In what has been a major shock for both the Bitcoin and Blockchain communities, Bitcoin core developer Mike Hearn has announced he feels that “Bitcoin has failed”, and has given a number of reasons why he believes so in a fairly detailed blog post on Medium. Not only this, he also said that he will no longer participate in Bitcoin development and has sold all his coins.
Hearns writes what was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse: a system completely controlled by just a handful of people.
He added that the Chinese miners are not allowing the block chain to grow and the reasons include:
- Developers of “Bitcoin Core” have refused to implement necessary changes
- Miners are terrified of anything that might make the news as a split and cause investor panic
- The Chinese internet is so broken by their government’s firewall that moving data across the border barely works at all
Imagine an entire country connected to the rest of the world by cheap hotel wifi, and you’ve got the picture. Right now, the Chinese miners are able to — just about — maintain their connection to the global internet and claim the 25 BTC reward ($11,000) that each block they create gives them. But if the Bitcoin network got more popular, they fear taking part would get too difficult and they’d lose their income stream. This gives them a perverse financial incentive to actually try and stop Bitcoin becoming popular.
He further explained how some prominent people in the bitcoin space decided to “kill” the Bitcoin XT proposal, which included deleting posts with the words Bitcoin XT from discussion forums, expulsion of a “massive” number of users from these forums and most importantly, Coinbase — the largest and best known Bitcoin startup in the USA — was temporarily erased from the official Bitcoin website for picking the “wrong” side.
He also said that within a few days of launching Bitcoin XT around 15 per cent of all network nodes were running it, and at least one mining pool had started offering BIP101 voting to miners. That’s when the denial of service attacks started. The attacks were so large that they disconnected entire regions from the internet.
The fissure in the Bitcoin core development community has led to death threats against developers and hacking attacks that have taken down Internet providers… as well as a flame war, Reddit censorship, and a split in the community that left Hearn and his campe on the losing, censored side.
And rightfully notes why would people invest in a currency:
- (Where) you couldn’t move your existing money
- (Which has had) wildly unpredictable fees that were high and rising fast
- (Which has) allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button (if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)
- (Which) is suffering large backlogs and flaky payments
- Which is controlled by China
- And in which the companies and people building it were in open civil war?
“The issue is that it’s now officially impossible to depend upon the bitcoin network anymore to know when or if your payment will be transacted, because the congestion is so bad that even minor spikes in volume create dramatic changes in network conditions.”
“Why has the capacity limit not been raised? Because the block chain is controlled by Chinese miners, just two of whom control more than 50% of the hash power. At a recent conference over 95% of hashing power was controlled by a handful of guys sitting on a single stage. The miners are not allowing the block chain to grow.”
“In the span of only about eight months, Bitcoin has gone from being a transparent and open community to one that is dominated by rampant censorship and attacks on bitcoiners by other bitcoiners. This transformation is by far the most appalling thing I have ever seen, and the result is that I no longer feel comfortable being associated with the Bitcoin community.”
“…In August 2015 it became clear that due to severe mismanagement, the “Bitcoin Core” project that maintains the program that runs the peer-to-peer network wasn’t going to release a version that raised the block size limit. The reasons for this are complicated and discussed below. But obviously, the community needed the ability to keep adding new users. So some long-term developers (including me) got together and developed the necessary code to raise the limit. That code was called BIP 101 and we released it in a modified version of the software that we branded Bitcoin XT. By running XT, miners could cast a vote for changing the limit. Once 75% of blocks were voting for the change the rules would be adjusted and bigger blocks would be allowed.”
Jeff Garzick noted that the block size debate ultimately boils down to competing economic and system survival theories. One theory has a free market range exists for block size, in absence of a hard limit. Another theory is that a hard limit is required to forcibly constrain the free market. Stalling on core block size changes the former to the latter — uncharted territory for bitcoin.
The NYT’s also covered the brouhaha today. Nathaniel Popper has interviewed Hearn extensively and provides a brilliant backstory.
The current dispute, though, is a reminder that the Bitcoin software — like all computer code — is an evolving product of the human mind, and its deployment is vulnerable to human frailties and divergent ideals.
There may yet be a middle ground on the question that began the fight, but for the moment the sides are deadlocked, and that has left the Bitcoin software — and the virtual currency itself — in a state of limbo. Mr. Hearn is convinced that the stalemate will soon make it hard to complete even simple transactions and will eventually drive away users and lead to a price collapse. Mr. Hearn’s concerns about this impasse have been echoed, often in less strident tones, by a growing number of other developers, as well as by start-ups that buy, sell and hold Bitcoins.
Gavin Andresen, a close collaborator of Mr. Hearn’s and one of the longest-standing contributors to the Bitcoin software, said the dispute was likely to cause disruptions in the short term, but he disagrees with the notion that it will damage Bitcoin’s long-term prospects. Other Bitcoin leaders have expressed a similar sentiment, and investors have been inclined to believe them: The price of a Bitcoin has actually risen in recent months, to about $430 this week.
For a tear down and opposite perspective of Mike Stearn read Bitledger.