What will happen to the price of ETH during the imminent slock.it crowdfund?
Slock.it say they are converting every type of coin they raise in to ETH. Once the "money" is raised, they will then be running on pure Ether. So they will have to sell some Ether to keep going. How much BTC will slock.it be able to raise from outside of the "Ethereum community"? Say they raise $10million worth of btc and convert it to ETH, what effect would that have on the price of ETH?
Futuristic vision of a fully developed smart contract economy
You have a smart agent you control working on your behalf. (Not Google, Not Amazon, Your own personal agent you control and that acts in your interests not in the interest of some huge corporation). It understands your preferences. It builds up a picture of your needs from your browser activity, location, and social activity) then negotiates with other agents and enters into contracts on your behalf so as to optimize your life. You walk into a coffee shop and it has already pre-ordered you your coffee. The staff greet you by name and you swipe to instantly pay. The transaction is paid using a stable coin backed by a combination of crypto and tokenised hard assets. As you drink it you order a new Ethereum home hub which will run your life. You track its progress as it moves through a transparent international supply chain, which ensures ethical sourcing and tamper proof handling, but this boring stuff like trade finance are not really your concern. It arrives delivered by a crowdsourced delivery agent to the coffee shop you are in, not your home address and you prove you ordered it using the universal identity system. The Ethereum home hub is a great product, it will run all your IoT devices and buy and sell electricity to save you money, Rents out your unused computing power, internet access, or storage capacity, selling data like weather data from your IoT devices, rents out your drive to people who want to park or charge their car. You made a whole chunk of money investing in crypto start ups and AI driven hedge funds, P2P lending and index funds manage most of your wealth and which trade on trusted decentralized exchanges. But you still work because its fun and you like to contribute to opensource science and the data-commons. You check your message feed curated so as to optimize your attention and see a couple of interesting microjobs to do on ethlance and there are some strategic decisions you need to make in regard to your cooperative business venture and you make these through a collaborative process maybe creating a few prediction markets to understand the unknowns. Your agent finds you a great outdoor event and books tickets for you, it knows if you don't want to go you can just resell, and if it rains it has already entered into an insurance Insuring contract. Then it books you an taxi to take you there and you track its progress on your we-chat like universal remote mobile app. It also pre-books you a table at some nearby restaurants entering into a option contract and then re-selling on secondary markets. After the event you come back home and maybe you watch a film that you invested in or settle down to listen to some music streamed live over a decentralised P2P network and with microfees going direct to the artists. What we need: Fully developed smart contract platform with thousands of transactions per second. Fully secured smart contract libraries for maximum security Decentralized oracle network for feeding off chain data into smart contracts Capgemini states that Smart Contract mass adoption starts at 2020. Fully emerging to 2025. When will you buy Ethereum and ChainLink? All credits go to https://www.reddit.com/useDunning_Krugerrands
[Security] The Old-To-New-Chain Replay Attack And The New-To-Old-Chain Exchange-Withdrawal Replay Attack (Post-Fork Vulnerabilities)
All of the major exchanges, including Kraken, Bitfinex, GDAX, Gemini (Edit: Polo just announced they will allow withdrawals onto both sides of the chain "for those interested in keeping their tokens from the losing blockchain as a keepsake" that's incredibly dangerous and makes this attack viable: https://poloniex.com/press-releases/2016.07.15-Ethereum-Hard-Fork/) have come out and confirmed that they will halt all ETH deposits and withdrawals before block 1920000 (fork trigger) and resume them when a single chain is identified as the clear winner, afterward the they will support only that chain. This means that, when they resume, they will hold all pre-fork ETH, which is valid on either chain, but then will allow withdrawals onto only one chain. You may wonder what happens to the equally valid ETH existing on the other chain? This may be a non-issue many times because it is usually unlikely that two chains will operate for any period of time together, but here several variables may it more likely and the chance of a quick convergence to a 90-95% consensus seems unlikely (you can disagree with me if you like, but ignoring the possibility seems foolish): (1) the geth client is being modified for the the fork in such a way as to make a single piece of software usable for both chains with only a toggle of a --support/--oppose flag, which is unlikely to affect the performance long term, and so every subsequent geth version will likewise be usable on both chains (i.e., you won't need a separate repo or different software to keep running old ethereum) with only a toggle. There will be no burden for the EF to support both chains, and it'll happen inherently. (2) there are lots of smaller exchanges competing for business, it seems likely one will offer the minority chain currency and so it will have some liquidity (they certainly offer worse alt coins after all); (3) this is a contentious fork without the typical 90%+ consensus needed to ensure this doesn't happen. Even carbonvote has hovered around 20% dissent, and the miner votes so far have been >25% dissent with ethpool even showing a majority No for a while. It seems like there will be at least somewhat of a protracted fight (see http://ethermine.org/stats/voteshttp://ethpool.org/stats/votes), A simple majority for a HF won't work like a SF, and convergence will be slower, making this attacks more likely both short term and long term. (4) many have vowed (whether you believe them or not) to pursue a censorship resistant chain after the fork. Both miners and stake holders who want to keep the old chain tokens. Here's the problem: the replay attack. The way the fork code was designed, any transaction sent on one side of the fork will only be sent to peers on that side (p2p network split). But, nothing invalidates the TX on the other chain; so the transaction body itself will be equally valid on the side. So, if you capture the transaction from one side, and just route it to a node on the other, it will proceed on both sides. This creates lots of potential attack vectors – replay attacks going both directions on the chains, and worse, imagine the chaos if we somehow have to revert and go back to the original chain post-fork when it was devastated by replay attacks while no one was looking (everything always goes according to plan and software never has bugs...right?) Old-To-New Chain Replay Attack: I hear people not taking this seriously because, why would replay to the OLD chain what happened on the NEW chain, it has no value. That's a minor issue. What about if the OLD chain keeps working, and you replay OLD chain TXs on the NEW chain, and are thus able to steal NEW chain valuable ETH? That's the major concern. If two chains operate together, I would expect to see TX replays on both sides, and it'll be chaos. The Exchange-Withdrawal (New-To-Old) Replay Attack: This also presents a very interesting issue given that exchanges will only plan to withdraw onto one side. Post-fork, if you withdraw ETH from an exchange, then simply replay the withdrawal transaction on the other chain, you will get a free withdrawal on the other side. Who cares? Well it will matter big time if we have to ever use that chain again, or if it continues on its own. Obviously, if you withdraw to new chain, replay it on old chain, then the something causes the old chain to have value making exchanges want to switch chains and call another mulligan, they'll have a major problem. But, it's not just exchanges that cause the issue. My disclosure. I'm a huge supporter of Slock.it and their whole team. I've been working on the DAO since the very early days, and was involved in writing a lot of the copy for the DAOHub website. I'm a major DTH holder, and a major ETH holder (I stand to gain financially most from what helps the network, but the HF will obviously benefit me in ETH terms). I think the HF can be a good solution and I support it happening, and I supported the SF (until the vulnerability was detected). But, as the HF is coded and planned right now, I think it's just dangerous, rushed, and short sighted, and I think we're all going to get hurt by it. As I've said for a long time on here, I wish we could do a simple fork, freeze the funds (much like the logic of the SF but preventing the DOS vulnerability), then take the time to do this correctly making sure everyone is treated fairly and we do it securely with a second hard fork. I'm curious to hear people's reactions to this, and perhaps some explanations why it won't be so bad. We are way down the road here, and it's going to be a bumpy ride, but let's please not cause more damage to the platform we have all dedicated so much to because of momentum.
Most important above all else, Ethereum has never been decentralized since its distribution (i.e. premine) & thus value of incentives depend entirely on 1 trusted party, the exact opposite of decentralization or trust minimization [1,2,3,4,5,6]. Calling themselves decentralized is literally deception of others for profit, which is by the most standard definitions called fraud. Below is an example of how this centralization manifests and the absolute lack of ethics & types of other fraud behind Ethereum: Historic account of bailout, fraud, and centralization: how Ethereum Foundation demonstrated to have full control over the ethereum blockchain beyond reasonable doubt while advertising falsely for profit Point by point summary (sources cited below):
Ethereum Foundation (EF) sell centrally pre-mined/pre-made Eth coins in ICO for centralized funding/profit while advertising "unstoppable .. exactly as programmed" code (regular cryptocurrencies are 0% premined, EF had 72m coins premined on day 0 which is ~70% of current supply)
Slock.it developers including eth co-founder create an app called DAO on it for the purposes of funding themselves even more with claims that their "code sets the terms and conditions" like no one has done before them for even more money.
DAO code has a mistake and starts giving away money to a user, vocal fraction of community is divided whether to bailout DAO investors, many unofficial polls show conflicting results with extremely low participation making it unclear whether the super majority is even aware or cares about this 3rd party issue.
EF members refuse to disclose if they are invested in the DAO after promoting it, and many are later found to have been invested in it.
EF tells exchanges there will not be a minority chain surviving, ignoring the divided community, and making it impossible to sell no-bailout version
EF makes the carbonvote the "official" vote 12 hours before the release of the client--after repeatedly claiming for weeks it had no official capacity, and after already having made support for the fork the default option in the codebase. The vote only shows 4% of possible consensus supporting bailout, 1/4 of it from one vote.
Most automated nodes and miners that run "apt-get upgrade && apt-get update" switch over even if haven't seen the announcement 12 hours prior and fork is declared a success.
No-bailout chain survives regardless despite Foundation's efforts, but Ethereum Foundation refuses to update it even if it increases in popularity or size.
Ethereum projects are forced to choose between developed chain with ICO funding, bailout, roadmap and one with no funding, no clear devs, no roadmap. Most are forced to stay with Ethereum Foundation holding central ICO funding & updates hostage.
EF sells the unsold premined coins they still own on the no-bailout chain (forked premine), thus damaging its value
EF members participate in White Hat Group (WHG), use same method used to drain DAO to drain no-bailout chain DAO and then market sell no bail-out ether on the exchanges damaging no-bailout chain value further
EF changed the properties of the security it sold and still falsely advertises "unstoppable .. exactly as written" code (despite proving it false) while profiting from all of it.
Almost all the above actions are fraud. Details and sources: Top left of the banner shows marked up graphic [1] of ethereum.org claims including "decentralized platform that runs smart contracts exactly as programmed without any possibility of downtime, censorship, fraud". Additionally, the third party app "the DAO" also re-iterated in their contract the similar premise that their code IS the terms and conditions [1,2]. Both DAO and Eth were sold advertised as such in their initial phases. However, the DAO was programmed in a poorly done manner [1] and allowed loss of the investments put into it [2]. It was no secret members of the Ethereum Foundation (EF) were connected to the DAO often promoting it. Many were found to be invested in the DAO as time passed [1,2,3] , yet refused to disclose it when asked directly [4,5,6]. Despite the loss due to DAO contract being an issue of only minority of users, virtually all mentioned advertised properties of ethereum and the DAO were changed by the Ethereum Foundation to manually reverse the operations the smart contract ran while profiting from it. How did they do it? By exploiting and proving centralization Several centralized aspects of Ethereum were used to achieve this result:
EF controls the defaults settings in codebase to get what they want. Only 12 hours before before the release of the client they selected carbonvote the "official" vote out of many varying options (after repeatedly claiming for weeks it had no official capacity, and after already having made support for the fork the default option in the codebase). This selected poll had many issues discussed below including 96% of possible votes not showing support for EF/DAO bailout. However the 4% vote with quarter from single vote with only hours of official notice before were used as justification anyway for bailout as default setting [1,2,3,4,5,6,7]. By controlling the defaults, they easily took advantage of anyone not up to date on announcement hours earlier who automatically updated and/or the apathetic users to control the blockchain. By moving focus from what's best for majority via opt-in consensus (blockchain standard) to giving only a short window to opt-out, they can centrally manipulate the blockchain in almost any manner without enraging the majority into action [1,2]. As expected, the fork was quickly declared a success [1,2,3]. Control over codebase also allowed them to compromise those opting out by leaving them open to replay attacks, thus further damaging their value as can be seen celebrated by DAO and Eth cofounder Stephan Tual [1]. Effectively, this was equivalent to a successful 4% attack on a blockhain or even attack by a single centralized entity (EF). The approach is easily repeatable and exact opposite of expected censorship resistance against <50% attacks, thus proving it unsecure.
EF has complete centralized ownership of the funds from 70% premine in form of eth and ICO BTC raised [1]. This made them the only well funded core developers and thus the only choice for rapid development and fully in control of what gets updated. By choosing to address this third party contract issue, by refusing to update the old chain, they effectively held their funding and updates hostage to make sure people can't opt out without significant costs [1,2]. Additionally, with such capital, it's trivial to affect the swing vote for under-represented polls with eth or hashpower making their polling governance methods unsecure. Furthermore, once the old chain did receive an exchange and thus possible value, the old chain coins from EF premine were used to damage the value of the old chain further [1].
EF has name recognition as the founders, name ownership of "the real Eth" or ETH, with even a trademark [1]. Unlike volunteer based or anonymous core teams, EF is Swiss nonprofit operating as a single entity. When a high publicity issue appeared that threatened their money, they were able to stop trade on major exchanges with a simple message [1,2].
Exchanges were deceived by the EF into belief there will be no one in dissent of the self-bailout fork (leaving the other fork without a market and 0 worth) and not prepared for people opting out of bailout [1,2,3], which was misleading due to highly uncertain polls (below). This deception allowed them to be the only chain with value following the fork, and allowed them to keep the name. Despite it all, dissent was also to exist by original chain surviving and prospering even under countless harmful actions of the EF (usually 1/3rd of Eth in number of transactions, 45-50% of marketcap at peak [3], and even longer chain on at least one occasion).
EF demonstrated ability and willingness to cease trade, fork, and affect entire network when a single app of their choosing fails while profiting from it [1]. The non-democratic nature of the decision was noted by many [1,2]. Changes in properties of the ether security - securities fraud The "unstoppable" app was sending money to an unknown user. What followed was the controversial change of the advertised rules where EF stopped the app by censoring that transaction without consent and confiscated the transaction contents resulting in personal profit for EF devs and friends. The rule change that let EF and friends profit financially while harming someone else financially is very plausibly securities fraud [1,2,3,4]. Additionally, it was a clear conflict of interest in governance. The change of the rules of the security associated platform to censor or run applications based on feelings of how it should run (e.g. liked/ok or disliked/exploit) by the Ethereum Foundation (a centralized entity) broke the EF and DAO earlier statements on decentralization, lack of censorship, and explicit execution of code. While the user followed all the known rules from statements of the platform and the app, the fork rule changes were applied not to fix a bug but to undo previous actions using new rules ex post facto. The changes were retroactive and arbitrary: stopping the app and censoring the user by reverting his money transfer back to where they could take it out, subjectively justified by calling it a theft. Blockchains gain value by decentralizing trust to numerous different parties thus creating censorship resistance against minority attacks and thus security. Ethereum Foundation supported ether asset changed from decentralized, trustless, secure, censorship-resistant platform asset to (proven based on EF actions) centralized, trust-requiring, unsecure, censorable platform asset hence damaging said value. However, to this day the advertisement of the properties of the ether security has not changed, long after EF actions proved virtually every statement in them false. No safeguards were put into place to prevent a repeat as well. This makes it a case of continuous securities fraud as well. What choice did community have? Bad and worse.
Miners had no choice but to mine on the chain with the only coin that would be sold on exchanges under same name (so they can cover electricity bills and profit instead of paying for useless coins) and only chain with future upgrades [1,2]. The bailout was the default setting in codebase with only hours of notice giving it enormous advantage [1,2,3,4,5,6,7,8]. However, some managed to remain on the original despite taking financial losses with no exchange value but were still ignored. Carbonpoll declared official only hours prior suggested 94% not knowing about the issue or being apathetic, hashpoll earlier had 90% no-responses.
App developers had a choice of 2 chains - EF abandoned chain with no clear funding/devs/roadmap or certainly centralized chain with funding/updates. Most had to choose the one with known roadmap despite concerns [1] vs complete uncertainty but community focused on security [2].
The ether security holders had the properties of their platform change from known as trustless dapp platform with ico funded devs and updates to two inferior choices : (1) chain with no roadmap nor funded devs but with a nervous community around trustless security, and (2) unsecure chain with no mechanism to prevent a repeat but with update roadmap and ico funded devs. Many gave up hope taking a loss up to 65% in value. EF effectively created two new different and inferior versions of the original security.
No evidence of community support for bailout The justifications of the self-bail out forks are often in the tone of it being a democratic decision or that there was agreement from the community. The survival of the original chain both in value and transactions despite being damaged in value by the EF and even when it had no market value is a demonstration it was not an insignificant disagreement. Additionally, often several voluntary polls are referred to with ~5% eth and 12% hash turnout and single digit 4% and 9% vote of all possible votes for self-bail out fork [1,2,3] - far from majority. Historic archives of the subreddit and simple online polls during the time show much stronger opposition to bailout [1,2,3,4,5]. Issues with official poll
The low turnouts of a voluntary insignificant poll done on a little known subreddit instead of protocol level makes it statistically insignificant. EF made carbon vote the "official" vote 12 hours before the release of the client after claiming it had no official capacity and after making support for the EF-bailout fork default option in the code base [1,2,3,4,5,6]. Additionally, due to low turn out and polls could be easily manipulated for financial gain by buying eth or renting hash power momentarily just for the vote by third parties (thus breaking another earlier statement). About 1/4th of the 5% eth vote was from a single voter [1].
Voluntary polls are extremely susceptible to biases. Voluntary response bias strongly favors those with stronger incentives to respond and thus results in sampling bias: the profit coming from self-bailout of a minor third party app investors is far stronger incentive than voting for standard operation of a blockchain. Uncast votes from apathy or not being up to date was prevalent accounting for 90%+ mentioned above. By setting the bailout as the default setting (unlike opt-in setting used typically elsewhere) with only 12 hour warning, anyone not paying attention was tricked into supporting the bailout. Nodes can simply automate "apt-get upgrade && apt-get update" so this setting took advantage of everyone who hasn't seen official announcement only hours earlier [1].
Censorship resistance is often taken for granted in crypto projects as it is expected as the minimum requirement of something being called a blockchain. This expectation results in a bias from bystander effect [1] and diffusion of responsibility to ensure it: many assume vote for censorship resistance is a sure thing but will definitely happen by others voting. What can happen is a group expects someone else to vote and ends up in almost no one voting.
By the EF labeling the unintended execution of a contract "an exploit" and the person doing it "the attacker" alleging "theft" (which was not a universal interpretation) and stating support for the bailout, they introduced leading question bias that increases tendency to vote in a way that favored bailout. Additionally, individuals and companies had to face a social desirability bias where they were more likely to vote in a way that would feel more socially acceptable.
In summary on 2 polls selected and referenced by the EF is that there is no conclusive evidence of majority support for the bailout fork. Similar conclusions were reached by others. [1] Financial & value attacks Ethereum Foundation refused to work on the older chain thus damaging the older security they sold [1,2]. Ethereum Foundation took the premine from the development of the original chain, which is possible theft. Ethereum Foundation took the money of a rule following user, which is possible theft [1]. Ethereum Foundation compromised security of the old chain by keeping it open to replay attacks hurting its value further[1]. Ethereum Foundation damaged the value of the competing asset of the original chain using the stolen premine by selling it on exchanges [1] and making fun of doing so [2]. Ethereum Foundation and closely related White Hat Group (WHG) not only took the remaining money from the DAO on their chain, but also on the original chain, and then used the funds to damage the price of the competing asset on the exchanges [1,2,3,4]. Every level of Ethereum proven to be unsecure and not trustworthy Additionally, every level of ethereum after proven centralized requires trust. And it's easily shown how each level cannot be trusted thus lowering its value:
Code: Ethereum Foundation (EF) via demonstration of centralized control stated and shown that they will decide how code should run instead of as written, so the code itself doesn't matter, and it can't be trusted to handle transactions, balances, apps.
Apps: Ethereum foundation broke the promises of a third party app called DAO that very uniquely stated code sets the terms, so eth apps cannot be trusted.
EF: Ethereum foundation also broke its own advertised statements about the platform when it censored users and stopped apps to take others money for subjective reasons. Additionally, their refusal to acknowledge conflict of interest, making a poll official only hours before pushing the update, and abusing power of defaults in the code shows so Ethereum Foundation cannot be trusted [1,2,3,4,5,6]. Additionally, centralization shown by EF makes it a weak spot for malicious actors to attack the entire platform using incentives (e.g. litigation, force, threat, pressure 1) to force them to exercise the control over the chain once again with existing precedent. There's no way to gain trust that this attack vector won't be used.
* The self-bailout fork events demonstrated centralized Ethereum Foundation has complete centralized control over every level of this blockchain: every transaction and every app. It proved that EF has capability and the will to use it to overwrite operation of any smart contract even if it serves their self interest. In other words, Eth is a proven unsecure centralized censorable trust-requiring platform that can't be trusted on any level with any aspect of operation. There are zero safeguards currently in place to prevent EF from taking advantage of their control from occurring again. Additionally this is public information making it a well known centralized weakness and, thus, a known attack vector that could be used by interested third parties, which would be nothing new [1]. Nothing has been done to fix it and continues to be part of Ethereum's flawed premine controlled "economic forks"[1]. This subreddit is a curated collection of resources for education purposes only that would be difficult to find downvoted on biased ethereum subreddits to protect and warn people from being hurt by this fraud via investment or development on top of a nonsecure blockchain. Other notable events about Ethereum to read about:
Newcomers are mislead to think EEA uses public chain with ether (ETH), while almost all actually use independent private chains [1] and mostly used for "dumb money" [2]
Ethereum being treated by some like a secure cryptocurrency alternative, when only recently months apart it was brought down several times: by spam attack [1] and also accidental forks leading to reversed transactions [2,3,4] on top of being unsecure through centralization discussed above including willingness to erase attackers money (even if they are a majority) by controlling the codebase defaults and causing user activated soft forks[4,5,6]. Developers have shown willingness to put rapidly written code as defaults to force a change while compromising security, shown most obviously in the failed soft fork incident [1]. Concerns about lack of security through centralization also appear to be ignored when even lead developer said he prefers consensus failures to criticism [1]. And the concerns of using crypto with larger attack surface are constantly being proven true [1,2,3] including issues with its scripting language & evm itself [4,5,6]. Centralized miners (2 pools control majority of hash power) are another source of security failures soon to be followed by stake based security in Casper where worst possible distribution method of premine+ICO will help centralize control further.
Ethereum plans to add zero-knoweldge proofs with unsecure trusted set-ups. [1]
Ethereum advertised as answer to scalability while already suffering issues [1,2] putting app use in question [3] at only 4th place transaction load in crypto [4] and requires distant updates to address it (casper, sharding). The blockchain is showing incredible size and bandwidth bloat already orders of magnitudes higher than alternatives [5,6]. Transactions are getting lost [7]. Most of the capacity is taken up by same accounts transmitting more eth/assets showing much lower adoption use [8].
EF often demonstrates willingness to make similar radical changes without requiring opt-in consensus [1]
SUMMARY: Ethereum is an unsecure, trust-requiring, centralized, mutable platform that runs stoppable apps and censors people Ethereum Foundation (EF) dislikes - the opposite of what it advertises itself as. Ethereum Foundation misrepresents what Ethereum is to prospective investors for increasing the value of the traded asset ETH while profiting financially. This means, by definition, Ethereum Foundation is participating in fraud by continuously misleading investors. Furthermore, the act of suddenly changing the properties of the unregistered security after the sale of the security in the initial coin offering (ICO) and/or on exchanges while profiting personally constitutes securities fraud. Additionally, Ethereum Foundation is connected to damaging the value of sold assets, damaging the value of competing assets, theft from competition, and market manipulation of competing assets for profit. Nothing has changed after historic actions proved centralization beyond reasonable doubt. Eth is still centralized, unsecure, and gains value only through fraud
How Ethereum will eventually become the internet economy
Ethereum will, inevitably, eventually become the internet money
Hello again. I've for long believed Bitcoin is the root of a disruptive, trustless internet economic system, but nights of thoughts taught me the truth isn't that. How can it be trustless if I can't buy a good online without trusting the other party will deliver it? It is logically obvious that, in order to make a truly trustless purchase, one must be capable of locking his payment until the other party has proven he delivered the due goods. This is the simplest form of trustless purchase, yet Bitcoin fails do that. If you're not convinced, just look at the infrastructure being built around Bitcoin: from exchanges to mixers and gambling, everything is a centralized service built on top of a falsely decentralized currency. That is why Bitcoin exchanges get hacked all the time, dice sites run with people's money, and Bitcoin companies are essentially becoming banks with equally abusive fees. This obviously does not satisfy those greedy for a trustless economy. I predict that, over the next years, Ethereum will slowly grow as it builds the trustless infrastructure that can't be built on Bitcoin. Eventually and inevitably, it will become the main blockchain, and Ether will be the de-facto internet currency. Bitcoin will probably still be highly valuable due to its internet-gold nature and historical interest, but Ether will overgrow it.
We're doing dapps the wrong way
In order to become the internet economy, a lot of infrastructure must be built. While the protocol and clients development is currently exceptional, I believe the dapp-development community have been failing in many aspects, and that is the core factor hindering Etheruem's growth. In order to understand what is wrong, let's separate dapps in 4 categories: A. Those which can be 100% encoded as contracts and require no form of trust. I call those pure dapps. Examples would be dices, prediction markets, colored coins, nameservers and so on. Pure applications must be of public-domain, must have no concept of "creator" or "stakeholders", must have no company behind them and, consequently, must have no operational fees other than gas costs. B. Applications that can be partly done with contracts, but require some kind of external resource that is cryptographically certified to be trustable. I call those pseudopure dapps. Examples would be state-channel-based games, compute markets based on proofs of computation, real-world oracles based on trust networks. Semipure applications can have operational fees when they're absolutely required to reward the external information providers. C. Applications that can be partly done with contracts, but depend too much on real-world resources to be trustless, and end up relying in a trusted company. I call those impure dapps. Impure applications can do whatever they want fee-wise. Examples are Akasha, Slock.it, Digix and single-source real-world oracles. D. Applications that fail to fit in one of the other categories. I call those defective dapps. Examples would be a pure applications that sends fees to a single "creator", or an impure applications that could be programmed as a pure application. Under that point of view, it becomes obvious what is wrong: most dapps under development are either impure, due to relying on centralized trust, or defective, due to the abuse of ICOs and operational fees. Pure dapps are the best use case for Ethereum and we must focus on them. There are tons of cool things that can be written as pure dapps. They don't generate profit, but they reward all Ether token holders directly by both aggregating value to the network and providing useful services. Pseudopure dapps are also great and often the most interesting ones, but are much harder to implement; we must focus on them only when the provided value out-weights the complexity. They also don't generate profit, but they aggregate value to the network, and generate work. Impure dapps are not the best use case for Ethereum. Some clever companies can build great products on top of the blockchain - Digix, for example - but those must not be our priority as a community as they're not "actually" dapps. Defective dapps should be avoided. But if pure-dapps and pseudopure-dapps can't generate profit, why would people build them? If ICOs shouldn't be the norm, then we obviously need to rethink the dapp-development model.
This is what we absolutely must do right now
There are many urgent core dapps that must be done under that philosophy, and some less-urgent dapps that would be cool to have. Eventually I'll mention many of those. For now, let's focus on the most important of them: a huge development incentive platform. Since the DAO fiasco, we have nothing to attract new developers. Currently, most of the dapp development work is done by random people that have a profound faith in Ethereum and want it to succeed. That is a terrible scenario, and is the single most important factor hindering Ethereum's growth. People won't come and work for faith, people will come and work for money. If we want the Dapp Store to succeed like the App Store did, then we need it to be as attractive, for developers, as the App Store was. I suggest the following dapp:
Anyone can propose an improvement for the ecosystem;
A proposal consists of a well specified task in a human-readable format; example: "build a mobile gambling dapp: (...details...)", "make Ethereum appear positively on /all: (...details...)", "fix the Mist button: (...details...)";
People vote on proposals by locking money on them;
Anyone can complete a proposal and, once he does, he submits a withdrawal request;
Impartial judges evaluate if the task was completed correctly and unlock the money to that person.
This is very different from The DAO model, as the roles are reversed. Under The DAO model, developers and/or companies propose improvements and ask money under a promise of completing them. Here, the community proposes the improvements and offers money for whoever actually completes them. This approach has more in common to freelancing sites, but it is much more attractive to freelancers because:
Proposals must, by design, be completely well-defined, to details, from the start. This is one of the main complaints about freelancing sites;
Freelancers don't have to deal with clients directly. Most freelancers hate that part of their job;
Freelancers can be reasonably sure they will receive the money as long as they do a good job.
Of course, there are many details to be worked: can someone withdrawal money from a proposal? How to decide when a task was done without room for attacks? Would it be a single contract storing all the money? What if two people complete the same task simultaneously? But hopefully such platform will be developed, and grow into a bank of tasks that will be very attractive for creative minds all around the world. Once that is done, Ethereum will be ready to start its next wave of growth. For now, I need feedback.
Feedback
I need a feedback now. What do you think about my points? Do you agree, do you not agree, and why?
Hard Fork. Liquidate. - ETH returned proportionally to DAO tokens held.
Soft Fork. Freeze. - 14% of ether becomes blocked indefinitely.
NO Fork. Do nothing. - most of 14% will likely go to attacker(s) and then perhaps on the market.
While Gavin in the video does mention some negotiation with the hacker he does not offer it as an option nor proposes anything related to it. Since the main probable motives of the attacker are: A. Financial. - He is after the money. B. Hostile. - He is after damaging the Ethereum network. C. Other. It seems feasible to try in parallel to working on the forks to make an offer to the attacker that will be hard for him to refuse in case his motive is A (Financial). If he has other motive this will probably not work. The idea posted by Adam Byrne on CoinDesk article is below: http://www.coindesk.com/ethereum-response-dao-kill/#comment-2742119606 "
Adam Byrne • 2 days ago My solution to #TheDao impasse.
Create a new (and properly vetted, this time) smart contract which will release an agreed and appropriate sum to the hacker.
For the sake of argument, let’s say $1 million, which (it could be argued) is a just reward for his ingenuity and attention to detail.
Create another smart contract (or use the same one?) to release the rest of the funds back to an escrow account (assuming that the total investment was $160 million, then $159 million will be returned).
Therefore less than one percent (0.625 percent) has been ‘lost’ to the hacker.
These losses will be spread on a pro rata basis across all the investors in The Dao.
For example, if you put in $100, you get back $99.375.
Refund the investors through yet another (properly vetted) smart contract and then close down The Dao permanently.
Advantages: Fund are unfrozen. The hacker walks away with a reward but relinquishes all claims on the rest of the funds. Everyone else walks aways with an almost full refund. MOST IMPORTANTLY: No roll back (fork) is necessary. No disastrous precedent is set and the integrity of the Ethereum blockchain is preserved. The efficacy of properly designed and vetted smart contracts is proved. We can all move forward and learn from the mistakes that were made. PS. I do realize that the hacker ‘made it away’ with ‘only’ $50 million of the total $160 million or so invested in The Dao but the precise numbers are not the most important aspect of my proposed solution. Someone else can do the exact calculations. " If attackers interest is financial it makes a financial sense to get a guaranteed 1% of a big sum then get nothing with the implementation of a fork that will also cause damage to Ethereum. I ask for a constructive discussion on this thread to try to brainstorm a possible way to offer the attacker(s) a solution to deposit all of the funds into a refund contract with the option to automatically send 1% to the attacker(s) address. This is in order to avoid implementing any kind of fork and avoid damage to ethereum eco system. This is more elegant and desirable solution if the attacker will be willing to cooperate and does not hold in his intention to hurt the ethereum community. *Disclaimer: I do not own DAO tokens. But own Ethereum.
Hello! Iam Daniil Kapran, a sales manager at Platinum. Our team of professionals offers a complete set of services for your successful ICO or STO. We are self-confident because of our huge experience in ICO and STO advertising and promotion. Besides, there are more than 700 successful companies’ promotions behind us. See for yourself: Platinum.fund We also launched the best online institution in teaching crypto economics! You will know everything about best security tokens in 2019, learn all about ICO and STO promotion and become real professionals after finishing our courses! How the original roles in the blockchain industry have evolved up to this day? Read this article to get the answer! Cryptocurrency Miners When people first hear about mining cryptocurrency it is natural to think of big drills and rock crushers. Of course it is different than that. What happens in cryptocurrency mining? Bitcoins exist in a protocol design, but the bitcoins need to be brought to light, or brought into being through a series of mathematical computations. This is similar to gold existing underground, but if we want it we need to explore for it, find it, and then dig it out. Another similarity to gold and gold mining is the scarcity of bitcoin. There are only 21 million Bitcoins which can possibly exist. Why would someone want to mine cryptocurrencies? The simple answer is for a reward, which is paid in the form of Bitcoins. A miner must run what is called a “node” in order to do the mining and earn the reward. A node is a powerful computer that runs the bitcoin software and helps keep the blockchain network functioning by participating in the relay of information. Anyone is able to run a node. A miner simply needs to download the free software and leave a certain port open. Mining nodes solve complex mathematical functions and add the correct answer to the block. Miners are rewarded for their ability to solve and complete blocks as well as verify transactions on the network. It is far more complex than this, but this is the general principle. “ “Cryptocurrency Miners §2 How has the role of miners changed? Mining bitcoin is an extremely energy-intensive process. In the very beginning miners would work to solve cryptographic puzzles for blocks, and to confirm transactions on their own. Bitcoin was not very popular, and most people simply mined for leisure or intellectual interest. No one really knew how much bitcoin would appreciate in the future. Maybe you remember the story about James Howells, who mined 7,500 bitcoins and forgot about them on his hard disk. The hard disk ended up in the trash can and later into a landfill in Newport, under tons of garbage. Other home miners did not care much about how they stored their BTC before the coin gained such massive popularity and value. What caused this change? As more and more bitcoins have been mined, the computations have gotten harder and harder, meaning more and more energy is required to perform the computations. This has led to the emergence of pool mining and the decline of home mining. The popularity of bitcoin has soared, and the difficulty of the problems needing to be solved has increased dramatically. What does the future look like for miners? Home mining is likely to remain a thing of the past. Larger commercial scale mining setups are likely to become more common place as the industry consolidates further. Tremendous scale is required to endure the volatility of the cryptocurrency industry. Home miners are not likely able to scale up for the intensity of this kind of competition. “ “The Emergence of New Roles in Cryptocurrency Industry The blockchain industry has evolved from the simpler early days with some people mining and verifying transactions, and some other people investing in cryptocurrency. Now there are thousands of professionals working in a much more complicated industry. These professionals can be broadly grouped into ten key roles. We have already discussed the basic roles that exist in the cryptocurrency space from the perspective of Bitcoin and other fundamental tokens. Now we will move on to a more focused discussion about the entire spectrum of roles in the blockchain industry today. The roles that facilitate everything from ICOs, to market making, to exchanges; from where they are now, and to where they will be in the future Ethereum, Smart Contracts and Dapps In order to understand the roles that have developed in the blockchain industry, we need to examine the underlying technology again. Ethereum is second only to Bitcoin from the perspective of market capitalization and popularity. Like many other altcoins created to address inherent weaknesses in Bitcoin, Ethereum was created to be better and faster. In the words of Ethereum co-founder, Vitalik Buterin: I thought [those in the Bitcoin community] weren’t approaching the problem in the right way. I thought they were going after individual applications; they were trying to kind of explicitly support each [use case] in a sort of Swiss Army knife protocol.” Ever since Ethereum was developed in 2015, the role of the underlying blockchain technology and potential applications upon that technology have been absolutely amazing. We will now discuss some of those applications. “ “Ethereum, Smart Contracts and Dapps §2 The Ethereum Virtual Machine One of Ethereum’s core innovations is that its software enables developers to run programs with any programming language on the network. This makes the process of creating blockchain applications much easier, faster, and more efficient than before. Developers had to build an entirely new blockchain to run their application before, but now they can develop different applications on the Ethereum blockchain. These applications are referred to as Dapps. Developers using the Ethereum Virtual Machine can build and deploy numerous decentralized applications, hence decentralizing many services across many sectors. This development has made the work of developers in the cryptocurrency space more efficient and quite rapid too. As a result, the majority of new cryptocurrencies are now built on the Ethereum network. Other than Dapps, the Ethereum blockchain has also been used to create decentralized autonomous organizations (DAO). A DAO consists of one or more contracts and could be funded by a group of like-minded individuals. A DAO operates completely transparently and completely independently of any human intervention, including its original creators. A DAO will stay on the network as long as it covers its survival costs and provides a useful service to its customer base” Stephen Tual, Slock.it Founder, former CCO Ethereum “ “Ethereum, Smart Contracts and Dapps §3 Other than Dapps, the Ethereum blockchain has also been used to create decentralized autonomous organizations (DAO). A DAO consists of one or more contracts and could be funded by a group of like-minded individuals. A DAO operates completely transparently and completely independently of any human intervention, including its original creators. A DAO will stay on the network as long as it covers its survival costs and provides a useful service to its customer base” Stephen Tual, Slock.it Founder, former CCO Ethereum How has the Ethereum network changed the role of developers in the cryptocurrency space? It is obvious from the above quote that Ethereum has made it very easy for developers to build and launch Dapps, DAOs and Smart Contracts on the network. You can say that it now takes less genius to create a cryptocurrency, thanks to Ethereum. What are we likely to see in the future? The roles of developers in the cryptocurrency space will keep evolving and perhaps become less complex with time. There are numerous online courses offering training for developers, as the remuneration for this function is becoming increasingly lucrative. But like with many other things, it is also a question of survival of the fittest. The competition will be fierce, and the urge to survive will be intense. The best developers may come up with something we cannot even imagine now, and better than what we currently have. “ “Notable Personalities within the Cryptocurrency Industry Vitalik Buterin – Programmer and Entrepreneur The well-known genius behind the Ethereum project is a young scientist and entrepreneur named Vitalik Buterin. His unique contribution, through the Ethereum project, has transformed the blockchain industry since the project took off in 2015. Ethereum has allowed for the development of Dapps and smart contracts which have revolutionized many blockchain projects. It is currently the second largest cryptocurrency in terms of transaction volumes. Nick Szabo He has been referred to as the secret cryptocurrency pioneer. He is responsible for coining the term “smart contracts” in 1996, and he is also behind an earlier blockchain innovation – Bitgold. He first came to attention in 1996 after his publication of Smart contracts: Building blocks for digital free markets. John McAfee He is both hated and loved in the cryptocurrency industry in equal measure. McAfee, a software tycoon, is heavily invested in cryptocurrencies, and was for a while, the “voice of judgement” to determine which ICOs or coins to invest in. Investors waited for his tweet before they invested their money. John McAfee’s tweets have played an outsized role in shaping the cryptocurrency space, especially in promoting ICOs and popularizing certain coins. “ “Notable Personalities within the Cryptocurrency Industry §2 Hal Finney He is second only to Satoshi Nakamoto when it comes to using bitcoin as a payment method, having actually received the first bitcoin payment from Satoshi himself. He has also been “accused” of being the real identity of Satoshi Nakamoto. Hal Finney has made milestone contributions to the development of cryptocurrencies. Finney was a cryptography activist and regularly posted on cypherpunks. In 2004, he created the first reusable proof of work system, before bitcoin. The DAO hacker This anonymous person (or group) has made a significant impact on cryptocurrency by managing to hack into the Ethereum network. The DAO hack resulted in the split of the Ethereum network, leading to the emergence of Ethereum classic. As much as this was a bad thing for several reasons, it has also served as a learning experience for the future; smart contracts are not infallible if a flaw can be introduced into the code. Contrasts between Blockchain & Traditional Roles The disruptive technology behind cryptocurrency is making an impact across diverse industries, affecting jobs in different ways. We will examine some traditional roles to see how they have evolved to function inside the blockchain industry. And we will see how some other traditional-world roles simply cannot exist in the blockchain space at all. “ “Traditional Roles which will evolve Realtors Once they get a willing buyer or seller to service, the bulk of work that a realtor does is paper work. With Blockchain technology, the paperwork will be largely eliminated. The role of realtors is likely to change in many ways similar to that of stockbrokers. Their role will become focused on facilitating or assisting individuals make complex decisions as opposed to just facilitating the transaction. SMARTRealty is a blockchain startup that is transitioning the real estate business to the blockchain. To the degree that paperwork is eliminated or significantly reduced, the process of buying and selling a house will be made much faster. The verification and transfer process will be swift and secure with records immutably stored on the blockchain. The blockchain will also allow for a trustless system where potential home buyers and sellers can interact directly without the need for a trusted intermediary. “ “Traditional Roles which will evolve §2 Banking Roles Research has shown that millions of people in the undeveloped world remain largely unbanked. Many developing nations suffer from unstable governments which lead to unstable national currencies and unreliable legal frameworks. This may in fact be the population group that needs cryptocurrencies more than anyone. Banking roles have largely become digitized in the modern globalized economy. All roles in the banking industry will likely further become focused upon the specific value added by each role. There will be less of a focus on pushing paperwork and a greater focus on providing a unique and discernable service to their customers. In third world countries with multitudes of unbanked individuals, the blockchain technology will allow those countries to start fresh, leapfrog ahead, and remove many of the grievances and friction points which presently plague their financial systems. “ “Traditional Roles which will evolve §3 Supply Chain Management In the past, it has been the duty of supply chain managers to record and track goods or services through the entire process from creation to their ultimate destination. This has been an arduous task, especially when the supply chain is prolonged, complicated and indirect. Blockchain startups have been created to tackle this challenge. The blockchain offers indisputably superior supply chain management as it greatly reduces delays, eliminates human error, is cheaper to use, and much easier to monitor. This role will therefore be forced to evolve to one of mostly management and troubleshooting issues along the supply journey. Records Management Records Management is a supportive yet vital role in many institutions. Record managers are tasked with responsibility to ensure the integrity of records both manually and electronically. The blockchain is one large immutable and tamper proof ledger. What better record could anyone possibly ask for? As more and more industries integrate blockchain into their operations, there will be less and less need to employ record managers to maintain records and ensure their integrity. Record Managers are likely to be one of the roles actually made obsolete as a result of the blockchain technology. The value they currently add to a business transaction will be rendered useless, and there does not appear to be any similar or adjacent role for these people to fill. “ “Traditional Roles which will evolve §3 Retail Roles The Retail business contains many roles from the front to the back end. The front end of the retail business should survive because they provide a special face-to-face service to customers. The back end of the retail operation however is a different story. Everything from supply chain management to accounts is likely to become obsolete. Blockchain technology will not only fundamentally redefine those roles but it will also dramatically reduce the workforce required to carry out the remaining functions. Openbazaar is one blockchain startup that is trying to create a trustless system that will allow manufacturers and buyers to connect without a middleman. The roles in the retail industry are likely to further move toward providing personal service and creating unique value-added experiences. Roles which are largely administrative and indistinguishable from one firm to another will become obsolete or at least dramatically leaner with time. What are current expectations for each role in the cryptocurrency industry? Read the full lesson of the UBAI Intermediate Course to get better understanding of blockchain industry: UBAI.co Thinking of how to start initial coin offering in 2019? Contact me via LinkedIn to get all the current information: LinkedIn
NEWs To Come - last updated - April 5th, 2016 Ethereum’s ecosystem is growing so quickly, very exciting news has a habit of coming out of nowhere. That said, there are more than a few things to have on our radar. Thanks to help from this community, here’s a current list. As always, what am I missing?
Our faq page may also be helpful for many common questions connected to the news listed below.
Ethereum Blockchain Development
Metropolis - Includes user friendly Mist Browser and likely a light client.
Serenity - Major scalability improvement and Casper
With Casper, issuance of ETH drops between 0-2m a year, depending on staking rewards (think, a crypto version of dividends more than Bitcoin's mining).
Synereo partnership with a important update. "Synereo and Ethereum now have an end to end spec of a correct, fault tolerant architecture that is sharded, i.e. scales".
Sharding development news. Sharding is a game changer for Ethereum and could allow it to 10000+ transactions a second (Visa currently handles 2000 per second). While its success is starting to look inevitable, more specific news should be watched carefully.
Client updates - Ethereum’s clients are wide ranging - Go, C++, Python, Rust, Java, Ruby, .net. This allows Ethereum to attract developers with a wide range of programming backgrounds and empowers Ethereum for more applications. It was a VERY smart strategy by the founders of Ethereum. Watching the news for client updates is important.
Jaxx Kryptokit wallet very well respected wallet, now placing Ethereum alongside Bitcoin!
Mist upgrade - providing easier access to the world of dapps
The Rudimental An equity crowdfunding portal for arts and media
Thomson Reuters mobile web project Yes, that "Reuters", the multinational mass media firm, is hiring an Ethereum developer for some mystery product. I'm still stunned by this one.
Coin relays and interoperability One very powerful aspect of Ethereum’s blockchain is it allows both formal relays between blockchains as well as general interoperability between chains. Relays allow Ethereum to empower other blockchains, basically letting these more classic chains (like Bitcoin and Dogecoin) use Ethereum as a service for smart contracts. This “bonded sidechain” is more powerful/flexible path to using smart contracts than building non-currency agnostic chains. Similarly, interoperability is a classic concept in software development with over 30 years of history. Ethereum’s Virtual Machine (EVM) greatly facilitates multi-chain interoperability – which could allow private chains to communicate with Ethereum’s public chain. Basically, Ethereum facilitates “chaining all the things”. In other words, even future private chains could interoperate with the Ethereum public blockchain to have a gateway between their secured private chain and the more global public chain. Private chain development is a GOOD thing under this model, even if that private chain is not an Ethereum fork. Current examples
Public Dapps and/or ventures to keep an eye on Ethereum ecosystem is growing in unbelievable way with well over a 100 DApps. Below are some DApps and ventures that have been commonly discussed and seem to be generating news sooner than later.
Many of Ethereum's 100+ DApps will fail, but it only takes one to succeed to bring Ethereum to the mainstream. That said, sadly, there will also be scams. We should never forget Bitcoin's NeoBee or any of the MANY failed exchanges. As a community, we'll want to keep a close eye out in more ways than one. Be enthusiastic but critical - with transparency being absolutely key to trust. Developer tools to keep an eye on
Ether.Camp's testing "imagine you could pay a dollar to buy an unowned tile in Etheria, purchase a dollar-pegged currency or vote for a resolution in a Decentralized Autonomous Organization"
Eth(Emedded) "Providing successful builds of Ethereum Clients for multiple, Linux based, ARM embedded devices"
Potential surprises that are not really surprises
Anything China – ETH's value has largely been independent of anything to do with China, that must inevitability change.
OKcoin inclusion (largest exchange in China, insane history with price boosts)
Gemini inclusion (New Yorkers access to ETH)
Parting statement Ethereum has essentially a monopoly on smart contracts, and from the list above, it should be clear that it has built a remarkable network effect around this ecosystem. It is a disruptive technology, that fosters synergies, and when put in a greater perspective, it’s market cap remains quite tiny, especially when you think of the relative size of the growing community. Please let me know if there is something you'd like to see.
Ether Thief Remains Mystery Year After $55 Million Digital Heist
Ether Thief Remains Mystery Year After $55 Million Digital Heist 2017-06-13 08:00:18.224 GMT By Matthew Leising (Bloomberg Markets) -- Summer colds are the worst, and Emin Gün Sirer had caught a wicked bug from his 1-year-old son. So it was with watering eyes and a stuffy nose that the associate professor of computer science at Cornell found himself working from his sickbed on Monday, June 13, 2016. Gün—everyone calls him Gün—couldn’t tear himself away from his laptop. He had another type of bug in his sights, a flaw in a line of computer code he feared put $250 million at risk of being stolen. It wasn’t just any code. It was the guts of the newest breakthrough in software design related to blockchain, the novel combination of decentralized computing and cryptography that gave life to the virtual currency bitcoin in 2009. Since then, the promise of blockchain to transform industries from finance to health care has captured imaginations in corporate boardrooms and governments alike. Yet what the Turkish-born professor was exploring that Monday was the next leap forward from bitcoin, what’s known as the ethereum blockchain. Rather than moving bitcoin from one user to another, the ethereum blockchain hosts fully functioning computer programs called smart contracts—essentially agreements that enforce themselves by means of code rather than courts. That means they can automate the life cycle of bond payments, say, or ensure that pharmaceutical companies can authenticate the sources of their drugs. Yet smart contracts are also new and mostly untested. Like all software, they are only as reliable as their coding—and Gün was pretty sure he’d found a big problem. In an email sent to one of his graduate students, Philip Daian, at 7:30 p.m., Gün noted that the smart contract he was looking at might have a problem—on line 666. (They say the devil is in the details.) Gün feared the bug could allow a hacker to make unlimited ATM-like withdrawals from the millions, even if the attacker, who’d have needed to be an investor, had only $10 in his account. This staggering amount of money lived inside a program called a decentralized autonomous organization, or DAO. Dreamed up less than a year earlier and governed by a smart contract, the DAO was intended to democratize how ethereum projects are funded. Thousands of dreamers and schemers and developers who populate the cutting edge of computer science, most of them young, had invested in the DAO. This was real money, a quarter of a billion dollars, their money, meant to build a better version of the world, and every cent was at risk. Gün, who wears his dark hair short and looks a decade younger than his 45 years, had already been tracking and publicizing flaws in the DAO’s design. A few weeks earlier, on May 27, along with two colleagues, he’d urged investors to stop buying into the DAO until security issues could be fixed. It had been too late, however, and the program went live the next day. Smart contracts such as the DAO are built to be entirely reliant on their code once released on the ethereum blockchain. That meant the DAO code couldn’t be fixed. Other blockchain experts—including Peter Vessenes, co-founder of the Bitcoin Foundation—had also pointed out security flaws in the smart contract, but Gün appears to be the first to pinpoint the flaw that put the money in jeopardy. The problem was the code was so new that no one knew what to expect—or even if there was actually a problem in the first place. Gün had his doubts, too. This wasn’t even his job. He does this for fun. Daian didn’t think they’d found anything either. Over email, he said, “We might be up the creek ;).” Later, when Gün pointed to the error in line 666, Daian replied, “Don’t think so.” Gün says, “We don’t sound the alarm bell every time we find a bug that seems suspicious.” Instead, he went to bed to try to kill his cold—the one bug he knew to be real. “I was too miserable to sort it out,” he says. Four days later, Christoph Jentzsch lay on the floor of his home office, taking deep breaths, trying not to panic. It was Friday morning, and software developers all over the Western world were waking up to the news that the DAO, which Jentzsch had created, was being attacked. Gün had been right. Jentzsch, who has dark hair and a perpetual five o’clock shadow, lives with his family in the Mittweida region of Germany, a rural spot not far from the Czech border. Mornings in the Jentzsch household are a whirlwind as he and his wife get their five children—age 2 to 9—fed and off to school. Yet today, after his brother Simon woke him with a call that the DAO was being hacked, Jentzsch had to ignore his familial duties. “You’ve got the kids,” he told his wife. “I have an emergency.” This is the story of one of the largest digital heists in history. And while you may have heard last year that hackers breached Swift, the bank-to-bank messaging system, and stole $81 million from Bangladesh’s central bank, the DAO attack is in a different category altogether. It played out in front of anyone who cared to watch and couldn’t be stopped. Just as the global WannaCry ransomware attack in May laid bare weaknesses in computer operating systems, the DAO hack exposed the early frailties of smart-contract security and left many in the community shaken because they hadn’t found the bug in time. The aftermath would eventually pit good hackers against bad ones—the white hats vs. the black hats—in the strange and futuristic- sounding DAO Wars. The roots of the DAO belong to an idea Jentzsch borrowed from another internet-fueled phenomenon: crowdfunding. The 32- year-old Jentzsch, a theoretical physicist by training, and a few colleagues started Slock.it in 2015. As they considered how to fund the company, Jentzsch approached it as many had—sell a digital currency, effectively a token, to raise cash. But why should each new startup have to program its own initial coin offering? Jentzsch wondered. What if one huge fund ruled them all? He introduced his idea to the world at DevCon 1 in London in November 2015. “What is the blockchain way of creating a company?” Jentzsch asked his audience. “Of course, it has to be a DAO.” It would work like this: Ether, a virtual currency like bitcoin, would be used to fund and develop applications on the ethereum blockchain—things such as making a music app similar to iTunes or a ride-sharing service along the lines of Uber. Investors would buy DAO tokens with their ether; the tokens would allow them to vote to fund projects they liked. If the app they backed made money, the token holder shared in the profit. In the six months he spent creating the DAO, Jentzsch thought it would raise $5 million. From April 30 to May 28, the DAO crowdfunding pulled in $150 million. That’s when ether traded just below $12. As the price of ether rose in the following weeks to $20.75 the day before the attack, so too did the value of the DAO, putting a $250 million target on this thing Jentzsch had unknowingly brought into the world with a fatal, original sin. “Our hope was it would be the center of a decentralized sharing economy,” says Jentzsch, who now regrets not capping the amount raised. “For such a big experiment, it was way too early.” In the weeks after the attack, Jentzsch and the rest of the ethereum community would come to grips with their own crisis that, writ small, echoed the bank bailouts and government rescues of 2008. “It became too big to fail,” he says. But why would anyone invest in the DAO in the first place? It has something to do with the strain of digital libertarianism at the heart of the ethereum community, much like the set of beliefs that led to the birth of bitcoin. Think of bitcoin as the first global currency whose use can’t be stopped by governments or corporations; on top of that, bitcoin is almost impossible to hack. Ethereum, then, is another level beyond. It’s an uncensorable global computer. As amazing and unprecedented as that is, it’s also a bit terrifying. Brought to life, the DAO ended up staggering off the table and turning on the community that wanted it so badly. Accustomed to working into the night to stay in touch with colleagues in North America, Jentzsch blows off steam by jogging or kayaking on the nearby Zschopau River. Yet on that Friday morning, he had the more pressing task of pulling himself up off the floor and dealing with the attack. “I went into emergency mode: Don’t try to save the DAO,” he says. “No, it’s over.” It was far from over. Several hours later and half a world away from the Jentzsch household in Mittweida, Alex Van de Sande was waking up in his apartment in the Copacabana neighborhood of Rio de Janeiro. The baby-faced ethereum developer had been born in the small fishing village of Santa Cruz Cabrália in the Bahia region of Brazil and moved with his parents to Rio when he was about 3 years old. These days he’s known as “avsa” on Reddit and Twitter. After reaching for his phone to see why it was blowing up with Skype messages, he turned to his wife and said, “Remember when I was telling you about that huge unhackable pile of money?” She nodded. “It’s been hacked,” he told her. His first thought was to get his DAO tokens out. He owned about 100,000 of them, valued at about $15,000 at the time. He’s the lead designer of the Ethereum Wallet app, a program that allows him and anyone else to interact with the blockchain. Van de Sande scrambled to log in to it, but his password didn’t work. It was glitching, and as he worked to fix it, his panic subsided. He realized he shouldn’t be bailing on the DAO but trying to save it. And to do that, he needed Griff. Griff Green, who’s worked variously as a massage therapist in Los Angeles and a community organizer in Seattle, is one of only a handful of people in the world who holds a master’s degree in digital currencies. He got it online, natch, from the University of Nicosia. A self-described “dreamer,” the 32-year- old is the closest thing Ethereumville has to a mayor. Green knows everybody; in fact, he’d been the first to relay word of the attack to Simon, Jentzsch’s brother and a co-founder of Slock.it. Green had been working for Slock.it for about six months by then and woke up that morning in the house belonging to Jentzsch’s mom in Mittweida. Jentzsch is one of nine children, so his mother had a spare bedroom where she could put Green up for a few days. Using his extensive contacts, Green started identifying as many people as he could who were interacting with the DAO—going so far as to ask strangers to send pictures or scans of their IDs—in an attempt to sort friend from foe. And then something strange happened: The attack stopped working. In the six hours since the attack began, the thief had managed to steal 30 percent of the DAO’s 12 million ether—which that day equaled about $55 million. “We don’t even understand why the guy had stopped,” says Van de Sande. Now Green raced to protect the remaining 70 percent of the DAO the attacker hadn’t stolen. Once Van de Sande got in touch with Green in Germany, along with two or three others, the foundation was laid for what would become known as the Robin Hood group—white hat hackers who’d devise a bold good-guy plan to drain the remaining DAO. To save the DAO, they’d have to steal the remaining ether, then give it back to its rightful owners. And yet as they scrambled that Friday, qualms emerged within the group. “What does it even mean to hack something?” Van de Sande asks. No one knew if what they were about to do was legal. Also, wouldn’t their hack look just as bad as the theft they were trying to stop? Then there were the practical issues. “Who pushes the button?” he remembers wondering. Doing so would initiate their counterattack and alert the community. “Someone has to push the button.” The price of ether the night before the attack had hit an all-time high of just above $20. News of the hack sent it tumbling to $15 by the end of Friday, wiping out almost a half- billion dollars in market value. At that price, the DAO still held $125 million, and the Robin Hood group worried the attack would resume. They might be the only line of defense if it did, so Van de Sande agreed to use his DAO tokens to fuel their counterattack, thereby becoming a public face of the group. At this point, it might help to think of the DAO as the spacecraft in Alien after Ripley initiates the self-destruct sequence. To flee, she’s forced to use an escape pod. DAO investors had to initiate a similar sequence to deploy escape pods that would allow them to get their ether out of the DAO. The code that dictated the escape pods’ behavior is where the bug lived, so to steal the remaining DAO funds the Robin Hood group would have to be in a pod to exploit the flaw—and because of the way Jentzsch wrote the DAO, they had only a short window of time and just a few pods to choose from. A few minutes before launching the attack, Van de Sande joked on the group’s Skype chat, “Let’s go rob a bank!” No one laughed. “Not everyone really appreciated the humor,” he says. In his Copacabana apartment, Van de Sande readied to push the button on his laptop. Then, suddenly, he lost his internet connection. His router was down. “I was like, What the f--- is going on here?” he says. He had less than 30 minutes left to execute the Robin Hood hack. He frantically called NET, his Brazilian internet service provider, but couldn’t get past the automated customer service experience. He says the robotic voice told him, “We see there’s an internet issue in your neighborhood.” The irony was not lost on him: Here he was trying to steal millions of dollars from a robot but was being waylaid by another robot. “Then we missed,” he says. The window closed. He went from the high of feeling like they were about to come to the rescue of the vulnerable DAO to the crushing low of having their international connection severed by NET’s breakdown. He took his dog, Sapic—named after the one in Pedro Almodóvar’s All About My Mother—for a walk, then crawled into bed, defeated. The next morning was Saturday, and Van de Sande tried to reconvene the Robin Hood group to infiltrate another escape pod. But folks were busy and couldn’t get together. “We felt like the worst hackers in history,” Van de Sande says. “We were foiled by bad internet and family commitments.” Who, exactly, were they at war with? No one really knows, but there are some clues. One address the attacker used is 0xF35e2cC8E6523d683eD44870f5B7c C785051a77D. Got that? Like everything else in a blockchain, a user’s address is an anonymous string of characters. But every address leaves behind a history on the blockchain that’s open for examination. Not that it makes sense to 99.9 percent of humankind, but Green gets it. To pull off his heist, the attacker needed to create a contract that would interact with the DAO. He did so on June 15 and deployed it in the early morning hours two days later, according to Green. Once activated, the attack contract started sending about $4,000 worth of ether through the attacker’s account every three or four minutes to drain the DAO. But where did the original money to fund the attack come from? To interact with the ethereum blockchain, every contract must be funded by an amount of ether. This attack contract was funded by two addresses, but tracing it further back becomes tricky. That’s because the second address used an exchange called ShapeShift to send 52 ether into its account on June 14. ShapeShift doesn’t collect any information on its users and says it turns one virtual currency, such as bitcoin, into another, like ether, in less than 10 seconds. While there are valid reasons for using ShapeShift, it’s also a great way to launder digital assets and cover your tracks. After the attack contract stopped working, the thief needed to deploy it again, says Green. He tried but failed, and after a few more transactions, the hack whimpered to an end. (One possible reason the attack stopped, Green says, is that the hacker’s tokens became corrupted, which means he had no way to exploit the bug.) We know this limited amount of one-sided information from the blockchain’s public record. Digital asset exchanges see both sides. An internal investigation by one such exchange concluded that the DAO attacker was likely part of a group, not a lone wolf, based in Switzerland, according to an executive there who wouldn’t speak on the record or allow the company’s name to be used. Exchanges are in the unique position of being able to analyze the trading activity of their customers because they know who they are, even if they’re anonymous on the blockchain. The executive says the exchange shared the analysis with the Boston office of the FBI, though there’s been no further contact since October of last year. Cornell’s Gün says he also spoke to the Boston office of the FBI—and to agents in the New York office and to the New York State Attorney General’s Office. “It’s very difficult to coordinate an attack of this kind without leaving breadcrumbs behind,” Gün says. He encouraged the FBI to look at the ethereum testnet, where programmers can run their code in a safe environment to work out kinks. The attacker wouldn’t just launch such a complicated hack without testing it, Gün says he told federal officials, and the feds might be able to get clues to his identity there. Gün says he also pointed them to addresses linked to the attacker, such as the one described above, that were listed by his grad student Daian on his blog. (The FBI declined to comment.) “I’m absolutely amazed. Why has no one traced this back and found out who did it?” asks Stephan Tual, the third co-founder of Slock.it. “It still bugs me to this day, because what that person has done is incredibly unethical.” On Tuesday, four days after the initial attack, the hacker returned and somehow resumed the heist. The Robin Hood group had feared this moment would come and was ready. Early Sunday morning they’d finally managed to convene online and successfully infiltrate an escape pod, but had held off their counterattack. Now they had no choice. One strike against the group was their distance from one another—one in Rio, others scattered about Europe. (Some of the group’s members didn’t want to be identified for this story.) It was important that they coordinate their activities because, like in Charlie’s Angels, they all had different specialties: Green the community organizer, Van de Sande the public face, others who wrote the Robin Hood group attack contracts. So Van de Sande needed to be walked through the step-by-step hacking process they were about to unleash, because that wasn’t his area of expertise. “I’ll be honest, I was excited,” Green says. “This is the craziest thing that’s ever happened to me. This is the craziest thing that’s almost ever happened to anyone.” Whether it was legal remains an unanswered question. “You literally have cyber ninjas warring on the blockchain,” says Vessenes, the programming expert. “What they’re doing is almost certainly illegal, but they’re claiming it’s for the greater good.” And now it was Van de Sande’s job to let the community know that the Robin Hood group counterattack was benign. He took to Twitter, where he wrote “DAO IS BEING SECURELY DRAINED. DO NOT PANIC.” A nod to the classic Hitchhiker’s Guide to the Galaxy, his plea to not panic was met with all the snark and real-life concern Twitter can handle. “NOTHING SAYS DO NOT PANIC LIKE ALL CAPS,” one user responded. “#RealLife is more exciting than
MrRobot !!” tweeted another. Yet as the Robin Hood group attack
gained steam, they noticed something strange and worrisome—the attacker was with them in every escape pod. “We escaped the mother ship, but now we’re alone in space with the alien we were trying to escape,” says Van de Sande. This was a big problem. Because of how Jentzsch wrote his code, the Robin Hood group would have to wait several weeks before they could secure the ether they recovered. Yet if the attacker was in that escape pod with the group, he could just follow them—what’s known as a stalking attack. If the hacker stalked the Robin Hood group, the ether wasn’t really safe after all. “The game only ends when one of these parties doesn’t show up to fight,” Van de Sande says. This, in essence, is the heart of the DAO Wars, the never-ending battle that would have to be waged to keep the recovered ether safe. If only there were a way to reverse the theft once and for all. What happened next is one of the strangest and most contentious episodes in blockchain’s early history. The morning of July 20 dawned cool and clear in Ithaca, N.Y., the home of Cornell. A weeklong ethereum boot camp on campus had brought developers and programmers from all over the world to town. The mood was anxious, but not because the workshops were about to begin. This was the day the ethereum community would decide to rewrite the past. The weeks since the DAO hack had been filled with acrimonious debate as developers, coders, investors, and other community members considered their options to undo the theft. As the Robin Hood group battled the attacker mostly in private, a public debate was raging. The white hat hackers weren’t the only ones trying to save the DAO. Jentzsch worked almost around the clock, fielding hundreds of requests from DAO investors on what they should do. Vitalik Buterin, 23, who created the ethereum blockchain before he was 20, became a focal point as he led the community through their options. In short, what they could do was change the ethereum blockchain to fix the DAO, but only if they got a majority of computers running the network to agree to a software update. Pull that off, and it’s as though the attack never happened. This is known as a hard fork. The decision stirred such strong reactions that it remains controversial a year later, both within the ethereum community and with bitcoin users who insist a blockchain’s history is never to be tampered with. In an interview in October, Buterin was unapologetic about pushing for the change. “Some bitcoin users see the hard fork as in some ways violating their most fundamental values,” said Buterin, who didn’t respond to requests to speak specifically about this story. “I personally think these fundamental values, pushed to such extremes, are silly.” Within the ethereum community, at least, Buterin’s views won the day, and computer nodes all over the world accepted the fork. Contained in block 1,920,000, the fix to the DAO was simple and did only one thing—if you had ether invested in it, you could now get it out. But why hadn’t the attacker made off with his money? It had been more than a month. The same code that exposed the DAO to the theft, in the end, enabled the ether to be returned. Everything to do with the DAO is a parameter: rules, if-then statements, and more rules that are all finalized before the program is set loose. One of these parameters stated that anyone wanting to get their ether out of the DAO had to wait a certain amount of time—27 days after the initial request, then another seven days. This fail-safe, written by Jentzsch, applied to the attacker as well. So even though somebody had effectively robbed a bank, he then had to wait 34 days before crossing the street to make his getaway. While he was waiting, the money was stolen back. A month after the original heist, the ether thief now had nothing to show for his caper. Back on the Cornell campus, ethereum boot camp attendees celebrated. The next day, Gün brought Champagne to the session he was teaching. He’d pasted makeshift labels on the Chandon bottles with a picture of the utensil that said, “Congratulations on the successful fork.” Then something else unexpected happened. The original ethereum blockchain, the one with the DAO attack in it, kept growing. Imagine a hard fork is a branch of a tree that sprouts in a different direction at the end of the main limb. The end of that limb is supposed to wither after a hard fork, but here it continued to grow as a small group of users continued to process transactions on that version of the blockchain. Instead of dying, this became a second form of ethereum, quickly dubbed ethereum classic, complete with a digital currency that now had value. Even in the science fiction world of blockchain, this was an unprecedented turn of events. It meant the DAO attacker suddenly had about 3.6 million ethereum classic coins in his DAO account, known as the DarkDAO, which were slowly gaining in value. The Robin Hood group held about 8.4 million, because in this parallel universe they still controlled 70 percent of the DAO funds they had recovered. The Robin Hood group couldn’t believe it. “We did everything to avoid this, but now we’re being dragged back into this fight,” Van de Sande says. Now, the bitcoin supporters who viewed the hard fork as a violation of the core values of blockchain could back up their belief by buying ethereum classic. That’s exactly what entrepreneur Barry Silbert, a heavyweight in bitcoin circles, did. “Keep in mind, the original chain is ethereum classic,” he says. “The fork is ethereum.” Putting his money where his mouth is, Silbert’s firm, Grayscale Investments, recently issued an investment thesis outlining the benefits to ethereum classic over ethereum. A section heading sums up the rationale: “The DAO and the Death of Principles.” Alexis Roussel, co-founder of Bity.com, a digital currency broker in Switzerland, still marvels at the aftereffects of the hard fork and the wild world of the blockchain. “This is something that doesn’t happen in traditional finance,” he says. “If something happens with Apple, you don’t suddenly have a clone of Apple.” It’s been about a year since the DAO attack, enough time to take stock of what went wrong. Van de Sande is eager to move on. “It was really just a blip,” he says. “We are ready to move past it and leave the DAO story behind us.” Green, who’s organizing an ethereum conference at this summer’s Burning Man festival in the Nevada desert, has kept a sense of humor about it. “The Robin Hood group was just a s--- show,” he says with a laugh. “I hope the movie portrays it better than it actually was.” As for the bug itself, apparently many smart people looked at the code before Gün but missed one major flaw. The order of commands in the code allowed DAO token holders to withdraw any profit they’d made from their investments. It reads “withdrawRewardFor(msg.sender)” and adds, almost improbably, a note to anyone reading the code that says, “be nice, and get his rewards.” That’s line 667—let’s call it “The Neighbor of the Beast Bug.” If the withdraw line had come after these lines: totalSupply -= balances[msg.sender]; balances[msg.sender] = 0; paidOut[msg.sender] = 0; return true; the attack wouldn’t have been possible, Jentzsch says. But if the code had been in the correct order, the reward parameter wouldn’t have worked. As for the note, this line of code was meant to allow investors to withdraw any profit—“Reward”—their investments had earned. Instead it became one of the biggest backdoors in hacking history. It would have been better to not pay rewards during the split function from the DAO, what we’ve been referring to here as the escape pods, according to Jentzsch. Another decision he made when he had no idea of the bug shows how quirky and unforgiving code can be. “If the capital ‘T’ in line 666 had been a small ‘t,’ that would also have prevented the hack,” he says. Jentzsch has many regrets but insists no one was aware of the specific problems in lines 666-667 (other observers had pointed to flaws in other lines, just not here). Had more people looked, “it would have made no difference at all,” he says. “If you don’t know what to look for in a security audit, you won’t find it.” Even Gün, who had it in his grasp, let it go. “I still missed it,” he says. Green’s emotions are still raw related to Gün. “I actually got really pissed at him about this,” Green says. “He started bragging about how he found the bug.” He adds that it was “very irresponsible of him to not tell anyone of his inkling.” Still, Green “respects the hell out of Gün” and says they’ve since made amends. Asked to recount that night last June as he lay sick in bed, Gün says, “I came away from this thinking there’s potentially an issue.” But he’d consulted Daian, his grad student (“whom I trust”). Daian had said it’s “not exploitable.” Gün says that had he been certain of the danger, “I would have told people.” In a blog post that explained the mechanics of the DAO heist Daian published the night of the attack, he gave a shoutout to his professor in the acknowledgments. “Gün, we were so damn close—sorry it wasn’t quite enough this time :),” Daian wrote. As for the attacker (whoever he or she or they are) and the ethereum classic booty, Gün says, “Great, wonderful, he should cash out.” The hard fork proved it wasn’t just the DAO that needed to be fixed, but the ethereum blockchain itself. He says: “The fault lies somewhere on the system side as well.” But the fear that smart contracts are too clever by half and that by extension so is the ethereum blockchain itself—prevalent in the days following the DAO attack—has dissipated. At least that’s the market’s verdict, judging by the price of ether. After the attack, it traded from $10 to $12 for about nine months. Then in March it took off; it’s valued at $341.19 as of June 12. (That would have valued the DAO at $4.1 billion, but let’s not even go there.) Ethereum classic has risen as well, and it now trades for $18.71. Both versions of ether remain viable, in other words. The thief holds one; the revisionists, the other. Going forward, the choice is really: Whom would you rather believe? Since the hard fork, the attacker ended up making off with his ethereum classic. That means he got away with about $67.4 million, assuming the stash hasn’t been sold. Not too shabby, 0xF35e2cC8E6523d683eD44870f5B7cC785051a77D. Leising covers market structure at Bloomberg News in New York. To contact the author of this story: Matthew Leising inNew York at [email protected] To contact the editor responsible for this story: Joel Weber at [email protected]
Ethereum is almost certainly the number 2 coin in comedy gold. It will likely surpass Bitcoin in comedy gold long before it passes it in market cap. Thanks in large part to a spam-based marketing campaign on Reddit, it also has a dedicated base of critics. After its IPO, it was known as “Inthereum” for a while, infinitely powerful of course, as vaporware can do anything. It had a major version release, then another. Finally, a major smart contract, in terms of valuation, came along: The DAO. Not to be confused with other DAOs, before and after. The DAO was the biggest. It was going to be the best; it already was the best! Euphoria was off the charts. Until just a few months in, a bug was found. And the killer app became the flash point. What could they do? Well, hard fork and give the money back, of course! And so they did. “Code is Law”; but this is actually good for Ethereum because “[a]lthough some do question the analogy ‘code is law’. I do not. We just found out that we have a supreme court, the community!” [1] After the D'OH, Ethereum struggles to top its ATH comedy gold, but there is still a bright future for popcorn and comedy gold from Ethereum.
5 Largest Veins of Comedy Gold
Here are the largest comedy gold veins in Ethereum in potential reserves in our estimation in approximately descending order:
Cultlike euphoria - Now, this can certainly be said to be common to almost all cryptocurrencies. But Ethereum seems special here, even more than Bitcoin's community. There is a real belief here that this coin is going to change the world. This helps play into a "this is very good for Ethereum" mindset, wherein even the D'OH fork was a great success!
Vitalik Buterin - The best name in cryptocurrency! Young genius central to Ethereum and almost universally seen as the most important leader in the project. In our view, his endorsement and leadership during the D'OH fork led to that route being taken. That is, we believe if he had opposed it from the start, he may have been able to prevent it or at least have led to what is now called ETC being the dominant of the two.
And so in our view, Mr. Buterin runs a billion dollar cryptocurrency right now. He and his team seem to have done reasonably well so far; it seems likely they'll continue to thrive. To the best of my knowledge, confirmed on /ethereum, there hasn't been a drug market implemented in Ethereum or trading with ETH so far. But while it seems like a terrible idea, because of the lack of privacy and proven mutability of contracts, it seems like eventually there's going to be a major drug market accepting ETH just because it has such a high value. And, they point out, monero and zcoin’s core privacy feature will apparently be available on ETH after this next fork, so look forward to anonymous ETH fueling drug markets! And then the interesting question will be raised of how Chief Justice Buterin will rule on the case, whether it is worthy of an intervention or not. If not a drug market, then another buggy and hacked contract. Or a hacked exchange, and the question of whether to make it or its users whole, or "let the hacker win".
DAOs - From the beginning, it was proposed that Ethereum itself and its reserve fund would be turned into a DAO. How exactly this was going to happen would be figured out later of course. There was an initial estimate of 2016 for the transition.
Of course, in 2016, The DAO and the D'OH happened. I'm not aware of a current further push to put all of ETH's future funding into a DAO. But I'm sure the topic will resurface. And it will be hilarious on so many levels. The DAO actually collapsed too soon for peak comedy gold extraction. It had been predicted that there would be no consensus on any proposals and that nothing would be funded, and that there would be gold from that. But it was just a few months in when the bug was found. And while the D'OH fork was certainly a rich vein of comedy gold, it wasn't as rich as what the DAO could have been if it had floundered around for a year or so before the hack. Surprisingly, there's actually a running, apparently working DAO on ETH that was started even before The DAO: digixDAO. If it keeps on running, it will continue to be hilarious as other DAOs fail to learn from it. If it fails, there's all the more hilarity for Ethereum, making it the platform where anything complicated enough to look like an original use case will break. The very existence of digix is proof-of-comedy-gold.
Immutability - The whole central notion of immutability is going to be a recurring question for Ethereum after the D'OH. While there was a lot of sentiment of "just this once and never again" at the time, there will someday be another major issue, and the precedent will mean that at least a major debate among the community will be had. Ethereum is "mostly immutable". Bitcoin is far better protected here, because while it's true they've hard forked to fix a bug before, that was years ago and the community is far more fractured now. Ethereum has a demonstrated capacity to do both routine and controversial hard forks. This strength is also a challenge, as it will invite constant legal and ethical questions about when it's appropriate to modify the chain itself with a fork: that is, rolling back some or all transactions after major bugs, thefts, frauds, and so forth.
Concentration of funds - This one I'm just guessing at. Although rich lists do exist, obviously one entity like an exchange could pool funds in an address without one person owning that much, or one person could splits their coins among many accounts. But it gives a rough guide. In Bitcoin, the top 113 addresses, having more than 10,000 BTC, in total are 17.46% of the current supply [ 2 ]. And in Ethereum, it's true that the top two accounts are marked as exchange accounts [ 3 ]. Still, having lots of funds concentrated in a single exchange wallet seems to still have some potential for comedy gold. In Ethereum, the top 50 addresses have more than double the proportion of the top 113 in Bitcoin, a bit over 40% of the current supply. My guess would be there are still a lot of people who invested heavily in the initial ICO who have held onto a significant portion of their initial ETH. While some of these top addresses are exchanges, I think there are probably many individuals represented in here as well, and every one of them is a multimillionaire from this account alone.
Of course, so far, because ETH is still smaller than BTC in overall market cap, these top addresses aren't as huge as the top addresses in Bitcoin in current market value. But if ETH were to overtake BTC's current position with a relatively unchanged distribution, there would be some real comedy gold coming off this factor. Cribs could have a spin-off Ethereum series. This concentration was a part of making The D'OH what it was in my view as well: in Bitcoin, there would never have been so much of the coin tied up in one particular venture, at least not now. But in Ethereum, this concentration and groupthink can combine to hilarious effect.
A Brief History of Comedy Gold in Ethereum:
“Laws, like sausages, cease to inspire respect in proportion as we know how they are made” - John Godfrey Saxe In the beginning, there was an offering. The greatest coin the world had ever seen; step right up and buy it! There was even code; this is no vaporware! Sure, there was more work to be done, but the ICO would fund that work, the founders would get a little, and create a reserve for the future and the rest would be mineable. There was also some of the most vociferous objections on BCT, declaring that the stake allocated to the founders was too large, pointing to other coins which had done smaller or done without. Arguing against the reserve; arguing against having a presale at all. Some people, of course, completely failing to read the documentation accurately to see what was even being proposed. And an almost complete radio silence from this large team working around the clock on Ethereum. It took some months from when the initial ANN was made until the sale actually started, but by the time they had their sale, they had perhaps the best documentation at launch to-date. Of course, there were some areas which seemed to lack some detail, like the budgeting, but never mind that, it was finally launching! Launching the sale, at least. In July and August of 2014, Ether was first sold. It was described as “fuel” for the virtual machine they were going to build [ 4 ]. And then, a year later, Ethereum was released live. By July 2016, it had already had its first major crisis after The DAO was hacked and the D’OH fork introduced in response. But the fact that Ethereum was ever released, and that it was released so quickly, is truly incredible. There was more than one person who thought that the stated goals of Ethereum were not possible. And, of course, many initial goals and deadlines didn’t happen. But unlike the railbirds on BCT were convinced, the team did not fail nor did it run off with the money. They were given a blank check, and they actually delivered a working product which has been successful so far financially. Of course, having its flagship smart contract go belly-up quite so quickly after having finally gotten a “killer app” seems rather unfortunate. The oracle problem (the question of how to reliably relate smart contracts to the outside world) seems unresolved, but partial solutions are inevitable and can only serve to make increasingly complex and thus popcorn-loaded contracts possible. Right now, all seems relatively quiet. But rest assured, there remains plenty of euphoria and gas to drive many more cycles of comedy gold production. Ether huffers need something to throw their ETH at. The more complicated; the better! Given some of the creations that have been made in NXT, for instance, a few more years of creativity on ETH should yield some very complicated and pop-corn rich smart contracts.
Researcher’s Narrative:
I was relaxing in my office, waiting for business. It was a dingy little one-room affair, but it would serve for now. Particularly with no clients. I had poured myself a double shot, and was about to enjoy it, when suddenly the door opened. A man walked in, familiar somehow although I couldn't place him. I reached out my hand instinctively, and instead of shaking it, he handed me a dollar. "Hello?" He pointed at the sign in the window, advertising a promotional one dollar gold survey for the first client. Always astute, I quickly surmised he wished to hire me. "Of course, sir! What coin would you like?" "Ethereum." "Certainly! And may I have your name for the log?" "Tyler Durdan." And with that, my newest client left. I downed my double and poured a generous triple to follow it. This was going to be a long day. Ethereum was the ultimate prize in my line of work. The coin which proved the adage that truth is stranger than fiction; which had proved itself a lucrative source of comedy gold. And who am I? Guy Noir, private comedy gold surveyor. I've seen things you people wouldn't believe. Premined scamcoins crashing on noname exchanges. I watched popcorn glitter in the dark on forgotten the BCT threads. Popcorn junkies strung out on a high, and I've delivered them more comedy gold, popcorn, salt and butter. There is never enough. A dark night in a world that never sleeps and knows how to keep its secrets...But on the 12th Floor of the Acme Building, one man is still trying to find the answers to life's persistent questions: Guy Noir, private comedy gold surveyor. Thank you, Narrator. Now, as I was saying, Ethereum is overloaded with gold. But the core is pretty straightforward: Ethereum promised "smart contracts". Immutable. Turing-complete. This was what Bitcoin lacked. The bee's knees. Crypto 2.0. What could go wrong? We'll skip over the "Inthereum" period. Perhaps the vaporware criticism was never fair: from their version, they had Proof-of-Concept code; they went through some iterations and eventually got to release. Let's note clearly that there was plenty of time to determine some sort of official policy for what to do about a buggy or improperly written contract losing money. In Bitcoin, every hack has been a SFYL event, although it’s true that a bug in the coin itself was hard forked away before. Mt. Gox tried to blame malleability, but there was never a fork to try to recover funds. In Ethereum, immutability was often talked about. So far as I saw in skimming, “what if” scenarios to undo bugs wasn’t brought up front-and-center. Nor was immutability being debated that I saw. So Ethereum releases. A major contract is launched, The DAO, which gets an astonishing portion of ETH invested. The world's largest crowd sale as they ultimately called it. All the major players in ETH buy into it, including Vitalik Buterin, the creator of Ethereum and the best name in cryptocurrency. Just as they're starting to get into the comedy gold that The DAO doesn't really have a purpose, a bug is discovered. And just as its leader is assuring everyone that no funds are at risk, the funds start being drained out of the contract by an unknown party. And suddenly immutable means "immutable unless we screw up on the biggest contract which everyone important has invested in heavily". Ethereum ultimately hard-forks to return investor funds and basically unwind The DAO. After claiming that the bug was in the contract, the coin itself is hard forked to fix the issue. And the first Ethereum clone results, one which simply does not follow the new hard fork. So the natural question is: when can a contract be changed? In the first page of the Ethereum launch, this question was implied by asking about what would happen if there were an assassination market hosted by a smart contract on Ethereum. Of course, in reality, Ethereum is not really functional enough at present to enforce such a contract, but the question remains in case Ethereum were to actually attain a functioning smart contract platform. Attempted reference to Tears in rain monologue, credit to Rutger Hauer Guy Noir and narrator text lovingly stolen from Prairie Home Companion's Guy Noir, by Garrison B. Keillor.
Researcher’s Rant
Filed for psych eval Twenty pages into the BCT ANN, I believe I have contracted cancer, again. I’m reminded of why I don’t generally go on BCT. As bad as altcoin forums tend to be for their circlejerking, it’s almost better than the, well, there’s really no way to put it other than FUD that inevitably appears in response to anything. Of course, it’s not paid shilling so much as it is willful and vocal ignorance. For all the critiques in that thread, most of them are utter nonsense and simply are misreading the initial information. On the other hand, it’s January 27th in the thread by now, with February 1st and the pre-sale start, and they don’t have their “prospectus” up yet. I also haven’t seen the change in mining rate yet. Side note: eMunie; wtf? I guess I missed something? Either it’s gone through a namechange or it’s dead, because a quick coinmarketcap search didn’t find anything. A comedy gold mining project for another day. Great; spoiler alert: fundraiser delayed apparently, so even more cancer to read through in that thread on the way to getting to a prospectus! The first 44 pages of the thread was summarized thus: “I want to believe. Why are you not speaking to us? Throw me a bone. Just tell me what I want to hear, and I'll gladly throw my money in.” [ 5 ] Would that I had only had to read that quote rather than all 44 pages, and facing many more. Pages and comments dragged on as I waded through the low-grade popcorn. When would this prospectus be released, so my torment would end? Oh god: a side-thread shows that by the time they get to April, there’s still no prospectus or presale date or estimate of when there may be a date [ 6 ]. It’s time to give up on reading through the cancerous mainthread on BCT and start jumping ahead pages to find the pre-sale and prospectus. Okay, finally, in July, they release documents and start the sale [ 7 ]. Good enough. I have mountains of links on my desk. Comedy gold is overflowing, but this is a survey expedition, not a mining operation. But by the time it’s surveyed, there’s always so much gold lined up to mine it gets hard to leave it behind and leave with the samples. It’s time to hammer out some copy and close this file. Folks, we hope you’ve enjoyed this descent into madness and comedy gold brought to you by the Comedy Gold Survey Company and our patron Tyler Durden. Do you need more comedy gold in your life? Of course you do! So please donate today; every $1 helps! I’ve added a new special: $5 lets you choose the next coin to be surveyed! Thanks again to Tyler Durden, and I will now be re-watching Fight Club and questioning my sanity. Cheers y’all! Resources:
https://en.wikipedia.org/wiki/Ethereum - Okay, you’re never supposed to cite Wikipedia, but still, this is a pretty solid first place to look and its references list will be better than mine anyhow.
Edit: 3/26/2020: Removed a link to a comment per request from the user. Footnotes and other links:
[ 6 ] https://bitcointalk.org/index.php?topic=448923.msg6438910#msg6438910 - April 28th, 2014; Ursium says “We won't issue further comments regarding the Ether Sale, until we have completely finalized the framework for it. In the meantime enjoy the free technology, people are already building apps on it, which is exciting Smiley” ; this official Q&A thread then abandoned; these guys clearly hates BCT as much as I do
[ ] https://blog.ethereum.org/2016/06/17/critical-update-re-dao-vulnerability/ - Dated June 17th 2016, Buterin recognizes bug and proposes actions. Interestingly, suggests high value (>$10 million) smart contracts should not be run as ecosystem not mature enough yet. “This is an issue that affects the DAO specifically; Ethereum itself is perfectly safe.”
[ ] https://bitcointalk.org/index.php?topic=412878.msg4497464#msg4497464 charleshoskinson, January 14th, 2014; “Current plans are for a 60 day fundraiser, starting from Miami on; however, we are still exploring this and thus will set something in stone closer to the conference.” - fundraiser launches in less than a month but date not even set yet; also “No, the rate of inflation is always decreasing and comparable with bitcoin.” and “In terms of ROI, this should be reflected with a positive ROI.” ; also “As for P2P exchange, we have a close relationship with Open Transactions and combined with a namecoin style contract provided in the whitepaper and bitmessage makes a significantly more efficient distributive exchange than is possible with BitShares. Trust is not required as auditing can be done on Ethereum blockchain and we wouldn't suffer any bloat. “
[ ] https://github.com/ethereum/wiki/wiki/White-Paper - Accessed Feb 12, 2017; shows a different version of the issuance model, including the variable presale price modification and reduced future mining. But constant mining reward is still shown and fixed.
[ ] https://forum.ethereum.org/discussion/2007/whitepaper-pdf - Thread from April 2015 where Stephen Tual says changes in whitepaper were “as to how significant these were, probably not much”; “We had a hosted copy of the WP on our .org website, but that is now pointing to the github (as the pdf, by definition, was static).”
[ ] https://bitsharestalk.org/index.php/topic,1854.0.html Thread which goes into Bytemaster response to initial Ethereum proposal; points out that running something complicated like Bitshares on Ethereum would be cost prohibitive. Also predicts Ethereum becomes PoS.
[ ] https://github.com/slockit/DAO “Our Standard DAO Framework allows people to create Decentralized Autonomous Organizations (DAOs) governed by the code in this repository written immutably to the blockchain.”
[ ] https://bitcointalk.org/index.php?topic=428589.msg4689634#msg4689634 - “We will have a legally vetted prospectus available on the first day of the fundraiser that will contain our terms and conditions as well as the risks and uncertainties as we understand them in the ecosystem.” - charleshoskinson
[ ] https://bitcointalk.org/index.php?topic=428589.msg4690140#msg4690140 - “I think this whole project will get forced underground onto the Tor network in short order because the illegal stuff will be in the blockchain instead of externalized. It will have to directly compete with bitcoin with both hands tied behind its back because it will be hard for people to even find a safe copy of the program to download. Am I to understand that you will not have a legal opinion supporting what you are doing?” - Seth Otterstad
[ ] https://bitcointalk.org/index.php?topic=428589.msg4718951#msg4718951 “We will switch our PoW from Dagger to a hybrid PoW/PoS system to be developed via a bountied competition conducted by our university partners and open to the general community for participation. The terms will be announced in late february including judges, specifications and the university partners.” - jubalix quoting some Ethereum promotional document
[ ] https://bitcointalk.org/index.php?topic=428589.msg4740396#msg4740396 “Creating the platform with new features is one thing. Competing in the real world of hype, adoption, and social marketing with Bitcoin, Litecoin, and Dogecoin is a completely different beast. Especially, when every coin is based on ever changing software. The software is secondary to the marketing and socialization at this stage in the ballgame.” - DieJohnny
[ ] https://bitcointalk.org/index.php?topic=428589.msg4817532#msg4817532 “Blockchain powered by Turing-complete language leads to a lot of unresolvable issues. It's not a scam, more like a failure where a lot of money is involved. I hope Vitalik is smarter than Matthew N. Wright and knows when it's time to stop…” - Come-from-Beyond
[ ] https://bitcointalk.org/index.php?topic=428589.msg4888045#msg4888045 - “oh and vitalik is a time traveling android sent from a dystopian future (Btw there is seriously a graphic novel coming out about it called vitalik ad 2134).” - charleshoskinson ; this really needs to be followed up on
[ ] https://bitcointalk.org/index.php?topic=448923.msg4936213#msg4936213 - “Also a fork of this nature would likely honor the original ownership structure and thus have no impact upon purchasers and early stakeholders of ethereum.” - charleshoskinson ; moment of prescience to ETC, although fork talks about was in different context
[ ] https://bitcointalk.org/index.php?topic=448923.msg4936673#msg4936673 - Feb 4, charleshoskinson uses 0.5x per year mining; every other source I’d seen so far quoted whitepaper at 0.4x. I wonder if typo or earlier version? I rather like the “TS(t) = 1.5X + 0.5X*t” model he does.
[ ] https://www.reddit.com/ethereum/comments/1wksgq/lets_help_come_up_with_a_better_fundraising_model/cf2yqeu/ - responding to a suggestion to change to “0.2x” mining rate, Jan 30th, 2014, vbuterin, “that may make investors happier, but it would also push us closer to the ‘100% premined’ camp and make another part of the community less pleased” - acknowledging common useage of the term, where IPO/ICO is a subset of premine (as in, anything before the mining).
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