Hello respected Steemit community. Eight years ago today, with two days remaining until the Games, the focus in world news was on preparations for the Summer Olympics. After years of economic growth and a winding down of the wars against terrorism, the world was turning a corner. Just as it seemed that the inevitable march of progress continued forward, Russia suddenly invaded Georgia, seizing control of South Ossetia. A series of events that followed, including the stark authoritarianism on display at the opening ceremony two days later, showed everyone that what we had thought was progress was actually an illusion: the world's most brutal dictatorships reminded us they were still there and that they were superior at taking decisive action to accomplish massive tasks quickly. Shortly after the closing ceremony, the economy in the West then crashed, shattering the economic prosperity that was thought to be certain to continue.
With two days remaining until this year's Summer Olympics, we are once again reminded that what seems like progress is often a façade that easily crumbles. Tuesday, August 2, 2016 will be remembered as one of the darkest days in cryptocurrency's history. After months of headlines where it appeared that businesses and financial institutions were finally coming around to Bitcoin, Ethereum, and other blockchain technologies, cryptocurrency took two huge steps back yesterday. Rather than continued growth, the latest events have set back progress and reminded everyone of the dark instincts of many cryptocurrency users. The scum of the planet rejoiced in their $70m haul from Bitfinex and their success in achieving a valuation of stolen funds on ETC of at least $20m.
The Bitfinex hack has destroyed lives and set back bitcoin's development. The theft itself, having occurred so many years after criminals stole money from a number of other institutions, brings to the forefront a fundamental question posed by user moral_agent last year: if thefts keep happening over and over, is it even possible for humans to secure cryptocurrencies? This fact is assumed to be true despite the mounting evidence that it is not possible to secure cryptocurrency with the confidence necessary to operate business models which rely on large amounts of money. The industry is at a point where it needs to consider whether the current design of cryptocurrency is fatally flawed, because the theoretical possibility of securing coins is not playing out in reality.
But as bad as Bitfinex is, the rise in the valuation of Ethereum Classic (ETC) is even worse. ETC's rise isn't as shocking, visible, or quick as the Bitfinex hack, but it also represents a transfer of wealth to thieves and hackers. We definitely know that 1/8 of the entire ETC value is held by the DAO thieves or the various subsequent attackers alone. When the replay attacks against Coinbase and other exchanges are included, it wouldn't be surprising to find that 17% or even 20% of all ETC is held by criminals. These criminals have been placing ads on reddit and in forums advertising ETC as an investment, a tactic reminiscent of those used to pump penny stocks.
People who place buy orders in ETC slowly bleed out money to the criminals, who have done a masterful job at hijacking a political ideology to enrich themselves. When the hype dries up, the ETC thieves will have stolen millions of dollars, just as their kin did at Bitfinex. With ETC, the theft is worse because the buyers have no recourse, and the perpetrators are much less likely to be caught. Few people seem to recognize that what is occurring actually is theft, because the money is flowing so slowly towards the thieves.
Both Bitfinex and ETC lay bare the hypocrisy of many people involved in crytocurrency. Bitfinex exposes the mismanagement of the US government, which has been wasting the tax dollars that people like me slave away every day to give them. They devote taskforces of highly paid agents and prosecutors to arrest people who sell a few bitcoins to someone who buys weed. Meanwhile, Alex Green, Paul Vernon, and a large number of other scam artists who actually ruined people's lives remain at large. There is little reason to suspect that the theft of Bitfinex's coins will be investigated any more thoroughly. While the government jails people who handle money involved with drugs, hackers repeatedly execute some of the largest bank robberies in the history of the world - because they see the number of agents devoted to those investigations is dwarfed by those assigned to deal with drugs.
With ETC, we see that a large number of normal cryptocurrency users, some of whom are the same people who loudly protest that they were ruined by Bitfinex, are willing to turn a blind eye to actual criminal activity that hurts other people. Barry Silbert, an investor who claims to support the emerging blockchain industry and who gives funding to cryptocurrency companies, took to twitter to recommend Ethereum Classic. Like many others who loudly complain about blockchain security (until they see an opportunity to get rich), Silbert carries on about the promise of blockchains for legitimate companies while at the same time siding with a blockchain where, if it were to succeed, thousands of people would have seen their DAO tokens transferred to the hands of criminals. The general public, rightly so, sees cryptocurrency as a haven for illegal activity because hypocritical people like Silbert claim one thing and then do another.
Thus, seven years after bitcoin was founded, we find ourselves back to the same old scams, thefts, and shady characters. Just when it looked like people like Mark Karpeles and Trendon Shavers were done for and the industry had moved on, cryptocurrency took one of the biggest steps backward in its history yesterday. Over the next few months, we can look forward to another bankruptcy proceeding. We can look forward to the panic that will ensue when the criminals cash out of Ethereum Classic and leave investors with nothing. And since it's only a matter of time, we can also look forward to the protracted battle when someone finally decides to be bold and hard forks Bitcoin Core.
Yesterday, the illusion of progress was shattered. The same problems continue to plague the industry, and the same battles are being waged over and over and over. While I would like to be optimistic about the future, cryptocurrency will never be successful if criminals are allowed to roam free and hackers are rewarded on the basis of political ideology. After seven entire years, there is still no sign that honest, ethical people will ever be rewarded in this arena, and unless that changes, it will be the industry's fatal flaw.
Thanks....
