I love Lord Vitalik as much as any ETH nerd, but the more he dictates to help his friends, the more it will hurt the ecosystem.
It's a bit like those clients that say of their software, in its requirements, "I want my software to be customizable after-the-fact with any new logic I desire, up-to-and-including the power to completely rewrite the application." Some people try to solve this problem as stated, resulting in the https://en.wikipedia.org/wiki/Inner-platform_effect. Other people recognize what's happening, and just respond with "the customization mechanism is the source code. You can customize it at any time by contracting a programmer to do so for you."
The FDIC of the Ethereum blockchain† seems to be—as this example, and the earlier example of the DAO, would suggest—the Ethereum maintainers themselves. The way the Ethereum maintainers propose changes to the consensus protocol to fix problems is through EIPs. So, if there's an Ethereum "natural disaster", the natural thing to expect in response would be an EIP.
† (as opposed to the Ethereum Classic blockchain, which has no such entity, which is rather the point of the fork.)
You could create another layer atop the EIP process, formalizing specifically the recovery process from a "loss of money" event... but it's really going to boil down to a consensus-algorithm change in the end, so an EIP is going to have to be involved.
(Unless you're suggesting that there should be some way, within the Ethereum VM itself, to aribtrate disputes in a way that invalidates the side-effects of previous contract calls? That'd certainly be a trick... especially given that the said "arbitration" would seem to be a human-complete problem, and Ethereum doesn't even have oracle support yet.)
But I see your point about the EIP process. Altering history to benefit a group of people is always contentious, so the EIP process is itself a way to do it on a public forum.
What is the process for adjusting the threshold if the value of the currency swings wildly? A theft of a single Bitcoin is now a theft of thousands of dollars, but years ago it would have been a handful of dollars.
It's easier to say that thefts of any amount should be restored than to deal with all of the politics of picking a threshold. Isn't the Ethereum system designed to avoid politics and the need to trust other people?
Thresholds are never fair and always arbitrary. However that's not a reason to avoid anything that has an arbitrary threshold. Arbitrary is often better than nothing.
Consider the difference between insurance companies, and reinsurance companies. Insurance companies help individuals when the individual has something bad happen to them (ignore, for the moment, that the individual has to pay into this scheme.) Reinsurance companies, meanwhile, operate solely to insure insurance companies: they keep insurance companies from collapsing when a natural disaster causes a correlated risk event that would otherwise cause an insurance companies’ clients’ claims upon them to bankrupt them.
I think the Ethereum developers-cum-NetOps are a sensible group to serve as Ethereum’s reinsurance mechanism, fixing problems for entire classes of people in the event of an economic “natural disaster.” In this case, the proposed EIP effectively reinsures this multisig-wallet “bank.”
But I don’t think it would make sense for the Ethereum devs to be made responsible for individual claims, any more than the US Mint is responsible for making you whole if someone steals your wallet with cash in it. (Though the US Mint, surprisingly, does attempt to make individuals whole if their cash is accidentally burned or shredded or melted or what-have-you, which is an intriguing basis for a counterpoint.)
Anyway, the usual party responsible for making depositors whole in the event of a system screw-up, is the bank itself. This is, in fact, effectively the reason that there are separate (consumer deposit) banks, despite it being entirely possible to just nationalize them all as part of the extended infrastructure of the central bank. These institutions are taking on the (uncorrelated) risk of holding these depositors’ funds themselves, in exchange for being allowed to themselves profit from the arrangement.
Ethereum, I think, would do well building up an infrastructure of smart contracts that facilitate bank-like obligations, including the obligation of the depositor to be made whole in the event of the bank being hacked or making a mistake.
The Ethereum devs would still be the ones to act if a mistake or accident event caused structural damage to the Ethereum economy as a whole. But, under the expectation (in such a world) that plain ETH is like cash in your pocket—uninsured—and only ETH in a [some-hypothetical-ERC-obeying] bank contract is deposit-insured in the event of contract error, the Ethereum devs wouldn’t be expected to act in such cases. It’d be your fault for choosing to give your money to a non-insured bank. (Or maybe some regulatory agency’s fault for allowing the bad bank to exist or to advertise.)
To fail to protect people is to invite regulation. And because people in different countries own Ether, it might happen that different national governments enact different, contradictory regulatory schemes. It would really be better for the Ethereum devs if governments didn't see a need to do that.
But I'll disagree. Whatever your opinion on bank bailouts, I don't think this is the same sort of thing. A bailout is providing assistance in the form of extra money. This is a 1:1 fix of damaged money, something that happens all the time without objection.
Maybe I am just blind and a luddite, but if such generalized mechanism and process would exisit, what would be the difference to the current government and fiat based system?
Admittably, I am astonished that after the DAO mess this smart contract thing is still alive. You can either have code as law, or you can have law as law. Not both. And obviously "code as law" was something these people did not like, so what on earth there is left for smart contracts?
But, yes, I assume that banks do undo transactions somewhat regularly. And I do see a difference. With regards to the banks, there are regulatory bodies with necessary tools to oversee banks and force (of course, they do fail occasionally...) them to behave properly. With Ethereum, there is no such body, but I am expected to trust a bunch of people who claim to have developed a currency which requires no trust. The oxymoron in the last sentence is in itself enough for me to prefer banks, thank you very much.
It does require trust just as you require trust from the seeders/peers of a BitTorrent shared file. If these seeders/peers agree that they should modify the said file, you either agree with them or not. If latter, then you end up with a two versions.
Further, to accept crypto as payment very much requires trust (or faith or belief or whatever you want to call it) that you later find some third party that is willing to accept your coins as payment, preferably with roughly the same value that you assigned to it in the first place.
Awfully lot of trust flying around in a trustless system in my opinion.
I hope your technical ability helps me here in conveying my point to you.
I don't know how to reply to this. That's the opposite of what I said.
> It’s kind of sad to see a lot of people enjoying
I hope you're not talking about me, because I wasn't expressing a preference between entire systems. I was just pointing out a single aspect.
(If you must know, I think having a court system is best, but having the EIP system is better than nothing.)
It's confusing to see my comment go from a positive score to negative while replies show up all agreeing with me...
Most people like that you can have your bank or credit card company hold or reverse a suspicious transaction, and don't regard that as evil statist chains of slavery.
Happens to me multiple times a year, it's unbelievably bad.
You should use a different bank if this is actually true. This is not a common experience.
I don't have to experience these personally to know there is a vast landscape of transactions that get unraveled days to months later.
Some of these benefit the consumer, and some hurt the consumer.
But they apply to all banks.
Smart contracts are similarly high on the code-is-law spectrum relative to other systems. Day-to-day transactions are near perfectly transparent, predictable and repeatable. Changes require highly visible and discussed EIPs or similar.
As time goes on and lessons are learned they will likely increase in desired qualities, never fully achieving them, always in a state of pursuit.
By which measure? There are more than six thousand banks in US, all of which are perfectly capable to create significant amounts of USD currency. My understanding is that even if the number of Bitcoin miners may be higher, it is still much more concentrated to a hand of a few pools.
Miners do not wield all the power, it is a dance between miners, economic nodes, developers and finally users. If those stakeholders are not on board it is unlikely for changes to occur.
Pools are different from being a single entity. If a thousand miners pooled together to lower their earnings volatility, that is much more decentralized than if one person owned a thousand miners. The individuals can choose to leave the pool or switch at any time. The pool is only a temporary agent.
The transactability of crypto is much more decentralized. In traditional banking you must ask for permission to send your money from one bank to another to eventually reach the intended recipient. In crypto it is peer-to-peer.
The US has a decent amount of banks, other countries like Canada do not, countries like Venezuela centrally destroyed their currency.