Why Ethereum?

AVC regular William Mougayar gave this presentation at the European Ethereum Developers Conference, Edcon, in Paris a few days ago. In his talk, William argues that Ethereum, unlike Bitcoin, is developing into a rich environment with many different services coming together to provide developers a wide platform to build on top of.

I am increasingly viewing Bitcoin and Ethereum as complimentary, not competitive, and see both of them as important public blockchains that will grow in significance in the coming years. But regardless of that, William’s take on Ethereum is correct and there is a lot of developer momentum and enthusiasm around it.


Comments (Archived):

  1. William Mougayar

    Thanks Fred. Indeed, Ethereum is different, but I believe that ETH deserves better than being only 6% of BTC; which is why I predicted it will experience a 5-10x gain this year. The ecosystem around ETH is newer than BTC. I’m going to write more about that. The video should come out in a few days.

    1. Joe Peters

      A successful hard fork to Metropolis (a significant upgrade to many aspects of the user experience) and more concrete details around the economics behind the move to Proof-of-Stake should drive the increase in valuation. Too many people don’t know that the annual inflation rate of Ether will significantly decline at the time of the switch to Proof-of-Stake. The estimate I’ve seen recently on Reddit (unfortunately where much of the conversation still occurs) is roughy 1% per year which would be a quarter of Bitcoin’s current inflation, which may make it a better store of value.

    2. LE

      Can you explain the Boeing 787 Dreamliner slide a bit?

      1. William Mougayar

        Yup, you need to hear the video. ;)I said the analogy to the dreamliner is that’s how Ethereum is being built : by dozens / hundreds of developers, contractors , subcontractors from around the world. But then it gets assembled & it works.

        1. jason wright

          Sounds like the Space Shuttle, which was an economic and engineering disaster.

    3. Girish Mehta

      Can you clarify a 5-10X gain in what (metric) ?

      1. William Mougayar

        I’m going to need to write a post on that! Either Bitcoin is overvalued, or Ethereum is undervalued. One data point is the volume of daily transactions of Ethereum vs. Bitcoin. Today, it’s about 50,000 vs. 300,000 so that’s x6 for Bitcoin, and it should peg ETH at $2.8B today, based on that ratio. Another data point is that the ETH network has been growing much faster than Bitcoin, so I would expect ETH transactions to be at 1/4 of Bitcoin’s by year end.

        1. ZekeV

          OK good, now we are getting into real numbers. If I were investing long-term in crypto, I would want a rigorous approach based on value as demonstrated by fundamental network statistics such as this. Not on how many brogrammers show up at a conference.

          1. William Mougayar

            Unfortunately, the space still has wild west characteristics. The more credible & mature initiatives will have concrete data, while others don’t.

          2. ZekeV

            Tx volume is something that can be computed on any bitcoin clone using its blockchain, publicly available info. OK, so it requires a little work to get that if there’s no blockchain.info for your particular coin. But if I were investing more than lunch money in these protocols it seems worth the cost to collect and parse the data. And if you wait for the market to get established in a coin before investing, you are leaving a lot of growth on the table potentially.

    4. ZekeV

      If ETH deserves to grow by X, where do you factor in ETC? Why shouldn’t people create a hundred more clones to capture part of X? Or why wouldn’t the utility of ETH be partially replaced by new competing protocols like Tezos?In the short term, the only reason I have to be optimistic about ETH is that it is well-hyped and seems likely to be considered for new exchange listings and possibly a public markets exchange traded fund (once bitcoin has one, others will surely follow).

      1. William Mougayar

        Actually, Ethereum is under-hyped. The Foundation doesn’t market what they are doing well, like the Hyperledger Foundation for example. We shouldn’t underestimate how long it takes to build an ecosystem around a protocol or set of technologies. For Tezos or others, building a better box is not the way to take Ethereum head on.

        1. ZekeV

          Underhyped based on what? Functionality is the same as any clone, by definition. There is a lack of technical rigor to this discussion. Hype goes up and down, but what I am interested in is coming up with a reasonable measure for the fundamental value of a bitcoin. That is kind of hard, I don’t have any suggestions yet.

        2. creative group

          William Mougayar:The advantage ETH and competing ecosystems have over BTC is they are able to include what BTC lacks….ETH is at an entry point that is inviting to the buyer. Could the ETH reach the levels of BTC?How can the speculators in ETH know a future price when there are no fundamentals to rely upon?Would Twain Twain evaluation of the blockchain technical aspects and endorsement of the Holochain be duplicated in BTC and ETH or is it much too late because how both foundations were built. Are the two blockchain able to adapt and use better protocol?

    5. Twain Twain

      Developers in SF will play with Holochain structures in early March. I agree with Fred that Bitcoin and Ethereum are complimentary public blockchains.I still think Satoshi didn’t think through trust, consensus voting mechanisms, the subjective factors of agreements in value attribution and representative distributions. That’s affected the way Bitcoin and Ethereum are set-up.For me, the starting structures of Holochain are much more flexible and closer to my views of how distributed computing and individual representativeness should work. It’s agent-centric rather than token-centric, for one thing:* http://ceptr.org/whitepaperhttps://uploads.disquscdn.c

    6. mikenolan99

      Great stuff, and excited to continue our conversation… did you see my email last week?

      1. William Mougayar

        Yes, & I responded to Lorraine. Thanks.

      2. PhilipSugar

        I keep meaning to see you in MN. Can you send email at philipsugar at the gmail service. I lost yours. What a great weather the last week.

    1. Tom Labus

      Thanks, William

    2. Donna Brewington White

      Our very own rockstar. 😉

  2. Frank W. Miller

    This is a nice slide deck. As you know I am skeptical of BC and its ability to become a major player in currency which is what it targets. I have these skeptical feeling due to my technical concerns about how BC is implemented. These concerns can be summarized as security and implementation. First I don’t trust the BC design to not be hacked at some point. Second, I really can’t believe that the currency was designed with the consequence that we burn billlions of joules for no discernible purpose other than to simulate scarcity of the currency itself.I would be interested in William’s opinions on how Ethereum addresses these items. Also, I’d like to know what other poor design choices Ethereum has made that might limit its use? The deck you put out is mainly a business deck. Are you able to answer these questions? Thanks

    1. Evan Van Ness

      > First I don’t trust the BC design to not be hacked at some point.It’s already been hacked! But they dealt with it and have hardened their protocol for a few years. Ethereum is quite possibly in the same boat, but has shown a pragmatic approach to dealing with protocol issues.> Second, I really can’t believe that the currency was designed with the consequence that we burn billlions of joulesEthereum is working on Proof of Stake, scheduled to go live later this year. That may prove optimistic.At the risk of self-promotion, I gave a short talk related to these issues that you might find interesting: https://www.youtube.com/wat

      1. jason wright

        “You only have to trust the code”- In Code We Trust.Yeah, but who writes the code?

        1. Twain Twain

          Read Timothy’s link on this thread.

          1. jason wright

            thanks. it’s the same old chestnut. who guards the guards?

          2. Twain Twain

            “Code is the law” is fundamentally flawed.PEOPLE create the law.Any system that abstracts people out of functional oversight and leaves it to code automation is not the optimal solution for the interests of Humankind and our evolution.Alan Turing: “One must therefore not expect a machine to do a very great deal of building up of instruction tables on its own. No man adds very much to the body of knowledge, why should we expect more of a machine? Putting the same point differently, the machine must be allowed to have contact with human beings in order that it may adapt itself to their standards.”

        2. Donna Brewington White

          It always comes back to this.

  3. Dennis Mykytyn

    I don’t pay any attention to my BTC or ETH until Fred posts about them. Then I go check my Coinbase account, where I was pleasantly surprised to see ETH is recovering nicely, as I added some at $8 when Fred posted in December, now almost $13. I may add some more ETH soon, as William has promised it will go up 10x this year. ;-).Comments on Coinbase for Fred:Love they raised my daily limit to $10k, finally a much better limit for investing versus the $3k.Bad news is I have no exact idea what my P/L is on my Coinbase account, as not only do they not seem to have a gain/loss report, but they don’t even report what the purchase price per unit was when I trade. Sure, I can pull out my HP 12c and do the math, but as I do more and more trades, it would be nice to see an aggregated profit/loss report.Even showing me what my average purchase price per ETH or BTC would be nice. And simple to implement on the dashboard. Along with adding a daily profit/loss for my accounts, eg “Up $487.63 today”.

    1. DanielHorowitz

      Maybe not quite what you are looking for, but the Cost basis for taxes report does have some of this info. You can find it by going to Tools -> Reports -> New Report. I’m sure they will continue to improve in this area.

  4. pointsnfigures

    All of crypto needs more developers…..I think that will help. I also think that figuring out ways to build on top of, or partner with incumbents could be a smart way to gain distribution. Banks, Fiat Currency, Salesforce, Quickbooks and other platforms like that aren’t going anywhere.

    1. awaldstein

      @wmoug:disqus is saying that there are 38K developers currently if I understand the slidePretty sizable developer community for a technology pre market fit.

      1. LE

        What is ‘a developer’ in this context?I think it depends on who the developers are and what they are actually doing and how much time they are spending. We are not talking about full time jobs for the vast majority of the 38k. How was that number even arrived at?So the question is quantity vs. quality and commitment.William, while not a developer, well, I am under the impression that he is full time, full tilt, on this idea (the blockchain). Fred and investors on the other hand are ‘part time’. They have hand in multiple pots, ditto for some of these ‘developers’ in other words. Numbers w/o the underlying basis aren’t super helpful. [1][1] Gmail for example has ‘1 billion monthly active users’. How many gmail accounts do you have? I have maybe 15 accounts which I control.

      2. Pointsandfigures

        there are more, but nothing compared to Java or other technologies. The more there are, the better it will be.

        1. awaldstein

          never said it was too many or enoughjava is over 20 years old and was pretty evident from the very beginning what to use it for. it is comparable how?amazes me that some of the smartest people I know are investing their time and money in the BC sector and feel threatened when anyone asks them why. or to share their inspiration.i need a vacation or need to relearn how to express myself.i’m failing it seems.

          1. pointsnfigures

            I am sorry if it came out threatened. Not meaning that at all. I agree there is no killer app. But, they are coming.

          2. awaldstein

            All good my friend. I believe they are as well.i think i’ll skip the BC posts along with the political ones. Unfortunately equally unsatisfying and guarded.

          3. pointsnfigures

            Someday we will buy organic wine in Ether.

          4. awaldstein


          5. jason wright

            I think the promise is bottled Ether.

  5. jason wright

    I was chatting with a dev at the weekend. She thinks the ETH code is difficult to work with and overly complicated hindering broad adoption.Why is the ETH Swiss Foundation in liquidation?

    1. Evan Van Ness

      > She thinks the ETH code is difficult to work with and overly complicated hindering broad adoption.Programming on the Ethereum Virtual Machine (EVM) is a different paradigm. Every node on the chain has to run your code, so you can imagine that storage is expensive [for the larger web3 vision, Swarm and IPFS will be the storage layer] and that every computational step has to be paid for to avoid spam attack vectors.Despite that, Solidity (a Javascript-like language for the EVM) is being adopted by many because it has the most developers programming using it, and is being rapidly improved.> Why is the ETH Swiss Foundation in liquidation?The Foundation is NOT in liquidation. It has about $11 million USD in assets, and probably a bit more now due to BTC and ETH price appreciation. Of several corporate entities, however, one is no longer needed and is being wound down.

      1. jason wright

        Thanks.Why the several corporate entities?i believe VB did sell some of his ETH holding, which to my mind is not a good thing for a founder to be seen to be doing at such an early stage of a project. taking something off the table is fine, but not yet.

        1. William Mougayar

          That was done a very long time ago, and is a moot and insignificant topic. Nothing wrong with founders that take a bit of money off the table when their company does well.VB spends 24 hours per day, 365 days of the year on Ethereum, and that is really what matters the most.

    2. Sebastian Wain

      > She thinks the ETH code is difficult to work with and overly complicated hindering broad adoption.Yes, it is very unstable and every few versions the community documentation, blogs, etc that was written for a previous release doesn’t work for the new one.Not bashing the project but there is a great dissonance between the hype and the reality once you start working, and basic development features are not available. I can make a long list but you can check the issues on GitHub.

  6. A Nemec

    William: How do you see ETC vs ETH from an ecosystem perspective? I agree on ETH usefulness, but am concerned over more potential hard-forks in the near to medium-term future. We have been investigating using ETH within a larger software ecosystem and I would appreciate hearing your input.

  7. Timothy

    Fred and/or William, what are your thoughts about the fundamental concerns about trust with Ethereum expressed here: https://aeon.co/essays/trus

    1. Twain Twain

      Thanks for sharing that article.THIS is the golden nugget: “Automation of trust is illusory.”

  8. Donna Brewington White

    Not “Whither Ethereum” ? Just rolls off the tongue.As a newbie to blockchain and alt coin, etc. (in spite of William’s book on my coffee table and the numerous AVC posts) I was recently introduced to Ethereum and wondered how it fits in. This is helpful, thank you.This is becoming close to home due to a new client so I am paying much closer attention!Once again, reading AVC has given me an edge.