How hard forks justified the biggest bailout in cryptocurrency history
In this blog post I’m going to share how hard forks led to biggest bailout in cryptocurrency history — the DAO. This is a perfect illustration of why setting a precedent for hard forks is extremely bad.
When ethereum developers figured out that the DAO — a project whom they themselves had invested in — had been hacked they started talking of hard forks almost immediately. Since ethereum developers had set the precedent to hard fork before — why not do it again?
This really shows the importance of precedent in the cryptocurrency space. If there had never been a hard fork in ethereum’s history before I don’t think the biggest bailout in cryptocurrency history would have happened — and a lot of people would have been held accountable for their irresponsible investing.
I also don’t think when Vitalik mandated the first hard fork of ethereum he ever thought hard forks would be used to bailout DAO investors. I believe he had the purest intentions — fixing a nuisance in the protocol. From what I can tell (I’m not an ethereum expert) the first hard fork was not contentious.
I think this is a perfect example of why the road to hell is paved with hard forks. It is easy to justify changing things “the easy way” especially if you have unilateral control over a blockchain. However, are blockchains interesting if someone has unilateral control over it? How about if they are able to change the invariants of the system within 2 weeks time?
Once you have done a hard fork, it becomes orders of magnitude easier to do it again — in the technical sense and more importantly the social sense. We don’t want to cultivate a culture of hard forks in Bitcoin. They are dangerous and can lead to mob rule. We need to support a strong system of unalieanble rights of each individual user of Bitcoin. Otherwise we are no better than PayPal.