Comment by phire | Hacker News Reader

Comment by phire | Hacker News Reader

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I spent the weekend researching Ethereum and speculating on why people are investing in Ethereum (as opposed to other altcoins). I've come to the conclusion that there are two major reasons:

1) Momentum. Ethereum is (by many measures) the top performing alt coin. It's the most likely to be accepted on random websites, companies are investing in it and it looks like it has interesting potential. People see that and jump on, hoping the momentum will continue.

2) Stability. Crypto-nerds like you and me look at DAO and shake our heads, "reverting transactions goes against the whole concept". But to investors it looks like stability, which is attractive to them. There is now the implication that the developers will step in and fix any major mistakes. It's not just ill-defined smart contracts, theoretically the developers could intervene in cases of stolen ETH from wallets of major exchanges, or anything really which could threaten the stability of the currency as a whole.

I doubt any sane investor would think like point (1).

I would follow ETH only because it's backed by the original developers. The reversion happened only because member(s) of Ethereum Foundation personally invested in DAO, so they easily could and did push hard at the root (devs). Even with all that, there's no certainty that another big mistake will be reverted by devs' will or even be technically possible having to deal with Turing completeness and zk-SNARKs "soon (TM)".

> I would follow ETH only because it's backed by the original developers. The reversion happened only because member(s) of Ethereum Foundation personally invested in DAO, so they easily could and did push hard at the root (devs).

The much bigger problem was that they didn't want anybody to control 14% of all ETH with the switch of PoS on the horizon. This was IMO the most pressing issue. That people got their ETH back (well, those who didn't panic sell) was a nice side-effect which convinced people to follow the ETH chain.

> Even with all that, there's no certainty that another big mistake will be reverted by devs' will or even be technically possible having to deal with Turing completeness and zk-SNARKs "soon (TM)".

Yeah, only because of some quirks on how TheDAO is implemented, it could be resolved that way. In slightly different circumstances, a fix won't be possible.

No sane investor is going to invest in Ethereum because that's not how Ethereum or its derivatives raise capital. The way they raise capital is by taking individual's existing irrational trust (fiat) and exchanging it for what appears to be rational computationally driven trust. Except nobody is using that computed trust for anything worthwhile (a use-case), but then they (the Ethereum fans) all spout that its "killer use-case" is trusted transactions.

This is, at best, a chicken and the egg problem, given trust is built over time by most cultures and people don't trust things they don't understand, even if those things are rational. Saying it's rational doesn't convince the group aggregate mentality (the thing that defines a killer use-case) so we sit here as individuals speculating about how great is is and they (the Ethereum group aggregate) sit here trying to convince us how great it is. By actual use adoption standards, used by VC firms to establish value, it has none.

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