This is a response to Mike Hearn’s Medium post.
For background, I am the Managing Director of Boost VC, the block chain and virtual reality accelerator. I have been investing in the Bitcoin space for 3.5 years, my first investment was in Coinbase (arguably first investor), and as of last week our total number of investments has totaled 56 in the block chain (including Bitcoin) space.
I’m not looking at Bitcoin as something that cannot fail, I just don’t believe it will.
Mike Hearn, one of the core developers for the last 5 years, has decided not to be a Bitcoin developer anymore and lit the roof on fire on the way out. I’m enjoying the fact that everyone is talking about Bitcoin with such ferocity again, but I’m not enjoying that the topic is based around it’s demise. People have predicted Bitcoin’s end before.
I appreciate everything Mike has given to Bitcoin and actually this blog post was the best way I have seen to lay out all of the problems and to get people talking about it and putting pressure where it is needed, but to say that Bitcoin has failed is flat out wrong.
The Bitcoin experiment has succeeded beyond anyones expectations!
- Millions of people have wallets
- Hundreds of thousands transactions happen every day
- The value of the market is in the Billions, not including the value of the startups
- Bitcoin helps people all of the world store value and transact
- People are being educated better than ever on how currency works
- All Financial Institutions are trying to implement block chain in their companies
Mike suggests that Bitcoin has failed because of these problems:
- Miners won’t update (Great Firewall of China)
- Bitcoin community is shady and conflicted
- The BitcoinXT update failed because Bitcoin community can’t agree on anything
- Bureaucracy of the Core Devs is bad
Most of Mike’s problems stem from there being excess demand of the network, not too little, which in the world of startups and technology, I would summarize as, “Champagne problems.” The network has too many people who want to transact on it, and it cannot keep up on the demand so it doesn’t clear 1oo% of transactions perfectly. This is what happens with new technology, and this is what drives innovation.
These are very important problems to be solved, in fact these are THE problems that threaten the network, but these are solvable problems. The problems detailed in this are solved by social means not technical means. These problems are SOCIAL problems not TECHNICAL problems. These issues all have to do with aligning incentives and social agreement. These pieces are the things that machines aren’t capable of doing, which is why AI robots have not taken over… yet.
In my opinion there is one fundamental problem:
Bitcoin core needs to be unanimous and aligned in belief and focus as a team.
This is probably the most important thing that can happen this year. There are a lot of strong feelings and arguments going on in the Bitcoin industry, and there has been less action. Mike Hearn experimented with BitcoinXT as a potential fork of Bitcoin, but the community rejected it, (I was in favor of it, if nothing else it was an attempt at progress). As Fred Wilson said in his post last week, I believe there will be a fork of Bitcoin core that the miners will accept this year.
Video streaming wasn’t possible for years on the internet, pictures weren’t even possible for years. TCP/IP didn’t just start out with insane bandwidth, we had to work up to that. We are in the beginning stages of a new protocol. Bitcoin and the block chain are going to go through many evolutions and 2016 is the start of a major shift.
Once the fundamental team problems have been solved, the community can start to rally and solve the other issues plaguing the technology. There will always be more problems, but as long as the people behind the network believe, the technology will be resilient. Bitcoin has been pronounced dead 89 times, I don’t think this will be the last time people believe it is the end.
The next year of Bitcoin needs to be about progress, decisions and alignment amongst the community.