Has Ethereum Been State Captured? With Mark Goodwin - WBD546

Mark Goodwin is the director of print editorial at Bitcoin
Magazine. In this interview, we discuss the US government's
sanctions on Tornado Cash, the upcoming Ethereum merge, and why
this is vitally important for the future of Bitcoin.


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On 24th August, the Ethereum Foundation's Protocol Support team
announced the Ethereum merge is expected to take place between
September 10th and September 20th. The event marks Ethereum’s
shift from proof-of-work to proof-of-stake, which would eliminate
mining from the network consensus mechanism.


However, major concerns are surfacing that move beyond the
well-worn battle lines. There is a growing desire for the
Ethereum PoW consensus to continue resulting in a network fork.
But, Ethereum has effectively been co-opted by USDC and USDT
stablecoins. Because these stablecoins are widely used on the
network and due to the centralised nature of these stablecoins,
the issuers can throw around their financial weight by deciding
which fork to censor. And the organisations behind these
stablecoins have shown a readiness to comply with state
sanctions. What will this make Ethereum?


On the same day of the merge announcement, a Dutch judge ruled
that the developer of the Tornado Cash mixing service on the
Ethereum blockchain must stay in jail for 90 days as he awaits
charges. What these charges will be is not necessarily clear at
the moment, but it seems that authorities will tie it into
hacking and money laundering schemes.


The Dutch action was coordinated with (and probably orchestrated
by) the US government, which has imposed sanctions on addresses
associated with Tornado Cash. The actions by the State Department
are reminiscent of the original battles with cypher punks in the
1990s that resulted in the first “Code is Speech” ruling. Do they
want to retest that ruling?


These events, on the face of things, reinforce the unique
position of Bitcoin. But, any rejoicing would miss the
existential dangers. The state may be setting a precedent to
outlaw code, sending a message to developers seeking to protect
privacy which is already having a chilling effect, whatever the
protocol.


Could we be witnessing the development of a state-coerced digital
currency?