As investors grow restless about the slow development pace of ethereum—an open-source computing platform powered by cryptocurrency—a vocal minority may have unwisely driven away one of the project’s longest-tenured developers after an online spat. Afri Schoedon, who has contributed to ethereum since 2015, almost entirely in unpaid roles, cheekily tweeted the following on Feb. 15:
“‘Polkadot delivers what Serenity ought to be.’ Change my mind.”
He has since deleted the tweet.
To most onlookers, that hodgepodge of words sounds like it might belong in a fantasy novel rather than the $14 billion ethereum project. But, to a small group of cryptocurrency enthusiasts—or perhaps, trolls—they were fighting words because they cast doubt about ethereum conforming to its roadmap and thereby, jeopardized the price of ether, the network’s currency.
The contretemps comes down to a much-delayed collection of planned network upgrades to ethereum called Serenity, also known as “ethereum 2.0.”
Schoedon, in his attempt to “stir discussion,” suggested that Polkadot—a protocol that enables communication between blockchain networks—might be superior to Serenity. It was an odd comparison because allowing networks to communicate (through Polkadot, which has its own cryptocurrency) isn’t the same as augmenting the speed or capacity of an individual network (Serenity). Nonetheless, Schoedon quickly caught flak.
To be clear, Polkadot isn’t an isolated blockchain—it’s a network of networks. It’s intended to specify how various blockchains should interact with one another, like a rulebook that will define how events or transactions on one network (e.g., ethereum) should be reflected on other, future networks.
Now, this gets a bit tricky: Development of Polkadot is led by Parity Technologies, which is headed by Gavin Wood, one of the co-creators of ethereum. And here’s a further twist: the Ethereum Foundation, a Swiss non-profit that supports ethereum’s development, actually gave Parity a $5 million development grant just last month.
So, what’s all the fuss?
Well, some ether conspiracy theorists claimed Schoedon might be sabotaging ethereum in favor of Polkadot. They said there was a conflict of interest, as Schoedon delayed ethereum upgrades while simultaneously working for Parity to coordinate software launches and updates.
Again, that complaint doesn’t make much sense. Ethereum and Polkadot aren’t exactly competitors—it’s like getting mad at somebody because they’re helping build highways and roads. Unfortunately though, because of unrelenting vitriol and personal attacks spewed by a small, uninformed contingent, Schoedon announced last Tuesday that he has “quit Ethereum.”
Other ethereum community members quickly embraced Schoedon, even publishing an open letter in support of him the next day, but the damage was done. For now, Schoedon has gone dark online.
While this complicated row may seem like much ado about nothing to outsiders, it points to a deeper issue. Developers working to enhance ethereum’s speed and capabilities have incentives within and beyond the network itself, and looking ahead, those will come into conflict.
Over time, teams working independently could decide the existing network isn’t worth their time (or what they envision) and decide to create their own versions of ethereum. While competition could spur faster development, it threatens to splinter the community and destroy ethereum’s advantage of scale as compared to other aspiring smart contract platforms. Polkadot says it isn’t a competitor to ethereum, but the controversy it’s stirred suggests that the battle for blockchain supremacy is far from over. —Matthew De Silva
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What you need to know — and why
Zcash’s creator rebrands as the “Electric Coin Company”
With a market cap of $314 million, Zcash is the second largest cryptocurrency dedicated to financial privacy behind Monero (market cap: $840 million). However, oversight and development of Zcash is nuanced because the coin’s creators, including founder Zooko Wilcox, have made earnest attempts to reduce their control of the coin.
The latest step was renaming the “Zerocoin Electric Coin Company” as the “Electric Coin Company.” The new name also distinguishes the company from the Zcash Foundation, a 501(c)(3) non-profit created by the company in March 2017 and funded with Zcash. The foundation is meant to provide broad-based, transparent development guidance and community support (e.g., conference planning, mailing lists), with the goal of encouraging wider adoption of Zcash.
Takeaway: The Electric Coin Company’s new name might seem like a minor change—and it is—but the team provides a good example of how cryptocurrency project leaders can prioritize transparency and demonstrate their commitment to decentralization. ↗️
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Hacks scams and capers
Bitfinex reclaims 27 bitcoins from catastrophic hack
Bitcoins worth $100,000 may seem like a lot, but the cryptocurrency recovered by US law enforcement and returned to the Bitfinex cryptocurrency exchange is just a fraction of the nearly 120,000 bitcoins stolen during 2016’s security breach. The theft, then estimated at $72 million, remains one of the largest in bitcoin’s 10-year history. At current prices, the missing bitcoins are worth more than $400 million.
In April 2017, the Hong Kong exchange said it redeemed all outstanding BFX tokens, the dollar-pegged units it used as IOUs to spread the exchange’s 36% loss of funds across all users. However, the exchange also allowed users to trade BFX for equity in parent company iFinex. Users who chose that option were also granted another token—the Recovery Right Token (RRT)—as bonus. Since all BFX has been reimbursed, Bitfinex announced on Monday that the recovered bitcoins will be converted into US dollars and distributed pro rata to RRT holders.
Ultimately, Bitfinex’s experience demonstrates that recovering stolen bitcoin is pretty darn unlikely, and its reimbursement strategy showcases the financial acrobatics that a desperate, but profitable, cryptocurrency exchange can use to stay afloat.
Please send news, tips, and polka dots to privatekey@qz.com. If this email was forwarded to you, click here to sign up for your own subscription, which includes a free two-week trial. Today’s Private Key was written by Matthew De Silva and edited by Oliver Staley. Just about anybody can face a crisis; it’s everyday living that’s rough.