The impact of the recent ethereum hard fork is extending far beyond message boards and forums, serving as a learning lesson even for firms actively engaged in building private blockchains.
Representatives from major consulting firms are reporting that they are receiving questions from enterprise clients about ethereum‘s decision to execute a hard fork of its blockchain. Companies as diverse as Capgemini, Deloitte and Ernst & Young indicate that their blockchain specialists have been observing as well, as part of an effort to keep an eye on the fast-developing open-source blockchain sector.
“This is definitely a set of developments that we’ve all been watching very closely,” Iliana Oris Valiente, a lead blockchain strategist at Deloitte, said in an interview today.
While she said she believes such a situation may not be replicable in a private blockchain environment (given the incentives structures and design specificities at play), she said there are lessons to be learned for the wider community.
Valiente told CoinDesk:
“Our clients are certainly asking questions, especially the ones that are more involved in a hands-on type of basis. They’re asking, ‘How does the DAO impact projects we have ongoing?’ ‘Should that reduce our confidence in ethereum?’”
Ernst & Young blockchain lead Angus Champion de Crespigny, however, said clients are more curious than concerned.
He reported to a persisting overall skepticism in public blockchains from clients, but said that notable public blockchain projects are serving as a basis point for experiments with the technology.
“Things that are happening in the public blockchain space are being watched with interest rather than with fear,” he said.
Overall, there was broad agreement that the demise of The DAO and the subsequent hard fork to rescue investor funds were a reminder of how nascent the blockchain ecosystem remains, and how regulatory oversight and consumer protections will need to be addressed in this new environment.
Champion de Crespigny likened it to a “teething process” for the industry, and a sign its innovators are perhaps keen to push the technology too fast, too quickly.
“To start a social media network in 1995, the tech wasn’t there, and the bandwidth for all the things in social media and mobile weren’t there either. You need the scaffolding to build the building,” Champion de Crespigny said, adding:
“I think it is a matter of tempering enthusiasm.”
Research needed
Also prevalent was the perception that the incident is an example of why more research is a requisite for the entire blockchain ecosystem.
Capgemini blockchain community lead Bart Cant, for example, said the situation demonstrated that more “tools and capabilities” are needed to deal with disaster situations that occur.
“Disaster recovery plans and procedures are absolutely critical and required for deploy in financial services industry solutions,” Cant said. “It was evident from the DAO hack and its aftermath that very little was in place or tested beforehand on ethereum.”
Champion de Crespigny notably said that the event should serve as a “wake-up call” to innovators in the industry, one that brings with it questions about how blockchains should be used, and how solutions built on these platforms should be architected.
For example, he noted how, at seven years old, bitcoin has proven that blockchains can be used for transaction executions. More complex contracts and agreements, he said, simply aren’t at that stage despite the institutional interest.
“It raises the question, ‘Are we overcomplicating things in this industry?'” he said.
Coin Sciences CEO Gideon Greenspan, whose startup firm consults enterprise clients on projects and proofs-of-concept, also voiced a desire to see blockchain projects conducted on a smaller scale.
“From our perspective, it supports our long-running view that smart contracts should be avoided in blockchains unless they are necessary for a particular use case,” Greenspan said.
Security and exploration
All respondents, however, were quick to assert that their firms are still committed to researching and understanding the blockchain industry, and that the hard fork would provide valuable data to help improve community understanding.
“I would say this situation has given us another vector from a security standpoint that we can add to the projects that we’re working on and improve from it,” Valiente said.
Champion de Crespigny noted that he believes that the event provides evidence that investors should be wary when engaging in the public blockchain ecosystem, noting the double-edged sword of these speculative investments.
“I think The DAO was a very exciting project with a lot of risks… It could have had a big payoff or a big loss,” he continued.
However, he said that ambitious projects, and perhaps ambitious failures, are necessary should the wider industry want to develop blockchain to its full potential.
He concluded:
“I think those experiments are good and people need to keep on doing it.”
Coin-operated telescope via Shutterstock