Draft of Ethereum section, needs technical fact checking

Please nitpick. I just found out about how Ethereum mining works and went "what the fuck". I expect it'll muddle through, though, because so far the community trusts the Ethereum Foundation to keep the whole shell game going.

The bit I need fact-checking on is the bits about mining and uncles and stuff. I'm still not sure what the point of "uncles" is, except to convince miners to bother with this weird flood-fill blockchain - if anyone can explain this so an ordinary human would go at least "er, ok" I'd be most grateful. Also, the Yellow Paper is incomprehensible to humans who aren't Ph.D mathematicians.

Ethereum

Ethereum was created by Vitalik Buterin, an early Bitcoiner and a co-founder of Bitcoin Magazine. Its key innovation is that you can run smart contracts on a blockchain: programs that are triggered to run automatically in a given circumstance. If Bitcoin is like an Excel spreadsheet, then Ethereum is like a spreadsheet with macros. This new idea was interesting enough to quickly make Ethereum the second most popular cryptocurrency. New altcoins are often tokens in a smart contract running on the Ethereum blockchain.

To keep smart contract programs (which they call “dapps,” a short form of “distributed applications”) from running forever, contracts require gas (a certain amount of the currency token, ether, abbreviated ETH), which is paid to the miner whose computer runs the contract.

The proof-of-work hash for Ethereum is designed to be ASIC-resistant – it requires 1GB of fast memory on hand, so mining is presently GPU-based. There are loose plans to move to proof-of-stake.[1]

Ethereum’s pitch has always been ridiculously aspirational. It’s a “smart contracts platform,” it's a “worldwide distributed computer,” at one point Wikipedia called it “Web 3.0,” at another a “publishing platform.” Anything other than a cryptocurrency. To this day, drive-by editors occasionally swing by the Ethereum article in Wikipedia to remove the word “cryptocurrency.”

Of course, the cryptocurrency is overwhelmingly the main use, and that the cryptocurrency will go to the moon is the main hope.

Ethereum has a block time of twelve seconds. How do blocks make it across the network in that time? Well, they don’t. So there are many long orphaned blockchains. A miner can store up to two failed blocks in their block as “uncles,” and the miners of the blocks that became uncles get some reward too. Whereas Bitcoin picks the longest chain, Ethereum picks the highest-scoring chain, and uncles give a block a higher score. The benefit to the system is to make the chain harder to fake. The unconfirmed transactions in the uncle will usually stay around until they finally make it into a block.

The existence of a single canonical blockchain is frequently questionable, but somehow it all muddles forth. (The Poloniex exchange requires 5760 confirmations on any given transaction, though.) And in any case, the software is buggy enough that users will generally blame that instead.

Ethereum has a theoretical maximum of 15 transactions per second. As at mid-2017 it's running 7 TPS; one really popular dapp could fill the blocks and clog the system, much as happened to Bitcoin when it filled in mid-2015.[2] The Ethereum community seems to have faith in the Ethereum Foundation, so a fix is more likely to be accepted; and soft and hard forks in Ethereum are a regular occurrence and are mostly managed without controversy.

Developers note that Ethereum is explicitly experimental and unfinished (and never mind the hundreds of millions of dollars in ether swilling around in it). A leaked Skype chat from May 2015 shows the Ethereum developers discussing how the promised fancy functionality will need “years” of work.[3]

Buterin cashed out a quarter of his ETH holding in early 2016, saying that doing so was just “sound financial planning”.[4]