Coindesk remains one of the more useful sources of information about cryptocurrencies and related technologies and communities, offering a number of perspectives and (mostly) careful reporting. In an overheated, superhyped arena, it is nice to have some reasonable coverage.
As always, they have done a bunch of “year end” articles, reviewing 2016 and looking forward to 2017 (“What Will the Bitcoin Price Be in 2017?” Sigh.)
I thought I would check some of their retrospectives against my own comments throughout the year.
Like everybody, I pounded on the major “fails” of the year,:the big, costly hacks. Bill Shihara summarized these into two phases, “First Half of 2016: Centralized Services Attacked” and “Second Half of 2016: Individuals Targeted”. In my own coverage of these stories, of course I have consistently pointed out, again and again, the importance of end-to-end thinking. Regardless of how “secure” the cryptography or part of the protocol might be, the actual system is only as secure as the whole, end-to-end flow.
From the end-to-end, the fact that actual users were vulnerable, and also needed to use vulnerable “centralized” services, indicates that Bitcoin overall is quite vulnerable. Part of the story here is that the innovations of Bitcoin do not actually eliminate risks, it “merely shifts the risks among actors” (to quote the Federal Reserve’s report ). Eschewing the heavily regulated conventional banking system, Bitcoin places additional burdens on individual users and intermediaries (such as “centralized services”). I would expect such attacks to continue, as the Bitcoin protocols push risks out to the edges.
Obviously, the biggest “fail” of the year was the DAO / Ethereum crash, which I predicted and followed. Christoph Jentzsch reports on the lessons learned from this ‘Blessing and a Curse’. He was involved in the controversial decision making around the hard fork, which was “exciting”. He writes about “lessons learned”, though his main lesson seems to be just how difficult it was to try “accurately aligning the community with all its parts”.
Shockingly, he concludes that, after sinking the Ethereum ship with all hands, “the ethereum ecosystem is getting stronger and stronger”. Also, “the concept of the DAO is not dead”, and has been resurrected in the form of the rather mysterious “Charity DAO”, and some other nebulous projects.
I hope everybody else has learned a different lesson: Ethereum “smart contracts” are pretty much guaranteed to be a disaster.
Finally, Coindesk suggests “The Year’s 13 Biggest Blockchain Stories”. It’s a pretty good list, touching on many items that I covered, including IBM’s big play, Ethereium and the DAO, the R3 collaboration, and zcash.
I’m not sure that the hoo-haw about Craig Wright’s claims to have created Bitcoin is all that important, though they certainly contributed to the overall feeling of chaos surrounding the cryptocurrency communities.
Coindesk left out a couple of important stories that I posted about. The Federal Reserve’s report on Distributed Ledger Technology is pretty significant, both because it was written at all, and for it’s useful summary of the landscape from the biggest player of them all.
But most of all, it shocking that their list has nothing at all about the failure to do anything about the Bitcoin “blocksize” problems. As I have written, Bitcoins scaling fiasco (along with Ethereum’s forking) have been a master-class in how distributed organizations can fail.
We can be sure that in 2017, cryptocurrencies an dblockchains will continue to give us yet more of these “lessons”.
- David Mills, Kathy Wang, Brendan Malone, Anjana Ravi, Jeff Marquardt, Clinton Chen, Anton Badev, Timothy Brezinsk, Linda Fahy, Kimberley Liao, Vanessa Kargenian, Max Ellithorpe, Wendy Ng, and Maria Baird, Distributed ledger technology in payments, clearing, and settlement. Board of Governors of the Federal Reserve System, 2016-09, Washington DC, 2016. https://doi.org/10.17016/FEDS.2016.095