Vitalik Buterin: Save Private Ethereum
Blockchain industry is a fluid thing. Nothing is set in stone there, and everything and everyone is continuously moving here: ambitious promises that lead to nowhere; startups that promised to change the world and stayed in the spotlight long enough to be remembered, but short enough to be instantly forgotten as soon as they become irrelevant. Only a select few managed to do stuff that carved them a place in the history of the industry.
This time we are talking about Ethereum, the second most crucial crypto in the markets, bitcoin ’s main rivalry or how one of its creators, Vitalik Buterin, called it - “swiss army knife of the blockchain.” And now it’s not feeling very well. The price of the network coin is crashing like a stone, according to the blocktivity.info rates the network is clogged with people rushing to take their money out of the system. For example - ICOs nowadays rush to sell everything they’ve earned during funding as they are afraid to lose money if they wait for too long.
Furthermore - getting money in the system is not easy as well. There are posts in the twitter that claim that transactions going into the system get into the cue as well. And that made investors mad as their money was losing weight “mid-air”. And the whole situation is not becoming easier because the amount of rivalry projects, that based on Ethereum model is just growing.
This seems like a pretty doom and gloom situation. Rivalries become numerous, and investors are running, social media accounts of crypto influencers are starting to show off titles like “It’s time to ditch Ethereum” or “Ethereum, the ultimate shitcoin”. This is a very definition of the FUD situation.
In a traditional economy - this would’ve sounded like a sentence. Even in crypto verse some people say that the legend of the blockchain world has come to an end. But this is not the first problem Vitalik had to face.
Just like bitcoin had Mt.Gox, Ethereum had DAO. DAO is decentralized, autonomous organization, an idea genius in its simplicity. In theory structures like this should work like VC funds that exist in the world of crypto and decentralized projects. Lack of the centralized governance should’ve made it cheaper and theoretically - more transparent and accessible for the investors.
This is why the creation of the DAO Genesis was met with tremendous enthusiasm, despite its rather primitive form, that would’ve been considered as a scam in the today’s cryptoverse. As a result of the initial funding stage - they managed to gather 12 million ETH, which was around $150 mln back then. That alone made them the biggest crowdfunded project in the world. Eventually, Genesis has gathered $250 mln on its accounts. Things were looking up for them since crypto was the future and future is now.
But they never got to use the fruits of their labor. In 17 of June 2016 unknown hacker siphoned 70 million USD worth of coins from its account. The hit was that strong that organizers of the project came to the conclusions that closing down the Genesis and refunding investors is the only right thing to do in this situation.
In the traditional economic world - that would’ve been called a failure. Which it was since Ethereum network has performed a hard fork of the system to punish the hackers and return the money. But this hasn’t helped all that much - DAO Genesis has been delisted by Poloniex exchange and then by Kraken. And to top it off - SEC decided to stop by and claim that Genesis’s utility tokens are basically security tokens and therefore - everything is illegal since it’s breaking the federal law. Genesis ended up being dead in the gutter before it even managed to do anything significant.
That would’ve been unacceptable in the traditional financial world, but it’s not that insane for crypto, since back then Mt. Gox had lost even more money, but that was not the end of bitcoin. And Genesis has not become the end of Ethereum ether. It became a textbook example of how to not run an ICO.
But anyway - that's in the past. Everything is different, even if it sounds close. Ethereum should've become a universal tool to make everything blockchain based, creating cool new world of blockchain based everything. But alas and alack - it failed at each and every spot of this list. It’s limited transaction rates prevent it from using it like a core of a payment mechanism and the fact that it’s often clogged - prevents it from being used in many other ways, as there are better options. The “gas” transaction fee conception is far from being ideal, and cryptocurrency of the project was rolling downhill with the speed of light. Only a fragment of the old glory of ETH, when it could’ve bragged being almost 1400 USD per coin remained - today one eth coin comes for 227 bucks.
It would ’ve seemed that Ethereum is simply unable to catch up after the rhythm of the cryptoverse and ended up being behind. But Buterin and team ЕTH have a plan. They are planning to implement sharding, technology from the simple digital world that promises to deal with the weakest point of every blockchain - scalability.
And unlike many fans of abstract talks about sharding, with a heavy implementation that it’s very bad idea (mostly because they don’t have the skills or experience to implement it without being forced to trade off some of the crucial parts of blockchain integral system or shilling for the 2 layer companies), Buterin has a plan. In 24 of September University college of London has released a short report called “Fraud Proofs: Maximising Light Client Security and Scaling Blockchains with Dishonest Majorities.”
Basically, in that short, 33-page long report Vitalik, Mustafa Al-Bassam, and Alberto Sonnino explained to the world a plan of Ethereum's counterattack. They have a theoretical solution to the main problems that shading has - safety. Because of its nature - anyone with a sufficient number of the nodes in his control could’ve become a criminal. And their report has offered a way to ensure that user side nodes stay as safe as full nodes as long as the system has a least one “honest” node in it.From the point of the math - this is an excellent theory and it looks legit. So it is safe to say that the master plan of the battle is ready. The next step is - laying down mathematics into the code, which is not easy to do at all. In the end, they should get a clean and slick universal anti fraud system, along with a mechanism for light clients to check whether or not sufficient data is provided to reconstruct a full block. With these, plus a network synchrony assumption and an assumption that at least a certain number of honest clients are online, light clients can achieve security guarantees essentially equivalent to those of full nodes.
And here we get a million dollar question: Does captain Buterin has enough time to save private Ethereum? Some experts answer - no. We, on the other hand, won’t be so harsh and swift in our judgment and won’t give a prognosis if Ethereum is going to sink or swim. But it is unlikely that it will crash and burn simply because of the vast number of projects that work on the Ethereum is far too numerous to simply crash and burn. But if some of the prognosis that influencers give are right and price of Ethereum will tanker to the double digits, it’s seriously doubtful that it will remain at the place Ethereum has now.
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