What are the critiques of Ethereum made by Bitcoin experts? And which ones do not apply to Bitcoin?

Question

Ethereum has been discussed by Bitcoin experts, for example on IRC such as #bitcoin-wizards. What are the critiques of Ethereum made by Bitcoin experts? Which ones apply and do not apply to Bitcoin?

Answer 1

The primary critique of Ethereum made by leading members of the Bitcoin community is that the Ethereum network created a new token, ether (ETH), instead of finding a way to utilise existing bitcoins (BTC) as the unit in which operations are priced. Obviously this is not a criticism which can be levelled against the Bitcoin network itself.

Since this criticism sits at the intersection of subjective opinion, technical optimisation, and personal/community economic interest, I won't try to comment directly on the decision myself. Instead all I can do is describe some of the many factors in play:

• As of January 2016, six months after the launch of Frontier, there does not yet exist a secure decentralised sidechaining mechanism which would have allowed the Ethereum network to directly use bitcoins as its token.
• Using a new token had the advantage of providing direct funding for development via the presale, but the disadvantage of not leveraging or rewarding the existing economy of BTC holders. Many BTC holders felt that the use of a new token was a form of "crypto token inflation" and that it violated the spirit of Bitcoin's original 21 million hard issuance limit. Hybrid strategies which partially rewarded or leveraged the BTC economy would technically have been possible, though inelegant.
• Until PoS consensus mechanisms become more developed, it's unclear how a new network can be secured without introducing a new token in which to pay miners. And even so-called "metacoins" which re-use the existing Bitcoin blockchain generally need to introduce at least one native token in order to enable basic functionality.
• Speaking of metacoins, Vitalik Buterin (creator of the Ethereum project) was extensively familiar with the metacoin concept and even tried to implement the basic idea of Ethereum there first. Unfortunately, metacoins suffer from poor SPV performance, making it difficult to interact with them from so-called "light clients". One of the main design decisions of Ethereum was to focus on fully supporting SPV/light client functionality at an architectural level.
• If a sidechaining mechanism is eventually implemented in Bitcoin, it's likely that Ethereum can be sidechained to Bitcoin as easily as any other network can be (and perhaps more easily). Combined with the ability to pay fees in BTC this would provide bitcoin users with complete access to Ethereum functionality. This would not completely address the original criticism at an economic level, however (since block creation is still funded by ether issuance, and even PoS deposits will be denominated in ETH).