I think that my position on Ethereum is clear. ETH started as a money grabbing project with very little in the way of future prospects. Since criticizing Ethereum long before it’s release, we have come a long way and ETH seems to have found its sea legs. In the last few months, I’ve been asked again and again, what I think about ETH. And I think that it should be no surprise, considering my history of stubborn resolve, that my position is the same. In fact, I would contend that all of my criticisms of Ethereum have been shown to be accurate. Amazingly, the chain’s demise is distant and as seems to be the case with blockchains, “demise” is, perhaps the wrong word. These things don’t die. They only… sort of fade away until someone somewhere revives the lost history. They fade into obscurity and disuse. But as long as there are believers and promoters, there is a chance that it will find price support somewhere. Even Sexcoin seems to have an $18,000 market cap.
In a way, the flaw of the blockchain model is that they are decentralized corporations. But there is nothing like “bankruptcy” for these corporations. While I suspect bankruptcy might look like waning emissions, it seems like these blockchains don’t explode like a dying star, but, rather, just slowly lose believers like a church filled with old people. This is also their strength.
So what was the prediction?
Boiled down the Ethereum prediction is pretty simple. A number of people have told me that they wish they hadn’t listened to me regarding Ethereum. Well, apart from the advice, don’t listen to anyone regarding your investments, BU’s predictions were never about Ethereum’s price. We regularly said that Ethereum could very easily pump. We’ve seen this again and again. Here, in crypto, stupid shit pumps all the time. Everyone here is playing a game of poker. Only so much money can be injected into any of these small systems before the injection of capital stops. Who is going to be holding the bag when that happens?
The predictions that Chris and I made are really the following:
- Ethereum’s attack surface is large and in charge. Hacks and attacks will abound because the code is shit. This seems like it’s hard to argue. Ethereum doesn’t get more robust. It proves its fragility every time it gets hacked. Each of these hacks will lead to a loss of credibility. I suspect, as the codebase gets bigger and more unmanageable, the hacks will increase in frequency. But that remains to be seen.
- Turing completeness is a red herring. There is no reason to have on-blockchain smart contracts. No one has yet found a use for these smart contracts that can’t be replicated on Bitcoin. And keeping a blockchain’s smart contract set small (nltv, for example), you don’t expose a massive surface to attackers. Bitcoin adds smart contracts to the chain like css adds functions as it finds them useful. But the language of the chain is neutered. For those new here, however, you should realize that this isn’t a limitation. Bitcoin’s openness allows the creation of “turing complete” anything off-chain. You can build a turing complete smart contract dependent on your own honesty and your remaining a going concern. The weight of smart contracts doesn’t need to be held on chain for the duration of the chains existence - especially when they are dependent on an entity to remain viable (like in the case of thse ICOs which require that the team/corporate entity continue to function in order for there to be meaning in one or another token). Ultimately, after years of touting the utility of Turing complete smart contracts, Vitalik agreed. Oh, and then there is the question of whether there is a use-case for a smart contract that is not perfectly emulative of an m of n multi-sig transaction. Ultimately, nearly every smart contract can be reduced to that.
- Code is not law. Law is law. Code is flawed and needs constant iteration. Robots.txt has been functioning with little to no bugs forever, at this point. But that’s a rare exception. As the hacks of the DAO, parity, and many others have shown, bugless code is a utopian dream. Also, security through bummed outness and loss aversion is not security. It’s a chargeback. Moreover, the ability to disenfranchise a person of their digital bearer instrument (irrespective of how they acquired it) is a terrible precedent. The DAO’s rollback, for example, was a 51% attack executed as a result of the economic majority’s admission that they did something stupid. It was touted as the most compassionate and empathetic response to the theft. In reality, it was purely selfish. Bystanders bought into the compassion and empathy arguments so that Vitalik and his cronies could get their holdings back. Everyone abandoned the “Code is law” mantra within minutes of the theft and said that they had never said it in the first place. Those of us who saw the DAO hack coming remember the claim fondly. Code is law… until that ideology becomes expensive. Then, suddenly, consensus is law.
- The project claims lack skepticism. All of Ethereum’s claims are met with a future solution that is both untested and inadvisable. Sharding is going to solve Ethereum’s scaling issues. Casper is going to solve the energy burning problems associated with POW. ASIC resistance will continue to make sure that mining is for and by the people. Vitalik promoted the DAO because he himself is unable to evaluate the ideas presented here. If you don’t believe that, you can watch Vitalik promote quantum mining, which he did before Ethereum. He is outsourcing his thinking to people near him, it would seem. So Casper… it will work because the person presenting it is someone he trusts - or trusted at one time. Sharding? There will be a day when it can simply be turned on and all scaling problems will disappear. Right? There is an insouciance to the difficulty of the problems. This handwaving should worry everyone. Because, as these things are added to Ethereum, the attack surface continues to grow. Your money is put at more and more risk.
- Ethereum isn’t innovative, it’s inadvisable. Everyone knew you could put Turing complete smart contracts on a blockchain. It’s a bad idea. It’s a bad idea for the reasons I’ve listed above. The attack surface is too great. It puts the whole chain at risk. It puts your money at risk. It adds undue weight to the chain. Honestly, Buterin is being praised for his ignorance. He’s being praised not because he did something amazing, but because he did something inadvisable. It’s astounding. How long will this inadvisable thing last? Not sure. Now that it is being co-opted by Russia.
So here’s what I think will happen going forward.
- Node centralization. Bitcoin suffers criticisms of miner centralization. I know a lot of individuals (even among core) think that this is a problem. Honestly, I’m not too worried about it. Perhaps that’s naive. But I see miners as highly mobile, and their equipment as highly portable. This may be giving Ethereum too long of a life, but presuming that Ethereum marches forward for some time, it will grow too large for individuals to have on their computers. This sharding (sharting?) proposal is a pie in the sky punt meant to distract from incompetence. Unlike government declaring, one cannot simply declare that something will be achieved in real life.
- Hacking ennui. It will become an expectation that Ethereum just explodes once or twice a year from hacks and exploits. It will become the chain of children. No one serious or interested in finance will use it. It will be regarded as a trash chain.
- The Tragedy. Ethereum is a commons. Blockchain trash is forever. The chain will become heavy with crap. Businesses that are no longer a going concern will leave their poo poo on the chain and Vitalik and his cronies will continue to say that sharding lets them maintain the chain costlessly.
- Sharding will shart. I guarantee sharding will have some hilarious attack vectors if they try it. I bet that Ethereum loses a ton of history data because some hacker will find it hilarious to destroy. This will require a hard fork or something, or something, or something to fix. Whatever the case, it will be hilarious and a lot of people will lose money.
- Shaudenfreude will be criticized but is virtuous. No one likes when people lose money. But at this point, Noah has entered the ark and closed the door after warning everyone about Ethereum’s problems.