V. Zamfir (Researcher, Ethereum Foundation) has addressed many important subjects in and about the Ethereum ecosystem. These are my personal thoughts about a couple of them: legality and value. I will attempt to summarize Zamfir’s positions to the best of my understanding, though no guarantee can be made as to how accurate my understanding of his opinions is. I’ll summarize my points at the end of each point.
How Legal Should Blockchain Frameworks Strive to Be?
Zamfir posits that blockchain platforms should strive to work with current regulations and regulators. A common goal of blockchain platforms is adoption, and adoption is hindered by illegality. Illegality is likely if effort is not taken to make blockchains law-compliant. Zamfir recently phrased this as taking precedence over the immutability of a blockchain platform’s history. (He coined ‘Szabo’s Law’ as a term connoting those who value immutability over legality.)
I would like to open my comments with a passage from Dr. Bruce Shneier, a noted security expert, from his book Data and Goliath:
There is value in dissent. And, perversely, there can be value in lawbreaking. These are both ways we improve as a society…
Think about it this way. Across the US, states are on the verge of reversing decades-old laws about homosexual relationships and marijuana use. If the old laws could have been perfectly enforced… society would never have reached the point where the majority of citizens thought those things were okay. There has to be a period where they are still illegal yet increasingly tolerated, so that people can look around and say, “You know, that wasn’t so bad.” Yes, the process takes decades, but it’s a process that can’t happen without lawbreaking. Frank Zappa said something similar in 1971: “Without deviation from the norm, progress is not possible.”
If we don’t have that, we can’t slowly move from a thing’s being illegal and not okay, to illegal and not sure, to illegal and probably okay, and finally to legal. This is an important point. Freedoms we now take for granted were often at one time viewed as threatening or even criminal by the past power structure.
…If J. Edgar Hoover’s surveillance of Martin Luther King Jr. had been successful in silencing him, it would have affected far more people than King and his family. Of course, many things that are illegal will rightly remain illegal forever: theft, murder, and so on… As law professor Yochai Benkler said, “Imperfection is a core dimension of freedom.”
Schneier, Bruce. Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World (Chapter 7, pp. 97–99). W. W. Norton & Company. Kindle Edition.
Dr. Schneier’s comments are not new; perusing the notes at the end of the book, the reader will find reference to a paper written in 1939, but I became familiar with this concept through his writing, and find it to be an eloquent explanation.
Zamfir’s points are cogent. He is arguing that legality should trump immutability. Whether this is the case or not is likely a matter of opinion. Perhaps we need both kinds of blockchains. I would like to argue a different point, though, not specifically about immutability, but about blockchain as a tool for financial reform.
There is a narrative that I used to hear more commonly about the need to reform financial law. The protections in purchasing and selling various kinds of investments, for example securities, needs reform according to this narrative. Similarly, access to banking needs to be made more available where it isn’t, and more anonymous and decentralized where it is. I am not going to judge the validity of these narratives. I will say, however, that blockchain as a tool of financial reform may very well trump legality, or short- to mid- term adoptability. This is not a point just about immutability. It’s also about censorship-resistance, and perhaps other features that I haven’t thought of.
Zamfir proposes that adoptability is threatened by immutability. I would argue that this is true in the short term, but if there is sufficient adoption, the law will change to meet blockchain. One could still argue that there’s no need to sacrifice the short-term gains in adoption. I would counter that the question is how much social reform for the good can be affected by leaving blockchain as it is (immutable and censorship-resistant). The question shouldn’t be immutability vs. adoption, but rather a cost/gain analysis of loss in adoption in order to affect social change.
Summary: Zamfir proposes that legality should trump immutability in order to spur adoption. We argue that if the social benefits of immutability may be worth fighting to reform the legality of blockchain.
How Beneficial is it for Tokens Such as bitcoin and ether to Be Valuable?
A general opinion I’ve seen attributed to Zamfir many times is that it may be more beneficial for the ecosystem if ether, the native token of the Ethereum platform, is not rising in value (is not a speculative asset). I would like to merely make some comments and observations about the Ethereum ecosystem both in the heavy bull run days and out of them.
Firstly, allow me to clarify that I don’t recall seeing much literature from Zamfir himself on the subject, and this seems to be more of the offhand comment kind of opinion, as opposed to a carefully thought-out and refined position. As such, I won’t take it more seriously than food for thought.
The reasons I see given for the benefits of a lower-value non-speculative ether are cheaper gas (the fees for executing computer operations on the Ethereum blockchain) and less scams and hype. I personally believe the first point to be very important. If gas is cheaper (in a broad sense, without getting into gas limit too deeply) than more complex operations can be run for cheaper on the Ethereum blockchain. In other words, programs of increasing complexity can be written on the blockchain. This in turn allows for more functionality on the blockchain.
I believe that less hype and scams are self-explanatory, but will still briefly explain that if ether’s price is rising, more people are likely to invest. In any group of investors there will be a percentage who do not get what they are doing. As the number of investors rises, and the amount of ether (or whatever) possessed by this group rises, they become an increasingly juicy target. In tandem, if crypto investment is easy to secure, and a certain percentage of projects are either outright scams or so poorly conceived and executed as to resemble them, the number and percentage of such projects will increase as the price of ether rises.
There are still benefits to a speculatively-valuable ether, in my opinion. The increase in investment when ether is valuable and rising means that beneficial projects also have greater ease getting funded. This is very important. There are very, very few currently profitable projects on Ethereum, and the only ones I know of are entertainment. This means that projects building out infrastructure and functionality need alternative sources of revenue, and raising investment is the classic model for this.
The bull runs do not only make it easier to raise funds, they also attract talent to Ethereum. One could argue that these points are one and the same, but I think that it’s worth splitting it into another category. The hype around Ethereum likely attracts more talent to the Ethereum platform, increasing quality and output. (It could just be a function of more money in the ecosystem allowing for higher salaries, but I would argue that the hype itself helps too.) Talent also has more projects to onboard themselves into crypto with.
The hype also causes more awareness, which in turn bolsters the ecosystem. If the New York Times is running a bunch of crypto articles, then people will take more notice. People taking more notice mean that an entrepreneur is more likely to think of an idea for blockchain, a streamer is more likely to put up coding tutorials about it, a coder is more likely to pick up the docs or a tutorial. All of this helps the ecosystem too.
I do not believe that Zamfir necessarily argues with any of this. To extend the turn of phrase used previously, I’m merely chewing over the food for thought.
Summary: While the integrity of the community seems higher with a lower-value, more stable ether, there are also community gains from a speculatively successful ether.
I’m obviously interested in feedback on these opinions and would be thrilled to generate even more conversation. Zamfir has done an amazing job getting us all to talk and discuss these ideas. In closing, I’d really like to applaud his calls to arms, and his willingness to be argued with, in addition to the ideas.