Drawbacks of having an ideal Ethernet that needs improvement(2)

In the previous article, “Why hasn’t Ethereum’s market value caught up with Bitcoin?” we analyzed the issue of Ethereum’s valuation. This post is a sequel to the previous one.

The unique value of Ethereum

1. Vitali’s idealistic spirit

First of all, we must admire Vitalik’s courage. He did an immensely colossal project that Satoshi Nakamoto did not dare to do. The probability of failure of this project is greater than the probability of success, but after struggling for 5 years, I began to see hope of success. If this is an investment project, investors must look at the team. If this Ethereum project will develop for 5-10 years, it is still relatively early. Therefore, the team’s idealism is still very critical. The author read the report of their foundation and found that they could consciously accept market supervision without the requirements of regulatory agencies, adhere to the spirit of openness and transparency, and maintain a tiny team, which can be said to be fully developed. The spirit of Bitcoin. Idealists may not necessarily succeed, but if they are not idealists, they will definitely not succeed. Because if you focus too much on interests in the early days, it will make people short-sighted.

2. Free automatic storage and settlement ecological platform

Is there such a platform in Web2? Web1 and Web2 financial platforms are closed, and they both regard the platform and users as their private property. In Web2, the best platform should be YouTube, but it is only a platform for podcasters, far from being an ecosystem. The country is also an ecology. To understand the concept of ecology, you can refer to the country. However, the country still lags far behind the Ethereum ecology regarding critical indicators such as transparency and management costs, highlighting the generation gap. Ethereum, like Bitcoin, is a pioneering project in human history. It will change the entire financial landscape. It is characterized by greatly improving personal freedom and attaching importance to individual rights, such as personal management of personal money. Ethereum is closer to “public ownership.” It has clear rules for realizing personal interests, and it is not anyone’s private property and belongs to the owners of Ethereum. All operations in Ethereum are programmed, and system programs and ledgers are transparent. Transparency creates credibility.

Also, humans do not have a trusted notary institution similar to Ethereum.

3. Foundations support entrepreneurs

Ethereum pioneered the ecological support fund model, providing unlimited imagination for poor entrepreneurs.

4. Solve the problems that Bitcoin did not solve

We can understand the Bitcoin system as the Bitcoin issuance system, while the Ethereum system implements currency issuance and is an ecosystem.

Satoshi Nakamoto reserved much instruction code space to implement his vision in Bitcoin’s script language. Still, for the sake of security, he did not do any further related work because it was challenging to do it well. However, the young people working on Ethereum have no baggage, and they have made improved innovations. If the Ethereum team solves the problem well, Ethereum should have a higher market value than Bitcoin. It is what people expected from Ethereum in 2017. Ethereum did not meet the market’s expectations. Although the Ethereum team did not meet expectations, its direction is good, and the opportunities remain.

5. Boldly convert POW consensus to POS consensus

As an ecological platform, issuing coins is not its main task; reducing accounting fees is its top priority. It is difficult for one platform to complete two tasks simultaneously. Satoshi Nakamoto’s advantage is that he has the right to make the first choice. He chose easy-to-solve problems to solve first but left complex issues for future generations. Vitalik, like Satoshi Nakamoto, has excellent intuition. He defied all opinions and finally kicked the miners out smoothly. Ethereum no longer needs to be mined, and the ETH’s requirements are enough for the POS model. It leaves only one task: accounting.

6. The ideal of sharding

Implementing sharding can significantly expand the capacity of Ethereum, making Ethereum no longer congested, thereby reducing handling fees, making many impossible projects a reality, and becoming an important foundation for Web3.

Ethereum’s major flaws

1. Comments on the Vitalik team’s knowledge deficiencies

Because the knowledge structure of Vitalik’s team was too single and they were not as comprehensive as Satoshi Nakamoto, some problems arose when realizing their vision. The author wrote in the previous article, “Why doesn’t Ethereum’s market value catch up with Bitcoin?” (chainless.hk) lists 11 issues. Technical capabilities are the strength of the Ethereum technical team, so they will pay great attention to technical problems and solve them step by step.

Generally speaking, shortcomings determine value, and solving faults can increase value. Earlier, we said that to restore the stored value of Ethereum is to solve the problem of unclear definition and self-limitation of Ethereum currency. These problems are not technical problems but financial problems. The reason why these problems are not solved is that they don’t know much about finance. Vitalik said, “The biggest difference between Ethereum and Bitcoin is that Bitcoin is a platform, and its ecosystem’s value comes from the currency’s value. But in Ethereum, the currency’s value comes from the ecosystem’s value.”

(https ://www.bitpush.news/articles/3662466). This sentence is very famous and widely circulated. The key to the problem is that it means Ethereum itself has no currency storage value, and the value of Ethereum comes from its platform. The market directly drove the stored value of Ethereum to zero. Vitalik doesn’t understand that since Ethereum is so scarce, why doesn’t the market recognize it? Because he does not even recognize the stored value of Ethereum. Judging from his subsequent operations, he did not deliberately protect the stored value of Ethereum.

The second problem with this sentence is that the Bitcoin system is a tool for issuing Bitcoins. It is a device for mining Bitcoins. The Bitcoin system does not have smart contracts, nor does it have a platform or an ecosystem; Bitcoin does not represent the value of the Bitcoin system, let alone that the value of the Bitcoin ecosystem comes from Bitcoin. Just like gold, it does not represent the value of the gold mining system. This sentence reflects Vitalik’s insufficient understanding of Bitcoin and the system. As an ecological platform, the Ethereum system also comes with a cumbersome production tool. Do you think it’s ridiculous, like a gold company that has to carry a heavy excavator when it wants to circulate various currencies? Therefore, abolishing POW mining is an inevitable choice.

This sentence illustrates that Vitalik’s correct decision-making does not come from his theoretical cultivation but from his intuition. Young people’s intuition is significant when they are inexperienced. If he were not an idealist, he would not have developed intuition by being devoted and dedicated and would have been defeated by the colorful world long ago. God cares for those who have great love in their hearts.

Vitalik failed to understand that the value of ETH can exist independently of the value of the Ethereum system. ETH itself has stored value, and the value of ETH does not only come from its ecosystem. The calculation methods of stored value and ecological value are different. He paraphrased the way Bitcoin trades, Bitcoin is not wrong, but they are wrong. The author wrote in “Invite Satoshi Nakamoto to Welcome the New World” (chainless.hk) quoted Maxdeath of China’s VeChain as saying about Satoshi Nakamoto and Vitalik: “He (note: referring to Satoshi Nakamoto) has a humble personality and can accept other people’s suggestions humbly. He is very Smart, but not as smart as many geniuses, such as Vitalik Buterin. He may have never been considered the best person in life, so he knows his shortcomings and even knows that he may make mistakes. Therefore, Bitcoin has sprouted from In the process of its birth; he has been absorbing other people’s suggestions and new knowledge without reservation. This is one of the important reasons why Bitcoin can appear and even succeed (https://www.zhihu.com/question/67192203 )”. According to Danny, “developers write the code and users run the software”…. It seems that people who can’t write code are garbage and are too superior to others. It is the gap between their team and Satoshi Nakamoto.

Criticize them to help them progress because they deserve help and are fighting for humanity’s future. Their problems stem from “knowledge barriers.” These problems are easy to solve for technical personnel who understand finance.

2. Self-limiting contradictions

In the previous article, “Why hasn’t Ethereum’s market value caught up with Bitcoin?” “(chainless.hk), we introduced the self-limiting contradiction: “The value of ETH comes from its ecology. The increase in ecological value will increase the price of ETH. The unchanged transaction fee standard and rising currency price will increase the Ethereum system’s cost, thus inhibiting ecological prosperity. In turn, suppresses the currency’s price and affects further price increases. This phenomenon is called self-limiting.”

Bitcoin can also be used for transactions, but for Bitcoin, its price is not self-limiting. Why? The Bitcoin system has only one currency. The rise and fall of Bitcoin and the proportion of handling fees do not change. Transactions occur between the same currency and do not require another ruler to measure, so there is no self-limitation. Our legal currency, the RMB, is the ruler for measuring the prices of all commodities in China’s ecosystem. Note that all goods are priced and circulated in RMB. When someone transfers RMB to me through a bank in China, the bank charges the handling fee in RMB and gives me RMB; the situation with Bitcoin is the same. However, if you want to convert to US dollars, the situation is different because the exchange rate difference has to be considered, so there is a self-limiting problem.

There is an exchange rate difference in the Ethereum ecosystem. There are N types of currencies in the ecosystem. Various currencies use Ethereum as a ruler. When Ethereum rises, it means that the scale of the ruler changes. Other coins may not necessarily be able to grow at the same time as Ethereum. It is just like the exchange rate differences between various international currencies. If ETH rises, if you don’t, the handling fees will be high. Therefore, if Ethereum is used to collect ecosystem handling fees, when the ecosystem is prosperous, the price of ETH will be increased, and its handling fees will be high, inhibiting its ecology. The fact that Vitalik believes that Bitcoin also has an ecosystem shows that he did not intentionally design Ethereum this way, and He does not understand.

It is common sense in finance that fees must be fixed. At this time, the stablecoin must be used as a yardstick, and the user’s Ethereum will be charged based on the proportion of the stablecoin. That is, no matter how high the price of ETH is, the charges will be the same in US dollars. It is easy to implement in the program. Not understanding such a simple truth shows that the Ethereum friends didn’t use their brains when copying homework. In other words, Ethereum, like Bitcoin, cannot serve as a benchmark unless Bitcoin and Ethereum are as stable as stablecoins.

Since fiat currency is the ruler, the inflation of fiat currency must be suppressed to less than 2%. It is so that people cannot feel the changes in the currency scale. The volatility of ETH is too high, and if it is used as a yardstick, it is beyond the range that people can tolerate.

3. Solve the problem of two coins with the same name

The author wrote in the previous article, “Why doesn’t Ethereum’s market value catch up with Bitcoin?” (chainless.hk), that the production methods and costs of Ethereum produced by POW differ from those produced by POS. But even though both production methods and costs differ, they share the same name. It is both an asset currency and a credit currency. The burning is mainly in asset coins; the new issues are in credit coins. If it enters the deflationary, there will be no currency Increase. So Ethereum is a currency: an asset currency generated through POW. From a legal point of view, the coins obtained from Ethereum ecological transactions must be distributed in sequential order, ensuring that old coins are received first, and then coins are issued. In this way, no coins will be issued if there is no revenue. Ensuring the system does not mint coins on new mechanics is important.

It is a legal issue. Because the coins issued by credit method have no cost, they are “fake and shoddy” products and have defects of being passed off as inferior. It is a legal issue, big or small. When someone raises this issue, and the Vitalik team fails to correct it, it becomes subjective and intentional and constitutes a criminal issue. It could at least give rise to a class action lawsuit. I don’t know if they consulted an experienced attorney beforehand. The biggest advantage of Ethereum is that it has actual controllers, which is also its most significant disadvantage. When a lawyer’s letter brings this issue to the foundation, the foundation must respond. However, there is no similar foundation you want to find for Bitcoin.

If the Ethereum system no longer issues new coins. From the perspective of currency issuance progress, Ethereum surpasses Bitcoin. The Bitcoin system has not issued all Bitcoins, while the Ethereum system has issued all Ethereum through POW.

None of the above is a technical problem and exposes the weaknesses of the tech-dominated team.

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