Bitcoin is not dying

Between last Thursday and Saturday, Bitcoin lost over 13% of its value to settle at below $365 for the first time since early December last year. That’s a long fall from the net gain of 35% last year that made it the “best performing currency of 2015.”

This is despite the fact that global stock, derivatives, and financial markets were all at that same time moving in the negative due to the effects of the Chinese economic downturn, a situation that would normally have sent the price of Bitcoin on an upward trajectory.

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What sent the currency into a dive was the news last week that Mike Hearn, one of the core developers of the software that runs the system, had decided to quit. And not only that, he had issued a scathing attack on the cryptocurrency in the process.

That the British computer programmer, who worked for Google before joining Bitcoin, was getting frustrated over the back and forth arguing within the Bitcoin community on the best way to scale the Bitcoin system, could not be further from news.

The current block size is growing smaller as the number of transactions per second increases. Early in 2015, Mike Hearn and Marc Andresen, another core developer, had taken it upon themselves to break the deadlock on the scaling debate that seemed to go on without an end in sight.

His Bitcoin XT efforts frustrated

They developed Bitcoin XT, a version of the Bitcoin core that would have bigger blocks, thus accommodating more transactions. Their plan was to have Bitcoin XT take over from the current core software after over 75% of nodes in the Bitcoin network had upgraded to it, something they viewed as a referendum.

That did not come to pass. The Bitcoin Improvement Proposal (BIP) 101 was met with a lot of resistance from other core developers, as well as some members of the community, who saw it as a way to centralize the system. This, in the view of the latter camp, was not what Satoshi Nakamoto, the inventor of Bitcoin, envisioned.

What many didn’t see coming as a result of this feud, however, was Michael Hearn throwing in the towel and walking away. Mike had maintained a lot of visibility in the media while leaving no doubt about his commitment to Bitcoin. There is no question that he was fascinated by the technology, and nothing shows that he isn’t still.

But walking away is exactly what he has done. According to reports, as the world ushered in 2016, he cleaned his desk in his apartment in Zurich of any Bitcoin projects he had been working on, sold a few hundred bitcoins he owned, and sat down to pen his now infamous farewell message to the Bitcoin community, the long and short of it being that Bitcoin is a failed experiment.

“From the start, I’ve always said the same thing: Bitcoin is an experiment and like all experiments, it can fail.” he declared. “The now inescapable conclusion that it has failed still saddens me greatly.”

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What others think about Mike Hearn’s decision

Aside from the Bitcoin price, the reaction to his departure has been varied. “I disagree with Mike Hearn’s analysis and concerns,” tweeted Andreas M. Antonopoulos. “I thank him for all his work and wish him all the best. Onwards.”

For his part, Gavin Andresen, a well-known Bitcoin developer, could only say, “Mike is too pessimistic.”

Gavin and Mike could be considered the godparents of Bitcoin, being brought together by Satoshi, Bitcoin’s creator. Now, Gavin and Mike hold competing vision for Bitcoin’s future.

The Bitcoin Sub-Reddit and other forums were full of opinions on Mike Hearn’s decision. Some contributors, while they do not think Bitcoin is a failed experiment, as he asserts, agree with many of the points that he raised in his post.

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Yet there are those who thin, he is a sellout, one who is being used to demolish Bitcoin. The fact that he is now working for R3, a startup building blockchain solutions for mainstream financial institutions, doesn’t help with that perception.

The general mood, however, seems to be that while this is not good especially for the image of Bitcoin, it doesn’t change much in the long run.

Rupert Hackett is the Community Manager at BuyaBitcoin.com.au. He specializes in the digital currency and digital payment space and is currently studying the world’s first Master’s in digital currencies alongside entrepreneurship. He writes for multiple bitcoin websites and regularly blogs for buyabitcoin.com.au.