On Forces of Self-Destruction in Bitcoin

I have worked for several years in bitcoin community.

In May 2014 I have published a paper in which I formulated the theory of programmed self-destruction of crypto currency.



Few points about this

  • My conclusion was that
    many crypto currencies were genetically programmed or bound to self-destruct. This is absolutely certain. Not because they were financial scams [though some certainly were] but because their source code had certain inevitable consequences.
  • It turns out I was not the first to formulate a similar idea in the public space, see Gapper FT paper [12 March 2014] which I find interesting but naive and poorly justified.
  • Importantly I have also postulated that bitcoin quite possibly will be exempt from this law, as it enjoyed a comfortable position of a natural monopoly with substantial positive externalities and network effects.

I have also for many year reflected on the questions of bitcoin governance. For me it was always clear since ever, that sooner or later incredible tensions will arise inside bitcoin community and that sooner or later some people will find it profitable to quit and invest their money elsewhere. My blog post about possibility of a divorce in bitcoin is cited in a recent report by the British government Chief Scientific Adviser [19 jan 2016].

I view the announcement of Mike Hearn quitting as a terrible setback for bitcoin, a blow from within. A thing close to a bitcoin assassination attempt, by a person who first have had a huge role in bitcoin, then more recently presented himself as a rebel working for but not against bitcoin. A person who had considerable authority and would be one of the few key people whom the community would trust in fixing bitcoin. Instead Mike Hearn, has now announced that bitcoin has failed after selling all his bitcoins.

I would argue that this combination is morally questionable. In private business this is OK, you sell your stocks and you retitre.

However bitcoin is different. It could be ethos or values, or just clever technology which makes that this system and community will exist and work, whatever are the circumstances. It is expected to work in North Korea, resist government intervention. It is expected to live even if Satoshi himself decided to destroy it. It is not expected to fail just because some prominent members of this community are fraudsters or liars. Or because they have been corrupted by bankers. It is not expected to collapse if one developer suddenly writes a paper in which he suddenly discovers things we knew for many years, and which he failed to fix[being in charge more than most people].

The combat for Bitcoin and the combat for money free from dominant forces of corruption will continue. 



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