What went wrong?
On 6th March, 2018, The NEO blockchain came to a standstill. the problem revolves around its consensus system known as delegated byzantine fault tolerance (dBFT). Using dBFT is expected to ensure that a blockchain would withstand the scenario where one of its consensus nodes fail or is dishonest. One of the consensus nodes on NEO did go offline. Since the nodes necessary for consensus on the NEO blockchain depend on each other for consensus, the network could not continue running when one of the seven designated nodes was temporarily down.
Bad Press For Neo on Twitter.
Following this event was a barrage of disparaging tweets on NEO.
Eric Wall, a cryptocurrency engineer and writer, took to twitter and called NEO “hilariously bad.” He went on to give reasons for his statement. According to him, any cryptocurrency using neither proof of work nor proof of stake consensus mechanism was largely based on trust. A system based on trust is not what a cryptocurrency is supposed to be in his opinion. Wall also mentioned that a better way for NEO’s dBFT could have been set up by having the consensus nodes simply broadcast their signatures. A requirement would then be set for the consensus nodes to agree to a certain point. This way a single node would not hold up the entire network if it went down. To Wall, it was surprising that the 6th largest cryptocurrency by market cap did not anticipate the simple problem.
Creator of Satoshi.info and well-known engineer in the cryptoshpere, James Lopp, weighed in on the issue with a tweet of his own. He felt that the hours of delay on the NEO network caused by a single consensus node going down was proof that NEO was not byzantine fault tolerant. NEO’s relatively high market cap in spite of this problem made Lopp wonder if the cryptocurrency market was irrational or ignorant.
Generally, most of the comments bashing NEO accused the project of being centralized and likened it to Ripple. More scathing remarks called it an Etherium knockoff. Here is what @shootingstarrob had to say.
“I’m just calling all the toxic/flawed concepts “Financial Illiteracy Coins” until I can generate a more specific framework, something with merch possibly…”
Word from the NEO Council.
In a statement from the NEO council, clarifications were made. According to Da Hong Fei, the founder of NEO,there was merely a block delay as a result of a node going offline and returning online after a short while. The document further iterated that NEO was in fact able to handle the situation. NEO and dBFT’s prioritization of finality over liveness meant the network coming to a halt did not require reversal of any transaction. More light was thrown on plans to decentralize the consensus node as well.
A few tweets from people who took to NEO’s defence showed that most holders or ‘fans’ of NEO were unfazed by the development. These two by @RobFiduciary and @trader_redneck sum it all up.
“It may be a ‘controlled node Crypto’ but if it ends up being ‘Chinese ETH-Ripple’ then I still wanna own it …”
“Oh, LOVE that FUD! Keep them coming, i wanna fill my bags with
$NEO Hell yeah!”
It is also hard to tell if the event had any negative impact on the price of NEO. The daily and weekly charts of most cryptocurrencies seem to move in tandem in recent times.
Eric Wall, who started the entire twitter storm about the issue made a turnaround a day later. He accepted he had a wrong understanding of exactly what went wrong initially. He based his earlier comments on the description of the problem given by NEO’s Senior R&D manager. Apparently, the R&D manager was inaccurate in his initial explanation of the problem. Wall still maintained that the standstill could have been avoided if the consensus system did not require all nodes to depend on single nodes that could go offline.
Similar Problems with other top cryptocurrencies
The team of the 14th ranked cryptocurrency on coinmarketcap.com was found wanting when it was detected that the Tron whitepaper was plagiarized. There have also been concerns raised over Ethereum’s Casper being “fundamentally vulnerable” . None of of these issues have had any lasting negative impact on the price of this cryptocurrencies.
Truth is it is difficult to find out the rationale behind the present valuation of cryptocurrency projects at the moment. It’s therefore critical that cryptocurrency investors understand what they are buying. More importantly, they should assume they are putting money into experiments and works-in-progress, instead of thinking of cryptocurrencies as full proof finished products. Like the CEO of Kraken once said, “cryptocurrency buyers should look after themselves.”