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What is dead may never die: Are Chinese miners really killing bitcoin?

By NexChange
FinTech

Bitcoin is on its death bed. At least, that’s what Mike Hearn — a high-profile supporter and developer of the cryptocurrency — is insisting. Last week he wrote a lengthy blog on the demise of the currency called “The resolution of the Bitcoin experiment.” The post summarizes Hearn’s reasons for selling his Bitcoin, giving up on the project, and joining blockchain startup R3. It’s long but it is well worth a read.

Here are his key points:

  • The Bitcoin blockchain is full and developers cannot agree on the best way to scale the Bitcoin network.
  • Overcapacity means it is now impossible to depend upon the bitcoin network to know when or if your payment will be transacted.
  • The blockchain is almost entirely controlled by Chinese miners. While just two miners control more than 50% of the hash (processing) power of the network, these guys — who appeared at the Scaling Bitcoin event in Hong Kong Cyberport in December — control almost all of it:
  • It’s these guys who are stopping the blockchain from properly scaling up.

But there are two sides to every story. Mike Hearn is on the losing side of a civil war that has threatened to tear the Bitcoin community apart. He was part of the group that developed a rival protocol called Bitcoin XT — as opposed to the existing Bitcoin Core — that promised to remedy scaling issues by making the blocks in the blockchain larger (to put it simply). It had a lot of critics, the chief complaints being that it did not represent a consensus among developers. There were also some fears of security and control that came with the new protocol. Hearn also notes much of dissent among miners comes from a fear that the change would hit their income stream. As a result, Hearn says, the Bitcoin XT project has been the victim of a sustained campaign of censorship and DDoS attacks from its detractors.

So far Bitcoin Core seems to have won out and, according to Hearn, the end is nigh. But rumors of Bitcoin’s death should be taken with a hefty pinch of salt. Despite taking a bit of a hit after Hearn’s post, the price of Bitcoin still hovers just below $400, according to CoinDesk. Some are saying the post is more just sour grapes on Hearn’s part.  It is also worth noting this collection of 91 Bitcoin obituaries put together by 99bitcoins has articles dating as far back as 2010.

Perhaps, in the case of Bitcoin, what is dead may never die?

Photo: Alan English CPA

 

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