Ethereum: 2nd gen cryptocurrency with contract programming, "dagger" hashing

[Stark-Fujikawa]

Keeping an eye on this.

[1715166445]

1715166445

[delulo]

From when to when will the IPO be?

What makes a proof of work algo better in this context than a proof of stake algo? POW has more friction / is less efficient / more costly overall...

[greentea]

Ether will have a theoretical hard cap of 2^128 units (compare 2^50.9 in BTC), although not more than 2^100 units will be released in the foreseeable future.

Does that mean there will be 2^100 =
1,000,000,000,000,000,000,000,000,000,000 units of Ether!?

Can you comment on this am I reading that wrong, or is half of that decimals?

Also, is there an ETA/roadmap for the public fundraising (.0001 BTC = 1 ether)?

[delulo]

Ether will have a theoretical hard cap of 2^128 units (compare 2^50.9 in BTC), although not more than 2^100 units will be released in the foreseeable future.

Does that mean there will be 2^100 =
1,000,000,000,000,000,000,000,000,000,000 units of Ether!?

Can you comment on this am I reading that wrong, or is half of that decimals?

Also, is there an ETA/roadmap for the public fundraising (.0001 BTC = 1 ether)?

what is with the other 2^28? Just because of the logarithmic supply increase?

Let's say there will be 2 million USD (roughly 200 000 BTC) invested in the IPO. That would be 2^9 ether. Then there are  2^91 (respectively 2^119) to be minded. That is a lot of inflation!
Is there anyway to figure out whether the price will drop after the IPO or not because a lot will be mined at the beginning... It is about a 60% inflation rate per year acc. to your white paper. Right?

By this part

0.25X ether will be allocated to the founders in a time-lock contract that prevents the founders from spending it for one year.
0.25X ether will be allocated to the Ethereum organization as a reserve pool to pay expenses in ether such as ether salaries or bounties for those developers who want part or all of their compensation to be in this form
0.5X ether will be mined per year forever after that point

do you mean, if we apply the above example, that 2^9 * 0,25 goes to the founders and so on...
 

[Ursium]

Thanks for participating in the thread Richard, this is really exciting.

I've started tracking information dispersed around the internet on the project at http://www.ursium.com/ethereum_so_far_live_updates/.

[Solidchance]

Alright guys since you're speculating about Ethereum, I figured I'd drop by and say hi. I'm one of the core developers. Go ahead and post your questions here

Can you answer some of these comments from Invictus?

Our technical team has evaluated the Ethereum proposal and design and have concluded the following:

1) Mining means the DAC will be operating at a loss or break-even at best.  No dividends.
2) Scripts will require more blockchain space and bandwidth resulting in lower transaction volume for the same level of decentralization.
3) We do not believe the scripts can efficiently implement a BitShares like market matching with automatic margin calls at scale.  
4) Merged mining would be required to secure parallel chains... this has its own challenges.
5) Mining will result in centralization one block at a time, something very bad for chains that implement markets.
6) Finding GPU developers is hard enough, defining a new dedicated language for this purpose will be even harder.
7) If you eliminate mining, then the cost of launching a new DAC is near 0 and you can simply use C++ to encode your contracts starting from a 'shell DAC' and launch without having to overload everyone not interested in your contract.  
NO 'competitor' thus far is willing to admit that multiple parallel blockchains will be required to handle the order of magnitude greater transaction volume an exchange experiences vs Bitcoin and this is for a SINGLE currency pair.  Imagine attempting to have every tradable market on one chain!   This will rapidly be centralized into trusted supernodes that can handle the bandwidth requirements.
9) You think bitcoin verification times have trouble scaling, imagine executing an interpreted language!

Conclusion: We believe Ethereum is an interesting computer science project with little compelling advantage in developing new DACs and many drawbacks.  

We wish them well and if their scripting language and contract design proves useful as a means for very special purpose contracts then we suspect we will be able to adapt it to a more efficient, profitable, AGS honoring DAC

https://bitsharestalk.org/index.php?topic=1854.msg27154#msg27154

[charleshoskinson]

What makes a proof of work algo better in this context than a proof of stake algo? POW has more friction / is less efficient / more costly overall...

There are been some interesting innovations in the proof of stake space with the introduction of Nxt and also BitShares adopting PoS. We feel that mining currently best meets the design decisions we've made for Ethereum, but this does need to be explained in depth and with context. There will be a lag between the fundraiser and the launch for mining thus in the gap, we are going to release an article explaining why we have chosen a mining versus a PoS security model. Should data from Nxt or Bitshares (if released within this timeframe) provide a more convincing counter-argument, we'll have the opportunity to switch.

Overall, designing a new cryptocurrency is a game of tradeoffs, economic philosophy and user experience. Ethereum is being developed with the notion of balance in all things from the method of distribution to the security model.

From when to when will the IPO be?

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.

Does that mean there will be 2^100 =
1,000,000,000,000,000,000,000,000,000,000 units of Ether!?

Can you comment on this am I reading that wrong, or is half of that decimals?

1 bitcoin = 100000000 satoshi
1 ether = 1000000000000000000 Wei

The unit of account of the system will be ether like bitcoin is the unit of account for the bitcoin ecosystem.

Also, is there an ETA/roadmap for the public fundraising (.0001 BTC = 1 ether)?

Come visit us in Miami. We should have everything ready by then.

Let's say there will be 2 million USD (roughly 200 000 BTC) invested in the IPO. That would be 2^9 ether. Then there are  2^91 (respectively 2^119) to be minded. That is a lot of inflation!
Is there anyway to figure out whether the price will drop after the IPO or not because a lot will be mined at the beginning... It is about a 60% inflation rate per year acc. to your white paper. Right?

No, the rate of inflation is always decreasing and comparable with bitcoin. The Total supply formula is as follows TS(t) = 1.5x + 0.5x*t with x being the initial supply and t being time in years. At genesis block TS(0) = 1.5x. Year 1 TS = 2.0x. You'll notice rate of inflation slows over time and we even made this  graph to compare it to bitcoin:



The core idea is that the rate of inflation tends towards year and that supply is growing fastest while demand is scaling non-linearly. In terms of ROI, this should be reflected with a positive ROI.

do you mean, if we apply the above example, that 2^9 * 0,25 goes to the founders and so on...

No, the founder shares will be given only once like founder stock in a startup and the percentage  founder ownership of the total amount of ether in supply will be 6.25% in year 5, which is a little over half of what Satoshi has of bitcoin. We really wanted to model supply like a startup to big company. The benchmark I used was Bill Gate's holdings of Microsoft going from 64% initially (which is considerably larger than our holdings) to roughly 5 percent or so today. Overall, both gates and Satoshi percentagewise are doing better. Finally, founder shares cannot be spent for a locked period of time that's hard coded into Ethereum. Thus, we can't sell our Ether until long after the ecosystem is bootstrapped.

Our technical team has evaluated the Ethereum proposal and design and have concluded the following:

1) Mining means the DAC will be operating at a loss or break-even at best.  No dividends.
2) Scripts will require more blockchain space and bandwidth resulting in lower transaction volume for the same level of decentralization.
3) We do not believe the scripts can efficiently implement a BitShares like market matching with automatic margin calls at scale.  
4) Merged mining would be required to secure parallel chains... this has its own challenges.
5) Mining will result in centralization one block at a time, something very bad for chains that implement markets.
6) Finding GPU developers is hard enough, defining a new dedicated language for this purpose will be even harder.
7) If you eliminate mining, then the cost of launching a new DAC is near 0 and you can simply use C++ to encode your contracts starting from a 'shell DAC' and launch without having to overload everyone not interested in your contract.  
Cool NO 'competitor' thus far is willing to admit that multiple parallel blockchains will be required to handle the order of magnitude greater transaction volume an exchange experiences vs Bitcoin and this is for a SINGLE currency pair.  Imagine attempting to have every tradable market on one chain!   This will rapidly be centralized into trusted supernodes that can handle the bandwidth requirements.
9) You think bitcoin verification times have trouble scaling, imagine executing an interpreted language!

Conclusion: We believe Ethereum is an interesting computer science project with little compelling advantage in developing new DACs and many drawbacks.  

We wish them well and if their scripting language and contract design proves useful as a means for very special purpose contracts then we suspect we will be able to adapt it to a more efficient, profitable, AGS honoring DAC

https://bitsharestalk.org/index.php?topic=1854.msg27154#msg27154

I'm not going to fully address Dan's concerns here. The questions he listed indicate they either didn't read or didn't comprehend the whitepaper. For example, the entire philosophy of Ethereum is to be a base layer for innovation thus the particular economic model of a DAC running on top of Ethereum is beyond the scope of our design. A person could indeed have dividends in a sub-currency, yet this point seems to have been missed or ignored.

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.  

Things like 7 again demonstrate either a lack of comprehension or ignorance of our design, contracts are more than robust enough to launch a proof of stake subcurrency. 6 seems to ignore ethereum script is turing complete and thus you can compile a language like c++ into it (anyone ever used coffeescript to write js)?

On a side note, I am honestly curious how Invictus intends on building DACs without a turing complete language? It seems like you would end in an infinite inductive process of having to build a bigger feature set for the next set of DACs. I guess they have a different philosophy and this is fine. I wish them well and hope they find success for the market's benefit.

[Solidchance]

Fair Enough, this project seems like a breathe of fresh air. BTW OT is another game changer. I will be following this closely, very interesting.

[MaxOnBit]

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[Ursium]

Richard, I've been following the project very closely. Questions I still have:

1) Since both turing-complete on the blockchain and GHOST have never been implemented before (AFAIK), isn't there a risk to investors to put money in *before* these concepts have been 100% validated? Or are you further down the implementation stage that you let out?
2) If capital dilution is baked in, surely this means the valuation of Ether needs to climb at a proportional rate or else both founders + investors would lose out over time?
3) Why use 12m time lock with dilution instead of a staggered time lock (this would make it much more akin to a standard startup reverse vesting process) Having the risk of core members bailing out at 12 months is not reassuring.
4) Do you plan / reserver the right to further rounds later on?
5) When are we going to get a full list of the people involved? So far only yourself and Vitalik have been announced, surely investors will want to do due diligence on each and everyone

Thank you!

[organizer]

I'm kinda dumb here, but i'll just ask... what exactly happens in 11 days? The formal announcement of this coin and then it goes into some sort of roadshow/IPO thing (dunno how that works) or is it actually going to be rolled out (i.e. people can mine)?

[delulo]

So Ethereum is supposed to be just the base layer which doesn't provide any "end consumer services" itself. If other developers or the Ethereum team itself builds on top of it to offer some DAC services how (what built in structure?) do ether holders profit from it? Under which circumstance does the ether price increase (because there is not direct benefit (service) from it)?

[delulo]

I'm kinda dumb here, but i'll just ask... what exactly happens in 11 days? The formal announcement of this coin and then it goes into some sort of roadshow/IPO thing (dunno how that works) or is it actually going to be rolled out (i.e. people can mine)?

First IPO plus mining when that is done...

[charleshoskinson]

What I would like to know is if there is a likelihood of a ROI on the IPO. This is the first time that we have seen a (non scam) IPO with PoW mining. Since the fundraiser will last a whopping 60 days, it is likely that everyone that wants to get in on the project, will already be in, which will create a shortage of buyers post fundraiser and a I'm sure there will be an absolutely huge amount of miners on release. Supply and demand would kick in and the price per currency would fall causing all investors to lose money. I am very interested in the project and making it a success, but logic tells me to wait. Correct me if I'm wrong.

ROI is ultimately connected to the demand for coins and it is our belief long term that the utility presented will be significant thus driving demand. I suppose it will depend upon your time horizon and also market perception. Ethereum will not be transferable until mining begins and I would expect enormous volatility during the first few trading days; however, I reject the notion of immediate liquidation. Should the product be well formed it appears highly likely many people who missed or passed on the fundraiser will want to invest while prices are still low. My goal is not to make investors money immediately after mining begins. My goal is to offer a product that will have a healthy ROI over some reasonable period of time (say 6-12 months). The only way to accomplish this is to ensure the ecosystem is well developed and provides real value.

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To complete the subscription process, please click the link in the email we just sent you.

I have not received any letter...Why ?

Website is still buggy. We didn't anticipate the public being aware until closer to Miami. Try again in a few days and sorry for the delay.

Richard, I've been following the project very closely. Questions I still have:

1) Since both turing-complete on the blockchain and GHOST have never been implemented before (AFAIK), isn't there a risk to investors to put money in *before* these concepts have been 100% validated? Or are you further down the implementation stage that you let out?
2) If capital dilution is baked in, surely this means the valuation of Ether needs to climb at a proportional rate or else both founders + investors would lose out over time?
3) Why use 12m time lock with dilution instead of a staggered time lock (this would make it much more akin to a standard startup reverse vesting process) Having the risk of core members bailing out at 12 months is not reassuring.
4) Do you plan / reserver the right to further rounds later on?
5) When are we going to get a full list of the people involved? So far only yourself and Vitalik have been announced, surely investors will want to do due diligence on each and everyone

Thank you!

It's Charles and let's do these in order

1) Since both turing-complete on the blockchain and GHOST have never been implemented before (AFAIK), isn't there a risk to investors to put money in *before* these concepts have been 100% validated? Or are you further down the implementation stage that you let out?

We spent a great deal of time writing and testing PoC code and also examining the scripting language. As a cryptographer, my foremost concern is the security model behind our sandbox. There is risk in all technology, yet we are early enough in this process to change things in the event an unexpected failure of design occurs. GHOST is solid and we already have a spec for the high level language: http://wiki.ethereum.org/index.php/CLL. That said, long journey ahead.

2) If capital dilution is baked in, surely this means the valuation of Ether needs to climb at a proportional rate or else both founders + investors would lose out over time?

The buy in will be in the millions and the expected market cap is in the billions. And yes this is correct, the price per ether does need to grow for returns justifying the risks of investment. Supply increases linearly whereas demand during the initial few years should be non-linear as large amounts of actors enter the market and new applications are discovered. The applications in Wall Street alone are fairly remarkable and we already have two quants working on the project writing up reference financial contracts that work on Ethereum.

3) Why use 12m time lock with dilution instead of a staggered time lock (this would make it much more akin to a standard startup reverse vesting process) Having the risk of core members bailing out at 12 months is not reassuring.

We have a few models for how to handle founder shares. The design principles are to both incentive founders to stay attached to the project long term and also to inhibit any notion of a pump and dumb. Thus shares need to be locked for some period of time sufficiently long to prove the utility of the network itself. Second, the network needs to evolve to the point that the founders are no longer necessary for the long term health of the ecosystem just value adders. We could stagger lock outs or do a gradual release. When the fundraiser begins, there will be full disclosure how and why we decided to do this process

4) Do you plan / reserver the right to further rounds later on?

No, one shot and done. The purpose of the 0.25x developer shares is to endow a DAC to maintain the network long term after ether has a respectable market value. The fundraiser covers expenses up to that point.

5) When are we going to get a full list of the people involved? So far only yourself and Vitalik have been announced, surely investors will want to do due diligence on each and everyone

There are five founders and the other 3 will be announced when the website is launched prior to Miami. We'll be front and center with PGP keys and all. There are also a lot of volunteers, developers and others we've managed to pick up over the past month. Our forums will be the best place to get to know them.

[charleshoskinson]

So Ethereum is supposed to be just the base layer which doesn't provide any "end consumer services" itself. If other developers or the Ethereum team itself builds on top of it to offer some DAC services how (what built in structure?) do ether holders profit from it? Under which circumstance does the ether price increase (because there is not direct benefit (service) from it)?

Services launched on ethereum are fee regulated and thus require Ether to function. More services, more fees, more need for ether to use them increasing demand. Ether like any other asset will only appreciate in value because of an increase in demand.

Consider ether like an ETF of everything done in the ethereum ecosystem. Applications would be specific companies in the portfolio. It's not a perfect analogue, but I hope it helps.

[jimhsu]

Based on the several recent IPO "incidents" on these forums, will you consider a trusted escrow to hold your funds, releasing them for certain project milestones? I'm sure several are willing to volunteer their services (I won't, because I'm not trusted enough).

[charleshoskinson]

Based on the several recent IPO "incidents" on these forums, will you consider a trusted escrow to hold your funds, releasing them for certain project milestones? I'm sure several are willing to volunteer their services (I won't, because I'm not trusted enough).

We took this a step further and came up with some innovations in the trust model we think that the community will like. I won't spoil it yet

[jimhsu]

Based on the several recent IPO "incidents" on these forums, will you consider a trusted escrow to hold your funds, releasing them for certain project milestones? I'm sure several are willing to volunteer their services (I won't, because I'm not trusted enough).

We took this a step further and came up with some innovations in the trust model we think that the community will like. I won't spoil it yet

Excellent, looking forward to it. Trust is something in seriously short supply, especially currently.

[charleshoskinson]

Excellent, looking forward to it. Trust is something in seriously short supply, especially currently

Be sure to watch cointalk

[peer2peer360]

Based on the several recent IPO "incidents" on these forums, will you consider a trusted escrow to hold your funds, releasing them for certain project milestones? I'm sure several are willing to volunteer their services (I won't, because I'm not trusted enough).

We took this a step further and came up with some innovations in the trust model we think that the community will like. I won't spoil it yet

Decentralized, peer2peer, trustless technology is what this is all about.

I intend to keep a closer eye on this project.