CoinDesk Research: Ethereum Hard Fork Had Little Impact on Sentiment
CoinDesk’s Q3 2016 State of Blockchain report summarizes key trends, data and events from the third quarter of 2016
This article highlights findings from our quarterly ‘Spotlight Study’, based on a survey of 240 startup execs and enterprise blockchain leads. For more of our quarterly and annual reports, visit CoinDesk Research.
Read the entire Q3 2016 State of Blockchain report.
Despite being labeled as another Mt Gox, the demise of ethereum’s first major project (the DAO) as well as subsequent, controversial attempts to save its investors, had little to no impact on the platform’s use or perception, a new CoinDesk study has found.
Conducted in October 2016, CoinDesk Research found the majority (63%) of industry entrepreneurs and enterprise executives surveyed reported no change in their use of ethereum following the hack or hard fork, with nearly half (48%) indicating it did not negatively impact their perception of the emerging technology.
Perhaps most notably, respondents indicated they believe ethereum’s developer team to display stronger governance practices than bitcoin, the most widely used public blockchain and most valuable digital currency ahead of ethereum and ether, respectively.
In total, 37% reported ethereum had better governance than bitcoin, while 22% said bitcoin displayed better governance.
Of note is that 34% said both displayed serious governance challenges, a figure that could explain the continued interest in private blockchain efforts.
The findings are notable as CoinDesk Research further revealed that the DAO collapse and hard fork had a measurable impact on users.
Of those surveyed, the events had a negative impact on one-third of respondents, and of those affected, 75% reported that they lost money.
A small percentage of respondents (11%) even lost confidence in ethereum completely following the hard fork, with some (20%) reporting a project setback as a result of the twin incidents.
However, these weren’t the only findings from the extensive survey. Below, we highlight the five biggest takeaways from our research:
1. Hard fork won over critics
While we know the decision to split the ethereum protocol effectively split the blockchain community, what was most notable was that few respondents changed their view over the course of the events.
CoinDesk Research found that 8% of respondents changed their view after the hard fork, but that of those who did, 88% now view the decision to hard fork favorably.
The results suggests that despite claims by some ethereum users that the fork violated the reliability of its blockchain, this argument has perhaps not resonated widely.
In total, 45% of respondents agreed with the hard fork, with 33% disagreeing and 23% reporting that they were unsure of how to feel about the event.
2. Governance concerns remain
Governance was the primary concern for those who expressed negative sentiment towards either the hard fork or DAO hack.
Almost half of those negatively impacted by the events were concerned with current and future governance of the protocol. Others expressed strong concerns over compromised immutability and fear of impending regulatory risk as a result of the fork.
3. Bitcoin benefits from ethereum struggles
While the DAO hack and hard fork certainly had a negative impact on ethereum, these events had a material impact on the perception of other projects, the survey found.
Notably, 39% of respondents believe the DAO hack and hard fork cast a positive light on bitcoin, with some referring to the protocol as “production-ready” while emphasizing its “stability and predictability” in comparison to ethereum.
Conversely, half of respondents suggested the hard fork “broke immutability” and “set a bad precedent” for the one-year-old protocol.
4. Users expect big changes in 2017
Yet, the survey did point to potential problems ahead.
The results show 40% of respondents believe that it’s somewhat or very likely that ethereum will be ready to implement an entirely new blockchain protocol (Casper) sometime next year.
Other big technical challenges are expected to be overcome as well, as one in three respondents expected ethereum to be equipped with state channels, an in-development feature that would allow for greater scalability.
However, the roadmap for such advances remains unclear, with leading technologists spearheading the work reporting disagreements on the best path forward.
As identified in CoinDesk Research’s ‘Understanding Ethereum’ report, a leading concern for the platform has long been the sky-high expectations of users, which seem to continually outpace the modest declarations from developers that the tech remains bleeding-edge.
5. Two distinct users emerge
CoinDesk Research also found evidence that ethereum displays two distinct classes of users, those using its public blockchain and those using private alternatives.
As the technology is open-source, many enterprises have taken to replicating ethereum’s technology for their private use. Notable is that both groups emphasized different qualities about ethereum when reporting their satisfaction with the platform.
Overall, enterprise users were more likely to emphasize its appeal to developers, as well as its flexibility and maturity, while public developers were more apt to cite its technical features, such as a Turing-complete programming language and smart contract capabilities.
For more findings and takeaways from our full Q3 report, including metrics on enterprise blockchains and industry-wide investment, download your copy of the full report here.
Images via Caroline Terree for CoinDesk; Skinned knee image via Shutterstock
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