Censorship

Ethereum community splits over solutions for transaction censorship

Social slashing and even a user-activated soft fork have been suggested as possible responses to the threat of transaction censorship on Ethereum.

The Ethereum community has been divided over how to best respond to the threat of protocol-level transaction censorship in the wake of the United States government sanctions on Tornado Cash-linked addresses. 

Over the last week, Ethereum community members have proposed social slashing or even a user-activated soft fork (UASF) as possible responses to transaction-level censorship on Ethereum, with some calling it a “trap” that will do more harm than good and others stating its necessary to provide “credible neutrality and censorship resistance properties” on Ethereum.

The heated debate comes after Ethereum miner Ethermine elected not to process transactions from the now U.S. sanctioned Ethereum-based privacy tool Tornado Cash, which has prompted members of the Ethereum community to worry about what would happen if other centralized validators did the same.

The Ethereum community is also debating the effectiveness of social slashing to combat censorship on the Ethereum network, as the strategy could lead to a chain split with some validators processing transactions on the censorship-less chain and the others validating only the OFAC-compliant chain.

Social slashing is the process whereby validators have a percentage of their stake slashed if they don’t correctly validate the incoming transactions or otherwise act dishonestly.

This may become a significant issue if regulators require major centralized staking services like Coinbase and other major centralized pools, which together stake more than 50% of Ether (ETH) in the Ethereum Beacon 2.0 chain to only validate OFAC-compliant chains.

Founder of Cyber Capital Justin Bons argues that slashing “is a trap” that “represents a greater risk than the OFAC regulation” and will not be a viable solution to tackle censorship at the protocol level.

In a 21-part Twitter thread on Monday, Bons said that social slashing exchanges may “deprive innocent users of their deposits,” which would “violate their property rights.”

Bons also said that too many validators complying with law enforcement on Ethereum would “lead to a chain split,” at the point at which “censors start ignoring or do not attest blocks that contain OFAC violating TXs.”

Founder of Ethereum podcast The Daily Gwei Anthony Sassano wrote on Twitter on Saturday that “collateral damage is inevitable in social slashing […] it’s worth it to protect Ethereum’s credible neutrality and censorship resistance properties.”

Meanwhile, Geth developer Marius Van Der Wijgen shared a similar sentiment stating that preserving censorship on the Ethereum network should be the Ethereum community’s highest priority:

“If we allow censorship of user transactions on the network, then we basically failed. This is *the* hill that I’m willing to die on.”

“If we start allowing users to be censored on Ethereum then this whole thing doesn’t make sense and I will be leaving the ecosystem. […] I think censorship resistance is the highest goal of Ethereum and of the blockchain space in general, so if we compromise on that, there’s not much else to do, in my opinion,” he added.

Related: Tornado Cash ban could spell disaster for other privacy protocols — Manta co-founder

Crypto researcher Eric Wall added that to date, censorship resistance has served as a core property on the Ethereum network and that while we’re seeing some censorship on the front end, “it’ll only get bad if censorship starts happening side Ethereum itself.”

The Tornado Cash sparked censorship debacle has plagued the Ethereum community for over a week now.

‘Programmable money should terrify you’ — Layah Heilpern

The comments come as Layah Heilpern believes CBDCs will give rise to government enforced censorship which will prevent residents from transacting how they wish.

Government-controlled “programmable money should terrify you,” says social media influencer and TV Host Layah Heilpern, who sees central bank digital currencies (CBDCs) as a way for banks and governments to reign control over their people.

In an interview on Friday with British news outlet GB News, Heilpern, who also released Undressing Bitcoin: A Revealing Guide To The World’s Most Revolutionary Asset in September 2021, said the widespread rollout of a CBDC from nation states is on its way, and that it could lead to the financial censorship of citizens in the future.

Heilpern stated that as CBDCs are essentially programmable cryptocurrencies that run on blockchains, they could potentially be “programmed against you” at the whims of the centralized authority behind them:

“If for whatever reason you say the wrong thing, because you know we’re seeing censorship increasing, then that money can essentially be programmed to be used against you.”

Heilpern added that while a lot of people might find this concept to be “quite bizarre,” it’s very realistic given the restrictions that were enforced on unvaccinated people by governments:

“With a CBDC, all [the government] have to do really is program that money so you can’t spend it on certain things.”

Heilpern also said that while CBDCs will be marketed as “better for the environment,” and serve as a “solution to rising inflation rates,” that’s simply “a lie.”

Following up on the interview via a Twitter post,  Heilpern didn’t mince her words as she stated that the “Central Bank Digital Currencies will be marketed as better for the environment and the solution to inflation. It’s a lie. Money is the energy that fuels your life; so programmable money should terrify you.”

Notably, however, such concerns around financial censorship have been especially prevalent with crypto in general of late, with the recent Tornado Cash debacle, which saw the United States Treasury sanction Ether (ETH) and USD Coin (USDC) addresses associated with the Ethereum-based privacy tool.

According to an Oct. 2021 report, 110 countries are “at some stage” of CBDC development, with the Bahamas’ Sand Dollar CBDC being the first of its kind to be rolled out in Oct. 2020.

But, perhaps the most controversial CBDC is China’s yuan (e-CNY), issued by the People’s Bank of China, which had its pilot version launched in April 2020, with some suggesting the ban on crypto was conducted to make way for the digital Yuan.

The Bank of Russia also began CBDC testing and is aiming to have one launched before their presidential election in 2024.

Despite much criticism, CBDCs may offer developing nations more macroeconomic stability in comparison to decentralized currencies, according to IMF Managing Director Kristalina Georgieva, as CBDC’s would have the “backing of the state” and would of course be regulatory compliant.

Cuban NFT artists say they face censorship within the crypto market

“Blockchain is decentralised and doesn’t obey any governments, so no embargo affects us there,” NFT artist Gabriel Bianchini explained.

Cuba’s art market shut down completely during the pandemic, leading the community to turn to digital markets for survival. However, artists say that they remain censored due to the United States sanctions against Cuba, with U.S. based platforms like the nonfungible token (NFT) marketplace OpenSea going to the extremes of deleting content and accounts linked to the country itself.

The censorship began in January with the sudden closing of the account of Fabrica de Arte Cubano — an art gallery that provided exposure to emerging artists.

As Cuban visual artist and founder of the project CryptoCubans, Gabriel Bianchini, explains: “The embargo’s sanctions are so vague that platforms just prefer to not take the risk and close our accounts.”

This type of censorship is a common occurrence for Cuban artists exposing their work on the Internet. Ernesto Cisneros, a musician and NFT artist, recounted his own experience as a tragic one after losing all his earnings on Patreon due to the embargo during the pandemic. This experience brought him to Web3, unaware that the same story would repeat again. He recounted:

“I helped to onboard many artists to web3. But then OpenSea started to block Cuban artists one after the other. I stopped using that marketplace altogether when I learned they were censoring because of the embargo.”

Adding to the consequences of censorship, they believe that Cuban artists have an increased susceptibility to being victims of hacks. Such is the case for Avinro, an NFT artist from Havana. “There are antivirus programs that don’t function correctly because I’m in Cuba,” he says, alleging that the lack of proper digital protection allowed an attacker — passing for an interested buyer — to send him a virus via Zoom link which should otherwise have been detected by the software. Avinro claimed that this oversight allowed the attacker to take over his MetaMask wallet, resulting in the theft of his earnings and the loss of his user profiles on various NFT marketplaces.

However, there is apparent progress on the technological side being made through official channels. Cuba’s government recently announced that it is open to the use of cryptocurrencies, which has fostered hopes of adoption at a rapid pace. Even if this comes to pass, however, it will still be highly regulated for citizens. Now, the arrival of blockchain smart contracts is a game changer for Cubans looking to send their messages back into the world. Bianchini said:

“There’s nothing more independent than a smart contract. Once you know how to program them, there’s no stopping you. What happened with Fábrica de Arte was an alarm to show the community towards a new direction. I believe we’ll build our independence, because now we have that chance.”