Ethereum’s failure is Bitcoin’s success

Note: This article is a rebuttal to an article published on Motherboard in July titled “Why Ethereum Succeeded Where Bitcoin Failed”. Babbitt also published a corresponding translation titled “Why Ethereum can easily solve the fork problem that has troubled the Bitcoin community for many years?”

Ethereum recently implemented a hard fork on its blockchain, which was a small compensation for the victims of the DAO smart contract. After the hard fork was implemented, some people immediately started shouting the word "victory". It even incited some supporters of Bitcoin's expansion hard fork, who used this as an example to show that hard forks are not as terrible as imagined.

Of course, the fact is that you never know how successful a hard fork is until the blockchain tokens appear on major exchanges. Initially, most of the mining power shifted to the new forked Ethereum blockchain, and speculators began trading the initial chain tokens (Ethereum Classic, ETC) on Bitsquare and Bitcointalk. Then, Poloniex decided to list ETC, giving speculators a chance to show the world the value of both chains.

Moreover, we have enough reasons to ignore the Ethereum hard fork, because it is completely different from the hard fork that the Bitcoin community has been discussing for a long time. Bitcoin Core core developer Peter Todd said:

Ethereum (hard fork) is not solving a technical problem, but saving a company or group that has screwed up. This hard fork cannot fix any technical problems at all.

The Bitcoin community understands their social contract

At this point, I can say that the Bitcoin community is very aware of the core value proposition of its blockchain. Simply put, the identity of the holder of the electronic currency is very important to Bitcoin. That is, any change in the historical record of the ledger, such as the way the Ethereum community handled the DAO, is intolerable. For example, after the Bitcoin exchange Bitfinex was stolen nearly $62 million, the community did not consider forking the blockchain.

When asked about past attacks on Bitcoin, and specifically MyBitcoin, Bitcoin Core developer and Ciphrex CEO Eric Lombrozo said:

In the past, Bitcoin has experienced several major thefts and attacks, but no transactions have been rolled back. Hard fork proposals have not even been put on the table. I was even disappointed in the early days because I thought some cool things would not be possible without hard forks. But then I understood a lot of the real working mode.

In fact, hard forks are taboo. Even if you want to go in that direction, no one will take it seriously. In fact, everyone knows that executing a hard fork requires a bit of high-handed politics, but unless everyone agrees, it will only lead to disaster in the end.

According to Lombrozo, Bitcoin Core developers have always known that a hard fork is essentially the start of a new currency model; however, they also knew that such a fork was possible. After all, the Bitcoin Wiki has a list of changes and features that developers would like to see, including a possible hard fork.

In fact, a hard fork of the Bitcoin blockchain could happen at any time once developers, users, and miners decide to split the network. But such a split is tricky for two reasons. First, a network split would also split holders of digital gold or digital assets like Bitcoin into two different tokens. In this way, the network effect of digital gold would be weakened.

Second, this network effect creates a situation where the majority of users can force a minority of users to accept changes to their system. Lombrozo said:

It will be a very difficult battle for the weaker (less numerous) chain.

In the case of the Ethereum hard fork, the ideological differences between the two chains were so great that they supported their coexistence, but the ETC story does not end there.

Some advanced privacy features, such as coin mixing services, can help prevent some thugs from activating malicious hard forks. But hard forks related to Bitcoin social contracts, such as Bitcoin monetary policy and block capacity limits, can happen at any time. In order to protect the core value of Bitcoin, we still have a lot to do.

Bitcoin gains security through simplicity

Some people think that Bitcoin is moving too slowly, but the fact is that moving too fast can cause more serious problems (like what happened with the DAO). Bitcoin Core developers are taking a slower pace and taking a more systematic approach to embedding smart contracts into the Bitcoin blockchain.

In fact, Bitcoin has developed very quickly this year. Since the basic development roadmap was passed at the end of 2015, the following goals have been achieved this year:

1. libsecp256k1 signature verification speeds up by 7 times

2. Check Sequency Verify (CSV) is activated

3. BIP 9 brings first soft fork change to Bitcoin

4. Segregated Witness (SegWit) written into Bitcoin Core client (not yet activated)

5. After Segregated Witness activation, Lightning Network will enter Bitcoin mainnet

6. Rootstock launches closed beta testing of Ethereum-like Bitcoin sidechain

7. Matt Corallo, Bitcoin Core developer and Blockstream core technical engineer, launched the Fast Internet Bitcoin Relay Engine (FIBRE), which enables block propagation between nodes with almost no delay.

8. Compact block relay was added to Bitcoin Core 0.13.0, greatly reducing the amount of redundant data transferred between nodes

The above are just some of the more critical examples. Most developers consider Segregated Verification and Lightning Network to be two important developments in the history of Bitcoin. Todd said:

Bitcoin is growing very fast. There are about 20 to 40 Core developers working full time, and even more if you include the Lightning Network. It’s true that some community members haven’t gotten what they wanted, but the community is indeed accelerating and making progress.

Bitcoin has users

Another factor to consider when comparing Bitcoin and Ethereum hard forks is that Bitcoin has a large user base. The smaller and more homogeneous the user base, the easier it is to make important decisions to change the protocol. Todd said:

Unlike Bitcoin, Ethereum has very few real-world use cases. Not many people use Ethereum for cross-border currency transfers, no one uses Ethereum for black market transactions, and no one uses Ethereum for donations...DAO can be said to be the only product launched by Ethereum, and Ethereum itself is very young. This makes it much easier to reach a consensus on changing the network because it lacks a user base and the interests of network participants are relatively simple.

In short, the Bitcoin community is not inclined to reverse blockchain records. The Bitcoin scripting language system is not complex to avoid catastrophic events like the DAO. Bitcoin's success also means that the platform has actual users. These users will be negatively affected by the various problems brought about by two split blockchains or a controversial hard fork.

Simply executing a hard fork does not mean success, and the specific situation should be analyzed on a case-by-case basis. In the Bitcoin network, not performing a hard fork actually represents success, because it means that our system is decentralized and it is difficult to reach a consensus on protocol changes.

At the same time, this also means that more controversial features will not be added to Bitcoin, while non-controversial improvements such as CheckLockTimeVerify (CLTV) and CheckSequencyVerify can be added to the system. Some experimental features can be tested on sidechains, such as Rootstock, which can separate speculative use cases of the blockchain from the main chain.

For public chains, adaptability and flexibility may not be entirely positive, because it makes it relatively easy to change the protocol, and the network may deviate from the fundamental principles that brought value to the system in the first place.