Good Forking Job: Metaprinciples of blockchain-based technology.

A few weeks ago, a hacker attempted to steal approximately $50 million USD worth of ether from a contract called the DAO. Today the ethereum community collectively reversed this action. Because ethereum was birthed out of the Bitcoin community, there have been a few critics of the reversal, as it is seen to violate the ideological constructs generally held by Bitcoiners. I have never felt particularly aligned with the ideology of the bitcoin community, and have always felt that while Bitcoin provided a solid technical foundation, it greatly missed the mark in terms of what is possible. A decentralized internet-based currency was a good start, but it wasn’t the ultimate application. While I knew of bitcoin in the early days, I mostly ignored it because I found it boring.

It was not until I started exploring the ideas behind blockchain and thinking through their application in a greater social context did I find them in any way interesting. I began thinking about the trust-based applications that could be created on top of trustless systems, and my interest was piqued to the degree I stopped what I was doing and started looking for people working on systems like I had been imagining.

I was lucky enough in my timing to be one of the first members of the Ethereum team. One of the things I really liked about the ethereum project and the community around it was the lack of ideological rigidity that seemed to infect the Bitcoin community. The people in the community were different; less obsessed with money, and more engaging to interact with.

Two years ago I began writing a blog called “Decentralized Autonomous Society”, which was a term I coined to describe a society built utilizing decentralized technologies and ideas. The posts I made were designed to provide a framework to use in thinking about the types of problems that need to be solved, to identify new ways of thinking about them in the new technological context we have created, and to avoid the pitfalls of thinking that pigeon hole things like bitcoin into ideological black holes from which they may never escape.

While watching the fallout from the DAO hack, and listening to people complain about breaking immutability, I have come to realize that I have not been loud enough. The toxic elements of bitcoin ideology has followed users as they became participants in the ethereum ecosystem. But from my perspective, many of them are intellectually stunted in terms of what is possible. This misunderstanding of the ultimate application of these technologies has caused them to take hard-lined, quasi-religious positions. I outlined the risk of this problem in a DAS post. I defined two types of problem solving: problem-based, and solution-based.

Problem-based problem solving focuses on the core problem and attempts to implement solutions against that problem, without becoming attached to any specific solution. Solution-based problem solving defines a problem, then defines a singular solution, and then commits blindly to that solution. Problem-based problem solving is the ideal method, and solution-based is a good way to fail.

The problem we are trying to solve with blockchain is one of trust. Bitcoin does this through irreversible trust-free transactions. Ethereum allows for this, but it also allows for other solutions to the problem of trust, ones that will be more practical, and which can be more nuanced than the transmission of digital tokens between pseudonymous parties. My involvement in ethereum has always been predicated on the notion that its ultimate contribution to humanity will be allowing a general platform for solving the problem of trust. It is not attempting to solve this problem with the silver bullet that bitcoin is. This is ethereum’s ultimate strength, and this is what the disciples of Bitcoin fail to understand.

You can solve the problem of trust in two distinct ways: build systems that do not require trust, or build systems that augment trust. Bitcoin relies on the former, ethereum allows for both. Unless we are planning to build a world in which we are physically strapped into chairs and interact only through VR, humanity will continue to require interpersonal trust for most interactions, and any technology that allows us to bolster this is a net win.

The reason that we must focus on trust is because of bad actors. Many disciples of bitcoin fixate on established power structures such as governments, but the government is simply an aggregate of individuals, and the individuals may or may not be bad, and the collective output of the group may or may not be bad.

Since “bad actor” is ambiguous, I will define a bad actor as anyone which engages in anti-social behavior. This can be overt in the case of murder or theft, or less cut and dry — such as acting in bad faith or lying. There are degrees of bad actors, but in general the goal of social constructs are to limit the damage of anti-social behavior, and to bolster the benefits of pro-social behavior.

So to reiterate — the reason we are building trust systems in the first place is because some people cannot be trusted. They act maliciously, and we are attempting to make that malicious behavior as impossible and undesirable as possible. This is the core foundation of bitcoin. It is the core foundation of ethereum. It is the problem we are trying to solve. Blockchains are simply an implementation of a type of solution which allows the problem of trust to be solved in a way that scales.

The person who committed the DAO theft was a bad actor with malicious intent, who acted in bad faith to exploit a bug in the system for personal enrichment. If the DAO heist was allowed to persist, it would have created an incentive structure contrary to the intentions of bitcoin and ethereum. It would have made it more beneficial to be a bad actor than a good actor. “Immutable” blockchains were an implementation of a single technical solution, which is not the only solution for solving the foundational problem. To focus on “immutability” is useless, as any immutable system does not require discussion - because, by definition, they cannot be modified. Even deeper than that, it is attempting to protect the technical solution while destroying the actual core solution we are looking for.

The reversal of the DAO is not only in line with both the foundational principles of Bitcoin and ethereum — it is the single most important thing that has happened in blockchain since Bitcoin was released, and it is potentially the single most important thing ever to happen at the intersection of society, governance, and economics. When the housing market crashed it took many years and required massive systems in both governance and banking to recover. When Mt. Gox was hacked it required the effort of multiple government agencies from multiple countries, and many years to recover just a fraction of what was lost.

When $50 million worth of ether was stolen, the community came together in a matter of weeks and collectively decided to reverse the theft. No government agencies required. No federal reserve. No drawn out and complicated legal battles. The will of the network simply set right what once went wrong.

This is the future. It is not ideologically immutable. It is here to serve us, to supplement trust, and code is law. Unless we all decide it isn’t.

P.S. Let’s be a little more careful next time.