Within the framework of the author's column, Anton Trusov, the founder of Nanopool, one of the largest pools for the production of altcoins, and CTIO of the Finom AG blockchain company, talked about the so-called “Ether wars.”
Is there really such a thing as a decentralized blockchain? The only network without a creator is Bitcoin. But even that is dependent on ASIC corporations. As a result, the destiny of the most powerful networks is solved by only a few people. And what do the miners think? Let us look at the history of Ethereum and Ethereum Classic.
Three years ago, the genius programmer Vitalik Buterin created the Ethereum blockchain universe with digital money, which is highly valued in the real world. Thanks to this system, each of us can make our own cryptocurrency using smart contracts.
But almost immediately after the launch of Ethereum, a disaster happened. In one of the applications on smart contracts of the DAO cryptocurrency fund, there was a loophole through which a hacker, managed to withdraw from $50 to $64 million in cryptocurrency according to various sources, or half of the entire fund.
The hacker’s program looped the DAO to create subsidiaries, rewarding the owner with tokens. The coins flowed down the river.
And they would have flowed on, but the system delayed its crash. According to the rules of the DAO, it is possible to withdraw cryptocurrencies only after a month.
So, imagine, they had about 27 days to find the thief and save their reputation. The countdown started.
Back to the Past
The decision was swift and brilliant in its madness. The creators of the platform decided to conduct a hard fork or roll back all DAO transactions to the moment of the hack as if it had not even taken place. A literal return to the past.
According to the plan, the new branch of reality should have included everything, and the hacked one had to be destroyed. But alas.
When Buterin and his team reported on the fork, accusations of authoritarianism and violation of their own rules poured at the company. After all, the basic commandment of the platform is to work only as it is programmed, without censorship, downtime, or interference by third parties. If a hard fork is applied, the Ethereum code will no longer be inviolable.
The creator surrendered under the pressure of the crypto community and announced a nationwide vote. The miners that the life of the network depends on had to decide the fate of Ethereum. To do this, they "rigged" the size of the blocks in the chain to more or less, adjusting the limit of gas fuel for the blockchain.
Buterin arranged two flags: "in favor" and "against.” If you want to fork, then open the gas valve, otherwise touch it not.
The large pools launched their vote to take into account the opinion of each miner. Nanopool and Ethermine included a special option in the program settings through which the farms linked to the pool. People literally expressed their civil positions through computing power.
The referendum went on for two weeks. The miners sent shares to the pools (parts of the work) with their voices, and the hacker waited for the moment to withdraw his loot.
About 20% of the miners voted on Nanopool, of which 15% voted "against,” and the overwhelming majority voted "in favor.” Not very legitimate, less than attendance in the Russian presidential elections, but enough to calculate that the users clearly wanted to punish the perpetrator.
Problems of Parallel Worlds
An impressive part of the custodians of the blockchain refused to follow the creator. They decided to continue the chain in the original reality. There was a schism, and parallel worlds were formed: Ethereum Classic and Ethereum.
Buterin left a so-called "complexity bomb" as a memento to the inhabitants of the old branch. This thing goes off at a certain moment and increases the complexity of mining. And this was done, according to the covenant of the creator, to pass to a new Proof of Stake consensus algorithm. According to it, a miner with a thicker wallet is more likely to find a block.
The developers of Ethereum believe that PoS will save energy. Their opponents, however, see in it the collapse of decentralization. In such a network, the more coins a miner has, the more rights and opportunities they possess. Once again, the rich will get richer, and the poor will get poorer.
No matter how many coins you invest, there are banks and exchanges that will always have more. With the PoS Ethereum algorithm, it simply digitizes the existing financial system. But the supporters of Classic do not want this.
The Schism Smolders On
A new fork of Ethereum Classic took place on May 30, 2018. Thanks to this, the "bomb" was destroyed. But the disagreements between the old "friends" remained. The Classic community is even further away from Ethereum.
There are many new consensus algorithms: Proof of Importance, Proof of Stake, Delegated Proof of Stake, and others. But all of them can be more centralized than the good old Proof of Work algorithm, because decisions on the network take a limited number of individuals, no matter how they were elected.
Will all the crypto groups ever reach consensus? If not, what will win, centralization or distribution? New schisms await until a compromise is found because the duality of reality has become a salvation not only from hackers but also from the excessively active ASIC miners, who are able to seize the network. For example, the Monero fork caused not just a bifurcation of the network, as there were those who proclaimed as many as four new coins: Monero Classic, Monero 0, Monero Original, and MoneroV.
The problem of choice has long haunted both blockchain developer and miners. Ethereum had already violated the fundamental commandments of blockchain once. We cannot be sure that this will not happen again. But if the choice arises before the Classic community or your network, what will you do?