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The Garden of Forking Paths: Differences Between Bitcoin and Ethereum

The Garden of Forking Paths: Differences Between Bitcoin and Ethereum

This year, the development of the two applications is hugely different on Ethereum. Zero-knowledge proof projects abound, and everyone is talking about them. In contrast, progress has been plodding on statelessness. Although the former started earlier than the latter, the vast difference between their status quo is astonishing. Private infrastructure is booming, especially in the hot segment; although construction of public infrastructure is continuing, the decisions are political and utilitarian. (Note: Here, “utilitarian” does not mean people are pursuing financial gains. It means doing simple things that deliver results quickly but whose negative impacts are not well-documented.)

Bitcoin presents a different picture. First, zero-knowledge proof and statelessness are treated equally, and statelessness is even more widely used than zero-knowledge proof; second, zero-knowledge proofs are used in a wider range of applications, except for those that can be financed. The construction of public infrastructure is being steadily pushed forward, and cryptography is being used as a tool rather than an end in itself.

Blockchain is sometimes likened to roads. If we follow this analogy, Ethereum is contracting out the construction of roads to private developers, who develop their own roads or facilities to expand the road system and generate revenues through tolls. The primary purpose of the construction of Ethereum’s public infrastructure is to assist and coordinate the projects of the private developers so that they can efficiently connect to and operate the central system.

But for Bitcoin, the design and construction of the main system itself account for a large part, and even private developers are mostly engaged in projects that can be used as public infrastructure.

There are two main reasons for this difference. From a technical perspective, Ethereum and Bitcoin have chosen different technical routes in terms of scaling solutions. Ethereum adopted a chain structure, which needs to increase capacity by developing sidechains. Bitcoin adopted a net structure which is easy to expand nodes in the future, what matters most is what the UTXO model and net structure can do.

There are also cultural reasons. For Bitcoin, the most important thing is “Bitcoin”, which can somewhat hamper private infrastructure involvement. But for Ethereum, the top priority is “making profits”, which will disturb the construction of public infrastructure. Different community cultures lead to different developer options, as well as different attitudes of users and investors. These options and attitudes, in turn, influence community cultures, further reinforcing certain trends.

For my part, when investigating a Bitcoin project, whether it’s related to its infrastructure or application, the first question coming to my mind is: Will it “hurt” or “boost” Bitcoin? If the answer is the former, I won’t waste my time on it. But for an Ethereum project, I’ll consider if it’s worthwhile to invest time and money in it. In other words, can I make money from these projects?

Private infrastructure is the driving force behind the industry’s growth, and public infrastructure lays the foundation for the industry’s existence. But I can’t pretend to be naive and conclude this section by saying I wish both could be taken into account—some ideas that are hard to hold on to, others that are seductive and addictive.

Trustlessness vs. decentralization

In the opening section of the Bitcoin white paper, Satoshi Nakamoto wrote: “While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model”. In the concluding part, Satoshi wrote: “We have proposed a system for electronic transactions without relying on trust.”

From the beginning to the end, the author has argued against the trust based model and proposed a system without relying on trust. The white paper didn’t mention decentralization. It did cite the central authority as an example, simply because it is the most common object of trust in the trust based model.

Look at another white paper: Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform. “Decentralized” is a frequently used word in this white paper. Its goal is to achieve “decentralization” in various situations, and even Bitcoin is treated as a decentralized rather than a trustless system.

Although they are similar at first glance, trustlessness and decentralization are different. Trustlessness can be achieved by multiple methods, including the decentralized consensus, but not any decentralized consensus can guarantee trustlessness because various factors are involved, including consensus mechanism and participants. It could even be argued that centralization can’t be trustless, and rarely can decentralization be trustless.

Different philosophy of Bitcoin and Ethereum has led to diverging development paths. Bitcoin turns to cryptography because cryptographic proof, which only relies on security assumptions, is the best way to achieve trustlessness. However, Ethereum turns to consensus, which can achieve decentralization easily.

Therefore, when we look at Bitcoin, we see a general signature, behind which all the effort and mystery are hidden; but when we look at Ethereum, we see a giant made up of multiple layers of consensus, each of which is a wealth code.

Remarks

I’d like to conclude this article with a quote from The Garden of Forking Paths. As a practitioner in  the cryptocurrency industry, I don’t want to tell which is better, and I wish them both success. If I must convey my personal opinion in this article, it would be: Please don’t try to turn Bitcoin into another Ethereum, because trustlessness is valuable, and privacy is valuable.

“With slow precision, he read two versions of the same epic chapter. In the first, an army marches into battle over a desolate mountain pass. The bleak and somber aspect of the rocky landscape made the soldiers feel that life itself was of little value, and so they won the battle easily. In the second, the same army passes through a palace where a banquet is in progress. The splendor of the feast remained a memory throughout the glorious battle, and so victory followed.”

btc: bc1p80u5advn72k2nzt8u6n5c3annrx87tuyq7t5ulae366qem3fxj5sze3pcu

eth: 0x8142B9A50a603eA0eD05C5D71E91E0FC41a6EF0b

https://widget.0xecho.com?color-theme=light&desc=&has-h-padding=true&has-v-padding=true&modules=comment%2Ctip&receiver=0x8142B9A50a603eA0eD05C5D71E91E0FC41a6EF0b&target_uri=https%3A%2F%2Fmirror.xyz%2F0x8142B9A50a603eA0eD05C5D71E91E0FC41a6EF0b%2FSg1WXMhWxINQD7_CBs7FdCHHltlktaIOq3J6jXGs3A8&height=800&display=iframe

This year, the development of the two applications is hugely different on Ethereum. Zero-knowledge proof projects abound, and everyone is talking about them. In contrast, progress has been plodding on statelessness. Although the former started earlier than the latter, the vast difference between their status quo is astonishing. Private infrastructure is booming, especially in the hot segment; although construction of public infrastructure is continuing, the decisions are political and utilitarian. (Note: Here, “utilitarian” does not mean people are pursuing financial gains. It means doing simple things that deliver results quickly but whose negative impacts are not well-documented.)

Bitcoin presents a different picture. First, zero-knowledge proof and statelessness are treated equally, and statelessness is even more widely used than zero-knowledge proof; second, zero-knowledge proofs are used in a wider range of applications, except for those that can be financed. The construction of public infrastructure is being steadily pushed forward, and cryptography is being used as a tool rather than an end in itself.

Blockchain is sometimes likened to roads. If we follow this analogy, Ethereum is contracting out the construction of roads to private developers, who develop their own roads or facilities to expand the road system and generate revenues through tolls. The primary purpose of the construction of Ethereum’s public infrastructure is to assist and coordinate the projects of the private developers so that they can efficiently connect to and operate the central system.

But for Bitcoin, the design and construction of the main system itself account for a large part, and even private developers are mostly engaged in projects that can be used as public infrastructure.

There are two main reasons for this difference. From a technical perspective, Ethereum and Bitcoin have chosen different technical routes in terms of scaling solutions. Ethereum adopted a chain structure, which needs to increase capacity by developing sidechains. Bitcoin adopted a net structure which is easy to expand nodes in the future, what matters most is what the UTXO model and net structure can do.

There are also cultural reasons. For Bitcoin, the most important thing is “Bitcoin”, which can somewhat hamper private infrastructure involvement. But for Ethereum, the top priority is “making profits”, which will disturb the construction of public infrastructure. Different community cultures lead to different developer options, as well as different attitudes of users and investors. These options and attitudes, in turn, influence community cultures, further reinforcing certain trends.

For my part, when investigating a Bitcoin project, whether it’s related to its infrastructure or application, the first question coming to my mind is: Will it “hurt” or “boost” Bitcoin? If the answer is the former, I won’t waste my time on it. But for an Ethereum project, I’ll consider if it’s worthwhile to invest time and money in it. In other words, can I make money from these projects?

Private infrastructure is the driving force behind the industry’s growth, and public infrastructure lays the foundation for the industry’s existence. But I can’t pretend to be naive and conclude this section by saying I wish both could be taken into account—some ideas that are hard to hold on to, others that are seductive and addictive.

Trustlessness vs. decentralization

In the opening section of the Bitcoin white paper, Satoshi Nakamoto wrote: “While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model”. In the concluding part, Satoshi wrote: “We have proposed a system for electronic transactions without relying on trust.”

From the beginning to the end, the author has argued against the trust based model and proposed a system without relying on trust. The white paper didn’t mention decentralization. It did cite the central authority as an example, simply because it is the most common object of trust in the trust based model.

Look at another white paper: Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform. “Decentralized” is a frequently used word in this white paper. Its goal is to achieve “decentralization” in various situations, and even Bitcoin is treated as a decentralized rather than a trustless system.

Although they are similar at first glance, trustlessness and decentralization are different. Trustlessness can be achieved by multiple methods, including the decentralized consensus, but not any decentralized consensus can guarantee trustlessness because various factors are involved, including consensus mechanism and participants. It could even be argued that centralization can’t be trustless, and rarely can decentralization be trustless.

Different philosophy of Bitcoin and Ethereum has led to diverging development paths. Bitcoin turns to cryptography because cryptographic proof, which only relies on security assumptions, is the best way to achieve trustlessness. However, Ethereum turns to consensus, which can achieve decentralization easily.

Therefore, when we look at Bitcoin, we see a general signature, behind which all the effort and mystery are hidden; but when we look at Ethereum, we see a giant made up of multiple layers of consensus, each of which is a wealth code.

Remarks

I’d like to conclude this article with a quote from The Garden of Forking Paths. As a practitioner in  the cryptocurrency industry, I don’t want to tell which is better, and I wish them both success. If I must convey my personal opinion in this article, it would be: Please don’t try to turn Bitcoin into another Ethereum, because trustlessness is valuable, and privacy is valuable.

“With slow precision, he read two versions of the same epic chapter. In the first, an army marches into battle over a desolate mountain pass. The bleak and somber aspect of the rocky landscape made the soldiers feel that life itself was of little value, and so they won the battle easily. In the second, the same army passes through a palace where a banquet is in progress. The splendor of the feast remained a memory throughout the glorious battle, and so victory followed.”

btc: bc1p80u5advn72k2nzt8u6n5c3annrx87tuyq7t5ulae366qem3fxj5sze3pcu

eth: 0x8142B9A50a603eA0eD05C5D71E91E0FC41a6EF0b

https://widget.0xecho.com?color-theme=light&desc=&has-h-padding=true&has-v-padding=true&modules=comment%2Ctip&receiver=0x8142B9A50a603eA0eD05C5D71E91E0FC41a6EF0b&target_uri=https%3A%2F%2Fmirror.xyz%2F0x8142B9A50a603eA0eD05C5D71E91E0FC41a6EF0b%2FSg1WXMhWxINQD7_CBs7FdCHHltlktaIOq3J6jXGs3A8&height=800&display=iframe