Leading Bitcoin developer disses the cryptocurrency, sells coins and joins bank consortium

Leading Bitcoin developer disses the cryptocurrency, sells coins and joins bank consortium

Mike Hearn says Bitcoin is a “failed system controlled by just a handful of people”

One of the most prominent Bitcoin developers, Mike Hearn, says he no longer wants to help develop the cryptocurrency, claiming the system has failed.

“I will no longer be taking part in Bitcoin development and have sold all my coins,” he wrote in a blog post on Medium.

“Why has Bitcoin failed? It has failed because the community has failed… [It’s] 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.”

Last November, Hearn joined R3, a global bank consortium that looks at blockchain technology. He became director and lead platform engineer and was one of the first Bitcoin developers to join the company and work directly with the big banks around the world.

Hearn left Google in 2014 to work on developing Bitcoin technology full time. He developed the first Bitcoin Android wallet as well as many other projects, and has spoken on the topic at several conferences around the world.

But now he believes there is no future in working on the cryptocurrency, as “fewer than 10 people” control the mining power of Bitcoin. ‘Miners’ do the job of confirming all recorded transactions made during about a 10-minute window on the blockchain or public ledger and put them into a secure hash. The successful miner to do this first is awarded a set number of bitcoins.

Hearn predicts the price of Bitcoin will continually drop. The current price is about US$385, which dropped from about $430 after Hearn’s announcement he is leaving Bitcoin and has sold his coins.

Leading members of the community have disagreed with Hearn’s views. Gavin Andresen, chief scientist of Bitcoin Foundation and leader in the Bitcoin development community, tweeted that Hearn is “too pessimistic”.

Andreas Antonopoulos, another prominent Bitcoiner, tweeted that he disagrees with Hearn and more engineering can solve the governance challenges around the cryptocurrency.

Brian Armstrong, CEO of Bitcoin wallet and exchange company, Coinbase, tweeted that Hearn’s announcement is more about him trying to get the community to move off Bitcoin Core, “which we should have done a long time ago”.

The issues with Bitcoin Core, a software platform, according to Hearn, is that the system sometimes cannot keep up with the transaction load as nearly all blocks (about 10-minuture window groups of transactions) reach maximum size they each can take. This means Bitcoin will likely hit capacity issues in future.

“One is that the developers of the ‘Bitcoin Core’ software that they run have refused to implement the necessary changes.

“Another is that the miners refuse to switch to any competing product, as they perceive doing so as ‘disloyalty’ —and they’re terrified of doing anything that might make the news as a “split” and cause investor panic.

“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.

Hearn took part in developing code (for Bitcoin XT) to raise the limit of a block size, but claims certain media and discussion forum administrators censored information pertaining to this.

Technical criticisms of what Bitcoin Core is doing are being banned, with misleading nonsense being peddled in its place," he said.

“As Bitcoin became more popular and traffic started approaching the 1MB limit, the topic of raising the block size limit was occasionally brought up between the developers.

“But it quickly became an emotionally charged subject. Accusations were thrown around that raising the limit was too risky, that it was against decentralisation, and so on.”

However, there have been recent forks made to Bitcoin Core such as Bitcoin Classic and Bitcoin Unlimited that look at addressing capacity issues, Hearn said.

“So far they’ve hit the same problems as XT but it’s possible a fresh set of faces could find a way to make progress.”

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