition, a reduced issuance in crypto tends to lead to the underlying asset appreciating in value, as noted by the Bitcoin stock-to-flow model in the wake of each halvening. The "code is law" i…

My understanding of MEV was "Maximum Extractable Value", and to clarify: MEV is the process by which a miner takes advantage of their ability to view pending transactions so they can "front-run" (add their own transactions ahead of) the transactions of others, bumping up the costs for the transactions that come after theirs, thus "extracting maximum value" from their privileged position. Using the original article au…

MEV began as Miner Extractable Value, but a lot of people are adopting Maximum so that they can keep the same acronym for proof of stake.

They typically don't have the on-chain analysis or skill to reorder the transactions in the highest extractable way, so people bid for these opportunities through side channels they signal the miner to do (off-chain) based on the mempool (backlog) of transactions. Miners profit from this activity and in some cases these profits exceed the 2ETH per block issuance. The class analogy is strained and doesn't fit at all. These are only possible because Ethereum has a rich application layer (and if anyone is 'working class' it's the users, devs and dapps on the chain). But these profits more than made up for any offset in EIP1559 losses.

Re: The Problem with Ethereum

#149
post #37

> working class — a group that does the work the community needs to operate it. It would be more correct to call miners a Merchant Class. They exploit capital to make profit. Like merchants of old, they take risks that regulations (real-world and the "ruling class") won't impede profit. Hardware gets outdated quickly as mining difficulty rises, so a timely exit is not difficult - wait until cards die, or offload them…

>Hardware gets outdated quickly as mining difficulty rises, People can and still do mine Ethereum with the cards they did 5 years ago, and the difficulty is irrelevant to whether your hardware is outdated or not.

If you run your mining rig in the Ukraine with stolen electric power, yes you can do that.

Re: The Problem with Ethereum

#150
post #7

"Something here seems awfully similar to the system that crypto-currency was meant to fix. It was meant to eliminate rulers. It was meant to make everyone accountable for their actions. It was meant to reward the intelligent, the hard working and the capable, and not reward the incompetent, or the makers-yet-breakers of promises. However, this repeat of the broken old system seems to be playing out again." One respon…

(b) is why Bitcoin core development has stagnated[*]. And that's fine if people just want it to be like gold, however Ethereum doesn't aspire to not evolve. (c) I actually disagree with. Decentralized governance is a very interesting subject, and some cryptos like Tezos are governed quite decentralized in many ways. Right now I'm really confident in how Ethereum is governed, with the "old-fashioned" open-source devel…

Decentralized governance is interesting like nuclear fusion: it's 30 years away and always will be. Real governance requires somebody to take the time and effort to think about solutions to public goods problems. In other words, governance is a public good. Decentralizing it just results in underprovision.
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