Is Bitcoin Really Dead This Time Mike Hearn Seems to Think So

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A Bitcoin Believer’s Crisis of Faith

Mike Hearn, a British computer programmer, holed up in his two-bedroom apartment in Zurich over several days and nights last week, writing a cri de coeur.

Two years ago, Mr. Hearn quit a cushy programming job at Google’s Swiss headquarters to devote himself full time to what was his great passion: the virtual currency Bitcoin. He was one of a handful of developers around the world dedicated to maintaining the basic software that governs both the creation of new Bitcoins and the network on which the financial transactions take place.

But a nasty fight has torn apart the small brotherhood of Bitcoin developers and raised questions about the survival of the virtual currency. Mr. Hearn, until recently one of the most prominent leaders of the Bitcoin project, became so disillusioned that in December he sold the few hundred Bitcoins he had left and quietly took a job at a new start-up.

The impassioned blog post he was working on last week was an announcement that he was leaving Bitcoin behind entirely: “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.”

The dispute — which grew out of a question about the number of transactions the Bitcoin network can handle — may sound like something of interest only to the most die-hard techies. But it has exposed fundamental differences about the basic aims of the Bitcoin project, and how online communities should be governed. The two camps have broadly painted each other as, on one side, populists who are focused on expanding Bitcoin’s commercial potential and, on the other side, elitists who are more concerned with protecting its status as a radical challenger to existing currencies.

The divide has led over the last six months to death threats against Bitcoin developers and hacking attacks that have taken down Internet providers. The sense of betrayal is strong on both sides. One of Mr. Hearn’s primary antagonists, a bearded California-based programmer named Gregory Maxwell, also appears to have pulled back from his work on Bitcoin after receiving anonymous death threats.

These internal struggles have surfaced at the same time that the Bitcoin technology is gaining credibility on Wall Street and in Silicon Valley. Throughout the various controversies that have plagued the virtual currency — including many instances of theft and fraud — the basic software has continued working as expected. That consistency has pushed the value of all outstanding Bitcoins above $6 billion and led many venture capitalists to imagine the technology as the future of finance, a cheaper and faster way to carry out financial transactions of all sorts.

Part of the basic appeal of Bitcoin has been its promise to provide a more reliable and trustworthy alternative to existing currencies and financial networks. Unlike the Federal Reserve and Wall Street, institutions that are managed by humans, Bitcoin was supposed to rest on the infallible logic of math and computer code. In this system, programmers like Mr. Hearn, who often volunteered their expertise and effort, were viewed as neutral technicians.

The current dispute, though, is a reminder that the Bitcoin software — like all computer code — is an evolving product of the human mind, and its deployment is vulnerable to human frailties and divergent ideals.

There may yet be a middle ground on the question that began the fight, but for the moment the sides are deadlocked, and that has left the Bitcoin software — and the virtual currency itself — in a state of limbo. Mr. Hearn is convinced that the stalemate will soon make it hard to complete even simple transactions and will eventually drive away users and lead to a price collapse. Mr. Hearn’s concerns about this impasse have been echoed, often in less strident tones, by a growing number of other developers, as well as by start-ups that buy, sell and hold Bitcoins.

Gavin Andresen, a close collaborator of Mr. Hearn’s and one of the longest-standing contributors to the Bitcoin software, said the dispute was likely to cause disruptions in the short term, but he disagrees with the notion that it will damage Bitcoin’s long-term prospects. Other Bitcoin leaders have expressed a similar sentiment, and investors have been inclined to believe them: The price of a Bitcoin has actually risen in recent months, to about $430 this week.

Some of Mr. Hearn’s allies in the battle are hoping the deadlock can be broken if the largest Bitcoin companies get behind something like Bitcoin Classic, a new version of the basic Bitcoin software that was announced this week, and that aims to expand the network’s capacity while also introducing new standards of governance.

But Mr. Hearn is convinced it is already too late. During nighttime walks in the woods near his apartment in Zurich, he has been trying to figure out where Bitcoin went wrong and what it means for the idealistic beliefs that led him to the project in the first place.

“It never occurred to me that the thing could just fall apart because of people getting crazy and having fundamental political disagreements over the goals of the project,” Mr. Hearn said in a Skype interview from his apartment. “It’s really shaken my faith in humanity.”

An Early Advocate

Mr. Hearn, 31, grew up in Manchester, England, where he played music and went rock climbing in his free time. He was one of the first serious programmers to take an interest in Bitcoin, back in April 2009, just a few months after its mysterious founder, known as Satoshi Nakamoto, let it loose in the world.

At the time, Mr. Hearn was working on mapping software at Google, a job he’d had since graduating from Durham University, in England. He had no professional involvement with finance or currencies, but the financial crisis convinced him that national currencies were vulnerable to politics and bad decision-making. When a web search led him to the primitive website for Bitcoin, he immediately emailed Satoshi, as the founder had become known.

“So many questions,” Mr. Hearn wrote. “But it’s rare that I encounter truly revolutionary ideas.”

Like many of the programmers who took an early interest, Mr. Hearn admired the rule-bound nature of the system. Only 21 million Bitcoins would ever be created. And the distribution of new Bitcoins was clearly laid out, relying on mathematical algorithms that left no room for human meddling.

Satoshi had written the software containing these rules, but after it was released, anyone could see the code and make changes. The people downloading this open-source software essentially voted on which changes to accept based on which version of the software they chose to use. If Satoshi proposed changes that they didn’t like, they didn’t have to download and run it, and anyone could offer an alternative. Bitcoin, like many other open-source projects, was a sort of leaderless democracy — a new way of governing human behavior online. One computer, one vote, with anyone able to propose new laws.

It took a while for Bitcoin to catch on, but by late 2020, when Mr. Hearn started contributing to the code, the currency had begun developing a passionate following. The apparently leaderless structure and seamless functioning of the software won Bitcoin renown among libertarians and anarchists, and soon enough, among entrepreneurs and venture capitalists, drawn to the transparent, mathematical foundations of the project.

Mr. Hearn joined a small but growing group of volunteers who worked on the basic Bitcoin software from various corners of the globe — the most committed of whom became known as the core developers. They met in person only a handful of times, but they would chat constantly online and send emails discussing potential changes. The leader of this effort, after Satoshi bowed out in 2020 (without ever revealing a real identity), was Mr. Andresen, a genial father of two from central Massachusetts who kept everyone on the same page.

Mr. Hearn was always a bit different from the rest of the core developers. Whereas most of them were classic techies, with patchy facial hair and ill-fitting clothes, the clean-cut Mr. Hearn had a taste for fashionable jeans and skateboard shoes — as well as an easy sociability. Within Google, Mr. Hearn became an informal spokesman for Bitcoin, answering queries from the Google co-founder Sergey Brin and leading an in-house email list discussion group that had attracted 400 employees by the time Mr. Hearn left.

Mr. Hearn was also, along with Mr. Andresen, of a practical mind-set, most interested in improving the basic experience of holding and using Bitcoins. He was not given to making the big pronouncements common to the more ideological members of the community, about the currency displacing the dollar or euro. He was more focused on the immediate challenges that could trip it up.

When tension cropped up among the developers, Mr. Andresen kept the peace by brokering compromises.

Things Turn Sour

The bonhomie began to fall apart last year because of what appeared to be a positive development: the continuing growth in the number of Bitcoin users and transactions.

The problem was that, early on, Satoshi established a limit on the number of transactions that could be processed by the network every 10 minutes. The cap was meant to ensure that the computers supporting the network, and processing the transactions, would not be overwhelmed by an enormous quantity of data. But Satoshi had suggested that the limit should be temporary, and as the number of transactions coursing through the network inched closer to the cap, delays started to occur and transactions were not going through.

When Mr. Hearn began pushing for changes to the core Bitcoin software to allow for larger blocks of transaction data, he faced immediate resistance. Gregory Maxwell, a largely self-taught programmer who had worked on Wikipedia and the Mozilla web browser, both open-source projects, said that larger blocks of transaction data would be harder for ordinary computers to process. The result, Mr. Maxwell warned, would be to hand control over the network to big companies that could afford powerful computers.

For Mr. Maxwell, slower transactions seemed to be a secondary issue to protecting Bitcoin from centralized sources of authority.

“It’s far from clear to me that the world will get a second shot at this in the next several decades if Bitcoin lapses into the same-old, same-old,” he wrote to other developers.

Mr. Hearn retorted that the technical issue wasn’t such a big deal; ordinary computers could mostly process the larger blocks of transaction data. More important, he argued, was that Bitcoin needed to succeed first as a cheaper, faster payment network, like PayPal or Visa. If Bitcoin wanted to ever compete with mainstream payment systems, which could process tens of thousands of transactions a second, it would have to do away with Bitcoin’s existing limit of fewer than seven transactions a second.

The debate was complicated by the financial interests of the people involved. Mr. Maxwell and several of his supporters were then working for a Bitcoin start-up called Blockstream, with $21 million in funding from venture capitalists. Mr. Maxwell’s start-up was trying to make it possible to break off some transactions from the Bitcoin network, making the number of transactions the network could handle less important.

After leaving Google, Mr. Hearn had begun taking a salary for his Bitcoin work from the venture capital firm Andreessen Horowitz, one of the most prominent supporters of Bitcoin start-ups in Silicon Valley.

As the debate grew increasingly fractious, friendships among the core developers fell apart.

In the past, the leader of the Bitcoin software project, Mr. Andresen (no relation to Marc Andreessen of Andreessen Horowitz), would have stepped in to mediate. Mr. Andresen says that as “lead maintainer” he always sought consensus, but on the few occasions when there was irresolvable disagreement, he made the final call, acting as a sort of “benevolent dictator.” But Mr. Andresen stepped back from his day-to-day role in 2020 and gave the job of lead maintainer to another volunteer on the project, Wladimir J. van der Laan, a Dutch programmer, who said he did not intend to follow Mr. Andresen’s lead.

“I cannot be the decider for network-level issues,” Mr. van der Laan said via email this week. “No one ‘owns’ Bitcoin. No one can decide over Bitcoin as if it’s some kind of company.”

Mr. Hearn and Mr. Andresen ultimately decided late in the summer that the only way forward was to give the vote to the people actually using the Bitcoin software. They put together their own version of the core software — largely the same as the current software, but with an allowance for more transactions — which they called Bitcoin XT. If a clear majority of the system’s users downloaded the software, it would become the new law of the land — what is known in open-source terminology as a fork.

Forks are part of the open-source process and had been used to make small, agreed-upon fixes to Bitcoin. But no one had tried the sort of divisive fork that Mr. Hearn and Mr. Andresen devised, largely because of the risk that it could result in two incompatible Bitcoin networks and create questions about the legitimacy and value of existing Bitcoins.

“So this is it. Here we are. The community is divided, and Bitcoin is forking,” Mr. Hearn wrote on Aug. 15, announcing the new software.

The release of Bitcoin XT was viewed by Mr. van der Laan and Mr. Maxwell as an act of betrayal. Yes, it was democratic, but they said that decisions about the core software should be made by technical experts — not by populist campaigns.

In an interview with Vice a few days after the announcement, Mr. Maxwell compared the Bitcoin XT team to a “guy standing on the sidelines with a beer cup hat.” One of Mr. Maxwell’s confidants likened it to an attempted coup. Their supporters blocked Mr. Hearn’s announcement of Bitcoin XT — and any discussion of it — from the Bitcoin.org website and several other online forums where Bitcoin members met to discuss the project.

The fight took on a new dimension when a powerful hacker distributed Bitkiller, malicious software that sought out computers that downloaded the Bitcoin XT software and overwhelmed them with traffic. One Internet provider on Long Island said the Bitkiller attacks brought down service for part of southern Long Island for several hours. The biggest American Bitcoin company, Coinbase, was taken entirely off-line for brief periods after declaring support for XT. Not surprisingly, this scared away many Bitcoin users from downloading the new software or even declaring support for it.

The hacker responsible for the attack, who appeared to be based in Russia, told Mr. Hearn in an online exchange that someone “payed me for killing XT” — though he declined to say who was responsible.

In the late fall, Mr. Maxwell and his supporters tried to engineer a compromise. They organized meetings in Montreal and Hong Kong where the leading developers met to discuss alternative ways to scale the Bitcoin system. Mr. Andresen went to the first of these, where Mr. Maxwell’s allies announced their own, more gradual plan for increasing the network’s capacity. But Mr. Andresen and Mr. Hearn both felt that the recommendations didn’t go far enough. Mr. Andresen, who is not normally given to sniping, began to harden his position.

“It’s likely that the current developers will get fired, and some other team will replace them because they are not listening to their customers,” he said in an interview last week.

Mr. Maxwell was equally dismissive of Mr. Hearn’s camp — saying that they had politicized what should have been a technical decision. Then he suddenly dropped out of the conversation in mid-December. He has not explained his absence, but colleagues say he was tired of the rancor.

An Uncertain Future

Mr. Andresen said a number of large Bitcoin companies had been asking him to come back in and lead a new version of the Bitcoin software. But if he did return to his old role, he said, he would insist on clear rules about decision-making.

Mr. Hearn says he thinks that getting the opposing camps together will now be very difficult. He believes that the dangers of the current impasse have not been reflected in the price of Bitcoin because the full debate has been censored in many of the online forums where Bitcoin is discussed.

Despite the discord, Mr. Hearn has not lost faith in all of the ideas behind Bitcoin. The start-up in New York where he has taken a job, R3, is developing Bitcoin-like networks for banks to enable cheaper and faster ways to trade assets of all sorts. The start-up aims to take advantage of the less-centralized record-keeping methods of Bitcoin, but still allow for someone to be in charge, to handle the software and to manage access to the system.

This work lacks the purity of Bitcoin, but after months of sleepless nights, fretting about betrayed promises, he said, “I want to be in a professional environment again where people are grounded in some sort of business reality.”

Is Bitcoin Really Dead This Time? Mike Hearn Seems to Think So

You know the drill – ask away.

I’ll answer questions by editing the top post so all the answers are bundled together.

Great question! It took me about 8-9 months of full time work to get Lighthouse to beta, working on my own. But this comes with several caveats. One is that I was working on other things during this time as well, like HD wallets. Another is that a big chunk of the Lighthouse code is actually the bitcoinj library, which I had been developing with many other people for years by that point. So I had a great understanding of the tools I was working with. If someone wanted to build an app like Lighthouse from scratch, it’d take them longer as they’d have to get up to speed, even if they used the same tools and frameworks I did.

That said, what I’ve seen is that most developers don’t want to build downloadable P2P apps like Lighthouse or the original Bitcoin. They mostly want to make web apps. Once I launched Lighthouse, a couple of devs came along and built lightlist.io which is a web based version of Lighthouse, albeit with fewer features. It took them much less than 8 months, though partly that’s because they were just reimplementing the Lighthouse design rather than doing something new, and because a more centralised solution is often easier to put together than something P2P.

The only decision making process that should really matter is end users and miners picking what software to run. At the moment this mechanism has broken down completely due to a combination of censorship/DoS attacks and general propaganda of the form “if you run something other than Core the sky will fall”. So the decision (non) making process used by Core has come under a lot of scrutiny because at the moment Bitcoin is a centralised system run by just one or two people (count differs depending on how you view things).

I don’t know if Bitcoin will eventually recover its decentralisation. For that to happen users must feel empowered, and must learn to distrust even those who claim to be unbiased experts (including me). Instead they must learn to pick the software they use based on its merits rather than what the people writing it choose to say, and be willing to switch at any point if the software they use stops delivering.

Of course it’s not technically impossible. 10 minutes is somewhat arbitrary. With faster block propagation, in theory the 10 minute number could be lowered. The questions are really:

1) Is it practically possible? Currently the Bitcoin protocol can only evolve when Blockstream want it to. So I’d say the answer is “no”, especially if the justification is higher capacity, which they seem to be dead set against.

2) Would 5 minutes really be better than 10 minutes? I suspect the difference is too small to matter. 1 second is clearly a lot better than 10 minutes and 10 minutes is clearly better than 1 day as often the case in banking. But the difference between 5 and 10 minutes probably wouldn’t change how people do business.

BIP 101 has been tested on private testnets. Gavin did this work months ago, with 20mb blocks. Things worked fine (which means, CPU/RAM/network usage increased linearly in line with block sizes).

Of course it’s hard to simulate every detail of the network. In particular the interaction with the Great Firewall is especially problematic. But I’m not sure a bigger testnet would give us any more useful data at this point.

Besides, the block size debate has ceased to be about technological specifics. It’s quite clearly become a fight over the arrangement of power and social philosophies. I don’t think more testing would change anything.

If you mean practical details, it’s on the website: https://bitcoinxt.software/

If you mean the higher level story, you can read my article “Why is Bitcoin forking?” https://medium.com/@octskyward/why-is-b . 47312d22c1

At this point I think the best way for Bitcoin to survive and remain viable is if an industry alliance formed to get rid of Bitcoin Core. That alliance would have to include miners. I don’t know if such an alliance might happen – what I’ve been hearing from industry and miners when I talk to them is that they’re incredibly frustrated with Bitcoin Core. That project and its people are literally popular with nobody right now. But the miners in particular are very scared of switching to anything else, for a variety of reasons. I don’t know how strong the ‘fear factor’ will end up being.

WRT Michael Marquardt’s censorship on /r/Bitcoin, he doesn’t seem able to accept that he might be wrong. The biggest problem that I think people are overlooking is that Marquardt/theymos also controls bitcoin.org . a screwed up subreddit is probably survivable. A screwed up official website is potentially much more damaging.

That depends on a lot of things, like the nature of the “solution” (I suspect if the limit is changed at all, it’ll be something from blockstream that won’t really solve the problem), and what work I’m doing professionally at the time.

I wouldn’t participate in Bitcoin Core development again, if that’s what you mean. It’s important to understand that the issues are deeper than block sizes. Core has lost its way. They are just deeply uninterested in growth and mainstream adoption. For instance, they’ve turned their back on unconfirmed transactions, even though that’s an important feature. They have spent a lot of time lately dumping on SPV wallets, even though they’re the most popular kind of wallet on Android and becoming highly popular on iOS (via Breadwallet).

The differences of vision there are just too deep.

Yes to merit and yes to undue paranoia This isn’t about Gavin or me specifically. Adam Back has also said listening to companies in general is a bad idea, because “it can give a misleading sense of consensus”. I don’t know what’s up with Trace, he isn’t very technical and seems to have been fed a garbled version of the March 2020 event. There’s a full post-mortem document as a BIP if he wants to read it.

I’m not sure I ever mentioned this before, but a long time ago I studied psychology for a couple of years and got a qualification in it (a UK specific thing, not a degree). One of the topics we studied was group psychology. If you read the wikipedia page on groupthink, I think the first couple of paragraphs describe what’s happened to Bitcoin Core quite clearly: a desire for harmony through unanimous consensus leading to irrational and dysfunctional decision making.

This is a well studied psychological phenomenon. In one famous early psychological experiment, since replicated, a test subject was put in a room and asked to fill out a pointless survey (they didn’t know it was pointless). The experimenters then pumped smoke into the room. When the subject was alone 75% of people got up and left the room before the experiment was terminated. But when two accomplices were placed in the room as well and the accomplices ignored the smoke, that figure dropped to 10%. An apparent example of this effect in action was a fire in Manchester in 1979. Most people got out of the shopping centre in time, but those that died were almost all in the restaurant. The fire chief concluded they had been waiting to pay their bills because nobody wanted to be the first to get up and leave, then by the time they realised the danger they were in it was too late and they couldn’t find the exits.

e.g. saying they are insecure, they suck, that actual existing wallets like Bitcoin Wallet for Android, MultiBit, BreadWallet etc aren’t “real” SPV wallets, that the feature was badly designed etc. Recently they decided to make support for the protocol features they need optional, with the justification being DoS attacks, although someone did actually try this against XT nodes and it didn’t work.

In general it’s pretty clear they aren’t going to do any work to improve this set of features, and I suspect they’re quite likely at some point to just tell people to disable them.

The purpose of the limit is to avoid DoS attacks by someone mining a massive block and then using it to explode nodes or break the block chain in some way. Same justification as why Satoshi put it in originally.

In particular, it isn’t to try and bring about some sort of economic outcome, and it isn’t to try and keep Bitcoin “decentralised”, which in this context is a term frequently used but rarely defined.

It’s hard to know what the solution is. Decentralising mining feels obvious, but would lots of smaller miners be better stewards of the network than a handful of big miners? At some level people have to want to vote, and they have to be informed voters.

To decentralise mining there are a bunch of technical things that could help. I wrote about them last year:

OK, a whole bunch of things here.

If everyone except me ends up agreeing on a way to increase the block size, then I wouldn’t have to collaborate on that, would I? It’d go ahead and happen anyway. Still, I think there’s a risk is that Jeff and Gavin end up “agreeing” to a proposal that doesn’t really make sense and they think is bad, just to try ensure something happens . but currently so little has happened that even this seems unlikely.

I don’t recall saying I support BIP 100. I may have said if it happens anyway then XT would go along with it, obviously it’d have to, otherwise it wouldn’t work properly anymore.

Workshop: right now neither me nor Gavin plan to attend Hong Kong.

Pulling together. I think the community has to get out of this notion that a vaguely defined community of experts hands decisions down from on high after a bunch of conferences or an IRC meeting or whatever. I realise why a lot of people like this idea but it’s unhealthy. I wrote above about what can go wrong when groupthink takes hold. It’s a very scary social failure mode, and yet isn’t uncommon. Frankly right now I see a lot of the symptoms: the desire for social harmony through unanimous consensus, the attempts to minimise conflict at any cost, the ‘illusion of invulnerability’ etc.

Ironically, central banking has a lot of the same issues.

How can the dangers of groupthink be avoided? The wiki page has a few suggestions, but here are mine:

  • For Core: replacing decision making through unanimity with a formal process for expressing and resolving disagreement, in a company this is usually a CEO, in a committee it can be a vote.
  • Ensuring that for any decision that is made, the wider world has a clear and simple process for rejecting it. Any group must be able to be given “no” for an answer. In a country this is usually an election or a market. Gavin, myself and many others think a market for nodes which may cast different votes on changes to the block chain is the right way to do this.
  • De-emphasising the role of (often self-proclaimed) intellectuals and experts, thus emphasising the judgement of work by results rather than the reputation of who was involved. Deference to expertise is a means to an end with the end being correct results, but in the Bitcoin community it’s too often become the end itself.

Whilst I understand the rationale that went into proposing two separate conferences to discuss scalability, and the idea that everyone always gets along with each other is lovely, I don’t think endless talk in the pursuit of 100% agreement is healthy or productive. The first conference didn’t produce any concrete deliverable e.g. a requirements document, so I am skeptical the second will be more effective. And I’ve made these views clear many times before.

Huge question. I don’t have space here to do a full Ethereum vs Bitcoin discussion, please remind me to write a blog post about it some time.

Bear in mind that the bulk of the work in Lighthouse was not actually the smart contracts bit. That isn’t so complicated, actually. The hard work was in making it easy to use, in handling the P2P network, in handling the workflow, in defining a decentralised online update scheme etc.

I think some of these smart contract platforms tend to assume that all they need is a better scripting language and suddenly everything is easy. In reality that part is like 5% of the effort.

WRT side chains – the main problem I see with side chains is that they create a complexity explosion inside wallets, and side chains don’t compose. That doesn’t mean they’re useless, they might be a kind of better testnet, but they aren’t a replacement for putting their features directly into the Bitcoin block chain. By “don’t compose” I mean consider what happens if you want to use features X and Y together but they exist only on separate side chains. You can’t do it. With the features in the same block chain you can compose them, e.g. use a crowdfunding/assurance contract together with multisig.

I’m not currently working on Lighthouse and have not been since around April. There’s no point in developing Lighthouse further, or indeed any Bitcoin related product, unless the block size issue gets fixed . otherwise the addressable market is too small to be able to justify the development costs.

In theory anyone could take it over though. It’s open source. The online update system is multi-sig, so there’s even potential to migrate existing users to the fork in a seamless manner (however, note that I own the Lighthouse logo).

70 kilobytes, in theory, if you were online for the whole time since the last block. However, the patch needs more work and testing before it can be shipped to users.

Re: mining over Tor. Tor isn’t actually very bandwidth constrained, if you check the graphs. The whole “omg mining over tor will break” thing doesn’t make much sense if you scratch the surface. Gavin wrote about it here:

There’s no requirement for the community to adopt XT specifically. Any node aligned with their interests would do, it could even be several different forks or reimplementations.

Industry has been pretty quiet over the past 7-8 months or so. Mostly I think they were hoping this whole nightmare would just go away. In recent days you saw Coinbase start to get more aggressive because they realised nothing was happening. I know there are other companies that would like to be more overt too but they’re scared of theymos erasing them from bitcoin.org because they rely on referral traffic there.

Re: timing. The community is already out of time. At the start of the summer I predicted stagnant traffic levels until the northern hemisphere Autumn arrived which is what indeed happened, and then I went on to predict steady growth through the winter until the network was entirely out of capacity by the start of spring . with the caveat that sudden bubbles or price spikes could mean problems start earlier. That seems to have happened with the recent runup to $400. It’s a bit hard to see because some miners aren’t making blocks as big as they could, but we seem to be approaching some sort of soft traffic limit already.

A prominent Chinese mining operator (Marshall Long) recently stated that they not only won’t switch to XT, they in fact do not update their software at all, under almost all circumstances (because it’s “a waste of money”) unless they “have to”, i.e. forced by something overwhelming. Given that the Chinese control >51% of hashpower combined, it seems like this attitude can stagnate the code forever, XT or Core – and was probably what caused the BIP66 soft-fork fiasco, as they opted to simply flag their blocks instead of actually upgrading software to enforce anything. The only Chinese pool that seemed to actively care about Bitcoin, so far, seemed to be Antpool/Bitmain.

Do you think there’s a way to overcome this? What can the rest of the community do to force their hands?

The general apathy and amount of handholding miners need has been a constant surprise to me. You’d expect people who fab their own ASICs and build their own datacenters would care a lot about the software they use, but apparently this often isn’t true.

I do not have any solution to that problem. I think we’d have to understand it better first. Core to XT is just a node restart, which takes seconds. Perhaps they think it’s something different: I’ve noticed a few miners seem to have a pretty garbled idea of what XT actually is.

You have to be a bit skeptical about this notion that a hard fork automatically results in two separate coins. Remember that transactions don’t contain any information about which fork they’re valid on. Only newly mined coins would be fork-specific, but over half of all bitcoins are already in circulation.

If you really wanted a block size hard fork to create two different currencies, you’d have to do a lot of complicated work to get that outcome, like by trying to take newly mined coins and send them as dust to literally every bitcoin user, to try and convince their wallets to spend them and make a chain-specific transaction. But wallets could easily be programmed to avoid that trick. Alternatively you could try and trigger a double spend that gets resolved in opposite ways on either side of the chain, if you didn’t want to wait for new coins, but again . same deal.

For unpolluted coins a payment for one side of the chain would automatically be valid on the other. Keeping them truly separate would be tough, so expecting there to be a market for trading across chains is . interesting.

That’s why me and Gavin say that when there’s a hard fork, the people on the minority side would just upgrade and continue on the majority side. Of course to some extent this is like saying, “if there is an election then the losing side will follow the laws passed by the new party instead of starting a civil war”. It’s an assumption about the basic level of civilisation people have. When people say “if we lose the vote we’ll fight to the bitter end” then perhaps the community does need to split into two currencies. The logistics of that would be complicated.

I already anticipated and implemented a solution to this problem years ago. BIP 70 which I authored with Gavin allows merchants to specify they want to receive transaction data directly and broadcast it themselves. Additionally I implemented (with Andreas Schildbach) Bluetooth support in Bitcoin Wallet for Android, meaning if the recipient uses the same app, the buyer sends signed transaction data to the recipient using local radio. The recipient then broadcasts it themselves. This can resolve many cases where the buyer does not have internet access.

To make this scheme work better it would need enhancement and then standardisation. At that point other wallets and POS vendors could implement it. However, this work was never done.

Nash sounds like a guy I’d agree with. I also would like the world to have a currency with a stable money supply and I’d agree with his analysis about the problems of money printing.

Where we disagree is the idea that you can/should have a money which is not actually usable as money by ordinary people. This is sort of like calling Treasury bonds “money”. Sure, it is if you squint, but if I can’t actually earn it and spend it in my ordinary life then to me, it’s not money. Satoshi very clearly intended Bitcoin to be ordinary, every day money . he talked about vending machines and things like that.

Still, I don’t really understand the basis of your complaint. There is no need to choose between coffee-shop money and a Nash-style global stable currency. It’s possible for one system to be both these things. Go review the calculations I did in 2020. Bitcoin can handle really huge amounts of traffic, even with today’s hardware!

Is Bitcoin Really Dead This Time? Mike Hearn Seems to Think So

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UPDATED 05:49 EDT / JANUARY 18 2020

Mike Hearn “Bitcoin is dead” coverage fails to note that he’s a paid shill for Blockchain company R3

A shill, also called a plant or a stooge, is a person who publicly helps or gives credibility to a person or organization without disclosing that they have a close relationship with the person or organization.

A funny thing happened in the Bitcoin world late last week with Bitcoin core developer Mike Hearn quit his work with the cryptocurrency and spectacularly pronounced in a post on Medium that Bitcoin has failed.

Putting aside that Bitcoin has failed so many times now that we’ve lost count, the post actually had the effect of driving the price of Bitcoin down as mainstream media organizations happily repeated Hearn’s claim without any critical analysis of whether what Hearn had to say was accurate and, more importantly, why was he making the claim now.

Everyone is entitled to their opinion, and to that Hearn is no exception, but putting aside the technical issues of which there is already plenty of excellent commentary on why he is wrong, his motivation for proclaiming Bitcoin dead is something that needs to be considered.

1. Hearn had his proposals for Bitcoin XT (a fork of the Blockchain) rejected by his peers

2. Hearn now works for the R3CEV LLC, a consortium that is developing private Blockchains that will compete with Bitcoin.

The first point is the easiest one to address, and is best described by Bram Cohen as being a case of whiny rage quitting.

He attempted a hostile takeover of Bitcoin with Bitcoin-XT, and now that he’s predictably been made to feel like persona non grata in Bitcoin development he’s throwing a tantrum on his way out.

On Reddit the crash in the price of Bitcoin following Hearn’s announcement is best addressed by u/MrGlobalCoin who wants it called the butthurt crash:

Can we term this the butt hurt crash, to memorialize this crash as the time when Mike Hearn turned into a baby girl and stomped his baby wittle feet, sold his btc, and blogged about it. I know that is not the cause, but it be nice to tie it to him.

There is no question that Hearn’s motivation is definitely in part an reaction to having his ideas rejected, but it’s the second point that is the more important one, the fact that he’s now nothing more than a paid shill for R3.

While I do agree with Mike Hearn’s position on the need to expand the size of the blocks in the blockchain, the more I read about what he did, the more I’m convinced his real intention was to privatize the blockchain.

That is; to ensure private corporations were the ones in control of the blockchain before regular, household computers could catch up with the processing power needed to maintain the blockchain.

I’m saying this because of Hearn’s employer pushing for private blockchains….

Hearn’s plan apparently was to cause a panic so people would abandon bitcoin because of a price crash in order to force the hands of the Core developers. And his shennanigans did sink the price of bitcoin to almost 350 dollars per coin from a high of 430.

If Hearn had walked away from Bitcoin without having employment with R3 you might be able to take what he is saying far more seriously, but when you’re putting food on your table with money from an organization that is primarily a large competitor to Bitcoin you can’t be taken seriously, and this is what the media coverage of Hearn’s announcement completely failed to note.

Image credit: kongharald/Flickr/CC by 2.0

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