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I'm a pretty big proponent of bitcoin and enthusiastic about 2.0 applications. But I've got serious doubts about Ethereum. For one it's still pretty much vaporware, little has been released and there's a ton of hype that puts style over substance. For example you'll hear 'turing complete' used 500 times in any piece about Ethereum, but speaking to core developers it turns out that this isn't really significant at all.

Besides this there have been some doubts about the development and governance of Ethereum. Let's be clear. Bitcoin is mostly developed by developers funded by the foundation which has a total budget of about $1.5m a year for 2013 and has been doing this for half a decade. Ethereum has already raised as much money as the BF spends in a decade on development, legal, lobbying, evangelism etc. In short, they've got way more money than they need.

And then there have been some complaints about how the team handled things, e.g. an investment round they tried to do earlier but failed. And how there's no real reason to need such a large amount of expensive ethers for actual development purposes, particularly not a long time before actual development start.

Don't get me wrong, not trying to hate on the team. But I can't find a good reason why people buy ethers like they do. They're supposed to be for development, not as an investment, and we really don't need so many of them. It's the equivalent of Google selling developer Google Glasses for $10k a piece, and regular joes buy 10 of em 'just to hold as an investment, who knows it might take off.' It's ridiculous. Only then it was a pre-order, and there'd be no way to start developing for it, the team behind it is talented but unproven, and in a classic hype scheme the price goes UP over time, not down, despite it being already overpriced and sold as an investment instead of as a dev-resource.

> For one it's still pretty much vaporware, little has been released and there's a ton of hype that puts style over substance.

This is vaporware for you? https://github.com/ethereum

You've got a 100% working testnet and hundreds of interesting apps/projects with released code in GitHub. Obviously the Ethereum team is not going to release "all the code" immediately if they want to keep the first-mover advantage. It's just about keeping a competitive advantage before clones start popping up like mushrooms. (common sense)

> But I can't find a good reason why people buy ethers like they do. They're supposed to be for development, not as an investment, and we really don't need so many of them.

I know a lot of people like me are buying ETH for time-to-market reasons. We already have toy-ether in the testnet, but this is a whole different thing. Believe it or not, there's a lot of people building things for ethereum. If you are serious about launching something on top of Ethereum, and like the idea, why not support the final stage of development? This is a crowdfunding campaign. That's all.

Obviously there's a bunch of other people just trying to get some ether for speculation. This is normal, and can't be prevented, just like in bitcoin (march'13 & november'13, remember?).

I'm not recommending to buy ether to anyone unless they believe in the project and want to see a team pushing the boundaries of cryptocurrencies development.

I'm now officially joining patio11 on the "bitcoin - wtf!" Side of the fence.

Someone is pre-selling a cryptocurrency in bitcoins at 2000 of our coins to 1 bitcoin. Stop! No-one same is converting hard cash to bitcoin in order to speculate on this. Their kick starter round is not x million in bitcoin it's "oh look I have some bitcoin that massively appreciated in value, but is painful to sell. How do I take my free money and grow it?"

It's another bitcoin like tulip mania. No matter how nice an idea a cryptocurrency is, it's not worth millions at pre-launch.

Caveat: I may be made to look a fool by the irrationality of crowds

"Bitcoin painful to sell" and "tulipmania" are completely nonsensical talking points of the anti-bitcoin trolls who haven't actually tried it and are butthurt they didn't get into it.

I've bought and sold more than $100k worth of bitcoin on two different exchanges, and at no point was it painful. It's infinitely easier than buying $100k worth of foreign currency, not to mention it's illegal to carry that much cash in most states.

i've sold some bitcoin for much more than i paid for it. i guarantee you, it wasn't painful.

i have no thoughts on etherium. i guess 12M is a lot of dollars, but it's within an order of magnitude of the daily BTC volume. maybe if one guy used 12M worth of BTC to buy this, i'd share your suspicion.

To be fair, Ethereum is not strictly a cryptocurrency, in the sense that its exclusive purpose is not payments. Sure, coins will have value convertible to fiat currency, but that value will be derived from cost of various applications built on the protocol. The primary purpose of Ether is to be the "fuel" for these applications.

So, high interest in the crowd sale likely derives not from speculation on the value of ether/USD exchange rates, but rather on the value of the cash flow across the many applications being developed on the protocol. As long as developers build these applications, people use them, and they facilitate money changing hands in the form of Ethers, then each Ether will have a set value. Unlike with Bitcoin, consumers will also have a reason to spend Ethers, as they will be the only accepted exchange mechanism of Ethereum applications.

Encouragingly, this will likely act as a self fulfilling prophecy. Investors in Ethereum are motivated to see the ecosystem of decentralized apps develop, so they will build them, and they will use their Ethers. The big problem I could foresee is that because the real value of an Ether will derive from the aggregate value of the Ether "app economy," investors may want to wait before spending their Ethers. But I suspect this will be mitigated by the fact that the apps will only accept Ether as payment.

Ethereum will be successful as a protocol once it gets its "killer app." At that point, there will be no turning back and the value will skyrocket. Surely the market cap will be more than $12.7mm. In fact, by writing this comment I've just convinced myself to invest.

> It's another bitcoin like tulip mania

Did you know the tulips in question were a fascinating breakthrough in genetic engineering? Just one of the many things you don't know about the myth called Tulipmania. I suggest reading the WP article, especially the parts about tulip-breaking virus and the latter half: https://en.wikipedia.org/wiki/Tulipomania

The tulip mania actually never existed. Look it up on Wikipedia.
Reposting my review of Ethereum from Quora:

Ethereum has been described by core developers as oil to Bitcoin's gold. it is similar to other metacoins in that it acts as superlayer that empowers the blockchain, that is something like when Javascript was added onto HTML.

It empowers an immense number of custom applications on top of the blockchain, for purposes as diverse as contracts, derivatives, custom currencies, and filesharing. As Robert Ver said recently in Miami, if it works it is at least as innovative as Bitcoin itself.

Enthusiasm is high because, unlike Bitcoin, there is immediate use value for ether within the Ethereum network. All of the applications built in ethereum consume amounts of ether along with their computational cycles.

For folks looking at things from a macroeconomic standpoint, this makes Ethereum perhaps the most interesting of the new cryptocurrencies, because among other things. there is immediate use value for ether outside of trading, mining, and the other standard features of the first generation of cryptocurrencies.

Is it Bitcoin 2.0? Time will tell.

http://www.quora.com/Reviews-of-Ethereum

Bitcoin already enables a lot of these applications, and of those that go beyond what's possible with Bitcoin none of the hard questions have been answered yet. These are questions about spam and denial of service. It is far from clear how these would be handled.
Exactly what applications can I use Ethereum for the moment that it releases? What independent scientific research are these applications based on, what trust models do they have, and how much can they affect the "real world"?
correct me if I'm wrong but the oil analogy breaks down when you look at the fact that there is nothing special about ethereum. it was conjured from thin air and can be conjured even more easily the second time. oil runs out and its not easy to make more.

ethereum running out? no worries! just create a new currency ethereum2, issue 100billion and use the blockchain to power more apps.

In fact you could just have several ethereum clones going at once.

Ok, so from watching a few video introductions to Ethereum, I gather that you can create almost anything from it. But limitless applications doesn't mean it's going to be used by everyone, right? I mean how often do we enter a contract (outside of purchases) in our lifetime? of what use are smart contracts and organizations if they are not accepted by your local jurisdiction? How much does a user care about an application that is using a decentralized blockchain to store encrypted information? For example; if he can get a slightly better service for free by google, with the only downside that his emails are checked for advertising keywords. It seems most people still put a huge premium on ease of use.

the biggest application I see for Ethereum is using it akin to the SETI project, but with a reward built in. Does the Ethereum VM support advanced math? Ie. complex numbers, high precision values? if so, I see a real use case there, or maybe in the form of some online games. but I'm skeptical of the "grand vision" a this point.

>unlike Bitcoin, there is immediate use value for ether within the Ethereum network.

You've clearly not used Counterparty yet. Give it a try, it's easy, offers a great featureset, and works 'today'.

My analysis of Ethereum:

It's economically limited. Ignoring the implementation, we could conservatively say that some interesting web applications are convertible into the "Dapp" form. Right now, these applications are presented as free to the user(free sign-up, free service) and the cost burden lies almost entirely on the service provider, while on Ethereum the user must pay some of the computation cost of their own transactions.

Why is this a problem? Surely everyone can have their personal devices mine and produce ether and then the cost of everyday use is hopefully negligible. But even if that were plausible, there's enough of a power differential between personal devices and large server farms that the latter is going to have a huge cost advantage. From this advantage market forces will seek ways to leverage out a monopoly within the Ethereum platform - to enable spammers, extract tolls, mine for personal information, or any other conceivable mechanisms of earning a profit by crushing competition. It's the position Bitcoin is facing now with the mining pool monopoly. There will be a market and it will have a price, but it won't be a huge, global one, not if it's an essentially centralized system doing centralized things underneath an inefficient blockchain layer.

In summary, currency design is hard. Proof-of-work mining basically favors capital pooling by letting the richest buy their work - although they may add some measure of anonymity, the resulting power dynamics are identical to those of gold. Changing the proof metric to another computationally-focused one only changes the cost basis, not the bottom line. As such I'm very sour on proof-of-work today as a decentralization tool. I would consider proof-of-stake or other metrics to be in a fundamentally different category, although they also need answers for the distribution problem.

Proof-of-stake could end up being part of Ethereum, and the team is putting a lot of thought into it. For example:

https://blog.ethereum.org/2014/07/05/stake/

https://blog.ethereum.org/2014/01/15/slasher-a-punitive-proo...

Is there any way to verify these have really been sold? Is there any third party involved that can verify? Something doesn't feel right and we know Cryptocurrency users are suckers for juicy hype trains.

But I do like the concept of p2p distributed servers.

Are you meaning to suggest that some of the people involved might have borrowed funds with promises to return them, or offered some parties deep discounts in exchange for temporarily putting up full prices on large amounts of share, in order to falsely prop up the 'market' value for these assets and create the social proof needed to dupe larger numbers of inexperienced investors into participating?

Inconceivable!

> Is there any way to verify these have really been sold? Is there any third party involved that can verify?

What do you mean? Just look at the blockchain address where the funds are being deposited [0]. I've done several buys and all of them showed up instantly...

[0] https://blockchain.info/address/36PrZ1KHYMpqSyAQXSG8VwbUiq2E...

Seeding the jar with BTC is speculated to be what Mastercoin did as well, it's not an unreasonable idea in the least.

It's essentially free except for the encumbered funds being unusable for a short period.

Ethereum isn't about distributed servers. It's not like a VPS. Like Bitcoin is to banks, Ethereum is like to any contract or transaction in the meeting of the minds.
How difficult is it to actually create a new cryptocurrency? With 14 cryptocurrencies currently floating around, isnt the value of one over the other simply a branding problem?

Edit: I had no idea there were >150. That's astounding.

A lot of the things raising headline generating amounts of money have not even created a new cryptocurrency.

E.g. Look at "Bitshares" by some of the same people behind ethereum— raised money on a whitepaper. When its "investors" later needed liquidity to cash out their investments they did some search and replace on a a copy of Bitcoin to create a "cryptocurrency" which implemented none of their whitepaper features but which would be redeemable for shares in the future system (if it ever comes into existence)...

It's in some ways optimal to _not_ create a cryptocurrency for these investment stunts: if they create something then there is something concrete, something with flaws and limitations, something which (hopefully!) is constrained by internal consistency, security considerations, implementability, etc. But if it exists primarily as marketing then there is no limit to the qualities which it can be claimed to have...

14? Try 450+ https://coinmarketcap.com/currencies/views/all/ And this list is not even exhaustive. It is dead easy to create one: fork and change a few identifiers in the source code. But to make it successful is another problem.
It's fairly easy. In fact there's a website where you pay $50 and plug in some numbers (like annual inflation, block mining times, which hashing algorithm you want etc) and they generate the code for you, which is just a github fork with some of the numbers changed.

Then you literally run the code on your computer and you've started your own cryptocurrency. No joke that's it.

It's the reason why people think crypto will be so resilient because it's just code anyone can run, distributed like torrent technology and hard to take down. What gives it value are network effects, mostly. If you created a superior facebook today, it just wouldn't take off. Look at Google+, perhaps not superior but, the network effects just aren't there even when they on-boarded hundreds of millions of users semi-automatically. There's just no reason to go to a platform where you have 0-3 friends and leave a platform where you have 250 friends. Similarly with currency, there's no reason to buy a currency that only 250 merchants accept worldwide (the closest one being 80 miles away), over e.g. the dollar. Bitcoin is the first big exception but it's clear it's struggling with adoption, there's maybe 2m users at most because there's only about 100k merchants taking it, less than 1%. But that's a million times better than any other cryptocurrency.

> With 14 cryptocurrencies currently floating around, isnt the value of one over the other simply a branding problem?

One of the most important aspect of a crypto-currency is the establishment of trust in the distributed database, most commonly by a proof-of-work algorithm. One can estimate the cost of changing the transaction history. The hashrate devoted to the Bitcoin blockchain is 130 Peta-Hashes/second, so to execute a 51% attach you'd need a lot Hashes/second and a lot of money.

You can very easily clone Bitcoin, change the branding and start from scratch, but you'd have to either convince the miners who currently work on the Bitcoin proof-of-work to switch, or come up with a new proof-of-work system that is incompatible with the one used in Bitcoin. Unless you can convince all Bitcoin miners to switch at once, your alternative cryptocurrency will have less devoted hashing power and therefore a lower cost of attack.

So it's more than a branding problem.

It's very easy to clone an existing currency. Not so easy to come up with a genuinely new concept for a cryptocurrency.
This probably answers your question and corrects something. There are far more than 14 crypto currencies out there: https://coinmarketcap.com/
Ethereum isn't just another alt coin. It's a bit...different.
Once Ethereum takes off, there will probably be millions of "cryptocurrencies" - o rather "crypto-stock" for start-ups that crowdfund themselves through Ethereum with their own "coin". Think Kickstarter, but where you actually own part of the company, by owning their coins. When the company gets bought for $2 billion like Oculus did, the value of their coin should go way up, too, making the backers' investment worth it, too.
It's incredibly easy. There are open source projects to create your own.
Can someone please direct me to where the node software is described (or even better the source code)?
I think mining based crypto-currencies are not the way forward. Consensus based protocols like are far more practical.
I've yet to find documentation describing those protocols clearly. Do you have any links?

(Of course there were consensus protocols already in distributed systems research, but generally they've relied on having a known set of nodes.)

As far as I can tell there will be a total of 10^18 ethers in total. At this stage, 1 BTC ($600 USD) for ~2,000 ethers seems like a really high price for something that hasn't been launched yet.
This is no longer true. They modified the algorithm, and right now the amount of ether produced will depend on the amount of ether sold in a presale.

In other words - nobody knows now how much ether will there be.

What happens to all the bitcoins that are being sent in now if ethereum fails? In startups, investors almost always have a liquidation preference, which means that if things go south they get their money back first (or at least what's left of it).

I haven't heard any mention of this and I'm wondering how this is structured? If the ethereum founders were able to fail spectacularly and still walk away as millionaires that'd be quite a perverse incentive structure!

Here is your answer from Vitalik Buterin himself: http://www.reddit.com/r/Bitcoin/comments/2bssfx/ethereum_sca...
If this works it's a great idea and will serve a wonderful purpose. I'm a big supporter of Bitcoin (and my own buy in came long after I was aware of it), but Ethereum doesn't seem baked enough to warrant throwing (at the current price) 1 BTC at something that isn't fully operational. Definitely something to keep an eye on, though.
Weirdly enough, opening this page locks my Google Chrome at 100% CPU, and it keeps going even after I close it, until I actually restart Chrome.
Just the amount of funding generated for this has to be a good sign for its success. They just funded a ton of development hours. Or I suppose they could just run with it. Do they have any further incentive to see this thing take off? Is there any penalty for disappearing with the Bitcoin?
How are they raising the funds? Can others do it?
How do I buy it?
Hi guys I'm one of the core developers and will I'll answer some the questions. There seems to be some misguided information and claims that are, fortunately, not true.

> but speaking to core developers it turns out that this isn't really significant at all. I'm one of the 3 core developers and I'm pretty certain I've not met or talked to you, and I can't imagine the other two making such claims either.

> Ethereum has already raised as much money as the BF spends in a decade We are a different tech but so happen so share and exist in the same space. Comparing us to the BF or Bitcoin in general is just downright wrong. You're comparing apples to oranges.

> For one it's still pretty much vaporware, little has been released I've been relentlessly working on this for the past 7-8 months and so has Gav & Vitalik. All 3 of us have made remarkable progress if I may say so. Right now we have 3 clean room implementations with 99.99% consensus and operate on the same testnet blockchain. Vaporware? I beg the differ.

* Go - myself * C++ - Gavin * Python - Vitalik

The Go, C++ and Python implementations have full interoperability. A 4th, Java, implementation is being developed by Roman but hasn't got full consensus yet.

> Obviously the Ethereum team is not going to release "all the code" immediately All of our code is available on GH actually (https://github.com/ethereum)

> Are you allowed to create TPC/IP listen sockets? This is undefined. We have been _very_ explicit regarding I/O (in any form), it's simply not allowed, period.

> Specifically, arbitrary code execution by strangers. I'm not sure if you're familiar with the model we're using but arbitrary execution isn't a problem considering we do not allow any form of I/O.

The arbitrary code, or contracts, are "triggered" by sending it a transaction. Once triggered it will run according to a set of rules that have to be goverend at all time. It's part of the consensus engine; it's "all in or nothing". Once mined, the miner will announce the new block, node's will verify the transactions and execution and can accept or reject based on their findings.

> Obviously it's not vaporware but there are many discussions about their implementation behind the scenes such as "Ethereum “Dagger” PoW function is flawed" Vlad is currently working on the PoW. For code see https://github.com/ethereum/mining

I don't mind a good bit of scepticism but the amount of false claims and downright incorrect information that some of you have been posted really is below the HN standard. Most (if not all) of the answers are available online, just put a bit of research in to it.

wow this just made me so much money ._.