A brief intro to world computers — Ethereum 1If you compare Bitcoin and Ethereum there is one significant difference. While the Bitcoin blockchain merely stores information on transactions within the network (it’s like a distributed USB flash drive), Ethereum lets people interact with the data on the blockchain and write software, that automates those interactions (like an operating system on a computer). So it’s almost like a mix of a regular computer and bitcoin.
As an example, your computer at home can do something super simple like:
If I receive an Email from Dave, then forward it straight to the spam folder.
A basic blockchain can use multiple computers to e.g. verify and store a transaction:
If Dave sends me one coin and it’s real, then accept and save it on the distributed storage.
And Ethereum, or any “world computer” combines those two:
If Dave’s sends me more than 20 coins and they are all real, then forward them straight to Rob.
As you can see, this has never existed before and the opportunities might not be self evident, apart from the automation of what already exists and costs a lot of manual labour. What is important to note here though, is that you don’t need to trust humans in this process and especially financial transactions become much more secure, because it’s a program and everyone can see how the it works by reading the code.
Why does it always have to do with money? Because the world computer allows us to create a similar concept to what we call money, except online and there is no way you can duplicate or counterfeit it. It’s currently the lowest hanging fruit of the technology.
Proof of work requires a lot of computers to solve complicated mathematical problems, which costs a lot of electricity
In addition, running a single computer costs money, and if we want a lot of computers to run, someone will have to pay. In fact, the problem with this world computer so far has been that running it is very expensive. In order to make sure e.g. that the coin Dave sent is unique on the entire network you need a lot of people running their home computers to verify the transactions. With every transaction you make, you pay a fee that goes to these people — but the more transactions on the network, the more energy is required to run the network. Currently, running Ethereum costs approximately as much as keeping the lights on in Luxembourg.
The energy consuming part of what sustains the network is called “proof of work” and it’s finally come to an end, being superseded and replaced by “proof of stake”.
Low energy consumption — Ethereum 2With eth2, its developers have come up with a new method to sustain the network. Instead of being based on energy consuming work, it’s a mathematical approach that requires money staked. Each computer taking part in the network gets rewarded for agreeing with the others on what’s currently happening on the network. If a participant doesn’t take part in this mechanism or tries to deceive it, it gets penalised. Because people want to use the network, the former case will happen more often and will make you money. In short, that’s why it’s called “proof of stake”.
Proof of Stake requires staking money instead of calculations
Once enough validators have signed up, the network will be activated and the world computer will start running efficiently.
This transition is what I’m writing here about, because this is what we worked on.
What are the main challenges in the transition?
How do we motivate people to stake?Letting people give away $5,500 with no guarantee of return is difficult, especially in a system where a little mistake can lead to a complete loss of funds. There are no examples of online places where people are asked to pay money and wait for another year until they get it back, just because they trust the system.
We needed to make sure everything is understandable and convincing. Apart from many different online resources and the fact that Ethereum is the largest open source software in the world, there were a few visual methods:
If the network reaches 500,000 ETH, then everyone gets a reward based on when they staked.
Many warnings that specifically point out the caveats but don’t sound too frightening follow throughout the flow.
We know from user interfaces about warning messages and explanatory sections, but on a low level we introduced “deliberate friction” in the user experience. Most people are used to extremely fast processes and check-outs as popularised by Amazon, Google, Facebook etc. which make people think as little as possible while interacting with them.
On the landing page we made it look very simple and fast, but right in the beginning of the validator set up process we wanted to slow people down, while constantly providing justifications for why everything takes a bit more time suddenly. In this place it’s also a good idea to constantly tease with the reward in the end.
How do we avoid phishing attacks?
An interface which individuals will use to transfer several thousand dollars is an inviting place to attempt hijacking accounts. Or copying the website to have uninformed people transfer the money to a malicious person.
Warnings are helpful, but if the whole website can be copied, even those could be faked. Apart from being generally helpful advice for navigating through the internet, here are a few ways how you can make sure the staking website is legit:
- Only visit the site from authorised sources. This could be the official Ethereum twitter account, the official Ethereum website or any other source you personally trust
- The contract will have an immutable ENS address but you still have to take care. Most likely the address of the contract which receives the money will have a specific ENS address (similar to a URL rather than a random string of letters and numbers) and the contract will have many incoming 32 ETH transactions. You can check that on etherscan.io So to avoid sending money to a malicious contract, type the deposit contract by hand into etherscan and compare if the transaction history on etherscan is the same as for the address you are sending to in Metamask (or any other wallet provider). It should show a lot of 32 ETH transactions. Please don’t copy-paste, you might copy a slightly similar looking address with a Greek or Russian letter, instead of the correct address.
- Let someone help you do it. If you think this is too complicated, ask a friend who understands all this to help you out.
- The Ethereum Foundation will publish the contract address and details at an event. This will be a trusted source, so if you happen to be at an Ethereum conference, look out for the deposit launchpad details.
Together into a future with a world computer
We designed this interface in a team of 9 people within a few weeks but countless more people are involved in putting it together, building the front- and backend and releasing it into the public. But this is just the beginning, the actual world computer can only run if we all cooperate and make it happen.
We hope that this piece of interface allows for as many people as possible to support the network but eventually it depends on anyone who wants it to be real. There are many applications for it, that can improve the world we all live in:
- Paying work in the actual relation to the significance of the problems it solves
- Removing bureaucratic processes and speed up global collaboration
- Transacting and translating value across countries and currencies
- Assigning value to digital assets
- Sending money through time
- Keeping your personal data really safe
- Let the public contribute to political decisions
Most of these applications already exist in some form in small spaces but with the efficiency of the new Ethereum network they can reach interplanetary scale.
Let us know if you have any questions and what you think!