World’s digital currency – bitcoin has failed. Bitcoin’s lead developer Mike Hearn provided that he was ending his involvement with the cryptocurrency and selling all of his remaining holdings because Bitcoin has failed. The senior developer would like to be dissociated from the web-based currency despite the fact that he spent about 5 years developing the solution.
“Despite knowing that bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly,” Hearn said.
The payment system was invented by Satoshi Nakamoto who later chose Gavin Andresen to takeover as his successor in 2011. For months, Hearn was in a non ending rivalry with the other lead developers over whether the blocks in which bitcoin transactions are processed should be enlarged. Each block currently has a capacity of one megabyte, which Hearn says is an entirely artificial capacity cap, and allows a maximum of just three payments to be processed per second.
In August, Hearn and Andresen released a rival version of the current software, called Bitcoin XT, which would increase the block size to 8 megabytes, allowing up to 24 transactions to be processed every second. While that is still a fraction of the 20,000 or so that Visa can process, it would increase every year, so that bitcoin could continue to grow.
However, Bitcoin XT has not been taken in by the mining computers that secure the network, the majority of which are in China. Hearn says that the bitcoin network is about to run out of capacity as the volume of transactions increases. And when that happens, the network will become unreliable, with payments unable to be processed and vulnerable to fraud.
“If an IT system runs out of capacity like that then all kinds of things go wrong – all hell breaks loose,” he said in an interview with Reuters in late December.
Hearn believs bitcoin community has failed in its governance of the crytocurrency’s code.
“What was meant to be a new, decentralized form of money that lacked ‘systemically important institutions’ and ‘too big to fail’ has become something even worse: a system completely controlled by just a handful of people,” he wrote.
Hearn told Reaters that whether or not Bitcoin XT was adopted, the crypocurrency would live on, if we thought it might be the end of bitcoin, we wouldn’t do it.
“The current price of bitcoin is supported almost entirely by people speculating on its future, in the assumption that this could be the money of tomorrow,” he said. “So if the network starts to collapse, then a lot of people are going to look at it and say: well maybe we’ve miscalculated its future value.”
A number of people believe Bitcoin has no future at all. “Bitcoin is outdated technology – almost prehistoric by crypto standards. It’s because of petty quarrels such as these that it hasn’t been able to evolve in five years.” Stephan Tual, the former chief operating officer of blockchain firm Ethereum, said.