Parallel dimensions, quantum physics, alternative universes and time travel have always fascinated most of us, inspiring many of the stories we grew up with. After Binance suffered a $41M hack on May 5, and the subsequent–and deeply controversial–blockchain rollback discussion, we could say that we got to experience our very own short story creation, albeit on a much smaller, contained scale. Call it a slip of the tongue, lack of sleep or desperate, hail mary attempt by Binance’s CEO Changpeng Zhao, the truth is the “unspeakable” Bitcoin blockchain rollback debate attempt was out in the wild, even if it didn't sound very plausible in the first place. However, the idea of reverting transactions, “going back in time” to undo the consequences of an unwanted situation is not new, and many were reminded of a previous precedent, that went much further, after the now infamous Ethereum’s DAO hack back in 2016.
It may be far-fetched, but if we take a quick glimpse into the future, and we imagine a scenario where blockchains store decades and even centuries of official information (from financial to historical data), the idea of an “editable” blockchain could very much resemble an instrument similar to a time machine. This instrument would have the power to rewrite truth, not only confined to financial transactions, but historic timelines, narratives and personal identities. The ability to rollback a chain by a group of individuals, a big company or a tyrannical government, will most certainly be considered a weapon capable of mass deception, propaganda and even unparalleled destruction. However before losing the run of ourselves, let us start at the beginning…
First Leap Into The Unknown
In 2016, the Ethereum network and community had to take an almost impossible decision that ended up changing the course of the project forever. After the DAO (a smart-contract based “decentralized autonomous organization”) was hacked, putting more than $50M in jeopardy, the still young project was at the brink of destruction. Sadly, the only viable option to recover the funds and undo the impending catastrophe ended up being a non-contentious hard fork of the blockchain. The rest is common knowledge by now, with the birth of Ethereum Classic (which is after all, the original chain). But that was not the only split that took place during that time, two fierce, opposite opinions emerged. On the one hand a more rigid, fundamentalist side, where censorship resistance and immutability is to be protected at all costs. On the other, a more flexible side, taking a more pragmatic and adaptive approach, yet highly prone to controversial decisions.
Immutability is without a doubt, one of the core principles of the technology. After all Bitcoin was created in an era of bank bailouts and general distrust of corporations, governments, politicians and similar positions of power. On the other hand, it’s to be expected that many situations like these will take place again in the near future. Honest mistakes do happen. Should that be a reason to throw it all away when there’s also the possibility to undo the damage? Technical bugs are to be expected in any kind of technology, old or new. Confirmed, malicious hacks and thefts, sadly, will always be a part of the landscape. If the financial infrastructure of the future will run on these platforms, it seems logical to demand a more predictable and reliable pathway.
Funds No Longer “Safu”
While certainly not the same level, the theoretical rollback scenario of Binace brought back the old familiar feeling. This time the severity is somewhat more accentuated, because it was not directed at the up-and-coming, still-experimental Ethereum blockchain, but to Bitcoin. This instantly generated a lot of critics from many leading figures in the industry. Even proposing such a course of action can be seen as blasphemous. Bitcoin’s blockchain immutability is almost sacrilegious at this point. Technically, the proposed methods devised to reverse the hack were different than with the DAO, however it shed light on another alarming theory: that Bitcoin mining is so deeply centralized that it could be commanded at will, as easily as a snap of the fingers. The debate was put to rest as quickly as it started, since logically in this case, the consequences and impact would be far more tragic than the theft itself.
There have been many similar heists in the past. These heists have affected exchanges, smart-contracts and even blockchains. This time, the initial spark of it all was “only” $41M stolen funds, a rather modest sum considering the previous long list of incidents. So the question there remains…how much capital loss deserves a blockchain rollback? What about DAO levels? What about $1B? Perhaps no rollbacks whatsoever under any circumstances? The lack of governance in Bitcoin and other similar cryptocurrencies is widely considered a feature — not a bug. While projects like Decred and Tezos are experimenting and trying to come up with protocols featuring on-chain voting mechanisms, the default governance solution for 1st generation blockchains, seems to be the lack of it. This is especially the case where mining alliances can switch sides so easily, sometimes dangerously disregarding the opinion of the community and stakeholders. This may seem a rather naive, or at least infantile stance to hold, particularly when the only real alternatives are to fork away (destroying accrued value and legitimacy in the process) or sit back doing nothing in the face of both great injustices or rather trivial mishappenings with potential dire consequences.
Going back to where we started, it gets more complicated when we consider that not just money will be at stake in the future, given the assumption that blockchain technology succeeds. Blockchains could indeed be able to adopt certain standards and deploy emergency protocols. A simple example is implementing a Bitcoin Layer 2 solution, where a hack or bug could be “contained” at the side-chain level before it gets permanently written into the main-chain, akin to a simple fail-safe mechanism.
So what happens then when the data in question are more important than just “mere” financial transactions? In an almost utopian future blockchain world, the combination of smart-contracts, decentralized oracles and prediction markets would most likely be the de-facto authority for the most precise, updated and trusted information in the world, including breaking news, scientific journals and/or any other pieces of critical data. Needless to say, the ability to influence and control what gets to be considered as “true” could have unfathomable consequences. Without a solution on the horizon, we continue to swing from blind faith in an immutable deity, to a tempting yet dangerous proclivity to intervene and play god.
Apparently where we’re going, no roads are needed.