be done on a large cloud of nodes. Other tasks, however, are much easier to parallelize; projects like SETI@home, folding@home and genetic algorithms can easily be implemented on top of such a platform. 6. Peer-to-peer gambling. Any number of peer-to-peer gambling protocols, such as Frank Stajano and Richard Clayton's Cyberdice ↗ , can be implemented on the Ethereum blockchain. The simplest gambling protocol is actually simply a contract for difference on the next block hash, and more advanced protocols can be built up from there, creating gambling services with near-zero fees that have no ability to cheat. 7. Prediction markets. Provided an oracle or SchellingCoin, prediction markets are also easy to implement, and prediction markets together with SchellingCoin may prove to be the first mainstream application of futarchy ↗ as a governance protocol for decentralized organizations. 8. On-chain decentralized marketplaces, using the identity and reputation system as a base. Miscellanea And Concerns Modified GHOST Implementation The "Greedy Heaviest Observed Subtree" (GHOST) protocol is an innovation first introduced by Yonatan Sompolinsky and Aviv Zohar in December 2013 ↗ . The motivation behind GHOST is that blockchains with fast confirmation times currently suffer from reduced security due to a high stale rate - because blocks take a certain time to propagate through the network, if miner A mines a block and then miner B happens to mine another block before miner A's block propagates to B, miner B's block will end up wasted and will not contribute to network security. Furthermore, there is a centralization issue: if miner A is a mining pool with 30% hashpower and B has 10% hashpower, A will have a risk of producing a stale block 70% of the time (since the other 30% of the time A produced the last block and so will get mining data immediately) whereas B will have a risk of producing a stale block 90% of the time. Thus, if the block interval is short enough for the stale rate to be high, A will be substantially more efficient simply by virtue of its size.

With these two effects combined, blockchains which produce blocks quickly are very likely to lead to one mining pool having a large enough percentage of the network hashpower to have de facto control over the mining process. As described by Sompolinsky and Zohar, GHOST solves the first issue of network security loss by including stale blocks in the calculation of which chain is the "longest"; that is to say, not just the parent and further ancestors of a block, but also the stale descendants of the block's ancestor (in Ethereum jargon, "uncles") are added to the calculation of which block has the largest total proof of work backing it. To solve the second issue of centralization bias, we go beyond the protocol described by Sompolinsky and Zohar, and also provide block rewards to stales: a stale block receives 87.5% of its base reward, and the nephew that includes the stale block receives the remaining 12.5%. Transaction fees, however, are not awarded to uncles. Ethereum implements a simplified version of GHOST which only goes down seven levels. Specifically, it is defined as follows: A block must specify a parent, and it must specify 0 or more uncles An uncle included in block B must have the following properties: It must be a direct child of the k -th generation ancestor of B , where 2 <= k <= 7 . It cannot be an ancestor of B An uncle must be a valid block header, but does not need to be a previously verified or even valid block An uncle must be different from all uncles included in previous blocks and all other uncles included in the same block (non-double-inclusion) For every uncle U in block B , the miner of B gets an additional 3.125% added to its coinbase reward and the miner of U gets 93.75% of a standard coinbase reward. This limited version of GHOST, with uncles includable only up to 7 generations, was used for two reasons. First, unlimited GHOST would include too many complications into the calculation of which uncles for a given block are valid. Second, unlimited GHOST with compensation as used in Ethereum removes the incentive for a miner to mine on the main chain and not the chain of a public attacker.