By Kashmir Hill
In the world of Bitcoin, Mike Hearn is a big deal. He developed the code that made it possible to use Bitcoin on smartphones. A couple of years back, he quit a cushy engineering job at Google to focus on Bitcoin full time because he was convinced of its potential to change the world. But now he’s quitting the digital currency and declaring Bitcoin a failed experiment.
“The fundamentals are broken and whatever happens to the price in the short term, the long term trend should probably be downwards,” he writes on Medium. “I will no longer be taking part in Bitcoin development and have sold all my coins.”
In a long screed, Hearn says that Bitcoin’s community has grown toxic, and that the system is now controlled by too small a group of people. His primary complaint concerns the “Bitcoin XT constitutional crisis” that emerged last year, during which two groups of people within Bitcoin had different ideas about how to deal with a change that needed to be made to the digital coin’s code. It led to a flame war, Reddit censorship, and a schism in the community that left Hearn’s camp on the losing, censored side.
The result, says Hearn, whose post is flavored by the sour grapes of losing that battle, is that “the network is on the brink of technical collapse.” He says that because the block size capacity, which is the cap on how many digital money movements can be processed at a time, wasn’t increased as proposed by his crew, transactions are now slow to go through and the system is vulnerable to attacks that consist of flooding the network with transactions. In order to ensure your transaction goes through, says Hearn, you sometimes have to pay Bitcoin miners a transaction fee that’s higher than what merchants pay for credit cards, which undermines one of Bitcoin’s primary appeals. If the blockchain cap doesn’t get bigger, those transaction fees will continue to grow.
Hearn blames Bitcoin’s demise on “Chinese miners, just two of whom control more than 50% of the hash power.” By that he means the people who control or run a majority of the powerful computers that process the network’s transactions.
Read the rest here.