Ethereum Classic For Investors #20 – The History & Future Of Ethereum Classic

Crypto Baron: Hey guys, welcome, welcome, welcome everybody to the crypto-times inaugural live stream. I am your host, the Crypto Baron. Today, we are absolutely privileged to be joined by none other than the Charles Hoskinson, the chief executive officer at Input Output Hong Kong.

Charles Hoskinson: It’s a pleasure to be here. I never honestly thought I’d come back to Etheruem. I thought maybe 20 more years in the future, we will do some reunion thing after all the wars had been fought, either we won or lost. However, outside of that, probably not.

However, what happened was one of the guys close to Etheruem, Stephan Tual, formed a company called Slock.it. They created basically a decentralized venture capital firm.

They said look at this amazing thing we’ve done. They made a lot of bold claims. They raised a hell of a lot of money that turned out that there was a flaw and that flaw was exploited.

Well, this is nothing new. There was a flaw with Mt. Gox. There was a flaw with a lot of things and a lot of money’s gotten stolen in the past or lost in the past.

There’s plenty of wallet makers who fucked up and they accidentally burnt tokens or didn’t preserve private keys and lost their money.

This is the danger of using cryptocurrency. One part of the social contract is when you make mistakes, there’s no one to show up to bail you out.

One of the problems though is that the people who started the DAO had some close relationships with the EF. It wasn’t clear that if the DAO was to fail, what legal and regulatory impact would have on the broader Ethereum ecosystem.

Things like Mt.Gox failure with Bitcoin and Karpeles goes to jail. We’re all fine, but Bitcoin lives on. This was a back door that could cascade into the EF, which for the next 2 or 3 years, potentially longer cause a lot of problems for them.

I can understand the political motivation to say: “Maybe we need to reverse this” and kind of “This is the only time we’re going to do backseat, but let’s never do it again.”

However, the problem is when you take other people’s money with a social contract, you have to be completely honest about that.

When you say such thing as code is law, code can’t fail, unstoppable applications and you put a bold red letter that if you do something, you are held accountable for your actions, then you make a decision to abandon that philosophy because of regulatory or legal convenience.

In my view, you’ve completely divorced yourself from everything that makes cryptocurrency special.

2008 is a great example where the government is going to bail people out and fix all this stuff up, they won’t get involved again. Nonetheless, we have to get involved this time to save the free market and save everything.

The problem is that they just keep saying it. They said it with the S&L crisis. They said it with long-term capital management. They said it with the mortgage back security issue. When there is be another crisis coming up, they still do the exact same damn thing.

The reality is the minute that you know you can cross that river, it becomes too tempting to cross it again, especially when you go from millions to billions to hundreds of billions of USD of people’s value and you go from you’re a bad guy to being sued, to going to jail in terms of the cost of not doing that.

If you have a small centralized group of actors who have the ability to do that, they’re going to do it because people are people.

However, the point of cryptocurrencies is they’re not people. They don’t have our values. They don’t have our philosophy. They don’t care when people lose their money.

Over $4 billion worth of Bitcoin has been stolen over the history of Bitcoin. That is about 10% of the supply. If you add up all the thefts and account for the increase in market cap, it’s a big number, yet Bitcoin still here. It’s still got strong principles. It’s still got a lot of adherence. People are still using it. People are building businesses on top of it. Hence, the point is that you pick the moral high ground.

When I heard that they were potentially thinking about rolling things back, I felt like they had defrauded the people who put the money in and a lot of people who work their asses off to build up the ecosystem.

It wasn’t a matter of me thinking that if they fork that it would destroy Ethereum and somehow the Ethereum would not be successful.

In fact, I think it’s quite the opposite. I think the fork actually made Ethereum much more appealing to banks and enterprise actors in governments because they realized that there was a consumer protection component now. They could intervene if necessary for the greater good of society potentially. The community may be on board with that.

Sure enough, post-fork has been established. The value got it from $1 billion to $20 billion now. There’s a huge amount of enterprise and government supporting it. Even the PVOC is saying that maybe this is a good idea.

However, I felt that betrayed what we were trying to do. Always being the guy in the minority and always being the guy on the outside, I philosophically supported ETC and didn’t expect it to go anywhere.

I thought it was going to get killed in a few days, but when it got listed, got developer support, it got momentum. It looked like it actually would become permanent.

I’m very glad that I got involved in. Frankly, I don’t care if it was $1 or $1 billion. I would still come in and make the same decision because it was about giving people who felt like they had been lied to or betrayed their original social contracts and honoring that a social contract.

That was then and where are we at today for ETC. You can’t build a movement on a protest. You can’t build something sustainable by defining yourself by what you’re not. You have to lead.

Now that the community stabilizes, we have 2 independent development teams. One I control and one of them is more community-centric.

We have good community management. We have a podcast Let’s talk ETC! done by Christian Seberino and Carlo. Carlos is also doing a very good job of broadcasting the message.

We have a great community now. It’s getting to the point where we can actually start diverging and actually having discussions about what does the divergence need to look like.

We’ve already had several hard forks just to clean things up such as getting rid of a replay attack, changing the monetary policy to cap it, making it much more Bitcoin-like than Ethereum current monetary policy.

Now, we’re going to have some discussions about what the future consensus algorithm is; how we are going to achieve scalability; how we are going to have much more secure smart contracts; what core programming languages are going to be used to create applications on ETC; how we get ETC to talk to other blockchains.

Because there are many different ways to do these things, the decisions that our community make will ultimately be very different in many cases than the decisions ETH makes.

You’ll see the change kind of diverged very considerably. Then, they’ll tend to be specialized and good for particular applications.

However, one thing ETC will never do is violate its principles. If I recommended rolling back a transaction or anybody else in the community that pitchforks and torches would be kicked out in 20 minutes. That’s one guarantee that you get.

ETC is basically Ethereum with Bitcoin-style ethics and Ethereum is its own thing, which is fine. If you bought Ethers, you can’t really complain because you actually got positions in both chains. The social contract is preserved and now you’ve got this other thing that’s going on that’s tremendously successful.

 

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