Foundations · 04 / 86 · 3 min

Consensus

A network agrees on one history. That agreement is what people mean when they say the chain cannot be quietly edited by one company.

A worked case

A token drains a wallet and the chain records it. People say the chain is secure, so the loss must be impossible. The chain agreed the theft happened. Consensus protected the history, not the person.

Proof of work

Miners spend electricity to propose the next block. Rewriting old history means outspending the rest of the network. That is expensive. It is not impossible.

Proof of stake

Validators lock coins for the right to propose blocks. Cheating can cost them that stake. The people with the most stake have the most say.

Agreement is not fairness, and it is not a guarantee your coins are safe from a bug, a scam, or your own lost key.

When the chain agreed to change the chain

In 2016 a program on Ethereum called The DAO held a large share of all ether, raised from thousands of people who thought they were funding a new kind of venture fund. In June a caller drained about 3.6 million ether into a child contract by using the program in an order its authors had not intended. The ether did not vanish. The network agreed the drain had happened. Consensus had worked. It had recorded a loss.

What happened next is the part people skip. A large part of the Ethereum community shipped a hard fork in July 2016 that moved the drained ether back, as if the call had not succeeded. A minority refused the fork and kept the old history. That chain is Ethereum Classic. So the sentence the chain cannot be edited is true only inside a set of rules a living crowd agrees to run. When the crowd splits, there are two histories, and exchanges and companies decide which ticker follows which crowd.

The DAO is also why code is law did not survive contact with a loss that large. The code did what it did. People with a stake in the outcome changed which code the majority would call Ethereum. Agreement is a social fact enforced by software, not a moral fact, and it does not stop a scam token from being recorded honestly.

Read it yourself

• Ethereum Foundation: hard fork completed (20 July 2016)
• The DAO

These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.

Apply the check

Open a question. The line is about this topic. It is not a verdict that anything is safe.

Check yourself