Mike Hearn has a great and thought-provoking post on why he thinks Bitcoin is at a developer-caused impasse, and he’s ending his participation. I ended up selling most of my Bitcoin last year, but if I hadn’t this would definitely make me reconsider.

10 thoughts on “Bitcoin Trouble

  1. I first decided to finally play with BitCoin a few months ago, in August 2014. The value started rising soon after, and I’ve been able to cash out my original amount, and still have a little BC left over. I’ve been watching things since then, trying to decide whether to cash out what I have left or reinvest in hopes of another rise. Of course, this article has prompted a recent drop. I think I’ll just keep watching a little longer…

  2. “…there are now two more forks vying for attention (Bitcoin Classic and Bitcoin Unlimited)”. If the Bitcoin power struggle is not resolved and all the other numerous issues then most likely just like other software projects, a new fork will be created with the knowledge of all of the bumps and mistakes of its predecessor and it will be better. If Bitcoin was not such a great idea and so popular I guess the project would just die, but obviously that would never happen. It is very likely that if all the problems are not ironed out then Bitcoin will have a fork successor. πŸ˜‰

  3. Hi Matt, what Mike Hearn doesn’t tell you is that he’s now working for the Big Banks R3 Consortium. The community has not failed. His attempt at hard forking Bitcoin by proposing Bitcoin XT failed to gain the required support to make this happen, and so he’s retreating in anger, burning his bridges and spreading Fear, Uncertainty and Doubt about Bitcoin along the way. Bitcoin is better now that he is gone, and it’s only going to get better.

    Mike Hearn’s parting gift? A 15% drop in Bitcoin which makes it a deal to get back in.

    1. @steviedeeee – The first time I read Mike Hearn’s post it was fairly obvious that there was a fair amount of personal emotion inbetween factual information posted and I cannot blame Mr Hearn for being emotional about something he spent so much time working on. I reread Mike Hearn’s lengthy explanation of all of the issues/problems and I felt the same sense that the post was very emotionally charged. I am human and have been guilty of letting my emotions get the best of me and have publicly posted things that were emotionally charged, which skews the validity of the factual information posted. Anyway I sounds like there are a lot of legitimate issues/problems to iron out with Bitcoin, but Mike Hearn’s post explantion is too extreme, which is an obvious red flag that there is a lot of personal emotion involved in the post. πŸ˜‰ Thanks for posting the coinjournal link. πŸ˜‰

      1. Oh and if you are wondering if I have any skin in the Bitcoin game and if that is my motivation for speaking out then yes I have 1 BTC just for fun and am perfectly ok with losing that small investment. In all honesty I recognize exactly what Mike Hearn is going through and have empathy for him and just felt like I should say something about the whole thing. πŸ˜‰

  4. Most currencies are used to both signal demand and to “store” wealth, and this dual function tends to make create practical problems when trying to create one currency that is good at both functions. Kanban systems show that a “currency” can be anything used to signal demand in a context (index cards, tennis balls, emails, twitters, WordPress posts, whatever).

    Morally, a currency like Bitcoin based mainly on artificial scarcity caused by the wanton destruction of electricity and CPU cycles seems wrong. It is neither a good signaling system (like WordPress posts) nor a good store of wealth (like refined aluminum or a charged battery).

    Ultimately, a good currency is backed by a social process which includes some sort of constitution that regulates (to the public benefit) the issuing, distribution, and taxation of the currency. For example a WordPress plugin could be written to create a new currency administered to some end on a specific WordPress site, tracking people’s balances in the currency and issuing new currency as needed (distributed first by whatever process). Whether that currency had much real-world impact would depend on how much faith people had in the social process surrounding any specific installation of the WordPress plugin.

    Currencies can be issues at any level from the household (negotiating and trading who does what chores) to a business (running up tabs as a way of issuing credit) to community (Local Exchange Trading System or LETS) to a bank (including taxing issued currency via demurrage to promote circulation, as around the 1760s in America a source of colonial prosperity the British put an end to leading in part to the American revolution) to city (Jane Jacobs suggested every city have its own currency to support self-correcting economic policies via exchange rates related to better or worse city governance, and why the Euro was a stupid idea going in the wrong direction for accountability) to country (the usual case most people are familiar with, where ideally the creation of new dollars to meet the needs of a growing economy are distributed equitably across the population instead of just given first to to bankers).

    For Bitcoin, it is almost trivial to make variants, so why should “Bitcoin” be privileged over other variants with slightly different initial parameters for being the first? One major claim for Bitcoin is it being semi-anonymous transactions, but that it a dubious benefit for most people these days when people so readily accept credit card tracking and check use and related loss of privacy but increased accountability. Low transaction fees are another claim for Bitcoin, but those are easily established in almost any other system these days that does not use monopoly power for rent-seaking. Bitcoin’s success as some mysterious technical thing without a true social constitution backing it just goes to show how little fundamental understanding there is in our global society about economics and currency. It can take a long time to achieve such an understanding of economics because it seems the main job of most mainstream economists seems to be to apologize for wide-scale suffering caused by economic policies that centralize wealth, privatize gains, and socialize costs and risks. πŸ™

    The “Money as Debt” series of videos is helpful here. As is “The Creature from Jekyll Island : A Second Look at the Federal Reserve”. As is “Cities and the Wealth of Nations” by Jane Jacobs. As is “Capitalism Hits the Fan: Richard Wolff on the Economic Meltdown”. As is “The Mythology of Wealth” by Conceptual Guerilla. As is “Economics for the Rest of Us: Debunking the Science that Makes Life Dismal” by Moshe Adler. As are ideas on a “Basic Income” like from BIEN or US BIG. As are many other resource that sadly very few people are yet aware of or read. Another important issues is that it is not just the amount of currency, but how fast it can circulate (and the internet age enables very fast circulation compared to cash). And of course, economies are more complex than just exchange, so see also my essay and video on “Five Interwoven Economies: Subsistence, Gift, Exchange, Planned, and Theft”.