Op-Ed: Ethereum’s social layer solution vs Bitcoin’s social layer solution


I wrote this to argue that users are the most important layer of defense in a network. [https://techcrunch.com/2019/01/19/bitcoin-social-layer/](https://techcrunch.com/2019/01/19/bitcoin-social-layer/). Here’s an excerpt in which I apply that to Ethereum & The DAO.

## What Ethereum got right

[Since the collapse of The DAO](https://www.coindesk.com/understanding-dao-hack-journalists), no one in crypto should be allowed to say “code is law” with a straight face. The DAO was a decentralized venture fund that boldly claimed pure governance through code, then imploded when someone found a loophole. Ethereum, a crypto protocol on which The DAO was built, erased this fiasco with a hard fork, walking back the ledger of transactions to the moment before disaster struck. Dissenters from this social-layer intervention kept going on Ethereum’s original, unforked protocol, calling it Ethereum Classic. To so-called “Bitcoin maximalists,” the DAO fork is emblematic of Ethereum’s trust-dependency, and therefore its weakness.

There’s irony, then, in maximalists’ [current enthusiasm for narratives](https://medium.com/s/story/bitcoins-social-contract-1f8b05ee24a9) describing Bitcoin’s social-layer resiliency. The story goes: in the event of a security failure, Bitcoin’s community of developers, investors, miners and users are an ultimate layer of defense. We, Bitcoin’s community, have the option to fork the protocol—to port our investment of time, capital and computing power onto a new version of Bitcoin. It’s our collective commitment to a trust-minimized monetary system that makes Bitcoin strong. *(Disclosure: I hold bitcoin and ether.)*

Even this narrative implies trust—in the people who make up that crowd. Historically, Bitcoin Core developers, who maintain the Bitcoin network’s dominant client software, have also exerted influence, shaping Bitcoin’s road map and the story of its use cases. Ethereum’s flavor of minimal trust is different, having a public-facing leadership group whose word is widely imbibed. In either model, the social layer abides. When they forked away The DAO, Ethereum’s leaders had to convince a community to come along.

You can’t believe in the wisdom of the crowd and discount its ability to see through an illegitimate power grab, orchestrated from the outside. When people criticize Ethereum or Bitcoin, they are really criticizing this crowd, accusing it of a propensity to fall for false narratives.

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