I have been a long-time follower of SteemIt, a social network based on the STEEM-Blockchain. How did I, like many others, become aware of SteemIt? The now infamous "Shadow Brokers" announced new software-leaks on this platform. ("Shadow Brokers" republished a very sensitive software archive from the NSA – a complicated story by itself.)
SteemIt has its followers. One for example could find lengthy articles from crypto anarchists traveling the world with Bitcoin. I also liked the aspect that articles cannot be deleted afterwards. So, here is what happened: A new investor, Justin Sun and CEO of TRON, took over SteemIt and STEEM. According to rumors, that Justin Sun kind of denied in public posts, his planned hard fork of STEEM would result into losses of 23.6 million STEEM (around USD 5 million). So here comes the kicker: someone transferred this amount to another crypto exchange (Bittrex), to save it from the forking. And, Bittrex? Well, they will not return the amount to the rightful original owners. Here is why: Bittrex follows the data on the blockchain and not what some users – in this case a minority on the blockchain – wish for. Even acknowledging the fork is not right for some, Bittrex must follow the instructions that majority owner Justin Sun implemented.
This reminds a bit of the attack on the Ethereum DAO blockchain, which also resulted into a fork. Blockchain-specialists might disagree on the similarity of both cases, but here is what I would witness as an average investor in Blockchain currencies:
If there are problems within the blockchain, it will be forked, and users lose money. #endofstory
Sounds exactly like hyper-inflation of a fiat currency to me: you lose purchasing power, but you get more coins in return. Since years we have heard that pseudo-anonymous peer-to-peer is safe and protects us from the abuse of one central instance. The government controlled central bank that “only generates more money out of nothing by printing it” and is "owned by the Rothschilds", as conspiracy theorists would love to add. Crypto becomes resilient and people start to invest into this digital alternative. Not so fast! Where is the resilience, when a fork will move your money away and reduce it in value?
The case of SteemIt (STEEM) demonstrates that a peer-to-peer architecture cannot guarantee resilience. I am pretty sure, that many will point this out as inadequately (e.g. majority of nodes in a blockchain) but isn’t this the prime usage of a crypto currency? To create an alternative pseudo-anonymouse safe-heaven investment?
This current and many future cases demonstrate that virtual contracts, goods, and tokens cannot create more resilience by just existing as an alternative. They need a real-world framework to plug-in, like stablecoins pegging to reserves or real currencies. This framework could be law and politics for example.
In my next post, I will explore how central bank cryptocurrencies (CBCC) could create such resilience for crypto currencies and why, for example Libra, stablecoins might be a dangerous alternative.
The fact is, we only interpret the data on the blockchain, and in this case, the consensus of the blockchain, regardless of how it was reached, agreed that the funds from those 64 accounts be moved to the “community321” account.