Jacob Eliosoff is a computer programmer and former Wall Street quant who runs Calibrated Markets LLC, a cryptocurrency investment firm with holdings in BTC and ETH.

In this opinion piece, Eliosoff discusses why he believes the ethereum community needs to unite around one implementation of the protocol, and why he believes it should be the version that opted for a controversial fork.

The ongoing ethereum classic drama is yet another illustration of the great irony of cryptocurrency – a technology invented as a way to form consensus keeps facing its greatest threat from the inability of its communities to form it.

When there's a fork, it's important for the community to choose wisely between the two branches. But it's also important, often more important, for the community to converge on one branch.

In a case like ethereum, which now has two competing versions, ethereum (ETH) and ethereum classic (ETC), not converging will do more harm than converging on the inferior branch.

We've reached the point where there are only two realistic outcomes for ethereum: a bifurcated project, confusing users and developers, or convergence on the ETH chain.

Fork or not?

During the original fork debate, I saw legitimate arguments on both sides, though no clinchers. I wasn't an investor in The DAO, which struck me as doomed from the start, and saw no need to rescue its backers. Concentrating 4.5% of all ether in the hacker's hands wasn't ideal, but didn't seriously threaten the network either.

The most common anti-fork argument is that fiddling with the ledger sets a bad precedent. This is true. But how bad? It's not like if this one sticks, we're all doomed to a future of hard forks any time the FBI asks or one of the admins loses a few coins.

Whichever branch wins out, this fork has been messy enough that no one is keen to go through another one anytime soon.

I agreed with Cornell researcher Emin Gün Sirer and others that ethereum was a young technology still very much at the dress rehearsal stage. Even if you want a future of 100% self-driving cars, you have to expect the occasional manual override early on.

Many questioned the financial incentives of Ethereum Foundation members who had bought into The DAO, but as Alex Van de Sande wrote, they had a vastly larger stake in ethereum's success than in The DAO. And meanwhile, there was amazingly little coverage of the fact that the hacker had a $60m stake in stopping the fork!

Even now, the hacker's stake is worth $7m on the old chain, $0 on the forked one. It would be quite a surprise if he or she hadn't been pushing ETC behind the scenes.

So, you can argue that ethereum creator Vitalik Buterin forced the fork through, or that ETC is a hacker-backed scam. I'm happy to leave these all-too-typical conspiracies to Reddit.

The fact is that there were many smart, sincere people on both sides of the fork debate, and that none of their arguments either way were overwhelming.

Harmful hard forks?

There's even a sense that July's fork set a good precedent.

I don't think anyone disputes that more hard forks will be needed, in both ethereum and bitcoin, better to get the hang of them now while the stakes are low.

And to those who say, 'Only for technical improvements, never to revert a hack', I question your imagination.

What if The DAO had attracted not 15%, but 60% of all ether, and the hacker had drained not a third but all of it? What if some malware spread widely across wallets or miners, giving a hacker control of 50+% of all ether? What if a similarly large theft resulted from exploiting a bug not in ethereum itself but in third-party software it's built on – say a compiler or operating system bug?

Of course, part of the answer is we should make the network robust against these attacks. But part is also, shit happens, and situations may arise where a fundamentalist attitude to hard forks is counterproductive. The bar for non-technical hard forks should be very high, but it will always exist.

Bitcoiners should watch the schadenfreude. Clearly this fork has been a mess, but that's not due to a hard vs soft fork distinction.

It's true that a soft fork, once widely adopted, avoids the bifurcation seen here: nodes that refuse to upgrade just see their blocks rejected, rather than spinning off a separate branch. But it's equally true that a soft fork which is not widely adopted can also result in a bifurcated chain. The reason this doesn't normally happen isn't technical, it's just, 'Why would anyone want to mine or transact on a minority chain?'

'Hard forks are dangerous' would seem to be the wrong conclusion here. In particular, a bitcoin hard fork would probably look very different.

One, it would come with months' rather than days' notice (avoiding, eg, Poloniex's out-of-nowhere decision to list ETC). Two, bitcoin's miners would be much more likely to settle on one chain or the other as a group.

The real risk comes from forks, hard or soft, that the community is significantly divided about. When an urgent situation demands a decision before the community can reach agreement, the solution is not to avoid forking (that was inevitable, given the level of disagreement), but for the community to debate, listen and settle on a majority chain quickly.

Given how long bitcoiners have been bickering about 1MB, if ethereum can overcome its current split by December, I'd even call this hard fork a success.

Should we stay splintered?

Some say, why not have two chains? Choice! Diversity! I could not disagree more profoundly with this for reasons any active developer of an ethereum-based project will understand. It's like wanting the choice between Blu-Ray and HD DVD.

There's certainly some benefit in having different technologies with different approaches, like bitcoin and ethereum. But, being forced to choose between implementations of the same technology is a huge headwind for the community.

It would be painful enough in bitcoin, with every website, service, user and developer having to make sure all parties coordinated on which variant to use. But it's vastly worse for ethereum, which is trying to build a true ecosystem of stateful, interacting smart contracts.

One of my greatest worries for cryptocurrencies has been that usage would become fragmented across competing implementations this way. Take what we saw in chat protocols over the last 20 years: IRC, ICQ, AIM, MSN Messenger, Gchat, WhatsApp, Viber... Anyone who's tried, for example, to collect all their chat logs in one place can attest to the frustration caused by this maddening multiplicity. And through it all we had the shining contrasting case of SMTP, the one true email protocol.

Imagine if email were as bifurcated as chat! That's my nightmare for cryptocoins.

So you can say, 'The principle behind ETC outweighs the pain of maintaining two ethereum blockchains'. But frankly, anyone who says 'There is no significant pain in having two chains' is just not a serious engineer.

How bad is the pain? Well, what's your goal? If you’re a technophile, more chains is great – better chance of finding one that ticks all your ideological checkboxes. If you're in it for short-term trading profits (certainly your right), two chains may present some opportunities. And of course for the popcorn-munching, told-ya-so bitcoin crowd, the more ethereum fragments, the better.

My goal is different: I want a tech that's not just decentralized and censorship-resistant, but widely useful and widely used. For that goal, two chains are a mess.

As Linus Torvalds said of his creation:

"We're not masturbating around with some research project. We never were. Even when Linux was young, the whole and only point was to make a usable system. It's why it's not some crazy drug-induced microkernel or other random crazy thing."

Beyond two chains

Moving forward takes us from technology to community dynamics.

I do wish the informal vote had been better and sooner publicized, but there was real-time pressure. If a majority had opposed the hard fork, then I (and, per Van de Sande and others, Vitalik & co) would have gone along with it. But in fact, a strong majority favored the fork: even ETC's first promoter, Arvicco, acknowledged that.

With ETH holding the support of a large majority of the community, the lead developers, and 80+% of both market cap and mining power, ETC becoming dominant is just a fantasy.

The only realistic outcomes here are either two chains persist, inconveniencing users and developers, or ETC fades to <5% and we move on. It's just a question of how long.

Technologists are prone to overrate the importance of pure technical merit. The greatest tech projects – the moon landings, the Internet, C, Linux, etc – were above all pragmatic, collaborative human organizations. In particular the IETF, the group that brought us the Internet, has been guided by what they call rough consensus: "strongly held objections must be debated until most people are satisfied that these objections are wrong".

Some ideological or technical objections are certainly worth holding up consensus for: many aren't. Internal strife has now become the number one obstacle to both bitcoin and ethereum (and cryptocurrencies in general) – not scammers, not governments, not poor scaling: well-intentioned but uncompromising, black-and-white ideologues.

The practical question right now is whether the principled appeal of keeping the unforked chain alive, as a minority branch, outweighs the practical drawbacks of forcing developers and users to juggle two parallel worlds. I have no doubt how this choice would be handled by the IETF (thank God we ended up with only one Internet!), the creators of Unix (which disastrously splintered between AT&T, Sun, BSD, etc), and other engineering role models.

Unfortunately, consensus comes less naturally to the cryptocurrency crowd.

I'm well aware that some believe passionately that the fork went against everything ethereum stands for (I can't wait to read their thoughtful and constructive comments below). I respect their view, but I don't hope to convince them.

The ones I'm addressing are the majority who, whatever their fork preference, recognize that there were reasonable arguments for both chains. To those who believe this, I say: help ethereum move on by putting your capital and your mining power where the future is, ETH.

A matter of time

What will happen from here? The most likely outcome is that ETC will continue to bounce around between 5% and 30% of ETH's price, then fade over the next 3-6 months as projects continue to build on the ETH chain.

Without animosity, this is what I hope for.

If the ETH/ETC split becomes permanent, it will certainly be a drag on ethereum, but probably not a fatal one. But the broader risk is stark. If we keep failing to build the rough consensus that's served communities like the IETF so well – with the compromising that entails – then the technology we love will never reach a wider public.

We'll have a Plan 9, not a Linux. And the blame will be not on "centralists" or the "legacy fiat system", but on our own failure to collaborate.

Rock in the desert image via Shutterstock

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

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A criminal investigatory unit in the UK is reporting that it has seen an increase in the use of bitcoin by criminals.

The UK Serious Fraud Office, an independent agency within the UK government, disclosed the stance in new comments addressing whether it believes bitcoin is "being used" in criminal activity. The remarks, published yesterday, represent what appear to be the SFO’s first public statements on bitcoin.

While the agency denied that it had undertaken any specific studies on the technology, the SFO said that it would consider such investigations given its mandate to look into new forms of fraud.

The SFO said in its response:

"We would therefore consider specific allegations of bitcoin being used to perpetrate serious or complex fraud. Such a case might, for instance, represent a new or emerging type of fraud. The SFO is aware of increasing use of bitcoin by criminals but has not conducted any specific studies into the impact of this type of crime."

While the SFO indicated that it hasn't pursued or released any research of its own, other elements of the UK government have done so in the past.

Last November, HM Treasury released a report detailing how digital currencies pose the lowest money laundering risk among other means, including banks and cash.

The full SFO letter can be found below:

FOI2016-065 Bitcoin by CoinDesk on Scribd

Image via Shutterstock

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A scheduling conflict has resulted in the postponement of the Blockchain World Expo, a three-day industry conference originally set to be held this September in Canada.

Scheduled to run from 19th to 21st September, the inaugural event was notable give its sponsorship by TMX Group, the operator of the Toronto Stock Exchange. Organizers included blockchain development firm Decentral, Ethereum Canada and Accelerate Finance.

Organizers said the event was ultimately moved due to the scheduling of a Canada FinTech Forum event to take place 20th and 21st September.

Anthony Di Iorio, chief digital officer at the Toronto Stock Exchange and CEO of Decentral, said additional considerations were involved, but that the competing event was the deciding factor. An update posted to the event’s official website indicated the formal request was made by event sponsors.

Di Iorio said plans are in place to potentially reschedule the event, billed as the largest of its kind in press materials.

“We're targeting spring next year,” he said.

California's legislature has once again shelved a plan to regulate businesses in the digital currency industry.

Reintroduced after nearly a year of dormancy earlier this month, Assembly Bill 1326 has now been referred back to the state's Rules Committee and Banking and Finance Committee – effectively freezing its progress.

Word first emerged on Friday that the measure would be delayed, and a representative for the Banking and Finance Committee has since confirmed to CoinDesk it will not be heard in the legislature again this year.

She said:

"It's being delayed for this year."

The move will prolong the already long road for the bill, which was first introduced in 2015 and saw months of back-and-forth debate take place between industry representatives, state lawmakers and technology advocacy groups.

However, statements from representatives of the legislature suggest that the bill, at least in some form, will return during the legislative session next year.

Banking and Finance Committee spokesperson Mark Farouk told American Banker that the bill "is dead for this year", suggesting that significant change was in the works. Farouk reportedly indicated that work by the Uniform Law Commission on a template for digital currency regulation could also play a role.

"I think there's going to be a lot of things that are going to be modified," he told the publication.

The Banking and Finance Committee did not offer comment on whether the law would be revisited in 2017.

California state capitol image via Shutterstock

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French airplane manufacturer Airbus has officially joined the Hyperledger Project, the Linux Foundation-led blockchain initiative.

The Toulouse-based manufacturer, which last year beat Boeing to sell more than 1,000 aircraft, is expected to “actively contribute” to the initiative, which also counts companies such as IBM, Intel and JPMorgan among its membership.

Airbus, founded in 1970, manufactures and sells the world's largest passenger plane, the A380.

Hyperledger executive director Brian Behlendorf said the inclusion of Airbus shows that the technology has applications beyond finance and healthcare, going on to remark:

"A key factor to the project’s success will be member expertise and guidance, and as such, I look forward to collaborating with the bright team at Airbus to drive this technology forward."

According to the project's GitHub page, two Airbus employees currently work on one of its subcommittees. Correspondence on the Hyperledger mailing list suggests that the company has an internal Emerging Technologies and Concepts working group that is exploring the technology.

Airbus did not immediately respond to a request for comment.

The announcement reflects what appears to be the airline industry’s increasing interest in blockchain technology. In May, blockchain startup ShoCard partnered with airline IT firm SITA to develop applications around identity management.

Launched last year, the Hyperledger Project counts roughly 80 members among its community of established businesses and startups, not all of which have been publicly announced, managed by the Linux Foundation.

Image Credit: Dr_Flash / Shutterstock.com

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Business blockchain consortium Hyperledger is now building an open-source tool that will let anyone explore the distributed ledger projects being created by its members.

Originally conceived by an intern at the Depository Trust & Clearing Corporation (DTCC), the proposal to create a blockchain explorer gained steam last month when it was informally proposed to members. It was then that other prominent contributors to the Linux-led group discovered they all had similar efforts underway.

But instead of launching competing open-source services, an effort began to merge the blockchain explorers being developed by DTCC, IBM and Intel. The joint project has been dubbed the "Hyperledger Explorer".

Similar to block explorers already being offered for other public blockchains, the tool would make it easier to learn about Hyperledger from the inside, while still protecting the privacy valued by many of the non-profit organization's members.

Hyperledger's newly appointed executive director Brian Behlendorf told CoinDesk:

"Rather than have three different projects that all do the same thing and compete essentially as three different code bases, [we thought] why not work together on one common codebase and cherrypick the best parts and use this as an opportunity to talk about standards for talking to different systems?"

When completed, the explorer is expected to give Hyperledger developers and non-technical users access to block information, transaction data, network information (such as a list of nodes) and chain codes or transaction families.

Since it was founded in late 2014, Hyperledger has grown to include major enterprises (CME Group, Hitachi and JP Morgan) and blockchain startups (Blockstream, Bloq, itBit).

Standard connections

According to some of the members involved, the project could end up being the first real test of the open-source collaboration.

The day after DTCC intern Konrad Pabjan submitted the code, Behlendorf responded with his support for the proposal. At the time, he noted that IBM was working on a similar offering that would detach its existing explorer from its Bluemix app development platform.

Intel's head of technology for blockchain and distributed ledgers, Dan Middleton, noted that his firm was working on a similar effort and instead of overlapping efforts, he proposed a "unified Hyperledger explorer".

Middleton wrote in the original email chain:

"This could be an interesting first case for showing ledger interaction among the Hyperledger family of blockchains."

By the end of the day, IBM's CTO in charge of open technology, Chris Ferris, had dubbed the project the "Hyperledger Blockchain Explorer", which has since been shortened to just the Hyperledger Explorer.

The code is currently being developed under the Apache software license created by the non-profit, open-source software company founded by Behlendorf, the Apache Foundation. Under terms of the license, anyone will be able use the browser, even non-members.

By building one single blockchain explorer through which anyone can explore projects, the participants will continue the process of standardization that the ISITC last month told CoinDesk could lead to unexpected network effects.

Deepening the bonds

But as more companies like Bank of America and HSBC begin to unveil proofs-of-concept using the Hyperledger protocol, a standardized way to search its data is just part of what it will take to scale, according to Behlendorf.

When Behlendorf was first hired in May, one of his goals was to make it easier for new members to join and for anyone – including non-members – to use the open-source software.

By moving the group's communication from predominantly conference calls to Slack, and beginning the process of switching its development tools from Github to Gerrick, he said they've take the first steps towards accomplishing that goal.

Since his appointment the consortium has more than doubled in size from less than 40 members to 80 members today, not all of which have been announced.

In total, there are now 160 code contributors, including individuals that may not be working on behalf of any company.

Protecting the future

This approach has led to other considerations, such as how to handle the question of ownership in a collaborative setting.

To help ensure that companies building on the code don’t accidentally find themselves in violation of intellectual copyright law, Behlendorf said contributors each sign an Apache license certifying that they have the legal rights to contributed the code.

The collected copyright of Hyperledger is owned by the Linux Foundation.

In an effort to further formalize the increasingly intertwined relationships, Hyperledger will host an election beginning Thursday to appoint 11 new members to its technical steering committee.

Behlendorf said the new explorer is part of that effort to further create the bonds that he believes form a successful open-source community.

Behlendorf concluded:

"We are turning towards this idea that Hyperledger can be a home for a number of different projects with different focuses, with different priorities, with different agendas, all collectively connected by this concept of blockchains, distributed ledgers [and] smart contracts."

To learn more about the Hyperledger Explorer, view a full demo below.

Hyperledger Explorer Demonstration from Konrad Pabjan on Vimeo.

High jump bar via Shutterstock

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