Video Of The Week: Ethereum In 25 Minutes

Ethereum (ETH) has exploded in the first half of 2017, with its dollar exchange rate going from $8.29 to $93.65, resulting in a current market cap of $8.6bn.

We can (and do) argue all day long about whether these numbers are crazy or not.

But I always like to think that where there is smoke, there is fire.

So it might make sense to try to understand Ethereum a bit better.

And nobody is better to do that than Vitalik Buterin, the inventor/founder of Ethereum.

Here is his take from Ethereum DevCon2 last fall in Shanghai.

#blockchain

Comments (Archived):

  1. William Mougayar

    Yup. I predicted this, back in February when it was hovering at $10-12. It didn’t make sense to me how low it was, relative to Bitcoin. ETH is now about 1/3 the value of Bitcoin’s and rivals its transactions volumes on some days.Ethereum is the new Java. https://twitter.com/wmougay

    1. gkamstra

      That makes sense to me. That said, the rapid increases across the space in past month or so especially (ripple, litecoin, stuff I haven’t even heard of) is kind of crazy. Feels like 100% FOMO, 0% actual fear.

      1. William Mougayar

        Consider this chart. (Source: MetaStable)https://uploads.disquscdn.c…

        1. gkamstra

          The technology is very cool – I am absolutely pro wider adoption by actual users.

        2. melbourne2049

          I would add that blockchain tokens are debt free. When we use fiat at the moment, only 3% of that is ‘outside money’ the rest is 97% ‘promises to pay at a later date.What do you think of Digix, they seem to be doing some pretty clever stuff with gold. Already have a credit card to pay at retail stores with gold……if only they had chosen to gone with ‘ideal money’.Just a quibble, but I struggle with fiat. I think to have a successful fiat, all you need is to be an institution that is going to be around for a long time and people trust. For instance Microsoft with their XBox points is a fiat, also airline miles is another one, these mediums of exchange are unbacked.As a bit of history, it takes a long time with “Familiarity”. It took Australia 50 years after they become fiat before the Reserve Bank sold off its gold. Also there are many fiat currencies around the world still that back their fiat with gold, so I think it will take a while before tokens on the blockchain are accepted by the regular joe. Just on the last line dealing with “Programable”. I would beg to differ. Something like Venmo is pretty cool, programmable and fiat. Fiat has been digital for a long time, but that ‘familiarity thing’, we humans are slow to adapt.

        3. JLM

          .On Saturday afternoons, I have my regular bout of Texas BBQ. I go round to different places depending on who wants what. Today, I had an ancient birthday coupon from Rudy’s, so I went there.They took fiat currency. They gave me BBQ. It made my Saturday.I also had a Rudy’s gift card I’d gotten for Christmas. It was denominated in fiat currency. I did not spend it because I had the fiat currency birthday coupon.I asked the Rudy’s folks how long they smoked their brisket and if they took crypto-currency. They said twelve hours and “no.”On a hunch, I asked them if they took gold. They also said “no.”They were very polite about it, but they do not take crypto-currency–nothing but fiat currency.I met a drug dealer at Rudy’s. I asked him, “Do you take fiat currency?” He said, “Yes.”I did not buy any drugs, but I was interested in his answer.Crypto-currency will be a thing when folks can buy BBQ with it.Looking for any real world app. It’s a “thing” just not a utilitarian thing. I am predisposed to want it to be a bigger thing solely because I know you. And, I read your book. Thanks for the book. I really enjoyed it. I learned a lot and it was extremely well written. Thanks again.JLMwww.themusingsofthebigredca…

          1. William Mougayar

            That’s ok for now. But it will propagate .I remember when the web had only 10 million users, and browsing was a mysterious , elite thing.One day, you’ll be able to do that.

    2. Vendita Auto

      Will D-Wave move everything forward in a click:Geordie Rose – Quantum Computing: Artificial Intelligence Is Here Sooo agree with two of the predictions IMO the parallel universes are a string to far.https://www.youtube.com/wat

      1. melbourne2049

        Is this really quantum computing? Isn’t it always 10 years off? I remain sceptikal.

        1. Vendita Auto

          Hi, the presentation is a few years old now, D-Wave has hit the beaches IMO any corporate without access to D-Wave systems will certainly have security problems as algo v algo play chess without mortal intervention. I asked the question of William Mougayar “will everything forward in a click” in the context of the warp speed and therefor the effects or not on probability /indeterminacy for blockchain security I can only flag it up the knowledge is beyond my pay grade although I have considered the benefits had I been in the gaming industry : )

    3. Richard

      There is continued speculation that the run up in crypto currencies are correlated with the drug and arms trade and other illegal activites. If this is true, are we profiting from blood on the streets?

      1. Zach

        This is a gross misconception and black market activity only makes up a very small percentage of the crypto space (cash is probably used just as often, if not more). In addition, Ethereum has not prioritized privacy like other currencies have (i.e. Bitcoin, Zcash) so even if this is a concern, it’s less of an issue with Ethereum.

        1. Richard

          That’s good to know! There are investments that I am not comfortable profiting on, such as big tobacco. Just want to make sure I’m not profiting off of something I’m uncomfortable standing behind

      2. William Mougayar

        That’s a parabolic correlation and the first time I hear about it. There are conspiracy theories for everything!

      3. melbourne2049

        I too want to know what has caused the run up in Ethereum. It has only just recently been accepting onto a large dark market exchange, so I struggle to see where it has come from.

        1. andersondb8

          Enterprise Ethereum Alliance announcement later this month with 200+ companies being announced as joining. Raiden state channels later this month (big scalability upgrade), ENS domain service launched last week and major protocol upgrade to “Metropolis” happening in June maybe. The earlier EEA announcement that had Microsoft, Intel, JP Morgan and others was the main reason for the huge price increase in March in my opinion.

    4. melbourne2049

      William, I struggle with Ethereum because it is not being used in the real world. Do you know of people using it that are not involved with any ethereum projects. To me it seems that a lot of the momentum in ethereum is financial firms putting money in for their own sandboxed development trial. So still no real world use. My concern is what happens in two years time when the banks choose not to role out these projects. Would it not be reasonable to wait to see if these trials are successful.

    5. Jim Ritchie

      It is still early days with blockchains and Ethereum, think 1992 in terms of web/http. Our company is using a combination public/private Ethereum network to solve specific use cases in B2B sales that really have not been solvable in any cost effective way in the past. This is sales intelligence for Web 3.0. @wmoug:disqus I’ll be coming from SF to Token Summit so we should try to catch up then.

    6. falicon

      You are being too humble here…you predicted ETH would be a hit long long before that (I know, because it’s been on my radar for awhile thanks to your early prediction) 😉

  2. Kent Karlsen

    Love it and support it! Waiting with excitement how Ethereum might change eCommerce & financing trade to simplify and secure transactions. Specially in developing countries.

  3. awaldstein

    Read this when I woke this am.Best piece I’ve read on anything in this sector.https://medium.com/humanizi

    1. William Mougayar

      Yes, Vinay did a good job with this one.

      1. awaldstein

        Yup.

    2. LE

      Great link. I liked this is particular:So what does it do, this programmable blockchain that’s worth ten billion dollars? Well, let me explain. A blockchain is a way of arranging a lot of computers together to do the same thing. It’s a bit like Dropbox or Google Docs or any other syncing technology that moves pictures from your phone to your laptop or whatever. The difference is that it’s syncing thousand and thousands of computers. If a few machines drop offline or get hacked, the network does not even notice: the consensus of all the machines which have the same data overwhelms the occasional drop outs. The computers form a choir, and they never forget the chorus.My question for @wmoug:disqus is is there a technically possible and feasible way for enough machines to be hacked whereby it would be noticed? All of the machines are running software and that software is only as good as the source. If it changes (rouge) then couldn’t there be a problem? (This is a newbie question I realize but maybe you or someone could clarify.)

      1. awaldstein

        above my pay grade so sure @willi@wmoug:disqus will chime in.

        1. Matt A. Myers

          Do you know if are there any other resident experts here on AVC?

          1. awaldstein

            dunno

      2. Dylan Dewdney

        I can reply to this: yes, it could happen, but the conditions for that happening would likely be so bad there’d be a lot more to worry about than the loss of Ethereum. An event would need to occur that wiped out all nodes. Something cataclysmic could probably do it, as long as there are no nodes deep underground that could be revived. Maybe a biblical flood, enormous EM event via the sun, or mass atomic explosions across the world. Still, you would only need one full, current node to get it back up and running. The only way it really dies in an estimable way is if civilization dies imo-just like the net.

        1. Matt A. Myers

          Money incentivizes. In reality, someone likely wouldn’t disrupt this for their own gain, but to be purposefully destructive.

      3. Matt A. Myers

        Well, that’s poetically put – I like metaphors using streams, rivers, and oceans too. I wonder how accurate that is, and what about a poetic version of the negatives of blockchain, cryptocurrencies, and the like?

      4. Matt A. Myers

        And to answer your question, yes – I believe if 50% + 1 computing power is added to the network, it can be overtaken; university researchers tried this awhile I believe. So then it allows a war between computing power (machines and energy).

      5. Evan Van Ness

        One should note that Ethereum has a plan in place to move away from wasteful proof of work (PoW) to proof of stake (PoS) which will provide significantly more consensus security with less societal waste on electricity/ASICs

        1. melbourne2049

          This is what concerns me. As somebody that is launching a service on a blockchain I need feel comfortable that the security of the blockchain is of imperative importance. It just makes me feel uncomfortable, from someone unable to judge the technology. Do you reckon I am being too concerned and that PoS will be fine? Will that still allow an anonymous append-only ledger? – thanks for any answers.

          1. Evan Van Ness

            PoS will bring more security and faster. Arguably the only reason not to transition to PoS is that no major chain has ever used PoS as the consensus mechanism. Ethereum has a pretty cautious plan in place for that though.Ethereum’s privacy upgrades may happen around the same time.

      6. William Mougayar

        It is noticed by the algorithm which ignores them, but not by users who are insulated, due to the inherent resiliency. As long as 1 computer is running, the blockchain keeps humming. Taking down 13,000 computers at once is not an easy task. They work in unison to defeat attackers. That said, a bug could have disastrous effects like we saw in the DAO fiasco, but usually humans intervene quickly to fix it, and put the train back on track.

    3. Twain Twain

      Note his closing comments: “Much as I’d like to raise $100m in 24 minutes in an ICO to re-invest in building out the core technologies to connect Ethereum to everything else, I just can’t see a way of doing it that gives us the flexibility down the line to make the decisions we need to.”That speaks to Vinay’s concerns that Ethereum may not be flexible enough.Vinay invited me to his Thanksgiving dinner in London last Nov and we talked broadly about AI, Blockchain, Ethereum and Quantum Computing.@wmoug:disqus — Should Ethereum be marketed as “the new Java”? I recently listened to Douglas Crockford give a talk at Oracle Developer Event. He developed Javascript and was talking about his hopes for a future programming language. He didn’t mention Java as a basis.

      1. awaldstein

        I knew Doug well as we were both involved in a company Electric Communities, one of the early pioneers in the community space.Cool company good guy.

        1. Twain Twain

          There’s a video of me at that Oracle event asking Doug whether a form of quantum physics might be a carrier for that future language he’s hoping for and him saying he’s never heard of it and doesn’t know what it is.LOL. I’ve gotten “I don’t know how to do that” from any number of people I was hoping could mentor me in my quest to solve Natural Language Understanding.In any case, I already invented the quantum code back in 2008/9.

      2. William Mougayar

        To your last question, the initial vision was to become a new development platform for decentralized applications. Java is the language of the Web. Ethereum is that new platform that goes beyond what we have today in web apps. I made up the Java analogy, but it’s a good one. One day, there will be 10 million Ethereum developers, just like there are 10 million Java developers.I’m not sure Vinay meant to draw a context about Ethereum’s weakness. ICOs are running with or without Ethereum. He is commenting that the ICO process has its drawbacks and cautionary signs, not Ethereum itself.

        1. Twain Twain

          There are hybrid languages emerging, including from Netflix and AWS which are more interesting than JAVA.ORACLE is considered a laggard in cloud, for example.That is not to comment on Ethereum either way.

        2. melbourne2049

          Wasn’t Java useful for people? What is Ethereum useful for? Would you mind sharing some non-test use cases that you have heard of? Digix is the closest I have come to, but I don’t know of anyone using it. It would be cool if someone in like Venezuela was using it to get around currency controls!

          1. andersondb8

            digix is still in development, the code is being audited by a third party right now.

        3. Twain Twain

          Alas, “Ethereum is the new Java” says this:(1.) Ethereum is for developers and not for Joe+Jane Main Street or in language they understand.(2.) Joe+Jane Main Street have no control, vote or say in how Ethereum is made or how it develops.That doesn’t say “democratizing and “for the people, by the people.”The other observation is that I’ve sat in Machine Learning workshops where participants ask if they should learn JAVA or another language. Almost no one opts for JAVA.Hello World in JAVA===============class HelloWorld { public static void main(String[] args) { System.out.println(“Hello World”); }}Hello World in Python================print “Hello World”Now, bear in mind that most AI frameworks are built for Python (including Google Tensorflow) and there’s this entire movement to make coding more understandable, easier and more accessible to everyone rather than wieldy.So … if you want to go with “Ethereum is the new JAVA”… That is how we’ll think of Ethereum.

          1. William Mougayar

            But developers create wonderful apps that users will be enlightened with. Ethereum is a set of technologies, just as Java is.

    4. Donna Brewington White

      Really good read. Thanks A. Sorry ran out of room to credit you on the tweet.Author’s Twitter handle is @leashless. Love It! Maybe (in part) the idea William is going for with his new book title?

      1. awaldstein

        All good Donna.

      2. William Mougayar

        Some intersects. Vinay & I go back, while helping the Ethereum Foundation.

    5. melbourne2049

      Vinay Gupta – “A blockchain is a way of arranging a lot of computers together to do the same thing. It’s a bit like Dropbox or Google Docs or any other syncing technology that moves pictures from your phone to your laptop or whatever.”I struggle with this definition. The one that I use, because it suits my frame of potential uses is that a blockchain is an “anonymous append-only ledger”. What do you guys/gals think? am I BS?

      1. Evan Van Ness

        it’s not really that anonymous at the moment. The only really anonymous transaction crypto is ZCash, though Monero/Dash have some privacy features.I should note that Ethereum has major privacy upgrades planned, including both ring signatures and zkSnarks.”append-only ledger” is definitely one aspect of a blockchain.

  4. jason wright

    Governance and scaling and verification issues.The price is the mark of good marketing.

    1. William Mougayar

      No, the price is the mark of a real ecosystem. Ethereum doesn’t do a thing about marketing itself. It really sucks at marketing actually. Its users, supporters, developers, believers do all the work.

      1. jason wright

        I hold Ether. I still say the price is a marketing driven phenomenon. The original pump was an orchestrated campaign. All over the forums.My view counts for nothing. No need to be concerned. I’m not an ‘influencer’.

      2. Evan Van Ness

        > Ethereum doesn’t do a thing about marketing itself.William is right. Ethereum does no marketing. Even for people that are interested in Ethereum, the “marketing” material is still aimed entirely at developers. Even that is hard, because some of the documentation is out of date. This space moves _fast_.No marketing does have some drawbacks. IBM is selling a blockchain-like product called Hyperledger to corporate America, and is beginning to see some traction. In the long-run, it’s unlikely that big businesses will be well-served by Hyperledger, but in the short-term it’s tough for Ethereum to compete with IBM’s salesforce.

        1. jason wright

          And isn’t that a very necessary reason to inflate the price? A lot of money is needed to compete with an IBM. I’m not seeking to argue. I always try to rationalise things I observe.

        2. Matt A. Myers

          Early adopters are generally developers for something so technical – that is marketing material.

          1. Evan Van Ness

            Sure. I expected someone to make this semantic argument, so you didn’t disappoint. :)But there’s a huge difference between having documentation on a site (ethereum) and actively going out marketing Hyperledger through sales, through holding events with free stuff, and through expensive PR efforts to get stories about PoC planted in the MSM about “blockchains” so that your salesmen and saleswomen have stuff to point to when they sell.

          2. Matt A. Myers

            Your argument is a moot point. A bad investment, in Fred’s eyes for example, is one that requires tons of money going into advertising dollars in order to be successful. The best investments have built-in virility – e.g. in this case if you can get every person that buys in to then be promotes, you’re gold – you have your marketing/advertising team.

          1. Evan Van Ness

            Hyperledger has a very large sales and marketing budget. That’s what IBM does.

      3. Matt A. Myers

        I feel that you’re side-stepping the statement.What’s it a real ecosystem of – gamblers?Can you 100% say why it is priced as it currently is, demand wise? You can’t, no one can. The easiest guess is the gamble.People involved in this ecosystem and Bitcoin – because of how these blockchains are structured – are incentivized to promote it, and so they are the marketers.You too are marketing Ethereum, as is Vitalik, as figureheads. Likewise Fred is marketing himself with this blog. And please don’t take my comments as a hit towards the positive aspects of Ethereum, however saying that Ethereum doesn’t do a thing about marketing itself is disingenuous response to the statement.You could only make the statement if you want to ignore basic network effects: the seller will want buyers, and so the network of people will share that they accept the cryptocurrency – and that “it’s great! It almost cures cancer!” This also isn’t including investment into the ecosystem for platforms and such; I’d love to see the finance spreadsheet for Coinbase to see if they take into account how much the Bitcoin they hold is worth/will be worth at different price points.The interesting part about the gambling aspect is they’re not only gambling, they’re helping build and run the casino.Until these blockchain take into account the unfairness (how early adopters gain more for doing nothing), then the blockchains shouldn’t gain a hold as a transactional layer – which is where they should exist.If the people who first started using email somehow were given a higher % of resources to spend in the world, simply because they started early – that would be ridiculous and non-sensical, right?

        1. William Mougayar

          Can you 100% say why it is priced as it currently is, demand wise?- Yes, I can point to the ecosystem and see hundreds of companies, thousands of developers (30,000), and 600+ startups working on Ethereum technology; not counting the hundreds of thousands in individual investors, 100,000+ transactions per day, or the 12,847 computer nodes running that network). It doesn’t get more real than that. I hope you can learn more about what is really going on. (and not sure about where you’re getting your gambling statement & overstating it)

          1. Ian Katz

            Can you explain simplistically how the actual trading value of ethereum is related to the well developed ecosystem?

          2. William Mougayar

            It’s a new trend that is getting increasing amounts of interest. As simple as that.

          3. Ian Katz

            so there is no inherent value?

          4. jason wright

            quantitative description.what about qualitative?

          5. William Mougayar

            Both are there. You just need to go out in the marketplace & see what’s going on, at the ground level in several cities around the world.

        2. Twain Twain

          Sometimes, pyramid schemes happen and even the most sophisticated folks aren’t aware that it happens.This has been the experience in many industries.That’s not any comment on Blockchain, Ethereum or marketing/selling generally.William is right: Ethereum sucks at marketing.If it was wizard at marketing like Steve Jobs, everyone including our grandmothers would want an Ethereum.

  5. pointsnfigures

    there will be hundreds of cryptos in the future.

    1. William Mougayar

      Hundreds? Say millions. Like we have millions of websites & millions of companies.

      1. Pointsandfigures

        I didn’t want to exaggerate.

      2. Dylan Dewdney

        Millions might be over-estimating, but who knows? Maybe. Certainly hundreds of thousands.

      3. Matt A. Myers

        Can you give a concise reason as to why there would be millions of cryptos/blockchains? That is counterintuitive to me.

        1. William Mougayar

          Every company can issue their own cryptocurrency token to empower their users and customers to do more with their products and services.

          1. pointsnfigures

            but many will have no value, or super limited value not unlike game tokens

          2. William Mougayar

            It depends. Like websites, some are more effective than others.

          3. Donna Brewington White

            Ahh

          4. alive88

            or indexed

      4. Donna Brewington White

        But each cryptocurrency needs to have a group of transaction partners, right? Are you envisioning individual parties using multiple cryptos? With multiple wallets?

        1. William Mougayar

          There will be interoperability. Much easier that exchanging foreign currency today.

    2. Alex

      There are hundreds of cryptos now.

    3. Matt A. Myers

      Let’s hope the one that is fair and reasonable is the one that gains hold globally.

  6. Frank W. Miller

    Interesting, I have some substantive things to say here at a technical level but I won’t since they’ll be perceived as critical and Fred, I’m getting the feeling you don’t want any dissent on this blog.

    1. Dylan Dewdney

      Shoot, I’ll reply.

    2. Dean Roskell

      I’d be grateful to hear your thoughts Frank. This is a new industry we’re seeing here and many people are putting their cash in (Purchasing altcoin tokens), so the more information out there to read the better.

    3. Twain Twain

      Better technical substance than sycophancy.

    4. Matt A. Myers

      Don’t not do it for Fred, do it for humanity – seriously.

    1. melbourne2049

      Hi Evan, would you mind replying if you have come across somebody unrelated to an Etheruem project that has purchased something with ethereum. I have bitcoin, but have yet to use it, but I know it is used on the black market. I am yet to hear of a normal person using ethereum, but I am not to close to the community.

      1. Evan Van Ness

        Sure, people buy things with Ether. But to most in the Ethereum community, currency is the least interesting thing about Ethereum. We’re nothing like Bitcoin in that regard — in the community, we don’t care whether merchants accept it or whether you can buy coffee with Ether.

  7. Dylan Dewdney

    Fred, no love? Hope you’re well, man, anyway. Honestly, VCs better watch out; although DAO was a mess, it shows that traditional days of VC may be numbered.

  8. Matt A. Myers

    Is there a website that lists how much $ early adopters gain as the value increases – for Bitcoin and Etherum?I wish I could have a place to point to to point to someone’s bias when they’re promoting these cryptocurrencies/blockchain technologies. On a side note, I like Etherum more than Bitcoin – I’ll reserve my reason why for now.

    1. Evan Van Ness

      Ethereum doesn’t think of itself as a cryptocurrency, more as a platform for decentralized software applications. That’s why the main community hangout (r/ethereum) has banned price talk — we prefer to discuss the technology.

      1. Matt A. Myers

        Great – so build into the technology a way to counteract the unfairness that early adopters gain? 🙂 Or would that conversation be ban because it’s talking about price?Edit to add: A question to ask is if they’re okay that they’re also building and running a casino with their technology. I wonder too how much initial investment money would have gone into the ecosystem if it was known the gambling aspect would be built out of existence? Perhaps this is the path that was required to get this ecosystem going, and I hope it evolves to be fair.

  9. Matt A. Myers

    Next they’re sell the story of the yin-yang balance that Ethereum brings, how yin rests in yang – and yang rests in yin.. not sure how they’d translate that into Ether though.

    1. Twain Twain

      LOL. Except they’d have to re-engineer all the code to get to YinYang coherency.Ethereum and its programming languages are not set up to get the machines towards Natural Language Understanding or coherency.

  10. Donna Brewington White

    @fernandogutierrez:disqus, whom I met through AVC, is on the core team for Dash (DASH) and introduced me as a consultant to the team.Thanks to you and @WMoug:disqus I had a basic handle on the blockchain and cryptocurrency but still working with the Dash team has been a wild wild west experience and amazing fun. (BTW, thanks once again for the intro to a topic on AVC that has become greatly beneficial to my work!)Any posts on Dash on the horizon? This seems to be coming up fast as a contender and, too, had a through-the-roof scenario in Q1.Would love to “hear” your (and William’s) take.

    1. William Mougayar

      I give lots of credit to the marketing & rebranding of DarkCoin as Dash. I don’t see it as a contender, rather an alternative.

      1. Donna Brewington White

        Didn’t think carefully about the use of the word “contender.” Meant more in terms of being a viable player …or as you say… alternative.I’m sure the rebranding helped but this didn’t seem to directly coincide with the recent surge. I was struck by the statement in the article Arnold shared that there is no marketing strategy for Ethereum. This is certainly part of Dash’s growth.Personally, glad they changed the name.

      2. Fernando Gutierrez

        I too think that we’ll have many successful tokens in the future. BTC and ETH are completely different beasts that cater to different needs, even if they sometimes intersect. Same thing for DASH.

      3. Fernando Gutierrez

        Btw, some Dash core team members will be at Token.

        1. Donna Brewington White

          Oh cool!

    2. Fernando Gutierrez

      I can only praise your flexibility and willingness to work with us in such a challenging space. It’s being a great experience for us too!

  11. melbourne2049

    A contrarian view. i just wrote a piece on blockchain tokens and how they relate to moneyness. A different perspective may help in clarifying this crazy blockchain technology.https://medium.com/@kamakar

  12. Ryan Dippmann

    Introducing truly outlandish #ICO claims, TokenCard on #ethereum fabricates a relationship VISA to raise $16M $ETH http://on.ft.com/2perlUw

  13. Ryan Dippmann

    Reminds me of the song by the Talking Heads “burning down the house” — https://www.youtube.com/wat