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The Evolution of Ethereum

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Vitalik Buterin


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The Evolution of Ethereum

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Many of you know that the Ethereum platform grew out of the realization that blockchains can go far beyond currency, together with a frustration with the limitations of previous projects. The core idea was simple: a blockchain with a built-in Turing-complete programming language, allowing users to build any kind of applications on top.

Over time, the vision evolved and expanded. The blockchain remains a crucial centerpiece, but it is ultimately only part of a larger vision of “web 3.0” as described by Gavin Wood here: a more secure, trustworthy and globally accessible internet for agreements, finance, auditing, tracking and simple websites and web applications that use decentralized technology to overcome some of the practical, political and technological inefficiencies of previous approaches. Together with the Ethereum blockchain, we see an entire suite of internally and externally developed, low-level and high-level protocols including Solidity, Whisper, IPFS, zero knowledge proof systems, account management systems, dedicated browsers and much more, all with the goal of providing a coherent vision of the internet as it should be.

With such an ambitious vision, come some challenges. Right now, the Ethereum project is in a time of complicated transition. Many of the difficult initial work – myself, Gavin, Jeff, Martin, Lefteris, Felix, Vlad and many others developing four compatible versions of a project that our security auditors have described as having “testing needs … more complex than anything [they’ve] looked at before”, Christoph and Dmitry’s tireless efforts setting up over ten thousand tests, Marian, Taylor and Konstantin’s work on network analysis and emergency response architecture, Christian, Liana and Gavin’s work on getting Solidity off the ground, IMAPP’s work on the JIT EVM, and the many other projects of contributors to the Ethereum platform  of which there are too many to mention, all culminating with the successful launch of a blockchain with over $50 million worth of value floating around on it starting from day one, are now behind us. Ethereum now actually exists, and those who were lucky enough to take up Mircea Popescu’s offer to buy ETH from him that he doesn’t have at a price of $0.12 a piece are welcome to try their best to collect. Today, we can all be proud that the Ethereum developer ecosystem has grown large enough to include major banks, corporations, governments, over a hundred dapps and individuals and businesses in dozens of countries speaking dozens of languages.

At the same time, however, there are some difficult challenges that remain: some technical, some organizational, and some of almost every kind. The core of the problem is simple. Up until fairly recently, almost all of the work that has been done on the Ethereum project has been done by subsidiaries of the foundation. In the future, however, although the foundation and its subsidiaries are going to continue to take on a strong and leading role, it will be the community that will gradually be the primary driver in making it succeed. This is true for several reasons, some unplanned and some positive.

First of all, it is indeed true that the foundation’s finances are limited, and a large part of this was the result of our failure to sell nearly as much of our BTC holdings as we were planning to before the price dropped to $220; as a result, we suffered roughly $9m in lost potential capital , and a hiring schedule that was meant to last over three years ended up lasting a little under two (although bolstered by a “second wind” from our ETH holdings).

Second, the project’s needs have grown. Over the past twenty months, the project has grown from being a simple attempt to improve on Mastercoin by adding a programming language into an effort to push forward a powerful and expansive vision of “web 3.0” that includes multiple technologies, some built by ourselves and some by others, and a complex software stack that integrates them all with one simple aim: to make it as easy to build secure, globally accessible and trust-minimized decentralized applications as it is to build a website – and hopefully even easier.

The foundation and its subsidiaries alone simply do not have the manpower to push the entirety of this vision through to its ultimate completion, including proof-of-stake driven scalable blockchains, seamlessly integrated distributed hash tables, programming languages with formal verification systems backed by state-of-the-art theorem provers and dozens of categories of middleware, all by itself; although the foundation and its subsidiaries can, and will, continue to be the primary driver of technology at the core, a highly community-driven model is necessary and essential, both to help the Ethereum ecosystem maximally grow and flourish and to establish Ethereum as a decentralized project which is ultimately owned by all of humanity, and not any one group.

And fortunately, the community has already stepped up. Just to give a few examples, here are a few parts of the Ethereum ecosystem that the Ethereum Foundation and its subsidiaries  have had nothing to do with:

Actually, the Ethereum ecosystem is maturing nicely, and looks unrecognizable from what it was barely a year ago.

On the inside, we have Ethereum Foundation subsidiary developers building yet more block explorers and other tools in their spare time, and some developers are already working on implementing Ethereum-based lightning networks, identity and reputation systems, and more. In the near future, there will be several more non-profit and for-profit entities emerging in and around the space, some with the involvement of Ethereum team members, and many with partial involvement from myself. The first of these to announce itself is the Wanxiang blockchain research institute and fund based in Shanghai (yes, this is the “major collaboration” I hinted on recently, and is also my much delayed answer to “how did your China trip go?”), which includes (i) an agreement to purchase 416K ETH, which has already concluded, (ii) an upcoming conference in October, (iii) a non-profit blockchain research institute, and (iv) a $50m blockchain venture-capital fund, all with emphasis on Ethereum development. I fully expect that within six months the Ethereum for-profit ecosystem may well be much more well-capitalized than the Foundation itself.

Note that a substantial number of Ethereum foundation subsidiary staff is going to be moving over to the rapidly growing for-profit Ethereum ecosystem over the next half year in order to bring more funds, interest and development effort into Ethereum-land; so far, everyone I have talked to who is leaving the foundation subsidiaries is intending to do this, and they will in many cases simply be continuing, and expanding, the same work that they have started on now either under foundation subsidiary employment or as personal side projects, under a different banner. Ming Chan, who has recently joined the foundation, will be managing the foundation’s administrative matters, helping to develop an updated and more detailed strategic plan, oversee DEVcon 1 setup, and generally make sure that things on the foundation side work smoothly throughout the many simultaneous transitions that are taking place; we have also expanded our advisory board, and the new advisors will be announced soon.

Under these circumstances, we must thus ask, what is the Foundation going to do (and not do)?

Finances

Let us start off by providing an overview of the Foundation’s financial situation. Its current holdings are roughly:

  • 200,000 CHF
  • 1,800 BTC
  • 2,700,000 ETH

Plus a 490,000 CHF legal fund that will be reserved to cover possible legal defense (it’s like insurance). The foundation’s monthly expenditures are currently ~410,000 CHF and starting Oct 1 are projected to fall to 340,000 CHF; a mid-term goal has been placed of 200,000 – 250,000 CHF as a good target that allows us to deliver on our remaining, but important responsibilities. Assuming that we get there in three months and that ether and bitcoin prices stay the same (heh), we have enough to last until roughly Jun 2016 at the 340,000 rate, and perhaps up to Sep-Dec 2016 given planned transitions; by that point, the intent is for the foundation to secure alternative revenue sources.

Possible revenue sources past that point include:

  • Developer workshops (including extended in-person “courses”)
  • Conference tickets and sponsorships
  • Third-party donations and grants (whether to the Foundation or to projects that the Foundation would otherwise be spending resources on)

Another action that may be taken is, when Ethereum switches to proof of stake, keeping 50% of the old issuance rate active for a year and directing the issuance into some kind of mechanism, perhaps a simple voting scheme or perhaps something more complex incorporating delegated voting, decision markets and potentially other revealed-preference tricks from game theory, in order to pay developers. In any case, our original promise that the issuance rate will not exceed 26.00% per year, and the goal that the eventual final issuance will be much lower (likely 0-3% per year) with proof of stake, will both be kept. We highly welcome community input on whether and how to go down this path; if there is large opposition we will not do this, though the community should understand that NOT doing this comes with a risk of greater reliance on the for-profit ethereum ecosystem.

Focus

Up until perhaps six months ago, the Foundation and its subsidiaries have been doing almost everything in the ecosystem; right now, the foundation and its subsidiaries are still doing much of everything though some community members have stepped up to compete with its own offerings – in some cases, in my own humble opinion, quite excellently. Going forward, the Foundation and its subsidiaries will aim for a more focused approach where it carries out only some of the work in the ecosystem, but does it well. An approximate outline of the Foundation’s activities can be described as follows:

  • Education
    • Online documentation and developer resources (new documentation site coming soon!)
    • Conferences (DEVcon 1 coming in November!)
    • Hackathons, workshops
    • Possibly paid in-person development courses
  • Conferences, events, Meetups co-ordination
  • Outreach, marketing and evangelism, both to the media/public and to institutions
  • Compliance and regulatory maintenance
  • Certifying businesses, individuals, etc (whether ourselves or through a third-party partner)
  • Highly targeted core development tasks including:
    • Some core client code
    • Network observation and coordinating emergency response
    • Maintaining test suites, certifying clients
    • Paying for some security audits
  • Research, including:
    • Proof of stake (Casper)
    • Scalability
    • Virtual machine upgrades
    • Abstraction
    • Formal verification
    • Zero-knowledge proof integration
  • Official protocol and sub-protocol specifications

Higher-level development tasks will in the medium term be done largely by for-profit entities, volunteers and other members of the community, although the Foundation’s subsidiaries will continue to employ many of the developers in the short term.

Transparency

The Ethereum Foundation would like to express a renewed interest in being maximally transparent in its affairs; to that end, we are publishing the information above, and as an initial trial in going further we are working with Consensys to use their (Ethereum) blockchain-based accounting software Balanc3 to record all expenses relating to Devcon 1.

Another important aspect of transparency is more open and inclusive development; to that end, we are making a renewed push to move conversations from Skype to Gitter where they are more publicly visible (eg. you can check out this room right now) and members of the public can more easily participate. We are also evaluating the possibility of introducing a more formal and inclusive process for agreeing on protocol upgrades and welcome input from client developers on this. And there are more announcements both from ourselves and others that will be following soon.

In sum, despite the evidence of growing pains, the state of the Ethereum nation is good, its ecosystem is vibrant, and its future is bright.

As a Foundation, we will continue to focus on promoting and supporting research, development and education to bring decentralized protocols and tools to the world that empower developers to produce next generation (d)apps, and together build a more globally accessible, more free and more trustworthy Internet.

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Vitalik Buterin

https://ethereum.org

Comments
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Author Zack Normandin

Posted at 6:27 pm September 28, 2015.

I’m extremely proud to be a part of Ethereum. Everybody is focusing on the price and just like what you said, Ethereum goes FAR beyond any kind of currency. This is the future.

That being said, I see an opportunity for Ethereum and I would love to crowdfund some more augur-like projects as well as launch a few of my own projects. Now that I’ve mentioned this, I might be seen as a little spammy, but nonetheless, I need to get my message out.

I’m a new father, a new husband, looking for a way to create new ways to create dapps for those who aren’t heavily knowledgable on coding. I have the marketing skills as well as the video production skills, I just need to crowdfund a team, but that comes with time.

0x03f0e241825fa1a0fd87eb6355605103784ef34d

This is my Ethereum Address. I’m extremely interested in being able to support my family as well as be able to get involved in many Ethereum-related ventures that I’m more than excited about.
If you could send even 1 ETH to me, I would be grateful.

Thank you everyone!

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Author William Mougayar

Posted at 7:37 pm September 28, 2015.

Great update, Vitalik. Onward and upward.
This clearly depicts where Ethereum is going. Having clarity of vision is good leadership.

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    Author gubatron

    Posted at 7:36 pm September 29, 2015.

    did we read the same post?
    This post reads like an Ethereum obituary.
    How are they going to make 340k-400k a month with workshops and conferences?

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      Author William Mougayar

      Posted at 8:07 pm September 29, 2015.

      Vitalik said they have enough budget well into 2016, so what part of that is not clear?

      Then, there’s additional intake from fundraising, education, events, ETH appreciation, and the other process mentioned by Vitalik. (and note the budget target is 250K, not 400K.

      And above all, the ecosystem is healthy, so one shouldn’t look at just the Foundation for pulling Ethereum forward, although it does have a key role.

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      Author Brian L

      Posted at 8:33 pm October 3, 2015.

      William Mougayar is friends with Butalik in Toronto Canada. He’s a cheerleader 4 him. I wouldn’t listen to any of Williams biased comments on Ethereum.

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Author Fabian Vogelsteller

Posted at 7:42 pm September 28, 2015.

I really like that blog post! We need more of this transparent leadership vitalik 😉
Stay tuned for the wallet and mist… its coming…

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Author Guest

Posted at 7:46 pm September 28, 2015.

Gongrats on reaching thi smilestone. But holding 1,800 BTC and 2,700,000 ETH still puts the Foundation at an extraordinary financial risk. Can we assume that lesson has been properly learned already?

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Author Dave Harrison

Posted at 8:20 pm September 28, 2015.

Very impressive track record and cogent road map. Just one thing… I thought it was “Etherland”. Maybe 3therland would be an appropriate 3.0 destination.

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Author liondani

Posted at 8:38 pm September 28, 2015.

“if there is large opposition we will not do this”
The dump result of ethers should be your answer!

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    Author Simon Janin

    Posted at 12:19 am September 30, 2015.

    The “dump result” is likely completely unrelated. But I’m not sure I like the idea either…
    We need to be able to balance (at least) three basic needs with the transition to proof of stake:
    1) early adopters must have an incentive to stay in the system. I really like the idea of getting a return on being a full-node voting using my coins – energy efficient, secure, fast, and profitable.
    2) new-comers must have an incentive to join the system.
    3) Further development of the platform has to be supported financially.

    If you ask me, I believe that 3) will be the least important once we have PoS figured out. Public Open-source has worked beautifully in the past on many occasions, there is no reason why it wouldn’t work for Ethereum. But the platform needs to reach a certain maturity first.

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      Author Dave Harrison

      Posted at 12:38 pm September 30, 2015.

      Re: “certain maturity” or critical mass. If an NBA star marries a WNBA star and they have a child, what are the odds that it will at least be a talented basketball player? I think that’s what we’re dealing with here. If that’s the case (and it may not be) then the pertinent question becomes; how does one game that? The Barry Silbert approach to betting on every BTC horse that comes along hasn’t worked out so well (but it stil may, cough) but then again BTC is not ETH when it comes to programmability.

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Author Souptacular

Posted at 10:36 pm September 28, 2015.

Excellent post. Great work Vitalik and the whole Ethereum community!

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Author FabOz

Posted at 11:16 pm September 28, 2015.

EtherEx would be nice!

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Author Igor Kiselev

Posted at 11:21 pm September 28, 2015.

Zero-knowledge protocols on top of blockchains.. Very interesting !

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Author Donald McIntyre

Posted at 11:57 pm September 28, 2015.

Thank you Vitalik, great update and very useful.

Is there a page or place where people can learn about Ethereum Foundation and donate? Are addresses published to spontaneously donate?

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Author Carlos Raul Gutierrez

Posted at 1:18 am September 29, 2015.

Thank you for this timely explanation. What about the original idea of a Supervisory Board to the Foundation, with groups addressing different needs like financing? Don´t you think you need more than 3 directors to help brain-storm new ideas? What about collaboration with other economic sectors beyond the software and financial industries? What about energy & electricity? Good luck!

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Author gleetree

Posted at 1:55 am September 29, 2015.

I’m confident holding Bitcoin because the tools to do so are readily availiable, but there seems to be no safe way of securing ether without a computer science degree.

Why has no simple to use wallet been developed? Something I can trust and manage without fear?

I tried ethereumwallet.org as a test and they promptly vanished with my 300 ether (mybitcoin.com style) – the only other alternative seems to be the kryptokit one, but it’s not something I would trust with a large investment.

If you want investors you really need to provide the tools to allow the rest of us to invest as non-experts.

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Author Escalicha

Posted at 1:26 pm September 29, 2015.

If foundation goes bankrupt, what happens next?

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    Author gubatron

    Posted at 7:37 pm September 29, 2015.

    finally someone read the post and isn’t subject to some sort of reality distortion field.
    sounds like this is dead unless the Bitcoin/Ether price shoots back up to the 500s-600s.

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      Author Dave Harrison

      Posted at 8:46 pm September 29, 2015.

      Wouldn’t it be more logical to ask the question if the foundation goes bankrupt does the Ethereum platform disappear? Foundations are good and all, but the foundation flourishing or failing is not particularly germane (not to diminish the jobs lost by staff)… or am I missing something? Or are you talking about token speculators. I don’t think you can kill Ethereum as easy as bankrupting a foundation by the same name. Tell me if I’m wrong. The space program wasn’t always a shuttle. Sometimes you destroy a lot of value and leave it behind on the mission. I would have bet against them getting to Frontier… and I would have lost that bet. Then again, if Bitcoin had gone to $50, I would have won that bet. Now, if Bitcoin goes to $500, you probably lose your bet. Ironically, the medium is now the message thanks to prediction markets. Ante up! Beats livin’ in a hexayurt…

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        Author Dave Harrison

        Posted at 12:02 pm September 30, 2015.

        I nearly forgot… Ethereum is also a blog. I will pay Godaddy $9.99 per year to keep the blog up if the corp fails so I can read V’s blog entries.

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        Author gubatron

        Posted at 9:25 pm October 1, 2015.

        well, the thing is really how much of a community has the foundation managed to rally up to continue the core development even if they’re gone.

        we can barely get anyone to contribute to Bitcoin-Core (everyone is in Ruby/Python land building on top)

        It would seem that if the core people behind this foundation are gone there’d be very little hope of it ever taking off, the only reason it got started was because they managed to sucesfully raise so much money with a pre-mined coin.

        Vitalik mentions several projects that have had some weight to throw around, like Augur, I guess it will be a matter of those leaving to pursue Ethereum-for-profit initiatives to be responsible and keep maintaining the core simply because their business depends on it, but then things could turn ugly given possible conflicts of interest.

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          Author Dave Harrison

          Posted at 12:17 am October 2, 2015.

          “Turn ugly”… you mean like a real business. “Squid ugly?”… “Madoff ugly?” Hmmph. Sounds like Wall Street. This could be big. I mean real BIG. Had no idea. I might have to buy in.

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Author Michael Kilday

Posted at 4:24 pm September 29, 2015.

The good news is you all put together the back end programming already minus POS…the front end + POS can come in time. I’ve been checking out solidity a bit, and it looks superb from what I’ve noticed so far…great job! :o)

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Author Tom M

Posted at 5:42 pm September 29, 2015.

Excellent post. Great work Vitalik and and honest post.

Like I understand, that ethereum as a foundations, are running out of the founds. (in 1-2-3 mounts time)
The community is great and big Right now, and Ethereum project is in a time of complicated transition.

And In Me is coming some question that was bother me from the start:
– how ethereum as a foundations rise founds in the future ??? ( donation, New crowdfunding or
advertising on MIST, or maybe in proof of stake that miner pay some % 1-40% of cost of transaction to ethereum developers )

And what i really dont like :
– That in proof of work 10 miners mind 80% of ether gas, is this decentralise and fair ( investment of miners in proof of work go to mining equipments not for a ethereum foundations.
– Inflation about ethereum gas ( how many ether gas? how many coin in a future?)

I am big fan of Ethereum and a new decentralise Internet, And I hope that Ethereum foundation will find the way and the founds to keep Ethereum developers for many years with a project and make Internet Decentralise.

GOOD LuCK

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Author oliverkx

Posted at 9:27 pm September 29, 2015.

How about we levy a temporary tax on mining to continue funding the foundation? This new tax and its amount (percent) could be put to a vote in a new version of the eth/geth client: miners who wish to vote simply invoke eth/geth with a new command-line argument: geth.exe –foundationlevy=10. Each block that is mined would record the levy percentage set by the miner of that block. After 200,000 blocks (about 40 days), the votes are tallied, and the average percent levy is baked into the next version of the client.

The voting process could also be made ongoing, similar to what was done for the spending limit at the beginning of Frontier. Each miner mining a block would get the chance to vote the percentage up or down by 0.1% toward the target he or she has set using the cmnd line arg.

I believe that the Ethereum community as a whole has a huge interest in keeping the foundation as active and engaged as possible for the foreseeable future, and many of us would be willing to fund it one way or another. The advantage of this type of system over individual voluntary donations is that in the latter, while it is in each participant’s interest that all (him or her included) donate, in the absence of any enforcement mechanism, many may choose to just let the others donate (i.e. “tragedy of the commons”).

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    Author Simon Janin

    Posted at 12:10 am September 30, 2015.

    I don’t know if this is a good idea, but I’d like this to be discussed at least.

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      Author Tomis Erb

      Posted at 4:13 pm October 22, 2015.

      This is the right direction. There needs to be crystal clear clarity on the direction and the sooner the better. I’d assume something approaching the worst and plan accordingly (cost won’t go down as fast as hoped and more delays than planned as well and additional unanticipated developmental needs cropping up). I’d keep 50%, more if necessary, of the old issuance rate active for a year, then 40% and so on by year until the 3% mark is hit. The farther away from the core developers you get the more reassurance is needed. The Foundation provides this reassurance and should decide the plan. The Foundation should be put on as solid a footing as possible (12 to 24 months financing). Once a plan is decided it needs to be adhered to and thus the need to make estimates that are not overly optimistic in the short run particularly.

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Author @mikeriddell62

Posted at 9:41 pm September 29, 2015.

What’s the single goal that the leadership team have in mind? It sounds to me like they’re all over the place.

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Author desrever

Posted at 2:03 pm September 30, 2015.

I started working at NuBits to help prevent such catastrophes from happening. You are very aware of stable coins or other hedging tools, so what didn’t you take some action?

How could you sit on those BTC and make hiring plans pretending BTC would be forever worth 500$? Can you provide more details?

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Author Adi

Posted at 1:32 pm October 1, 2015.

Ethereum will go down in history as a technological milestone.
Well done Vitalik and the team for creating something truly amazing.

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Author Donald

Posted at 8:14 pm October 3, 2015.

Vitalik can’t stop lying to everyone. This was a horrible crowdfund but it was a good learning process. Blockchain 2.0, Etehreum, has given us “smart contracts” which will allow us to now perform a proper crowdsale with more structure. I look forward to the next big project a.k.a. blockchain 3.0 tech!

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    Author Bri

    Posted at 8:24 pm October 3, 2015.

    Well maybe Ethereum is blockchain 1.1 😉 I don’t think we have reached blockchain 2.0 yet. I guess we can call the next big innovative blockchain 3.0 if you want. LOL

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    Author Crypto Lady

    Posted at 8:45 pm October 3, 2015.

    So bchain 1.0 was used to crowdsale for bchain 2.0 and we got Ethereum. Now bchain 2.0 will be used to crowdfund bchain 3.0! This sounds interesting. What will we get!??? exciting

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    Author Donald

    Posted at 11:02 pm October 3, 2015.

    What do people think of these “Private developers” starting their own $ETH style public blockchains such as $SHF? Vitalik Buterin calls them “yet more block explorers”. (see https://shift.etherchain.org/ A $SHF SHIFT block explorer) $SHF is to SHIFT what $ETH is to Ethereum.

    Reply

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