The Bitcoin experiment is NOT over
I appreciate Mike Hearn a great deal. In fact, there is a debt I feel like personally I owe him, which I can never repay.
When I found Bitcoin in March 2011, it was via Mike Hearn. I read a Slashdot post Slashdot about his project bitcoinj, and it, and him personally, inspired me to dig more into Bitcoin, and shortly thereafter invest in it. Mike, throughout this last five years, you’ve been an inspiration to me, and I thank you for all the work you’ve done for Bitcoin. The fact that you and Gavin supported XT was a major factor for me in deciding to “side with it”.
But, with all this due respect, I think you are wrong.
The experiment is not over. The problems we are seeing now are excellent problems to have. In fact, when I joined the Bitcoin community I never dreamed we could be at this point.
Bitcoin has grown very rapidly in the last few years. Mike used this important graph:
This graph shows increased usage of Bitcoin over time. Yes, increased usage leads to stress tests, bugs, delayed transactions. More importantly, the increased economic growth of Bitcoin leads to an immense power struggle and politics. It is … not really surprising, since there is a great deal at stake here.
I want to reply to a few of Mike’s point directly:
Why has Bitcoin failed? It has failed because the community has failed. 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.
Bitcoin started off as a one person project. Satoshi was emperor of Bitcoin, and dictated his vision and rules. He decided the inflation schedule, mined a lot of coins himself (estimated ~ 1,000,000 BTC), and generally was Bitcoin’s (benevolent?) dictator.
What we are seeing now is evolution. Bitcoin’s governance is evolving, and evolution is bloody painful. Wars are fought. Species are born, and die. The title of the article I just linked to reads “The Bitcoin Schism Shows the Genius of Open Source”. I can’t agree with this title more.
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.
It seems that Mike is mistaking his emotions for predictions. I know depression first hand, and I suspect that months and years of political wars have depleted Mike’s reserves, and made everything tained with a layer of pessimism for him. The truth is that the Tech stack of Bitcoin can and will be upgraded, it just won’t necessarily be as quickly as Mike wanted it, or in the direction he pushed for. Note how things are already changing, as the largest private miner and is ready to move forward and support 2MB increase with Bitcoin Classic.
A couple of more points that Mike makes:
Think about it. If you had never heard about Bitcoin before, would you care about a payments network that:
Couldn’t move your existing money
I just moved some bitcoins a few days ago, zero hickups, it worked within less than a minute. We don’t need Bitcoin to be perfect, just to work for most everybody most of the time, and not lose our money.
Had wildly unpredictable fees that were high and rising fast
My tx cost me $0.12. Yes, that can be considered high for some usages, e.g. micropayments. However, I moved $1700 in this transaction (split to multiple inputs). Show me another payment system on the globe that charges this little.
Bitcoin itself does not need to support micropayments in order to work, as was demonstrated by Payment Channels, first implemented in Mike’s bitcoinj a few years ago.
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)
Mike is referring to the contentious “replace by fee” proposal by Peter Todd. Peter has been working on this since 2013, and an implementation was recently merged into Bitcoin Core. One very important thing to notice about RBF, is that it is off-protocol. It is not a soft or hard fork, it is just software that miners can run or not run, at their discretion.
We are coming to a time of choice. While Core was the only major valid implementation for miners up until very recently, it is no longer the case. Other versions such as XT, Classic or Unlimited are now viable options, and it left to the economical majority of miners, users and businesses to choose which version of the protocol and software they use. The fact that RBF was merged into Core doesn’t kill Bitcoin anymore than big blocks in XT killing it.
Is suffering large backlogs and flaky payments
This is currently just an edge case in some stress tests, not in most (99%+?) of production usage.
… which is controlled by China
Chinese miners are not China. Chinese people represent 14% of the world. Some economic factors have made building and running mining rigs in China more profitable than the rest of the world, hence a lot of the mining power is concentrated there. How is that any worse that 75% of all VC investment into Bitcoin/Blockchain companies happening in the U.S or Canada? Is a North American-dominated technology any more “global” than a Chinese dominated one? In this light, I think it’s good that power isn’t all concentrated in the U.S. As much as I personally hate the Great Firewall of China, and abhor the policies of the Chinese government, I have serious doubts that “China controls Bitcoin” is a true statement.
… and in which the companies and people building it were in open civil war?
What’s nice about Bitcoin, as opposed to say the banking industry, is that wars escalate to be open, rather than fought behind closed doors. We air our dirty laundry out in the open. Yes, it’s rather smelly and unpleasent. But it’s ours, and it’s the only way to achieve progress in a massive, open source, decentralized and monumental project such as Bitcoin.
I haven’t sold my coins. In fact, the percentage of my net worth invested in Bitcoin is in the high double digits. I am not blinding optimistic that “Bitcoin will rule the world and reach $1,000,000 per coin”. However, I do feel that we are on track, and the jury are still very far away from announcing Bitcoin’s demise.
P.S — if you want to read some positive news about Bitcoin, head over to a new sub-reddit I just opened called /r/BitcoinPositive. I felt there was a usefulness in providing a place to gather good news about Bitcoin. It’s not meant to bury our heads in the sand — Bitcoin is far from perfect — but sometimes you just need that boost of optimism.