Popular Science Corner 11 | Controversies and Questions Brought by Ethereum
There are fundamental differences between Ethereum and Bitcoin:
Bitcoin defines a currency system, while Ethereum focuses on building a main chain (which can be understood as a road), allowing a large number of blockchain applications to run on this road.
From this point of view, the application scenarios of Ethereum are more extensive, which is why we say that Ethereum marks a pure currency system in the blockchain 1.0 era, and it will realize the transformation of other industries and application scenarios in the blockchain 2.0 era.
However, there is no perfect thing in the world. Although Ethereum has expanded the application scope of blockchain in various industries and improved the speed of transaction processing, it also has certain controversies and doubts.
1. Insufficient scalability
The biggest problem with the underlying design of Ethereum is that Ethereum has only one chain and no side chains, which means that all programs must run on this chain equally, consuming resources and causing system congestion. Just like the very popular Ethereum game "Crypto Kitty" last year, when this game was popular, it once caused the Ethereum network to be paralyzed.
For the problem of improving processing capacity, Ethereum proposes two methods: one is sharding technology (shard), and the other is Raiden Network, which belongs to a state channel technology (state channels).
(1) Fragmentation technology
Let's first introduce sharding technology. Vitalik Buterin, the founder of Ethereum, believes that the reason why mainstream blockchain networks such as Bitcoin process transactions very slowly is because every miner has to process every transaction in the entire network. The efficiency is actually very low.
The concept of sharding technology is: a transaction does not need to be processed by all nodes in the entire network, but only a part of nodes (miners) in the network can process it. Therefore, the Ethereum network is divided into many slices. At the same time, each slice can process different transactions, which will greatly improve network performance.
(2) Raiden Network
(2) Raiden Network
In addition to sharding technology, another solution to the problem of insufficient scalability and easy transaction congestion is the Raiden Network.
The Raiden Network uses off-chain transactions. When participants using the Raiden Network transfer funds to each other, they do not need to confirm transactions on the Ethereum main chain, but create payment channels between participants and complete them off-chain.
However, the Raiden Network is not separated from the main chain. Before establishing a payment channel, you need to use the assets on the main chain as collateral to generate a balance proof (Balance Proof). Only with a balance proof can you show that you can make a transfer of the corresponding balance. In the case that both parties to the transaction hold balance certificates, both parties can perform an unlimited number of transfers off-chain through the payment channel.
Only when off-chain transactions are completed and assets need to be transferred back to the chain, will the balance change information of the main chain account be registered on the Ethereum main chain, and no matter how many transactions occur during this period, there will be no records on the main chain of.
The Raiden Network has a real benefit, which is that it can save you miners' fees. At present, when we conduct transactions on the Ethereum main chain, we need to consume Gas and pay miners' fees. Once the transaction is moved off-chain, this part of the cost can be saved.
Of course, the Raiden Network is not perfect. First of all, when using the Raiden Network, assets on the main chain need to be used as collateral, and these assets are used as collateral and cannot be used until the user completes off-chain transactions. This also determines that Thunderbolt transactions are only suitable for small transactions.
The above is the problem of insufficient scalability of Ethereum, and the two main solutions currently proposed: sharding technology and Thunderbolt Network. Then, when it comes to sharding technology and Thunderbolt Network, you need to know that these two technologies are aimed at Ethereum and are solutions to the problem of insufficient scalability of Ethereum.
2. Vulnerabilities in smart contracts
The smart contracts of Ethereum are very powerful, but there are loopholes in all codes. The biggest controversy of Ethereum smart contracts lies in the so-called loopholes, that is, security issues.
According to relevant research, among the nearly 1 million smart contracts based on Ethereum, 34,200 (about 3%) were found to contain security vulnerabilities, which would allow hackers to steal ETH, freeze assets or delete contracts.
Here we talk about The Dao incident, which is a notorious hacking incident on Ethereum.
Before the introduction, let’s see what DAO is. DAO is the abbreviation of Decentralized Autonomous Organization, which can be understood as: decentralized autonomous organization.
From the perspective of Ethereum, DAO is a certain type of contract on the blockchain, or a combination of contracts, which is used to replace government review and complex intermediate procedures to achieve an efficient and decentralized trust system.
So, DAO is not a specific organization, that is to say, there can be many DAOs and various DAOs.
However, when we mention DAO now, we basically refer to The DAO incident, which is the notorious hacker attack incident we just mentioned. Let's briefly talk about the "The Dao" incident:
In 2016, Slock.it, a German company focusing on "smart locks", released the DAO project on Ethereum in order to realize decentralized physical exchange (for example: apartments, boats). And starting April 30, 2016, the financing window was open for 28 days.
Unexpectedly, the popularity of this DAO project was very high. It raised more than 100 million US dollars in just half a month, and by the end of the entire financing period, a total of 150 million US dollars had been raised. Therefore, it became the largest crowdfunding in history. project.
However, the good times didn’t last long. In June, hackers used the loopholes in the smart contract to successfully transfer more than 3.6 million ethers and put them into a DAO sub-organization, which has the same structure as The DAO. So much so that the price of Ethereum fell directly from more than 20 US dollars to below 13 US dollars at that time.
What does this incident show? It shows that smart contracts do have loopholes, and once the loopholes are exploited by hackers, the consequences will be very serious. This is why many people now criticize Ethereum, saying that its smart contracts are not smart.
As for this problem, there are currently many foreign companies providing code audit services to test smart contracts through technology, and many teams have already obtained investment from leading institutions.
3. Hidden dangers of "centralization"
In addition to the lack of scalability and smart contract vulnerabilities in Ethereum, the controversy over Ethereum lies in the POS consensus mechanism it pursues, that is, the proof-of-stake mechanism.
Under the proof-of-stake mechanism, if it is said that the larger the amount of currency held and the longer the currency is held, the more "equity" (interest) will be obtained, and the opportunity to obtain the right to bookkeeping, and bookkeeping can be rewarded, then this First, it is easy to create an oligarchic advantage of "the strong get stronger".
4. ICO chaos
Another problem is the ICO chaos. ICO is a common way for blockchain projects to raise funds, which we can understand as pre-sale. The outbreak of ICO projects on Ethereum has spawned illegal behaviors such as capital trading and fraudulent misappropriation under the banner of ICO, which has caused security risks to society and financial stability.
