Reaching Everyone, Pt III: Why Bitcoin Matters — Privacy, Freedom and Authority

ICYMI on In The Mesh, read the next parts there first.

This article is the third in a four-part series by Matt ฿ (@MattoshiN) and Wassim Alsindi (@parallelind) on the use of Bitcoin and the technology stack built atop it to assist those living under oppressive regimes or in conflict zones, and those seeking to flee them. Read the first and second instalments.

By Kevin Durkin for In The Mesh

Bitcoin is, above all, agnostic. It serves anything, and anyone, with no regard for who users are or what their intents might be, provided they play by the rules — rules, not rulers. What one may see in the network, protocol and currency is a context-dependent Rorschach test: one person’s rat poison is another’s meal ticket. While legacy financial institutions are fuelling a wave of social media deplatformings through the ever-expanding Operation Chokepoint, Bitcoin rises to prominence as a tool for the marginalised, ostracised, oppressed and forgotten. It enables any human to develop a parallel means to transact and store wealth and, as time goes on, the ways and means of using Bitcoin grow in variety and quality. There is no doubt that volatility in BTC-fiat crossrates make external measures of cryptocurrency value vary wildly, and obviously downside risk is not helpful especially when you are putting your life on the line. On the other hand, when national currencies undergo hyperinflationary events Bitcoin can be one of few accessible havens of relative stability. As of today, stablecoins are not the answer.

Freedom means everyone can use it, regardless of your opinion on their motivations, political leanings or priorities. Guerrilla and outsider organisations of all flavours and persuasions will be early adopters of decentralised technologies, and there’s nothing that can be done about that. The precautionary principle doesn’t work in permissionless environs and there is no ‘off switch’ — a feature, not a bug.

Bitcoin heralds a new age of ‘extreme ownership’ — or at least, provides the option for individuals to truly exercise sovereignty over their wealth. When used correctly, it is both unseizable and uncensorable. In the digital age, few things are more important than ensuring that wealth can be stored and transmitted without custodians or other third parties keeping personally identifiable information, blacklisting recipients or otherwise denying/reversing transactions. While physical cash offers individuals a degree of anonymity in their day-to-day exchanges, the push towards digital payments threatens this privacy by creating digital footprints that could be exploited for the purposes of surveillance.

How an individual ‘experiences’ Bitcoin is entirely up to them. On one end of the spectrum are those who have no need for true possession — consider speculators that rely on custodial exchanges or wallets. On the other are power users seeking granular control for maximising their privacy and financial self-sovereignty — functions like coin control, UTXO mixing or operating a fully validating node. Evidently, the further towards this end of the spectrum they tend, the more the value proposition of Bitcoin becomes apparent.

The appeal of Bitcoin today is undoubtedly rooted in the ease of its trust-minimised, rapid and global transfer, paired with the change-resistance and (algorithmically enforced) scarcity that precious metals have historically exhibited. Where faith in centrally-issued fiat currencies requires that participants entrust governments with maintaining monetary legitimacy and purchasing power, faith in a cryptocurrency network’s continued healthy function merely requires that participants act in their own self-interest — consensus is driven by active nodes. Indeed, you’ll have a hard time garnering support for an upgrade that would endanger the wealth of others such as inflating the money supply or sacrificing security for convenience. However, no system is infallible, and it’s foolhardy to overlook some potentially dangerous attack vectors executable in various manners. Everything from eclipse attacks — which geographically or otherwise target individual or grouped subsets of nodes so as to obscure and alter their view of the canonical blockchain — to state-sponsored 51% attacks and mass deanonymisation efforts which could vastly undermine the security and credibility of the network.

Fungibility and privacy are linked concepts — an asset’s fungibility preserves the privacy of the individual holding it. Assets such as gold and fiat cash are considered highly fungible, as it’s near impossible to distinguish between units of the same type. Conversely, something like a rare painting would be non-fungible, on account of its uniqueness. Functionally — for the most part — Bitcoin appears to be fungible: the vast majority of merchants will indiscriminately accept payments regardless of the provenance of coins.

Upon closer examination however, the situation is less rosy. As the protocol relies on a public ledger to keep track of the movement of funds, this provides a rich source of information for the intrepid data miner looking to perform analyses and potentially deanonymise users. “Blockchain analytics” companies (and their governmental clientele) have been known to track the propagation of UTXOs through the network that have passed through a given address or that have interacted with ‘blacklisted’ entities.

[Source:; re-design by Kevin Durkin for In The Mesh]

There’s an entire class of coins which offer varying degrees of privacy within their protocols and address a niche that Bitcoin inherently lacks. In life-and-death situations, linking a BTC transaction or an address to a real world identity can have grave consequences in locations where authorities are hostile. On the other hand, if Bitcoin was as private as Monero or Zcash, then its monetary soundness would be dependent on cryptographic assumptions holding true. An example of such a situation is the recently disclosed vulnerability in Zcash which arose from cryptographic errors which — although complex to exploit — would have allowed an adversary to surreptitiously inflate the supply in the secret “shielded pool”.

Despite the transparent nature of Bitcoin’s ledger, it can be used privately. Whilst the protocol doesn’t incorporate strong guarantees itself at present, this is set to change with the implementation of improvements such as Confidential Transactions, MAST, Taproot and Schnorr signatures. Externally coordinated obfuscation techniques are in use today, most commonly CoinJoin implementations such as JoinMarket and ZeroLink. These allow users to pool and jointly transact multiple inputs so that a degree of plausible deniability is assured, as observers cannot map outputs to specific inputs.

Recent development of more sophisticated CoinJoin transaction types such as Pay-to-Endpoint (also known as PayJoin/Stowaway) and Ricochet, have proven the shortcomings of chain analytics capabilities as they are understood today. One cautionary note is that although we have many separate techniques for improving Bitcoin transaction privacy, interactions between these elements are not necessarily widely understood. As a result, there are non-zero probabilities of critical information leakage or failure of certain processes and users should not assume that all tools have been tested thoroughly in combination. For example sending mixed UTXOs from a CoinJoin wallet into a Lightning node may lead to deanonymisation given that Lightning node IDs are public.

Since the Bitcoin protocol has displayed such admirable resilience and uptime in the past 10 years, authorities at the local, regional, national or global scales can only try to apply pressure to the “soft” interfaces between the network and the wider world such as exchanges, merchants, miners, hardware and software vendors. Inconsistent laws arising from governments’ knee-jerk reactions towards Bitcoin are an ongoing reality.

Ensuring regulators are in possession of independent tools and information sources will minimise misunderstandings leading to arbitrary bans, restrictions, licenses, fines, jail or seizure. Even upstream infrastructure such as ISPs, domain registrars and payment intermediaries are coming under increasing pressure. One aspect of particular concern is the conflation of Bitcoin with tokens, ICOs or other blockchain projects raising funds via regulatory arbitrage. China now apparently requires the registration of cryptocurrency nodes with authorities. Where persons or businesses operating cryptocurrency enterprises are kept under close watch by corrupt officials, they are at risk of extortion or kidnap.

Another front on which there is work to be done is on the fungibility of bitcoin UTXOs themselves. As mentioned above, there is a growing industrial niche providing analytical services to governments and businesses submitting to state compliance procedures. Though they may oversell their capabilities to clients, it is known that exchanges supply information to them. One attempt to deanonymise identifiers on a network such as Bitcoin has involved attempting to use metadata such as browser fingerprinting, language preferences, node and web client IP addresses for location and to link these to particular addresses or UTXOs. Even a small part of the user graph being deanonymised has wider potential implications, due to the public nature of the ledger as discussed above. Know-Your-Customer and Anti-Money Laundering laws (KYC/AML) collectively constitute the greatest privacy risk to individuals using Bitcoin today.

Dusting is also a potential chain analysis technique which takes advantage of poor coin selection in wallets by sending tainted UTXOs to target addresses and tracking their propagation. This vector primarily targets merchants (exchanges and other economic nodes) as individual users can easily circumvent such attacks by marking dust UXTOs as unspendable. The mechanism of transaction itself is also important to recognise in light of the recent OFAC sanction of addresses linked to Iranian nationals. How is any entity going to stop people interacting with sanctioned addresses in a push system?

For the most part, many of the existing issues will become less of an issue over time as the Bitcoin network and the ecosystems built around it mature. The reduction of hashpower aggregation in certain regions such as the West of China makes it increasingly difficult for a malicious (private or state-sanctioned) actor to commandeer dangerous amounts, more skin in the game from cryptocurrency businesses contributing to a state’s GDP and tax coffers makes the budgetary penalty for nations greater should they consider outright bans on cryptocurrencies or adversarial mining and advances in cryptography hardens Bitcoin’s privacy preserving potential.

In the final part of this series the myriad tools, techniques and strategies to transact using Bitcoin in contexts where personal privacy and freedom are under threat will be explored.

Thanks to Yuval Kogman, Alex Gladstein, Richard Myers, Elaine Ou and Adam Gibson for helpful feedback.

Wassim Alsindi directs research at independent laboratory Parallel Industries, analysing cryptocurrency networks from data-driven and human perspectives. Find him at and @parallelind on Twitter.

Matt B is a writer and content strategist in the cryptocurrency space with a particular interest in Bitcoin and privacy technology. He can be reached at and @MattoshiN on Twitter.

Images by Kevin Durkin for In The Mesh

Ethereum Classic: The Ungoverned Blockchain?

How does anything get done if there are no leaders? Why hasn’t ETC died by being abandoned by the Ethereum Foundation after TheDAO hard fork? The ecosystem of participants and stakeholders working in and around the ETC network is examined in outline below.

So, where and how does ETC “governance” happen?

Making changes to Ethereum Classic consensus rules is “ungoverned” in a similar way to Bitcoin and Ethereum with little appetite for large numbers of consensus-breaking upgrades. Currently it is an ad hoc process where ECIP proposals are raised on Github, discussed in public/semi-public fora and should they be widely supported without contention locked-in to the nominally canonical “Classic-Geth” client with the other clients (Parity Labs’ eponymous software and IOHK’s Mantis) merging in response. In the case of a contentious proposed upgrade some arbitrary signalling criteria could potentially be set (i.e. % of miners upgrade/signal, on-chain carbon vote as used by ETH to justify DAO hard fork) though this has not occurred in ETC since the events which led to the creation of the network.

On-chain “Carbon Vote” for TheDAO fork on Ethereum. Source:

As with other networks based on the original Ethereum design, some parameters such as adjustments to the gas limit per block — restricting the amount of EVM computation in a similar way to block size / weight in Bitcoin-derived networks — can be enacted in small increments on a per block basis via miner signalling. There is currently some discussion to motivate a decrease in the gas limit per block in order to avoid the chain growth rate issues which make running ETH full nodes a challenge in terms of burdensome resouce requirements. The likely aggregation of ETC hashrate among a small number of big mining farms, cooperatives and pools presents issues with reliance on miner signalling, as recently evidenced in Bitcoin when the merge-mined EVM Rootstock sidechains went live with 80% of network hashrate signalling. The naive downstream adoption of “default” Ethereum settings such as ETH’s 8 million gas limit per block is also a potential issue for ETC’s ungovernance to navigate.

ETC Gas Limit versus Block Height. Source:

Two hard fork network upgrades have taken place in the ETC network — ECIP-1010 to remove the “difficulty bomb” and ECIP-1017 to institute a supply cap with asymptotic supply curve.

The decision-making process could be better organised, more transparent and clearly defined and refinements to the ECIP process are currently being discussed. At present most informal community discussion takes place on ETC’s Discord server, with ECIPs themselves posted on the nominated Github account (ethereumclassic) following a power struggle and takeover of the previous canonical Github account (ethereumproject), ostensibly related to the situation with ETCLabs discussed below. ETCLabs appear to be preparing to implement their own proposed parallel “ECLIP” improvement proposal scheme though this may be a mis-communication rather than a “consensus hostage situation” — situation is unclear at time of writing. Below are a few links to recent discussions and proposals relating to how Ethereum Classic reaches decisions relating to network upgrades and changes.

Ethereum Classic (ETC): Putting Together the New Decentralized ECIP Process

Ethereum Classic Improvement Proposals


Some stakeholders in ETC want to see closer collaboration with ETH, some are ambivalent and others are opposed. The recent announcement of Bob Summerwill as ETC Cooperative Executive Director is noteworthy as he was instrumental in founding the Enterprise ETH Alliance, was involved in the Ethereum Foundation, was a senior figure at Consensys. There are some existing collaborative projects between ETH and ETC, including Akomba Labs’ “Peace Bridge” to allow cross-chain transactions, Kotti unified PoA testnet and some recent discussions regarding ETC considering the adoption of aspects of the Ethereum 2.0 roadmap.

The last few months have seen a change in the composition of the ecosystem around Ethereum Classic, as a the previously pre-eminent privately funded core development team “ETCdev” collapsed due to lack of funds with another entity “ETCLabs” forming a new developer team “ETCLabs Core” with significant overlap of personnel. Some community members have described the sequence of events as a corporate takeover attempt, others do not seem so worried.

“The ETC community is still small and, in this bear market, lacks funding from volunteer investors or other sources to initiate new core maintenance and development projects or pay new core developers quickly. This is because there are no leaders, foundations, pre-mines, treasuries, protocol taxation or any other financing gimmicks that so much contaminate other centralized projects.”

ETC History and Network Characteristics

The Ethereum blockchain launched on 30th July 2015. When the Ethereum Foundation conducted a hard fork as part of TheDAO’s exploit recovery (“irregular state transition”) on July 20th 2016, they kept the name and ticker symbol Ethereum / ETH. The canonical chain branch in which TheDAO exploiter kept their spoils survived against most observers expectations and attracted community, developer, exchange and mining support. The unforked chain came to be known as Ethereum Classic (ETC).

Ethereum Classic (ETC) is pure Proof of Work utilising the Ethash (Dagger Hashimoto) algorithm. It is the second largest network using this algorithm, marshalling approximately 15–25x times less hashrate than Ethereum (ETH). Due to its situation as a minority PoW network without 51% attack mitigations at the protocol or node levels it has been deemed to be vulnerable to thermodynamic attacks and this has been observed recently. Mining is permissionless so the identities and extent of participation of block producers are not necessarily known. Some network and blockchain analysis of the ETC mining ecosystem is being undertaken currently. There is a high degree of suspicion that covert FPGA and/or ASIC mining was employed leading to the recent majority attacks. Most of the hashrate employed in the recent attacks is suspected to be of exogenous origin to the existing Ethash ecosystem and marketplaces such as Nicehash.

Ethereum’s whitepaper was first circulated in late 2013 and there was a “token crowdfunding” (= ICO) in 2014. Approx 72 million of the 105 million supply issued were distributed in the ICO. Mining providing block and uncle rewards has distributed the remainder. Work is ongoing currently to compare the movement of balances either side of the ETC/ETH fork. Inflation was set to “5M20”, reducing mining rewards by 20% every 5 million blocks which corresponds to approximately 5% annual supply increase. The same hard fork in 2017 (ECIP-1017) also installed a fixed supply cap.

Ethereum “became” Ethereum Classic because the Ethereum Foundation asserted intellectual property rights over the “Ethereum” name despite branching away from the canonical chain. This is still a point of contention and some prefer the name “ETC” as a subset of stakeholders look for alternative nomenclature to “Classic”.

How are Development and Ecosystem Activities Funded in ETC?

What is the reference node implementation?
This is also a bone of contention in ETC. When ETCdev ceased operation, the hitherto canonical client Classic-Geth written in Golang stopped being reliably maintained. ETCLabs Core maintains Multi-Geth but not all stakeholders in the ETC ecosystem are currently comfortable using their software given their ostensible desire to have an independent ECLIP improvement proposal pathway which appears more hard-fork than soft-fork oriented.

Are there any other full node implementations?
Parity Labs maintains their Parity client written in Rust.

IOHK maintains their Mantis client written in Scala.

How is client development funded?
Development is funded by private organisations — ETCLabs, Parity and IOHK fund client development following the demise of ETCdev. ETC Cooperative (partly funded by DCG/Grayscale and DFG) also support protocol development.

There has been resistance to adopt an on-chain treasury as proposed by IOHK, some stakeholders see this as inherently centralising but given the collapse of ETCdev due to funding shortfalls and absence of alternative funding models / “build it and they will come” the status quo is at risk of prolonging a continuing tragic commons scenario. There are some grants and funding opportunities via ETCLabs but at present are focused on business/startup incubation.

Most funds are controlled by companies but ETC Cooperative is now a 501(c)(3) non profit based in the USA. There is also a small community fund controlled by a multi-signature wallet but there are no current plans to disburse this.

What other software does the entity(ies) which funds the reference node produce?
Hard to answer conclusively since there is a lack of agreement over what the reference implementation currently is.

Parity — Rust ETH client, Polkadot/Substrate, Bitcoin client, Zcash client.

ETCdev — defunct, Emerald application development framework and tools, Orbita sidechains.

ETC Cooperative — developer tooling and infrastructure e.g. recent Google BigQuery integration.

IOHK — a lot of software for Cardano, ZenCash, ETC.

ETCLabs — ?

What else do the entities which develop or fund the reference node do? (not software)

Parity — Web3 Foundation

ETCLabs — VC/Startup incubator

ETC Coop — General PR, community and ecosystem development, conference organisation, enterprise & developer relations

IOHK — PR, summits, art projects (Symphony of Blockchains), academic collaborations, VC partnership and research fellowships with dLab / SoSV / Emurgo….

DCG/Grayscale/CoinDesk — PR, financial instruments e.g. ETC Trust, OTC trading…

How is work other than development (e.g. marketing) funded?
It in unclear how funding and support for non-development activities is apportioned.

DCG/Grayscale and DFG fund ETC Cooperative

DFG funds ETC Labs

Related projects — Are there any significant projects which are related? For example, is this a fork of another project? Have other projects forked this one?
Ethereum (ETH) was a ledger fork of this project, Callisto (CLO) was a ledger fork of this project. There may have been more minor codebase or ledger forks.

Significant Entities and Ecosystem Stakeholders

ETCLabs is a for-profit company with VC/Startup and core development activities funded by DFG, DCG, IOHK and Foxconn.

ETC Cooperative is a 501(c)(3) non profit based in the USA funded by DCG and DFG.

ETCdev (defunct)

IOHK (Input Output Hong Kong) is the company led by Charles Hoskinson who previously worked on BitShares, Ethereum and now Cardano.

DCG (Digital Currency Group) is Barry Silbert’s concern which contains in its orbit Grayscale Investments, CoinDesk, Genesis OTC Trading amongst other organisations.

DFG (Digital Finance Group) is Chinese diversified group concerned with investments in the blockchain and cryptocurrency industry, OTC Trading, Venture Funds.

Wassim Alsindi directs research at independent laboratory Parallel Industries, analysing cryptocurrency networks from data-driven and human perspectives. Find him at and @parallelind on Twitter.

Reaching Everyone: Are stablecoins the answer to Bitcoin’s volatility?

It depends on the question. For those most in need of value preservation and freedom of transaction, the risks likely far outweigh the benefits.

This is a brief aside from our “Reaching Everyone” article series on In The Mesh, by Matt ฿ (@MattoshiN) and Wassim Alsindi (@parallelind) on the use of Bitcoin and the technology stack built atop it to assist those living under oppressive regimes or in conflict zones, and those seeking to flee them.

There is no doubt that volatility in BTC-fiat crossrates make external measures of cryptocurrency value vary wildly, and obviously downside risk is not helpful especially with those in straightened circumstances, or even with their lives on the line. On the other hand things like this might happen:

Could so-called “stablecoins” be the answer to the volatility dilemma? Well, stable with respect to what, and how to maintain price consistency? Broadly, there are three current models:

1) Central issuing authority. Confidence in value is faith-based with censorship risk — such as JPM’s upcoming offering. Additional risks with undercollaterisation.

2) Asset-backed with trusted custodian. Price maintenance depends on faith in the underlying assets and transparency of auditing. Examples include Tether or gold-backed products.

3) Algorithmic mechanisms seem like worthy but very much unproven experiments. Until tested at scale and over significant periods of time, these are no place for people on the margins to place their wealth. DAI and Basis (RIP) are examples of this approach. Additional risks arise from regulatory burden, if the stability process is deemed to be security-like and centralised oracles reporting external prices. Front-running may be an additional issue with DAI as MKR (MakerDAO’s parent token) holders would be diluted in the event of a peg failure, with more sophisticated holders jumping ship at first signs of trouble. This may resemble the Cantillon Effect playing out backwards?

There is considerable base protocol and smart contract risk for platform-issued tokens such as stablecoins, especially as the current predominant stablecoin token “hosting” platform Ethereum prepares to undergo transition to ETH1.X and ETH2.0 with some combination of ProgPoW, hybrid PoW/PoS, PoS, the bewilderingly diverse Plasma family of state channels, new virtual machines, sharding and/or state rent. Contrast this with Bitcoin’s conservative development philosophy and aversion to rapid changes in network function largely pushing innovation into “second layers” such as Lightning Network and sidechains.

Using a Stablecoin today largely redistributes risk from price volatility to technological, regulatory and/or custodial uncertainty, not necessarily a wise trade for someone with few other options compared to physical cash. Privacy is also an issued with almost all these systems, which either require some element of AML/KYC or use networks with inherently poor privacy. Historically, no stablecoin has ever defended its peg over a period of years. Stablecoins are still an experiment, no place to deal with matters of life or death. As the crowded retinue of competing fiat-pegged products grows ever larger, more concepts from traditional finance such as demurrage, censorability, discounts on par or interest are being proposed or experimented with.

Even major currencies such as the British Pound have failed to maintain agreed trading ranges against well resourced adversaries, what chance a smart contract or non-native blockchain token with limited resources has to balance price, supply and demand through the various phases of cryptocurrency’s wild market cycles remains to be seen.

The BitShares USD stablecoin BitUSD has among the longest history of any attempt. Source

For people outside the most developed nations, or those whose human rights are under risk stablecoins do not deliver the goods, at least in the present day.

Wassim Alsindi directs research at independent laboratory Parallel Industries, analysing cryptocurrency networks from data-driven and human perspectives. Find him at and @parallelind on Twitter.

Matt B is a writer and content strategist in the cryptocurrency space with a particular interest in Bitcoin and privacy technology. He can be reached at and @MattoshiN on Twitter.

A Brief Primer on Navigating TokenSpace

This is the second in a series of pieces focussing on TokenSpace, a novel conceptual classification framework for cryptographic assets. This Q&A provides some additional background. If you need more answers than these two pieces provide, get in touch to be a lucky proof-reader of the manuscript.

TokenSpace may be considered by analogy with our own spatio-temporal conception of reality, consisting of a three-dimensional space delineated (for convenience and visual clarity) by orthogonal axes Sbar, Mbar and Cbar. Assets may possess a score or range on each axis between 0 and 1 inclusive giving rise to an object inhabiting a region of TokenSpace described by the (x, y, z ) co-ordinates (C, M, S). Time-dependence of object properties may also be incorporated to reflect the dynamic nature of cryptocurrency protocol networks and their native assets, tokens issued atop them and network fragmentations such as ledger forks.

Sbar, Mbar and Cbar correspond to intuitively reasoned assignments of subjective classificatory meta-characteristics Securityness, Moneyness and Commodityness which together form the basis of TokenSpace classification
methods currently in development. Each asset’s location in TokenSpace is intended to be derived from a weighted scoring system based upon taxonomy, typology, intuitive, elicited and/or quantitative methods depending on the choices and assertions of the user — which may or may not be identical to those proposed in this work.

TokenSpace visual impression. Yes, those branches coming out of the axes represent taxonomies!

Definitions of the proposed meta-characteristics:
Sbar — Securityness. The extent to which an item or instrument qualifies as or exhibits characteristics of a securitised asset. For the purposes of clarity this meta-characteristic does not refer to how secure (robust/resistant) a particular network or asset is from adversarial or malicious actions.
Mbar — Moneyness. The extent to which an item or instrument qualifies as or exhibits characteristics of a monetary asset.
Cbar — Commodityness. The extent to which an item or instrument qualifies as or exhibits characteristics of a commoditised asset.

Example scores for a range of assets are outlined in the tables below with visual depiction in Figure 2. Ideal types are postulated canonical examples of particular asset types and are discussed in Section 2 of the manuscript. It is the aim of this and future research to provide suggestions for classification approaches and some examples on how TokenSpace may be utilised to comparatively characterise assets from the perspective of various ecosystem stakeholders. Time-dependence may also be significant in certain instances and can be incorporated into this framework by evaluating an asset’s location in TokenSpace at different points in time and charting asset trajectories.

TokenSpace is expected to be useful to regulators, investors, researchers, token engineers and exchange operators who may construct their own scoring systems based on these concepts. Careful review of territory-specific regulatory guidance and judicious consideration of boundary functions for example delineating “safe”, “marginal ” or “dangerous” likely compliance of assets with respect to particular regulatory regimes are recommended and an example is presented in Figure 3. Parallel Industries is developing hybrid multi-level hybrid categorical/numerical taxonomies for each meta-characteristic alongside time-dependent and probability distribution functions for anisotropic score modelling and is available to develop bespoke TokenSpaces for clients on consulting and contract research bases.

Example of cryptographic assets inhabiting TokenSpace
Example of a regulatory boundary function. Arbitrary polynomial for illustrative purposes.

Q&A on Reaching Everyone: the Political and Humanitarian Potential of Bitcoin

This conversation with In The Mesh was recently published on their website. Wassim Alsindi, director of research at Parallel Industries, is currently co-writing a series of articles In The Mesh in which he’s deep-diving into bitcoin and the potential for cryptocurrency to be leveraged to assist those living under authoritarian rule. If you’ve missed them, be sure to check out parts I and II and come back soon for the last two installments. Wassim’s take on everything “crypto” is incisive, studied, and worth listening to, and he has an interesting background, ranging from academe to experimental music. So we chatted with him to learn more about his background and get his perspective on some current trends in the cryptosphere.

Kevin Durkin for In The Mesh

When did you first hear about cryptocurrencies and what were your thoughts about it at that time?
My life before Bitcoin and cryptocurrencies was as an experimental musician and decentralised arts organisation founder, manager of interesting creative technology projects and festival curator. Whilst on a music tour around the US West Coast in 2012 we went to a friend-of-a-friend’s place in Silicon Valley, he opened his closet and said “check this out, I’m doing this thing called mining Bitcoin”. It took a while to be convinced, the idea sounded great but everything I could find online looked quite dubious — Mt. Gox, Bitcoinica, BitInstant and so on — and as I wasn’t a computer scientist or cryptographer the detailed discussions were beyond me. It wasn’t until 2014/5 during what may have been Bitcoin’s darkest days that I started to get really interested. The idea of natively digital money that isn’t controlled by anyone has obvious appeal, but surviving the Gox incident showed me that the technology had some serious resilience and could be a long-lived proposition.

Wassim Alsindi

Lately, Bitcoin and other coins have been losing financial value. How do you see this turn of events and the claims that cryptocurrency is and always was a “bubble”?
Well, the facts don’t lie, Bitcoin had a cycle bottom in 2015 at around $180 and two years later it was trading at a hundred times that price. As much as I favour Bitcoin’s characteristics and qualities as the first natively digital commodity and (in time) money, we do have to ask ourselves if that kind of price action is really sustainable or desirable. Volatility is acceptable in a commodity or speculative vehicle, but if people around the world are going to adopt it for monetary use we need to see some more price stability, increased liquidity and less friction in the conversion of our existing state monies to cryptocurrency. Was it a bubble? Probably. But not the first, and likely not the last either. So, are they bubbles or market cycles as a new asset is adopted, matures technically and becomes monetised? That is in the eye of the beholder.

Your interest in cryptocurrency seems to peak at times of others’ fear/panic. Why is that?

Wassim is in it for the tech.

It’s somewhat of a cliché these days but I’ve been a technology researcher my whole adult life, so I really am here for the tech and the freedom. My interest has been steadily building over the years and having wrapped up previous commitments I have nothing better to do now. I don’t take pleasure in the bear market, it’s been very difficult for me and for Parallel Industries too. We’re operating on a shoestring, and the string keeps getting shorter every time the market takes a leg down. I had hoped to bootstrap the organisation on an open-source donations model but this seems very difficult at the moment — even organisations and developers who directly contribute to these protocols are struggling. All the same, every day that Bitcoin survives in the wild it gets stronger and more widely known. These days you don’t have to ask most people in the developed world if they’ve heard of it, they just want explanations and/or advice.

You’ve innovated a field of fork future studies, called forkonomy. How do you hope it will impact the crypto space?

The research area arose from a conversation with a Twitter friend who was monitoring hashrate on various networks using the Equihash algorithm. We noticed that a new coin (BTCP) had a much higher “market capitalisation” but a fraction of the hashrate of the project it had been borne from (ZCL). Due to the novel “fork-merge” operation used to generate the new ledger, a coin with an effective age greater that Bitcoin’s was created.

So we have been afforded a glimpse into a possible future of Bitcoin, albeit a nightmare scenario where the network has not achieved its goal of developing a transaction fee market before the mining subsidy attenuates. The goal is to find similar anomalies as they arise and relate them to the possible futures of major networks. Having spent some time as an experimental astrophysicist, I like to compare this idea with the stellar taxonomy of the Hertzsprung-Russell diagram which predicts the likely fates of stars based on their temperature and luminosity.

Still some way to go before we have a suite of robust and predictive analytical tools, we are very much in the alchemical phase of cryptocurrency.

How has your background has made you sensitive to the potential uses of cryptocurrencies by people living under oppressive regimes?
Without going into too much detail, the “political and humanitarian hacking” potential of decentralised technologies in general and Bitcoin in particular are very real for Iraqi diaspora such as myself. For those who were able to leave the country under Saddam’s rule as some of my family did, one of the hardest things was to move money or value from place to place. Bank accounts had been frozen, confiscations of gold and cash were commonplace at airports, bandits would patrol the desert regions close to frontiers looking for easy pickings and scholars’ international funding was withdrawn suddenly. Given the above, it is not hard to see promise in these nascent technologies to re-empower the individual and community at the expense of tyrants, institutions and nation-states. The fact that we can engineer tools, solutions and strategies for people living under oppression or conflict to have government-hard, unconfiscatable pseudo-monetary assets completely changes things for people in the most unfortunate and compromised situations.

The “Byzantine Generals” in Wassim’s family.

What kinds of uses of cryptocurrency do you envision that can do the most for people in those situations?
I would say that only a handful of cryptocurrencies truly show the resilience (today or as future potential) to withstand these sorts of situations. These are the ones with sufficiently mature and dispersed networks that have a defined focus on immutability, privacy and censorship-resistance that also lack central points of failure such as conspicuous leaders, companies or foundations. Bitcoin, Monero and Ethereum Classic are the examples I have identified having deeply studied the cryptocurrency space for the past six and a half years. (Happy to hear of any more — please hit me up on Twitter, even if it is a smaller / newer network.) The uses are limited only by the ingenuity of the brilliant minds worldwide who do and will work on these issues, and that is what Reaching Everyone is really about — nothing more complicated than a non-profit, unorganised initiative to plant these seeds in curious minds: that we must not forget the rest of the planet as the fortunate ones create a new world of financial freedom. But we don’t have to get too hand-wringing about it — this is not about “Western guilt”. Incentives drive Bitcoin and everyone can act according to their own rational self-interests here. Furthermore, the less resources people have at hand, the more resourceful they tend to be. Anyone who has visited less wealthy countries can attest to this.

The experimental musician Goodiepal helped bring Wassim into his current exploration of the possibilities of cryptocurrency.

How did Reaching Everyone come to be?
The idea came about quite unexpectedly, despite all the above. Just over a year ago (December 2017) I was in London for a meeting with UK financial regulators as I have another project TokenSpace which has developed novel taxonomic frameworks to help see similarities and differences between cryptographic assets with the goal of preventing regulatory mis-steps. It just so happened that my much beloved Danish-Faroese friend and infamous radical experimental musician Goodiepal was performing with his band their annual Christmas show that evening. So I went along and found out that they had moved to Serbia and were raising funds for informal humanitarian work with refugees stuck in limbo there at the EU frontier. Among the biggest issues facing the people they had been helping were moving money internationally and exploitation / extortion by smugglers and mafia cartels. I simply put two and two together that cryptocurrency can provide at least a partial solution to these problems. I’m sorry that we haven’t been able to raise any money for the immediate cause but I hope we can still make a difference in the longer-term.

Your interests are wide-ranging and Parallel Industries seems to have a holistic view on the crypto world. What do you hope Parallel Industries will add most significantly in the near future to the crypto scene?
 Indeed things are moving forwards quickly on multiple fronts, and as well as pushing ahead as much as possible with Reaching Everyone, I am trying to take a wider view of what I consider the ontological meta-stack as applied to radically decentralised technologies. The “TokenSpace” supra-taxonomy research project is very close to outputting a manuscript after over a year of work and I recently revisited “Forkonomy” in early 2019 having learned some new skills at the command line for node operation, mining and directly harvesting blockchain data. There is another project entitled “DAOs and Don’ts” which investigates insider asymmetries in P2P networks, though it is a daunting prospect to comprehend the task at hand due to the sheer volume of cases encountered.

Q&A On TokenSpace: A New Conceptual Classification Framework For Cryptoassets

In search of fresh perspectives on the characteristics of cryptographic assets. This Q&A with Matt ฿ originally appeared in in December 2018. A comprehensive manuscript describing TokenSpace will be released soon, in the meantime more TokenSpace information over at and on Twitter.

Q: Can you give a bit of background on yourself? What got you interested in cryptocurrency?

Sure, it’s been a winding road though so let’s not get too lost in details! I grew up in various towns and cities in the UK mostly reading maths and sci-fi books, stargazing, misusing home chemistry crystal growing kits, making music and playing way too many computer games. Spent a decade at universities studying, researching and managing scientific research in chemistry, physics and astronomy where I really got exposed to the idea of organising knowledge to further our understanding. My chemistry mentor (now YouTube-famous) Professor Sir Martyn Poliakoff is very likely the world’s leading connoisseur of the periodic table of the elements so I’ve had classification systems such as taxonomies on the brain for a while now.

After that I spent several years working with experimental music and arts, running a record label, organising educational activities, managing interesting projects and curating a festival. Whilst on a music tour around the US West Coast in 2012 we went to a friend-of-a-friend’s place in Silicon Valley, he opened his closet and said “check this out, I’m doing this thing called mining Bitcoin”. It took a while to be convinced, the idea sounded great but everything I could find online looked quite sketchy — Mt. Gox, Bitcoinica, BitInstant and all that — and it wasn’t until 2014/5 during what may have been Bitcoin’s darkest days that I started to get really interested. The idea of natively digital money that isn’t controlled by anyone has obvious appeal, but surviving the Gox incident showed me that the technology had some serious resilience and could be a long-lived proposition. Since then it’s gradually taken over my life as I’ve worked my way through various activities as a hobbyist — watching the markets, running nodes and following on-chain activity, messing around with coloured coins and smart contracts, mining and now research of various flavours through an independent research organisation Parallel Industries.

My Bitcoin sunrise, after playing a gig in Stanislaus National Forest in Summer 2012

Q: ELI5 TokenSpace.

TokenSpace is an attempt to make a relatively simple and easy to use comparison system out of the sprawling and confusing mess of cryptocurrencies, tokens and suchlike that we find ourselves with today. Think of it as a 3D “space” to place different assets inside, with each of the axes representing a characteristic that we can use to visually compare and contrast different assets. The position of an asset along each axis is determined by a scoring system between 0 and 1 for that characteristic, so that a score of zero means the asset doesn’t have those properties at all, and a score of one means it’s a textbook case. Where the score comes from is up to the user, it can be from an intuitive ‘gut feel’ perspective, a weighted taxonomy of different properties, a consensus view from a panel of advisors and so on. It all depends on the intended application.

TokenSpace visual impression

The primary application so far has been to look at the ongoing uncertainty as to the legal and regulatory status of cryptoassets and how similar or different they are to traditional asset types such as monies, securities or commodities. Obviously there is a lot of variation from asset to asset and it is becoming increasingly clear that government bodies are looking at these things closely.

It’s important to understand that the difference between concepts like TokenSpace and the periodic table of chemical elements is that we are still very much in a subjective realm with cryptoassets, and therefore any particular score should be taken with a pinch of salt. People are not going to have the same opinions on a lot of these things — if you follow the cryptocurrency and blockchain space then you will know that humans are VERY biased creatures! A future avenue for this work is to explore different perspectives to see where they come together and where they do not. You could say we are still in the occultist and alchemical phase of cryptocurrency…

Q: Tell us about the metrics you’re using to place the assets in this 3D space.

The axes I’ve chosen are for the properties Securityness, Moneyness and Commodityness — in other words how much a coin or token embodies or exhibits the characteristics of a securitised asset, a money or a commodity. Having encountered the fruitless debate of “I think token X is a security but you think it is not” innumerable times, and given the fact that these tokens and networks are hybrids of payment mechanisms, rights to on-chain property or “cashflows” like masternodes, value stores and consumable resources it seems reasonable to engender a greater ability to differentiate between more subtle differences in these assets.

One thing that’s nice about working with a conceptual framework like this is that it could easily be adapted for another purpose — for example Parallel Industries has begun a collaboration with DAO specialists who want to apply a similar approach to characterising the organisational structures that exist around decentralised networks and providing the right dimensions are found, there’s no reason why you can’t also build a set of taxonomies or scoring systems for that purpose. It does require careful thought and design choices to ensure you end up with a useful tool that can be meaningfully used.

Q: How would you distinguish between, for instance, Bitcoin, Litecoin, Tether and Polymath with this framework?

Good question. I think it’s reasonable to say that as assets, bitcoin and litecoin are often thought of as having “commodity-like” characteristics. People often refer to the digital gold and silver memes so they would place reasonably well on that, though bitcoin has much more liquidity and market depth so it would be easy to make a case for it being the premier digital commodity. Neither have much in common with securities though you could make a case that Litecoin’s founder and Foundation are somewhat relied upon for expectation of profit. As much as it’d be nice to say otherwise, bitcoin and litecoin still aren’t great as monies compared to fiat currency so they do still have some ground to cover there.

Tether functions primarily as a monetary substitute although it’s hard to be confident about it’s supply or ability to store value in the long term, though by virtue of its stability against fiat currency relative to traditional cryptocurrencies it does fulfil that purpose reasonably well in today’s high friction on and off ramps with exchanges for example. It doesn’t look much like a commodity or a security to me.

Polymath is not one I’m very familiar with, being a security token platform they are at least being upfront with that. As an ERC20 token on Ethereum with a central administrative team it does seem to have a lot of the hallmarks of a security and though there does appear to be some “utility” being used to issue securities tokens on their platform it could be argued that it has more commodityness than the typical Ethereum ICO vintage of 2017 or something quite useless such as XRP but nowhere near as much as bitcoin or litecoin.

Placing selected assets in TokenSpace. Scores are assigned by author.

Q: You’ve taken on the seemingly insurmountable task of attempting to classify cryptoassets. What are regulators doing wrong? What sort of organisations would benefit from this?

It’s a tall order indeed, and perhaps not surprising that it’s taken a while to get to this stage. The hope is that tools like TokenSpace can help coin and token issuers, lawyers, regulators and exchange operators get a better grip on the characteristics of different assets and avoid making misinformed decisions such as blanket bans, listing or adopting assets which might cause them compliance headaches or issuing poorly designed tokens which might land them in hot water later.

I’ve met a few regulators, token issuers and exchange compliance officers and it seems that a lot of the pitfalls seen so far (and many more to come) are from a lack of understanding of how these assets and the underlying networks function and evolve over time. It’s virtually impossible to have a complete grasp on these things — even Satoshi didn’t have every angle covered! The biggest mistake I’ve seen being made so far by officials is the rush to make sweeping pronouncements without being able to back them up with justifications that make the situation even less clear.

One example are comments made by US Securities and Exchange Commission officials that the ETH crowdsale was a securities offering but the Ethereum network has since become “sufficiently decentralised” and therefore is no longer a security. Taking that at face value, it suggests that at one point, ETH has passed through a “legal / not legal” boundary, but where and how? What made the difference and how was that decision arrived at? Node distribution? Concentration of tokens amongst insiders? Decentralisation of leadership? It’s not easy to resolve that with existing securities laws guidelines like the Howey test. What about network forks and issues such as The DAO exploit? These sorts of things are going to keep happening.

Example of an Arbitrary Regulatory Boundary Function

Q: What could regulators be doing better?

Make clearer statements, do your homework to understand the technology at play and be more upfront about decision-making processes! What are the metrics that regulators deem important? Why? Don’t build rigid legal frameworks that can’t cope with the breakneck pace of cryptocurrency developments. There will always be regulatory arbitrage with borderless technologies, just look at Malta and Puerto Rico. Which small nation will be next to reposition itself to attract jurisdiction-hoppers like Binance?

There is also the perennial issue of legions of “Blockchain Experts” who usually land influential advisory roles but seem to know very little about the ins and outs of applied cryptographic networks and assets associated with them. Having spent a very frustrating year in a business school environment having to deal with fakers and imbeciles claiming said proficiencies recently, I can confirm that this is a very real problem.

Q: What else is Parallel Industries working on? What are your future plans?

Currently Parallel Industries is very much in the bootstrap phase, limping along with very little income (thanks bear market) so it’s a major priority to bring in resources through sponsorship, consulting and contract research to operate sustainably so that we can expand our research activities and yours truly isn’t spread quite so thinly! The TokenSpace paper is finally approaching readiness and our Forkonomy project undertaking comparative analysis of network forks (such as BTC/BCH, ETC/ETH, BTCP/ZCL) has already had a number of outputs including a talk at the recent ETC Summit in Korea and a well-received paper. There’s also a project in progress named DAOs and Don’ts looking at power imbalances in cryptocurrency networks which has been on the sidelines a little too long. Keep an eye out for an article series on political and humanitarian hacks and use cases for cryptocurrencies in In The Mesh magazine under the title Reaching Everyone.

If any of that arouses curiosity do a look at our website or find us on Twitter @parallelind. If you’re a crypto-millionaire looking for a way to lighten your bags and fund some research in the process, we can help with that too!

Forkonomy Revisited: Where Are They Now?

51% of a year has passed, let’s check back in on our plucky and hopeful minority networks.

[Note: This is a follow-up commentary after the original Forkonomy paper (now on Hacker Noon) was written and self-published on in summer 2018 with last revision 10th August. Figures come from #forkonomy tweets, original manuscript and presentation slides from ETC Summit Forkonomy talk in September 2018.]

Introduction: ELI5 Forkonomy

Forkonomy” was a shower thought and though the idea initially seems awkward and quirky, in retrospect it was simply the concrescence of my previous and current proclivities in the domains of time (small)time (large)lightspace (small)space (large) and cryptocurrency. Thinking about a proof-of-work cryptocurrency network as a thermodynamic system with its own internal synchronicity (target interblock time, deterministic coin supply schedule) in energetic balance ’twixt enthalpy (mining) and entropy (forks, time) is pretty straightforward.

The approach of studying codebases and ledgers fragmenting into incompatible but similar network factions doubtless diffused across from Parallel Industries’ TokenSpacecryptographic asset taxonomy research. Combining these with the astronomical observation of stale light from faraway objects and stellar taxonomic tools such as the Hertzsprung-Russell diagram which use a star’s physical properties to understand probable fates, and there’s the makings of misspent summer weekends seeking further conceptual parallels and predictive tools through the joining of celestial and cryptographic dots in the hope of catching glimpses of possible futures through family resemblance.

Writing the paper and crudely crunching chain data looking for patterns and potential heuristics was a great deal of fun, and in the course of doing so inadvertently put my neck on the line a few times. One might call them forkcasts (groan), making some forkward-looking projections (groan again) as to the likely fates of PoW cryptocurrencies unable to attract the majority of hashrate for their particular hashing algorithm, activist fork campaigns fomenting inside discontented growing networks and potential mitigations thereof. In September 2018 I spoke at the second Ethereum Classic Summit in Seoul about forkonomy with speculation on positive and negative possible futures for ETC in addition to discussion of the BTC/BCH situation and the ongoing BTCP clusterfork (okay enough, sorry) with particular emphasis on susceptibility of minority chains to thermodynamic attacks as the bear market extended. Let’s take a look at our three pairs of sibling stars — BTC/BCH, ETC/ETH, ZCL/BTCP — and see how they’ve been getting on in their thermodynamic tugs of love.

Where Are They Now?


Since we last met, two have become three! Who would have thought that a raggedy ensemble of protesters bandying together for various reasons might not see eye-to-eye? After another network fragmentation, further division of already slim hashrates and assorted hostilities on either side of the chain split have left prospects for both BSV and BAB (aka the “new BCH”) looking rather dour. There was an expected amount of drama around the fork event as it was planned and contentious, with threats of inter-chain attacks and aggressive market actions. At time of writing, each of BCH’s spawn command ~1 EH/s in comparison to BTC’s 30–50 EH/s long-term range with market pricing BTC $3500, BSV $75 and BAB $125. Data from and

BCH (grey), BAB (Orange) and BSV (red) network hashrates. Source:

Whereas the difference in price and hashrate between BTC and BCH in August 2018 was approximately 10–15:1, the BSV/BAB split and resultant negative sum implications have lengthened this out to 30–40:1 at time of writing in late January 2019. What was then a marginally vulnerable network to 51% attacks is now at serious risk. Regardless of the amount of SHA-256 hash available on distributed marketplaces such as Nicehash and Amazon EC3, it is feasible that a single entity could amass 3% of BTC’s hashrate and perform a solo attackespecially given the amount of shelved / unsold ASIC inventory available at this time.

Fun story: I wrote an even bleaker forecast for BCH’s future in an earlier draft but pared it back after receiving comments that it may be going too far. Ha! Still, some summer ’18 predictions regarding the increasingly uncomfortable situation that the BCH family find themselves in — between chain security and miner bribes — have not yet come to pass (see below tweet) other than checkpointing on BAB. Both networks are exhibiting ever increasing centralisation of network infrastructure, hashrate and human leadership so expect further mandatory “upgrades”. A lot of them, sometimes at very short notice.

As for Bitcoin, the bear market has had an impact on BTC hashrate, ending a parabolic trend that extended much further than the price. Though the price of BTC today is around half of that in the summer (~$7000 versus ~$3500), network hashrates then and now are both in the 30–40 EH/s range. The security model of Bitcoin’s PoW remains largely untested in the ASIC era, with the only obvious network weaknesses being external entities’ political, technical and regulatory actions, miner / foundry oligopolies, cryptographic vulnerabilities and consensus-breaking code errors in implementations such as CVE-2018–17144. Still some time to go before miner subsidy attenuation becomes a pressing concern with respect to fee market development, with everything depending on BTC price to provide the necessary incentives.

The question remains open as to how L2 appendages such as sidechains and off-chain payment channels will affect this by offering alternative transaction pathways which minimise writing to the blockchain and consequentially demand for block space. Side note on the recent launch of Grin — a network based on the novel MimbleWhimble blockchain construction —with a constant, indefinite coin issuance rate (60/min) which may better mitigate against a lack of a transaction fee market in Bitcoin’s subsidy halving regime, by exhibiting a smoothed and steeper initial decline in effective inflation rate.

Monetary Policies of BTC (blue) and Grin (orange) as demonstrated by effective annual supply increase. Source:


It’s been an eventful few months in the land of Ethereum-based networks. The expected Ethash FPGAs and ASICs have not been spotted in the wild by any great number but their effects may be being felt already. It will be interesting to see if nonce fingerprints will eventually be evident as has been the case for BTC and XMR.

There have been 51% attacks and deep chain reorgs on minority Ethash chains MUSIC, ELLA and PIRL, with exchange double-spending the typical approach for attackers to ROI. PIRL has taken an approach to mitigate these hazards with client-based solutions which would penalise offline nodes for attempting to rejoin the network and broadcast a rapid series of blocks (PIRLguard). UBQ instead changed its hashing algorithm to avoid Nicehash / ASIC susceptibility.

Although a big theme of this work has been looking at the vulnerabilities of minority PoW chains to attack and defensive strategies — and also that this work was presented at the ETC Summit in autumn 2018 — it was a surprise to see Ethereum Classic itself fall prey to these attacks as well. Read the below articles by Phyrooo and Pyskell to put the temporarily disruptive nature of a majority attack into context. However, in these early innings of cryptocurrency, exploits against exchanges provide a strong disincentive for listing minority PoW networks unless precautions are taken with confirmations required for transactions to be considered final. Seeing altcoin exchanges like Cryptopia listing small PoW networks getting constantly exploited (and suspending operations recently) is a universal warning sign, especially for projects with little value proposition other than speculation and trading.

51% attacks aren’t a network failure
In regards to recent events on Ethereum Classic blockchain, I’ve decided to write a bit about 51% attacks since there’s…

Your Exchange Needs More Confirmations: The BitConf Measure
In cryptocurrency we regularly advise against accepting zero-conf transactions but are entirely happy to accept…

It remains to be seen what path ETC will take in order to mitigate attacks, the usual gamut of options are being discussed by stakeholders in a rational way — I was present for the post-mortem call and reiterated my opinion that changing mining algorithm in a knee-jerk response is probably sub-optimal to penalising attackers withholding blocks. It appears that the continued delays of ETH’s attempted transition to a sharded, proof-of-stake network — thereby bequeathing the Ethash majority to ETC or another as-yet-unborn timeline — has exacerbated the issue alongside the protracted bear market and abundance of marshallable hashrate.

There is also discussion of ETH adopting an “ASIC-resistant” algorithm (ProgPoW) while waiting upon Casper and prior to the recent failed Constantinople network upgrade a pro-ProgPoW activist fork faction appeared with the ostensible goal of rejecting the EIP-1234 reduction in mining reward from 3 to 2 ETH per block in addition. It seems inevitable that either (or both) ETH-ASIC and ETH-ProgPoW factions would attempt a fork should the network not move in their favour. Additionally, due to the 11th hour cancellation of the Constantinople upgrade, the so-called “difficulty bomb” has now activated on ETH, having been repeatedly delayed by previous hard forks.

In terms of social layer network politics, both ETH and ETC have had issues of differing types. ETH’s diverse stakeholders are pulling in different directions regarding key technological design choices such as state rent and allegations of insider asymmetry / opacity at crucial meetings. ETC may be suffering from a “tragedy of the commons” scenario as hitherto leading core development company ETCDEV shut its doors due to a funding crunch, with accompanied suspicions of power struggles for prized network resources such as the Github repositories and experienced core developers.

Ratios of hashrate and price between ETH and ETC are approximately 20–30:1, similar to BTC/BAB-BSV ratios discussed above but ETC has an additional light at the end of the tunnel — or is it a “friendly ghost” who will remove incentives for miners to stay on ETH? Data from and

Just going to leave the below few tweets documenting my ETC Summit talk here. We’ll have to wait and see what happens with ETH regarding PoW to observe the effects downstream in the Ethash ecosystem.


The disconnect between market cap and miner incentives for ledger forks such as BCH/BSV/BAB, BTG and BTCP has been discussed widely in recent months (here for example) but it wasn’t as blindingly obvious last summer. Indeed I received some stern criticism from a reviewer on my claim that market caps for minority ledger forks were heavily inflated in comparison to codebase forks. The below tweet sparked the realisation that all was not well in the land of BTCP.

By combining the UTXO sets of ZCL and BTC, BTCP aimed to leverage the Bitcoin name whilst heavily incentivising ZCL holders and buyers. It worked too, in the final “junk rally” of 2018 ZCL pumped 100x in USD terms before beginning a protracted and decline in price of >99%. ZCL is still bumbling along as a semi-zombified chain, with other spin-off ledger forks and fork-merges attempted. The client software got rather out of date and broken, making it hard to run a node over winter, and indeed to find peers and sync the chain.

With only half a million coins remaining unsupplied from the 21M cap, BTCP finds itself effectively a halving ahead of Bitcoin. With a low token fiat price, miners are not sufficiently incentivised to defend the chain and since there is an abundance of Equihash resource available launching thermodynamic attacks would be trivial. Indeed the hourly cost estimates in the paper had to be continually revised downwards, from >$600/hr initially, to <$50/hr now. As the supply schedule of ZCL, BTCP and BTC are directly comparable (4x factor in block time and subsidy to convert) we can think of BTCP as a time machine taking us forwards to the most pessimistic possible future of any Bitcoin-like network with a halving subsidy and fixed supply limit. This is the timeline in BTTF2 where Biff makes it bigtime.

As expected, attacks were inevitable. ZCL has <5% of the ZEC hashrate and BTCP a further order of magnitude less. With Equihash ASICs on the scene they are sitting ducks. Both tokens are in the $1–1.50 price range, with a ZCL pre-fork ATH around $200. Data from and

BTCP forkcast: REKT with a high likelihood of upgrades .What’s next for this white dwarf chain? Pretty much every mitigation you can think of has been discussed — Horizen’s chain selection rule update seems to be working for them.

Something else interesting and related! The wizards at CoinMetrics who I had badgered to run BTCP and ZCL nodes last summer, recently uncovered a grand heist with ~2 million coins secretly added to BTCP’s shielded pool at the time of inserting the BTC UTXOs into the ledger. Indeed I had a great deal of problems getting the BTCP client to play nicely, as the few thousand blocks around the time of the operation were enormous and often crashed my workstation when parsing data for analysis. BTCP is the worst of all possible worlds.

iv) Miscellany

Assets atop forked networks

There was a brief note in the paper on security risks of “top heavy” networks, where for example Ethereum can allow for a greater “value” of issued non-native tokens than the base protocol token. Read the great article below by Joe Looney to get a fuller understanding of the various hazards subsumed within this. Let’s think about how non-native assets could be used as bargaining chips by forkers. Offering to honour assets on a ledger fork network may skew hodler’s incentives in ways that are hard to predict.

The Real Cost of Cryptogoods
The “realness” of these tokens is, in many ways, the most important facet to consider as both a token issuer and a…

#forkgov: Fork-resistance and governance

In the original paper Tezos and Decred were discussed as networks addressing network governance by inhibiting forks in different ways. Taking a high-level perspective, let’s address the most general question: are these two notions meaningfully compatible? If we think of any natural process in the Universe — from the celestial to the tribal — as accretions and communities grow in size and complexity, scalability challenges increase markedly. Minimising accidental chain splits during protocol upgrades is a worthy goal. However, denying a mechanism to allow factions a graceful and orderly exit has upsides in preserving the moat of network effect but at the cost of internal dissonance, which may grow over time. Sound familiar?

One can look at ledger forks in a few different ways as good, bad or neutral:

[Good] A/B/…/Z testing of different technical, economic or philosophical approaches aka “Let the market decide, fork freedom baby!”

[Bad] Deleterious to network effects of nascent currency protocols with respect to Metcalfe or (IMO much more relevant) transactome-informed network capital theory after Gogerty.

[Neutral] An inevitability of entropy and/or finite social scalability as these networks grow and mature it is not realistic to keep all stakeholders sufficiently aligned for optimal network health.

As such, protocol-layer fork resistance and effective public fora with voting mechanisms can certainly be helpful tools, but there is a question as to whether democracy (the tyranny of the majority) should be exercised in all cases. If there was a “block size” style civil war in Tezos or Decred with no acceptable compromise in sight, would the status quo still be the best situation in all cases?

My perspective is that fork-resistance will largely redistribute the manifestations of discontent rather than provide a lasting cure to ills, and the native network governance mechanisms may be gamed by either incumbents or ousters. More time is needed to see how decision-making regarding technical evolution unfolds in both networks. Decred seems to be sitting pretty with a fairly attack-resilient hybrid PoW/PoS system, but there are some “exclusionary forces” in the network leading to the escalating DCR-denominated costs of staking tickets necessary to receive PoS rewards and participate in proposal voting, denying access to the mechanism to smaller holders.

Demand for tickets and staking rewards naturally increases with ongoing issuance, as the widening pool of coin holders wanting to mitigate dilution also does. As the ticket price is dynamic and demand-responsive, it creates upwards pressure which would make tickets inaccessible for a growing proportion of coin holders. At time of writing, “ticket splitting” allowing smaller holders to engage in PoS is available from some stake pools and self-organised collectives but the process is not yet automated in reference clients. On the other hand, the ongoing bear market has seen the USD ticket price fall from ~$8–10k USD at January and May 2018 peaks to ~$2k USD today in late January 2019 so those entering Decred with capital from outside the cryptocurrency domain would likely be undeterred. Data from and

50 day moving average of DCR staking ticket price. Source:

Further, as per Parallel Industries’ TokenSpace taxonomy research, staking rewards resemble dividends and token-based governance privileges resemble shareholder rights which make Decred appear a little closer to the traditional definition of a capital asset than pure PoW systems. This may or may not be an issue depending how regulation unfolds. Tezos has those potential issues plus the regulatory risk from the token sale. Decred’s airdrop may not have distributed the coin as fairly as possible but will undoubtedly attract a lower compliance burden than a token sale or premine.

“Activist Forks” & “Unfounder Forks”

Taking this a step further, these dissonant groups may conduct a guerilla campaign inside a network to focus attention on their cause. Last summer, a few anti-KYC factions of Tezos had appeared on social media outlets prior to network launch, however since the launch things have quietened down somewhat. One faction which still apparently intends to create a fork of Tezos changed tact and became a delegated staker within the network whilst continuing to voice dissent —perhaps this “fork activism” can be interpreted as a response to the “fork-resistance” of Tezos.

So, what else could a fork activist do? Take a look around at the ongoing ICO bonfire of the vanities which is largely due to poorly thought out sales of high-friction futility tokens infringing on / attempting to circumvent various regulations around the world. The prospect of removing the token issuers and the tokens themselves once treasuries are liquidated (by themselves, or by lawmakers) and development ceases is quite attractive indeed — will we see a wave of “unfounder forks?”

Conclusions & Future Directions

As with astronomy, there are no conclusions in forkonomy. Only endless observations as entropy drives time along. More work needs to be done analysing blockchain data harvested from nodes, especially on ZCL and BTCP. The quest for candidate network heuristics and tools continues. Studies of Decred’s Politeia proposal & voting system now that it’s operational would be interesting too.

Which is your favourite fork?


Thanks to Richard Red for details and resources regarding Decred’s PoS and ticketing mechanism.