Crypto Baron: Now you mentioned the social contract and for you, that’s “code is law” philosophy.
Charles Hoskinson: Ita’s not just me. I mean there are videos of him on YouTube saying he invented new words for it.
The Ethereum core team was perfectly comfortable going for over 2 years talking about unstoppable applications and saying how they’re not going to roll things back and it’s going to run the way it’s written.
In fact, I remember there’s great paper from the Ring of Gyges which talks about all these legal smart contracts used for bad things like assassination markets and other things.
He asked the Ethereum community and they said that’s not their responsibility. They don’t take a position. The protocol doesn’t care about the code.
Just like Bitcoin. If somebody uses Bitcoin to fund terrorists or buy child porn, it’s not the responsibility of the miners or the protocol developers because it’s a neutral platform that doesn’t care about the transactions.
The whole philosophy was whatever your smart contract is that happens to live on the protocol, we don’t care and protocol will run it. That was the original philosophy.
It was incredibly crystal clear that long after I left, they were pumping it, raising money on it, getting the hype on it, getting developers on it, holding meetup groups about it and doing YouTube presentations and Defcon presentations.
We would not have such a large community in ETC to be a $1,500,000,000 project. We have people willing to work for free. No one’s getting paid right now. ETC Dev is outside of donations.
I pay my guys, but that’s a loss leader. I don’t make any money on it if we didn’t believe in that social contract.
With all due respect, I don’t think it was just a small difference of opinion. I think it was a marketing message that people accepted, they raised money on, they built a community on and when it became inconvenient, they threw away because of legal and regulatory reasons.
Crypto Baron: Absolutely. I’m pretty Switzerland on this issue. I understand the Vitalic and the massive success of Ethereum, as well the argument that this is clearly a bug. However, I also understand the very firm stoic code as law approach.
Charles Hoskinson: Bitcoin fixes bugs in the protocol. There was an error with Bitcoin way back like in 2010 or 2011 where you could manipulate Bitcoin script in just the right way and create billions of Bitcoins.
Obviously, they fixed that quickly, but that’s a problem with the protocol and it violates the social contract. There was a transaction malleability problem with Mt.Gox as the software allows hackers to come in and steal all the Bitcoins. That’s Mt. Gox’s fault.
Some of the Bitcoin core developers had over $1 each in Mt. Gox. They still did not advocate a rollback and they lost millions of USD of their own money.
I think principles are expensive and they’re hard and I don’t care if there was the intent.
I’m pretty sure Mt. Gox had an intent not to be hacked and had it attend for their software to behave in a certain way.
I absolutely know that slockit had an intent for the DAO to work. They were trying to build their brand and reputation on it. If it doesn’t, it’s a disaster for them. I appreciate that.
However, the problem here is in crypto, you can’t go ahead and advertise a certain type of development experience that says you are 100% accountable for your actions and the people that invest in you and work with you are at 100% risk. There is no government. There is no guy that’s going to come and save you if that guy’s a scammer or if the code doesn’t work or if you lose your private keys.
This is the world we’ve lived in since 2009. It’s the Wild West. It’s a harsh one. It’s like saying you’re to go out in the desert and have to provision your supplies. If you run out of the water you dehydrate and die, that’s on you. You didn’t prepare yourself properly, but you’re told that before you go into the desert.
Similarly, this desert may have gemstones, an oasis or a long-forgotten city that you can accomplish and see, but it’s a dangerous world.
In the minute you say people will get a do-over because it’s too big and that person is too important, you’ve basically mean this guy who goes out in the desert and because he’s a celebrity, I’m going to send the helicopter in and rescue him.
Then, what happens to all the other people who died in the desert and dehydrated? What the hell did they die for? What’s the cut-off point? Is it $100,000,000 or $10,000,000?
I mean how would you feel if you had 2 swimming pools and they both have child falling into them. The lifeguard in swimming pool A saves a child. The lifeguard in swimming pool B says immutability code is law and lets that child drown. Then, they say the child in the pool A is Bill Gates’s kid, so it’s way too important. Child B is just an illegal immigrant kid.
That’s the moral hazard in the most concise of terms with what intervention does because you have no standard for when you intervene. It’s all about political connections or outcome. Then, the people you didn’t intervene for losing everything.
I mean at least when you have principles you can say I save no one. We all know that then and we all took the risk.
There’s a cave that people love to go and scuba dive in and it’s a very dangerous cave in South America. Every year, it kills dozens of scuba divers, but it’s a beautiful cave.
They had this little sign and has a skull on it with a saying “if you go in this cave, you’re probably going to die” in multiple languages. However, people every year still go.
When somebody calls and says my friends went in the cave and didn’t come back, the authorities won’t show up. They said we put the sign, so we’ll hope for the best.
That is the world of cryptocurrency. Ethereum has exited that world and it now entered some sort of mid-ground. I don’t know what that is, but it’s not crypto land. It’s something different.
Doesn’t mean it can’t be successful. Ripple is tremendously successful at $11,000,000,000 and has a lot of enterprise customers. I have tremendous respect for Arthur and Chris. I think they’ve built one of the finest companies in the space.
I also have tremendous respect for the people at the Etherum foundation and for the people at a consensus. I think they do tremendously good work. They have a great guy called Yoichi Hurrah. He does a formal verification. It’s some of the best work and the most systematic and rigorous work you’ll see in the space.
However, I will not call that a cryptocurrency because I think what’s happened is it abandoned everything that makes a cryptocurrency a cryptocurrency. It’s a different kind of cave and it’s lost any moral mandate
Crypto Baron: It’s hard to argue with a lot of that.
Charles, I think this question is is a rough one, but I do I have to ask it.
There’s a lot of people out there that do believe if Ethereum classic is essentially an attack on the legitimacy of Ethereum, so how do you respond to this?
Charles Hoskinson: Let’s just look at where it was and where it is. It doesn’t really matter what the thing existed as it was when it was created.
If you really think about it, it was a protest. I’m sure that a lot of people in that protest movement who had a lot of reason to be angry with the Ethereum.
There were people who bought Ether and they felt like they’ve been lied to. There was Bitcoin maximalist who probably thought this was a good avenue to damage Ethereum and prevent it from overtaking Bitcoin.
There were probably people there who said they missed the Ethereum boat. If they could join the ETC boat if this thing could overtake it, maybe they could get the asset at a tremendously underpriced value.
That’s what it was. It was a very chaotic and unstable time. I was in the camp that felt the social contract had been violated. I came in and said I was going to put in developers and community management. We were going to try to be good custodians of this project, helped it along and got it past the crisis point.
Now, we’re past the crisis point. A lot of the short term actors have left. A lot of people on the Ethereum side try to kill it by dumping their Ether classic which they got for free.
There was even tweets from certain people saying: “Free money. I can’t wait to see the price go down. I can’t wait to see this thing collapse.”
There were a lot of people said to use the trademark to shut it down. A lot of people said we should sue Barry Silbert. It was a pretty vicious attack from the EThereum side to ensure hell. There was a vicious attack him from the ETC side to the Ethereum. I’ll acknowledge that. That’s fair.