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When the Greeks were developing the cornerstones for modern civilization, their principles focused predominantly on empowering their citizenry to have greater influence over the decision-making process.  Although the idea of democracy is not a new concept, it has evolved significantly over the centuries.  In most modern societies, the idea of pure democracy as it was originally envisioned exists only informally, with the needs of the people and actions of their representatives having become tragically misaligned. There are gaps in information, geographies, socio-economic tiers and other obstacles that make the impact any single person on policy very shallow. However, the rise of cryptocurrencies and the blockchain environment has helped to restore the embodiment of some of these principles as originally intended.

Although cryptocurrencies are painted in a very positive light due to their numerous advantages and growing functionalities, one of the best and most underrepresented attributes is the notion that governing a network depends on the consensus of its participants.  Between determining how to advance the architecture, broadening the potential for adoption, or adding other ancillary features and services, platforms like Ethereum and its resulting fork are the most prescient modern incarnation of democracy when compared side-by-side with its ancestral form.

Witnessing Democracy in Action

While a little later to the cryptocurrency arena relative to its other more established peers, Ethereum quickly took the crypto ecosystem by storm by providing a platform for the development of other blockchain associated applications and services.  Unlike bitcoin or its offshoot bitcoin cash, Ethereum serves as both a cryptocurrency and an open chain for advancing other activities that are built on smart contracts, like the robust ERC20 protocol.  Apart from leading to the massive explosion of a new business financing model, termed an Initial Coin Offering (ICO), it demonstrated the staying power of the network and its ability to serve as a springboard for other activities.

Even with the promising backdrop, it does not mean that Ethereum has been without controversy.  One of the most notable events since inception was the theft of DAO funds which generated significant discord within the community.  On the one hand, there were the participants that lost money due to this hack that wanted to use the functionality of the Ethereum chain itself to recover their funds.  This party suggested utilizing the code’s design to effectively backtrack on the blockchain itself to restore the lost funds and return them to their rightful owners.  One of the main reasons that this position was so well-supported was because it would increase the confidence in the overall system and its ability to self-govern.

However, the flip side saw many of the developers and entrenched Ethereum enthusiasts cry foul.  For them, the attribute of irreversibility of transactions, termed immutability, was more important than returning lost funds.  They believed that by rewriting the blocks, it would destroy the value of the system founded upon one-way irrefutable transactability.  Unlike the majority consensus, which was firmly behind changing the code, loyalists (core developers) thought that any actions designed to change or adjust the blockchain itself would destroy its formative principles.

The Big Split

For traditionalists, who believed in protecting the integrity of the idea at the root of Ethereum, the eventual hard fork that occurred saw many of these loyalists opt to continue mining the original network, now known as Ethereum classic.  Per these figures, nearly 13% of the total mining power of Ethereum immediately shifted to Ethereum Classic, representing a significant transfer of total network power away from Ethereum. Traders followed, and still buy Ethereum Classic in droves, hoping to capitalize on this updated version with new and improved economic rules. A preset supply cap imposed on circulating ETC gives the coin a better scarcity factor, a key driver of price, and incentivizes all participants accordingly. Many believed that the exclusion of this component on Ethereum limits its value proposition, and it made the Ethereum Classic hard fork one of the biggest shifts in favor the community had ever witnessed.

While the Ethereum split did prominently display the power of consensus and democracy in action after the majority voted in favor of rewriting the code, the developers who abandoned this model in favor of its predecessor also highlighted the parallel importance of community.  For the so-called purists, the decision to backtrack and form a hard hark to protect Ethereum users’ capital highlighted that despite their disparate positions, every party got what they wanted at the end of the day.

The new Ethereum chain maintained its credibility as a consensus-governed decentralized institution, which would go out of its way to protect user capital, highlighting the successful application of democratic principles within the ecosystem.  By contrast, the breakaway Ethereum Classic supporters followed their own vision of what was best, deciding instead to vote with their feet and move away from Ethereum to their preferred destination.

Although they did not agree, their freedom to act showed that despite democracy winning out for the broader community, dissent could be accompanied by freedom to make a different economic decision.  In this case, it was represented by the decision to form a new community of like-minded individuals.  Furthermore, Ethereum Classic has embraced the principles of democracy within its new platform, after a summit resulted in the group discussing the future of the coin and how it will differentiate itself amongst an increasingly crowded crypto field.

Looking Ahead

While ultimately it may prove that its chain is immutable, the most beneficial attributes for Ethereum Classic are that it maintains its users’ anonymity and veracity of the original Ethereum design.  This could serve as a strong value-added selling point, positioning Ethereum Classic as a competing platform for applications and the proliferation of smart contract functionality.  As more businesses move to bring their activities onto the blockchain, having a platform that is irreversible and maintains the integrity of the system may prove to be more important than constantly evolving to fulfill the increasingly varied demands of users.

While the consensus of Ethereum moved in one direction, highlighting the democratic nature of this new crypto institution, economic freedom is another key tenet of democracy that ultimately prevailed when Ethereum Classic planted its own flag.  Apart from fulfilling the needs of its own participants and supporters, it proved that the democratic nature of many blockchain-based platforms ultimately will benefit the stakeholders and not be a hindrance.

Mati Greenspan, a Senior Analyst at the social investment network eToro notes: “We’re entering a brave new era with cryptocurrencies providing people a new platform to shape the future. Whether it’s an alternative way to store value, a new means of exchange, a way to make investments online, or a way to create innovative computer applications, is all up to each individual to decide. Each person can participate in the projects that they feel most attached to and can of course vote with their time, energy and money.”

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