May the Force be Ethereum

Ethereum has had a fantastic year.

The Merge upgrade, 8 years in the making, was finally executed flawlessly.

What is the Merge?

Let me rephrase that to a better question.

Why the Merge?

No, it is not for reducing energy consumption. That is just a positive side effect.

The real reason is more fundamental.

Blockchains are revolutionary because they allow for people all around the World to agree upon a canonical chain of blocks containing cryptocurrency transactions.

These people need not be related. They need not trust each other.

They need not be white Caucasian males. They need not even have rich parents.

The point is that this group is inclusive, trustless and permissionless. Anyone can verify the integrity of the public blockchain.

It is decentralized – That is the sole reason for the existence of a public blockchain such as Ethereum.

Now, going back to agreeing upon a canonical chain. There are multiple mechanisms to achieve this agreement, or consensus, as popularly referred to.

The Merge, put simply, is a switch from one consensus mechanism to another because that preserves the decentralization of the Ethereum blockchain in an economically sustainable way.

In my opinion, this is the second-most significant event in the history of cryptocurrency, after the birth of Bitcoin. This wasn’t just a highly technological feat, but it was also an exemplary display of massive social coordination all across the World.

(Here’s my screenshot of the livestream on YouTube as the upgrade went through.)

Think about it. Ethereum is a network securing hundreds of billions of dollars’ worth of economic value.

It was previously adding blocks based on what hundreds of thousands of participants deemed as valid, based on the vast amount of energy they’ve spent.

Now, it is adding blocks based on what hundreds of thousands of participants deem as valid, based on the vast amount of wealth they’re willing to put at stake.

This switch cannot just be simply executed like how you would download and install an application update on your smartphone, after the software team releases it to the app store.

Instead, it comes into effect when majority of the participants in the network adopt the update, after having deliberated on it for a really long time via social media such as crypto Twitter, meetups in real life, Zoom calls and what not. There is no one company working on the update. Instead, you’ve got a decentralized network of developers, economists, researchers and users, all of whom may work on various aspects of the update such as writing code, publishing research papers, and debating on proposals. This process typically takes years.

But, all of it is done in the open, in the eyes of the public.

When the update is good to go according to the majority, it is adopted.

The Ethereum Merge is one such update, only that it has been worked upon in this decentralized fashion for 8 years.

Finally, it was perfected and the network was updated flawlessly. This event was streamed live by tens of thousands of viewers across the World! This number would have been much higher if the upgrade occurred during the day for North America. This happened late in the night, between 1-4 am Eastern Time.

Have you ever heard of any software upgrade being watched live by the masses?

You might have watched the iOS reveals but it’s not the same thing. The new iOS software does not synchronously install on your device at the time of the reveal.

I have worked previously as a software developer who has seen an upgrade happening live. Trust me, nobody looks forward to it. It is conducted behind closed doors, the environment is highly stressful, and errors can not only ruin your sleep, but also leave you with a termination letter and PTSD. If all goes well, you’ll be more relieved than happy.

The Merge upgrade, on the other hand, was conducted publicly. There was excitement in the air. Errors are nearly impossible. If, for some teeny tiny chance, they do occur, participants in the network can simply disagree to adopt the upgrade. If all goes well, you’ll be motivated to work on further improvements, which is what is currently happening in the Ethereum ecosystem. The developers planned to take a break after the Merge initially. However, it seems like they’re competing to put the most work into future upgrades at ETH Hackathons across the World.

So, where is Ethereum heading to? What’s the endgame here?

Without getting very technical, I would like to present an abstracted future of Ethereum using the Star Wars universe.

The Force:

The Force is a powerful field of energy that permeates through space and time. All living beings are connected to the force.

The diagram below is a high-level overview of the Ethereum ecosystem.

(Image credits: Reddit user u/emkoscp)

The yellow box signifies the canonical Ethereum blockchain.

The blue boxes represent other blockchains with different technical configurations.

Don’t worry about the technical details. The big picture here is that while the blue boxes do have their own blockchains, they ultimately have to respect the consensus of the yellow box.

Three major reasons to respect the consensus of Ethereum:

1. Highly decentralized
2. Large number of consensus-participating validators
3. Secures the most economical value for all of the ETH, other fungible tokens including stablecoins, and NFTs

If they don’t respect the consensus of the Ethereum blockchain, they get cut off from all of the Ethereum ecosystem. For them to survive on their own, they will have to work on developing their own decentralized economic security, which will be a Herculean task.

IMO, all public blockchains will consolidate to settling their transactions by respecting the consensus of a single blockchain, by the force (pun intended) of economics.

An important characteristic of this singular blockchain is neutrality.

Why is neutrality important to note?

The Force is neutral. Ethereum is neutral. No Godly entity decides what’s good and what’s bad.

Ethereum does not bend to regulation and law enforcement, much like the Force does not bend to the Galactic Empire or the Senate.

Also similar to the Force-users in Star Wars, we’ve got coders in the Ethereum ecosystem with their own factions.

Jedis vs Siths. Developers vs Hackers. Two sides of the same coin.

Jedis:

Coding is to developers what meditation is to the Jedis. Developers using their skills to develop apps on the blockchains and make the Web3 world amazing for us to use and live in. They have strong open ties to the real world as we know it. They work with companies, even regulation and law enforcement. Many accomplished developers are celebrities in the real world. A prime example is Gavin Wood. He wrote the yellow paper for Ethereum covering its technical specifications and helped develop the Solidity programming language for other developers to code on Ethereum.

Siths:

The Sith sought to bend the Force to their will and empower themselves. They could never form a large group due to inevitable infighting to rule at the top. Hackers are quite similar in the sense that they exploit weaknesses in the blockchain for their own gain, even if it may be at the cost of another hacker. White hat hackers are an exception though, as they seek bounties in exchange for information regarding potential exploits.

However, what if these bounties are cheap?

If apps and projects cheap out on paying out bug bounties nor refuse to offer additional incentives, they will be causing a tilt in the economic force towards relatively greater gains for black hat hackers.

Nevertheless, both the Jedis and the Siths together bring balance to the force, as developers and hackers bring balance to the public blockchain ecosystem.

If there are no developers, economic forces cease the existence of hackers.

And if there are no hackers, economic forces undervalue developers and undermine white hat hackers.

We are entering a new phase of human civilization. A new normal.

Much to learn, we still have. This is just the beginning for us, young padawans.

?PS. Crypto twitter is a great location to start learning. Follow me on Twitter (@JohnsonArchives). I retweet all of the educational threads that I come across.

PPS. Polynya’s ‘A Vision of Ethereum – 2025’ article inspired me to write this overview of the Ethereum ecosystem. Here’s a link to the same.