The cryptocurrency world is ruled by a few mainstays: Bitcoin, Litecoin, even Dogecoin. Within these coins are technical options like sidechains, pegs, lightning networks, proof of work, proof of stake, and variations and changes that continually promise to fulfill the promise of cryptocurrencies. The digital space is exciting because it is creative; the value of a developer can be as large as their creativity. It can appear, on its face, to be a true meritocracy. Your worth is determined by your contribution. What more can an enterprising person ask for?
Enter Ethereum, the brainchild and product of Vitalik Buterin, a Russian-born programmer with designs on overtaking Bitcoin. Speaking about plans for Ethereum, known as “Eth” to users and proponents, Buterin sought to develop a programming language for blockchains. Likely seeking to cash-in on the trend of banks and venture capitalists showing interest in blockchains as a financial tool rather than Bitcoin as a currency, Ethereum could serve as a conduit, and importantly for programmers is Turing complete. The premise of Ethereum solves the problem of how users and developers make use of the blockchain for regularly occurring transactions, executing smart contracts, a long-held interest in the libertarian and anti-government populations that are interested in Bitcoin.
This is, unfortunately for Ethereum, where the story begins to turn away from ideal usefulness toward pragmatic exploitation. The inception of The DAO was praised by believers as the culmination of programmable contracts that executed themselves and relieved contractual parties of the need for enforcement, i.e. court systems and governments. The phrase “The code is law” and variations thereof were repeated by users, who placed and continue to believe in placing faith in the execution of contracts via code. This belief came to a tragic head when a hacker managed to exploit The DAO, making off with a substantial payday. But wait, was it a hack? The code is the law, so was this a hack or simply a manipulation of the code to benefit the rational self-interest of the programmer? Does that mean the parties that lost funds have no standing to make a complaint? They trusted the code, and the code can’t commit fraud….right?
The exploit caused a search for a way to return the taken funds, and set in motion a debate over a “hard fork” and other steps that would effectively reverse the exploit, and alter what is supposed to be an immutable ledger. During this debate the inherent power wielded by Buterin became obvious, increasing concerns over decentralization. If the founder can alter the code, or through a small consensus of developers change the code, is Ethereum actually a secure, immutable record? Using code as law only works if the folks who write the code can’t retroactively alter it, and users are rightfully concerned for the practical use concerns of Ethereum. Or Ethereum Classic, since now there are two Ethereums.
Like many cryptocurrency endeavors before it, Ethereum ran full speed into the buzzsaw that is reality. Many of the systems that Bitcoin and Ethereum proponents decry as outdated or obsolete are built to be pragmatic and human methods of conflict resolution. Courts, backed by strong property laws and enforcement mechanisms, are imperfect by any measure. Yet they are the best option the civilization has found yet for enforcing contracts and resolving disputes. Practical solutions that have safety mechanisms built in, things like appeals, hearings, discovery, and exhaustive trials, have proven to be productive and safe. In order for Ethereum, or any future blockchain system, to unseat the status quo, they have to demonstrate a superior use case. Idealism and political beliefs can’t enforce contracts. The folks at Ethereum have some work to do.