
A Bitcoin Believer’s Crisis of Faith - chollida1
http://www.nytimes.com/2016/01/17/business/dealbook/the-bitcoin-believer-who-gave-up.html?_r=0
======
dang
Since
[https://news.ycombinator.com/item?id=10905118](https://news.ycombinator.com/item?id=10905118)
is also on the front page and is the original source, we've demoted the
current thread as a dupe. But both are worth reading.

(We plan to build something to aggregate related URLs, so this should become
less of an issue at some point.)

------
HappyTypist
To give everyone some background on the block size debate, here is a recap:

"Small blockers" propose keeping the block size at 1 MB, essentially 5 real
transactions per second. They argue that the bigger blocks are, the less
people will be able to run a fully validating node, and the network will less
decentralised. They want Bitcoin to be a base layer for bank and network
settlement.

A 1mb limit means that there is a very low "production quota" for block space.
As with every quota, prices will rise - ie Bitcoin network fees will go
higher. Currently fees are about 4 cents per transaction. They're anticipating
a three orders of magnitude increase.

But that's okay, or they say. Banks can pay $400 to move a million. A typical
user can't. So they must use something else.

Most of the "small blockers" are employees of a VC-funded company named
Blockstream.

They are building things that bypass the Bitcoin network, occasionally settle,
and charge it's own set of fees. Oh yes you don't pay Bitcoin fees. You pay
our fees. That's claimed to be a major selling point.

Also, bitcoin currently handles "zero confirmations" pretty well. That's
because the miners will refuse to mine double spends if it knows about them.
These big blockers have removed that functionality. Yes, lightning handles 0
confirms!

On the other side, there are "large blockers". These people believe the block
size should be raised in accordance to natural evolution of hardware
progression. 2MB today, 4MB in 2 years, dynamic adaptive limit, whatever.

They think there shouldn't be a artificially ceiling on Bitcoins transaction
volume, and people should be able to use the Bitcoin network directly. Fees
would be reasonable. Instead of 10 people paying $4, they want 100 people
paying $0.40 or 1000 people paying $0.04. Pretty simple.

I think you might be wondering why there is a limit in the first place. Back
in 2010 someone made huge blocks. So satoshi put in a crude, static anti DoS
limit. Back then the average transaction volume was 10 kB, so the limit was
set to 100x the average transaction load.

~~~
pbreit
As ingenious as this all is, it seems even more preposterous. I think I'll go
spend some money now without thinking about for even a nan-second.

------
chollida1
I thought this article was interesting because it highlights the problem when
there is a lack of strong governance in an open source project.

After talking to a bunch of financial firms about bitcoin I've got the sense
that the strong consensus is that they don't believe the core bitcoin team
"has their act together" in terms of a coherent road map, or possibly more
charitably, that the core team isn't at all interested in having the
transaction limit increased.

This means that that if bitcoin, or other related technologies like the block
chain are going to be adopted by companies to run real businesses on then
either the companies themselves will own the technology roadmap or some other
entity with a fair bit of credibility will have to step in.

~~~
roymurdock
It's fascinating to me that someone paid the Russian hacker to develop such a
comprehensive and powerful solution to kill XT. That couldn't have been cheap.
But it also wouldn't make sense for a large GPU/ASIC miner to block the move
to XT, as it would have favored their hardware over those mining on regular
CPUs.

So it must have been an ideologically-driven attack? But it defeats the main
ideological purpose of the protocol - democratic consensus as nodes decide to
accept or reject changes to the client. Weird and paradoxical.

~~~
droffel
ASICs are basically it these days, GPUs and CPUs are only used by hobbyists at
this point. The reduced energy requirements of ASICs over GPUs has made it
basically a requirement to use ASICs, as energy costs can't be amortized over
the lifetime of the miner (while the fixed cost to buy the miner can).

------
roymurdock
> Unlike the Federal Reserve and Wall Street, institutions that are managed by
> humans, Bitcoin was supposed to rest on the infallible logic of math and
> computer code. In this system, programmers like Mr. Hearn, who often
> volunteered their expertise and effort, were viewed as neutral technicians.

This is the key. If the neutrality and technical/economic/ethical character of
the lead developers is called into question, Bitcoin (just a flavored brand of
blockchain) is done. An untrustworthy/biased dev team could adjust the cap,
difficulty, etc. for their own gain or that of their sponsors. While this
would probably cause the majority of nodes to fork the chain and reject a bad
update, it would leave the protocol without strong leadership and call the
brand into question.

Will be interested to see how this plays out with the dev environment around
bitcoin becoming so toxic and ideologically split.

------
Animats
The Bitcoin "core developers" don't matter. It's the big miners who matter.
Both of them. What Antpool[1] and F2pool[2] decide is what Bitcoin does. They
have 52% of mining capacity. Jihan Wu, CEO of Antpool, and Wang Chun, chief
administrator of F2pool, rule Bitcoin. They're the ones in charge. Not the
"core developers". And certainly not the Bitcoin Foundation clown car.

[1] [https://www.antpool.com](https://www.antpool.com) [2]
[https://www.f2pool.com](https://www.f2pool.com)

~~~
roymurdock
It is often asserted (for example, in the Bitcoin white paper [22]) that a
cartel can double-spend Bitcoins. In a strict sense, this is true: a cartel
can spend a Bitcoin by paying it to a player Alice, receiving goods or
services, and then shifting the consensus choice of history to a branch where
that coin is instead paid to a different player Bob. However, we argue that
double-spending by a cartel has a limited payoff. Bitcoins have value because
people are willing to trade them for goods and services. If players were
unwilling to accept Bitcoins for trade or unwilling to spend Bitcoins for fear
of having their payments nullified, the value of Bitcoins would diminish
significantly as players lost confidence in the system. Worse, because players
are encouraged to generate a new identity for each transaction and because
identities are not linked to any side information, players cannot easily
determine whether a proffered payment is coming from the double-spending
cartel or an honest user. Thus, a rational player should refuse to accept any
payments when there is a significant threat of double-spending. As a cartel
must outmine the entire Bitcoin network and thus outspend the entire Bitcoin
network for as long as it would remain a cartel, we believe it is very
unlikely that a cartel could double-spend enough to recover the cost of the
attack.

An interesting facet of mining cartels is that they can censor certain
transactions. The cartel can choose to ignore any transaction it does not want
appended to the log. Further, the cartel can choose to treat any blocks
appended by others to the log as forks which it will not attempt to extend.
Thus, other players will naturally also abandon these transactions, possibly
even consciously if the cartel announces that certain transactions (or
transactors) are disfavored.

[https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pd...](https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pdf)

~~~
fragsworth
It's still not obvious whether or not bitcoin is economically secure.

With ETFs and other instruments, a mining cartel can potentially spend less
money performing a 51% attack than they can make from a massive short sale of
the currency.

~~~
Animats
Double-spending is detectable by anyone with a full Bitcoin node. It's not in
the interest of the big players to double-spend; it would destroy their
credibility and devalue their assets. My point is that in the arguments over
block size, only what the big mining pools decide to do matters.

------
runn1ng
This is the actual medium post, where Mike expresses his frustrations and what
this article is referencing.

It explains things rather well.

[https://medium.com/@octskyward/the-resolution-of-the-
bitcoin...](https://medium.com/@octskyward/the-resolution-of-the-bitcoin-
experiment-dabb30201f7)

------
Hermel
Here is what will happen (my guess): as Bitcoin usage continues to grow, the
limited capacity will start to hurt over the coming months, with the planned
"segregated witness" proposal not helping much. Also, the block reward will be
cut in half this summer to 12.5 Bitcoins per block, driving many miners out of
business and reminding the rest that they could earn more with larger blocks.
Furthermore, some of the affected companies (e.g. Coinbase) will announce
rewards for larger blocks mined (e.g. 1 Bitcoin reward for each block above
1MB for the next 1000 blocks), making the first miners jump to the new
protocol (the much feared hard fork), with the others following soon after the
most popular exchanges announce that they will not accept "old branch" coins.

------
smaili
A bit off topic, but did he literally let a reporter into his house and take a
photo of him in his bed - or is that just a stock photo? Either way a bit
creepy...

~~~
Hermel
I think this is a couch.

~~~
darkr
Looks like a big pouffe to me

------
jimrandomh
Disagreement over an important technical decision gets politicized and spirals
out of control. An anonymous DDoS and death threats against developers fan the
flames, and key figures bow out.

Who did that?

There is a significant contingent of people promoting Bitcoin as a force that
will eventually undermine the power of governments. This can hardly have
escaped their notice. Perhaps one of them saw a conflict brewing, and decided
to opportunistically fan the flames?

~~~
guelo
There's really no need to add unfounded conspiracy theories like yours to the
public discussion.

~~~
jimrandomh
It's a known fact of psychology that people fight less if they believe they
have a shared enemy. In this case, there is what looks like enemy action
(anonymous DDoSing and death threats) directed at both sides of the block-size
conflict, appearing to come from across the aisle but definitely anonymous.
Why not speculate on possible third parties that could be responsible? Maybe
it'll make them notice they both just want Bitcoin to succeed.

~~~
ceejayoz
It's also a known fact that it doesn't take insidious government involvement
to get a bunch of programmer-ideologues to get political and spiral out of
control.

------
namecast
Worth reminding people:

On August 15th, 2015, Mike Hearn announced Bitcoin XT, and his attempt to fork
the blockchain: [https://medium.com/faith-and-future/why-is-bitcoin-
forking-d...](https://medium.com/faith-and-future/why-is-bitcoin-
forking-d647312d22c1#.cdoemw4gh)

On January 14th, 2016, 5 months later, Mike has unilaterally declared Bitcoin
to be a failed experiment.

In the intervening period, support for XT was at best minimal, and that's
being charitable.

There is a phrase we use in my neck of the woods when developers behave like
this, and "responsible grown up behavior" isn't it.

~~~
brazzledazzle
There's some serious accusations of sabotage in that article. It hardly seems
like a hissy-fit in that context.

------
pbreit
If bitcoin is such a disaster, why is the price holding firm or even
increasing?

------
seliopou
tl;dr: "Money" is political. If you don't think it is, well, that's a
political statement about "money."

------
afreak
There are three types of people who are into Bitcoin:

1\. People who are in it out of sheer curiosity.

2\. People who are in it to get rich quick.

3\. People who have been scammed into it.

The people who are in it out of curiosity are the people I don't take issue
with. At its beginnings, I found Bitcoin to be a curious thing because it was
a novel and new idea. However, as things progressed and I learnt more about
how it all worked, I saw it as a cumbersome idea that wouldn't effectively
replace anything and as a result now I'd rather make jokes about it than take
anything about it seriously. I've never spent more than $20 CAD on Bitcoin and
I have gotten it all back for that matter too.

People who get scammed into Bitcoin typically get scammed either one of two
ways: they're either being coerced into using it because they've gotten
something like malware on their machines (CryptoWall and its variants) or they
see it as an investment alternative. The only times I've ever seen non-
technical people experience Bitcoin is when I have to tell them that the
malware on their computers will only release their unbacked-up data requires a
payment using the cryptocurrency to get it all back. And that is really what a
non-technical person's experience with Bitcoin is going to be: it's a way to
pay thieves.

As for the get rich quick people, they tend to fall into the third category or
they themselves are scammers.

Right now there are two forces dominating the Bitcoin community: the miners
and those who are holding out on whatever magical unicorn rainbows makes the
coins have value. The miners don't want to see changes to the software because
it'll hurt their bottom line and the people holding and exchanging it want to
see these changes so they can benefit. So as a result, Bitcoin has entered a
war of attrition and is starting to show its problems. Mike Hearn's leaving is
definitely a consequence of this problem.

Earlier yesterday [1], I made a quip about how it's insulting to suggest that
we get those who are "unbanked" as a result of living at no-fixed-address (ie:
"homeless") should eventually move on to Bitcoin as an alternative to
mainstream financial institutions. It's really for the reasons that Hearn
made: would you want to wait a random period of time ranging from maybe a few
minutes to a few hours for your transaction to go through? It's already
insulting enough that they're living at the bottom of society, so why would we
want to get them to use a bottom-tier financial system? Why not instead
suggest making it easier for them to participate within mainstream banking
schemes?

I anticipate based on my last remarks that the responses to this post will
consist of feckless anecdotes and pointless accusations that I and others have
a "problem" with Bitcoin. I guess to a certain extent the statement of me
having a problem is true, but at the end of the day Hearn is right.

Bitcoin is a failure and if you invested into it then you're getting what you
deserve.

[1] -
[https://news.ycombinator.com/item?id=10898408](https://news.ycombinator.com/item?id=10898408)

~~~
SatoshiRoberts
> Bitcoin is a failure and if you invested into it then you're getting what
> you deserve.

How do you quantify a failure?

~~~
afreak
> How do you quantify a failure?

I think that Hearn's article can answer that for you.

~~~
SatoshiRoberts
The Bitcoin Blockchain is still processing transactions right?

What part of the technology has failed?

