Intensive reading and analysis of V God's new book "Proof of Stake" (4)
Book chapter
The first part of the book - pre-mining
The first part of the book - pre-mining
abstract
The second paper, Ethereum - The Next Generation Cryptocurrency and Decentralized Application Platform, was published on the Ethereum Blog, January 23, 2014.
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abstract
Ethereum still has some shortcomings, mainly its own scalability.
Translator's point of view
As with our slogans on the currency itself, the only limit is our imagination.
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Translator's point of view
Look at BTC objectively. Although mentioning the limitations of BTC, V God is not belittling BTC, but believes that the technology industry has a specialization. It is very vivid to describe the principle of Occam’s razor. The positioning of BTC is to only realize the function of currency and bookkeeping, and nothing else. It is simple and exquisite, so it has a higher degree of existence. Various security incidents such as bridge theft have never occurred on the Bitcoin public chain.
Looking forward to the birth of new things that we have not seen before. Throughout the previous industrial and technological revolutions, there have been products that were unimaginable at the time. For example, when the Internet just entered people's lives in the 1990s, we could not imagine that there would be Taobao, WeChat, and Didi 10 years later. Products such as taxis and Douyin will greatly stimulate economic development. The new products that the blockchain can bring are by no means simply copying the products of WEB2 to the public chain, nor are they avatar-like NFTs. As for the major innovations of WEB3 or the metaverse, they still need to evolve repeatedly and need heroes from all walks of life. Heroes continue to add bricks and tiles to this building. But if an epoch-making innovation occurs, its rate of return will not be measured by thousands or tens of thousands of times.
Brief translation of the content (the order has been adjusted, and the content has been deleted)
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Brief translation of the content (the order has been adjusted, and the content has been deleted)
In 2013, there was growing talk around the so-called Bitcoin 2.0 protocol, an alternative encrypted network inspired by Bitcoin that aims to make the underlying technology more than just a currency. The earliest implementation of this idea was Namecoin, a bitcoin-like currency created in 2010 that would be used for decentralized domain registration. More recently, we've seen the emergence of colored coins, allowing users to create their own currencies on the Bitcoin network, and more advanced protocols such as Mastercoin, BitShares, and Counterparty, which intend to offer financial derivatives, savings wallets, and decentralized exchanges . However, all protocols invented so far have been vertically specific, attempting to provide detailed feature sets for specific industries or applications, usually financial in nature. Now, a group of developers, myself included, have come up with the opposite project: a cryptocurrency network that aims to be as general as possible, allowing anyone to create specialized applications for almost any purpose imaginable. Project: Ethereum.
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A common design philosophy among many cryptocurrency 2.0 protocols is that, like the Internet, a cryptocurrency design will work best if the protocols are separated into different layers. In this line of thinking, Bitcoin is considered a kind of TCP/IP for the cryptocurrency ecosystem, and other next-generation protocols can be built on top of Bitcoin, just like we have SMTP for email, HTTP for web pages, and XMPP for chat is on top of TCP as a common underlying data layer. So far, the three main protocols following this model are Colored Coins, Mastercoin, and Counterparty. The way the Colored Coin Protocol works is simple. To create colored coins, users mark specific bitcoins as having special meaning.
Mastercoin and Counterparty are a bit more abstract; they use the Bitcoin blockchain to store data, so a Mastercoin or Counterparty transaction is a Bitcoin transaction, but the protocol interprets the transaction in a completely different way. However, after about two months of research and involvement, Buterin finally realized that while the basic idea of having such a high-level protocol on top of a low-level protocol is laudable, there are fundamental flaws in this implementation scheme, as they Standing today, this is likely to prevent these projects from gaining more traction. The reason is not that the idea behind the protocol is bad, but that the protocol itself is bad. The ideas are great, and the community response alone proves that they are trying to do something that is much needed. Rather, the reason is that they are trying to build a high-level protocol on top of Bitcoin, and a low-level protocol is simply not suited for the task. This is not to say that Bitcoin is bad, or not a revolutionary invention; as a protocol for storing and transferring value, Bitcoin is excellent. However, in terms of being an efficient low-level protocol, Bitcoin is less effective; Bitcoin is not like a TCP on which HTTP can be built, but rather like SMTP: a protocol that is good at its intended task (in SMTP email in the case of Bitcoin, money in the case of Bitcoin), but not particularly good as a basis for anything else. Bitcoin's specific failures focus on one place in particular: scalability. Bitcoin itself is as scalable as cryptocurrencies, even if the blockchain swells to more than terabytes. The Bitcoin white paper describes a protocol called "Simplified Payment Verification" that allows "lightweight payments" with only a few megabytes of bandwidth and storage. clients" to safely determine whether they own the transaction they received.
This is the problem Ethereum intends to solve. Ethereum is not intended to be a swiss army knife protocol with hundreds of functions for every need. Instead, Ethereum aims to be a superior base protocol and allow other decentralized applications to build on top of it rather than Bitcoin, giving them more tools to use and giving them full access to The scalability and high efficiency of Ethereum.
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At the time Ethereum was being developed, there was a lot of interest in implementing financial contracts on top of cryptocurrencies; the basic type of contract was a "contract for difference". In a CFD, two parties agree to put in a certain amount of money and then withdraw the money in proportion to the value of some underlying asset. For example, a CFD might have Alice put in $1,000, Bob put in $1,000, then after 30 days, the blockchain will automatically return Alice $1,000, plus $100 for every dollar that the LTC/USD price has increased during that time, And send the rest to Bob. These contracts allow people to speculate on assets with high leverage, or to protect themselves from cryptocurrency volatility by canceling their exposure, without the need for any centralized exchanges.
At this point, however, it becomes clear that CFDs are really just a special case of a more general concept: formula contracts. Let the contract take $x from Alice, take $y from Bob, and return $x to Alice, plus an additional $z for every dollar that a given stock price rises, the amount the contract should be able to return to Alice Contracts of arbitrary complexity are allowed for funds based on any mathematical formula. These generic CFDs can even be used to implement a kind of peer-to-peer gambling if the formula allows random data as input. Ethereum took this idea and took it a step further. A contract is not an agreement between two parties that begins and ends, a contract in Ethereum is like a kind of autonomous agent simulated by the blockchain. Each Ethereum contract has its own internal script code that is activated every time a transaction is sent to it. The scripting language has access to the transaction's value, sender, and optional data fields, as well as some block data and its own internal memory, as input, and can send the transaction.
In addition to the CFD model, the white paper also briefly mentioned that through Ethereum script, many other types of transactions have become feasible, including: multi-signature verification custody, savings accounts, peer-to-peer gambling, and the issuance of personal currencies. This is the strength of the Ethereum code: since the scripting language is designed to have no restrictions other than the fee system, any kind of rules can be coded in. A company-wide savings account can even be realized through the blockchain. Through a smart contract, only 60% of shareholders agree to move funds, or 1% of total assets can be moved every day after 30% of shareholders agree. In addition, it is possible to reduce the traditional capitalist structure; only one idea about the democratic organization is fixed, that is, only 2/3 of the existing members agree, and new members can be invited to join.
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beyond finance
Financial applications have only scratched the surface of Ethereum and the cryptographic protocols on top of Ethereum, they can achieve a lot more. While Ethereum’s financial applications may initially excite many in the cryptocurrency community, the long-term vision should focus on Ethereum’s collaborative models with other non-financial peer-to-peer protocols. One of the main problems facing non-financial peer-to-peer protocols to date has been a lack of incentives — that is, unlike centralized for-profit platforms, decentralized platforms have no economic reason to participate. In some cases, participation is rewarded in a sense, and it is for this reason that people continue to write open source software, contribute to Wikipedia, comment on forums, and write blog posts. However, in the context of peer-to-peer protocols, participation is often no longer a "fun" activity. Instead, it's resource-intensive, with the daemon running in the background (using CPU and battery power).
For a long time, there have been data protocols such as Freenet, which basically provides decentralized, uncensored static content hosting for everyone, however in practice Freenet is very slow, and few people contribute resources . File-sharing protocols all face the same problem: while altruistic enough to spread popular commercial blockbusters, it's significantly less effective for people with less preference for mainstream content. So, conversely, the peer-to-peer nature of file sharing may actually exacerbate the centralization of entertainment and media production.
