Crypto n’ Coffee Recap #2
Date: October 17, 2018
Here in Madison, home to UW Madison’s Badger Blockchain, it’s officially the beginning of the end of all known warmth (except our coffee, of course).
But you know what? Honey Badgers don’t give a s***.
That’s why we bucked up, bundled up, and huddled over our piping hot cups of coffee this week to discuss:
- San Francisco Blockchain Week
- An open source community gives non-developers the false impression of quality code at all times.
- The critical mass of projects and how that influences its development.
- The nature of the technology changes how people value blockchain projects, and how different this is then investing in a normal stock or company.
San Francisco Blockchain Week
Roz Stengle and Brennan Fife attended the 2018 San Francisco Blockchain Week and found it preeetttyyyy cooool. So cool, in fact, that they wrote up an overview of their insights and adventures (To be posted).
Open Source … Contemporary or Catastrophe?
Blockchain is sometimes believed to be a springtime field of open-source beauty: there’s a shining standard of accountability, diligent developers checking one another’s code, and an overall fower-picking Woodstock harmony.
We would like to respectfully disagree.
Speculators may not have the ability to parse through and validate a projects work, so they falsely rely on other developers to hold each other accountable. While many blockchain projects are open source, this doesn’t necessarily make all of their code accurate.
Here’s why:
- Decentralized accountability, decentralized blame
Blockchain communities are often decentralized. But that also means that their responsibility is decentralized. Without an entity to place blame on when something goes wrong, people are not held accountable for their wrongdoings.
For example, icons such as Vitalik will be questioned for issues on the Ethereum blockchain, and Rodger Ver will be put on trial for Bitcoin Cash. Other developers tend not to take blame for the bugs they push onto the chain, but rather outsiders will look to the protocol itself for allowing such issues to persist.
The asset or project will be degraded instead of rebuking the source of the problem. In turn, this creates negative connotations around blockchain as a whole and doesn’t make developers think twice before deploying million dollar exchanges or smart contracts, risking everyone’s wealth.
2. Bugs spread like viruses, doctors otherwise occupied.
The beauty of open-source code is that developers don’t have to start from scratch every time they want to create a feature. They can simply look on Github or Stack Overflow and find a base for the feature they need.
The unfortunate pitfall to this is that these niche features are often pushed by intermediate developers who may or may not have double checked for bugs.
Once copied, these bugs will propagate throughout the community to unknown places at unknown speeds.
We expect that people will check over this code, but there are hundreds of coding languages with different logic. What experts will have the time to doctor the code? To check logic and alert the community? Will they really take the time out of their day to critically look at a small ICO?
No, and I would hope they don’t often unless they are making a personal investment. Their time and brainpower should be focused on industry-changing projects. #KnowYourWorth
There is hope, though. Somehow Wikipedia, one of the most famous open-source projects, has managed to create an ecosystem of accountability and accuracy for even the most obscure topics. Hopefully the blockchain ecosystem will evolve in a similar fashion.
But for now, this code needs to be triple checked: appreciated with a critical eye, and taken with a grain of salt.
3. Financial Incentive to Exploit the System
When developers do find a bug, in the case of centralized exchanges, there is a financial incentive to exploit the code instead of an incentive to alert the community.
Andreas M. Antonopoulos referred to centralized exchanges as, “large honeypots, with the world’s best hackers continuously attacking the system at all times”.
Hackers have taken hundreds of millions of dollars from the exchanges, frozen wallets, and killed smart contracts. Yet, rarely anyone hears about those that are working every day to fix blockchain bugs.
The community focused on incentive structures, we are being quite hypocritical. Hopefully the blockchain community will begin to empower the good to increase security and reputation.
Thanks to the 2018 Madison Blockchain Hackathon, developers may have found a solution to the open source issue.
Smart contracts cannot be changed once deployed, so checking for bugs is essential to the security of your decentralized agreement. Unfortunately parsing code is hard, and has lead to large hacks like the Parity Hack in 2018. The smart contracts should have had rules in place to make sure certain states were not possible. For example, when kill() was called, all Parity multi-sig wallets became permanently frozen (source: Anthony Akentiev).
Fortunately, there is a new solution to this state-check dilemma.
Solispidy is using a formal verification to detect bugs in smart contracts BEFORE deployment. Charles Rosenbauer and Ian Nordan developed this system and won the grand prize at the 2018 Madison Blockchain Hackathon and will be making the code open source in a few months.
Reach out to us if you’d like to contribute or help with Solipsidy, or are interested in their progress!
Importance of Critical Mass
For a blockchain project to be successful, projects have a push to reach a critical mass of people to continue to innovate and grow.
What is critical mass? We had a few ideas to explain it:
- The number of ecosystem participants needed such that they can reliably give value to one another.
- The number of people consistently using the project/token such that developers be incentivized to continue to build the project.
- The number of people needed to create a powerful word-of-mouth, such that the project can organically grow without any marketing.
This critical mass is a development incentive: with a healthy ecosystem, developers will join the project and feel a personal push to correct bugs, build updates, and contribute (if possible) to the governance of the project.
Changing Investment Valuation
Many people want to jump on the next project going to the moon, but there is no clear way to accurately value cryptoassets.
Stocks and startups are evaluated by their team, business structure, history, and are compared to other options within their market.
Compared to cryptoassets, stock valuation is a breeze.
Blockchain projects don’t have an industry standard, a history to compare, the industry is moving at an astonishing speed, and it is nearly impossible for non-nerds to see how accurate the code actually is.
As the community grows, we will hopefully see a standard emerge.
For now, we must rely on projects like Bitpayper and Crypto Briefing to give us an objective, comparable evaluation.
Concluding Thoughts
Maybe it’s just the bear-market air talking, but this week’s discussion was heavily critical of the blockchain space.
While we have incredibly talented developers and members of the community, it is important to not view blockchain as the golden egg of technology.
At Bager Blockchain we are making sure to keep ourselves grounded with thoughts on the open source community, valuation, and more.
Tune in next week for more pondering thoughts, but for now enjoy your warm coffee!
