Ethereum is at best a $13 billion “science experiment,” believes Tuur Demeester.
The Austrian economist, known for his anti-Ethereum remarks, explained why he has been overly pessimistic about the blockchain project in a 50-pointer thread. A majority of these points referred to the Ethereum team’s earlier promises of improving the main chain’s scalability.
Ethereum Can’t Scale?
Demeester, for instance, touched upon a peer review report of Ethereum’s Casper/sharding whitepaper, a solution that was proposed to scale the mainnet in 2014.
The review, as the economist pointed out, concluded that the Casper protocol was at most a theoritical solution which, in practical terms, can neither provide the Ethereum blockchain any meaningful security, nor can solve its scalability issues.
In another example, Demeester reminded followers that the Ethereum developers were exploring a second-layer solution, similar to the Bitcoin’s Lightning Network solution. However, he doubted whether or not main-chain issued ERC20 type tokens would be compatible with Ethereum’s second layer.
Ethereum founder Vitalik Buterin in 2017 proposed another scalability solution, but it had to do with a complete infrastructural overhaul of the project. He recommended that Ethereum should transit from being a Proof-of-Work to Proof-of-Stake project.
In PoW, each miner has to compete with other miners in the network to solve a mathematical problem by providing its compting power. The more the computing power is, the better is the probability of the miner to solve the problem and win the block reward. On the other hand, PoS protocol allocates the right to mine to those the most that have more coins. In return, the rich miner takes away a transaction fees instead of a block reward.
Demeester questioned why PoS, which has not a new concept, was picked at such a later stage of the Ethereum development.
”If this was the plan all along, why create a proof-of-work chain first?” he asked and added that such an upgrade would change the economy of the system.
”Keep in mind that [PoS] is not a new concept at all. PoW actually was one of the [biggest] innovations that made Bitcoin possible, after PoS was deemed impractical because of censorship vulnerability.”
Demeester also said that Ethereum is an extemely overbought asset because of the hype it garnered since its inception. According to him, Buterin promised Ethereum followers a utopia – an unproven future of a perfect proof of stake system based on social consensus-based hard forks and perpetual income to every Ether holder.
“This was criticized by P2P and OS developers as a reckless notion, given that amat contracts are actually a de nova cryptographic protocol,” he added. “In other words, it’s playing with fire.”
The economist also made references to reports mentioning Ethereum as the world’s supercomputer, the perfect censorship resistant solution.