Of all the cryptocurrencies, ETH at least has a story about why it might have intrinsic value in the medium-term, beyond pure speculative passion: i.e. its use as a platform for smart contracts. But that potential only gets realised if more people use it for more significant purposes, rather than just for functionless ICOs or trivial games.
On the other hand, if this injection can help ETH grow this year, the backers of this fund should more than make their money back.
It's going to be an interesting year, I think. It's easy to shout bubble bubble bubble, and easy to shout buy buy buy. My hunch is that the reality will be more interesting than either.
My understanding of Ethereum is that it markets itself as a smart-contracts platform, and you need to have an associated coin (Ether) to pay people to run the platform.
But the number of Ether is fixed at 100,000,000ish. Which means that if the platform is successful, the coin will increase in value indefinitely. But I don't see why those who 'miss out' on the presale etc. (think banks, governments) would choose to hop on board at a later date - essentially gifting money to early adopters - when they'd be better off simply creating a new coin (or indeed forking Ethereum and awarding themselves more Ether). It all just seems very unstable, game-theory-ish situation.
> But I don't see why those who 'miss out' on the presale etc. (think banks, governments) would choose to hop on board at a later date - essentially gifting money to early adopters - when they'd be better off simply creating a new coin
This exact same argument has been repeatedly given to explain why Bitcoin would never break above $10, $100, $1000, whatever, or why Ethereum was doomed to stay in the pennies. Clearly the late adopters see more value in entering than they see a problem with gifting money to earlier adopters.
Creating a new coin or forking doesn't solve anything, they would be alone and it wouldn't have any value if nobody wants to trade in.
The value is what people value it at. Just because the supply is bounded doesn't mean its value will increase indefinitely.
> Creating a new coin or forking doesn't solve anything, they would be alone and it wouldn't have any value if nobody wants to trade in.
Well, is the point of Ethereum to make some cash at the expense of later investors (basically a Ponzi scheme), or does the platform have some intrinsic value? Point is, the platform itself can be duplicated at little cost (it's an open source project after all, just fork it), so the cost to the (new) user should be low (or more importantly, stable), even if the value proposition is high.
This logic leads me to conclude that almost all the value of Ether is purely speculative and could disappear at any time.
The software can be duplicated but the network of devs, users, validators, etc is harder to duplicate.
The intrinsic value of ETH is to use it to pay for transactions on the Ethereum platform. These transactions are used to form dApps that can be run without censorship. I would have said the value of that is TBD but now I'd stay that some minimum value has been determined (ICOs, DAOs, the Dai system, games, etc.)
I think anyone looking for an interesting use case for Ethereum smart contracts should check out how the Dai stablecoin works[1]. Using it is an eye opener, too (https://dai.makerdao.com).
Dai stablecoin is using oracles. What is eye opening about that. That you can't build something useful with Ethereum without trusting some centralized authority?
- Is it legal for effectively crowdfunded projects to then fund other projects?
- Ethereum has integrity, willing to change its core technology in order to become more scalable. But...
- Is "paying off" developers to build apps for it just evidence of the lack of apps naturally/organically being built?
- Yet Seed Stage funding from traditional VCs has dried up, so is this effectively a market response from technical-oriented now-wealthy investors, to make up for it?
I think these are hard yet important questions. Obviously, who doesn't wish they were rolling in this kind of cash to dole out? At the same time, we already have people building P2P dApps with our system (https://github.com/amark/gun/wiki/auth), you know, the ones that Ethereum/Dfinity/etc. can only dream of doing even after they hit their scaling goals (realtime character-by-character updates on decentralized social networks - https://www.youtube.com/watch?v=C3akdQJs55E , 3D multiplayer VR games - https://www.youtube.com/watch?v=s_m16-w6bBI , etc.), so it seems nonsensical that so much money is being offered to build Ethereum apps - is there genuinely a lack of developers?
In what world does ignoring your core principles and breaking promises to users in order to spare some speculatively valuable digital assets equate to integrity?
I think right now the easy money is all in ICO's. Talented developers have much more incentive to just create a new coin than develop a dAPP on Ethereum. Eventually, this ICO craze should slow down, and it will make more financial sense to develop on top of existing coins.
> Is it legal for effectively crowdfunded projects to then fund other projects?
This makes me wonder, people (presumably) bought into an ICO to fund a specific goal and not to enable a new age of venture capitalists.
Though this could be another classic sign that we are witnessing a bubble in its pre-bust stage -- would seem to fit with the "spike the punch bowl" phase but with replacing central banks with core cryptcurrency advocates methinks.
So much money and yet this is what they are betting on:
https://www.stateofthedapps.com/.
I just baffles the mind, how much money is being thrown at this. I think Ethereum is still mostly just a foggy idea of something that might have potential. But it is nowhere near ready to host any dapp that creates value. The chief problem is that while you can execute code in a decentralised manner, you cannot interact with the real world in a decentralised manner. You still need to have a trusted source of information from the outside world. And if that wasn't enough of a problem, anything that isn't a stupid game is going to run into legal hurdles very quickly.
The current solution is to rely on a Blockchain Oracle, a third-party smart contract that is hooked to real-world data feeds and acts as a data career.
I think that's what is meant by "a trusted source of information from the outside world". You can have as many layers of smart, trustless technology as you want sitting between the dapp and the data source, but it always comes back to relying on a trusted (and potentially corrupt/compromised) real-world source. Maybe it has to be multiple independent sources? Sorry - there's still no way for those sources to cryptographically disprove any collusion.
> There's still no way for those sources to cryptographically disprove any collusion
Honest question, do blockchains do this? My understanding is that blockchains operate under the assumption that collusion is common and bad actors are rampant and are designed to mitigate it, not that they can prove collusion is not happening.
Hypothetically, if every mining node provided a real-world value in every broadcast, then wouldn't the consensus mechanism operate as an oracle just like the transactions operate as a ledger?
Oh the cynicism here is so sad. To everything there is a season, I guess. Anyway! Does the Dai stablecoin not undermine this idea that nothing worthwhile can be built on Ethereum? Don't like ICOs? Neither do I. While the evolution of ICOs in 2017 was really interesting I think DAOs (and things like DAICOs) will see more prominence in 2018. It is an exciting world!
It’s a common error of judgement to assume that people who don’t share your unvarnished enthusiasm are cynics. One way to test for this is to see if you can intelligently address the concerns of “cynics” without just waving your hands and invoking the rosy future you imagine. It can be helpful to look to the past and present and try to understand why people have reservations, and address them comprehensively.
Every day I'm further convinced that all that's happening in this space at the moment is that cryptocurrencies are soaking up enough fiat money to push it at someone to come up with a good reason for them to exist.
23 comments
[ 3.0 ms ] story [ 25.6 ms ] threadOf all the cryptocurrencies, ETH at least has a story about why it might have intrinsic value in the medium-term, beyond pure speculative passion: i.e. its use as a platform for smart contracts. But that potential only gets realised if more people use it for more significant purposes, rather than just for functionless ICOs or trivial games.
On the other hand, if this injection can help ETH grow this year, the backers of this fund should more than make their money back.
It's going to be an interesting year, I think. It's easy to shout bubble bubble bubble, and easy to shout buy buy buy. My hunch is that the reality will be more interesting than either.
But the number of Ether is fixed at 100,000,000ish. Which means that if the platform is successful, the coin will increase in value indefinitely. But I don't see why those who 'miss out' on the presale etc. (think banks, governments) would choose to hop on board at a later date - essentially gifting money to early adopters - when they'd be better off simply creating a new coin (or indeed forking Ethereum and awarding themselves more Ether). It all just seems very unstable, game-theory-ish situation.
This exact same argument has been repeatedly given to explain why Bitcoin would never break above $10, $100, $1000, whatever, or why Ethereum was doomed to stay in the pennies. Clearly the late adopters see more value in entering than they see a problem with gifting money to earlier adopters.
Creating a new coin or forking doesn't solve anything, they would be alone and it wouldn't have any value if nobody wants to trade in.
The value is what people value it at. Just because the supply is bounded doesn't mean its value will increase indefinitely.
Well, is the point of Ethereum to make some cash at the expense of later investors (basically a Ponzi scheme), or does the platform have some intrinsic value? Point is, the platform itself can be duplicated at little cost (it's an open source project after all, just fork it), so the cost to the (new) user should be low (or more importantly, stable), even if the value proposition is high.
This logic leads me to conclude that almost all the value of Ether is purely speculative and could disappear at any time.
The intrinsic value of ETH is to use it to pay for transactions on the Ethereum platform. These transactions are used to form dApps that can be run without censorship. I would have said the value of that is TBD but now I'd stay that some minimum value has been determined (ICOs, DAOs, the Dai system, games, etc.)
They should certainly do this if it would result in a system with the security profile that meets their requirements.
[1] https://medium.com/cryptolinks/maker-for-dummies-a-plain-eng...
- Is it legal for effectively crowdfunded projects to then fund other projects?
- Ethereum has integrity, willing to change its core technology in order to become more scalable. But...
- Is "paying off" developers to build apps for it just evidence of the lack of apps naturally/organically being built?
- Yet Seed Stage funding from traditional VCs has dried up, so is this effectively a market response from technical-oriented now-wealthy investors, to make up for it?
I think these are hard yet important questions. Obviously, who doesn't wish they were rolling in this kind of cash to dole out? At the same time, we already have people building P2P dApps with our system (https://github.com/amark/gun/wiki/auth), you know, the ones that Ethereum/Dfinity/etc. can only dream of doing even after they hit their scaling goals (realtime character-by-character updates on decentralized social networks - https://www.youtube.com/watch?v=C3akdQJs55E , 3D multiplayer VR games - https://www.youtube.com/watch?v=s_m16-w6bBI , etc.), so it seems nonsensical that so much money is being offered to build Ethereum apps - is there genuinely a lack of developers?
Most of those are connected to some kind of dApp project.
This makes me wonder, people (presumably) bought into an ICO to fund a specific goal and not to enable a new age of venture capitalists.
Though this could be another classic sign that we are witnessing a bubble in its pre-bust stage -- would seem to fit with the "spike the punch bowl" phase but with replacing central banks with core cryptcurrency advocates methinks.
I think that's what is meant by "a trusted source of information from the outside world". You can have as many layers of smart, trustless technology as you want sitting between the dapp and the data source, but it always comes back to relying on a trusted (and potentially corrupt/compromised) real-world source. Maybe it has to be multiple independent sources? Sorry - there's still no way for those sources to cryptographically disprove any collusion.
Honest question, do blockchains do this? My understanding is that blockchains operate under the assumption that collusion is common and bad actors are rampant and are designed to mitigate it, not that they can prove collusion is not happening.
Hypothetically, if every mining node provided a real-world value in every broadcast, then wouldn't the consensus mechanism operate as an oracle just like the transactions operate as a ledger?