Bitcoin Schism Remains Chaotic
Ex-Googler and bitcoin software co-creator Mike Hearn stated last month that the bitcoin was “a failed experiment” and promptly divorced himself from the bitcoin community and sold all of his bitcoin.
Among his complaints regarding the anarchic, unregulated internet currency was that it was “completely controlled by just a handful of people” and “on the brink of technical collapse.”
Hearn has started out trying to avoid this technical collapse, but then ran into issues with that handful of people at the heart of the bitcoin community, who were also core bitcoin developers and who had their own visions for the future of bitcoin. Thus began the dispute Hearn refers to as the bitcoin “open civil war.”
“When parts of the community are viciously turning on the people that have introduced millions of users to the currency, you know things have gotten really crazy,” Hearn stated in response to the company Coinbase being banned from the bitcoin website and removed from discussion groups.
The New York Times reported that some bitcoin developers had received anonymous death threats, and hackers allegedly carried out denial-of-service attacks against Coinbase and other bitcoin companies with controversial bitcoin opinions.
However, some of the very people that Hearn opposes state that there is no opposition; the civil war is in his head, and bitcoin is not splitting up.
CEO of Coinbase Brian Armstrong believes that the debate over software is a normal part of the democratic process integral to the development of the bitcoin system:
“Bitcoin is not having a crisis. It’s having an election,” he claimed “The [prevailing] mental model for what’s going on is a split, a divide in the community. But the right model is an election.”
Of course, Armstrong runs one of the world’s largest bitcoin exchanges. He has a lot to lose from the belief that bitcoins have failed, especially since the only thing that attributes value to a currency is human belief in the first place; especially when there’s no government to regulate and enforce its use.
So what exactly is this ideological issue? It all comes down to the size of something called “blocks” which identify transactions on the network. Armstrong and his camp believe that the community must increase block size to accommodate the increasingly large number of transactions on the network.
“Assuming the transaction volume keeps going up, transactions will get increasingly unreliable at random times. That’s just not a good situation,” explained Gavin Andresen, a software developer of the big block camp. As Bitcoin scales up, these people just believe that their software’s infrastructure will need to as well.
That means changing the software responsible for the miners, or computers specialized n the art of running bitcoin software and harvesting bitcoin. However, those of the Hearn camp believe that this could make it so that bitcoin’s original mission (to keep large businesses and government agencies from regulating money in such a way that they always have a disproportionate amount of it) fails.
It may be relevant here to say that bitcoin’s successful creation owes itself in large part to its response as an alternative to the fraudulent banking practices that caused the financial crisis in 2008.