“Silicon Valley” is a great show that’s responsible for introducing many new technologies to more casual and less technical audiences.
And when they decided to explore the world of cryptocurrencies by introducing a technical framework for the Pied Piper ICO, the expectations rose significantly. However, the attempt fell flat for multiple reasons: first and foremost – it was never revealed what kind of technology the Pied Piper Coin uses (does it have a proprietary blockchain, is it an ERC-20 token?) or how it’s meant to support the team’s decentralized internet project.
The Pied Piper ICO was presented as a financial alternative to Laurie Bream’s ruthless tactics as a tech world investor, but it lacked all the organizational details and we didn’t get any explanations regarding how a cryptocurrency or token can help a decentralized internet project reach its technical goals. Nevertheless, the season finale has revealed the true intention of the writers: they wanted to show the fragility of new blockchain projects and how big corporate interests can take over. The attempt was pretty weak, and the next section will deconstruct it.
The technical aspects of overtaking a blockchain
Attention: there are plenty of spoilers ahead!
After Laurie’s company partners with the Chinese manufacturer in order to create Jian Yang’s version of the decentralized internet, their efforts get channeled towards overtaking their direct competition, Pied Piper. That’s why the Asian phone-producing factory sets up a slow but gradual process of overtaking the network with hash power. Since Gavin Belson’s Hooli steps in and gains a greater network majority with only a few computers (the equivalent of ASICs), it’s assumed that Pied Piper uses some kind of Proof of Work in order to secure their network via processing cycles.
However, the case gets even more confusing as soon as the video game company of Pied Piper brings 80,000 users into the network in only a few minutes (which is nearly impossible to accomplish, but we’ll just overlook this detail) in order for the original programmers to regain majority. Now this is a big issue, as the idea of having most processing power gets replaced by a principle of simple node majority.
When Richard Hendricks allows Hooli to get access to the network through its powerful Gavin Belson signature boxes, he inputs the access data as if he integrates the computers into a network of miners. But in the case of the Chinese company and the 80,000 users that the video game start-up brings to the Pied Piper network – they are mere participants who seem to operate as nodes.
So how does Pied Piper coin really work? It appears that it’s a weird mix of Proof of Work and Proof of Stake. However, how can they release a public network that’s meant to support a new internet and expect it to scale it so that it reaches mass adoption – if they have to worry about users running nodes to overtake the entire system? None of it really makes sense, and maybe it was just written to dramatize the entire situation.
51% attacks can’t delete users or shut down the entire network
This is another part that Silicon Valley gets completely wrong: if a third party gains majority and overruns the network, then the most it can do is reverse transactions, hard fork the coin, or change certain rules of the protocol. Blockchains are designed to store information permanently and in an immutable way, so that any operation gets stored forever and without the ability of being edited in the future. You can’t reverse blocks that have already been created unless you actually fork the network to a previous point and start an alternative blockchain – which is what happened with Ethereum and Ethereum Classic, for instance.
If the Chinese phone company wanted to take over the majoritarian consensus of Pied Piper’s network, they could either reverse transactions and therefore destroy the value of the coin, or create a hard fork for a blockchain they could run themselves. The first sounds like the most probable scenario, while the latter appears to be pointless and a waste of time and energy (especially if you’re planning to launch an alternative).
When Bertram Gilfoyle writes a security patch to disable Chinese and Hooli miners/nodes, he does the equivalent of Monero’s cyclical hard forks. He wants to maintain central authority over the blockchain and excludes other participants from the protocol. Those who get cast out are actually left with an older version of the protocol and may keep on running it (you can’t actually disable computers which participate to the blockchain unless you directly hack them).
In conclusion, none of the worrying claims that are made during the episode are legitimate, and the depiction might as well pass as FUD.
Hollywood likes to create dramatic scenes and tension, but the writers and producers of Silicon Valley don’t seem to understand how blockchains work. This depiction might draw people away from cryptocurrencies by showing a potential vulnerability for every coin in existence, and it’s a pity that they didn’t hire someone who understands the phenomena a lot better. They could make the season finale funny even if they remained faithful to the technological details, but maybe that “they can reverse transactions” doesn’t sound as alarming as “they can shut down the network and delete users”.
The episode is enjoyable, thrilling from the perspective of character development, but disappointing as soon as you realize that the writers’ understanding of blockchains is blatantly limited. However, the ending is the most positive we’ve ever had, and it seems like the show is about to enter a whole new phase where cryptocurrencies are part of the status-quo. The decentralized internet project has become viable by virtue of an ICO and a proprietary blockchain, so season 6 should be full-crypto. Hopefully, by that time they will hire reputable people from the crypto space to help with the script, as there is plenty of qualitative comedy even in real technically-feasible situations.