Based on “Visions of Bitcoin”.
How major narratives of Ethereum and $ETH have evolved over time.
Crypto-communities seek for newish narratives or adapt current ones as an exercise of collective strengthening. They also do so to combat critique by isolating some of its premises (“Bitcoin is expensive to use! — But it’s not meant to be ‘used’ that often!”).
Proactive and reactive sense-making.
Nobody can know everything. The complexity of society is irreducible. We cling to mental models that satisfy our thirst for understanding a given phenomenon, and stick to groups who identify with similar narratives. Image of the DEV plan³ circulated in 2014, at the time of the Ether sale.
Beliefs are not only shaped by reality; they define it. In any social arena, there’s a never ending battle to tells what’s happening, why is it happening, and what is happening next. Controlling narratives is particularly powerful in cryptoland given the innate complexity and polytechnic nature of the field.
As 2018 unwinds over filled weeks in Berlin and Prague for the Ethereum community, it seems like a proper moment to reflect.
What exactly should Ether be? And how have our views on it changed, in the past 5 years? Below, we chronicle disparate answers to this questions over time.
Ether over time
In the absence of a reachable leader, Bitcoiners rely on founding documents to debate the currency’s ethos (e.g. “decipher what Satoshi ‘truly wanted’”).
Ethereum is way younger than Bitcoin. In the quest for legitimacy, it has flirted with a broad range of overarching narratives⁴. Founding documents are recent, their authors are still around, discordance abounds even among them
In Ethereum, vocation is an ever-growing construction (like bees building a hive), much more than an exercise in regression (like Theseus rolling back a ball of thread to escape the labyrinth). Here we break down seven major themes around which Ethereum development has revolved, along time. In rough order of appearance:
1. Bitcoin 2.0:
Ethereum was unveiled to the public at a Bitcoin conference⁶. Early media coverage was very reliant on comparisons to the predecessor cryptocurrency (see 2014’s “Bitcoin’s most ambitious successor” by Al Jazeera⁷; “Bitcoin 2.0” by Bloomberg⁸). The original motivation for Ethereum stemmed from Bitcoin’s scripting limitations. The tale of a young idealist leaving the “toxic” bitcoin underworld was appealing to mainstream journalists having to report on crypto after the 10x price increase in BTC by the end of 2013. Although this narrative lost momentum as Ethereum carved its own identity, it’s still a popular way for newcomers to see $ETH when first picturing the space.
2. dApps (a.k.a. World Computer):
Technically, from the beginning, Ethereum was meant to be “a platform for the deployment and execution of smart contracts”. Old promotional material already described $ETH as “crypto-fuel”: the asset is to smart contracts akin to what gasoline is to cars. The vision of a “world computer” lost gas (😉) as scaling took longer than expected, dApps didn’t proliferate, and alternative smart contract platforms started to gain traction.
3. DAOs:
The promise of ownerless organisations has always been a magnet for the politically-inclined ones. Proposals like the famed People’s Republic of DOUG⁹ (the first Ethereum-based DAO²) were common in Ethereum’s early days. Vinay Gupta, who coordinated releases for the Foundation, used to jam on what he called “State in a Box”¹⁰. TheDAO¹¹ obviously blew everyone’s expectations, and slowed down excitement for autonomous experiments. This narrative slowly languished as no DAO truly thrived; but it has seen resurgence as ICO-funded organisations did no better; and toolkits for managing ownerless organisations are finally coming to main net.
4. Crypto-crowdfunding (ICOs & STOs):
Ethereum’s mere existence is a testament to the power of borderless crypto-crowdfunding. Such has been praised the most eminent utility of ETH since it became obvious that deploying a token was the most straightforward thing to do with contracts. The story-line weakened as the SEC’s increased scrutiny towards the industry¹² and natural selection exerted its effect on the market¹³.
5. Utility tokens & collectibles:
As the “path to liquidity” for new tokens started to get more complicated, a lot of focus shifted to studying¹⁴, simulating and improving already existing token frameworks¹⁵. For some time, “utility” actually meant “defence to legal enforcement targeting securities”, even more than it meant “moulding incentives”. The introduction of the “NFT standard”¹⁶ in 2017 jumpstarted exploration of non-fungible tokens and highlighted the value proposition of games with shared states. These were already spoken of in Ethereum’s early 2014 videos, hinting at what would later become a very hyped use case.
6. Open finance:
The “open finance” narrative¹⁷ emerged in response to the frivolous abundance of tokens in the market. Abstracting ownership via socially agreed information structures (titles, tokens) is key to economic development¹⁸. Hernando de Soto argues that $9.3 trillion in property is economically dead capital (lost value) due to improper rights registration - mostly in the hands of the poorest. The point is: benefits of asset digitisation are somehow plutocratic until people have permissionless, shared economic infrastructure — what this story is about. 0x’s success in building an ecosystem of relayers from scratch fostered intense experimentation with financial instruments. The #DeFi Alliance was established by leading entities in the field. After the Fat Protocol and the Fat Monies “thesis”, the “Fat Wallet” theme¹⁹ arose, in line with the philosophy of “truly open source bankware”²⁰.
7. Radical Markets:
“Open finance” is great, but instead of emulating the complex financial arrangements we’re used to in the real world, what if we could redesign markets from the ground up? How can programmable money help evolve private property contracts, improve (or liquidate) representative democracy, and prevent data harvesting in order to spawn more inclusive and efficient markets? Where is permissionless infrastructure needed the most? How can the community maximise social impact per unit of effort? From mid-2018 onwards, Ethereum started to be revered by the social values it embodies²² as much as it had been for its technical merits. If bitcoin was well-positioned to capitalise the aftermath of the last big financial crisis, Ether seems poised to fill the void left by the cultural, political and economic decline of surveillance capitalism²³ (as depicted by the slow corrosion of Facebook’s empire), in what appears to be a societal shift towards a more liberal future.
Much of the analysis here relies on the subjective interpretation of documents, Reddit posts, archived webpages, DevPost submissions and Github discussions. If you disagree, I welcome suggestions for alternatives.🕒 Timeline
“When […] bitcoin began, the anonymous wizard desired to test two parameters- a trustless, decentralized database […] and a robust transaction system capable of sending value across the world without intermediaries. Yet the past five years have painfully demonstrated a third missing feature: a sufficiently powerful Turing-complete scripting language.” —
Vitalik, Official Ethereum.org website, 2013–14Vitalik has worked on KrypoKit (a wallet backed by Roger Ver and Erik Voorhees) and Amir Taaki’s Dark Wallet. He co-founded Bitcoin Magazine with Mihai Alisie and wrote for it extensively. After frustrations with Bitcoin’s apathy in welcoming changes, Vitalik devoted some time to Mastercoin. He had some proposals for generalisation rejected there; pondered about implementing his ideas on Primecoin; and finally decided to go for a new blockchain²⁴.
The Ethereum whitepaper began to be circulated by the end of 2013, and in early 2014 the project was unveiled at the North American Bitcoin Conference while most of the founding members were staying in a house together²⁵. Seed capital was secured, leading to a jurisdictional adventure that ended up setting a legal entity in Switzerland.
The team had to decide between a “crypto-Mozilla” (non-profit) or “crypto-Google” (for profit) approach. The later was reportedly favoured at first, but a non-profit structure ended up being chosen²⁷. In light of conflict, Charles Hoskinson, who served briefly as a CEO to the project, departed²⁸.
The Ether sale went smooth on mid-2014 attracting around 6.000 lucky participants²⁹.
One year later (and treasury management hell for the freshly established Foundation after a sudden drop in BTC), a competition was held to find bugs while on a test net. During this time, the Olympic period, some contestants earned up to 3500 $ETH in rewards³⁰ — close to U$ 700K in today’s prices.
The subsequent Frontier release brought the first version of the main net alive. It’s hard to believe today, but, at that point, some doubted the Ethereum Foundation would even survive the imminent financial collapse. Nevertheless, there were code contributions coming from everywhere, and a sparse community already organising meetups in random corners of the globe. Ethereum had started walking on its own.
ICOs begun proliferating that very same year, more pervasively after the ERC20 standard was proposed in 19th of November of 2015³¹. Months earlier, Augur had notably conducted the first ICO on the network. Their pioneership costed a painful migration to the newly accepted token standard later down the line.
In early 2016, the second main net release - Homestead - went to production.
From that moment onwards, the network wouldn’t live through a full year of peace, until present days - having had to deal with bug exploits, hacks and DoS attacks that repeatedly diverged community attention from important decisions towards more urgent ones.
From ICO to mainnet, Ethereum took 1 year.
From 1st production release to 2nd, it took 9 months.
From 2nd production release to 3rd, it’s taking ~2.5 years, and counting.
Soon after the Homestead release, it became clear that Ethereum had outgrown its founders, and evolved to a point where it could cause significant economical impact - for good and for bad.
The DAO experiment drew worldwide attention. It was funded (very) successfully in May 2016, attacked in June, and caused a fork to happen in July¹¹. The White Hat group formed amidst the uncertain days that followed the incident. A counter attack that limited the action of the stealer was executed successfully, and gave the community time to think through viable courses of action.
The heated debate that followed dissected property rights, interventionism vs. non-interventionism, and the weight of social consensus³⁴. As it became clear, some scars forged during the reaction to the DAO hack would be permanent from then on. A hard fork was conducted in collaboration with key stakeholders in the ecosystem.
The split signalled that the notion of absolute immutability was not primordial for Ethereum (the overarching narrative of a “platform for DAOs” significantly lost momentum). Social consensus was openly acknowledged to be at least as important as “protocol consensus”. Worth remembering, the asset we refer to as ETH today belongs to the fork of the original chain, whose token is now ETC.
In the aftermath of the split, towards the end of 2016, the network would still suffer a severe DoS attack while DevCon II was happening in Shanghai³⁵. The fast, coordinated response served as a display of maturity for the disperse group of developers strengthened after a troublesome 12-month period.
2017 was a year of consolidation. Ethereum had attracted wide community attention after surviving the post-DAO fork. Both ETH and ETC would still rise significantly in value. ETH had conquered liquidity on all major crypto exchanges. Silicon Valley was fond of it, and helped the asset capitalise like no other the wave of mainstream interest that arose through the period.
ICOs raised billions of dollars, and expectations on the sector outgrew actual usage. Celebrities from Floyd Mayweather to Paris Hilton to Ronaldinho endorsed ERC20 coins (2 out of these 3 were condemned as scams; 1 is still pending). The carefulness with which Vitalik & co. had incepted Ethereum (from a legal and technical standpoint) was far from what became the standard for tokens throughout 2016–17³⁶.
As competing smart contract platforms started to blossom, large ETH holders prompted a lobbying effort aimed at preventing the currency from eventually being deemed a security by the SEC³⁷. The agency adopted a more proactive stance on enforcement - progressively targeting bigger enterprises (as of today, dozens of entities have already been involved in “Operation Cryptosweep”). Needless to say, ICOs (and STOs, and whatever came next) lost much of their appeal³⁸.
Teams who held on to their tokens mostly justified so by differentiating on the game theoretic /economic properties of their systems. “Tokenomics” (the term) gained popularity in mid-2017³⁹. Crypto-collectibles rose to prominence soon after.
By late 2017, Cryptokitties clogged the network and gave Silicon Valley a pet project to cheer for⁴⁰. Millions of VC dollars flowed to crypto-games, NFT marketplaces and art-collection related projects. Little measurable demand followed. CryptoKitties stabilised at a couple hundred daily users. A Warhol was auctioned to a collective of shareholders via the Ethereum-based Codex Protocol. As of today, there are still people who blog enthusiastically about accumulating and trading estate on Decentraland. Despite the excitement, the network hadn’t proven to be a safe fund-guarding system nor a fully decentral-governed one. In the turn from 2017 to 2018, the community faced yet another dead-lock.
Two incidents in July and November of 2017 (a hack⁴¹ and an accident⁴², presumably, involving Parity software) led to rightful owners being deprived of dozens of millions of dollars of their ETH⁴³.
Protocol-level measures to ensure access to funds (or even revert malicious transactions) were proposed by affected parties. EIP999 became the go-to issue for arguing in favour of one camp or the other⁴⁴. TheDAO reaction had set a slippery precedent. Tense debate followed, but no compromise was achieved. If anything, the period helped popularise politics among common Etherians — that is, to turn network governance into a more inclusive practice. Initiatives like ETHPrize, the Fellowship of Ethereum Magicians and the Etherean message board started to pop up, aimed at better understanding shared visions and goals within the community.
In 2018, capital once hungry for ICOs and new tokens has dried up. Projects shipping at the most consistent pace seem to be the ones on the #DecentralisedFinance sector, where a good part of founding technologies, surprise, has no native tokens attached¹⁴. Debt provision infrastructure, stablecoins, derivative instruments and non-custodial relayers have recaptured the attention of both big investors and the SEC (see the EtherDelta case)⁴⁵. This sub-sector is an evidence of the compounding effects at play when it comes to well-crafted, open source, modular building blocks.
As a corollary of the increase in governance participation, observed (subjectively) throughout last year, the ethics of Ethereum became a more commonly discussed matter. At DevCon IV, in the end 2018, there was a whole track dedicated to “Society & Systems”, heavily focused on inclusiveness.
The latter part of 2018 was also marked by a convergence of ideas⁴⁶ between the Ethereum community and the RadicalXChange movement jumpstarted after the publication of “Radical Markets” by Eric Posner & Glen Weyl. Vitalik has engaged on refining concepts proposed in the book and co-authored a paper on “Liberal Radicalism”, exploring better mechanisms for funding public infrastructure⁴⁷.
In short time, a tide of Ethereum-based applications incorporated “radical” notions like those of partially common property, self-assessed taxes and treating data production as labor⁴⁸. Submissions to recent hackathons reveal experiments for buying ad-placements, pixels in a map and domain names under a Harberger-tax-model⁴⁹. We may soon have a similar form of resource allocation being piloted in urban spaces with public art.As Weyl eloquently put, after his talk at the last DevCon, Ethereum is likely among the most “serious, organized and broad-based movements for a positive, forward-looking, liberal vision of the future”. It’s use case has evolved to be “less any particular technical question, and more [that of] offering a vision that can save us from returning to the 1930’s next time we hit a recession”. There’s certain plutocratic aspects to the network, and a lot of design quirks to fix… but “what other movement can introduce you to people of every creed and race from every continent united around the idea of decentralizing power”²²?
🏁 Conclusion
The intention here was to depict overarching narratives driving the development of Ethereum over time. The chosen method was to chart community sentiment through an analysis of Reddit posts, discussions with early community members, documents, archived webpages, Github threads, DevPost submissions for hackathons, personal blog posts, recollections of major attitudes and media coverage along the years. Anyone who has been around long enough can perform a similar analysis.
No statement is meant to be an absolute truth. The goal is to nudge people away from absolutism, and acknowledge that the identity of this community is vivid, even if far from solidified. It’s fine to change one’s mind in response to new evidence. Vitalik’s “that didn’t work!” chorus in DevCon IV’s “BUIDL song” was a powerful - yet kitschy - reminder.
Bitcoin is commonly praised as a conservative organism. Ethereum is usually viewed as further down the spectrum, towards progressivism.
Ethereum can be borderless crowdfunding and a revolution in access to finance. It can be the missing substrate for sovereign data markets to blossom. It can be the testbed for a desert city running on smart contracts.
It can also be just a collective delusion around fantasies that stubbornly scale faster than reality.
What is the vocation of this network, its asset, and its community, in the end?Vitalik has once noted that, “contra doctrinare libertarians, freedom is a high-dimensional space”. Maybe Ethereum is a land in which to explore these dimensions.The chilling uncertainty, while a central point of critique to detractors, is precisely what makes supporters so excited about the future of Ether.
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