Bitcoin, a distributed and decentralised digital currency dubbed “the currency of the Internet”, has been declared a failure by one of its most ardent supporters and developers. In a lengthy post on Medium, Mike Hearn states that “despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly.”

This comes as unfortunate timing as PayPal appoints Fintech figure and bitcoin entrepreneur Wences Casares to its board this week. “I am honored to serve on the board of an iconic global company dedicated to driving the transformation of money on a global scale. I look forward to working together with the PayPal board and leadership team to continue to deliver their compelling vision,” Casares said.

However Mike Hearn’s scorn on the Bitcoin industry casts a shadow over financial services rush to take advantage of the digital currency.

Hearn places Bitcoin’s failure squarely on the shoulders of the community, and internal politics, describing it as a system that is now controlled by a handful of people only, a complete opposite of the original goals of the currency as a decentralised monetary system. Most of the disagreements are around whether a key piece of Bitcoin’s technology should be adjusted so that it can support more transactions, the Bitcoin community has essentially been split between those in favor of increasing this limit and those opposed to it suggests Hearn.

If you had never heard about Bitcoin before, would you care about a payments network that:

Couldn’t move your existing money

Had wildly unpredictable fees that were high and rising fast

Allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button
(if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)

Is suffering large backlogs and flaky payments

… which is controlled by China

… and in which the companies and people building it were in open civil war?

I’m going to hazard a guess that the answer is no.


It should be noted that Bitcoin is often confused with Blockchain, which is the underlying protocol behind the technology of the currency. The strength behind Blockchain technology is in the authenticity of records, content and transactions, and its decentralised nature. Which opens up the possibilities of many use cases beyond FinTech.

Proof of ownership of digital purchases and content

Proof of authorship of digital goods and content

Digital trading, transaction history, transfer and ownership authenticity

Code authorship in application development

In a post in December I described where Blockchain has this potential.

However, as Mike goes on in his article, he cites a post by ProHashing arguing that the transactional aspect of Blockchain is under threat, where “the issue is that it’s now officially impossible to depend upon the bitcoin network anymore to know when or if your payment will be transacted, because the congestion is so bad that even minor spikes in volume create dramatic changes in network conditions. To whom is it acceptable that one could wait either 60 minutes or 14 hours, chosen at random?”


Mike states that Bitcoin has no future whilst it’s controlled by fewer than 10 people, and that the Blockchain itself as a core mechanism is a failure.

“At a stroke, this makes using Bitcoin useless for actually buying things, as you’d have to wait for a buyer’s transaction to appear in the block chain … which from now on can take hours rather than minutes, due to the congestion.”

If this is the case, then the future of Blockchain as an integral part of the Internet Of Things is also under threat with the same caveats, especially where digital handshakes and the transaction of information can no longer be (a) guaranteed and (b) be conducted in real-time. It also calls into question some of the uses outside of financial services where Blockchain can be applied, such being a decentralised storage system.

Hearn has said he is no longer working on Bitcoin and has moved on, but suggests that the protocol still has a future in the right hands.

http://www.forbes.com/sites/theopriestley/2016/01/15/bitcoin-declared-an-inescapable-failure/#2715e4857a0b5c5e845d9bf8

http://www.theguardian.com/technology/2016/jan/15/mike-hearn-senior-bitcoin-developer-says-currency-failed-experiment

Confirms above

so bros,wat are u tryin to say now