Sunday, September 11, 2016

The Value of Immutability

Public immutability is the killer app of Bitcoin. It is literally the only place in the world that you can write a message in a way that anyone can read it without concern for censorship or backlash. In this post I outlined the digital land concept and the value proposition behind that, so in this post I want to focus on how Ethereum really shit the bed by violating that, and as Ethereum Classic begins to make changes I could very well see it overtaking ETH in market size in the future.

As it stands Ethereum is the dominant player in the market, and it makes sense because there are many apps being developed on the forked ETH blockchain. Many of these apps are illegal to build in a centralized way in the US, including a poker app and a prediction market, both of which will be coming out soon. As it stands now these businesses will live on ETH, though technically they could probably be ported over to ETC were ETH to somehow die.

Why would ETH die where ETC survives? Immutability. When ETH forked, they set a precedent for overwriting bad smart contracts. This precedent implies that with enough carrot or stick, it should be possible to do it again. If you are running a decentralized prediction market, it's pretty important to your business that you can trust the immutability of a the blockchain that this market is built on.

The Motivated Despot President
With our election coming up it is natural to imagine that there is a market for betting on the election. As it stands there is a growing bet out there with an opinion, but it's not likely that this represents a legitimate assessment because the numbers aren't really big enough and the weighting really disincents new money coming in. So maybe Gnosis launches in time for the election and maybe a DAO sized amount of money goes into the presidential bet.

Maybe the future president decides to declare war on someone along with a state of emergency, and with the enhanced power of the office decides to confiscate the funds put into the bet, since it is illegal to bet on elections in the US. Given the precedent of the DAO, they have a formula for doing that: threaten to prosecute every American citizen in the contract, threaten to extradite every non-American citizen, put the full weight of the US government behind that threat, and it probably will happen. 

Can ETH survive another hard fork?

You Got Un-forked
Ethereum was a massive undertaking, and credit needs to go where credit is due. ETC straight up stole their intellectual property, but now that it's here that community will have the opportunity to correct a number of things in ETH that need to be corrected. They can cap the coins, they can remove the difficulty bomb, they can avoid the move to proof of stake. They can do that because like Bitcoin, their community doesn't have a central leader with a vision like Ethereum's does. 

It is actually imperative on the ETC community that they demonstrate their ability to improve their code and adopt new ideas if they want to attract projects. As it stands now there are many variables that are keeping ETC down, but were they to demonstrate a vibrant developer community committed to growth of the network, I expect that there would be many projects willing to work with them due to immutability and maybe also cheaper gas.