Why do I remain bearish in ETHER?

How much do you know about Turing incompleteness?

ETHER SUFFERS FROM USING TURING COMPLETENESS

https://en.wikipedia.org/wiki/Turing_completeness


There was recently a 2021 hack of 650 million on ETH. The first one was in 2017 called the DAO hack and it causes the ETHER hard fork = ETHEREUM CLASSIC

Why do these hacks keep happening?
In computer science, there’s a concept of a Turing complete machine. A Turing complete machine is able to do everything that a modern computer can do from a mathematical standpoint. This is powerful because that means you can do a lot with it, especially when it is paired with a blockchain and a programming language.

What it also does, unfortunately, is introduce an infinite and unknown amount of attack vectors, which are potential ways that the system can be hacked. Combine this with a team of developers who fail to implement a robust set of test suites to make sure that the known attack vectors are handled and you get the ridiculous meltdown we are currently witnessing.

Something you should also know is that while you can’t prevent bad programmers from programming bad code, Ethereum has a duty to produce its smart contracting language in a way that mitigates these sorts of potential attack vectors. That would be great if there were people actually working on the core development of Solidity.

Turing Incompleteness
For complicated applications that run on independent computers, Turing completeness works great. If the system crashes, you just have to reboot it. Because these systems are generally private, you can create permissioning and swath off huge potential attack points and limit how people use your app.

In the blockchain, everything is public. The original Turing complete systems don’t really work well when you have everyone smashing everything all over the place. When a newbie programmer can trip over a wire and cause a $150,000,000 crash, you know something is wrong.

That’s why Turing incompleteness is the way in which we need to go. Not only is it safer, but the types of applications we’ve seen on the Ethereum blockchain thus far do not require Turing completeness and it has only done more damage than good. Most contracts right now are for crowdfunding and moving assets. Why are we supporting a system that does so much more?

It is because the marketing of ETH was in calling it world computer. The truth is, if it was one it would be a poor one because of the attack vectors this allows.

Programmers since 2017 have realized they need to permission themselves out of the system and only allow very specific operations to occur. It may not be a ‘true computer’ but that doesn’t matter. Unless your money is made in the world computer marketing arena. Crypto users just want to be able to do certain things on the blockchain and in public. ETHER does not seem to realize this limitation.

 

Interesting how quickly these ETH ETF applications were pulled. Less than a week.

https://decrypt.co/79070/vaneck-proshares-pull-ethereum-etf-proposals

https://www.coindesk.com/vaneck-proshares-abruptly-withdraw-ether-futures-etf-proposals

 

gensler has eth bulls worried.

 

$400 Billion dollar asset manager walks back commitment to ETH exposer. New report out states they are allocating up 5% of assets in their $164mm commodity fund to BITCOIN ONLY.

Original filing language below followed by updated news feed.


Per the Original filing:

"Neuberger Berman Commodity Strategy Fund’s (the “Fund”) investment strategy will permit actively managed exposure to cryptocurrency investments and digital assets through (i) cryptocurrency derivatives, such as bitcoin futures and ether futures, and (ii) investments in bitcoin trusts and exchange-traded funds to gain indirect exposure to bitcoin."


https://www.coindesk.com/neuberger-bermans-164m-commodities-fund-can-invest-5-in-bitcoin

 

Proof of work by energy consumption (volcano) isn't a drawback. It is a common misunderstanding, but it's actually the only way we know of to distribute and secure p2p electronic cash. Pow is what keeps bitcoin decentralized, permissionless, trust-minimized, all desirable features for a global, neutral monetary asset. Pow is how Nature works as well.

Proof of Work:
- Objective consensus
- Unforgeable costliness
- Exogenous security source
- Permissionless

Proof of Stake:
- Subjective consensus
- Forgeable costliness
- Endogenous security source
- Permissioned

 

USA: Pondering a trillion-dollar coin to use as an accounting trick. El Salvador: Harnessing volcano energy to produce Bitcoin\. What's more honest?

 

The ETH network is governed by politics: there are situations where ethereans consider it's opportune to confiscate the funds of a user even if there is no bug involved nor any rules of the protocol have been broken. In other words, on ETH your property rights are not guaranteed.

 

Bitcoin's Lightning network is a better proof-of-stake system than Ethereum's ETH2 network. Why? Because you can actually send payments with Lightning, this is impossible to do with ETH2.

 

There is still a lot of regulatory uncertainty around these DeFi tokens like ETH; unlike Bitcoin, they generally seem to meet the definition of being financial securities.

PoS vs PoW is a huge coming problem.

It’s time to delve into three concepts that will affect Ethereum. The first is about the trade-offs of proof-of-stake as a consensus mechanism in general, the second is the stablecoin centralization problem, and the third is the spectrum of centralization that various smart contract chains use to compete with each other on fees.

The Bitcoin network is programmed to create a new block on average every ten minutes and add that block to the blockchain, which consists of hundreds of thousands of blocks since inception in 2009.

A new block is produced by a bitcoin miner (a specialized computer) contributing processing power (and thus electricity) to solve a cryptographic puzzle that the previous block created, at which point the miner can package thousands of bitcoin transactions currently in the queue, into that block. That’s how transactions get settled. The network is programmed to target average block times of ten minutes, meaning on average every ten minutes a block of thousands of transactions is added to the blockchain. PoW got acid tested in 2021.

In the first half of 2021 China (by far the largest country in terms of miner concentration at the time) banned crypto mining, and approximately half the global Bitcoin network went offline and started moving elsewhere. Bitcoin’s payment network briefly slowed down, but otherwise kept working with 100% uptime. The difficulty adjustment then kicked in, and brought the network back up to its target speed. Imagine if Amazon or Microsoft were told with one week’s notice that they had to move half of their server capacity internationally; they would likely experience uptime issues for their services for the rest of the year (at least) as they moved and rebuilt half of their infrastructure. The Bitcoin network instead continued to operate with 100% uptime.

 

Proof-of-stake is more complex because there is no connection to real-world resources and the system needs a way to punish stakers that improperly vote on the “wrong” chain. In addition, they need a way to make sure stakers aren’t voting on all possible chains (which can’t be done with proof-of-work, because it takes real-world resources for each one). So, proof-of-stake is a much more complex system that will try to take away stakers’ coins if they vote improperly, and has ways of checking to see if they are voting on multiple chains.

Ben Edgington, a developer for Ethereum and someone who is in favor of Ethereum’s upcoming shift towards proof-of-stake, went on the Compass Mining Podcast and elegantly explained the long-term challenges that Ethereum has faced as it undergoes its multi-year (and long-delayed) shift from proof-of-work towards proof-of-stake:

The reason it has taken a while, you know we’ve relied on proof-of-work in Ethereum for five-plus years, is that proof-of-stake is complicated. Proof-of-work is fundamentally very simple, is easy to analyze, is easy to implement and deploy, and proof-of-stake has a lot of moving parts. You can code up a proof-of-work algorithm in a hundred lines [of code] or so. Our current clients are a hundred thousand lines or so for proof-of-stake.

And I think the theoretical foundations for proof-of-stake have taken time to mature. It’s not obvious how to make it robust, there are attacks like long-range attacks and things that just don’t exist in proof-of-work, that we’ve had to think through and come up with solutions to, so that’s just taken time. So we’ve relied on the tried and tested proof-of-work algorithm and it served Ethereum well.

 

Besides this larger amount of complexity, trust, and attack surfaces, Many would argue that the main issue with proof-of-stake is that it can be prone to centralization.

 

How?

 

With a proof-of-stake system, the more coins you have, the more voting power you have, and those with the coins are also the ones earning the new coins from staking. Since they don’t need to expend resources to stake, they can simply increase their overall staking amount as they earn ongoing coins from staking rewards, and exponentially grow their influence on the network over time, forever. Network dominance tends to lead to more network dominance, in other words.

 

Proof-of-stake is inherently equity-like rather than money-like, compared to proof-of-work. This is why Silicon Valley and Wall Street love ETHER. It something that mimics fiat. Those who have a lot of Ether = cantillon effect

 

Proof-of-Stake Technical Challenges big

Ethereum has been running into more acute scaling problems than Bitcoin, which has opened the door to a number of more centralized (and thus in some ways more efficient) competing smart contract blockchains.

And among those new proof-of-stake competitors, there are multiple examples of their systems running into technical problems.

One of the highest-profile issues involved the Solana blockchain going down for 17 hours, requiring a manual coordinated restart by validators

 

Solana is a popular VC-backed smart contract blockchain that tries to be a lot more scalable than Ethereum by implementing a combination of proof-of-stake with proof-of-history to achieve significant throughput. Guess why Silicon Valley folks like it?

You need to own a data center to run it: the rich remain in control.

 

Solana uses manual slashing. In other words, it’s a blockchain that requires human decisions to determine consensus if there are significant attacks on the network:

Slashing is a hard problem, and it becomes harder when the goal of the network is to have the lowest possible latency. The tradeoffs are especially apparent when optimizing for latency. For example, ideally validators should cast and propagate their votes before the memory has been synced to disk, which means that the risk of local state corruption is much higher = why the rick like it. They can alter it.

 

All smart contract platforms have a natural tendency to move towards greater and greater centralization, because the more centralized they are, the more efficient they are, and users want efficiency (e.g. low fees and fast confirmations).

Why the rich guys love them.

 

An October 2021 paper from Stanford (and financially supported by the Ethereum Foundation, to their credit) called Three Attacks on Proof-of-Stake Ethereum outlined ways to attack the system once Ethereum switches over to proof-of-stake. https://arxiv.org/abs/2110.10086