On The Topic of Morality, Finality and The Blockchain

I recently read that an Ethereum miner received an unexpected sum of $2.6 million. This was due to a user error in which someone with a lot of Ether accidentally paid an enormous gas price for a transaction. You only need to add a few zeros to one input to do this (and have the money of course). This unfortunate individual was only trying to move about $100 in value when they paid the enormous sum.

The lucky Ethereum miner offered to give the money back to the user. This may be an interesting starting point to discuss character and morality in automated, trustless, decentralized systems, such as blockchains. I often hear my blockchain development colleagues say “Code is law”. For the uninitiated, that means that, unlike traditional financial systems, there is a certain distinct finality to events that occur in completely machine-legislated mechanisms where no one party can reverse machine decisions. On the Ethereum blockchain, agreements between parties are legislated by smart contracts or the protocol itself. Pay too much in gas? There’s no one to really compel the receiver of those funds to reverse that error. Same goes for the Parity debacle in which over $100 million dollars was frozen and locked off from thousands of people due to a programming error in a multi-sig smart contract. The only way to reverse that particular phenomenon would be for over 51% of Ethereum miners (represented by hundreds to thousands of people around the world) to vote on a hard-fork and disrupt the entire blockchain ecosystem. They opted not to do this. Were they wrong in this? What about the people who’d lost so much money?

People take things that happen to their money incredibly personally. I know I have, especially when I lost nearly most of my small investment in a South American lithium mining startup a few years ago. However, as in blockchain-based markets, there’s not really anyone I can complain to with the expectation of recourse. Should I even be able to? I’ve also witnessed other misfortunate outcomes from participating in a few blockchain-based coin offerings. I’m still holding on to most of these assets, because you never know. Further, I’ve actually made the aforementioned mistake of adding too many zeros to a gas fee in my code and paid nearly $40 to process a small blockchain-based transaction. More interestingly, I once launched a smart contract that was vulnerable to an attack and lost a few hundred dollars. Oddly enough, the hacker messaged me to chat about the hack. Because “code is law”, and because he had used the rules of my smart contract in a way I had not intended, he reaped a benefit that many might claim as unethical. The gentleman kept most of the money (though he did give some back, because I guess this anonymous actor enjoyed chatting about it with me). The key was that I made an error, it was exploited, and this happened on a system with value transfer finality. We discussed whether it might be morally hazardous for him to return to me all of my lost funds. We resolved that it would be, as personally as I do take personal money. If a vending machine has a secret button on the back of it that spits out free sodas, is it wrong to know the secret and use the button?

Many decentralized casinos have been hacked due to the smart contract creator’s random number fallacy on the Ethereum blockchain. The rules of the game are usually simple: predict a future number correctly, reap monetary reward, lottery-style. However, some have come up with savvy ways to calculate instead of guess theses numbers. Is this wrong?

There are many ethical debates around this sort of topic, and the resolution anyone might come to is distinct to their background and personal views. However, what makes blockchain-based markets so interesting is that the arbitrary nature and linguistic ambiguities of moral and legal codes are removed, so that code can truly be law. Justice can be truly blind. This has its pros, but certainty its cons. Buyer beware.