Bitcoin is alive and well, many argue

Mike Hearn’s recent declaration that Bitcoin is a failed experiment has been met with staunch opposition from many of the currency’s key developers. Hearn has been accused of hyperbolizing the situation because he personally disagreed with decisions made by other developers; many have also said that he is guilty of self-promotion for his new company R3CEV.

Throughout its years of operation, Bitcoin has alternately been considered the future of money and a wasted project. Hearn is the current voice behind the dissolution of Bitcoin, causing those like BitTorrent Founder Bram Cohen to tweet about Hearn’s farewell essay, “That was one whiny ragequit. He’s epically wrong on almost all technical points.” Greg Slepak published a point-by-point refutation of Hearn’s blog post; Sam Patterson similarly refuted a Washington Post article written from a pro-Hearn perspective.

The main controversy about Bitcoin’s demise stems from an original debate about block size. Blocks are virtual files that transaction data is permanently stored in, assembled in a linear sequence to form a “block chain.” The most recent block contains a very difficult mathematical puzzle that requires a correct answer in order to add a new block to the chain, thereby “unlocking” new Bitcoins. Currently, there’s a size limitation to the blocks, which limits the currency’s overall capacity.

Hearn and two others want to split the block chain in two, a move colloquially called the “hard fork,” whereas the other key developers have a different plan, alternatively titled “the roadmap.” The root of the issue, however, is more than technical jargon. Bitcoin is divided because it’s unclear as to who should govern the system. Hearn said that the virtual currency was “meant to be a new, decentralized form of money.” Yet without any centralization, Bitcoin remains a feud between opinionated elite software developers. Which out any form of governance, Bitcoin loses its opportunities at progress.

Then there are those who believe that without Hearn, a feud no longer exists. Mike Komaransky, an employee of the Bitcoin firm Cumberland Mining, tweeted, “Bitcoin Hearn Paradox- With him, consensus is hard to reach, [bitcoin] suffers. [Without] him, consensus is easy to reach, bitcoin prospers. he can’t win.”

Article via TechCrunch, 23 January 2016

Photo: Bitcoin by CoinDesk  [Creative Commons Attribution-NonCommercial-NoDerivs]


Bitcoin declared a failure

Two years ago, British software developer Mike Hearn quit his job at Google so that he could dedicate himself to developing the new online currency, Bitcoin. The currency’s value and prevalence has fluctuated considerably these past two years, but it suffered perhaps its largest blow yet on Jan. 14: Hearn announced Bitcoin to be a failure and admitted that he had sold his entire collection of Bitcoins. The value of the currency fell 10 percent within a day.

In the blog post he wrote about the failure of the system, Hearn wrote, “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.”

Yet the need for an effective virtual currency is still great. Venezuelan citizens grapple with hyperinflation that devalues the paper money they own and makes buying simple products at the supermarket nearly impossible. Migrant workers sending money to families in Mexico, India and Africa lose 5 to 12 percent of their earned salary to money-transfer companies. Even in the United States, citizens lose 1 to 2.5 percent in each transaction with a credit-card company.

Bitcoin failed largely because it was unregulated. Criminals and drug users exploited the anonymous nature of the currency; venture capitalists invested millions in Bitcoin start-ups that were forced to navigate the changing value of the currency. Above all, Bitcoin was dominated by an elite few, and therefore it lost its egalitarian potential to help people in countries suffering from hyperinflation or working far from home.

“It (Bitcoin) has failed because the community has failed. What was meant to be a new, decentralized 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,” said Hearn on his blog post.

Article via The Washington Post, 19 January 2016; The New York Times, 14 January 2016

Photo: Bitcoin by Tiger Pixel  [Creative Commons Attribution-NonCommercial-NoDerivs]