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

[Come-from-Beyond]

Funny, I can't seem to get anyone to admit that investment was ended ended early in NXT or cancelled in eMunie to prevent further dilution of existing investors, though it is obvious that this is the case.

Aye, that's funny. I suspect people have another opinion and just think that u r trolling them.

[ThePatient]

Can someone give me synposis on wth this thing is (in as simplified terms as possible)?

Why should or shouldn't I invest. 10K for 1BTC....should be 20k. 

[tacotime]

A few people here didn't read the whitepaper closely enough.
1.2 trillion ether will NOT be issued at launch. At a tentative price of 0.0001 BTC, X ether will be raised. The initial money supply will be 1.5X, of which founders get .25X, ethereum reserve pool .25X, and fundraiser (investors) participants 1.0X.

After 1 year, total money supply is at 2X, with the ratios:

Founders .25X / 2.0X = 12.5%
Fundraisers   1.0X / 2.0X = 50%
Reserve  .25 X / 2.0X = 12.5%
Miners   .5X / 2.0X = 25%

Every year miners are mining .5X, this is the inflation rate

So year 1 inflation is (1.5X increase to 2X) = 33%  
Year 2 inflation is 2X to 2.5X , 25%
Year 3 inflation is 2.5X to 3X, 20%
Year 4 inflation is 3X to 3.5X, 16.66%
Year 5 inflation is 3.5X to 4X, 14.2%

I personally think the distribution model is a lot fairer than the way Nxt and mastercoin did theirs. I'm not knowledgeable enough about emunie or bitshares to comment on their model, but I think ethereum has more promise than any of these other coins PLUS a fairer distribution.

This type of distribution is less than ideal, in my opinion.



We only hit the case where the premine is 10% of the mined portion of the coin at 27 years.  For MC2, I aimed for <1% at the same time.  But I guess it's all based on what a person considers a "fair" distribution.

You can approximately reach this with linear mining inflation using these ratios (this is after one years time, with miner production held constant):
Founders 0.5X / 12.0X = 4.2%
Fundraisers   2.0X / 12.0X = 16.7%
Reserve  0.5X / 12.0X = 4.2%
Miners   9.0X / 12.0X = 75%

I have no idea how many coins Satoshi has, but I'd guess it's less than 1.05m (but I may be wrong, I know it's quite large).

[BldSwtTrs]

Based on above.

ROI 0% requires ether doubling in value in Btc terms in first year. If Btc rises 10 times in fiat, ether needs 20 times increase in fiat terms for ROI to 0%.

Every year after that, ether depreciates per table above. This implies adoption rate must exceed Btc for it to ROI positively as Btc is strongly deflationary.

What is the point of measuring Ether's ROI in terms of BTC? Why not just measure in terms of fiat, or gold? Why choose a volatile BTC?

Because a lot of people plan to invest in BTC. And there is an opportunity cost.

If Ether underperformed BTC, it's make no economic sense to convert BTC into Ether.

[td services]

Funny, I can't seem to get anyone to admit that investment was ended ended early in NXT or cancelled in eMunie to prevent further dilution of existing investors, though it is obvious that this is the case.

Aye, that's funny. I suspect people have another opinion and just think that u r trolling them.

It's been my experience that when people try to ignore or dodge around an issue, and accuse the person questioning them of trolling, that it's because it's the truth.

Sorry to other people reading this discussion as it's tangential to Etherium, but the opportunity arose to confront the person responsible.

It does highlight the importance of sticking with a plan in a funding round once it is announced. NXT has made an enemy where it didn't need to have one, and I will continue to discourage people from investing in it as I feel the situation shows a lack of integrity of the people managing the project. All they had to do was say, "we are closing investment, so if you want to invest you need to do so within 4 hours" (or some reasonable time frame). All they have to do at this point is admit to the real reason they closed investment early.

[Crestington]

It's over complicated and will run into problems but people will buy into it because they think complicated is better.

You should start with a simple robust system that keeps all investment in the foundation and adjust fees when updating the blockchain,  you can only guess that your system will work flawlessly.

[vlight]

What is the point of measuring Ether's ROI in terms of BTC? Why not just measure in terms of fiat, or gold? Why choose a volatile BTC?

Because a lot of people plan to invest in BTC. And there is an opportunity cost.

If Ether underperformed BTC, it's make no economic sense to convert BTC into Ether.

Ok. I view that as investing with/using BTC, not in BTC. BTC is just a tool to invest in.

The fact is that neither you or i know the future. BTC may be a better investment, but who knows? You may also invest in some other project which will outperform both btc and ether. Then following that logic it makes no economic sense to invest in both Ethereum and BTC.

[td services]

I look at the goals of the project as well as the potential ROI. Ethereum is great on both counts. The mining actually performs a useful function in executing the smart contracts. The functionality of the Turing Complete scripting language as a platform for development is a milestone. The funding and distribution plan promises to be a good compromise for different types of stakeholders.

[tacotime]

Here's another good chart, this assumes 10 minute blocks with 50 coins issued per block continually to miners (as Bitcoin had when it began);



As you can see, there's no 1 trillion in the near future.  By year 30, we've achieved 86,724,000, approximately 4 fold of that for Bitcoin.

So in many ways this premine is insanely good to investors who decide to hold onto their coins (but in my opinion, a little generous to the foundation itself).

I think it would be best if these (the premined coins) were given over a span of 10-15 years to investors, as a sort of "bond".  This would also ensure that the foundation would keep up with maintaining the blocktree and ensuring that is works.

[td services]

Very nice chart and calculation. It shows why intuitively I'm not too worried about the theoretical quantity of 2 trillion. It will take a long time to reach and 1.2 trillion is well  under the quantity of USD in circulation today.

[msin]

Here's another good chart, this assumes 10 minute blocks with 50 coins issued per block continually to miners (as Bitcoin had when it began);



As you can see, there's no 1 trillion in the near future.  By year 30, we've achieved 86,724,000, approximately 4 fold of that for Bitcoin.

So in many ways this premine is insanely good to investors who decide to hold onto their coins (but in my opinion, a little generous to the foundation itself).

I think it would be best if these (the premined coins) were given over a span of 10-15 years to investors, as a sort of "bond".  This would also ensure that the foundation would keep up with maintaining the blocktree and ensuring that is works.

Is there an inflationary element of the coin?  For example, if I own 10k Ether but I'm not mining, will that 10k Ether increase just based on linear inflation year to year?

[msin]

Very nice chart and calculation. It shows why intuitively I'm not too worried about the theoretical quantity of 2 trillion. It will take a long time to reach and 1.2 trillion is well  under the quantity of USD in circulation today.

This also assumes 10 minute blocks for 60 years, isn't that a little conservative?

[Lloydie]

Agree, the theoretical limit is not something to worry about. However, early investor risk should be looked at, especially ROI versus Btc which is more mature and where take up rate is expanding very rapidly.

People may criticise satoshi and the winklevoss twins, but that is not slowing the rate of adoption, afaik. Even the Winklevii are providing a service by holding btcs for the very long term, without them each Btc would be worth less (not worthless).  The more investors pile into btcs, the more the value rises, providing long term stability and more widespread adoption.

Early adopters should be rewarded for their foresight, attention to detail and the fact that they are putting their money where their mouth is. IMHO.

[Lloydie]

Is there an inflationary element of the coin?  For example, if I own 10k Ether but I'm not mining, will that 10k Ether increase just based on linear inflation year to year?

Negatory, I'm afraid. Ethers will decline in value as more ethers are mined, at a fixed rate of 0.5 x original ethers formed via fundraising. The rate of ethers declining will slow down over time. The most painful year seems to be the first year, which from an investment point of view is counterintuitive, as that is arguably the point of highest risk.

Btw, I like Ethereum and I do want it to succeed. I find the distribution counterintuitive at this point.

[Anon136]

This is the true revolutionary second generation in cryptocurrencies.  I encourage everyone to read the white paper.

Posted From bitcointalk.org Android App

link to whitepaper?

[jimhsu]

This is the true revolutionary second generation in cryptocurrencies.  I encourage everyone to read the white paper.

Posted From bitcointalk.org Android App

link to whitepaper?

1st page? http://ethereum.org/ethereum.html

[SyRenity]

It's been my experience that when people try to ignore or dodge around an issue, and accuse the person questioning them of trolling, that it's because it's the truth.

Sorry to other people reading this discussion as it's tangential to Etherium, but the opportunity arose to confront the person responsible.

It does highlight the importance of sticking with a plan in a funding round once it is announced. NXT has made an enemy where it didn't need to have one, and I will continue to discourage people from investing in it as I feel the situation shows a lack of integrity of the people managing the project. All they had to do was say, "we are closing investment, so if you want to invest you need to do so within 4 hours" (or some reasonable time frame). All they have to do at this point is admit to the real reason they closed investment early.

+1.
While the reasons to NXT genesis investors (who made on paper >1000 BTC out of investments of <1BTC) being so zealous are understandable, IMHO it still hurts the NXT in the long run. While it's an interesting technology, chances it will have a hard time competing against MSC, BTS, Ethereum (and other upcoming other 2nd gen platforms) with a much larger initial adoption base and much fairer distribution model, bringing similar features and capabilities into the play.

[tacotime]

Very nice chart and calculation. It shows why intuitively I'm not too worried about the theoretical quantity of 2 trillion. It will take a long time to reach and 1.2 trillion is well  under the quantity of USD in circulation today.

This also assumes 10 minute blocks for 60 years, isn't that a little conservative?

Doesn't matter what the block time or block reward is. The number if coins changes, but the proportions do not.

The proportion of coins you get in the premise adjusts based on the quantity of BTC coming in. The more BTC everyone invests, the less ETH everyone receives.

[msin]

It's been my experience that when people try to ignore or dodge around an issue, and accuse the person questioning them of trolling, that it's because it's the truth.

Sorry to other people reading this discussion as it's tangential to Etherium, but the opportunity arose to confront the person responsible.

It does highlight the importance of sticking with a plan in a funding round once it is announced. NXT has made an enemy where it didn't need to have one, and I will continue to discourage people from investing in it as I feel the situation shows a lack of integrity of the people managing the project. All they had to do was say, "we are closing investment, so if you want to invest you need to do so within 4 hours" (or some reasonable time frame). All they have to do at this point is admit to the real reason they closed investment early.

+1.
While the reasons to NXT genesis investors (who made on paper >1000 BTC out of investments of <1BTC) being so zealous are understandable, IMHO it still hurts the NXT in the long run. While it's an interesting technology, chances it will have a hard time competing against MSC, BTS, Ethereum (and other upcoming other 2nd gen platforms) with a much larger initial adoption base and much fairer distribution model, bringing similar features and capabilities into the play.

How is the pre-sale of a POW mined currency price at more than double current Nxt market price a fair distribution model?  I wasn't a stakeholder in Nxt, but I bought right after launch when people were selling 1Mil Nxt for 1BTC.  I thought to myself, "I could theoretically buy 1% of this currency, that will ever exist, for 10 BTC" to me that was a great risk but also a great deal.  I've been trading BTC long enough to remember having about 15k BTC in my wallet in the early days, and to be honest, Nxt is the first alt coin I've ever owned, including LTC, which I always thought was a joke.  The founder of Nxt only made 21BTC (1 of which was his) on the launch, sure the stakeholders were limited (73 total), but they were all like you and me, with zero affiliation with BCNext or Nxt.  To me, Ethereal is a slave of ASIC Miners, with a ridiculously high IPO price and no interest earned like eMu, so who is being fair?

[ThePatient]

Yeah this IPO is ridiculous.

Founders.....why so high??