On November 22, 2019, Vitalik Buterin, published a blog post highlighting his opinions about the state of technology around cryptocurrencies. In the text, he elaborates on different aspects, plans, and issues that are or might start affecting the crypto industry.
Buterin is a well-known figure within the community as the co-founder of the second-largest cryptocurrency by market cap, Ethereum.
In his analysis, Buterin broke down the problems facing crypto in 2019 into three categories, which include cryptographic, consensus theory (largely improvements to proof of work and proof of stake), and economical, which looks at hence creating structures involving incentives given to different participants.
Buterin argues that one of the most significant problems facing the cryptocurrency space today is the issue of scalability, and the main concern with oversized blockchains is trust.
He explained that if there are only a few entities capable of running full nodes, then those entities can conspire to give themselves a large number of additional BTC. Also, there would be no way for other users to see for themselves that a block is invalid without processing a full block themselves.
According to the analysis, there already are a number of techniques that allow groups of validators to securely come to a consensus on much more data than an individual validator can process.
Some techniques allow clients to indirectly verify the full validity and availability of blocks even under 51% attack conditions.
The Ethereum co-founder points out that fully sharded blockchains still have not been seen in action, besides the partially sharded Zilliqa, which recently started running.
As a proposed solution, Buterin suggested the implementation of technologies such as Proofs of Custody, allowing validators to probabilistically prove that they individually downloaded and verified some piece of data.
He also recommended random sampling, allowing a small randomly selected committee to statistically stand-in for the full validator set, and data availability proofs, allowing clients to identify when blocks that they have headers for are unavailable.
He concluded by saying that tacking shrading cannot be solved by just thinking about them; only developing the system and seeing ethereum 2.0 or a similar platform running live will be sufficient.
Vitalik continued to say in his latest analysis that there is a growing consensus of ASIC-resistant algorithms having a narrow lifespan and that ASIC-resistance has disadvantages as they make 51% attacks cheap.
He believes that PoW algorithms that deliver an average level of ASIC-resistance can be produced, but such resistance is limited. In fact, the analysis concluded that both ASIC and non-ASIC PoW have disadvantages; in the long-term, the better choice for blockchain consensus is Proof of Stake (PoS).
Vitalik Buterin’s latest analysis provides a good roadmap on the progress made on the crypto space in the last 5 years and practical advice on what is needed to tackle emerging problems, such as the need for developed Oracle tech and fully formalizing responses to PoS 51% attacks.