There seems to be a misconception that Ethereum Classic is against hard forks, nothing can be further from the truth. Without a hard fork, Classic would cease to exist due to the mining difficulty bomb.
Some people within the Ethereum community are using the hard fork narrative as a pretence to troll Ethereum Classic. Their arguments fail to understand why there was opposition to the DAO Bailout.
Why Immutability Matters
Having an immutable public ledger is the only thing that can guarantee a blockchain is decentralized. The reason why these networks spend millions of dollars on mining is to ensure that transactions on the ledger stay permanent.
Immutability is necessary for decentralized public blockchains, because it’s what guarantees that the system can run without needing to trust third parties. Hard forks that change the ledger’s history violate immutability, whereas hard forks that fix bugs on a protocol level does not.
Once a ledger’s immutability is violated it sets a dangerous precedent and the blockchain can no longer be fully trusted.
The DAO Bailout
Ethereum already had a hard fork when they switched from homestead, which created no conflict within the community. Ethereum established a social contract at its inception, that hard forks would be a natural part of its evolution. Ethereum Classic, being a part of the original social contract, has no problem with hard forks and will continue to use them for protocol upgrades.
The main issue with the DAO hard fork, is that it changed the immutability of the public ledger in order to compensate for the failures of a third-party application. It was not a fix on the protocol level and violated the original social contract to bail-out a private company called slock.it
The reason for the bailout is because the DAO was “too big to fail”. Having millions of dollars lost by reckless investors may have been detrimental to the Ethereum ecosystem.
We see bailouts all the time, when companies such as banks are so big that the impact of failure would be detrimental to the economy. The problem with bailing out these companies is that it’s done on the backs of taxpayers and creates a system of crony capitalism. Banks will act recklessly without fear because they can escape the consequences of their mistakes.
The DAO was a reckless mistake for many reasons:
- Security audits should have been done before and not after accepting funding.
- Slock.it was trying to use security as a way to profit from charging for its services.
- Investors blindly shovelled in $150M worth of ether without conducting due diligence on the fundamentals.
- Vitalik invested in the DAO, which created a conflict of interest to hard fork the ledger for an application that had nothing to do with the protocol.
- The DAO violated its terms and conditions and used false marketing hype around immutability.
- The general attitude around the DAO was one of hubris and there appears to be no remorse for violating Ethereum’s main value proposition.
A Dangerous Precedent
The DAO bailout set a dangerous precedent of being able to arbitrarily change the state of the ledger. Vitalik may be well intentioned but he’s changed the rules of the game. Rather than keeping a neutral ledger that lacks discrimination, he’s becoming the arbiter of smart contracts and a benevolent dictator for Ethereum.
Ethereum is on a slippery slope of mutability. One controversial example is EIP156, where Vitalik suggests the refund of broken smart contracts.
It is understood that there may be a risk that this proposal will be viewed controversially as it is in some sense a “rescue” rather than a “technical improvement”, even though it is arguably much less intrusive than previous such proposals for the reasons outlined above; the proposal is created in order to allow community discussion and debate and does not signify full endorsement.”
Imagine if Bitcoin developers decided to hard fork the ledger to refund everyone who’s lost their private keys. While this proposal may have good intentions, it kills immutability and makes Ethereum more centralized.
This may also set a legal precedent, how can the Ethereum Foundation guarantee that contracts won’t get censored by regulators? Could it be possible for them to pressure the foundation into making further changes via hard forks? An example is Augur, a prediction market built on Ethereum yet online gambling is illegal in the U.S.
As much as some people want to criticize Ethereum Classic, it’s a testament to the free market and decentralization. Even the majority cannot force everyone into adopting changes they don’t agree with.
It’s possible that the Classic chain is actually a hedge that can protect Ethereum from being legally meddled with. In the event that Ethereum gets legally challenged to hard fork, they can argue that doing so contentiously has consequences that can fragment the network.
Ethereum Classic is a blockchain that remains impartial to all smart contracts and transactions on the ledger. The project aims to keep the original Ethereum social contract of immutability alive. Like Bitcoin, Ethereum Classic is organized by a community of volunteers, making it truly decentralizied.