Fifty shades of decentralization in Ethereum hard fork

The ruins of a hotel in Argentina. Once the most popular holiday destination was destroyed by unfortunate events and bad actions taken by community around it. Now this symbol of prospect is haunted by ghosts.

Blockchain doesn't exist in decentralized vacuum; the rules of the blockchain must come from somewhere. Ethereum blockchain is a byproduct of Ethereum community - made up from actors like individuals, miners, mining pools, developers and exchanges. The consensus algorithm is what the community agrees to resolve transactions and issues in short term.

The consensus algorithm or other blockchain rules are not holy in long term. They can be changed. In fact the community must evolve or it will surely go extinct. Your interaction with the community happens through actions like software downloads, trades, exchange sign ups and participating mining pools. When you interact with the community you may care about recent and upcoming events and plan your actions accordingly. If you don't care about the events then you are effectively giving a proxy vote to the party you are interacting with and thus trust their judgement.

Now the community faces the dilemma if it should clean up the mess caused by some individuals in the community. There are long term credibility (immutability), criminal and financial consequences to consider. If you are part of this community you may or may not agree with the outcome and try to alter to outcome to be favorable for your values. If you don't agree with the outcome you can always stick with the ruleset of likeminded people. Thus, the fork is not technical but social. Ultimately you can leave the community, burn the bridges and create another community with your fellows with your own rules.

There might be two Ethereum blockchains for a while. But if this economically viable is another question. The disagreeing party may need to fold and submit to the vote of majority of the community, as in long term it makes more economical and political sense for them. This is how most democracies in the world operate.

Having turmoil in the first place is a problem in financial world. Economic growth prefers stable political conditions and guaranteed future events. The damage already happened when the community actors acted badly - any technical rollback doesn't take back these actions. The act of resolving the issue will cause more turmoil and unfortunately the resolution has hard deadline with automatically set outcome. If the turmoil takes large enough proportions it might render Ethereum ecosystem inoperable for long time. So long that Ethereum community has to migrate to something that works. Only this would be the end of story for Ethereum when there is no community left to sustain what they think Ethereum presents for them.