In addition to its jolly governance problems, Ethereum has been slouching towards doing something about scaling. Specifically, Ethereum has been discussing a new consensus mechanism, based on ‘proof-of-stake’ (codename Casper).
Classical Nakamotoan consensus is based on proof-of-work, the crude, brute force requirement of expending real world resources to preclude cheating. Proof-of-Stake substitutes a different ‘hard problem’, basically placing a bet on the ultimate consensus. This approach is vastly more efficient than POW, running faster and using less computing resources.
Great, huh?
The question has to be, is this really a secure protocol?
This is not a question that can be solved by intuition or happy-talk. It’s really, really hard to analyze this kind of protocol, and it would be wise to have some adult supervision before committing millions of dollars to a possibly flawed idea.
This winter Dahlia Malkhi (a very smart grown up) sloshed some icy water on the Casper protocol. Alyssa Hertig reports that Malkhi was pretty clear that “proof-of-stake is fundamentally vulnerable” [1]. Speaking from decades of experience, she says there are trivial scenarios that break Casper.
The Coindesk report suggests that Casper’s advocate, Sensei Zamfir, replies to this criticism that the protocol is still useful, if it is ‘mostly’ OK.
All together now: No, it isn’t.
I’m not enough of an expert to analyze this protocol in detail. But I am smart enough to pay attention when Sensei Malkhi tells me it’s not secure. She’s almost certainly correct.
The most troubling thing about this exchange is that Ethereum has a history of pushing on even in the face of expert warnings about security. The DAO disaster was no surprise. It was predicted by Cornell researchers days before the catastrophic loss and resulting hard forks.
Ethereum has been warned about Casper. It is another self-inflicted disaster waiting to happen.
This will be a test. How many times will Ethereum walk off the cliff while we are yelling ‘stop!’
- Alyssa Hertig (2018) Vulnerable? Ethereum’s Casper Tech Takes Criticism at Curacao Event. Coindesk, https://www.coindesk.com/fundamentally-vulnerable-ethereums-casper-tech-takes-criticism-curacao/
Cryptocurrency Thursday
Robert McGrath's Blog 
Interesting point of view. Security is a troubling subject. I doubt that any system can be completely secure in the period of development of these days.
Ethereum has his flows, as any other system. The question is how much of security it gives rather than is it an absolute recur system. Million of dollars are invested in far less secure channels.
Ethereum as part of the general blockchain technology is a new concept in development. I innovation and potential is huge, which in my opinion worth much more than other investment. What’s your opinion in the subject?
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I am not in the business of investing or advising about investments. Do I have any money involved? Absolutely not. I wouldn’t trust Ethereum for a minute.
If you look at my blog posts, I am skeptical about Ethereum and all cryptocurrencies for may reasons.
As far as “how much security it gives”, I think you are misguided. A cryptographic system that is not secure is 100% useless, and misunderstanding the security of a system is dangerous.
This particular post is calling attention to a careful study that should be a warning of very serious problems in the technology.
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