The co-founder of Ethereum dedicated an article to the analysis of the status of the ecosystem. He mentioned a total of 16 aspects, with advances and pending tasks, as well as suggesting new problems.
Five years ago, the co-founder of Ethereum, Vitalik Buterin, published his article “Problems,” in which he reviewed the main difficulties faced by cryptocurrency economy in 2014. Recently, the executive published an update of his work, in which he grouped again the 16 aspects that show advances, as well as other pending tasks within the world of cryptocurrencies.
The developer expressed his views in the article “Difficult problems in cryptocurrency: five years later,” in which he divided into three sections his reflections updated to 2019. Buterin believes that challenges are mostly focused on cryptographic problems, consensus theory problems, and economic sciences. Also, he suggests 10 new problems that relate to the past, present, and future of the cryptocurrency ecosystem.
According to Buterin, the number 1 problem of cryptocurrencies is scalability, as it relates to large blockchains and the confidence of their participants. In this regard, he noted that “if there are only a few entities capable of running full nodes, then those entities can conspire and agree to give each other a large number of additional bitcoins, and there would be no way for other users to see for themselves that a block is invalid without processing an entire block themselves.”
Buterin mentions that the problem is to create a blockchain design that maintains security guarantees similar to those of Bitcoin, but in which the maximum size of the most powerful node needed for the network to continue functioning is substantially sublinear in the number of transactions. In this regard, he said that in the last five years there has been great theoretical progress on this point, but further evaluation in the real world is pending.
The programmer sees four other challenges in the crypto area, including timestamping, arbitrary computer testing, obfuscation coding, and hash-based cryptography.
One of the challenges in the area of consensus is the Proof of Work (PoW), which is resistant to ASIC miners. However, Buterin considers that the problem has been solved as far as possible and cited as an example the application of the Ethash algorithm in the Ethereum blockchain to try to counteract digital mining with higher-capacity processing equipment.
The developer added three other challenges in this area: that of a useful Proof of Work (PoW), the same Proof of Participation (PoP), and the so-called Proof of Storage (PoS) that involves the bandwidth of Internet connections and the storage on hard drives.
Challenges in the Economic Area
Buterin’s update also covers the area of economic sciences. The main problem, according to its criteria, is the volatility of Bitcoin prices. The challenge is to design a cryptocurrency with a stable price. On this issue, he notes that there is some progress and mentions the arrival of MakerDAO as a collateral ETH asset, not to mention other stablecoins with more time in the market, such as Tether (USDT).
In this section, the developer stressed that the difficulties are also concentrated in decentralized incentives for public goods, reputation systems, Proof of Excellence (PoE), anti-Sybil systems, decentralized contribution metrics, and decentralized success metrics.
It is important to comment that Buterin’s analysis is conducted, in certain aspects, from the perspective of the Ethereum blockchain, its main project in the ecosystem, comparing some elements with the Bitcoin network. Despite the progress that has been made, the programmer is one of those who believe that there are new problems, such as decentralized governance mechanisms, reputation systems, and unique human identities, among other challenges.
By Willmen Blanco