This highlights an incentive issue and a paradigm issue in the blockchain space. There is a strong incentive to get new protocols up and running and even though users are technically responsible as they can audit the code, most users, of course, are not qualified to do so, and stand to make more from exploiting any vulnerabilities they find than they are pointing for them out.
The issue of paradigm is just how poorly suited EVM is as a smart contract language. It is too hard to manage the complexity of bytecode with memory managed on chain and in contract code. When small errors have huge consequences and there are no second chances, EVM is and should be pointed out to be one of the worst standards Ethereum has brought to crypto.
When it comes to high stakes programming and especially in a space where new programs are written quickly and often, its almost objectively obvious that functional styles with more guard rails is the better choice. Nothing running on chain needs an infinite loop or many other fancy features one typically expects from a programming language - restrictions and readability in smart contract code are more important to computational chains than seat-belts are to automobiles, but the network effect is slowing the space down.
Edit: Some people have pointed out this was an issue with Solana contracts, which run on Rust - so I was wrong to use this as an example for half of my point, but still believe the point stands. Even Rust IMO is not tied down enough for contract code, but the fact that it can happen on Rust which is loads better then EVM for bug catching I think proves the point a bit more if anything.
I think the trippiest bit of cryptocurrency economics I have ever witnessed is how Ethereum and Ethereum Classic forked after the DAO hack and both chains were still worth considerable market caps. It blew my mind.
What matters is the order book. How many bid/asks are there on it. The contracts and debts outstanding in it. That's all there is. Everything else. Store of value. Whatever. Doesn't matter. Cryptocurrency is people persuading each other to do things in an organized fashion, believing there will be reciprocation at some later date.
I wish we had someone around who really understood currency at a deep level like F.A Hayek to write about crypto economics in a painfully cerebral careful way that avoids all handwaving. There is something very deep going on here that is entirely new or very old and never quite clearly elucidated.
> persuading each other to do things in an organized fashion, believing there will be reciprocation at some later date.
Sounds like it has parallels to society in general. It is just that society with it’s deeds, titles, government issued promises to pay etc. has been around for a very long time, so has proven itself. But it is all based on faith.
For example borrow 1M tokens in exchange for a piece if paper that says you own some land, with confidence that you can earn more tokens (or get someone to rent the land for tokens) and that the legal system will give you continued access to that land and so on.
Get rid of 'store of value,' 'decentralization,' 'smart contracts' and all that's left is a ledger. Its really not that complex or special - if that's what fascinates you then you can just as easily approach the topic from the examples of traditional credit or even the history of semi-arbitrary currencies.
If your implication is that the only thing backing crypto currencies is an expectation of reciprocation then you are mistaken. The qualities you want to hand waive away, and most importantly (though often trivialized), is the inability to roll back the chain which is a function of "consensus power." Consensus power simply quantifies the cost of rolling back x blocks. Bitcoin currently has the highest cost to roll back blocks and therefore the most assurance.
You’re saying things that are true but don’t really make sense.
The history of transactions has no importance to the value currency. A dollar that was stolen is just as valuable as any other because they are bearer bonds (like most currencies).
The whole Immutable thing is just translating the concept of a bearer bond to digital space, nothing to do with its intrinsic value.
In theory a higher block reward will incentivize and allow for greater computational power to be thrown at it, thereby increasing the cost to attack it.
Before EIP 1559 fees were much more important. Ethereum has higher rewards since about Q3 2020
edit: even worse, f2pool just multiplies the base reward (2 eth) - ignoring uncle rewards and fees, by the wrong number of blocks (based on 15 sec block time - it's actually 13.2s). Trash calculation.
> the only thing backing crypto currencies is an expectation
This is, however, true regardless. The value of cryptocurrencies are measured in USD, and it is expectations of this future valuation that backs up the current price.
The only way to make it more certain than expectations, would be by some sort of government decree.
I was actually disgusted by the fork - it was a 'the emperor wears no clothes' moment: Instead of standing by the proposed system, the stakeholders instead chose to change the rules. This can happen again any time for whatever reason.
Happened to Bitcoin as well, the moment was the big block debate and UASF - the narrative from Bitcoin Core developers for years had been "miners hashrate 1 CPU 1 vote" (this is how they drove BitcoinNG out, the client by Andersen the person Satoshi left maintainership to). Then over a day decided to flip "well fuck the miners it is the users running node software which can activate a fork". No clothes.
F.A Hayek wrote a book titled "The Denationalization of Money" in the 70s where he predicted that we'd have competing private currencies not tied to any government at some point. Reading Hayek is difficult because he writes in a very intellectually dense style with very long sentences that assume the reader is already familiar with a lot of technical jargon. Here's a more general introduction to some of his ideas on private currencies with footnotes pointing to the source material: https://mises.org/wire/will-cryptos-fulfill-hayeks-vision-pr...
> What matters is the order book. How many bid/asks are there on it. The contracts and debts outstanding in it. That's all there is. Everything else. Store of value. Whatever. Doesn't matter. Cryptocurrency is people persuading each other to do things in an organized fashion, believing there will be reciprocation at some later date.
This was on the Solana side of a Solana to Ethereum bridge. The vulnerable code was written in rust, and living on the Solana side. Not an EVM issue or EVM code.
Did the cavemen finally rewind all of history to finally rediscover while we organized around justice, legislation and law enforcement or we're still waiting for a few more fortunes lost ?
> most users, of course, are not qualified to do so, and stand to make more from exploiting any vulnerabilities they find than they are pointing for them out.
The incentives are even worse then that.
Participants who aren't active crooks are actively incentivized to not look for vulnerabilities, because the easiest way to make money in this space, but to sell to a bigger fool. The quality of the underlying 'investment' doesn't matter.
Crypto projects tend to be the best in the entire world about paying out bug bounties. The connection to dollars is really obvious. In the last three months there have million dollar plus bounties paid out.
Here's an article from today about a million dollar bounty paid out:
Capital tends to get allocated where it can be the most product for its owner. The alternative to putting it into crypto would not have been to solve world hunger, climate change, or to create a more equitable world.
It’s like saying “think of all the ways we could have made the world better if people didn’t invest in Apple.”
It helps to realize the USD values of the amounts involved are mostly bullshit. Things like NFTs wouldn’t be worth a small fraction of what they supposedly are if people had to buy them with actual USD.
Some things can't be solved with money. (Or rather, it would take infinite money to solve them in a given amount of time, but allow enough time and solving it is free.)
Imagine how many people could be fed if people just stopped buying Starbucks… People have varied motivations but reward for self is a pretty common theme across them.
That's partially true in short term pump and dumps, but not for anything long term or with innovation. Investing in practical innovation and holding is still the easiest way to make money in crypto.
Most crypto are pump and dumps, but there is also the bizarre practice of a community of bagholders continuing a project after it has already been dumped by the promoters
Not altogether unprecedented though; the suicide cult Heaven's Gate had people stay around to maintain their website, etc. and apparently they still believe the Hale-Bopp comet was some portend of the end of times.
Pretty much all recent bugs are logic errors which have nothing to do with the language. The actual bugs are often things like typos that use > instead of >=, lagging price oracles or using oracles that can be manipulated. You asserted that loops are 'insecure' but in reality dumb restrictions only force people to invent complex workarounds to obtain the same functionality, making everything less secure, not more. The absolute disaster of trying to make dexes work on Cardano is the best recent example. Their 'safe' utxo design is so limiting dexes like Sundae had to implement a trust-based sidechain just to be able to trade tokens, and it barely works.
After years of iteration, Solidity is now the safest smart contract language in existence. All common pitfalls are either well known or have been fixed. There are code analyzers. The problem with EVM isn't security, but the fact its word is 32 byte long which limits computational performance - but not that much really.
What about the DAML smart contract language? It's currently being used to digitalise the world's largest stock exchange (Hong Kong) and the Australian Securities exchange
The issue of paradigm is just how poorly suited EVM is as a smart contract language. It is too hard to manage the complexity of bytecode with memory managed on chain and in contract code. When small errors have huge consequences and there are no second chances, EVM is and should be pointed out to be one of the worst standards Ethereum has brought to crypto.
When it comes to high stakes programming and especially in a space where new programs are written quickly and often, its almost objectively obvious that functional styles with more guard rails is the better choice. Nothing running on chain needs an infinite loop or many other fancy features one typically expects from a programming language - restrictions and readability in smart contract code are more important to computational chains than seat-belts are to automobiles, but the network effect is slowing the space down.
Edit: Some people have pointed out this was an issue with Solana contracts, which run on Rust - so I was wrong to use this as an example for half of my point, but still believe the point stands. Even Rust IMO is not tied down enough for contract code, but the fact that it can happen on Rust which is loads better then EVM for bug catching I think proves the point a bit more if anything.