Tezos, a blockchain best known for its off-chain drama rather than its on-chain utility, is set to fork. Internecine conflict has riven the Tezos community for months, spilling over into the courtroom and leading to the dismissal of foundation members. On the eve of its mainnet launch, another twist will see nTezos created as a spin-off. In the process, it will make Tezos the first blockchain to have been forked before it’s launched.
And Then There Were Two
For armchair addicts, the cryptocurrency space is never short of popcorn moments, ranging from ICO scams to in-fighting, FUD, FOMO, and all the other acronyms for which the sector is renowned. Tezos its very own soap opera however, a twilight zone in which every week offers something macabre or unexpected. The news that Tezos looks likely to fork before it has so much as launched isn’t entirely unexpected, but it’s certainly an odd turn of events.
There are many reasons that could have triggered an acrimonious fork of the Tezos code, splitting the project in two, but in the end it appears to have been the enforced KYC that was the final straw. nTezos, should it launch as promised, will share the same open source code as Tezos minus the KYC and without the founders’ rewards. It will also come with an auditable genesis block and will not be affiliated with the controversial Tezos foundation.
This means that Tezos token-holders will have a choice of blockchains to adopt straight out the gate – or they can simply hedge their bets and claim their tokens on both chains. For token-holders to preserve their anonymity, however, they will presumably have to refrain from claiming their tokens on the parent chain, whose enforced KYC will leave them easily identifiable on the nTezos chain.
KYC Is So 2018
Back in the summer of 2017, when ICOs could do no wrong, KYC was optional. Many crowdsales didn’t bother with it and Tezos was one of them. A lot has happened since then and in an email sent out on Sunday, the project explained:
We value and respect the privacy of our contributors, and along with countless others around the world, we personally oppose the unnecessary collection of personal information that has become pervasive on the Internet. However, it is important to comply with a rapidly evolving regulatory landscape. To that end, performing a KYC/AML check — as has become the norm for blockchain projects — is the best way forward.
Without completing KYC, investors can’t claim their tokens. Given that this stipulation wasn’t in place at the time of the ICO one year ago, participants are understandably irked. And it’s not just investors who are frustrated by this development – so is Tezos founder Arthur Breitman. On the Tezos Reddit page, Breitman, under the username “murbard” wrote that KYC was “not my call”.
Paying Penance for the Sins of the Past
In its understandable desperation to launch, Tezos has been trying its utmost to atone for the sins of the past. Around the time of its ICO, the Breitmans – Arthur and Kathleen – naively thought there would be no repercussions for admitting US investors, and famously referred to crowdsale investments as “donations”. In fairness to the pair, the entire ICO space was then working under the assumption that tokens were unlikely to be classified as securities, but a spate of SEC pronouncements and subpoenas has put paid to that.
It’s too early to tell whether nTezos, the KYC-less clone, will gain traction, or even go on to become the dominant chain. What is certain is that a fully KYC’d Tezos is a blockchain that will struggle to gain new adherents wooed by cryptocurrency’s promise of privacy and economic freedom. All investors ever wanted was a quick flip of some tezzies for more bitcoin. Instead they got KYC, courtroom battles and tote bags.
Do you think nTezos will launch and if so is it likely to gain support? Let us know in the comments section below.
Images courtesy of Shutterstock, Twitter and Tezos.
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