4 ms·

This is a sensible move, I think. Of all the cryptocurrencies, ETH at least has a story about why it might have intrinsic value in the medium-term, beyond pure

by sago 9y ago

This is a sensible move, I think. 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.

adwhit 9y ago
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.
- jobigoud 9y ago
  > 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.
  - adwhit 9y ago
    > 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.
    - cslarson 9y ago
      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.)
- cslarson 9y ago
  > when they'd be better off simply creating a new coin (or indeed forking Ethereum and awarding themselves more Ether) They should certainly do this if it would result in a system with the security profile that meets their requirements.
cslarson 9y ago
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 https://dai.makerdao.com). [1] https://medium.com/cryptolinks/maker-for-dummies-a-plain-english-explanation-of-the-dai-stablecoin-e4481d79b90 https://medium.com/cryptolinks/maker-for-dummies-a-plain-eng...
- tobltobs 9y ago
  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?

by sago 9y ago

adwhit 9y ago

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.

jobigoud 9y ago
> 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.
- adwhit 9y ago
  > 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.
  - cslarson 9y ago
    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.)
cslarson 9y ago
> when they'd be better off simply creating a new coin (or indeed forking Ethereum and awarding themselves more Ether) They should certainly do this if it would result in a system with the security profile that meets their requirements.

cslarson 9y ago

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 https://dai.makerdao.com). [1] https://medium.com/cryptolinks/maker-for-dummies-a-plain-english-explanation-of-the-dai-stablecoin-e4481d79b90 https://medium.com/cryptolinks/maker-for-dummies-a-plain-eng...

tobltobs 9y ago
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?