Here are a few of the reasons that come to mind as to why this transition has been taking us so long:

* The design of the Beacon Chain is far more optimised than our initial designs for a PoS system

* There are far more crypto-economic edge cases in a PoS system when compared to PoW

* Software development is hard and time estimates are even harder

* The use of a hybrid fork choice to balance safety and liveness trade-offs

* There is a crazy amount of value being handles on Ethereum so it is necessary to be conservative with our changes (move fast and break things is not an option)

* There are 4 concurrent implementations being developed all of which need to be inter-compatible, and production ready

* As Ethereum governance is decentralised we need a shelling point for exactly what Ethereum PoS looks like, this takes time

* We have worked hard to create, encourage, and embrace standards with other chains so that the cryptocurrency community of tomorrow is more inter-compatible (eg. IETF BLS standard or libp2p networking)

* We have spent time designing around quantum-computing resistant backups for the majority of the cryptography (eg. validators all have a Lamport backup key though most don't realise it)

* New cryptography has been developed and previously abandoned schemes revitalised (eg. Verifiable Delay Functions or the Legendre PRF)

And by far the most significant hindrance to moving away from proof of work is that there a number of significant players who have a large economic interest in PoW. Ethereum was promising this move many years ago, but it always was an extraordinarily low priority.

There are a lot of people with perverse biases. Many of the comments enthusiastically defending Bitcoin are people who are sitting on BTC and have watched it get pummelled due to its ludicrous enormous-energy-for-something-that-does-nothing-for-humanity reality (seriously -- if I see one more chart comparing the entirety of the financial industry with Bitcoin. The former powers the entire world. The latter powers some speculators, criminals, and a minuscule number of legitimate transactions).

I disagree about the priority, they literally didn't know what they were doing or how to do it just yet. The security demands this community wants are and were completely science fiction as there is no proof of stake network that has met the goals they are aiming for, and they are simply much closer to reality now.

There was poor governance and management that debilitated their ability to function during the 3 year bear market. And they got their act together. In the mean time, more product market fit was made apparent and upgrades to the instruction set for arbitrary execution was done to the network and continues to this day.

The Ethereum network consists of many-to-many relationships for approval transactions for ERC20 tokens to interact with other smart contracts. This wasn't even foreseeable 18 months ago, and 18 months before that the ERC20 protocol wasn't even ratified.

> Does nothing for humanity

Really? If that energy consumption problem wasn't there, what advantages does Ethereum have over Bitcoin? Would it even exist, since it offers many of the same features?

Ethereum natively supports smart contracts. Bitcoin doesn't support them natively; any attempt to add them has to be a separate layer on top.

That's why the past few years have seen a rise in fungible and non-fungible tokens (average merit of those aside for the sake of argument, since this is just answering the question "it offers many of the same features"), pretty much all of which are hosted on Ethereum or Ethereum code forks like Binance Smart Chain.

For more details on advantages of Ethereum over Bitcoin, and advantages other new blockchains have over Ethereum, please see my recent presentation:

https://capitalgram.com/posts/history-of-cryptocurrencies/

Interested to hear your thoughts on Polkadot. At the end of the first section, you stop the 'innovation train' at NPOS. Polkadot takes all the ideas presented in your article, combines them and adds a couple unique ideas such as parachains.

(Not the parent poster.) I've looked at it and think it looks interesting, but I think Ethereum may be approaching something like JavaScript's status, now. It's not necessarily technically ideal, but it has first-mover advantage, tons of network effects, and an entrenched position, so it might have already won.

I think there's a decent chance they may eventually pivot a bit and rebrand Polkadot or Substrate as an Ethereum layer 2 platform. They already seem to be leaning in that direction a bit.

Most of the development team of polkadot is the team that made eth.

So back to the OP's point, Ethereum minus smart contracts and efficient energy use is "nothing for humanity", as if the basic features of money haven't improved our standard of living and there's nothing wrong with central banks and the powerful that benefit from them. The energy used provides immense value today. The costs need to be internalized though.

> Ethereum minus smart contracts [...] is "nothing for humanity"

No shit, if you take away the defining feature of something, you will be left with very of value indeed.

That's like saying the web without HTTP is nothing for humanity.

The “as if” part means it can only be true if the regular money aspect of these two cryptos has no value, which is laughable.

* Its a technically flawed solution that now has so much hype, abandoning the idea would lead to further FUD, tarnishing the project's future direction. So we must go through the motions to appease the energy FUD warriors.

lol, Ethereum's Beacon Chain already been running since Dec 1. See https://beaconcha.in/ Please point me towards the flaws.

Point me at its purpose?

As far as I can tell, it was a trick to remove coin from circulation, locking it away where it could not be used again. The fact that people have tokenized these beacon coins on other chains to trade show that people want their money back!

No, it really doesn't. This is akin to saying because people take out second mortgages they really want their money back that they bought their house with.

Being able to leverage a committed sum of money via collateralization is as old as financial systems themselves.

If you can find any specific reasons for your take I'm very open to hearing about them?

In the world of hard money (bitcoin), leverage is extremely dangerous, you may never be able to repay the loan. You would not want to borrow a house worth of bitcoin in a 2nd mortgage -- you could never pay it back!

In the legacy financial world, 2nd mortgages just lead to private inflation of the fiat money supply (the money is being conjured out of nothing to pay for an asset that was already paid for). Nothing is produced, except some energy is burned updating centralized databases.

Having systems where both realities exist is great. I'm a fan of hard money. It is honest.

To establish "good enough" distributed consensus without burning absolutely enormous amounts of energy doing throwaway math problems?

I understand what they wanted to achieve, and I understand that they cannot achieve this. Seems that burning absolutely enormous amounts of energy is the only secure way of doing it. I guess rather than fight the universe, we better find a way to do it cleanly!

> and I understand that they cannot achieve this

Gonna need some citations here for this one.

> the initial distribution of the coin has to be wide enough

I don't understand how proof of stake works to the depth I understand proof of work. But this reassures me that it's feasable that they'll accomplish the same distributed consensus.

So then, could I say that Ethereum proof of stake will allow the owners of the coins (ether) to be independent from the owners of the mining operations?

or uhmm...

is the independence between the computaional costs of the "mining" and actual minted ether?

Ethereum proof of work made it so the owners of the coins could be independent from the owners of the mining operations, even if in practice many miners end up keeping most of the block rewards themselves and only reinvesting what they need in new infrastructure and to maintain what they already have. Proof of stake makes it so the miners and holders are now the same (you stake the coins that you have, or you pool them up with others), however the cost to wreck the chain is much greater than it would have been 3-4 years ago.

The whole idea is that Ether is so spread out now, it'd be unfeasible for someone to snatch up enough of it for an attack, in a similar way to how an ever-increasing difficulty makes it harder for a hostile actor to coordinate enough of it to make such attack.

Maybe it is spread out now, but won't there be centralized aggregators of eth so some point in the future a handful of POS nodes control a disproportionate amount of power? Is it so hard to imagine that coinbase or some other exchange accumulates enough eth to sway transaction validation?

Seriously, please answer if this is wrong!

I do think there will be some centralization at the exchange level. As of April 2021, Kraken had 600,000 ETH staked for ETH2 [1].

It's not in the interest of Kraken or Coinbase to disrupt one of these PoS networks, but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange. In the case of ETH2, if your staking node goes down, you get slashed and lose some ETH. If there isn't slashing (not all PoS coins have that), I don't see what guarantee of network security or uptime there is.

I'd be curious what PoS coin experts think about this part. It seems like PoS / staking can lead to centralization. PoW has energy concerns for sure, but it has so far demonstrated decentralization pretty well.

I'm legitimately curious about this. I'd love for PoS to be feasible and am trying to understand it more.

[1] https://en.cryptonomist.ch/2021/04/20/ethereum-2-0-600-thous...

I definitely do think centralization is a risk of PoS over PoW.

> It's not in the interest of Kraken or Coinbase to disrupt one of these PoS networks, but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange. In the case of ETH2, if your staking node goes down, you get slashed and lose some ETH. If there isn't slashing (not all PoS coins have that), I don't see what guarantee of network security or uptime there is.

This is actually one place where ETH has tried to incentivize independent staking - the penalty for downtime is equal to the incentive for mining. In an extreme example, if you are down for 6 months of the year, and up for 6 months, the downtime costs should cancel out the earnings from the other 6 months. One caveat to this is that there are larger penalties for correlated downtime (ex: if a large portion of the network is down). This is to de-incentivize centralization of mining.

That said, as someone fairly technical that could run his own staking node, I am seriously considering using a centralized service, or at the very least using a vps. This makes me think that the the majority are going to be independently run on a slew of hosting providers and via centralized hosting providers.

There are also some interesting "decentralized" options like Rocketpool that haven't launched yet, but will allow staking via smart contracts against a pool of random nodes.

And then at the end of the day, the choice in staking providers should allow the network to at least react to centralization risks. Say a locality forces a provider to censor transactions in some way - I imagine folks will move their funds to a provider in another country, or switch to something like Rocketpool, effectively working around the issue.

>but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange

This is true, but those exchanges either charge fees or are going to charge them, making it more profitable to stake at home. Because offline penalties depend on correlation to how many other people are offline, it's actually safer to stake at home. Eth was accumulated primarily by devs that understood its value before everyone else. Devs are in general paid well. As a result, it's nothing special for those individuals to own thousands of eth - it was even possible to buy eth below $100 as recently as in 2020. Those 600k eth on Kraken aren't that much relatively.

Right now it's very early and many people aren't staking because there are much higher returns elsewhere, and before the merge withdrawals aren't possible, so you can't even go back if something better appears. I fully intend to stake at home once extreme yields elsewhere stop - in the long run staking is likely to have the highest yield on eth.

>PoW has energy concerns for sure, but it has so far demonstrated decentralization pretty well.

Mining is extremely centralized in China. Mining has infinite economies of scale + less efficient miners are pushed out, so the most efficient entity/location is certain to control all hashpower eventually (not necessarily China). https://www.nasdaq.com/articles/bitcoin-mining-hash-rate-dro...

Centralization meaning those who have more gain more? I'd love to hear about any currency that doesn't have this feature/bug. Those who gain power tend to be able to acquire more by bootstrapping from prior power; it's pretty much universal. Even PoW has its own form of centralization in that those who have more can become richer and more easily gain therefore leading to maturation (centralization) of the currency.

My understanding is those who have more coins on a PoS network have more stake / power. This can matter if there are things like on-chain governance / voting rights, depending on their stake. Those with more stake would also get more staking rewards (it's like an APR % return based on the total staked), and if they stake their rewards as well, then they'd have even more total stake on the network. There also are concerns with those having a majority of the stake in a network being able to disrupt or attack the network (things like slashing based on poor behavior can prevent bad actors from wanting to do that, as they would lose some or all of what they had staked in that case). There are also different kinds of PoS though, and I'm not an expert on it.

Yes, that's a feature or bug, however you see it, that's universal in capitalism, even communism or socialism what implementations I've read about. I guess if one isn't happy with those that have power in one system, a person should switch to another system. It's just so universal that I don't think there's any other way around it other than switch systems as none are perfect, all insofar as I can see are susceptible to the power of consensus.

We've tried to mitigate it with constitutions in the political world and it helps to some extent but many would agree that there is still an exploitable hole in that those with power can use their own to gain more or mitigate risk. And any time you mitigate that feature/bug too much you run the risk of decreasing reward for work and stake, thereby delegitimizing the system itself or in the case we speak of, your currency. So pick your poison.

It is in their interests — remember when CZ asked if it was possible to rollback BTC before the hack? Imagine if you actually gave the exchanges this power. Nothing to stop them staking with customer funds. The exchanges do it now with other PoS shitcoins. PoS is the death of decentralization.

Yes, that's the problem with validation through concensus which is universal in currency. With enough power (nodes) you can delegitimize other stake holders.

This is one thing I've been wondering about new projects that start with PoS. How do they have enough distribution of the coins in order for them to be resilient against attacks?

This is a good point and I think only ethereum has sufficient distribution. The sole advantage of PoW over PoS is distribution - miners sell, dumping the price, which is also likely to make other people to sell. Even many ethereum founders sold very low - Vlad Zamfir in particular sold ~100% below $20 (he tweeted about it, can't find it now).

Ethereum had 6 years of PoW now - most likely nothing else can repeat its distribution, ever. The time of PoW is visibly over.

Another point is that ethereum was icoed when crypto was tiny, few people believed smart contracts could have value and VC stayed away. Normal people are much more likely to sell just to buy a house. Now new coins start with coins distributed to VC and they are prepared to hold for years hoping for eth-tier returns. There's an argument that not that many people even knew about the ico - but the same is true for bitcoin mining early. It's very hard to quantify precisely but I think both have almost identical coin concentration.

Be wary of manipulative statistics that ignore the inherent differences between the utxo vs account model - like percentage of coins held by top x%. The assumed practice in an account-based model is for one user to use one address, while the current practice for utxo coins is to use one address per received transaction. Same is true for value sent per timeframe - because utxo relies on change addresses the actual transferred value is much smaller.

> The time of PoW is visibly over.

Thanks for pointing this out! I never thought about this. To me the biggest long term threat to btc is the shift in block rewards from mined coins to transaction fees. I am assuming a possibly much smaller security budget available for “wasting energy”. But at that point it still might be enough as there is no network effect supporting new pow chains anymore, that could threaten btc security by having more sha hashpower.

Exactly, the devil is in the details, just like how all current "scalable" blockchains are only able to do so because they sacrificed decentralization. Ethereum is dealing with growing pains right now because it's solving scalability with an approach that doesn't sacrifice decentralization or security.

AFAIK they are already at 6-8tb for their blockchain. Seems to be not very helpful with a high diversity of staking nodes. I am in doubt that their turing complete global computer can scale AND stay decentralized

That's only for an archive node which isn't that useful to the network and is generally only used by specialist. A full Ethereum node easily fits on a 1TB drive and with research ongoing into statelessness the problem of state growth won't be a problem long term.

I really hope they don't rush all this merging and forking.

And also "audit the auditors". So they don't end up on a future rekt.news leaderboard.

I wonder if it's already on on a testnet

The PoS protocol itself has been running in production since December 1, in parallel with the old network, with over $10 billion staked so far.

What remains is to change the legacy clients to use the PoS network for choosing blocks, instead of miners. That has a working multi-client testnet.

Here's the testnet: https://nocturne.rayonism.io/

Consensus may take time, but when you're pouring gas onto a fire, arguing that you need to dump out most of the can before you can be sure you know what you're doing isn't a defensible position.

I don't understand what you're trying to say.