Ethereum (ETH) Failing to Deliver on Promises, Leading Crypto Pundit Says

December 28, 2018 / by Angel Reyes

Technological advancements in the crypto space are often under scrutiny as many projects make claims of scalability, decentralization, and security. Tuur Demeester, a monetary economist and early Bitcoin adopter, has been speaking out against Ethereum’s validity and credibility for some time now. He says “Ethereum is at best a science experiment” and has failed to uphold its marketing promises.

Responding to people who wonder why he is so against Ethereum in a Twitter thread, he points out various architectural and cultural flaws in Ethereum’s programming and development. Having followed Ethereum since 2014, he believes the current market value of $13 billion is too high leading to misinformed investors taking an interest in this “blue chip” crypto.

First and foremost, he poses that Ethereum’s claims of decentralization, immutability, SoV, asset issuance, [and] smart contracts are similar to that of Bitcoin Core but without progress to back such claims.

Quoting Ethereum Foundation researcher, Vlad Zamfir, “that [Ethereum is] not money, not safe, and not scalable,” he references the lack of scalability that has yet to be seen by the Ethereum dev team.

In 2014, Joseph Lubin, a prolific Ethereum development contributor said to “anticipate blockchain bloat — working on various sharding ideas.”

Sharding allows for separation of larger databases into smaller, more manageable parts. Four and one-half years later, sharding is still not implemented despite promises from the dev team that it was in sight of completion.

A second level of solutions called state channels have also been in the works by the Ethereum dev team. Ethereum’s version of the lightning network, state channels are designed to move transactions “off-chain” to minimize slowdowns in the network. He says “it is unclear whether main-chain issued ERC20 type tokens will be portable to this environment,” which creates more inconsistency in the development team’s claims. Compared to Bitcoin’s Lightning Network beta release on March 15, 2018, Ethereum has still not produced results.

Then, in 2017, Ethereum scaling solution Plasma was announced. Plasma, another off-chain scalability solution, is said to be an old, unsuccessful idea taken from the Treechain network. Allowing for the creation of smaller blockchains linked to the larger blockchain, Plasma acts like secondary roots attached to a taproot in a plant. “Ultimately rejected as insecure. – fraud proofs are invalid and can hide large-scale financial fraud in small amounts of data,” says cryptography consultant, Peter Todd in a tweet

Overall, the marketed solutions to scalability given by Ethereum have yet to see any significant progress. Bitcoin, however, can solve its duality problems of securely operating and scaling for cash-like use with modular scaling.

Putting every dApp on the Ethereum Blockchain, however, bloats the system and forces devs to ask people not to make more smart contract apps on the blockchain.

This causes centralization as nodes are more expensive to run with inefficiencies in scaling.

Next, Demeester points out the various flaws involved in the proof-of-stake (PoS) system behind Ethereum’s Casper Protocol. Citing a peer review of the Casper and sharding white paper by Blockstack co-founder Muneeb Ali, he supports its claim that it is “neither a theoretically sound nor practically useful treatment of Byzantine fault-tolerance. It remains unclear if the definition of the Casper protocol family provides any meaningful safety guarantees for blockchains, or if this approach is applicable to scaling blockchains at all.”

Demeester calls PoS an “elephant in the room” that has design flaws but relies on its environmentally friendly label to gain traction. He references Hugo Nguyen’s article on how PoS is flawed in its inability to deal with extraordinary scenarios. Additionally, he references threads on Blockstack and Reddit explaining how PoS verifiability requires trusted third parties, which is not in line with decentralization and autonomy for users. Its ability to be censored is its largest downfall, unlike Bitcoin’s proof-of-work.

Vitalik responds to Demeester’s attacks on PoS by saying it is a phase in development. Returning to his comparison with Bitcoin, however, Demeester rebuts, saying “BTC layer 1 is not “just a phase,” it always will be its definitive bedrock for transaction settlement.” Demeester stands strong with his references that PoS is unproven, unreliable, and utopian. PoS is not an original concept and is not comparable to proof-of-work in security and autonomy.

The recycling of scalability ideas and PoS concepts is compared to a failed science experiment with poor citation to past research or peer review standards. He claims “sophistry and marketing hype” are the only real reason for Ethereum’s success and “inflated market cap.”

His next point addresses “Ethereum’s romance with the vague and dangerous notion of social consensus.” Hard-forks are designed to upgrade or optimize the system or escape problems such as the “difficulty bomb” that forces PoS transitions by miners. The hard fork allows disturbances in this process and the operation of Ethereum as a whole.

Furthermore, Ethereum devs are able to make centralized decisions regarding forking the blockchain at will, even against voter will.

If you’re going to attempt centralization in an open source project based on Bitcoin, secrecy is subject to condemnation. Despite that, Ethereum meetings are increasingly secretive while Bitcoin Core meetings are recorded, and the protocol is open source.

He further explains the difficulty of working with Ethereum programming languages despite early marketing that this would be easy. Even for experts, the cryptographic nature of smart contracts’ makes creating good tools difficult.

This would require a strong dev team, but Demeester claims there are few of adequate pedigree working on Ethereum.

He ends his Twitter diatribe by disclosing his previous enthusiasm for Ethereum in its initial stages. Since then, he has come to disagree with the marketing and philosophy behind it, calling the initial coin offering reckless. He claims it set the crypto environment up for scam ICOs and illegal securities offerings.

Demeester believes in the scalability, privacy, and flexibility seen in Bitcoin development, but he holds strong opinions about Ethereum’s lack of deliverance. Only time will tell if Ethereum will continue to succeed as an investment or produce products worthy of adoption.