“It is in the nature of a system of government control of business to aim at the utmost centralization…In voting for government control of business the voters implicitly, although unwittingly, are voting for more centralization.”

– Ludwig Von Mises

One of the most underestimated threats that modern society faces is the ever tightening grip of centralized control. History has shown us time and again that centralized control inevitably devolves into tyranny, eroding the foundations of liberty upon which free societies are built. The 10 planks of communism, as outlined by Karl Marx and Friedrich Engels in The Communist Manifesto, that serves as the blueprint for transitioning society to a collectivist system cannot be implemented without centralization first occurring; due to the fact that communism at its core seeks to abolish every form of private ownership while enthroning the state as master of all. The sad reality is that these planks have been gradually implemented over the years by most countries in the world, thus progressively eroding free markets and the overall liberty of their citizens.

The centralization of speech online is the most recent threat that has emerged as a potent tool for state control. Ironically, this phenomenon resembles the realization of plank 6 of the communist manifesto, which advocates for the “centralization of the Means of Communication and Transport in the Hands of the State.” As commerce and communications via online platforms grows, these two very important aspects of human existence become centralized in the hands of the big tech companies that own these platforms. In our cancel culture driven world, the increasing overlap between centralized social media platforms and financial services has significantly increased the risk of absolute censorship; where violating the constantly changing “community guidelines” can lead to one becoming persona non grata and being immediately deplatformed.

Without decentralized alternatives, censoring any speech or transaction that is deemed “undesirable” becomes a trivial matter. Big tech social media giants acting as the de facto thought police and enforcers for the state, wield immense influence over the flow of information, and suppress every form of dissent through the threat of financial strangulation when one doesn’t toe the line. There are two major factors that undergird this power to silence dissent online:

• Centralized nature of the social media platforms
• Centralized payment processors like PayPal that dominate these platforms

For individuals who rely on social media for their livelihood, deplatforming represents a significant threat, not only to their ability to express themselves freely but also to their income. Self-censorship naturally becomes the norm and this is even more dangerous as it creates the illusion of alignment with the current thing of the day. Thankfully, Bitcoin has made these payment processors irrelevant and due to it being fully decentralized, neutral, apolitical and censorship resistant; it’s a viable alternative.

Code is Speech

In 2013 Cody Wilson, the pioneer of the world’s first 3-D printable gun, received a letter from the State Department demanding removal of blueprints for his plastic firearm, the Liberator, or risk facing jail time and millions in fines. In 2015 Wilson’s organization, Defense Distributed, filed a lawsuit against the State Department, alleging that prohibiting the publication of his plans, which are essentially computer code, constitutes a prior restraint of free speech rights, as guaranteed by the First Amendment of the US constitution. The dispute revolved around the State Department’s claim that posting 3-D printable gun files online constitutes a potential breach of arms export controls, a controversial set of regulations known as the International Traffic in Arms Regulations (ITAR).

The history of ITAR has been marred by controversy and contention. In the 90s, it was used to target cryptographers (aka cypherpunks), classifying strong encryption tools as military munitions. After the source code for PGP was released and printed out as a book, it immediately fell under First Amendment protection. Despite this seemingly obvious fact, its inventor Phil Zimmermann, was subjected to a grueling three-year Department Of Justice (DOJ) investigation during these Crypto Wars, which was subsequently put to bed without any indictments. In 1995 cryptographer Dan Bernstein also sued the DOJ, arguing ITAR violated his First Amendment rights, and won the case. This was the landmark case that designated code as speech.

Despite the State Department’s two-year enforcement of ITAR against Defense Distributed, it failed to stop the proliferation of its 3-D printable gun files online. Instead, concerns over censorship spurred over 100,000 downloads of the Liberator blueprint in just two days! Despite removal from Defense Distributed’s websites, the file quickly spread to platforms like the Pirate Bay, making erasure nearly impossible. Attempts to ban speech in the digital age are not only absurd but futile because of its ability to manifest in infinite forms.The historical example of RSA’s classification as munition highlights the futility of restricting information as epitomized by printing forbidden information on t-shirts. Information must be free.

In an interview I had with Jessica Solce, the film maker and executive producer of Death Athletic: A Dissident Architecture a documentary that profiled Cody Wilson and the 3D-printed guns movement; when commenting on the significance of Cody’s battle with the government she said,

“Cody entangled the First and Second Amendment by pushing guns into the digital era. He utilized the burgeoning technology of 3D printing to reduce a gun to code. This WikiWeapon, the Liberator, was directly inspired by Wikileaks, and immediately threatened the Government’s axis of power and control. It was a masterful play that antagonized the military complex and forced the conversation of gun control into the age of the Internet.”

In other words, Wilson didn’t just challenge the military industrial complex’s monopolization (i.e., centralization) of firearms manufacturing. His stance extended to firmly resisting instances of government overreach that sought to regulate and control information pertaining to emerging technologies, which in and of itself is another form of centralized control. A condition which George Orwell described in his book 1984 as, “an endless present in which the party is always right”.

Interestingly Jessica also encountered firm resistance from centralized content distributors and media outlets when the film was released, as it definitely didn’t fit the “approved narrative” because on the surface it looks like a film about guns but it’s really a story about the power of free speech and free access to information in the internet age. Clearly the time is ripe for more decentralized content distribution and streaming services that are integrated with Bitcoin payments, think Angel Studios on a Bitcoin standard. This will empower content creators to not only profit from captivating content while simultaneously challenging centralized control over information, ensuring artistic creative control, prioritizing truth, and preservation of free speech., but I digress.

In July 2018, three years after Defense Distributed challenged the State Department’s actions in court, they accepted a settlement offer from the State Department, including a license to publish its files and a payment of nearly $40,000. When questioned about the settlement, State Department spokesperson Heather Nauert justified the decision, stating that the Department of Justice advised settling the case to avoid likely loss on First Amendment grounds in court. Information must be free.

This and many other ongoing legal battles faced by Cody Wilson and Defense Distributed underscore important aspects of individual rights and freedom of speech that must be defended. These battles serve as a reminder that:

1. The state seeks to control and capture new technologies by “any means necessary”
2. Lawfare and bureaucracy are the weapons of choice in achieving this aim
3. More decentralized technological tools and protocols that incorporate Bitcoin as the monetary layer need to be built to ensure the preservation of liberty and individual sovereignty.

Jessica echoed similar sentiments when stating one of the biggest takeaways that she hopes people will get from Cody’s story; “The takeaway is to build however you can – community, resources, decentralized systems, archive history and information. The battle for information, the era of the Internet and the battle for its control must be understood as a type of new frontier. Many are against second amendment rights so I’d ask them are they truly against the free and open dissemination of information as well? Do they like someone telling them what they are able and not able to understand and read?”

I couldn’t agree more.

Decoding Free Speech in the Digital Age

Just like PGP or Cody’s 3D-printable gun designs, Bitcoin at its core is fundamentally open source code, thus Bitcoin is speech. In the words of Beautyon,“There is no point in any Bitcoin transaction that Bitcoin ceases to be text. It is all text, all the time.” The ruling in the Bernstein v. The DOJ case set a precedent that recognized code as protected speech under the First Amendment, and therefore this protection also directly applies to Bitcoin. Fundamentally, Bitcoin is a messaging system and functions much like email and text messaging, all of which transmit messages. Its primary aim is to definitively confirm an owner’s control over a cryptographic key, represented as a block of text, enabling access to a corresponding entry in the global Bitcoin network ledger. The point here is that restriction of communication using programming languages is an example of a prior restraint of speech.

Attempts to ban Bitcoin are just as ludicrous as banning memorizing 12 words in your head or outlawing certain musical scores .Does this mean that the powers that be will not try to outlaw Bitcoin and increase their grip on the narrative through censorship? You bet they will! Just like they have declared war on free speech online by rebranding it as a war on “misinformation and disinformation”, propaganda is also being disseminated by the corporate media that paints Bitcoin mining in particular, as being harmful to the environment, a claim that has been repeatedly debunked along with the usual “Bitcoin is for money launderers and criminals”

Time fails me to discuss the latest proposed FinCen regulations and the EU’s Markets in Crypto Assets (MiCA) law which are all very subtle but sinister attempts to gradually cripple Bitcoin in the name of combating money laundering and enforcing know your customer policies.. In the same vein, digital ID’s and central bank digital currencies (CBDC’s), are more than just surveillance tech; but are also weapons for destroying free speech and independent thought. The ultimate road to serfdom. While legal challenges against all these forms of government overreach noted above will be launched and likely won, they take a long time to settle and are usually very costly. The best solution is to develop more open-source, decentralized technological tools that will thwart and defang any attempts by the state to censor speech.

As big tech companies pay lip service to freedom of speech while simultaneously implementing “freedom of speech not reach policies, online discourse increasingly mirrors the authoritarian control described by Ludwig von Mises when he said: “At every instant of his life the “comrade” is bound to obey implicitly the orders issued by the supreme authority. The State is both his guardian and his employer. The State determines his work, his diet, and his pleasures. The State tells him what to think and what to believe in”. This is even more true today, than it was in 1944 when it was written.

Without the freedom of speech we lose a critical part of what it means to be free human beings. Today we may witness the battles between Defense Distributed and the State Department, Wikileaks and the DOJ, Bernstein and the DOJ, and so on. However, one thing remains clear: the players may change, and the time frames may differ, but the underlying struggle has always been centralization versus decentralization, a battle between those who seek to control speech and those who seek to liberate it. Satoshi Nakamoto, Julian Assange, Aaron Schwartz and many others are some of the martyrs of freedom that contributed immensely to the preservation of free speech in our society today. Bitcoin is the best shot that we have at safeguarding the future from being suffocated by the censorship industrial complex leviathan. 

This is a guest post by Kudzai Kutukwa. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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A PDF pamphlet of this article is available for download. 

Self custody is an essential requirement when using Bitcoin to fully benefit from all the properties that make Bitcoin valuable in the first place. To be able to truly transact without permission, benefiting from the censorship resistance of the network, you have to control your own keys. You can’t outsource that to someone else, you can’t trust the neutrality or honesty of a custodian, you must solely have direct control of corresponding private keys to your UTXOs. If you fail to do this, you will always be a second class user. Bitcoin as a system gives you almost total control over your own funds; control of custody, when it is spent and how it is spent, even the ability to completely destroy your coins through deleting your private keys.

When you outsource that direct control of the actual Bitcoin UTXOs on the network to a third party, you relinquish that control in its entirety. That’s not to say that there aren’t middle grounds to that, such as Lightning, Statechains, and other proposed second layer designs, but ignoring those for a moment, when you do not control your UTXOs directly, you do not have the ability to transact whenever and however you want. You do not have the ability to destroy and render your coins inaccessible if you want. You do not have something that is permissionless in your ownership and control.

So why do people choose not to withdraw their coins and leave them with a custodian? Some combination of apathy, lack of understanding, fear or doubt about their ability to correctly manage their own keys without losing money, or even concerns over being able to physically keep their keys safe. There are numerous reasons, and over time we will have different solutions to address the root cause. But one of the big causes for such a choice has yet to even really happen to any serious degree; the raw economics of blockspace utilization. If you only have a couple of dollars of bitcoin –or even less in the case of zapping satoshis around with things like custodial Lightning solutions– you cannot practically take control of those coins or spend them on chain cost effectively. Even when fees get that high however, it’s still cost effective for a user in such a situation to handle their Bitcoin until they have enough to be able to afford to withdraw to self-custody at a reasonable cost.

That is not going to be the case forever. No matter what happens, if Bitcoin actually succeeds and becomes widely adopted for real use among normal people, that cost of blockspace is going to trend up; a tide that continues rising in sync with the growth of users forever. It will even rise without user growth whenever economic activity and money velocity picks up among the existing userbase. It is an inevitable reality, it cannot be stopped by anything short of the stagnation or complete failure of Bitcoin itself.

So what is the solution here? That is pretty much the root of the tug of war between the old big block versus small block divide that has been going on since the beginning of Bitcoin. Taking custody of your own bitcoin by having them sent to key pairs you control is a foundational aspect to Bitcoin, but so is being able to actually validate that a Bitcoin UTXO controlled by a key you possess was really created on-chain. The relationship between the costs of these two things is, and will forever be, an eternal tug of war between the costs of one versus the other. If you make the verification cost of blockspace cheaper and increase its availability, more people will utilize it. If you make the use of it more efficient, more people will utilize it.

You can tweak those variables all day long, back and forth, you can make computational verification cheaper, you can make blockspace use more efficient, but either one will just enable more people to use it and inevitably (unless we are all wrong about Bitcoin) lead to an increase in demand for blockspace. And that is just looking at things in a basic vacuum of economics and how demand and availability regulate each other. That isn’t even considering the actual engineering trade-offs of the specific ways to accomplish either thing, and the downside risks each optimization creates.

And there are a lot of trade offs involved in all the specific ways that either of those goals can be accomplished. A lot. Even the Lightning protocol, with all the engineering brilliance behind it, giving an exponential increase in transactional throughput, has massive trade offs and limitations. It is the most scalable while simultaneously being the most trustless second layer protocol proposed so far in terms of throughput versus trustlessness. But even it has downsides and fundamental differences.

Lightning’s security model is reactive, meaning that the only way to ensure that you don’t lose money is to pay attention to the blockchain and react quick enough if someone tries to steal funds from you by submitting an old channel state to chain. While this is a perfectly workable solution to that problem, it is a great departure from the security model of just unilaterally holding a UTXO. All you have to do in that situation is verify once that a coin sent to you on chain was actually confirmed and then you are done. You do not have to continuously pay attention to anything after that in order to keep your money secure.

This fundamental difference between using bitcoin through Lightning rather than directly on chain will have a lot of consequences for users with less money or cost tolerance for blockspace. The higher the average fee rate trends up, the more people will be pushed into locking their coins on Lightning to be able to actually spend them more cost effectively. It doesn’t even begin to end there with them being forced into a reactive security model though. Lightning routes payments through Hash Time Lock Contracts to guarantee that the money is fully sent or fully refunded across an entire payment route. This is actually never done for small value payments that are not cost effective to enforce on the blockchain if necessary. Those 1-2 satoshi payments getting zapped around for fun are sent in an entirely trusted fashion without using HTLCs and just hoping no one along the path screws up or refuses to cooperate. As fees rise on the base layer, this will have to be done for larger and larger payments. It makes zero economic sense to spend $5 in fees to enforce a payment worth only $1. Imagine $10 fees, $20 fees, etc. As the fee market matures and the base level of fees rise, even the nature of payments across the Lightning Network will fundamentally change, moving from a trustless system enforceable on-chain to one ultimately depending on honest behavior.

The same dynamics will bleed into whether or not a user can even open and maintain a Lightning channel in the first place (or whether someone else will want to allocate liquidity to that channel so the user has receiving capacity). If it’s going to cost $10 to transact on-chain, then you are immediately on the hook for 20$ –assuming fee rates don’t get even worse– for opening and inevitably closing that channel. If you have to close non-cooperatively, even with no HTLCs in flight, it is $30 because that closure takes two transactions. How much money are people going to need to put in a channel to consider fees that high worth it? Things will start getting very exclusionary very fast when fees truly start growing for good when blockspace demand saturates.

So what does this mean? Lightning isn’t enough. It gives a lot more headroom in scaling self-custody, but it does not completely solve the problem and will itself wind up subjected to the exact same economic scaling issues that are present on the base layer of the blockchain. Not to mention introducing new security assumptions in the process along the way. It’s like building up a barrier of sandbags around your house in a flood; it will keep your house safe as long as the water level doesn’t rise above it. But if we are right about Bitcoin and its adoption continues unabated, the water level will keep rising well above the top of that barrier. Lightning by itself is not enough to raise the barrier much higher.

What concrete and deployed alternative can raise it higher? Statechains are a concrete example. They can accomplish a massive increase in the efficiency of blockspace use, but surprise surprise –it shouldn’t be a surprise–, they introduce even more trade-offs than Lightning. When you deal with a Lightning channel, you open it to a specific counterparty and that is the only person you can interact with. In order to change the person you are interacting with to access routes to other people, you actually have to close that channel out on-chain and open a new one with someone else. Statechains completely change the dynamic there.

With a statechain, you can transfer coins to any new person you have never interacted with before completely off-chain. But you can only transfer the entire UTXO and a third arbitrating party is involved. Downside number one; once you lock a coin into a statechain, the whole thing can be transferred off-chain, but only all at once. Secondly, the entire way it works is by essentially trusting a neutral third party to exclusively cooperate with the current owner. The actual way its enforced on-chain can be done a few different ways, but the long and short is that the original owner creates a statechain by locking coins up Lightning-style with a service operator, and gets a pre-signed withdrawal transaction that is timelocked just like in Lightning to unilaterally withdraw. The trick is when setting up the “multisig”, you use a scheme like Schnorr where there is only a single key that each party has a part of. There are cryptographic protocols that can be used to regenerate shared keys in a way that successive users and the service operator wind up with different key shares, equaling the same public key. When you transfer a statechain, the sender, receiver, and operator engage in an off-chain protocol and the operator deletes their old share for the prior owner so they are not even capable of signing something in cooperation with that user.

Lightning is essentially a unilateral agreement between two users in which either can enforce on-chain at any time, as long as they pay attention to the blockchain. But you cannot change the channel participants in that agreement without going on-chain and paying the necessary fees. Because of how the penalty security mechanism works (take all the money from someone who tried to cheat with an old state), you cannot create those agreements between more than two people either. It is (practically, not literally, because of the computational cost) impossible to figure out a way to assign blame and penalize only the correct party in agreements between more than two people.

Statechains are that same type of agreement, except open ended in whom can be involved, as long as anyone wanting to be is willing to trust the service operator, which it should be noted can be federated among a group, and can be enforced unilaterally as long as you watch the blockchain and the service operator(s) behave honestly.

What happened here in this progression, from Lightning to Statechain, is you have made it possible for more than two people to interact safely in an off-chain manner if they are willing to trust a neutral party to enforce an honest outcome. So a great deal of scalability was gained for the cost of introducing trust on top of the already existing requirement to stay online and watch the blockchain.

Why? Because that’s really the only way to accomplish that greater scalability without adding new functionality to the blockchain. Add trust into the picture. As things stand now we can probably achieve quite a lot of scalability to the blockchain without resorting to full on custody trusting a single entity not to steal your money, but each step we take towards greater scalability will introduce more trust.

There is no way around that; either new functionality needs to be added to the blockchain or we as a collective of different groups of users need to accept that is how this is going to go. More trust creeping in at the edges for lower value use cases and lower net worth users.

There has been quite a lot of concern and discussion around this entire dynamic this year. The higher the average fee trends for space in a block, the more people will be priced out of using Bitcoin, even when you take into account things like the Lightning Network. Inscriptions and Ordinals caused a massive divide in the more active minority of people in this space, and all of it at the root was centered around the dynamic of one use case potentially raising the fees for blockspace to the point that another use case was priced out of being viable on Bitcoin.

It has been a very illuminating year so far watching people call Taproot a mistake, rally around publicly decrying the incompetence of developers in not realizing what they did, and dig in further into a dogmatic attitude. “Never upgrade or change Bitcoin again because it is perfect and infallible.” These same people in a vast overlap tend to also be the same people championing Bitcoin as a tool for self-sovereignty. They seem to always be the same people preaching self custody as a magic remedy for everything, and when scaling problems get brought up? Oh, Lightning is THE solution to that. Then they point at Ordinals and inscriptions again and start screaming about how one use case will price out another one, and so that bad one has to be stopped.

It is missing the forest for the trees. Any use of bitcoin that is profitable and cost effective to deal with demand is going to happen. There is literally no way to stop that, and Bitcoiners convincing themselves they can are fooling themselves. All of the backlash against Ordinals and Inscriptions very quickly led to people intentionally doing even more costly things like STAMPS, which instead of using witness data that doesn’t have to be stored in the UTXO set, puts their data inside the actual UTXOs. Rather than acknowledging the reality that if people think it is profitable to pay for blockspace they will, many people are falling victim to a knee jerk reaction of trying to stop what they think is bad while completely ignoring the reality that there are other worse ways to accomplish the same thing anyway if it makes economic sense. An impulsive reaction to the rise of Ordinals and Inscriptions is dragging down the entire attention span of involved people in this space into a pit of wasted efforts to stop things causing fee pressure that they don’t agree with instead of considering how to adapt and scale things they do agree with to that fee pressure.

A good percentage of the people engaging like this are literally arguing with the wind. They’re trying to tell us to stop blowing because it is knocking things over instead of tying things down or weighting the foundation to weather it. If you successfully block or censor Inscriptions, people will just use STAMPS, or OP_RETURN, or techniques even more wasteful of network resources.

Ultimately no technical filter will be good enough to stop people from doing dumb or non-monetary things with the Bitcoin network. The only filter that will successfully stop anything from being done on Bitcoin is economics. And that filter is equally created and equally affects every use of Bitcoin. It’s time to stop trying to fight externalities driven by economic demand and try to counter them through improving efficiency.

If you think Bitcoin’s primary value and purpose is to transfer value, then rather than obsess over somehow stopping all other uses of Bitcoin, you should be focused on considering the trade offs of different mechanisms that can improve its efficiency in transferring value. You are either going to have to choose between progressively adding more trust to things in order to accomplish that, or adding new features to the Bitcoin protocol itself to build more efficient things without depending on trust.

Buraq, the infamous slayer of Lightning, has recently proposed TBDxxx, a new second layer protocol. It is essentially a big multiparty statechain/ecash system that is non-custodial, does not require trusting the service operator like a statechain, and can pack many users into a single on-chain UTXO. This requires ANYPREVOUT(APO) or CHECKTEMPLATEVERIFY(CTV) to work, so it needs a consensus change. Channel factories are a way to take a single UTXO and stack Lightning channels on top of each other, so one UTXO can represent dozens of users who all have a regular Lightning channel at the top. This also requires ANYPREVOUT.

Both of these proposals can scale the use of Bitcoin to transfer value much further than Lightning can now, but ultimately both of them are subject to the same economic fee pressure that Lightning and on-chain use are. To join one of these multiparty channel pools, or exit one, or enforce something non-cooperatively on chain you still have to pay fees. For something like a channel factory this will involve one person who needs to close or enforce something actually unfurling and closing (fully or partially) the entire channel factory with everyone in it, creating costs and on-chain implications for everyone. Even despite accomplishing a huge increase in scalability without trust, it still falls victim to the effects of the blockspace market maturing.

In order to mitigate (not solve) that, we will likely need even more OP codes. Things like OP_EVICT or TAPLEAFUPDATEVERIFY. OP_EVICT lets a group collectively kick a non-cooperative member out of a multiparty channel without closing or affecting anyone else in it using a single transaction with one input and two outputs. This doesn’t solve the issue, but it makes it a lot more efficient by allowing one person to be evicted with a much smaller on-chain footprint. TLUV accomplishes the same thing except instead of everyone else kicking someone out, it allows a single user to withdraw all their funds without disrupting anyone else or needing anyone else to cooperate.

To address more of the issues, we need to make more changes to Bitcoin. There’s no way around that. Taproot “opened the door” to Inscriptions in the sense that it relaxed limits enough for people to go nuts with it, but they were already possible before Taproot. You can look at Taproot as having provided efficiency gains for both monetary use cases as well as non-monetary use cases. It made multisig the same size as a regular single sig address, which helps make using a higher security set up for keys or second layer protocols cheaper, but it also made it cheaper to inscribe arbitrary data.

Two sides of the same coin. And that is how it is. Same as it ever was. Making use of the blockchain more efficient is not always going to improve solely the use case you want, but it is absolutely necessary to scale Bitcoin in a way that is self-sovereign and self-custodial. It’s time to either accept that and start considering the reality of finding the optimal efficiency gains for value transfer with the least efficiency gains for detrimental or non-value transfer uses, or it’s time to accept that the only way to scale value transfer is to introduce trust.

A good number of people in this space have already made their choice one way or another, but there is a large contingent of people in the middle who refuse to accept either. This loud group in the middle needs to wake up and smell the coffee, and accept the reality of the situation. This is how blockchains work. Pick one; either brace yourself to accept the injection of trust into things, or accept the reality that changes need to happen. You can tell yourself all day long that you don’t have to choose, but your actions in attacking the notion of any change to Bitcoin at all while simultaneously championing self-custodial Bitcoin as a solution for the world are implicitly making the choice to accept more trust being introduced into the system, whether you want to acknowledge that or not. 

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A PDF pamphlet of this article is available for download. 

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An attacker who sparked community-wide panic by hijacking the Tornado Cash governance is now proposing to undo their hack — and while not everyone feels the hacker can be trusted, they apparently have little choice in the matter.

On May 21, the passage of a malicious proposal allowed the attacker to gain complete control over Tornado Cash’s governance. With total control over the governance of the decentralized crypto mixer, the attacker was in a position to inflict massive losses, considering they could withdraw all of the locked votes, drain all of the tokens in the governance contract and brick the router.

While the story unfolded, community member Tornadosaurus-Hex or Mr. Tornadosaurus Hex, took proactive steps to minimize the potential damages by publishing a subsequent proposal requesting all members to withdraw all funds locked in governance, as shown below.

However, Mr. Tornadosaurus Hex (Hex) was uncertain about the effectiveness of the new proposal considering the attacker’s grip over the mixer’s governance. A few hours into the hack, to everyone’s surprise, the attacker surprisingly reached out to the Tornado Cash community with a new proposal, hinting at their intent to give back the governance control.

As shown above, Hex communicated the attacker’s plan to the community, stating that:

“The attacker posted a new proposal to restore the state of Governance. I think that there is a good chance he’s going to execute it.”

Hex further pointed out that while the community has no other option other than complying with the attacker’s chosen method of giving back the governance control, his due diligence with regard to verifying storage layouts checks out.

While many community members showed optimism toward the attacker’s supposed change of heart, others speculate it was a move to pump the TORN token’s price before cashing out.

Related: Allbridge offers bounty to exploiter who stole $573K in flash loan attack

On the bright side, the crypto ecosystem has witnessed a sharp decline in the overall hacks in the first quarter of 2023.

However, history suggests that crypto users shouldn’t get complacent as 2022 witnessed a spike in crypto hacks soon after recording a slow phase.

Magazine: ‘Moral responsibility’: Can blockchain really improve trust in AI?