A day after former Bitcoin lead maintainer Gavin Andresen stated that he would continue supporting alternatives to Bitcoin Core, former Bitcoin Core developer and leader of the Bitcoin XT project, Mike Hearn, has called the Bitcoin “experiment” a failure and revealed that he has sold all his bitcoins.
Hearn notes that the major factor in Bitcoin’s failure is the failure of the Bitcoin community. That point of failure, for Hearn, is the consequence of a system controlled by a small group of developers at Bitcoin Core, a network that is not updated, and the failure of human mechanisms meant to update that network.
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. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.
Hearn asks whether people who have never heard of Bitcoin would adopt a payments system that, like Bitcoin, has the following flaws.
- Couldn’t move your existing money
- Had wildly unpredictable fees that were high and rising fast
- 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)
- 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?
While Hearn’s point that China controls Bitcoin is hyperbole, approximately 70 percent of the Bitcoin mining pools are geographically in China. There are valid concerns that the bitcoin network could have problems if the Beijing authorities attempt to shutdown those pools, but no entity controls all those mining pools.
The “civil war”, which is a reality and very bitter dispute, is between the Blockstream-led faction of developers, who resist a size increase of the blocks in the Bitcoin blockchain, and many small and large businesses in the Bitcoin ecosystem, who support some type of increase in the block size.
As Nathaniel Popper writes in the New York Times, Blockstream’s Chief Technology Officer, Greg Maxwell, leads the faction that saw Hearn and Andresen efforts with Bitcoin XT to hard fork Bitcoin to a bigger block size as a threat and whose actions are driven by a conflict of interest:
The debate was complicated by the financial interests of the people involved. Mr. Maxwell and several of his supporters were then working for a Bitcoin start-up called Blockstream, with $21 million in funding from venture capitalists. Mr. Maxwell’s start-up was trying to make it possible to break off some transactions from the Bitcoin network, making the number of transactions the network could handle less important.
According to Hearn, this “civil war” has led to a stalemate over blocks, inaction over what to do, and eventually a blockchain filled up with data. Hearn laments:
The block chain is full. You may wonder how it is possible for what is essentially a series of files to be “full”. The answer is that an entirely artificial capacity cap of one megabyte per block, put in place as a temporary kludge a long time ago, has not been removed and as a result the network’s capacity is now almost completely exhausted.
It was evident back in November that Hearn was giving up on Bitcoin XT and quite possibly Bitcoin in general, after accepting a leading position with R3, a New York company developing a global blockchain technology standard with 42 leading banks. Although Andresen and Hearn’s Bitcoin XT looked like it had significant industry support when it launched last summer, a backlash led by the same group of Bitcoin core developers who oppose significant reform succeeded in felling the project only after a few months.
While Hearn’s frustration with the Blockstream faction of the Bitcoin community is understandable, one wonders why he found it necessary to take such a parting shot at Bitcoin as a whole.