Celebrating the five year anniversary of Ethereum

Science and technology are endless frontiers, magical lands of discovery and innovation which welcome and reward the curious and unprejudiced.

In late 2013, almost five years after the launch of Bitcoin, Vitalik Buterin outlined a design for a new type of distributed ledger.

Unlike Bitcoin which is designed primarily to transfer value using the embedded bitcoins, Vitalik described a “next generation smart contract and decentralized application platform” sharing a distributed ledger and linked by a network of virtual machines. …

A tribute to a trailblazer

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Vilhjálmur Freyr Jónsson en route to Hofsjökull glacier, March 1991

For the past months the snowline has been creeping down the mountains to the north of Reykjavík. Earlier in November, the city woke up to a few inches snow which have since disappeared, but the white capped mountains to the north confirm that winter is here, and from time to time streaky green northern lights illuminate the night sky as further reminder that the seasons have changed.

Snowfall has already closed some roads along the northern coast and many tracks in the highlands. But as winter progresses and snow accumulates, the snow in the highlands will soon be thick enough…

Over the weekend a friend of mine sent me a link to a recent article in the Economist, “Flaws in Bitcoin make a lasting revival unlikely”. Reading the article brought about a deep feeling of déjà vu. In the wake of MtGox closing in the winter of 2013–2014, I debated a journalist from the Economist on the BBC. Back then, Bitcoin adoption was much more limited, but it has continued to grow as I predicted and the journalist doubted, both for speculation and payments. …

For Isaac Newton, it was, allegedly, an apple falling off a tree that provided him with the inspiration to describe the laws of gravity. Yet Newton also acknowledged the body of knowledge he had inherited from preceding generations, “I can see so far because I stand on the shoulders of giants”.

Bitcoin is an innovation which is brilliant and original; at the same time, it builds on the work of others. The two main constituent parts are public key cryptography, which authenticates transactions, and a one-way function which secures the integrity of the ledger. Both technologies were widely used prior…

Bitcoin miners now use as much power as the state of Massachusetts. But they are very profitable and, in the near term, they will probably need more.

Let’s consider why. The energy consumed in Bitcoin mining protects the Bitcoin blockchain against hacking, it’s a deflector shield if you will, a feature of the protocol which secures the integrity of the distributed ledger.

As bitcoin grows in value, the rewards for mining become more lucrative which attracts more capacity to the system and increases the energy consumption. …

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The price of bitcoin barely changed when the Bitcoin block reward halved in early July, unsurprisingly as the reduction was long anticipated. Transaction volume, mining capacity and transfer fees remained roughly the same, to the casual observer the halving had no impact on Bitcoin.

A closer examination reveals, however, that the block reward halving has substantially raised the barrier to entry for new miners without impacting the ability of incumbents to mine profitably. With the largest five mining pools and companies controlling over 75% of mining capacity, Bitcoin mining is now an oligopoly. …

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