The scourge of outside "experts"

[Steve Sokolowski]

Britain's vote to leave the European Union on June 23 exposed a stark divide between those who think they know what is best, and those who actually have to live with the decisions. The same dynamic that led to the result some viewed as shocking has been at play in bitcoin's leadership for a long time. In this article, I will explore why this disconnect occurred in Britain, why people appear to be shocked by it, how bitcoin has suffered the same fate, and why the Ethereum community is in danger of allowing the same situation to develop.

It has always been common for people to have varying degrees of knowledge on any given subject. In addition, not everyone in an organization needs to be an expert for that organization to function. For example, a racquetball club often consists of expert players who have been members for many years and who compete in national tournaments as well as novices who join to play some friendly games on Sunday afternoons. The club chooses its leaders from those most qualified to serve - the expert players. The leadership usually makes decisions that are in both their and the other members' best interests, because they are all members of the same group and are all affected by the decisions they make.

Lately, however, the educational requirements for achievement in many fields have become so great that the "experts" are sourced from outside the organization. For example, a fast-growing supermarket chain in Nova Scotia with a few stores needs to better organize its inventory. Having previously purchased point-of-sale systems from commercial providers, it has no in-house IT staff. They place a job posting online and hire a software engineer from southern California to relocate to Cape Breton and manage a team that will produce and release a new checkout system.

The engineer is very knowledgeable about C# and supply chain management, but he has had no exposure to Canadian culture and has never lived outside the huge metropolitan area of Los Angeles. The completed system will probably be bug-free and accomplish the goals of a supermarket's managing its inventory, but because he was placed in charge of the project by himself, employees of the chain may have issues with the system where it doesn't fulfill their needs. The system may make it difficult to accommodate price negotiation for items that is uncommon in cities but occurs often in areas where tourists visit. In explaining the difference, the engineer may refuse to modify the system to allow price changes, on the grounds that losses and thefts are more difficult to track when employees have the ability to negotiate with customers. This engineer is developing software that is inappropriate for the target market. He may acknowledge his mistake and make the changes, or he may state that his methods are correct and try to force the employees to change their procedures, which will probably result in his firing.

The intrusion of outside experts is what happened in the case of Benjamin Lawsky. Lawsky is an "expert" who had no involvement in cryptocurrencies before he was assigned to regulate them, and who was not elected by anyone to his position. He approached New York's regulations from the perspective of a banker, since his previous experience was in the banking sector. What he developed was completely inappropriate for the cryptocurrency industry, which is demonstrated by the single-digit number of companies who have received the New York Bitlicenses years later. For people actually involved in the industry, the regulations were too expensive for compliance, and there was a string of companies that have banned and which continue to ban New York residents. Furthermore, since banks weren't using cryptocurrencies and still aren't, Lawsky failed, as outside experts do, even at establishing a banking-like environment for cryptocurrency in New York.

Thus, the British vote is very easy to explain. While journalists from the United States repeatedly criticize voters in the United Kingdom for their choice, saying that they "got what they expected" with the economic crash that occurred last week, the voters didn't make their choice for economic reasons. This statement becomes clear if one reviews the results of post-election polling at http://www.huffingtonpost.com/david-rot ... 73874.html. Petitions to hold a second referendum online, while highly visible, don't represent the views of actual voters. Only 5% of people who voted "leave" would definitely change their votes, and 2% of the people who voted "remain" would change their own votes in the other direction, which is hardly a groundswell of people who regret their choice. But the more interesting information in this poll is that people who voted "leave" still believe that their family will be better off in the future, despite being first told about the performance of the markets. There is a complete disconnect between the two groups that journalists still seem unable to grasp.

"Leave" voters generally understand the economic consequences of their decision, but made it anyway and are happy with it. They voted to leave because their country had become dominated by regulations created by unelected "expert" bureaucrats appointed by MEPs conducting business away from their homes. The experts were experienced in their fields, and truly believed that integrating cities as much as possible was in the best interest of European people. But many of these rich individuals live in gated communities with 24-hour security rounds and send their children to private schools. Even if they themselves believe tolerance and diversity, the "experts" were out of touch with the real problems that immigrants, both friendly and terrorist, create on social institutions that everyone who isn't as rich benefit from. Here again, we see how a group of knowledgeable experts from outside an organization failed to represent the views of ordinary members, and that led to their ouster.

In bitcoin, the chasm between the "experts" and the ordinary users is even wider than that between Lawsky and cryptocurrency businesses, or between EU regulators and the British people. In bitcoin, the "experts" consist of three classes: the Core developers, the miners, and the off-chain speculators.

The problems with the Core development team are well-known. The Core has gone off the rails in developing and merging features that almost nobody has requested while neglecting features that are absolutely necessary for continued growth. Instead of increasing the network's blocksize, the Core chose to introduce replace-by-fee, a controversial addition that few have welcomed or adopted. Instead of improving CPU performance, the Core continues to add new opcodes to the network that will be used by a small minority. It took the Core a long time to acknowledge the usefulness of Xtreme Thinblocks, a dramatic performance improvement they have still not yet released but which has been present in Bitcoin Unlimited for a year. A majority of people have chosen not to upgrade to the Core versions that contain all these new features, likely because they weren't requested nor are they needed.

Miners ignore the bitcoin blocksize controversy almost completely. It was only recently that rumors of an agreement about the issue from miners started to appear. Action has yet to materialize and there is little reason to suspect that this recent declaration represents any more progress than the numerous other agreements and conferences that miners have attended. Meanwhile, miners largely continue to ignore the problem.

The "expert disconnect" in bitcoin is also visible in market activity by investors. There is clear scientific evidence that transaction fees in bitcoin have risen substantially, and that confirmation times are becoming more problematic. Yet, while the product is becoming more expensive and of lower quality, big investors continue to buy bitcoins and bubble up their price. If you question whether this price is fair value or not, ask yourself if there is any other product in the world that becomes less reliable and more expensive, and for which consumers don't eventually ditch for alternatives.

On the other side of the "experts" are ordinary users. Talking with actual users yields a display of anger, frustration, and disappointment. Some users are angry that the promise of bitcoin is going unfulfilled. A few are frustrated that there is too much uncertainty for them to invest in new startups. Most, however, are disappointed that they have to change their usage of the network because of the unacceptable confirmation times or fees, as we were when we raised our bitcoin payout threshold by a factor of 10 and defaulted user payouts to Ethereum.

The Core developers have lost touch with their users because they don't run businesses that depend on the operation of the network. It is easy for them to suggest that people implement features which sound cool when they think that the product is already working as-is. Miners don't care about ordinary users because their business model doesn't actually use the network in a normal use case. Where they actually need to pay someone in bitcoins, they can always include those transactions in their own blocks. Many investors just trade paper bitcoins on an exchange by changing numbers in a database, rather than actually losing a dollar every time they want to buy a $20 product. These three groups, who happen to contain the people with the most knowledge of bitcoin, don't have a clue about the needs or experiences of the ordinary user.

In Ethereum, the situation is different. While there clearly exists a group of experts, most of them are affected by the actual operation of the network. Buterin, for example, not only owns a lot of Ethereum but also serves as Curator for the DAO and has had involvement in both its creation and its rescue. The Ethereum developers are using contracts on the network, rather than simply pushing out features without much experience as to whether people will use them. Part of the reason for this difference is that Ethereum is more hands-on and persistent than bitcoin, which is meant to send money and be done with the transaction, but the Ethereum developers also have more concern for other people than bitcoin developers like Peter Todd and Gregory Maxwell have shown.

However, the upcoming hard fork in Ethereum is a risk that could fragment the community into a group of "experts" and normal users. The chief concern is the prevention of influence by bitcoin users who have been very vocal in opposing a fork on principle. There was a recent article in one of the bitcoin publications that tried to interview bitcoin personalities about the Ethereum fork, but the author couldn't find anyone who was in support of the fork. Allowing these people to have a say risks development of the same sort of problems that the organizations discussed above have encountered - that outside "experts" who do not actually use Ethereum for their daily business somehow become trusted to make rules for normal users.

As I said in a previous article, Ethereum community members need to be extremely vigilant to prevent the intrusion of bitcoin's ongoing problems into Ethereum. In the previous article, I pointed out that people like theymos must be unconditionally banned from any official involvement with Ethereum. In this article, I want to implore people debating a hard fork to listen to other people who actually use Ethereum, and to ignore the almost unanimous opposition from bitcoin users on the issue. If a hard fork cannot be agreed upon, then I hope that the developers will at the very least release a blacklisting client within the next week that "auto-burns" DAO coins to a known burn address. At the very least, a client that burns exactly the inputs coming from the stolen coin addresses, without user input so that no human can be accused of touching them, and which does so within seconds of receipt is absolutely necessary for businesses to continue operation on the Ethereum blockchain. Such a client will also likely be opposed by bitcoin users, but they again aren't the people who actually would have to monitor their wallets and waste time getting rid of the coins themselves. These are the sort of features that differentiate disconnected "experts" from those in touch with users.

In conclusion, I believe that we are starting to see the world move toward two distinct classes of people. Rather than rich vs. poor, the immense amount of knowledge that is now required as a result of improvements in technology has made the primary division one of expert vs. people who actually suffer the consequences of the experts' decisions. We have seen this divide in Britain, we will likely see it in France, and we could see it in a Trump victory. Bitcoin's dysfunction can be explained almost entirely by how people who are in control have completely lost touch with the needs of their ordinary users, who greatly outnumber them. Ethereum has so far avoided the divide through selection of responsible people, but their status is at risk by the intrusion of outsider opinions who do not use Ethereum and will not suffer the consequences of their decisions. History has demonstrated that when outside experts overreach, the people rise up and overthrow them. The Core developers, miners, and investors should have listened to their users. Fortunately, Ethereum has been listening, and looks poised to continue to do so while coming to a solution with the DAO fork.