I recently had a 2 hour long chat with Paul Sztorc creator of Truthcoin at the Montreal Scaling Bitcoin0.00% event and we talked along with Adam Back about Ethers shortcomings. Since that day I have begun placing shorts on ETH, to my surprise Sztorc turned his 2 hour long speech at the Embassy into a blog post and I will cite from it here today to outline some of the problems Paul has brought up in addition to my own misgivings about the project and currency.
"Smart Contracts need Oracles, Oracles need Governance, Governance needs Sidechains. cannot support Oracles, and has no use-cases."
What Paul is saying can be broken down as such
1. "Permissionless smart contracting systems introduce contradictions in incentives which destroy all interesting use-cases." they become susceptible to what Paul calls " The Parasite Contract" with which "any Host (external-data contract) can’t grow to a significant size without being invaded by Parasites and leeched to death." as Paul states "(Probably) Nothing Can Fix This"
2. The use-cases of Introspective will either be absorbed into Sidechains (or businesses) designed for such a purpose, or simply fade away.
3. Ethereum’s value proposition was something general (enabling a high rate of project-creation). However, Ethereum’s use cases are few (if not nonexistent), making the “generality” objective inappropriate." Paul Sztorc
4. Although it purports to be “crypto-law”, real “law” can be enforced on real people. can only edit ledgers in computers; it can’t get Shylock any flesh. Paul Sztorc
5. On July 30th, 2015, “launched”. Three days later, nothing of any significance happened whatsoever. Months after that, the publicized list of “Some Projects Using Ethereum”, in addition to solely consisting of Oracle and Physical projects (which, again, are incompatible with ), are laughable ideas, fraudulent misinterpretations of Pauls own (Oracle-dependent) work, projects “ which misunderstand the very purpose of loans by ignoring the essential concept of liquidity and assuming that someone who needs to borrow $1 in cash is willing to front $1.50 in cash, and, believe it or not, projects whose entire website, locate-able codebase, and documentation comprises all of six sentences." Paul Sztorc
6. "Even assuming that itself never has any conflicts or problems with whatever use-case you do come up with, you still, upon creation of a new Smart Contract, have all of your work ahead of you. What if Satoshi had shipped a C++ compiler (a “general blockchain-creation platform”)? What if Shakespeare had shipped 26 letters (a “general script-creation platform”)? If a student clips a fresh pen to his blank exam, has he “solved” it “for all answers”? Of course not: the work was the specifics." Paul Sztorc
7. "Even supposing you do find a specific use-case, and you do write a quality piece of software, you still have the problem of learning that it is secure and worth using and convincing others of what you’ve learned. The accumulation of security isn’t general (across contracts) at all (unlike with a sequence of Oracle-questions, where it is the same Honest-or-Not mapping each time). On top of that, unless is redesigned to give contracts the equivalent of a soft , any accumulated security is obliterated upon every software update." Paul Sztorc
"Some freedoms contradict each other. By oppressing contradictory freedoms, total freedom can actually increase."
1. Even if Ethereum worked as it should, one could simply fork it or adopt its features and instantly have a better system then the original because there wouldn’t be a number of coins (gas for the network) disproportionately distributed to those that participated in the initial coin offering or the large bounty paid out to Devs. For those that argue that the Devs are necessary for the success of the project I have two things to say. There exists no incentive to keep developing once you have been paid (it really seems from charts that devs are in fact cashing out), and secondly as Paul Sztorc mentions in the 6th point above the Devs have left us with no more than an ambiguous framework for other people to develop on top of, those are the people that will need funding to maintain and grow the network.
2. The amount released from the pre-sale is disturbing as you can see here http://ether.fund/market there were 60,102,216 ETH purchased in the pre-sale and of those the top 100 purchasers hold more than 40.7% of the ETH sale. ( these whales can ruin the price as we might already be seeing). In addition to this enormous sum of ICO coins there is a 12 million ETH Dev bounty, there are now so many people ( the devs and the 100 largest eth buyers) that are highly incentivized to dump on the market. Especially as the realization that side chains can independently do using layers on top of the already widely adopted Bitcoin blockchain.
- how many ether will ever exist ?
- is ether gas limited or go to endless supply?
- how many ether will be in 1, 2, 3, 4,5, 6,7 , 8, 10 years time ?
- when is mining convert from proof of work to proof of stake and what happen whit supply of ether gas ?
- why in proof of work 10 miners mind 80% of ether gas , is this decentralise and fair?
- is proof of stake better, and why? ( faster transaction ? )
- will have ether gas owner have right voting for ethereum administration team?
- how will ethereum team will be paid in the future (from advertising on Mist ?) or make more ether gas sell ?
- how is ethereum protecting from copycats?