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I think the article is aimed at more experienced Ethereum users. Unfortunately these are real things on Ethereum where only the most involved understand it. IM

by fallat 3y ago

I think the article is aimed at more experienced Ethereum users. Unfortunately these are real things on Ethereum where only the most involved understand it. IMO, Ethereum is actually doing a fantastic job at moving itself forward. The issue with Bitcoin has always been the lack of innovation to overcome its fundamental problems. Ethereum isn't afraid to do what needs to be done to become adopted. Yes, the technology stack is INSANE. As someone who runs a plain text only website, thinks about using Commodore 64s to access the Internet, etc, I can completely ignore the complexity because they are solving an extremely difficult problem. My hope is when these problems are solved, the teaching and mental model around them will become vastly simplified. Until then, they're in research mode.

andrepd 3y ago
>As someone who runs a plain text only website, thinks about using Commodore 64s to access the Internet Blog post? o.O
beefield 3y ago
> IMO, Ethereum is actually doing a fantastic job at moving itself forward. The issue with Bitcoin has always been the lack of innovation to overcome its fundamental problems. Ethereum isn't afraid to do what needs to be done to become adopted. My occasional lazy-ass status check: what's the status of non-crypto-collateralized loans at the moment? Can I get a crypto loan to buy a car or house nowadays without having to post crypto as collateral? (If the answer is yes, I'd be curious to know what aspect of present day crypto makes it competitive to establishment finance.)
- michaelscott 3y ago
  I'm not sure I understand what you want; you want to get crypto through a loan to buy a car, but you want to post eg. fiat as collateral?
  - beefield 3y ago
    I can walk to a bank and have a loan without any collateral. If I put a car or a house or a company as a collateral, I get a discount in the interest rate. Can I do that with crypto? To be clear, those products, lending money without fiat collateral are much, much more significant feature of modern financial system than payment settlement. Until crypto solves those somehow, any comparison is meaningless. Like trying to compare wheels with cars.
    - michaelscott 3y ago
      You can get a loan without any collateral in some countries and under certain conditions. Banks in the countries I've lived in, across 2 continents, would all still perform checks on you before handing you any money and this process has nothing to do with whether the transaction happens in fiat, crypto or a new car. Services exist to do what you want, but like in fiat institutions the checking process has to be performed "off-chain" in lieu of collateral. If your follow up question is "well then what's the point of crypto?", consider that getting a fiat loan at a bank with collateral still requires human checks in order to ensure that, for example, the collateral exists. In crypto, the collateral check is performed automatically and autonomously, and is therefore immediately more efficient.
- pa7x1 3y ago
  If you want to obtain a loan onchain, then whatever you post as collateral must be a token existing onchain. Otherwise it wouldn't have any visibility on it, or actionable mechanisms against default. You may post a stablecoin backed by EUR or USD. Here is one such market to do it: https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48&marketName=proto_mainnet_v3 https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b... Heck, if ownership of other real-world assets was defined onchain, instead of paper, you could post that as collateral. For instance, if the ownership of your house was officially registered onchain, then you could post it as collateral. Because whoever loans you, would know that he would get the official ownership of the asset. Which is for all intents and purposes the same thing that happens when we mortgage our house. Except that with our current systems we involve a lot of lawyers, banks, and notaries, that to a large degree would be dis-intermediated into code. To be noted that, of course, you can refuse to leave the house even if you lose control of its ownerhship, but these happens with both paper ownership and onchain ownership. Both would require the enforcement of private property rights by some authority holding the sanctioned right to forcefully remove you.
  - beefield 3y ago
    > Except that with our current systems we involve a lot of lawyers, banks, and notaries, that to a large degree would be dis-intermediated into code. I don't quite see how it could be a significant share of workload that would go to code. The parts you can dispatch there just are not that significant in costwaise when running a financial organization. Furthermore, even the part that could be dispatched to code, won't. See DAO in the early days of etherium.
- numtel 3y ago
  You're asking about undercollatorized loans on chain? It's not a solved problem but there's progress. See this survey of approaches of loans on chain. [1] Last year for the ETHOnline hackathon, I made an app that allows anyone to request a loan in any erc20 token with (optional) collateral in any set of erc20s. In addition, the borrower identity is used to increase confidence: a linked Lens profile and/or verified passport using Coinpassport. The principal is then crowdfunded. [2] While making this, I learned that Aave was originally called ETHLend and followed a similar model of requesting individual loans but this approach makes it difficult to attract liquidity so when they developed over-collateralized pools, the protocol became much more popular. It's going to take better identity tools than we currently have. Of course, undercollatorized lending is the basis of traditional banking so replicating it on chain is a massive win for the ecosystem. There's a few projects working on credit scores on chain: Sprectral [3] and Cred protocol. See this article about using Cred protocol [4] [1] https://jumpcrypto.com/writing/paradigms-for-on-chain-credit/ https://jumpcrypto.com/writing/paradigms-for-on-chain-credit... [2] https://ethglobal.com/showcase/lwned-75x0f https://ethglobal.com/showcase/lwned-75x0f [3] https://www.spectral.finance/ https://www.spectral.finance/ [4] https://medium.com/chelo-finance/chelo-tech-guide-2-uncollateralized-loans-ece48666d07 https://medium.com/chelo-finance/chelo-tech-guide-2-uncollat...
rkagerer 3y ago
The issue with Bitcoin has always been the lack of innovation to overcome its fundamental problems. Couldn't disagree more. Bitcoin evolved like crazy in its younger days - largely removing features in the interest of security. The fact it does one thing really well and has a fantastically simple and clean UI in it's core app is a feature and the reason I prefer it over Ethereum. I ran an Ethereum full node, but gave up years ago after new versions constantly broke it and it became way too much of a resource hog for an average joe to maintain. I want a stable and reliable protocol and software, which I can wrap my head around with minimal surprises, and that's exactly what Bitcoin delivers. The risk-averse approach of the Dev team is appreciated, and the update cadence and size of the changelogs are still lean enough to swallow. Ethereum scratches a completely different itch for me, and that's great. I don't need or want them to try and do the same things.
- Pxtl 3y ago
  When Bitcoin's simplicity means wasting vast amounts of fossil-fuel-powered compute for proof of work, that simplicity is apocalyptically bad. I'm not into crypto currency but I respect Ethereum for trying to move forwards and solve real actual problems with the field.
  - rkagerer 3y ago
    It's a fair point and I won't argue it uses a lot of energy. In fairness, by some accounts (I can't personally attest to their accuracy) more than 50% of that is already from renewables, eg. https://www.nasdaq.com/articles/renewable-energy-sources-that-will-power-the-future-of-bitcoin-mining https://www.nasdaq.com/articles/renewable-energy-sources-tha... I do know from experience there are mining outfits that have located themselves where the energy was going to waste anyway. But it doesn't excuse the huge use of power, and I wouldn't be surprised if over the long term a more efficient algorithm like proof-of-stake displaces proof-of-work. It's basic physics once you can do the same thing for less energy, and technologies more efficient than their predecessors tend to win out. If by that time there's a popular proof-of-whatever coin with a similar focus, lean feature set and works-as-expected usability as Bitcoin I would definitely consider switching to it! Edit: To be clear I share your admiration for Ethereum migrating to proof-of-work, my concerns and contrasts in the earlier post are more around protocol bloat and client software user-experience.
api 3y ago
Extremely difficult, yes, but loads and loads of complexity is not a sign they are doing a good job solving it. Adding complexity to solve problems is mere cleverness. Removing it is intelligence. Huge reductions in complexity without loss of function — or even with gain of function — is the definition of genius. The more complex a solution is, the less intelligence is evident in its design. I think this is related to how data compression is central to the way intelligence works.
- lxgr 3y ago
  Very well put. I've seen this in myself and others: There's a certain rush to creating a system so complex that you can barely master it yourself. But in a real system (one being actually used by people other than its designers, that have interests other than working on it and admiring the beautiful machinery), there is an infinite supply of complexity in the form of external constraints and internal one-way architectural decisions, and you'll be grateful for every single bit of complexity you can still chip off while keeping the system running. It takes good engineering to solve a problem, but it takes great engineering to solve a problem without creating three others elsewhere.
  - api 3y ago
    > It takes good engineering to solve a problem, but it takes great engineering to solve a problem without creating three others elsewhere. Yeah that’s basically what I mean. There’s essential complexity and incidental complexity. The first is the complexity that comes from the real world. The second is self imposed due to design choices or path dependency effects. Minimizing the latter is good engineering. I do maintain that every once I a while someone finds a way to radically cut complexity without losing essential capability. That’s genius, and it’s rare.

by fallat 3y ago

andrepd 3y ago

>As someone who runs a plain text only website, thinks about using Commodore 64s to access the Internet Blog post? o.O

beefield 3y ago

> IMO, Ethereum is actually doing a fantastic job at moving itself forward. The issue with Bitcoin has always been the lack of innovation to overcome its fundamental problems. Ethereum isn't afraid to do what needs to be done to become adopted. My occasional lazy-ass status check: what's the status of non-crypto-collateralized loans at the moment? Can I get a crypto loan to buy a car or house nowadays without having to post crypto as collateral? (If the answer is yes, I'd be curious to know what aspect of present day crypto makes it competitive to establishment finance.)

michaelscott 3y ago
I'm not sure I understand what you want; you want to get crypto through a loan to buy a car, but you want to post eg. fiat as collateral?
- beefield 3y ago
  I can walk to a bank and have a loan without any collateral. If I put a car or a house or a company as a collateral, I get a discount in the interest rate. Can I do that with crypto? To be clear, those products, lending money without fiat collateral are much, much more significant feature of modern financial system than payment settlement. Until crypto solves those somehow, any comparison is meaningless. Like trying to compare wheels with cars.
  - michaelscott 3y ago
    You can get a loan without any collateral in some countries and under certain conditions. Banks in the countries I've lived in, across 2 continents, would all still perform checks on you before handing you any money and this process has nothing to do with whether the transaction happens in fiat, crypto or a new car. Services exist to do what you want, but like in fiat institutions the checking process has to be performed "off-chain" in lieu of collateral. If your follow up question is "well then what's the point of crypto?", consider that getting a fiat loan at a bank with collateral still requires human checks in order to ensure that, for example, the collateral exists. In crypto, the collateral check is performed automatically and autonomously, and is therefore immediately more efficient.
pa7x1 3y ago
If you want to obtain a loan onchain, then whatever you post as collateral must be a token existing onchain. Otherwise it wouldn't have any visibility on it, or actionable mechanisms against default. You may post a stablecoin backed by EUR or USD. Here is one such market to do it: https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48&marketName=proto_mainnet_v3 https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b... Heck, if ownership of other real-world assets was defined onchain, instead of paper, you could post that as collateral. For instance, if the ownership of your house was officially registered onchain, then you could post it as collateral. Because whoever loans you, would know that he would get the official ownership of the asset. Which is for all intents and purposes the same thing that happens when we mortgage our house. Except that with our current systems we involve a lot of lawyers, banks, and notaries, that to a large degree would be dis-intermediated into code. To be noted that, of course, you can refuse to leave the house even if you lose control of its ownerhship, but these happens with both paper ownership and onchain ownership. Both would require the enforcement of private property rights by some authority holding the sanctioned right to forcefully remove you.
- beefield 3y ago
  > Except that with our current systems we involve a lot of lawyers, banks, and notaries, that to a large degree would be dis-intermediated into code. I don't quite see how it could be a significant share of workload that would go to code. The parts you can dispatch there just are not that significant in costwaise when running a financial organization. Furthermore, even the part that could be dispatched to code, won't. See DAO in the early days of etherium.
numtel 3y ago
You're asking about undercollatorized loans on chain? It's not a solved problem but there's progress. See this survey of approaches of loans on chain. [1] Last year for the ETHOnline hackathon, I made an app that allows anyone to request a loan in any erc20 token with (optional) collateral in any set of erc20s. In addition, the borrower identity is used to increase confidence: a linked Lens profile and/or verified passport using Coinpassport. The principal is then crowdfunded. [2] While making this, I learned that Aave was originally called ETHLend and followed a similar model of requesting individual loans but this approach makes it difficult to attract liquidity so when they developed over-collateralized pools, the protocol became much more popular. It's going to take better identity tools than we currently have. Of course, undercollatorized lending is the basis of traditional banking so replicating it on chain is a massive win for the ecosystem. There's a few projects working on credit scores on chain: Sprectral [3] and Cred protocol. See this article about using Cred protocol [4] [1] https://jumpcrypto.com/writing/paradigms-for-on-chain-credit/ https://jumpcrypto.com/writing/paradigms-for-on-chain-credit... [2] https://ethglobal.com/showcase/lwned-75x0f https://ethglobal.com/showcase/lwned-75x0f [3] https://www.spectral.finance/ https://www.spectral.finance/ [4] https://medium.com/chelo-finance/chelo-tech-guide-2-uncollateralized-loans-ece48666d07 https://medium.com/chelo-finance/chelo-tech-guide-2-uncollat...

rkagerer 3y ago

The issue with Bitcoin has always been the lack of innovation to overcome its fundamental problems. Couldn't disagree more. Bitcoin evolved like crazy in its younger days - largely removing features in the interest of security. The fact it does one thing really well and has a fantastically simple and clean UI in it's core app is a feature and the reason I prefer it over Ethereum. I ran an Ethereum full node, but gave up years ago after new versions constantly broke it and it became way too much of a resource hog for an average joe to maintain. I want a stable and reliable protocol and software, which I can wrap my head around with minimal surprises, and that's exactly what Bitcoin delivers. The risk-averse approach of the Dev team is appreciated, and the update cadence and size of the changelogs are still lean enough to swallow. Ethereum scratches a completely different itch for me, and that's great. I don't need or want them to try and do the same things.

Pxtl 3y ago
When Bitcoin's simplicity means wasting vast amounts of fossil-fuel-powered compute for proof of work, that simplicity is apocalyptically bad. I'm not into crypto currency but I respect Ethereum for trying to move forwards and solve real actual problems with the field.
- rkagerer 3y ago
  It's a fair point and I won't argue it uses a lot of energy. In fairness, by some accounts (I can't personally attest to their accuracy) more than 50% of that is already from renewables, eg. https://www.nasdaq.com/articles/renewable-energy-sources-that-will-power-the-future-of-bitcoin-mining https://www.nasdaq.com/articles/renewable-energy-sources-tha... I do know from experience there are mining outfits that have located themselves where the energy was going to waste anyway. But it doesn't excuse the huge use of power, and I wouldn't be surprised if over the long term a more efficient algorithm like proof-of-stake displaces proof-of-work. It's basic physics once you can do the same thing for less energy, and technologies more efficient than their predecessors tend to win out. If by that time there's a popular proof-of-whatever coin with a similar focus, lean feature set and works-as-expected usability as Bitcoin I would definitely consider switching to it! Edit: To be clear I share your admiration for Ethereum migrating to proof-of-work, my concerns and contrasts in the earlier post are more around protocol bloat and client software user-experience.

api 3y ago

Extremely difficult, yes, but loads and loads of complexity is not a sign they are doing a good job solving it. Adding complexity to solve problems is mere cleverness. Removing it is intelligence. Huge reductions in complexity without loss of function — or even with gain of function — is the definition of genius. The more complex a solution is, the less intelligence is evident in its design. I think this is related to how data compression is central to the way intelligence works.

lxgr 3y ago
Very well put. I've seen this in myself and others: There's a certain rush to creating a system so complex that you can barely master it yourself. But in a real system (one being actually used by people other than its designers, that have interests other than working on it and admiring the beautiful machinery), there is an infinite supply of complexity in the form of external constraints and internal one-way architectural decisions, and you'll be grateful for every single bit of complexity you can still chip off while keeping the system running. It takes good engineering to solve a problem, but it takes great engineering to solve a problem without creating three others elsewhere.
- api 3y ago
  > It takes good engineering to solve a problem, but it takes great engineering to solve a problem without creating three others elsewhere. Yeah that’s basically what I mean. There’s essential complexity and incidental complexity. The first is the complexity that comes from the real world. The second is self imposed due to design choices or path dependency effects. Minimizing the latter is good engineering. I do maintain that every once I a while someone finds a way to radically cut complexity without losing essential capability. That’s genius, and it’s rare.