Consensus 2016: Bitcoin takes governance lessons from Ethereum

With news that Dr Craig Wright has re-affirmed that he is Satoshi Nakamoto, the question of Bitcoin governance was riding even higher than usual at this year's industry standard crypto conference, Consensus 2016.

At the opening of the conference, Garrick Hileman of the Cambridge Centre for Alternative Finance, made the point that Bitcoin could take some governance lessons from Ethereum.

"Ethereum doesn't have gridlock," he said. "Does this relate to the importance of a founder for governance? And we have heard Dr Craig Wright say it's time to scale Bitcoin dramatically."

With these questions ruminating around the minds of delegates, a panel session titled "Reaching Consensus on Open Blockchains" had reached standing room capacity. Pre-empting any questions on the subject, Bitcoin Foundation's Gavin Andresen began by stating that beyond any reasonable doubt in his mind Craig Wright is Satoshi, citing a message signed with a private key used to sign block #1 newly generated coins.

The panel, which was deftly moderated by Pindar Wong of VeriFi, also included Vitalik Buterin, inventor of Ethereum; Naha Narula, Digital Currency Initiative, MIT; and Eric Lombrozo, Bitcoin Core.

Kicking off he panel Wong acknowledged the power of an open process, but made the point that "nuance doesn't scale".

"It's very hard to articulate why these open protocols are constructed the way they are, why scaling them is in fact technically quite a nuanced discussion," he said.

Buterin said open blockchains are this very unique kind of environment, in that they are not like any kind of traditional corporation, country or software system because there is no one group that very clearly control them.

He said: "Particularly, it becomes interesting because the group that can review the mechanism that actually controls it is to a very large degree unspecified. So there is no sort of consensus that this is the mechanism by which some new feature can get adopted to the protocol. Instead it's this interesting game where people have to get consensus on a purely social level."

Buterin's analogy was to imagine that the English language had an English core development institute that might try to launch new words from time to time. Then along comes some classical English development institute that started launching its own changes. Then these two started disagreeing with each other.

This is hugely frustrating to the business community, noted Wong, who then asked if there is a difference between opensource and open blockchains, if they are comparable.

Buterin said that to some degree blockchains are a continuation of opensource, but added it is important to remember how valuable it is for a person to be in control of the code they are running. "The whole concept of free software movements started off in the 1980s. The 2000s saw cloud computing and arguably cloud computing is even worse than proprietary software like windows, because if you are running windows, and if it's on your computer, at the very least you can reverse engineer it.

"If it's on the cloud you have no idea what's happening. And people are potentially interested in bockchains as a kind of open source counterpart to that."

Andresen said there are now some 7000 nodes on the Bitcoin blockchain, adding that they are actually not all running the same software. "There is definitely a tension between compatibility and diversity. Diversity on the network is great if you can get and maintain compatibility - it's a great thing that there is a diversity of web browsers we can choose from, it's a great thing that there is diversity of ethernet companies producing equipment that speaks that protocol.

"We need to get more serious about the protocol definition and try and nail down exactly what is the Bitcoin protocol," he added.

Buterin made the point: "At Ethereum our philosophy different from Bitcoin - the spec isn't in code; the spec is in English. We did that basically because if the spec is an implementation then the developers of that implementation become the new point of centralisation."

Buterin also pointed out that software that is finished is software that's dead. Picking up a question on interoperability between public and private blockchain environments, he took the opportunity to mention a new app running on Ethereum called BTC Relay.

"This is basically a smart contract inside of Ethereum which is a Bitcoin-like client; it verifies Bitcoin transactions, it verifies that Bitcoin transactions have been confirmed.

"And actually by BlockStream's own definition which is quoting their paper, a sidechain that validates data from other blockchains, we have basically literally launched the first ever production sidechain.

"You can have something like a crowdsale that launches tokens on Ethereum and you can pay to it in Bitcoin. And potentially that kind of model can be expended, like between any chains. It can do between some public chain and some consortium chain; between two consortium chains; between Bitcoin and a consortium chain.

Andresen added: "There are hundreds of alternatives to Bitcoin now. It doesn't surprise me the technology exists to move currency between chains. It's all part of becoming an open system. And that's why all these new monies are better than traditional fiat money, which is really closed.

Buterin summed up: "There is an education problem that is going to have to be solved over time by the community. It's unique also because of the cultural constraints we have around being really concerned about being decentralised, and being concerned about things like censorship resistance. A lot of people are not going to be happy if there exists an official Ethereum standards body and the board of directors is like controlled by five major software companies."

"And to some degree you can't really force a model from the top down. This is something that we haven't really seen before and I think the approach we are going through, which is sort of evolving things crisis by crisis, may even be the best we can do."