Developer Walks Away From Bitcoin Declaring the Crypto-currency A Failure

Last week the price of Bitcoin dropped 20% to $358

Mike Hearn was a big Bitcoin enthusiast and for a long time he was supporting this digital currency. He even quit his job at Google to devote himself on developing and improving the Bitcoin technology. However, at the end of last week, he told media that he is walking away from this crypto-currency.

Hearn wrote a long blog post on Medium last week where his explained why he decided to turn his back on Bitcoin. He also declared the digital currency a failure. “The fundamentals of Bitcoin are broken,” he said. “Whatever happens to the price in short term I believe that it will go downwards in the long term,” he added. He also said that he sold all his Bitcoins and will no longer be involved in the development of this virtual currency.

The former Google developer is not the first to speak out loud on the Bitcoin subject. However, he apparently caused stir in the Bitcoin community which resulted in dropping of price. The digital currency was stable for months, but last week it went down 20% to $358.

The Reason

According to Mike Hearn, the biggest reason for the future failure of Bitcoin is the internal politics. In his post he explains why he has lost faith in the Bitcoin community. He admits that decentralized block chain technology has its ups and downs which create problems for users and that this is also provoked by fighting within the community.

The biggest disagreement among community members is about a core piece of the technology- the block chain size limit. The code of Bitcoin limits the size of the transactions to 1mb and in order to change this limit one must get the consent from the miners who have enough power to manage all transactions. However, certain miners fear that if the limit is adjusted it would badly affect their economics.

Bitcoin XT vs. Bitcoin Core

In order to give all miners the opportunity to make a vote whether to raise the limit, Hearn developed a somewhat modified version of the software- Bitcoin XT. But this version was greatly criticized by the opposition. Soon afterwards, the fight between Bitcoin XT and the original software version Bitcoin Core began. It went so far that it resulted in thrown off messages on board, critics on Reddit and social media and even in cyber attacks on firms and individual users. The ugliness of the fight convinced Hearn that Bictoin and its community are collapsing.

Hearn added that when an industry is controlled by less than ten people, it’s doomed to fail. “The Bitcoin industry is in dangerous waters. Previous cases such as the bankruptcy of Mt Gox had to do with the firms and services that run the ecosystem. But this case is different,” he said pointing out that now the problem is in the core system, namely the block chain itself. “And nobody has a suggestion on what to do.” Despite Hearn’s critics, however, some gambling operators are taking Bitcoin to a whole new level. Namely, The D Hotel and Casino in Las Vegas was the first to introduce a Bitcoin ATM in May 2014.