Imagine if your bank told you that they’d cloned all the accounts in their system, and you now had the same balance in two different accounts. They’d essentially copied your bank account as you would a file on a computer. You’d probably expect that you now had twice as much money, right? Not so fast. The laws that govern value go pretty deep and would compensate for this almost immediately, assuming your bank wasn’t able to reverse the process - as happened recently with the Ethereum “hard-fork” that turned one blockchain into two and replicated balances in accounts across both. No, it’s not quite like the cloned bank accounts in my example, but does provide a useful analogy for what happened next, especially when it comes to value.

Ethereum, for those who aren’t aware of it, is a platform for applications that make use of ‘smart contracts’ written into a blockchain. It’s been designed to make it far easier, and more efficient, for anyone to build applications on a blockchain than with Bitcoin, for example.

Ethereum is an ambitious undertaking that has banks, startups and a large community of followers excited about the future of blockchain applications, and last month its biggest success story so far went up in smoke.

The story in question is that of the DAO - or ‘decentralised autonomous organisation’. With a market cap of $140 million in less than a month, the DAO is the biggest crowdfunded undertaking in history. For more on how the DAO worked, you can see ‘The company of the future: a beginner’s guide to the DAO’ on Medium.

The DAO took ambition to new heights with organisations that form virtually around projects, and value that’s automatically and fairly distributed. Unfortunately, it also became a target for some of the world’s top hackers, one of whom managed to take advantage of a flaw in the smart contract that underpinned the DAO, and stole millions of dollars.

This fueled a crisis in the Ethereum community and sent the price of Ether, the base currency on the Ethereum blockchain, tumbling. Then came the ethical question of what to do next.

Technically, the theft could be reversed. The Ethereum blockchain could be forked, and the new version could make it so that the theft never happened.

Unlike bank accounts, blockchain transactions are immutable and the network is distributed in such a way that they can not be undone. This is why blockchains are better than any conventional banking system in existence - it’s also why many big banks are currently wasting their time trying to build their own blockchains. They’ll never have the distribution or the trust, and we don’t need them for central vetting of transactions anymore. Like taxi companies trying to copy Uber, banks are the middlemen rearranging furniture on the Titanic, all the while thinking they’re too big to fail.

Forking the blockchain meant writing a new version of it and then getting the people who run the network to adopt new code. In a blockchain network the power of decision making lies with miners; the people who operate nodes in the network and process transactions. All these nodes need to be running the same version of the blockchain to agree, cryptographically, that transactions have happened.

This is where things got interesting. A majority of the community agreed to run the new code, undoing the theft. A smaller group, however, refused as they believe that forking a blockchain undermines the very principles of its foundation.

According to the rogue group, the DAO hacker had taken advantage of a loophole in the DAO contract. They don’t regard this as theft and see it as the contract holders’s problem, not Ethereum’s. As this group correctly pointed out, Ethereum didn’t have anything wrong with it. The DAO did. Sucks for the DAO, but why should the entire network be changed to undo the transaction?

And so began one of the most interesting philosophical battles of the 21st century. Is a majority vote more important than the immutability of a transactional system?

One argument is that it’s early days for Ethereum. A fork is plausible now before there is widespread adoption, so let’s do it - but it won’t be happening again.

A counter position is that this sets a bad precedent and creates the impression that there is something wrong with Ethereum that needed to be fixed. Most people find it hard enough to understand what a blockchain is in the first place, never mind the differences between cryptocurrencies and their smart contract derivatives.

The majority got their way and the split happened, but the stubborn few who refused to fork continued running the alternative, and original, version of the Ethereum blockchain. One became two and people who had acquired Ether before the split now had accounts on both forks. If you had 10 Ether the day before the fork, you would have had 10 Ether plus 10 ‘Ethereum Classic’ after.

This meant the community splitting too, with some committed to continuing development of Ethereum Classic, while the official version went its separate way.

For investors, this was an interesting dilemma. Regardless of our philosophical stance on the matter, we now had some “free money”. Which brings us back to the question of value.

The price of Ethereum is hovering around $11 at a time of writing, while the price of Ether Classic is currently a touch below $2. In the run up to the fork, Ether had seen values of between $10 and $14, so one could argue that the combined value of Ether and Classic is what Ether alone would have been had the DAO never happened. Of course, this will not persist as the two blockchains go their separate ways, but it’s a fine demonstration of how quickly market fundamentals catch up with just about anything - especially in the cryptocurrency world.

The second Ethereum developers conference, sponsored by Microsoft, takes place in Shanghai in September 2016 and will see the community putting the fork behind it and getting back to the business of smart contracts and the many opportunities they represent. The fork showed that, beyond technology, Ethereum is powered by a thriving community that can pull together, for the most part, to make things work.