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Stick a Fork in Ethereum (elaineou.com)
250 points by themgt 516 days ago | hide | past | web | favorite | 183 comments



I'm really disappointed in how the DAO heist was handled. The promise of cryptocurrencies was that they are harder to manipulate than fiat currency. If the fork succeeds (or even if it fails), I think the very notion of rolling back transactions is a step backwards.

The next time there is something like the DAO, people can invest without fear since rollbacks are the modus operandi. Isn't this why people are upset with the financial system? When people invest in stuff, they need to be responsible for the results. As someone who didn't buy a house in the crazy mid-2000s, I am paying the price for everyone else's stupidity in the form of crazy low interest rates (which have fueled record home prices). But who is standing up for me? No one. I thought cryptocurrencies were leading to a better world (or at least one where the system couldn't be rigged as easily). I guess not in this instance :(


There are basically two types of cryptocurrency enthusiasts as far as I can tell. The first one believes that decentralized cryptocurrency and smart contracts will lead to a better world, free from the authoritarian rule of central banking and legal systems. And the second type, which is far more numerous, is hoping to to make a quick buck off of price fluctuations in the underlying digital assets.

The NYT has a great article on this, where they suggest the bulk of Bitcoin users are Chinese citizens gambling on price fluctuations. And their stats seem to support this assertion:

http://www.nytimes.com/2016/07/03/business/dealbook/bitcoin-...


There's at least one other type you're missing: people who appreciate the utility of an electronic equivalent to cash.

I pay for things with cryptocurrencies fairly frequently. I don't want every company I buy things from having my name, address, date of birth and credit card info if they don't need it. If I'm buying goods or services that don't require physical shipping, all they need to know is what I want and that the money has changed hands. Crypto facilitates those kinds of transactions.


Maybe you can just use ... PayPal?


PayPal, credit cards etc. all have their place, but for non-physical purchases from reputable parties I'm not sure how much you can improve on "pay money, receive thing."

It would have to be a very compelling argument to persuade me that transacting through a middle-man (who then holds all my personal information and card details and also takes a cut) is better than just handing over cash and getting what I want.


You don't need credit-card chargebacks until you do, but then you really need them. (And actually most of the time the threat of chargebacks keeps merchants honest).

Once you get to the point of using a reputable escrow system (which will have to charge a fee), that plus the bitcoin fees (either direct transfer fees or the implicit tax that is mining rewards) are unlikely to be cheaper than the credit card system (which doesn't have to burn immense amounts of processing power for business-as-usual). Having all participants be anonymous and untrusted adds a lot of overhead; in a civilized environment with a reasonable legal system you can shave that off by being willing to trust your counterparties (trust that is made possible by central clearing houses and verified identities).


One way to do escrow is with 2-of-3 signatures. If both parties to the transaction sign, the escrow agent doesn't have to get involved. On Ethereum it's easy to implement as a smart contract that lets the escrow agent choose who gets the money, and pays the agent a fee for the service (but nothing otherwise).

Participants aren't necessarily anonymous; if you're buying from a known vendor and having something shipped to your house, neither party is all that anonymous. People are working on adding verified identities, for people who want them.

Ethereum hopes to do away with mining by early 2017.


> One way to do escrow is with 2-of-3 signatures. If both parties to the transaction sign, the escrow agent doesn't have to get involved. On Ethereum it's easy to implement as a smart contract that lets the escrow agent choose who gets the money, and pays the agent a fee for the service (but nothing otherwise). > Participants aren't necessarily anonymous; if you're buying from a known vendor and having something shipped to your house, neither party is all that anonymous. People are working on adding verified identities, for people who want them.

At which point why use this instead of a credit card?

> Ethereum hopes to do away with mining by early 2017.

How are they doing byzantine-fault-tolerant consensus without it?


With the escrow, you can set it up to pay a fee only if you need the judge's services, so if you don't have a problem it's free. Or you can set up whatever other arrangement you like. Either way you're paying only for the arbitration, not for stockholder dividends.

They're switching to proof of stake. Early PoS designs have some issues, like the infamous "nothing at stake" problem, but theirs addresses those. People lock up ether for several months, and bet it on which blocks will be included in the chain. The blocks that get the best odds in the betting are the ones that get included, so basically you're betting on what everybody else will do. You start with low-confidence bets that don't risk much, and as you see other people's bets you progress to high-confidence bets that pay off better, and it converges.

Miners essentially do the same thing: by choosing a block to mine on, they're betting their energy cost on that block being chosen.


> With the escrow, you can set it up to pay a fee only if you need the judge's services, so if you don't have a problem it's free. Or you can set up whatever other arrangement you like.

Sure, but that doesn't really change anything. Their service will cost a certain amount to run, and so you'll end up paying an average of x amount per transaction/per dollar spent, whichever way you slice it.

> Either way you're paying only for the arbitration, not for stockholder dividends.

And yet for-profit companies usually end up being the most effective way to get something done. If I need a tree cut down in my yard I don't try to find some non-profit tree-surgeon collective, I call a professional from a reputable company. (And I would think that anyone who supported cryptocurrencies - which are all about directly transferring money without involving a social layer - to feel this way even more strongly).

> They're switching to proof of stake. Early PoS designs have some issues, like the infamous "nothing at stake" problem, but theirs addresses those. People lock up ether for several months, and bet it on which blocks will be included in the chain. The blocks that get the best odds in the betting are the ones that get included, so basically you're betting on what everybody else will do. You start with low-confidence bets that don't risk much, and as you see other people's bets you progress to high-confidence bets that pay off better, and it converges.

> Miners essentially do the same thing: by choosing a block to mine on, they're betting their energy cost on that block being chosen.

Hmm. Doesn't that mean the reward for fraud is much higher? Can't someone just bet a massive amount that their fork will win, and then their fork wins precisely because they bet a massive amount on it?


What happens when you "pay money, don't receive thing"?


You stick a fork in it! ;-)


There's the same amount of risk as with any other cash transaction, except a receipt exists which can never be lost or altered.

If you're not dealing with dodgy people, the big pain points are getting it, and keeping it safe once you have it.


Paypal takes 3% fee and then an extra 2-3% on the currency exchange. I would absolutely prefer the $.05 Bitcoin fees given the chance.


PayPal is about as far from cash as one can get.


And the gambling is what makes me skeptical of figures like "the DAO is worth $150 Million" or whatever.

I would like to know how much REAL MONEY went into this thing rather than its "value" as a result of funny-money speculation. I expect that any adult that put money or compute cycles into ethereum understands that the value could literally vaporize at any time, so it seems disingenuous to throw around dollar figures inflated by speculation. Is anyone _really_ losing their shirt at this point?


Is anyone _really_ losing their shirt at this point?

This. This is what I'd like to know before I can give a crap about crytocurrencies. Otherwise, it is all tulip bulbs in a land far, far away.


Excellent reference to Tulip Mania (https://en.m.wikipedia.org/wiki/Tulip_mania) for those of you following along at home!


actually "gambling", aka "speculation", is the crucial ingredient in the building of credibility of any tradable financial contract. It increases liquidity, and contrary to popular belief, it usually dampens volatility like a shock absorber. This is because non-speculative supply and demand tends to be much less normally distributed (herd behaviour) than speculative transaction direction, leading to large price spikes (see: bitcoin and Cyprus). I welcome with open arms the "gamblers" because they provide the "other side", in return for a skewed future price distribution towards profit, when such "one way" stampedes occur.


You're completely right when it comes to regular currencies, stocks, and so on - speculation is how prices stay accurate. If the price goes too far out of whack, speculators can make large amounts of money off of everyone else.

With cryptocurrencies, however, there isn't enough "legitimate activity" (i.e. people actually conducting business with Bitcoin) to allow a stable price to emerge. This makes them vulnerable to manipulation because there is no function for the form to follow. At least with regular currencies, speculation has to follow reality. With cryptocurrencies, reality follows speculation!

This leads to a negative feedback loop; people are reluctant to use cryptocurrencies for business because the price is unstable, and the price is unstable because not enough people are using them for business.


>If the price goes too far out of whack, speculators can make large amounts of money off of everyone else.

That's a wholly circular argument, and a counterfactual one.

If speculation influences prices then it's in the interest of speculators to create pricing mechanisms that are perpetually "out of whack" so they can profit from them.

There is no such thing as an accurate commodity or currency price, and there never can be. There's only market sentiment, and that's largely based on optimism or pessimism about the future - which is unknown.

Markets are just entrail reading, with very expensive and complicated entrails.

DOA was more like a meta-entrail system with an extra layer or two of obfuscation. But it was no more stable than any other market, and fell prey to exactly the same problem - manipulation of mechanisms creating a dishonest illusion of objectivity for profit.


you clearly have absolutely no clue what you are talking about - a catastrophic dearth of experience in financial markets, nor any idea of the theory of speculation. I don't know where to start but this laughable statement is as good as any:

"If speculation influences prices then it's in the interest of speculators to create pricing mechanisms that are perpetually "out of whack" so they can profit from them"

How exactly will they influence said prices without trading? Which costs money? HOw would they move a price (cost money) then move it back (cost money) without constantly losing money? You need other people to take you out of your speculative position, and those other people must be (net-net) non-speculators, and sufficient in number (which was @omegaham's point). Separately, any market which is purposefully "perpetually out of whack" is not even a market, and will quickly tend to zero participants.

"Markets are just entrail reading"

Another eye-roller so vacant that I don't know how to respond.

I wish people like you wouldn't jump in with such certainty about subjects in which you are eminently and so evidently without the foggiest of any idea, but willing to get your word in anyway.


An investment market is a game we agree to play with ourselves because it's useful.

Long ago I worked for financial traders on early electronic trading systems. One day in our Frankfurt office there was a big commotion. Our head trader thought he had made a boatload of money. But it turned out that the trader on the other end of the trade had fat-fingered an offer. The mistake-maker stood to lose hundreds of millions of dollars, destroying his company.

The exchange halted trading in that instrument, unwound all the trades, and started things back up again as if the mistake had never happened. I only heard of it happening that once; smaller mistakes were always the trader's problem. But for the exchange, the normal rules of the market did not override the purpose of the market, which was to facilitate certain kinds of commerce. There was just no point in destroying an entire company, and even our traders were fine with the outcome.

If Ethereum's goal is a market where "people can invest without fear", then it sounds like they did the right thing. Your "caveat emptor" approach has the advantage of being ideologically simple, but it results in an economically suboptimal amount of trading.

Real markets all have elaborate protections pushing them away from purity and toward economic utility. E.g., the US's stock market is a preferred place even for foreign companies to list because our strong disclosure requirements and legal protections make investors less afraid, increasing capital availability and decreasing cost. And it's not just financial markets; consider the Uniform Commercial Code: https://en.wikipedia.org/wiki/Uniform_Commercial_Code


Each cryptocurrency has its own culture and philosophy, and each will handle problems in different ways.

Ethereum's hands-on approach allows them to innovate more aggressively. Bitcoin wouldn't touch this with a 10ft pole because the challenges behind such a scripting system were beyond anything they felt secure implementing. And now we are seeing why.

But Ethereum can use hardforks to keep things ~stable despite the road bumps. Some people are really glad this is happening, and those people should stay in the Ethereum ecosystem.

If that's not your style, and it's not mine, there are other coins (namely Bitcoin) that have more conservative cultures.


I think that's entirely too apologetic. The innovation was the original protocol. They were premature (as a lot of people warned) setting up anything as massive as the DAO, someone found a way to creatively interpret the rules and make a lot of money. Instead of sucking it up as a very expensive bug bounty, they decided to manipulate the entire system -- going against the very essence of that system.

The DAO's own terms state: "Any and all explanatory terms or descriptions are merely offered for educational purposes and do not supercede or modify the express terms of The DAO’s code set forth on the blockchain; to the extent you believe there to be any conflict or discrepancy between the descriptions offered here and the functionality of The DAO’s code at 0xbb9bc244d798123fde783fcc1c72d3bb8c189413, The DAO’s code controls and sets forth all terms of The DAO Creation."

Obviously the hacker's intent was theft but under the DAO's own terms it was a valid activity.

Basically the code is law. If we're going to then interpret that law then we've created a system similar to the current systems we have, but lacking in maturity. The point of something like Ethereum is not that it can't be manipulated, it's that it doesn't need to be in order to function. It can be trusted explicitly because its functionality is not open to interpretation.

If I'm not being clear enough -- what they should have done is taken this as a very expensive lesson and otherwise left the system alone. Yes, a "bad person" would have profited but the system's integrity would have been untouched.

FWIW, I was an early backer of Ethereum and bought ETH during the pre-sale. I invested because I thought it was promising -- without any real expectation of return. Coincidentally I sold all of my ETH just before this hack (40x ROI). Because of the fork I would not invest in ETH again, regardless of potential returns, because Ethereum is no longer what it set out to be.


Why would anyone want code that is not mathematically proven to become law?

Yes, even with modern automatic theorem provers it is a bit torturous. But people are even going so far as writing a mathematically proven safe kernel (1) and Ethereum is much smaller and simpler.

(1) https://sel4.systems/


I think you raise a good question; I further wonder whether the provability of outcomes is even sufficient to justify the kind of total procedural adherence which the ethereum folks (until recently!) advocated.

In normal contract law that doesn't have a blockchain in it there is a special moral "backstop" where a judge may find a contract to be unconscionable. An unconscionable contract may contain nothing forbidden by statute, but if it is found to be profoundly unjust in terms of its outcomes (not due to change in circumstance, but as a result of its formulation), then a judge can call the contract unconscionable and it is void.

This kind of latitude is really valuable, as it recognises the fact that things are pretty complicated and that in the end the law is there to ensure justice, not to mechanically interpret a set of rules.

So, even if you have a smart contract (or as I would call it "program") which can be proven to work a certain way, that may not be enough to guarantee that it is not going to give rise to bad outcomes. For example, say we have a proof showing that the program obeys some invariants, and one may even have such a proof generated automatically. This makes us feel confident - let us irreversibly bind our future actions to the output of the program! Blockchains be praised!

However, if the real invariant being aimed for is that the program's execution is "justice-preserving" (and I would say this is a good aim), then there is a grounding problem we have missed, where the prover needs to specify formally the nature of a just situation or action.

I believe a large number of person-years have already been spent on attempts to derive such an "ethics predicate", but if anyone has found it they have not yet bothered to demonstrate it. As a result if we wish to pursue justice, we end up falling back to the position taken by the ordinary law, and we might wonder quite why we decided to use 51% of all computing power for the rest of time to keep a ledger intact in the first place.


> This kind of latitude is really valuable, as it recognises the fact that things are pretty complicated and that in the end the law is there to ensure justice, not to mechanically interpret a set of rules.

It's also entirely dependent on judges being nice and reasonable people, who will judge according to common sense standards of "what is right" shared by a solid majority. This just isn't true. If anything, judges are likely to be less reasonable than random regular people, because

1. They have an education where argument is treated as a sport, and objective measures of bias or correctness play little part.

2. They belong to a class who firmly believe (and society backs them up on it and tries as hard as it can to make it reality) that their opinions are worth more than ordinary people's.

That was always my problem with libertarians, their eagerness look to the legal system to solve social problems (contracts, etc.). The judicial branch is the worst of all branches of government. Sensible people don't go there to get justice, it's where you go when you've given up getting justice any other way.

A judge is just as likely (if not more) to protect an unjust order as to overturn it when it's really called for. Ethereum provides a way to guarantee desirable outcomes without such arbitrariness (in the very literal sense). It failed to do so with the DAO, but at least there, bugs can be fixed. It's much harder to fix unjust judges.


Proven against what? The intentions of coder? In that case the intentions need to be codified. With that, we are back to square one I think.


If a contract is sufficiently simple, it seems to me like it could make sense.

However, I do think it is, or perhaps, would have been, important to put a lot of focus on moving to mathematically proven contracts.


> The DAO's own terms state: "..."

Would the "hacker" have a chance to win in court? The DAO/Ethereum administrators are obviously breaking the terms of the contract...


I have read somewhere previously that someone claiming to be the hacker came forward anonymously and said they would indeed take it to court if they lost the funds due to intervention via a fork[1]. Who knows if this was really the hacker, or whether it was a credible threat even assuming it was.

[1]: http://pastebin.com/CcGUBgDG


Given that the supposed signature isn't even in a valid format, it's unlikely to be the hacker.


I don't think so, because if he claims "the code" is everything and even if the judges accept that argument, then the logical consequence is that, if "the code" allows for a hard fork, then the hard fork is "the code" as much as his attempt to drain funds.


I'm not a lawyer, but as I understood, the famous "the code is the law" quote is written in the DAO's terms of service (that's the whole reason why it could have any legal relevance at all: They basically tried to make the code their terms of service)

Therefore changing the code would be equivalent to updating the terms of service - and many judicial systems restrict when and how you can do that.

So I don't think it would be that easy.


As an aside, the world moves crazy fast, enough to get a conservative cryptocurrency culture after just few years ;)


Bitcoin might seem like it has a conservative culture, but the truth is that the Chinese government could fork bitcoin tomorrow. I find that worrisome. Those miners that hold more than 80% of the hash power operate at the pleasure of the CCP.


> But Ethereum can use hardforks to keep things ~stable despite the road bumps

Splitting the road into two roads with very different outcomes sounds like a far bigger problem than hitting that road bump to me.


Well, bitcoin has a much better track record... No political forks that undo transactions. One or two bug fix forks.


Satoshi's genius was to disappear. Ethereum's creators have a stake in it, which is a moral hazard.


Now that's a good point.

The biggest problem with Etherium is that many of the same people are behind Etherium, the DAO, and slock.it.


This is what ties it all together.


Agreed. Bitcoin gets the philosophy right. A fork for bug fixes is a completely different matter than for rolling back transactions.


They just view the transactions in question as side effects from a bug.

<sarcasm> Ethical dilemma eliminated.</sarcasm>


Who will guard the people themselves?


One way to find out why things are done a certain way, is to try not doing them that way...

http://www.jstor.org/stable/2338493?seq=1#page_scan_tab_cont...


I generally agree that the ETH fork is a broken promise. But if enough people adopt it, what can we say? At the same time, you are free to continue using ETH "classic" and refuse the hard fork. I'm sure there are some people who will do this, and then you may have your own blockchain.


Yes, the DAO made a colossal error in shipping unverified code and are now having a bailout because .. they're "too big to fail". This is hilarious, but it's also a true statement about the importance of confidence in financial systems.

(If the DAO had waited the couple of years necessary to produce a provably secure system, they would have been beaten to market by someone less secure who would have been hacked instead. Because people are incredibly keen to throw money at being early adopters of cryptocurrency systems. They're the new dotcom shares.)

I'm also going to predict that a few months after the dust settles on this that another exploit is found in the DAO. What happens then?


The DAO is dead. The ether is going to the token holders, not to the DAO contract. Hopefully people have learned their lesson about putting so much in one big convoluted contract.


> the very notion of rolling back transactions is a step backwards

I see what you did there


There is no reason to be disappointed. The guarantees are same as before. That is, Its 51% computing power that sets the next reality not a central/political/technical institution.


On paper that sounds great, but 51% computing power rapidly becomes a "central/political/technical institution" in the real world.


There is no scenario where (eg) bitcoin's 51% computing power goes to single institution. If one govt jumps in so will the others. In fact you can jump too and vote with your computing power. And note this is not possible in fiat currencies.


The top three mining pools, all in China, have well over 50% of the hash rate.[1]

[1] https://blockchain.info/pools


And how are they single institution ? And if you dont like the distribution you can be a miner as it is required by cryptocurrency. Bitcoin is still being adopted. We should see more fair distribution or see another better cryptocurrency. Anycase cryptocurrency is the future global currency.


That sounds like a strong statement about the ownership of the four or five entities that control most Bitcoin mining. You're quite sure they don't have a great deal of commonality? Remember that this is a completely unregulated market.


In addition to the other comments, why would you start investing computing power (and therefore money) in a 'currency' that is centrally controleld. Just to 'take away said control'? There's no motivation for that.


To make it more decenteralised. Cryptocurrency without enough participents actively voting with their computational power is not a cryptocurrency and will have none of the improvements over fiat currency.

Bitcoin might have 51% dishonest problem but it can be made honest again by increasing total computation. Whether 51% are honest or not is function of total computation power [TCP]. Probablity of 51% being honest goes to 1 as TCP goes to infinity.


Yes, I understood your reasoning.

My point was, only very few people are about something like this.


EDIT: OK lets say some 51% is dishonest. You have the option to become miner and reduce their power/influence share.

51% being honest is fundamental assumption of a cryptocurrency [1]. The assumption gets stronger as total computation power increases.

[1] Its necessery but not sufficient condition to make the whole state dishonest. You would need to have >50% computation work done.


> The assumption gets stronger as total computation power increases.

This assumes that the increases in computing power were not added via a mining pool, in which case the additional computing power is making things worse.

This is one reason that many view mining pools as one of the worst failures of bitcoin / other blockchains.


Mining pool or single gpu its irrelevent. As long as honest people can get more computational power than dishonest ones, cryptocurrency is decentralised and 51%-honest.


Honest centralization is still centralization. You may be assuming that everyone participating in a mining pool will get an independent vote. From my understanding, this is usually not the case. If a small number of mining pools control more than 50℅ of the capacity then just a few people can decide these types of matters, honestly or dishonestly. That's centralization.

It's not total centralization, but it's a far cry from the level of decentralization that would be possible if mining pools did not exist.


Cryptocurrency does not mean it has perfect dicentralised distribution. It only means that its (much) better than fiat currency's.


My point was not that mining pools completely do away with decentralization, just that contrary to your comment, additional network computing power does not necessarily contribute to that decentralization. It can in fact push it in the opposite direction. And the reason for that is mining pools. If it wasn't for mining pools, your statement would always be true.

There is a lot about this topic in the new, free book from Princeton authors titled "Bitcoin and Cryptocurrency Technologies" (a great read)[1]. There is much research being done on the front of finding the best way to eliminate mining pools or at least stop them from potentially centralizing consensus to just a handful of people.

[1]: https://freedom-to-tinker.com/blog/randomwalker/the-princeto...


That's not entirely correct. If 51% of the network is overtaken, and blocks are mined that aren't considered valid, that 51% will have hard-forked the network. The 49% chain will likely maintain its value- since the new blocks won't be accepted by the rest of the network- and the majority fork will die.

This is the whole "longest chain" versus "longest valid chain" distinction. A Sybil attack can censor the Bitcoin blockchain, but 51% doesn't gain full control of the network.


That's what institution means.


CODE IS LAW until the whales lose money.

Note that Buterin cashed in 25% of his ETH just before this.

Just another premined altcoin scam.


CODE IS LAW, but when in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

Code is law, but there is no law which we can't abolish, especially when the law stops serving the purpose for which the law was established.


"just before" seriously? He did this on 24 april, the DAO was launched on 30 april.. stop the cynicism please...

I just noticed your nickname, it's well known you hate cryptocurrencies and spread FUD about them on wikipedia and forums.. what's up with that? at the same time you are a admin for Rational Wiki? and yet you are oblivious to your own bias.. incredible


Source for the 25% ETH?



1. This was before the the DAO was even launched by a 3rd party. 2. Can't blame the guy for cashing in a bit, wouldn't you? (and just 25%, still keeping 75%) 3. and he also donated a good portion of it to charity.


Cite for that last claim?



Bitcoin is an open source project. Ethereum is much more like a product managed by a corporation. The Etherum Foundation can make swift decisions where to take the project, which is both a strength and a weakness.

Not all cryptocurrencies are alike because there is this fundamental difference in governance. Personally I have a hard time envisioning a successful cryptocoin that does not have a level playing field. The oligopoly of a few companies hiring most Bitcoin developers is problematic, and the Ethereum situation much more so.


Ethereum is also an open source project. Arguably it's less centralized in this respect than Bitcoin.

Bitcoin is defined by a reference client, which is managed by developers who are mostly employed by a for-profit company. Anyone wanting to do another implementation has to comb through a lot of hairy C++ and match it bug for bug.

Ethereum is defined by a 32-page spec, produced by a nonprofit corporation. At this point there are eight implementations, each in a different language, mostly by entities other than the nonprofit.


> cryptocurrencies were leading to a better world

The problems of the mid 2000s credit bubble and subsequent near depression were down to too much laissez-faire and not enough / smart enough regulation. Crypto currencies won't fix that - they'd be worse. Their main strength seems to be for drug dealing and cryptolocker type extortion. Regulating the money supply / interest rates through an open source algorithm/AI rather than it being done by politicians might be a way forward.


Yeah but in reality letting half the DAO be siphoned off is vastly worse for the promise of smart contract cyptocurrency. So the 'messy' solution is the better one for what you want, but that'll never stop nerd culture seeing things as black and white.


The whole point of the blockchain is that it is black and white. Your veiled insults don't change that. Stick to wall street if you want to bend the rules.


I consider myself part of nerd culture, it's not an insult. The whole point of Ethereum is to build something black and white, but it isn't there yet. Either way this is a failure - the failure of the DAO to operate how the makers of contract specified is significant.

Yes letting the transaction stand is boost to the confidence in the protocol at the expense of the DAO funds but it shouldn't give anyone the impression that future transactions are immune from reversal.


I would love to hear the line of logic where if we all paid and got paid for everything in crypto currency would have spared you from the housing bust?


I think this is an argument by analogy:

If bad, leveraged, investments in real-estate will not result in large losses, due to government intervention, then the real-estate market gets inflated, as when you have limited downside, your expected returns go up significantly. This also hurts less-leveraged investors (e.g. people who saved a large down-payment) as they get less house for their money, but don't gain any risk-reduction as their risk of negative-equity is much lower to begin with.

If malinvestments in ETH can be rolled-back, then any risks that are reduced by potential future roll-backs[1] will be discounted by investors, which means investors who carefully vet their investments for those risks no longer gain any benefit.

1: I'm not familiar with the fork, so don't know what the roll-back criteria are, but remember, to distort the market a roll-back need not actually happen in the future, just that a significant fraction of investors believe it is likely


If investors in stupid investments lost their money - all the way from investment banks down to individuals who made bad home purchase decisions, I'm pretty sure homes would cost less today. My point is that interventions have unforeseen consequences which hurt some people (typically the responsible ones).


That went way over your head, didn't it?


Please don't comment like this here.

Also, please don't create many obscure throwaway accounts on HN. This forum is a community. Anonymity is fine, but users should have some consistent identity that other users can relate to. Otherwise we may as well have no usernames and no community at all, and that would be an entirely different forum.


Most people didn’t know, didn’t care, or couldn’t figure out how to vote. Carbonvote is a poll that weighed user votes by their ether account holdings. Only 5.5% of the total ether holders bothered to vote. A quarter of the DAO-Fork votes came from a single account.

That's wild. It seems like the largest holders of Ether can tie their investments together and agree to "undo" anything that loses money. Am I misunderstanding how the hard fork process works? Why would anyone bet on this being the "killer cryptocurrency" if it already has entrenched interests capable of manipulating it for personal gain? How is this system decentralized beyond the trivial, technical sense?


The reality, every blockchain is vulnerable to such forking. The system is still decentralized, as the miners have to make their choice. However, the Ethereum Foundation decided to force the fork upon geth users, as the software defaults to pro-fork. So in effect a lot of users will be coerced into forking, without knowing.

This particular fork is political and not technical. The previous ETH forks were modifications to the protocol. The current fork is a modification to the account balances. The rich Ethereum fanatics are completely and absurdly delusional in thinking this will be a great event in their history. To me, the canonical chain is all but dead. The protocol will survive, just not on this chain.


Not quite. Ethereum's trie allows transaction paths like this to be clipped with almost no collateral damage to the rest of the data structure. Bitcoin's UTXO model makes it very difficult to roll back transactions since it would cause havoc on every other transaction on the network.


What is "not quite" referring to?


> as the miners have to make their choice

Miners don't make stances. They mine whatever is economically viable.

A fork without exchanges would not have economic value, for example, and would be useless to mine.


Carbonvote is an informal vote. It has no consequence in reality. That's why there was such a low voting rate.

As of now, the amount of ether you hold doesn't increase your ability to affect a fork. That's entirely controlled by miners. The amount of computing power you bring to the ethereum blockchain controls how much your vote counts.

If Ethereum switches to a "proof-of-stake" system as planned, then yes, the amount of ether you hold will effectively be how many votes you have in making decisions like these.


> That's entirely controlled by miners.

This is why I found all the "voting" stuff such nonsense and somewhat deceptive in nature.

Miners that adopt the code that implements the hardfork is the only measure that actually matters. Everything else is mice voting to bell the cat.


The "proof of stake" vote wasn't binding.

In the bitcoin world, this would be called a 51% percent attack. What really matters is what the miners choose to do.


Miners majority decides only with soft forks. A hard fork is a consensus protocol change, the economic majority can split even without the majority of miners (of course it is nice to have the miners on board as well).


Thanks for clearing that up - rereading the article, I see now that I missed the sentence describing the informal, non-binding nature of the vote.


The vote wasn't official, it was just an indicator of community sentiment. The fork is happening because, in addition to carbonvote, the miners are voting 80% in favor of forking, the exchanges are ok with it, and all the major implementations built the code for it. Any cryptocurrency can pull off a hard fork if 80% of its community wants to do it.


The vote was used to set default options in the client.


This is why some one us have been calling the crypto-cultists...well cultists for some time now.


As a layman, vis-a-vis blockchain and crypto in general, the language of this post reinforces my sense of a community of very smart, dumb people who I wouldn't trust with ten cents.

Whenever I find myself looking at a topic which technically goes over my head, I generally have to rely on the way the people involve express themselves. The language of the Blockchain community is awful from that point of view. It reminds me of sitting in meeting with too-clever lawyers, lost in a world of cunning minutiae, oblivious to the fecking meteor about to land on their heads.


>...who I wouldn't trust with ten cents.

Interestingly the entire point of bitcoin, for example, is that you don't need to trust anyone at all.


You have to trust the system


I love how, 15 hours later, you were proven to be so very wrong, and even the bitcoin people are now taking Ethereum's lead.

Yes, it's epicaricacy. Yes, it's warranted.


I've been following the Ethereum/DAO situation since the drain of funds occurred. I currently do not own any cryptocurrencies so this has been my first real look at the communities surrounding Ethereum and Bitcoin. In laymen's terms I am under the impression that these crypto coins are to be treated the same as cash. If I hand someone $10,000 in USD and they disappear and/or spend the money without fulfilling their side of the contract, I'm out of luck. Sure, I could take them to court but if I can't find them (or I sent my crypto coins to another country) or they can't repay, my coins are still gone. I know there are different schemes to handle this situation, such as coin burn, escrow, etc. But, barring those methods, once a coin is spent it's forever spent, same as a crisp $100 I hand to some door to door salesman that never comes back.

After dipping my toe into the crypto currency world, learning about the DAO and Ethereum, there are a few things that bother me about this whole situation.

1.) Rolling back (voiding) transactions, which seems to go against the concept of cryptocurrencies in general.

2.) The conflict of interest between the DAO, slock it, and core Ethereum developers, and their hefty co-mingled investments in the DAO.

3.) The labeling of this person as a "thief" when they played by the rules set forth by the DAO contracts. Maybe not the spirit, but courts generally decide that. The code is the law and is final is my understanding. (I don't know how you code the spirit, by the way.)

4.) The non-inclusive "democratic" vote of the Ethereum community on the hard fork that appears questionable.

5.) The different rules for reversing a "theft" depending on whose funds where taken (see #1 and #2) or how much was involved.

6.) The centralized decision making on the fork by a small number of people who stand to lose substantial funds based on a poorly understood investment vehicle.

This whole situation occurred because of some poorly implement code and now there's a whole lot more code being deployed in a hurried manner. If there is another unnoticed, unintentional way to run code that is not within the spirit of a contract in the future and no core Ethereum or slock it funds are involved, will another hard fork occur? Will they legally be forced to do it? It seems as though the risk was contained to the DAO's funds and now, with the hastily rolled out fork, the whole Ethereum market is put at risk.


This. To me (1) are (3) are amazingly, agonizingly ironic given the context of the situation, even if the outcome is not entirely surprising knowing how the voting is done and how centralized mining pools make things (as well as point (2)). The hypocrisy of the whole thing is astonishing to me.


>[…] and now there's a whole lot more code being deployed in a hurried manner.

This made me wonder, is it possible that the added code were to introduce bugs to the Ethereum protocol itself, allowing for even worse exploits than the one affecting the DAO? (Worst case scenario: unrestricted draining of any smart-contract, or something like that.)

I’m not knowledgeable enough to answer myself, but maybe somebody is familiar enough with the code to say?


Insane how there will be a pool of $6m worth of DAO tokens to be distributed according to the will of trustees.

Maybe I'm not understanding correctly, but that seems to be the dumbest thing I've ever heard of in the context of a trustless system of computation.


I also know only as much as you, and it seems hilariously weak. Shouldn't it be possible to make a smart contract that dispenses it in accordance to the whims of ETH stakeholders? I guess the trustees will need to decide...


nope, that's exactly correct. They even use the term "trustees".


If Ethereum is just another way that humans muddle through (and not the dispassionate justice of machines), is it still something different then the legal and political systems that came before it?


Sure: it's ruled by money or social/technical standing rather than votes. It's run by a bunch of Ayn Rand-ian social darwinists who believe morality can be defined in absolute, 'dispassionate' truths. Oh, and they're now playing the game they hate so much and know so little about.


Believing a group of people can interact without politics is like believing bodies with large masses can interact without gravity; you can believe it, but if you do you really have no idea what gravity -- or politics -- is. As a result, the difference between those who do politics and those who don't, is that those who don't are just destined to do it badly.


If aggression is normally used by murderers, robbers, and tyrants, and that is normally "not okay" -- do you believe there are cases where it IS okay, as long as we voted on it first?


That is an extremely rude/ungenerous blanket characterization of proponents of cryptocurrency.

I guess I shouldn't be surprised given your support for authoritarianism.


Of course not. Ethereum failed, spectacularly. Ethereum made as clear-cut and direct a statement of purpose and of conditions for success and failure as possible, and they failed. Instead of accepting that fact and moving on zealots have refused to believe that they could be wrong or that their utopian ideals could be flawed in any way. Like most zealous utopians they'll be willing to accept a horrific amount of damage and destruction before seeing reality.


Zealot is a great way to describe them. The absurd justifications they have over at r/ethereum blow my mind.


Do you think that the vision is bad or just the implementation?


Writing bug free software is extremely difficult, as anyone who knows a little about software can tell you. When software bugs can cost people millions and your system is built on the idea of people writing lots of software contracts, there is a problem.

I think the vision is bad. The idea of software enforced contracts is a neat idea and someday we will have it. Ethereum is not going to be it, IMHO. Their developers want to handwave the hard problems aside and brag about how innovative they are. E.g. call for research on tools to check for bugs in contracts, meanwhile their programming platform is absolutely dreadful for writing bug free code.

A better vision would be to use all the software correctness research that been done over the last 20 years. Probably use a function language that makes reasoning easier. Maybe something like Lamports TLA+ to specify behavior. I would think you want a small set of contract templates that people can use. They would be as simple as possible and heavily reviewed.

I have read the DAO is on the order of 1,000 lines of code. I'd be willing to bet money there are more bugs remaining to be found. More forks in the future?


The state of software verification is not yet there; if it were, there would be a lot of use - and corresponding job demand - in aerospace, finance and wherever security matters. Almost everyone who is enthusing about software-enforced contracts is implicitly assuming that someone else is going to do the verification, because they could not do it themselves even if they wanted to.


Both. The whole idea is stunningly naive in multiple different ways.

First, because the idea of "the law" as some sort of operating system for society or even the concept of the law as a program is extremely dangerous and fraught with difficulties. And most legal systems in the world have built in systems to ensure that there are elements of flexibility through humans bringing subjective judgment to bear connecting the inflexible "programmatic" elements of the law, so that errors, bugs, incompleteness, paradoxes, etc. in the law do not have undue negative consequences on society. The idea of a completely programmatic system of law, even in contract law, should be monstrously frightening. This is the stuff of kafkaesque nightmares, of unfeeling and inflexible bureaucracy which has in it no room for humans or human life. To the extent that there are programmatic aspects of law that could be good, these must have a "safety valve" that allows them to be overriden and human judgment applied. Consider how often everyone has experienced a moment of frustration when trying to get some sort of customer service while hearing a clerk or service person say "sorry, the system just doesn't allow that". And indeed we've seen precisely what happens when you lock yourself into a contract system with zero human oversight, Ethereum proved that it did need oversight, and bolting it on after the fact is much more costly (if perhaps impossible) than building it in from the start.

Second, there is a stunning naivety about logic and computing involved. One common misconception of developers with an immature understanding of computing is the idea that software is deterministic. In theory software can be deterministic, but largely in a way that is completely irrelevant quite often. It's deterministic the way dice are deterministic or fluid dynamics or computation of the mandlebrot set are. In practice it's not possible for humans to understand and reason about systems that might exhibit a stunning degree of complexity despite being very simply designed.

Additionally, it ignores several well known fundamental problems in computer science, such as the halting problem and the problem of decidability. As well as several thorny problems in software engineering. Even if you work only within the space of "provably correct" software systems, that still doesn't save you because one of the most common kinds of software engineering errors is an omission at the design stage. Software that provably does exactly what you've specified, but when you've specified the wrong thing is unhelpful.

The whole idea relies on behavior of both humans and software that are not only unrealistic but provably impossible. It requires that everyone write 100% perfect bug free code for every contract and to be able to read code and determine conclusively with minimal effort exactly what it does and also verify that it is 100% bug free.

If any of that were possible the direct applications of being able to do such magical things in software development would vastly outstrip the use in contracts or cryptocurrency, by orders of magnitude. If we had the formula to make bug free software with minimal effort the world would be an utterly different place.


On the other hand, as hard as auditing software is, auditing humans is just about impossible. Any kind of "human safety valve" is just as much (if not more) a vector for corruption as it is a bodge to avoid having to audit for bugs.

If a trial depends on what judge you were (un)lucky enough to get then I'd consider that a far bigger flaw than the occasional misjudgement.


Which is why there are layers of accountability and protections. A system of appeals. A free press. Governor and presidential pardons, etc. Of course it's not perfect and of course it can, and has been, subject to tremendous corruption. But the idea that you can simply insert code based contracts into the maelstrom of human society and expect to avoid those problems is sheer fantasy.

Indeed, you call attention to the possibility of "occasional misjudgment" here, in this thread, where the context is about the complete and utter failure of the entire system due to defects in the system. You're standing next to a barn with not only the doors wide open but that is actively burning to the ground and you're trying to tell people that using the barn is safe, and only subject to occasional misjudgment.


For the record, I never invested anything into ETH. I'm more interested in the general concept than this specific approach.

That said, human day-to-day oversight has also caused massive failures. Eliminating failures completely isn't an option, but the question is how to reduce them in the long run.


>As hard as auditing software is, auditing humans is just about impossible.

It is the other way around. Currently, there is no software being verified to the degree that anything but almost inconsequential smart contracts would require. Instead, we deal with software the way we handle contracts: when something goes wrong (which is quite common) we intervene.


Was it Ethereum or the DAO that failed?


As an outsider looking in on trying out my first cryptocurrency, Ethereum was definitely on my radar. Now that the founders have shown they are capable and will undo the way the system has executed if they do not like it, I feel much more comfortable keeping my money in fiat where the regulations are well-defined and I know I have recourse through the law. I do not want to be subjected to the whims of an unregulated group operating under unknown rules with an unknown, possibly nonexistent, path of rectification if they chose something I did not like. I otherwise would have accepted the operational philosophy similar to how Bitcoin has been handled thus far and all of the responsibilities associated with a level, permanent playing field. I honestly am no longer interested and do not plan to keep up with Ethereum.

I'm just N=1, but if the trend continues then I see it not growing beyond a hardcore self-interested group of people.


>Now that the founders have shown they are capable and will undo the way the system has executed if they do not like it, I feel much more comfortable keeping my money in fiat where the regulations are well-defined and I know I have recourse through the law.

US fiat failed and was only rescued through ad hoc legislation. US fiat would not exist today if new rules (unknown at the time of failure) were not defined to essentially rollback prior transactions.


Thank you for exactly making my point. There is a legislative process, no matter how ad hoc and pressing the issue is, that can attempt to rescue US fiat. There's no way to divine every rule which is needed for a fiat currency to keep succeeding. And rules change over time with the ebb and flow of balance of power between nations, their trade, their military might, etc. Legislation provides a well-defined process for changes to be made. Whether you trust that legislative process seems to be a key point in choosing a cryptocurrency.

Now take Ethereum: suddenly changes to the transaction history needed to be made which violates the one law of cryptocurrency that's been shoved down my throat ever since Bitcoin hit mainstream media. So with no process set (because it should not have been needed in the first place), a sudden reversal of intent for one arbitrary contract, and no way to have the original intent stay binding, Ethereum made its choice. It didn't even have a legislative process, just an authoritative one guised as a democratic vote. The way that choice went down shatters all trust. If US Treasury suddenly decided it didn't need to follow any US legislation and redistributed wealth across the world, trust in USD would equally be shattered. I'm not a gambling man, but at this point in time my money stays in USD.


Uh, you're welcome?

I don't think I made your point, though. The laws that were passed to rescue the previously failed rules were utterly unknown at the time the failure was occurring. Instead of those rules being followed through (resulting in the complete destruction of debt-currency), a political elite was able to force a rescue of the failed actors. Wealth was redistributed across the world as USD should have ceased to exist and all debt vanished, but was allowed to be propped up at the whims of technocrats (Fed buyers).


You did, I just think you are getting hung up way too much on the wording of this quote I said (emphasis mine):

> I do not want to be subjected to the whims of an unregulated group operating under unknown rules[...]

I read it as "operating under unknown rules", so I don't mean the laws as currently written but the legislative process used to change the laws so they can be fixed (this was my intended meaning). I agree with you fully: the rules can, do and will fail and the next set of rules are utterly unknown now. But rulemakers are currently operating under known rules: the legislative process. Always have been through all the US fiat changes.

The lack of trust in the legislative process is what makes cryptocurrencies attractive. I infer (possibly incorrectly) you also share a healthy mistrust in the legislative process, just as I do. But Ethereum never laid out a formal process governing these sorts of changes (not a legislative, authoritative, nor democratic one) so the implication to the whole world was that none would ever be needed (because cryptocurrency) and people trusted that this fact would be respected. With this DAO reversal, Ethereum has broken that assumption many people hold, and lost that trust. This is why the OP in the article is upset: the process that resulted was an authoritative one disguised as a democratic vote in his or her eyes. And I am inclined to agree.

Edit to remove typo "as as" to "as".


Hard fork and Soft fork were always part of the process. In fact, you can democratically vote through whatever you want in the ETH/DAO system, either through the established code for voting or by developing protocol extensions. People can freely choose what code they want to run, or not.

The bailout of USD can also be described as an authoritative one disguised as a democratic vote. Congresspeople were told the world would end if they did not vote for the legislation they were handed.


I agree with you, because that's how the legislative system works. Lobbying, pass-this-or-we-all-die-scaremongering to whip the votes, and more all fall under the rules of the legislative process. Like I said before, you and I share an unhealthy skepticism of that legislative process. But for some reason I keep having to circle around this point: the legislative process is well defined and enshrined and advertised in law (constitutional or otherwise) whereas the ethereum process is clearly not as evidenced by a 5% turnout and an immediate distrust in the process by constituents. Representatives aren't blindsided about a new kind of vote the President made up that is default "yea" that results in a 5% voter turnout.

This is the last time I'll attempt to make this point.


Ethereum is fully open-source (that is my understanding anyway; I have never used it), so all the code is known. Further, anyone may participate, or not; contribute code, or not; promote and run their own protocols, or not.

Congressional elections are typically decided by ~25% of citizens. Not very far from the 5% rate you are claiming. Sampled approval rates have been as low as 11%. The most recent rate I've found is 16%.

Your point is about minimal discrepancies and misses (for me) the much, much larger picture.


The potential for forking was always part of the reality, but never part of the myth, which tried hard to bury the fact and instead pushed the idea that Ethereum was proof against manipulation. My guess is that many of its supporters have either bought the myth, or are speculating that many others will do so.


Yes, and if ETH is behaving the same as US dollars then there is no reason not to just stick to US dollars.


I do not know what you are referring to, but I point out that fiat means "by decree". So US fiat only exists through legislation. When is legislation not ad hoc?


Well in absolute everything is ad hoc but think about it this way:

You are pretty much guaranteed that, modulo some events, any US president from any party will honor their predecessors' decisions, pacts, treaties, etc. And you can be assured that the whole nation will follow them, because of of the Rule of Law!

What you've just witnessed in Ethereum is a bunch of rich, moderately intelligent, technocratic and very technologically literate (but not necessarily well educated ("who would want a government when you have code bah!")) visionaries and mostly speculators crying to get their money back by abandoning the very characteristic (immutability) that distinguished them from traditional systems of governance! They had a modus operandi that "Code is Law", and they've now turned against it. "Code is Law unless X". Why have that when you can just have plain and simple "Law"?


> US fiat would not exist today if new rules (unknown at the time of failure) were not defined to essentially rollback prior transactions.

[citation needed]


This should be common knowledge.

Here is one Paulson quote:

>You could just see it. We could see it and it was one of the most frustrating--when I look at the things I could have done better, there were a lot of them and they come out in the book, but the communications challenges were huge. I mean, I sat there when the capital markets froze, before we went to Congress, and the money markets weren't working, and I just tried to think about how to explain this. Because I knew--I was seeing major, blue-chip industrial companies that were having trouble raising financing, so I knew with $3.4 trillion of money market funds, and with everything that was just getting ready to break apart, that if the system had collapsed there'd be thousands and thousands and thousands of mainstream industrial companies--middle-sized companies, large companies--that wouldn't be able to raise their short-term funding, finance their inventories, pay their people. People wouldn't have been able to pay their bills. This would have rippled through the economy. We would then have had--well, today we have over 10% unemployment. That's terrible. And that's after everything we've done. If the system had collapsed, when we were on the brink, unemployement easily could have been at the 25% level that we saw at the Great Depression, and the value destruction--much greater than we've had in terms of home prices and in terms of people's savings accounts and stock portfolios and so on.

>https://www.amazon.com/Brink-Inside-Collapse-Global-Financia...

And Bernanke: >He said that bailout was necessary because “we knew that the collapse of the firm would potentially destroy or at least paralyze the global financial system with tremendously bad consequences for everybody.”

>http://www.centraljersey.com/news/princeton-former-fed-chair...


The clearing system is not the currency, although it's certainly important to daily functioning. Nor is the system of short-term trade credit the currency either.

Also, where's the "rolling back of prior transactions"?


None of this is about the clearing system. It is about money (ie. credit [ie. debt]) creation. New money must be continually created to replace the money destroyed through principal payments. If new money is not created at a sufficient rate, the existing money is rapidly destroyed as pre-scheduled principal payments eat it up.

>Also, where's the "rolling back of prior transactions"?

AIG's CDS/O's should have basically all failed, per the rules of the system. These were just papered over. "Pre-emptive rollback" might suit better.


> "Pre-emptive rollback"

You can't roll back something that hasn't happened! That's not how causality works! :)


Both. Etherium's smart contract system turned out to be too hard to program correctly, and the DAO botched their program. Etherium needs to go back into the shop for a redesign. Maybe a full virtual machine is the wrong model for contracts. The problem with programs as contracts is that the goal of contracts is predictability. Something more declarative might be more predictable.


Ethereum failed when it forked to try to mop up the DAO failure.


DAO failed, but it controls about 15% of the total ether supply, so it was too big to fail, and the fork will save it.


The DAO did exactly, exactly, what it was supposed to do. In no way can it be have said to fail, except in the "wasn't a great investment" sense. Maybe in failed in the "wow using terrible languages to write complicated code is a bad idea" way, too.

Ethereum failed, as they decided smart contracts aren't a great idea, so they're now going to involve humans when they feel like it. The whole premise of Ethereum was the opposite of what they're doing.


I believe that Ethereum+DAO was a sucessful experiment (with negative results) - they had a vision/hypothesis that smart contracts without human/legal overrides are a good idea, despite the experience of the whole financial and legal world over the last couple of millenia telling them that this vision is naively utopic. The whole point of Ethereum was implementing and testing this vision in practice, which they did.

In practice they found out (and showed the public) the kind of consequences everyone was expecting; and so we have a successful experiment giving some evidence on whether smart contracts w/o overrides are a good idea - apparently, it's not; and now based on this we can build better systems that properly account for the risks that DAO had.


Yes, that is a more accurate description. The Ethereum community was very quick to call the guy a thief, without due process.


So what happens when new bugs are found in contracts controlling a lot of money? Fork again or let the buggy code run?


I also have been questioning why at this point you would ever build on ethereum because if its not truly decentralized then whats the point?

If a contract can be updated then its not decentralized so now you are trusting some dev or some group of people. If a contract can't be updated then it will have bugs and you can't trust it....and so on...


It's truly decentralized. Really, I don't think decentralization is a good thing, and this is demonstrating why. If you've got a truly decentralized system, pretty much anybody can tear the whole thing down while no one is paying attention.

In a centralized system, there's a small group of trusted people who are responsible for keeping it safe.


And this is why I'll be pouring my money into a serious government backed digital currency. It's a shame Canada isn't going all in on this, they were pioneers with their digital money project last decade. I'm reassured by Bank of England's latest (95 page) note on the matter.


Perhaps the problem boils down to putting all of your eggs in one basket?


A basket with a bunch of holes in it.


The machines are controlled by humans, and will be, unless and until AI takes over the world. So how can you possibly have a system where humans can't decide things?

I would still view it as less corrupt than traditional finance, where a few powerful companies / people / government have disproportionate control.


    > The machines are controlled by humans, and will be,
    > unless and until AI takes over the world. So how can
    > you possibly have a system where humans can't decide things?
It's not about humans not deciding things.

It's about:

    1. Creating a protocol (Ethereum)
    2. Making claims about what this protocol can do; attract investments
    3. When the protocol is shown the be flawed: discard it
The very value proposition of Ethereum is that it's a protocol. When the authors suddenly "change the protocol", it amounts to the reference implementation of the protocol changing to be incompatible with all other alternative implementations of the protocol. This has no value in the real world. The value proposition (the protocol) is now gone. Investors invested $150 million in a protocol, not an computer program distributed by the "official developers", which everyone must use in order to access the system.


Actually $150M worth of ether was invested in just the DAO, just a single contract running on the protocol. Probably more than that has been invested in the protocol at this point.

One thing to keep in mind is that much of this was not invested by buying in with fiat currency or even mining in the traditional sense. Apparently a significant amount of the ether invested in the DAO belonged to Ethereum developers and insiders. If I understand correctly some of this ether was essentially created out of thin air during their "pre-mine" process[1].

The $150M USD worth of ether in the DAO is out of almost $1 billion USD in market cap[2].

[1]: https://news.ycombinator.com/item?id=8072340

[2]: http://coinmarketcap.com/currencies/ethereum/


The post I replied to talked of "the dispassionate justice of machines", and I was saying it's ultimately the humans deciding things, not machines.

Incompatibility is a downside of changing the protocol, but that doesn't justify jumping to the conclusion that protocols with serious flaws should never be changed, even after millions of dollars have been stolen.

Keeping it running as it is won't convince anyone to invest in it, which defeats the point of running it, in the first place.


It's also the reason for the change. Changing the protocol to fix clear bugs is one thing; changing the protocol because whales lost a bundle is another.


On the surface we can "fix the protocol", yes. But when the value proposition was a protocol that has now been shown to be flawed, what is there to fix? Create a new protocol, which does not exhibit the exploited bug, and hope people choose to believe that this was the only bug that is there?

In-production protocols can't really be changed. You can only create a new protocol, and hope people switch to that. And if you, the inventor of the protocol, have the power to just "move over" users to the new protocol, it was never really a protocol to begin with, but more like a backend interface (the difference being that the latter can change without changing the client protocol).


    “Invent a new version of the universe” is normally not
    permitted by the software protocol, which is why this
    involves a client update and a hard fork.
To have "separate universes" is to have separate blockchains with different genesis blocks. There's an incentive to do just that with Ethereum[1] since the effective doubling of funds (X ETH on each chain) is bound to cause disruption.

Anything other than a new fork is going to fail for the reasons the author mentions.

[1]: https://reddit.com/r/etheregen


Thanks for the link, I didn't know people were doing this. I had only seen EthereumClassic, which seems prone to attack, and a nightmare for exchanges.


The author makes a lot of assumptions about DAO holders. I am both an ETH and DAO holder. I am pro hardfork, not because I will get my DTH back, but because 1) the consequences of the attacker having that much ETH as Ethereum migrates to PoS and 2) it's much better than eternal white hat battles to control the DTH and the drama it would bring. TBH if we could just destroy all the DTH without a HF, I would be happiest with that solution. But, of course that cannot be done. I would prefer if the HF just burned the DTH.

Slock.it was very irresponsible not to cap The DAO from the beginning. Growing pains.

I didn't vote with carbonvote.com because I didn't have to. It was clear the HF was going to win. No need to mess with my cold wallets. There was no perfect outcome from this situation, but I see the HF as the least bad.

IMHO Bitcoin could use a HF, but they can't get one due to the centralization of mining in a few Chinese companies. I see that as a negative.

The threshold for a HF will likely grow for Ethereum as the network grows due to the diversity of stakeholders and their interests. These are very early times for Ethereum, and even for Bitcoin.

Ethereum does have more scheduled hard forks coming, BTW. The switch to PoS is going to require one.


less than 13 hours later, your viewpoint was proven correct.

The rule of HN and cryptocurrencies seems to be, look what the majority is saying, then do the exact opposite.


This heist a nice demonstration of the usefulness of politics. So much so that the zealots are willing to forgo actual money and let that injustice stand rather than admitting defeat. Well, some of them are.


The most entertaining part of cryptocurrency for me has been watching libertarian ideologues gradually re-discovering the reasons for financial regulation.


The entire hard fork idea was a case of "your choices are shit and shit, pick one". On one hand, if the hard fork fails, the hacker gets away with millions of dollars, representing a very large chunk of the entire market. On the other hand, if the hard fork succeeds, the entire idea of a decentralized currency where everyone's equal and there are no higher authorities (i.e., corporations or governments) to intervene against you is dead.


VeriCoin did something similar when MintPal was hacked. They rolled back the blockchain prior to the heist. Now it's a shadow of itself, and MintPal is dead.

What a mess.


Blockchain newbie here. While I somewhat understand what a DAO is, can someone explain what is the DAO? What are its objectives?


The objective is to create a decentralized fund/holding company. Thousands of people put money into a pot and then vote on what that money should be invested on.

I view it as more of an experiment with new tech rather than an actual plan to run a successful business, however there is an absurd amount of money on the line.


this may explain, why expanse(ethereum clone) has so much volume at the moment. Seems like a lot of people are bearish on eth. http://coinmarketcap.com/currencies/expanse/


I was hoping that the title would be a pun on the phrase "Stick a fork in her, she's done." I was a bit disappointed given such a prime opportunity for a pun.


one day later, Looks like all the naysayers were wrong.

only one block remained on the old fork.

I'm glad I bought in when I did, during all this FUD. I'll be making a killing now.


Too big to fail!


ETH was always shit anyway. The idea is good, but the execution always lacked professionality. No idea how they came so far actually.


The mistake was putting so much money in one untested contract.

It was a big mistake.

But Ethereum is still the leader in terms of a lot of technical aspects and also the ability to pull people together.

To try to give people a perspective: say you and your friends took out second mortgages on your houses and came up with 5 million to invest. Then you invented some tool, and someone found a back door or bug in this tool that allowed them to steal 1 million dollars.

So most of the group would like to undo this 1 million dollar theft with a patch.

Now, most outsiders are condemning you for trying to work around the bug and recover your million dollars with a patch.

I think that the mob is fickle. Quick to pile onto a bandwagon, and quick to burn it.

So, I hope Vitalik and the other group of hard working, intelligent and ethical people involved do not take the mob's response to heart.


> So most of the group would like to undo this 1 million dollar theft with a patch.

That's very sensible. Which is why all traditional banking systems have the concept of a "chargeback" when something goes wrong.

Ethereum still sells itself as "Build unstoppable applications: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference."

The reason everyone is piling on Ethereum is because it said "we don't need politics to sort out disputes - the code is the truth". And that turned out to be untrue. There was just a huge political campaign to do a hard fork.

So if it's just yet another politically managed currency, why even bother to use it? Anything fancy it can do you can also do with a Python script, and then you can solve your disputes in a court or with chargebacks instead of starting a campaign to hard fork.


Because its not yet another politically managed currency. It still has a sound and revolutionary premise. It just had a bump in the road.


Now say, you took out a mortgage and came up with 5 million dollars. Another 100 people don't have any dollars, so they would like to seize your 5 million dollars with a patch. There's a clear majority vote to take your 5 million dollars. Should they be allowed to do that?


Its not anything like that though. Its more like the small group of investors with the most money in the pot are voting to protect the large amount of money 'hacked' away. Its not like a majority stealing money.

The idea of decentralization and objective rule by code is sound, but the other part of this is that it is an alpha system that was untested, and obviously this was a theft. Forking in this case does not invalidate the concept or the team or any of it.

It doesn't mean there will be people forking in the future to steal money.

It really seems like most people are operating on the same level that the kids were in my 7th grade class. Which is pretty bad, because it was full of dullards, children acting almost like monkeys, and actual juvenile criminals.

Honestly the common reaction here is at a middle-school level.


If investors think it's theft, they should call the authorities.

The suspect (not "thief", because "theft" is determined in a court of law) can then be convicted via due process, which is a constitutional right.

After the Mt. Gox hack, users contacted authorities. The Mt. Gox hack lost $600M worth of bitcoin. They are now recovering some of their funds.


It's worth comparing the Madoff scam. It's been a long, slow grind, with lawsuit after lawsuit against many different parties. But 63% of the losses of direct customers of Madoff have been recovered.[1]

The anonymity feature of Etherium is why this can't happen with the DAO. Nobody knows who has that money. It's tied to a numbered account. They haven't been able to launder it yet, but everyone seems to assume they will be able to.

If Etherium were non-anonymous, this problem could have been unwound in court.

[1] http://www.madofftrustee.com/recoveries-04.html


That's a possible course of action, but in order to be practical and effective in restoring justice, it needs some technical abilities that Ethereum currently doesn't have and probably cannot have - namely, the ability within due process to (a) freeze the anonymous stolen funds during the trial and (b) after a (hypothetical) decision of court, seizing the funds against the will of the account's owner (e.g. trial in absentia).




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