Bitcoin Bear Market Forces Ethereum Cofounder To Make Changes

The fall in the price of bitcoin, ethereum, and Ripple's XRP (as well as the wider cryptocurrency market) over the last month is beginning to cause companies to rethink their strategies—battening down the hatches in preparation for what could be a long crypto winter.

Ethereum cofounder and ConsenSys chief executive Joseph Lubin (who last month predicted blockchain technology would cause a radical overhaul of society) has said he's planning to restructure ConsenSys to protect it against the recent downturn that saw bitcoin record falls of more than 40% in a matter of weeks. 

Ethereum's tradable token ether is down by more than 50% since early November, topping off a year that has wiped some $700 billion from the cryptocurrency market as investors get cold feet waiting for long-expected institutional investment into the sector.

Lubin's ConsenSys, and ethereum-based development studio, is now reorganizing, entering a new phase Lubin calls ConsenSys 2.0, focusing on efficiency, accountability, and attention to revenue.

According to a letter from Lubin to ConsenSys employees, seen by Breaker magazine, underperforming ConsenSys projects will be axed and the arm of ConsenSys that oversees venture investment will become more like a traditional startup accelerator.

“We must retain, and in some cases regain, the lean and gritty startup mindset that made us who we are," Lubin said. "We now find ourselves occupying a very competitive universe. We must recognize that what got us here will probably not get us there, wherever ‘there’ is."

"In ConsenSys 1.0, we built a laboratory instrumented to prove the moon existed, using complex engineering and math and creative philosophical arguments,” Lubin added. "Now we need a streamlined rocket ship to get us there, since the actual proof, ultimately, is in the landing.

"We're going to get a lot more rigorous in terms of milestones and timetables."

The ethereum price has been on a downward trend all year, dropping over 90% from its all-time highs.COINDESK

Elsewhere, the bitcoin price collapse has seen other companies look to restructure and streamline their operations.

Steemit, a blockchain-powered social media platform, laid off 70% of its staff last month, while adult entertainment industry orientated SpankChain downsized to eight employees last month. In October, the UK's oldest bitcoin exchange Coinfloor axed around 40 employees.

Bitcoin and cryptocurrency miners have also been forced to desperate measures to keep the computers running, cutting costs to the bone.

Others have remained upbeat, however. Bitcoin miner Argo Blockchain, a UK-listed company, yesterday sought to soothe shareholder unrest, telling the market demand for its products and services has remained robust despite the downturn. 

The bitcoin price has gotten off to a bad start in December after many had hoped the worst was behind it, with the cryptocurrency market recording its steepest monthly declines in years last month.

Bitcoin moved sharply downward at the beginning of this week as it gave up the psychological $4,000 level that had appeared to support the price over the last week.

The bitcoin price has come under renewed pressure this week.COINDESK

Bitcoin dropped as low as $3,790, according to CoinDesk's bitcoin price tracker, back to near its yearly lows at the end of last month—and renewing fears the rout that began in November will bleed through to December.

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have cov...

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New Ideas Energize Ethereum Though True Signaling Solution Still Elusive

Put enough heads together and you might just solve governance.

At least, that was the idea behind a private, two-day meeting of top researchers, who met in Toronto this week to discuss how decisions should be made on ethereum, the world's second most valuable blockchain network.

Named "EIP:0," a nod to the platform's process for accepting codes changes - the meeting consisted of members from a variety of startups and non-profits working to advance the technology, with notable members including Parity Technologies, the Web3 Foundation, the Ethereum Foundation, Giveth, Aragon, Consensys, MetaMask and others.

Designed to give participants a protected space to discuss one of the platform's hardest problems, much of the focus was around a handful of issues that have caused controversy over the past few months. Whether it was the debate over how to return frozen funds, whether to limit ether issuance or to reject mining hardware advances, developers have struggled with how best to measure and enact the will of the diverse and polarized community. 

But for such a theoretical unknown, the meeting proved highly productive, participants said.

"One thing that immediately became apparent through the workshop was the question of community," core developer Lane Rettig told CoinDesk. "I think it is the single biggest takeaway from this event."

According to Rettig, much of the discussion surrounded how to better identify what constitutes a community member, or someone who should have a say in just how ethereum develops, and how to accurately measure their sentiment.

Toward this, Rettig said several companies at the event expressed an interest in funding the development of open-source, sentiment gathering tools, that could better measure the will of identified parties when it came to contentious change.

"There's general consensus that we need better signals," Rettig told CoinDesk.

And while the choice to keep the working group small and invite-only has already ruffled some feathers on Reddit, with some warning that such a formula contradicts the openness of the platform, it was clear from the event documentation that aligning to the community was the central concern.

Rettig told CoinDesk:

Better signals

Of course, it's well-known by now that social media can be a noisy and hostile place.

"Everyone on the internet needs to chill out and not be so mean to everybody," community manager Hudson Jameson said at the public panel following the event.

Several others echoed this point, stating that while channels such as Twitter and Reddit can be filled with abusive uproar, it's not clear whether the loudest voices fairly represent the opinions of all.

And when it comes to the platform's hardest decisions, such as whether to hard fork to return money lost in the Parity fund freeze of November last year, clean signals are crucial.

"There's a very strong voice for immutability on channels like Reddit," Dan Finlay, from ethereum wallet MetaMask, said at a later public discussion. "I'm seriously suspicious of those. Maybe they're sock puppets. I didn't see them very well represented here."

As such, event participants put their heads together to better isolate the various groups that have different stake within the platform, including protocol developers, application developers, application users, miners, investors, full nodes, governments and regulators.

The diversity of signals can be collected with purpose-built tooling directed towards each group, and possibly aggregated onto a website, that would visibly depict the different leanings and inclinations.

"What we really want are signal aggregators or bundles of signals," Retting told CoinDesk in an interview.

And there was a lot of creation discussion on how to achieve this, too.

Speaking in the public panel following the event, Griff Green from decentralized charity Giveth suggested mirroring the efforts deployed by bitcoin in the midst of the scaling debate, using tools like the website Coin.Dance, where the signals sent out by biggest mining pools were neatly depicted.

Rettig also expressed other ideas, that could extend beyond the biggest players to the smaller ecosystem members as well, by including an option in wallet software to signal a position with a simple transaction.

Rettig explained:

Crypto's magic power

And when contention remains, there's always the option to split.

Speaking at the event, several attendees expressed that far from being feared, the ability to create a new version of the ethereum blockchain in the case of divisive decisions is the ultimate, non-coercive tool for dissident groups to enact their opinions.

"Forks are absolutely essential," Rettig said.

Indeed, in allowing communities the possibility of exit, Rettig and others expressed that the option to split off in case of contention is one of the key advantages that blockchains have over traditional governments.

As such, a dedicated working group on Tuesday discussed how to make forks "less dire," ways to cheapen, increase security and destigmatizing community divides when they do inevitably occur.

"A fork is going to happen. I mean eventually there will be a fork," Rettig said, though he stressed this sentiment is more theoretical than a commentary on current events.

However, while a split is a clean way to settle disputes, there's messy, technical complications when it comes to enacting such a divide on ethereum.

Because ethereum is not just a blockchain, but a computation platform as well, every decentralized application would simultaneously co-exist on both versions of the platform.

As well as proving complicated for the many, many businesses that rely on ethereum software, this could spark unanticipated strangeness in other types of decentralized applications as well.

"What happens to a stablecoin?" Rettig asked. "Does it stay at one dollar on both blockchains, and now you have two dollars? Or is it 0.25 cent on one blockchain and 0.75 cent on the other?"

Rettig said that like many of the sessions that occurred over the two days, the result was non-conclusive, but attendees will be running a monthly online meetup dedicated to such conversations.

And it is clear that in spite of risks, splits are a still a value fallback method.

"The fact that in a bloodless way we can neatly fork, and each group can go off and do their own thing, and we can bisect along the lines of values, that is a magic power," Rettig said.

He concluded:

Griff Green courtesy of Lane Rettig