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(Bloomberg)   A year after $55M worth of Ethereum Classic was stolen and a majority of users decided to roll back the transaction and move to New Ethereum, nobody on either side of the debate knows who did it, and nobody cares. tl;dr: Smart contracts aren't   ( bloomberg.com) divider line
    More: Followup, decision makers, dynamic network, CBC Radio One, financial information, World, Decision making, Earth, Bloomberg  
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3267 clicks; posted to Geek » on 19 Jun 2017 at 4:59 AM (17 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2017-06-19 03:13:38 AM  
I thought that the whole point of cryptocurrency was that it's "not" reversible, unlike credit cards and their stupid "protections" that "steal" money from "honest" businessmen.
 
2017-06-19 04:26:48 AM  
If someone lost $55m of anything wouldn't he care? Or did someone still $.50 from millions of people, and then turn up to work in a new Ferrari? Either way, surely someone cares.
 
2017-06-19 05:19:31 AM  

Slaxl: If someone lost $55m of anything wouldn't he care? Or did someone still $.50 from millions of people, and then turn up to work in a new Ferrari? Either way, surely someone cares.


I only read a little bit, it's late, but I think that money is pooled. So it's the money a bunch of people who put in for various reasons. No one lost $55m, the system did. If you lost a small chunk of money in some flaky investment, would you care? If yes, should you have invested that money in the first place?
 
2017-06-19 06:45:46 AM  
That was a good read, cheers subby.
 
2017-06-19 06:47:38 AM  

themindiswatching: I thought that the whole point of cryptocurrency was that it's "not" reversible, unlike credit cards and their stupid "protections" that "steal" money from "honest" businessmen.


Exactly. They created a new, parallel system with a different history; a "hard fork". Then they expected people to use the new version instead of the old. Instead, some people kept using the old system with the old history, and there was nothing they could do to stop it.
 
2017-06-19 07:22:46 AM  
No idea what this is.
 
2017-06-19 07:39:04 AM  

Sim Tree: themindiswatching: I thought that the whole point of cryptocurrency was that it's "not" reversible, unlike credit cards and their stupid "protections" that "steal" money from "honest" businessmen.

Exactly. They created a new, parallel system with a different history; a "hard fork". Then they expected people to use the new version instead of the old. Instead, some people kept using the old system with the old history, and there was nothing they could do to stop it.


Sounds like someone got forked, good and hard
 
2017-06-19 07:39:28 AM  

BalugaJoe: No idea what this is.


It's a Matt Damon movie. I think.

IDK
 
2017-06-19 08:03:34 AM  
So, now there are 2 system both laying claim on the same amount of money or what? How the fark do you just double the money by creating "new fork" and yet living the old one standing? Now you have 2 forks and double amount of bitcoins?

What. The. Hell?
 
2017-06-19 08:03:54 AM  
"leaving", of course.
 
2017-06-19 08:09:41 AM  
dang, that must have taken a lot of crashed ufos to be worth that much
 
2017-06-19 08:14:38 AM  

Grahor: So, now there are 2 system both laying claim on the same amount of money or what? How the fark do you just double the money by creating "new fork" and yet living the old one standing? Now you have 2 forks and double amount of bitcoins?

What. The. Hell?


I am the President of Bitcoin and it is unlikely that your human-sized brain will be able to comprehend the utter genius of cryptocurrency, which according to the researchers at Gigantic Brains Incorporated, will replace water by the 2020s.  We will, quite literally, be swimming in Bitcoins.

The day is coming soon and it will be glorious.  I will finally be able to order those naughty, naughty Sears catalogues without leaving a paper trail.  Oh, god, just thinking about the "modest clothing" section is making me wet.  Wet.  WET.
 
2017-06-19 08:26:23 AM  
I love observing tech-bro libertarians discover why banking regulations exist.
 
2017-06-19 08:33:31 AM  
Is there a TL;DR version where the author isn't trying to turn the article into a cyberpunk novel?
 
2017-06-19 09:07:47 AM  

Grahor: So, now there are 2 system both laying claim on the same amount of money or what? How the fark do you just double the money by creating "new fork" and yet living the old one standing? Now you have 2 forks and double amount of bitcoins?

What. The. Hell?


Not doubled exactly. There are two versions of history- one where the money was stolen and one where there isn't. Some people adhere to the first, and some people adhere to the second. Those two groups can't do business with each other, but otherwise each system behaves normally.

So in effect, there's "etherium classic", which is the branch where the hack took place, and there's "etherium" which is the branch that was forked. They're two separate currencies at this point, and some people have decided to use one, and others have decided to use the other.

If you happened to own etherium at the time of the fork then you'd end up with replicated holdings in both systems.
 
2017-06-19 09:19:57 AM  

facepalm.jpg: If you happened to own etherium at the time of the fork then you'd end up with replicated holdings in both systems.


So if you had $ 100 before the fork, do you have $ 100 in each after the fork and could you collect $ 200 if you withdrew from both systems?
 
2017-06-19 09:23:38 AM  

facepalm.jpg: Not doubled exactly. There are two versions of history- one where the money was stolen and one where there isn't. Some people adhere to the first, and some people adhere to the second. Those two groups can't do business with each other, but otherwise each system behaves normally.


But they aren't CLOSED systems! They operate with outside world. There was 1 bitcoin. Now there is a person who says "I have it", and another person who says "I have it". Now there are two versions of the same bitcoin. For me, for the outside observer, there are 2 bitcoins where previously was one. When I, the outsider, say "I want to buy a bitcoin", which bitcoin I'm getting? From the first system or from the second?

If it's anything but "playmoney", then it's exactly that: doubling of the money.
 
2017-06-19 09:35:21 AM  

Mike_LowELL: We will, quite literally, be swimming in Bitcoins.


Is this how Scrooge McDuck dives into a pile of coins without breaking all his Duck-Limbs?  Was McDuck 20 years ahead of the curve?
 
2017-06-19 09:38:47 AM  

Grahor: facepalm.jpg: Not doubled exactly. There are two versions of history- one where the money was stolen and one where there isn't. Some people adhere to the first, and some people adhere to the second. Those two groups can't do business with each other, but otherwise each system behaves normally.

But they aren't CLOSED systems! They operate with outside world. There was 1 bitcoin. Now there is a person who says "I have it", and another person who says "I have it". Now there are two versions of the same bitcoin. For me, for the outside observer, there are 2 bitcoins where previously was one. When I, the outsider, say "I want to buy a bitcoin", which bitcoin I'm getting? From the first system or from the second?

If it's anything but "playmoney", then it's exactly that: doubling of the money.


Before you say "I want to buy a Bitcoin", you have to choose which of the two systems you want to join and buy it from.  This is a natural consequence of the intentional design decisions that are the foundation of cryptocurrecies.  No single person or group is in charge, so it is all based on consensus of the users.  There is literally no way to stop fracturing of the blockchain into multiple forks if doing so is in the individual best interest of more than one faction of users.

If it sounds retarded, that's because it is.
 
2017-06-19 09:40:22 AM  

Grahor: So, now there are 2 system both laying claim on the same amount of money or what? How the fark do you just double the money by creating "new fork" and yet living the old one standing? Now you have 2 forks and double amount of bitcoins?


Ah No.

If I read this correctly...

There was an investment firm called Ethereum; its developers and investors had all bought shares in the investment for research and development.   then it got hacked.

Before the hackers could get away with the (30% of) shares they had laid claim to, another group of investors and developers ("illegally") seized the remaining shares to prevent the other hacking group from gaining more control.  There was a rule in the investment that prevented the hackers from cashing out their shares immediately.  While that rule was in effect the remaining investors voted to go back in the ledger and start a new firm (call it "New" Ethereum) and balance the books (start a new set of books) without the flaw the hackers took advantage of, basically freezing the hackers out.   The original firm should have then closed and been considered insolvent, but a few hard core investors decided to still do business with the old firm even though it was basically starting from 0$ in value.

So no, they did not double the money.  Most of the value of the original project was moved to the new firm.  A few stakeholders in the original project kept the old firm afloat long enough to stabilize with the value that those investors still held in the original project while everyone else moved on to the new firm.

one way to think of it:*
The original project, now referred to as Ethereum classic is as of this post valued at $23.49 a share.
The forked project, Ethereum is as of this post valued at $371.73 a share.

It is somewhat meaningless to compare the value of the two; at this point it would only be useful to someone trying to convert between the two imho.

* I realize that cryptocurrencies are not directly comparable to investment shares, but enough of the same concepts apply to be usable for explanatory purposes.
 
2017-06-19 09:58:52 AM  

facepalm.jpg: Grahor: So, now there are 2 system both laying claim on the same amount of money or what? How the fark do you just double the money by creating "new fork" and yet living the old one standing? Now you have 2 forks and double amount of bitcoins?

What. The. Hell?

Not doubled exactly.

*snip*

If you happened to own etherium at the time of the fork then you'd end up with replicated holdings in both systems.


Umm... so how is that not doubled?

Really the question would be what happened to the price of each when  the split happened. If the value of both was half what it was the day before the split then no new money was created. If either coin retained more than half the pre-split value, then everyone's money magically doubled.

Funny how crypto enthusiasts are fine with this but complain about fractional reserve banking...
 
2017-06-19 10:00:13 AM  
Ether = bitcoin = fetch

Stop trying to make virtual currency happen.
 
2017-06-19 10:01:53 AM  

Barricaded Gunman: Ether = bitcoin = fetch

Stop trying to make virtual currency happen.


Fat chance of that now that the big banks are getting into it.
 
2017-06-19 10:11:35 AM  

BalugaJoe: No idea what this is.


I think it's what powers He-Man's sword
 
2017-06-19 10:14:52 AM  
I gave up halfway through... That could have been an interesting story but had so much fluff of "then so-and-so went to walk his dog..." I couldn't get into it.

Anyone able to distill it for me?
 
2017-06-19 10:28:30 AM  

vonmatrices: Mike_LowELL: We will, quite literally, be swimming in Bitcoins.

Is this how Scrooge McDuck dives into a pile of coins without breaking all his Duck-Limbs?  Was McDuck 20 years ahead of the curve?


My favorite episode is when he stole the cryptocurrency from the indigenous peoples of South America, and his nephews are like, "Uncle Scrooge, isn't imperialism wrong?", so Scrooge explains that it is the "white duck's burden", and he must help these people.  Then he hits the tribal chief with a flower pot.  It was great.
 
2017-06-19 10:32:23 AM  

Seequinn: While that rule was in effect the remaining investors voted to go back in the ledger and start a new firm (call it "New" Ethereum) and balance the books (start a new set of books) without the flaw the hackers took advantage of, basically freezing the hackers out.   The original firm should have then closed and been considered insolvent, but a few hard core investors decided to still do business with the old firm even though it was basically starting from 0$ in value.


Okay, I'm perfectly fine with that explanation so far, but, again, that's not a closed system. "Old Ethereum" had contracts with outside world, I suppose, had obligations going both ways; what happened to THAT? Which of the Ethereums' owns contracts and obligations with the outside world? New one? Then why "old one" still has ANY value at all?
 
2017-06-19 10:34:36 AM  

OceanVortex: Anyone able to distill it for me?


New currency based on Monetaria monetashells goes through growing pains, discovering why exactly Central Banks have evolved through history.
 
2017-06-19 10:38:42 AM  
Also, let imagine that at some point the majority of users of New Etherium will lose the money (say, 80% of users will lose a lot, while 20% will gain a lot). As I understand it, a populist politician may arise, arguing for creating a new "true" fork where the majority's losses never happened, thus the majority would greatly benefit at the expense of minority. Sure, you may say "that never happened in the history of the world", but don't you think such possibility exists and is more probably with each such "voting"?
 
2017-06-19 10:49:34 AM  
www.austinchronicle.com
Splitters!
 
2017-06-19 10:52:31 AM  
If I heard correctly, isn't bitcoin going through a hard fork soon? Definitely wondering what all of that is about, and will it be similar to what happened with Etherium?  I cannot believe how expensive these things got, suddenly.
 
2017-06-19 10:58:40 AM  

aungen: If I heard correctly, isn't bitcoin going through a hard fork soon?


Kinky...

// Wonder if there's a cryptocurrency-themed Chuck Tingle novel out there yet...
 
2017-06-19 11:03:07 AM  

Grahor: Seequinn: While that rule was in effect the remaining investors voted to go back in the ledger and start a new firm (call it "New" Ethereum) and balance the books (start a new set of books) without the flaw the hackers took advantage of, basically freezing the hackers out.   The original firm should have then closed and been considered insolvent, but a few hard core investors decided to still do business with the old firm even though it was basically starting from 0$ in value.

Okay, I'm perfectly fine with that explanation so far, but, again, that's not a closed system. "Old Ethereum" had contracts with outside world, I suppose, had obligations going both ways; what happened to THAT? Which of the Ethereums' owns contracts and obligations with the outside world? New one? Then why "old one" still has ANY value at all?


Most of the contracts probably followed the fork. The old one, Ethereum classic, has value for the same reason every other currency has value: people think it has value. They're willing to buy and sell stuff with it. They're willing to exchange it for other currencies. You can use whatever you damn well please as currency, it's just an object (in this case, digital) that has some assigned value to it, so you can trade it for stuff.
 
2017-06-19 11:20:02 AM  

Birnone: I only read a little bit, it's late, but I think that money is pooled. So it's the money a bunch of people who put in for various reasons. No one lost $55m, the system did. If you lost a small chunk of money in some flaky investment, would you care? If yes, should you have invested that money in the first place?


Except the system didn't really lose $55M; a parallel system was created to shift the Ether into a more secure blockchain.  The Ether in both systems still has value, though the "Classic" has far more value than the original, and people seem to have faith in both.
 
2017-06-19 11:21:15 AM  

Grahor: Seequinn: While that rule was in effect the remaining investors voted to go back in the ledger and start a new firm (call it "New" Ethereum) and balance the books (start a new set of books) without the flaw the hackers took advantage of, basically freezing the hackers out.   The original firm should have then closed and been considered insolvent, but a few hard core investors decided to still do business with the old firm even though it was basically starting from 0$ in value.

Okay, I'm perfectly fine with that explanation so far, but, again, that's not a closed system. "Old Ethereum" had contracts with outside world, I suppose, had obligations going both ways; what happened to THAT? Which of the Ethereums' owns contracts and obligations with the outside world? New one? Then why "old one" still has ANY value at all?


The same reason DogeCoin and other altcoins (shiatcoins) have value. The market determines they still want to buy it. This is one of the weird aspects of blockchains that is both a plus and a minus. All it takes for the chain to continue onward is for one node to maintain it. So long as that exists, the chain can't be killed. This creates a situation where crap chains like ETC continue onward, because people refuse to give it up. But at the same time it makes the blockchain itself an amazingly resilient technology. 

For the contract piece, they are still functioning within the old system. The way smart contracts work is once they're put into the world they basically cannot be retracted, and they will run in perpetuity or until their conditions have been fulfilled. So any contract running on the ETC chain will continue onward. When they hard forked to the current Ethereum chain, I believe smart contracts were also reset to 0 to ensure the bug that created the original DAO hack situation couldn't possibly exist.
 
2017-06-19 11:32:43 AM  
There are a lot of informative, snark-free, well thought-out responses in this thread.


I still don't understand any of this.
 
2017-06-19 12:31:55 PM  

Weidbrewer: There are a lot of informative, snark-free, well thought-out responses in this thread.


I still don't understand any of this.


Basically, a bunch of nerds (not a cut, it is what it is) that are circumventing the governments and the IRS with non-tangible currency composed of computer code..   fun game if you are into that sort of thing...
 
2017-06-19 12:34:27 PM  

Mike_LowELL: vonmatrices: Mike_LowELL: We will, quite literally, be swimming in Bitcoins.

Is this how Scrooge McDuck dives into a pile of coins without breaking all his Duck-Limbs?  Was McDuck 20 years ahead of the curve?

My favorite episode is when he stole the cryptocurrency from the indigenous peoples of South America, and his nephews are like, "Uncle Scrooge, isn't imperialism wrong?", so Scrooge explains that it is the "white duck's burden", and he must help these people.  Then he hits the tribal chief with a flower pot.  It was great.


This is the greatest post about the greatest show ever to feature anthropomorphic ducks.
 
2017-06-19 12:43:25 PM  

Tr0mBoNe: I love observing tech-bro libertarians discover why banking regulations exist.


Banking regulations exist to protect the bankers.
 
2017-06-19 01:04:17 PM  

HempHead: Tr0mBoNe: I love observing tech-bro libertarians discover why banking regulations exist.

Banking regulations exist to protect the bankers.


And crypto is often sold on the promise of "be[ing] your own bank".  So...?
 
2017-06-19 01:21:02 PM  

turboke: facepalm.jpg: If you happened to own etherium at the time of the fork then you'd end up with replicated holdings in both systems.

So if you had $ 100 before the fork, do you have $ 100 in each after the fork and could you collect $ 200 if you withdrew from both systems?


Yes and No. If you had 100 ETH (ethereum) before the fork, then you would have 100 ETH and 100 ETC (ethereum classic) after the fork. The value of ETC started at zero and currently stands at 10-20% of ETH. In that sense, you suddenly had two investments where before you had one, but the overall value didn't really change during the fork, but only afterwards via holding.

On top of that, you've got to figure out a way to liquidate your ETC to an actual currency in order for that to make any difference. I don't do cryptocurrencies, so I don't know how hard that is or not, but the bulk of the transaction volume is in ETH rather than ETC.
 
2017-06-19 01:33:58 PM  

facepalm.jpg: Yes and No. If you had 100 ETH (ethereum) before the fork, then you would have 100 ETH and 100 ETC (ethereum classic) after the fork. The value of ETC started at zero and currently stands at 10-20% of ETH. In that sense, you suddenly had two investments where before you had one, but the overall value didn't really change during the fork, but only afterwards via holding.


It's like a stock split, only dumber.
 
2017-06-19 01:41:59 PM  

Grahor: facepalm.jpg: Not doubled exactly. There are two versions of history- one where the money was stolen and one where there isn't. Some people adhere to the first, and some people adhere to the second. Those two groups can't do business with each other, but otherwise each system behaves normally.

But they aren't CLOSED systems! They operate with outside world. There was 1 bitcoin. Now there is a person who says "I have it", and another person who says "I have it". Now there are two versions of the same bitcoin. For me, for the outside observer, there are 2 bitcoins where previously was one. When I, the outsider, say "I want to buy a bitcoin", which bitcoin I'm getting? From the first system or from the second?

If it's anything but "playmoney", then it's exactly that: doubling of the money.


It was a doubling of *notes*, but not a doubling of value. During the fork over 90% of the people involved had migrated to the new system and the old system was essentially worthless... for a while. Some people persisted in using the old system, so those old shares have some value after a not-insignificant amount of time elapsed, but nowhere close to a doubling of value.

Here's an analogy: Germany, on January 1st, 2002, switched from using Deutsche Marks to the Euro. This in a sense was a hard fork for Germany's monetary system, and everyone with Deutsche Marks at that time was given an equivalent value of Euros. There were then twice as many notes in circulation, but the total value of the system didn't change because DMs had no value by common agreement.

However, suppose that some small die hard group of Germans didn't want to give up the DM, and still accepted it. Because those people were willing to trade in the currency it didn't loose all of its value. But, it's definitely not the case that everyone now has twice as much money because some small die-hard segment is still accepting those old notes. At best, you've got a limited form of currency that you can use with those die-hards to purchase goods that they provide. Economically, you've got an aberration that's going to disappear as soon as those die-hards realize that they're selling their labor for DMs but they can't buy bread and milk with DMs. At worst, you've got predators exploiting the confusion between DMs and Euros to take advantage of uninformed victims.

Now, in reality the old DMs were largely destroyed in the transition to the Euro, so the situation above couldn't have happened. However, due to the decentralized nature of the system you can't really enforce that with cryptocurrencies. In practice the ETC/ETH split can only really persist because both are backed by real monetary systems that allow you to exchange to a common currency, and is yet another reason why you shouldn't consider cryptocurrencies to be real money.
 
2017-06-19 01:44:53 PM  

Olympic Trolling Judge: facepalm.jpg: Yes and No. If you had 100 ETH (ethereum) before the fork, then you would have 100 ETH and 100 ETC (ethereum classic) after the fork. The value of ETC started at zero and currently stands at 10-20% of ETH. In that sense, you suddenly had two investments where before you had one, but the overall value didn't really change during the fork, but only afterwards via holding.

It's like a stock split, only dumber.


It's like people in the south trying really damn hard to bring back confederate money. Which is even dumber than a dumb stock split.
 
2017-06-19 01:59:37 PM  

turboke: facepalm.jpg: If you happened to own etherium at the time of the fork then you'd end up with replicated holdings in both systems.

So if you had $ 100 before the fork, do you have $ 100 in each after the fork and could you collect $ 200 if you withdrew from both systems?


No because when the fork happened laws of economics weren't completely suspended and remember that all "equities are priced via the market".  As a result etherium classic likely devalued a great deal as people stopped using it (think the venezuelan bolivar no one wants it so it reduced in value)  the new etherium likely continued its normal value.

In a totally liquid rationally priced market at the split you would have $50 in value in each fork, but that's not how the pricing methodology worked.

Imagine a stock spinning off a new company.  As a stock holder you have X value which is the sum of the two holdings by the rational market.  Since crypto-currencies are not valued by fundamentals you could end up with more than you started but over time the lesser used currency would decay in value as its utility is lower.

But again, rational markets for crypto-curriences are not occuring right now.
 
2017-06-19 02:15:10 PM  
www.cardkingdom.com
Is gonna be pissed
 
2017-06-19 02:28:22 PM  

Olympic Trolling Judge: HempHead: Tr0mBoNe: I love observing tech-bro libertarians discover why banking regulations exist.

Banking regulations exist to protect the bankers.

And crypto is often sold on the promise of "be[ing] your own bank".  So...?


Bankers and bank are two different things.
 
2017-06-19 03:31:29 PM  
At the top of my screen now, I am seeing an ad for a book about how to buy Ethereum with your 401(k).

howaboutno.jpg
 
2017-06-19 03:54:25 PM  

jake_lex: At the top of my screen now, I am seeing an ad for a book about how to buy Ethereum with your 401(k).

howaboutno.jpg


Not news: I store my bitcoins in a jar buried under a tree in the back yard.  Weird News: On a piece of paper in a jar.  FARK: This actually works? Wow...
 
2017-06-19 04:17:31 PM  

aungen: Not news: I store my bitcoins in a jar buried under a tree in the back yard.  Weird News: On a piece of paper in a jar.  FARK: This actually works? Wow...


Storing digital data on paper is nothing new.

img.fark.net
 
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