So, once more the world of cryptocurrencies has been rocked by conflict, controversy and uncertainty – fortunately for us bitcoiners, it’s happened on the other side of the fence: Ethereum. If you follow this blog regularly, you’ll remember it wasn’t very long ago that the DAO disaster punched a massive hole in the Ethereum project, and it’s been reeling ever since. If you need a quick recap, here’s what happened: someone exploited a loophole in the Ethereum smart contracts feature to take lots of money out of a fund that had been accumulated to give to selected startups and other tech projects. The price of ETH plummeted, followed swiftly by its reputation. Since then, the community has been trying to come to a consensus about what to do next. Last week they decided to roll back the blockchain – or fork, if you’re using the proper jargon – so that the stolen funds returned to their rightful owners. The problem is, not everyone in the Ethereum community agreed, and a small group of developers and miners decided to keep the original blockchain going, and Ethereum Classic is born, with its currency ETC.
Double or bust
Keeping the original blockchain alive meant that suddenly there were two versions of the Ethereum blockchain. And as soon as you start running two versions of the same blockchain, you run into a unique problem: your currency now exists twice. Albeit in different guises, and currently with different dollar values, but whatever you previously held in ETH you now also hold in ETC. Confused? You have every right to be – and it gets worse. Because the blockchains are duplications of one another, your coins have the same address on each of the two networks. Which means you might unintentionally end up double spending (unless you’re prepared to jump through all kinds of hoops to create new addresses for your deposits in one of the systems). Furthermore, any exchange platform which doesn’t pick up ETC could be said to be withholding funds from their ETH depositors. You couldn’t make it more complicated if you tried.
Not all forks are created equal
Clearly, things can’t continue like this long-term. Leaving identical coins with identical addresses on parallel blockchains is just asking users to lose faith in your project, so one of the Ethereums is going to have to give in and create a hard fork. Problem is, each side thinks the other side should do it. And while I can agree to some extent behind the majority rule vote, the Ethereum Classic community have a strong argument in their favour. For one, they’ve left the blockchain intact, and accepted the DAO losses as part of the Ethereum learning curve. If you share their belief in the idea that blockchain transactions should be final and irrevocable, you could find yourself torn between pragmatism and ideology. What’s right isn’t necessarily what’s best.
A protest or a rival?
Despite pundits claiming that a ‘fundamentalist’ version of the blockchain might remain following the Ethereum fork, the prevailing attitude was that it would quickly disappear through lack of interest. But that hasn’t happened. Instead, the Classic network accounts for around 13% of Ethereum traffic, and has a currency that’s already listed by the main exchanges – albeit at a lower dollar value than its stable-mate. For a project that’s not even a year old, but accounts for the second largest userbase in a public blockchain, these are some pretty big waves. It might turn out that Classic is just a ‘protest’ project that’s still attracting attention past its sell by date. Or, Ethereum may have just created its own shadow. Whatever happens next, I think every blockchain project can learn something from these events, and take action to keep their currencies intact.
This article represents the personal opinion of the author and is not a recommendation to buy or sell Bitcoins.