Nexus 9, we have a similar long term goal.  You say :


In particular, see our reply here concerning coup-completeness.

Ethereum has great marketing, but the core of their technology design - what we actually care about - is not a huge advancement beyond Bitcoin and alternatives compatible with it (Mastercoin, Counterparty, etc).  They may end up having the best practical implementation of a scriptable blockchain, or maybe just better marketing - but its still just a scriptable blockchain.

It will be able to process what - 1,000 transactions per second? 10,000 if they really compress transactions and or limit themselves to fiber nodes - maybe?  The core problem is O(N) transaction cost, so performance doesn't scale as you add more nodes.  That's not an improvement versus current technology, its a step back to the 80's.

Will you be able to build some sorts of applications on that?  Yes, but only by dropping almost everything off the blockchain and using some side database - essentially abandoning the design - which then opens up fraud and attacks again.  This just isn't interesting from a technology standpoint; it's a deadend.

To take just one simple example: BitTorrent is kinda cool, but it'd be way cooler if it could be integrated with a pirate-bay style database and a cryptocurrency, to create a market for valued file data.  That requires enormous quantity of transactions per second.  Its just not going to happen on anything like a blockchain.

But that's not the biggest problem.  Imagine if a country/region (say europe) actually adopted ether as their reserve currency 8 years from now.  The inflation of about 10% that year would amount to about a trillion euro being spent on pointless hashes.  The world is probably not that stupid.

Nor does this problem go away with PoS schemes - for the distribution problem is not technical, it is economic.  For a coin to go to reserve status, it has to redistribute wealth massively - and just about any such redistribution will be an enormous economic malinvestment.  PoS just redistributes it in a very concentrated fashion to the early stakeholders - who don't add any additional value thereafter - hardly ideal.  To avoid that problem, you actually must have some sort of strategic plan for the economy: something to invest all that monetary energy in which results in actual return and real GDP growth.