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Seven Critiques of Ethereum According To The Creator

Seven Critiques of Ethereum According To The Creator

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Vitalik Buterin Seven critiques of Ethereum

On July 5, 2017, Vitalik Buterin answered an inquiry posted on r/ethtrader to address which Ethereum critiques merit consideration and discussion. As co-creator of Ethereum and the most visible face of the Ethereum Foundation, Buterin articulates concerns that are likely prevalent among those in the development community. In this article, I will attempt to explain Buterin’s concerns in layman’s terms.

IMO [In my opinion] the most valid criticisms of Ethereum as it currently stands are:

1. Scalability sucks; the blockchain design fundamentally relies on bottlenecks where individual nodes must process every single transaction in the entire network

From a social and technical standpoint, scalability is a major obstacle to Ethereum’s continued development. As the network grows, achieving consensus to enact significant changes will prove more difficult. Detraction by mining pools and activists alike may hinder Ethereum’s rise. From issues of size and speed to throughput limitations and gas controversies, there is no overarching solution to scalability. Instead, it’s a puzzle that will require work on many fronts – which is probably why Buterin lists this as the number one issue.

2. PoW is extremely expensive, and furthermore is fundamentally vulnerable to 51% spawn camping attacks with no effective strategy for recovering from one. Selfish mining is profitable starting at 25-33% hashpower, and 51% censorship attacks are definitely profitable.

In its simplest terms, Proof-of-Work (PoW) is the way that miners confirm transactions and enter them into a blockchain. The longer a blockchain becomes, the harder it is to alter previous transactions. However, by virtue of the way mining works, a blockchain is susceptible to a “fifty-one percent attack.” Controlling the majority of computing power in the network is akin to controlling the House or Senate in American politics. Pushing legislation (transactions) through can’t be stopped by the minority. In passing, Buterin also references the difficulty of recovering from attacks (nobody needs to be reminded of The DAO) and worries about selfish mining, an attack which would give a pool an unfair advantage and disproportionate opportunity to mine blocks.

Although PoW is due to be replaced by Proof-of-Stake (PoS), for now, the cost incurred by the Ethereum network is absurd. According to Digiconomist’s Ethereum Energy Consumption Index, the network is using approximately the same amount of electricity as Moldova (a country of 3.5 million people). From an environmental and technical standpoint, Ethereum needs to step up its game to be feasible for widespread adoption.

Lastly, “spawn camping,” which evokes video game terminology, is one of Buterin’s recently invented phrases. On Twitter, Buterin explains that spawn camping occurs when “a 51% miner cartel keeps attacking over and over again, rendering the chain useless.”

3. Privacy sucks

The desire for privacy in cryptocurrency has enabled the rise of Zcash and tumbling. In digital currency, tumbling mixes small amounts of a coin from independent pools to pay for a transaction. Imagine that you were buying an XBOX at Costco and wanted to be anonymous. If you gather $5 from each of your friends to pay, then it would be much harder for the cashier to figure out who originally wanted to buy the console – this is obviously a very watered down explanation. Nonetheless, this makes it much harder to trace the transaction’s originator.

Replying to a comment on the same thread, Buterin explains, “There’s a plan to develop a general-purpose HLL [high level language] that compiles to zk-snark verification.” Implementing a zero-knowledge protocol for Ethereum could make Zcash and tumbling services secondary, or even obsolete! Evidently, this is a development to follow closely.

4. It’s hard for regular users to hold large amounts of funds without running substantial risks of theft or loss due to theft or loss of their private keys.

If you had one irreplaceable, unique key to your house, then losing it would be devastating. Storing your valuables in your house might seem like a good idea for security purposes, but you would also need to weigh the chances that you may permanently lose access to your belongings. Cryptocurrency users face this same dilemma with wallets.

Additionally, centralized wallet providers present an attractive target for hackers, so keeping a significant amount of cryptocurrency in a single wallet is a risky proposition. While spreading your funds across several wallets can help avoid a catastrophic event, this also requires keeping track of multiple private keys. Investors need to weigh the benefits of a decentralized currency versus the absence of a third-party mediator. Ultimately, there’s no customer service department on the blockchain.

5. Economics do not encourage good “storage hygiene”; insufficient incentives for clearing storage and insufficient cost for filling it, especially for long periods of time

Blockchain storage goes beyond the scope of this article. For interested parties, I’ll direct you to Appendix G of the Ethereum yellow paper.

6. Bunch of various marginal technical inefficiencies.

On reddit, Vitalik responded directly to my request for elaboration. Fair warning, this is deeply technical.

He explains:

  • With its 256-bit values, the EVM is substantially less efficient than it could be, making it hard to implement many kinds of cryptographic primitives.
  • The trie is hexary and not binary, and there doesn’t yet exist a data format for taking advantage of the redundancy between a trie node and the fact that the hash of the node is in that node’s parent; these two things together mean that Merkle branches are ~4x longer than they need to be.
  • RLP is somewhat overcomplicated; if I could redo it I would remove the single-byte case. I’d also come up with a trie format that doesn’t use RLP to keep it simpler and easier to encode and decode.
  • The storage tree is 2-layer and not 1-layer. This makes various optimizations harder to implement and adds more edge cases.
  • The storage tree doesn’t properly let users take advantage of the fact that fetching and writing anywhere up to a few kilobytes to a database doesn’t cost that much more than fetching or writing 32 bytes. As a result, most applications take substantially more DB reads than they need to.
  • All current implementations of the state tree do an account or storage read by hopping through the tree in the DB. This makes any state reading opcode take O(log(n)) database reads when there exists a way to only make it take one.
  • Quite a few gas costs are probably still not well-optimized.
  • Not enough ability to take advantage of parallelization.

Edit: 7. It’s hard for regular users to know that contracts they are interacting with do what they say they do, and do not have accidental or malicious bugs.

Auditing code is crucial for users to trust the contracts on the Ethereum network. Buterin notes that “regular users” (or non-technical folks) often don’t know how to protect themselves. On a governmental level, that’s why the US has agencies like the FDA. Experts help make sure that complicated architecture functions like it claims to – and certify that products are safe for consumption. The newness of Ethereum, and its accompanying applications, makes it hard for non-technical folks to determine what meets a suitable standard for investment or usage.

In all, these concerns reflect thoughtful and patient leadership, qualities that will be necessary as Ethereum expands its reach. Buterin’s willingness to engage in a public forum like reddit demonstrates that he acts as a strong bridge between the technical and non-technical worlds. Continued discourse and careful discussion should allay fears and attract additional support for the network.

Source: Science of Crypto
Seven Critiques of Ethereum According To The Creator

The Bank of Canada Just Joined An Alliance to Develop Ethereum

Click here to view original web page at motherboard.vice.com

On Monday, the Enterprise Ethereum Alliance announced 86 new members that will work together to develop business applications on the Ethereum blockchain, including Toyota, Deloitte, Samsung SDS, and the National Bank of Canada.

Ethereum is an alternative to bitcoin, which still dominates the cryptocurrency world. But while bitcoin has become a haven for speculators trying to win big by trading coins, Ethereum’s promise is that its blockchain—the public ledger that records all transactions—is chiefly a platform for developing apps, powered by economic incentives. One often-floated use case for blockchains in the financial industry is as a settlement layer to instantly close transactions without middlemen.

Read More: The Bank of Canada Slipped the Konami Code Into a Bank Note Announcement

The alliance, which was founded in February of this year, is a global foundation with more than 100 members which include financial institutions like JP Morgan, Credit Suisse, and Banco Santander. Its goal is to develop business applications with Ethereum. Membership in the alliance grants organizations the ability to participate in meetings and events, as well as to make contributions to technical documents and white papers.

This isn’t the first time the Bank of Canada has dabbled in cryptocurrencies. The bank ran a pilot using an in-house digital currency to conduct interbank transactions on a blockchain in 2016, snubbing the existing bitcoin currency. However, a recent staff paper proposed ways to regulate bitcoin. Membership in the alliance is the first time the bank has indicated that it wants to have a hand in developing an existing digital currency platform itself.

Neither the National Bank of Canada nor the Enterprise Ethereum Alliance were available for comment at the time of publication.

Interest in Ethereum is growing as its boy genius creator, 23-year-old Vitalik Buterin, continues to travel the world and spread its gospel. Ethereum still might not be as valuable as bitcoin (one coin is worth over $2,000 USD at the moment, while one denomination of Ethereum, called ether, is worth $163), but it could be a whole lot more useful for banks. It was designed from the ground up to accommodate applications—called dapps, or “decentralized apps”—while bitcoin is still just a currency to many.

Joining the EEA is one more indication that the Bank of Canada is open to new technologies in the finance industry, but perhaps even more significantly, it appears to have chosen Ethereum as its horse in the race over bitcoin.

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Source: Science of Crypto
The Bank of Canada Just Joined An Alliance to Develop Ethereum

Worlds collide: JPM works with team behind anonymous crypto Zcash

Worlds collide: JPM works with team behind anonymous crypto Zcash

Click here to view original web page at www.americanbanker.com

Blockchains make strange bedfellows.

For years, Jamie Dimon has derided digital currencies. Now, his company has teamed up with the creators of one of the most prominent “altcoins” to build privacy features for the bank’s blockchain platform.

JPMorgan Chase’s partnership with Zerocoin Electronic Coin Co., announced Monday, is perhaps the most surprising alliance yet as traditional financial institutions co-opt a technology originally developed to route around them.

ZECC’s founder, Zooko Wilcox, was part of the 1990s cypherpunk movement, which sought to defend individual privacy through strong cryptography. Last year his firm released Zcash, a cryptocurrency designed to be more anonymous than bitcoin.

Just that phrase, “more anonymous than bitcoin,” might send shivers up the spines of some bank compliance officers, to say nothing of regulators. So, just to be clear: JPMorgan isn’t using Zcash. “This is solely a technology transfer agreement,” Wilcox said.

Instead, his team will use the same cryptographic techniques to add a “security layer” to Quorum, the system JPMorgan is developing to run smart contracts.

In their most basic form, blockchains allow all participants in a network to see who has done what. But that transparency has been a turn-off for financial institutions, which don’t want to tip their hands to competitors, or reveal confidential client data.

“Existing smart contract systems on replicated shared ledgers are unable to provide data privacy — transactions and smart contract state data are exposed in the clear on the replicated shared ledger,” JPMorgan said in a white paper for Quorum published in November.

Quorum was designed so that a smart contract would be visible only to the parties, not the whole network. But that, by itself, precludes the contracts from involving assets that could later be transferred to other participants in the network. “You can’t prove to Charlie that Bob is the legitimate owner of an asset while concealing that Alice was the previous legitimate owner,” Wilcox said. (“Alice and Bob” are regular characters in the hypothetical examples given by cryptographers.)

The Zcash developers plan to enable Quorum smart contracts to trade transferable, resellable tokens, through a cryptographic method called zero-knowledge proofs. These allow someone to prove that a statement is true without conveying any other information.

In the Zcash currency, for example, zero-knowledge proofs provide assurance that users are only spending money that they have without revealing on the public ledger how much they have received from or sent to others. Participants can selectively decrypt such details about their own transactions, however, making it possible to comply with audits or court orders. Otherwise, the ledger is just a list of timestamped transactions, with the senders, recipients and amounts obscured.

Applying that technology to Quorum would allow tokens (representing real-world financial assets, say, shares in Apple) to circulate throughout the network, rather than be confined to bilateral agreements between banks, without sacrificing privacy.

“By adding the zero-knowledge security layer into Quorum, we are able to explore how state of the art cryptographic privacy technology will enhance the next generation of financial services applications,” Suresh Shetty, an executive director and lead architect for JPMorgan’s Blockchain Center of Excellence, said in a press release Monday.

Dimon has famously predicted that decentralized currencies like bitcoin — which let anyone with an internet connection send money anywhere in the world without the permission of an intermediary — are doomed. According to published reports, his bank has expressly forbidden banks it does business with to work with digital currency exchanges.

“Virtual currency, where it’s called a bitcoin vs. a U.S. dollar, that’s going to be stopped,” Dimon said in 2015. “No government will ever support a virtual currency that goes around borders and doesn’t have the same controls. It’s not going to happen.”

Bitcoin vending machine next to a Chase branch in Austin, Texas, photographed March 14, 2015
Together at last?

Around that time, JPMorgan and other banks had begun to investigate the possibilities for their business of blockchain technology, which was originally developed to prevent double-spending of bitcoins. One advanced use case is smart contracts, which theoretically can cut costs in the financial system by automating much of the work done by lawyers, compliance officers, syndication desks, and others.

“Smart contracts on a replicated, shared ledger hold the promise of improving efficiency and lowering costs compared with existing enterprise systems based on duplicated business logic and consensus by reconciliation,” the bank’s Quorum white paper said.

JPMorgan participated in several of the industry alliances that are working to develop blockchain solutions for financial services, though it recently quit the R3 consortium. The bank decided to model Quorum on another open-source platform, the bitcoin rival Ethereum.

While Zcash started as a “fork,” or modified version, of bitcoin, Wilcox’s company has joined the Enterprise Ethereum Alliance, of which JPMorgan is also a member.

Wilcox said the Zcash currency has served as a showcase of sorts for the technology his company has been pitching to enterprises.

“We can point to the thing running live in the wild as proof that it works and we can deliver,” he said.

Source: Science of Crypto
Worlds collide: JPM works with team behind anonymous crypto Zcash

Three Services That Aim to Create Bitcoin Professionals and Experts

Three Services That Aim to Create Bitcoin Professionals and Experts

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professionals
Forum

Bitcoin can be a very technical subject, and oftentimes people have to find various resources online to educate themselves. However, there are a few organizations that instruct cryptocurrency enthusiasts through training and curriculum in order to edify the growing field of bitcoin professionals.

Also read: The Case for Using mBTC Over BTC Denominations

Education and Professional Expertise Helps the Growing Bitcoin Economy Flourish

As the bitcoin economy grows, there are many people looking to learn about the bitcoin protocol and the growing cryptocurrency ecosystem. A leading-edge network of professionals that understand the technology is needed to bolster the innovative technology into the future. In 2017, there are few ways an individual can become a certified bitcoin professional to advance their knowledge and careers.

Three Online Academic Bitcoin Courses

The Cryptocurrency Certification Consortium

Three Services That Aim to Create Bitcoin Professionals and Experts

One educational program called the Cryptocurrency Certification Consortium (C4) teaches students how to be certified bitcoin specialists. C4 has three types of courses that enable people to become either a Certified Bitcoin Professional (CBP), a Certified Bitcoin Expert, and a Certified Ethereum Developer.

A graduating CBP claims to give an individual a significant grasp at understanding the bitcoin protocol, transactions, and network operation. “CBPs are able to apply Bitcoin technology to their professional area of expertise and understand privacy aspects, double-spending, and other issues that relate to the currency,” explains the educational consortium. The cost to become a CBP involves two years of study at the cost of $95 for the course and a $30 renewal fee.

A CBX gives an individual “expert-level knowledge” about bitcoin, says the consortium. C4 also claims the certification gives a person the ability to develop blockchain applications as well. “CBXes understand how peers communicate on the Bitcoin network, how transactions are crafted at the byte level and how Bitcoin scripts can be written to customize the behavior of transactions,” C4 details. This course is three years long but is not yet available to students.

The consortium is backed by a board of directors which include Andreas M. Antonopoulos, Vitalik Buterin, and Michael Perklin. Furthermore, C4 has well-known advisers such as Ethereum co-founder Charles Hoskinson, Director of the Bitcoin Education Project, Peter Todd, Bitcoin Core Developer, and Steve Dakh, author of Kryptokit and Rushwallet.

Digital Currency Council

Three Services That Aim to Create Bitcoin Professionals and Experts

The Digital Currency Council (DCC) was created in 2014 in New York by David Berger, the school’s founder and CEO. DCC claims to have over 1500 members from 90 countries worldwide utilizing the organization’s digital currency training, and certification. The group calls itself an “association of professionals in the digital currency economy.”

The DCC Professional Certification Training Program is shorter than the two-year consortium course with only a seven-hour online program. However, the course is far more expensive costing $299 for students taking the final exam. The DCC advisory faculty covers the six sections called “core competencies” which include cryptocurrency technical underpinnings, monetary implications, practical use, bitcoin’s ecosystem, accounting, and legal subjects. DCC also offers a self-assessment test to see if you qualify for the certification training program. The school is also backed by Barry Silbert’s Digital Currency Group and the Silicon Valley accelerator 500 Startups.

“The DCC Certification, like other professional certifications, allows us to hold professionals who are advising clients to a higher standard, and provide a benchmark for evaluating skill and professional value,” Barry Silbert, CEO of the Digital Currency Group explains on the DCC website.

Coursera: Bitcoin and Cryptocurrency Technologies

Three Services That Aim to Create Bitcoin Professionals and Experts

Princeton’s Coursera computer science class called “Bitcoin and Cryptocurrency Technologies” is a free course from Princeton University. Assistant Professor Arvind Narayanan instructs the class on a variety of lessons that cover the innovative technology at a “technical level.” The next class begins on May 15 and begins to discuss cryptographic building blocks and introduces the concept of cryptocurrency.

“After this course, you’ll know everything you need to be able to separate fact from fiction when reading claims about Bitcoin and other cryptocurrencies,” explains the Princeton Coursera website. “You’ll have the conceptual foundations you need to engineer secure software that interacts with the Bitcoin network. And you’ll be able to integrate ideas from Bitcoin in your own projects.”

The Coursera class is eleven weeks long discussing subjects like decentralization, the mechanics of bitcoin, regulation, mining, altcoins, and more. Every week the course offers an interactive textbook, pre-recorded videos, quizzes, and projects. Furthermore, students can connect with other peers and converse about course material.

Furthering Bitcoin Careers and Creating Crypto-Professionals

There are other ‘certification style’ digital currency education programs online but do some research on the course and organization before registering. Teaching a broader audience of professionals is a good idea to continue progressing the new digital economy.

These types of certificate programs may even further an individual’s career, and it’s also possible to learn at home for free. Besides Coursera’s free course, there is a boatload of information on bitcoin and its technical aspects. However, people often enjoy a class setting and a certificate from an organization from accredited luminaries in the bitcoin space could go a long way.

What do you think about these certification programs and courses covering the cryptocurrency environment? Let us know in the comments below.

Images via Bitcoin.com, C4, DCC, and Coursera websites.

Bitcoin.com’s own store features a wide range of interesting Bitcoin-related products. Looking for a hardware wallet? We got ‘em. Want a good-looking t-shirt? It’s there. Want to gift a nice Bitcoin tea cup? Go shopping.

Source: Science of Crypto
Three Services That Aim to Create Bitcoin Professionals and Experts