Some really interesting things can happen with decentralized systems. In decentralized systems, there is no single institution running the show. So while the creator of Ethereum, Vitalik Buterin, was calling for one action to be taken, there is still a minority whose principles just won’t go away.
So what happened? Ethereum was built to handle smart contracts. Smart contracts can be simple, or something as complicated as a full-fledged corporation with shareholders and dividends. One such contract was written, and went live on Ethereum’s network. It was called the DAO. Hundreds of millions of Ether started pouring in to what soon became the world’s largest crowdfunded project in history. Until a hacker found an exploit in the DAO’s contract and funneled out a huge stake of that crowdfund and into a child DAO that he controlled. According to the contract rules, the hacker was unable to move coins out of the child DAO for about a month. You can imagine how disastrous this was. Due to the sheer size of the DAO, Vitalik and much of the community felt there was something that needed to be done to address this or the hacker would walk away with hundreds of thousands of Ether worth well into the millions.
What could the community do? The only thing would involve an augmentation of the entire platform, a re-writing and implementation of a new code that erased the DAO from existence and returned the invested funds back to the investors. Most of the community supported this change, as it meant that they would be returned their Ether. A small minority protested, and the philosophical debate was fierce:
On the one side, immutability has been heralded as the cornerstone for financial networks. The community should not have the power to “vote away” wealth accumulated to certain individuals, or reverse bad investments, or otherwise move money without the consent of the owner. This is essentially theft, and these people morally opposed any fork that forced money out of the hands of one and into others. It set a dangerous precedent.
On the other side, those who supported a change in the code to erase the history of the DAO, made their arguments: It was obvious the money taken from the DAO was a theft, and if we can do something, we should. Also, Ethereum is meant to be a computing platform, not necessarily a money. While some traded it like a commodity, it was not designed to be such. And finally, Bitcoin had to go through some hard forks in its infancy as well.
Both sides presented some arguments, forking code was written by Vitalik and Co. It was up to the miners and pool and node operators to implement the new protocol. A vast majority decided to vote pro-fork, and Ethereum "successfully" hard forked a few days ago. But it left behind a disgruntled minority who felt no need to run the new protocol. A vocal minority continued to run the old code, and began to build tools around it. The minority rebranded their blockchain “Ethereum Classic (ETC). Poloniex, announced they would allow trading of Ethereum Classic, and anyone who held Ethereum at the time of the fork suddenly found themselves holding both Ethereum and Ethereum Classic. The network had forked into two, nearly identical protocols running in near parity, one with the DAO tokens, and one without. You can compare the two’s chain states here. Ethereum Classic now lives on and, while the price has tanked and the hashrate but a fraction of Ethereum, will continue to live on, boasting how it is immutable, and the original chain. Bitfinix recently annouced they will add ETC trading, and Shapeshift.io also mentioned they may support the Classic chain.
Who knows how this story will end. Traders are speculating. Will Ethereum Classic die, or live on as its own currency, drawing the support of those who value immutability over adaptability? Time will tell. Maybe it will live on, or maybe its time to Make ETC ETH again.
Thanks for reading!
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