Trust: the inside story of the rise and fall of Ethereum
This article veers between erroneous sensationalism and strategic deception.<p>I will attempt to debunk a few of the most important errors in this article.<p>In short, the author takes the position that the promise of blockchains is immutability; and that by hardforking, Ethereum proves that &quot;immutability&quot; requires trust:<p>&gt; We aren’t actually trusting the blockchain technology; we are trusting the people that support the blockchain.<p>We should start by observing that un-mutated Ethereum - Ethereum Classic - still exists.  You can mine its blockchain and run contracts on its virtual machine.  So whatever point there was to be made about the untrustworthiness of &quot;immutability&quot; seems false, since the &quot;immutable chain&quot; is still there chugging along.  The only problem is that nobody <i>actually</i> wants immutability, once they really think through its permutations.<p>---<p>I will posit that &quot;immutability&quot; is a red herring. While some people did promise immutability, this was a false promise made by <i>some</i> people.  <i>Other</i> people have instead said for years that consensus blockchains like Bitcoin are not - and don&#x27;t need to be - in fact shouldn&#x27;t be - &quot;immutable.&quot;  I will further posit that this is in fact the majority view.<p>In fact there is a perfectly clear reason why a blockchain might &quot;mutate&quot; and fail to honor the contract as it is written in code: the contract sufficiently harms the economic majority of miners and holders.<p>And that is why such &quot;mutability&quot; is not bad, but in fact desirable.  <i>Otherwise, all that is needed is the invention of some sort of poison contract, and then the network would be unable to administer its own antidote.</i><p>This is in fact what happened when someone mined some 90M Bitcoin in 2010 <i>while everyone else was running code that considered these to be valid coins.</i> Obviously, there was a fork, and the perpetrator&#x27;s 90M Bitcoin were taken out of the ledger.  And a good thing, too: if &quot;the code was <i>really</i> the law&quot; then those would still be 90M valid Bitcoin and the whole project likely would have been dead some time ago as the malactor would own something like 90% of the money supply.<p>&gt; The code was supposed to be the law. If you didn’t see the weakness in the software, that was your problem<p>Ironically, because this is in fact a true statement, the author&#x27;s point is exactly wrong.<p>The code <i>is</i> the law - not just The DAO&#x27;s code, but also <i>Ethereum&#x27;s code</i>, on which The DAO depends.  Ethereum code is not only also &quot;law&quot;, but in this sense, it&#x27;s the &quot;highest law in the land&quot; with respect to contracts executed on its virtual machine.<p>It should be patently obvious that Ethereum&#x27;s code permits forks, &quot;soft&quot; and &quot;hard.&quot;  It should therefore be patently obvious that any promise of &quot;unstoppable contracts&quot; is simply <i>overpromise.</i> The Ethereum global VM came to consensus that The DAO was not just a failed contract (buggy Ethereum contracts happen all the time) but a failed contract so toxic as to be a threat to consensus.<p>So, by following one chain, a group of users may declare its will that The DAO contract be &quot;held invalid.&quot;  By following another chain, a different group may declare its will that the DAO contract be held &quot;valid.&quot;  Each group actually got its will.<p>---<p>Consensus blockchains like Ethereum and Bitcoin are not &quot;immutable&quot; and never were, in the sense that all it takes is someone to mine a fork, and the chain &quot;mutates.&quot;  This is the &quot;permissionless innovation&quot; aspect of blockchains: <i>anyone can create a fork - though it takes a lot of hashpower to protect a fork from hashpower attack.</i><p>But on the other hand, consensus blockchains <i>are</i> immutable in the sense that nobody can compel you to follow a &quot;mutated&quot; chain and you are always free to continue to mine on the original chain.  Moreover you can hold coins on either - or both - chains.  This is the non-compulsory nature of blockchains: <i>nobody is forced to hold coins on anyone&#x27;s fork - though it takes a lot of money to protect the value of a forked coin.</i><p>Since anyone can create a fork, but it takes a lot of hashpower and coin holdings to sustain a fork, the system on the whole is highly resistant to - but fortunately not completely immune from - hardforks.<p>Even &quot;contentious&quot; hardforks.  Like the DAO rollback.<p>The beauty is that hardforks provide automatic market choice.  One day there&#x27;s only one Ethereum, and the DAO attacker who holds a not-insubstantial percentage of the entire money supply.  Then there&#x27;s a fork, and everyone who held Ethereum now holds coins on <i>two</i> chains - Ethereum and Ethereum Classic, and can signal to the market by holding coins on one chain and selling them on the other - or hedge by holding coins on both chains.<p>Do we really want true &quot;immutability?&quot;  In the case of Ethereum, the market of Ethereum users was offered a choice of either &quot;mutated Ethereum&quot; and &quot;non-mutated Ethereum.&quot;  Since the split, the market has fairly consistently valued &quot;mutated Ethereum&quot; over &quot;non-mutated Ethereum&quot; roughly 10:1 - and as the article points out, even &quot;non mutated&quot; Ethereum Classic found itself facing a hardfork.  Uh oh.<p>Forks are good, because they allow markets to place bets on which outcomes they prefer.  It&#x27;s also good that it&#x27;s really, really hard to create economically-viable fork.<p>Getting back to the first paragraph of the article:<p>&gt; on that day, after much deliberation and hand-wringing, in the aftermath of a multimillion-dollar swindle from his automated, algorithm-driven, supposedly foolproof corporation, Vitalik Buterin, then 22 years old, announced the ‘hard fork’ of the cryptocurrency Ethereum.<p>Vitalik is a respected developer.  I think there&#x27;s a valid argument to be made that certain high-profile devs carry more influence than is their due - but no developer controls any consensus blockchain - not Ethereum, not Bitcoin.  Ethereum, like all consensus blockchains, is &quot;controlled&quot; by its ecosystem of miners and users.<p>&quot;Devs propose, the market disposes.&quot;  And we have seen - the market preferred the forked Ethereum.<p>&gt; By making that announcement, Buterin shattered certain tightly held assumptions about the future of trust and the nature of many vital institutions that make modern life possible.<p>I hope by now we see that the only thing that Ethereum shattered is the overpromise and undesirability of &quot;immutability.&quot;<p>---<p>I hold in each hand a cryptocurrency.<p>In the left hand, I offer a truly immutable cryptocurrency.  The economic fundamentals of this currency <i>cannot be changed by the will of man even if things start going wrong with the initial assumptions upon which the money was based.</i><p>In the right hand, I offer a <i>self-improving</i> consensus blockchain-based cryptocurrency.  This currency cannot be easily forked, but when it does, two things will be true: the market must value the change quite badly to stimulate a fork, and you will be permitted to hold coins <i>on either side of the fork as you see fit.</i><p>Take your pick.<p>[edits: a lot of stuff - I got onto a bit of a long topic and realized it needed some editing.  It still does.]