Two years ago, Hearn quit a cushy programming job at Google’s Swiss offices to devote himself full time to his great passion: the virtual currency bitcoin.
He was one of a handful of developers in the world dedicated to maintaining the basic software that governs the creation of new bitcoins and the network on which the financial transactions take place.
But a nasty fight has torn apart the small brotherhood of bitcoin developers and raised questions about the survival of the virtual currency. Hearn, until recently a prominent leader of the bitcoin project, became so disillusioned that in December he sold his last few hundred bitcoins and quietly took a job at a start-up.
HIS impassioned blog post was an announcement that he was leaving: “Bitcoin has gone from being a transparent and open community to one that is dominated by rampant censorship and attacks on bitcoiners by other bitcoiners.”
The dispute has exposed fundamental differences about the aims of bitcoin and how online communities should be governed. The two camps have broadly painted each other as, on one side, populists who are focused on expanding bitcoin’s commercial potential and, on the other side, elitists who are more concerned with protecting its status as a radical challenger to existing currencies.
In the past six months, the divide has led to death threats against bitcoin developers and hacking attacks that have taken down internet service providers. These internal struggles have surfaced as the bitcoin technology is gaining credibility. Throughout the controversies that have plagued the virtual currency — including many instances of theft and fraud — the basic software has continued working as expected.
That consistency has pushed the value of all outstanding bitcoins to more than $6bn and led many venture capitalists to imagine the technology as the future of finance, a cheaper and faster way to carry out financial transactions of all sorts.
Part of bitcoin’s appeal has been its promise to provide a more reliable and trustworthy alternative to existing currencies and financial networks. Unlike the US Federal Reserve and Wall Street, institutions managed by humans, bitcoin was supposed to rest on the infallible logic of maths and computer code.
The current dispute, though, is a reminder that the bitcoin software is an evolving product of the human mind, and its deployment is vulnerable to human frailties and divergent ideals.
GAVIN Andresen, a close collaborator of Hearn’s and one of the longest-standing contributors to the bitcoin software, says the dispute is likely to cause disruptions in the short term, but he disagrees with the notion that it will damage bitcoin’s long-term prospects.
Other bitcoin leaders express a similar sentiment, and investors have been inclined to believe them: the price of a bitcoin has risen in recent months, to about $430.
Some of Hearn’s allies hope the deadlock can be broken if the largest bitcoin companies get behind Bitcoin Classic, a new version of the basic bitcoin software that was announced this month and that aims to expand the network’s capacity while also introducing new standards of governance.
But Hearn is convinced it is too late.
“It never occurred to me that the thing could just fall apart because of people getting crazy and having fundamental political disagreements over the goals of the project,” Hearn says. “It’s really shaken my faith in humanity.”
Hearn, 31, grew up in Manchester, England. He was one of the first serious programmers to take an interest in bitcoin, in April 2009, a few months after its mysterious founder, known as Satoshi Nakamoto, let it loose.
Like many of the programmers who took an early interest, Hearn admired the rule-bound nature of the system. Only 21-million bitcoins would ever be created. And the distribution of new bitcoins was clearly laid out, relying on mathematical algorithms that left no room for human meddling.
Satoshi had written the software containing these rules, but after it was released, anyone could see the code and make changes. The people downloading this open-source software voted on which changes to accept based on which version of the software they chose to use.
If Satoshi proposed changes they didn’t like, they didn’t have to download and run it, and anyone could offer an alternative. Bitcoin, like many other open-source projects, was a sort of leaderless democracy — a new way of governing human behaviour online.
Hearn joined a small but growing group of volunteers who worked on the basic bitcoin software — the most committed of whom became known as the core developers. They met in person only a handful of times, but they would chat constantly online and send e-mails discussing potential changes.
The leader of this effort, after Satoshi bowed out in 2011 (without ever revealing a real identity), was US-based Andresen, who kept everyone on the same page.
THE bonhomie began to fall apart last year because of what appeared to be a positive development: the continuing growth in the number of bitcoin users and transactions.
The problem was that, early on, Satoshi established a limit on the number of transactions that could be processed every 10 minutes. The cap was meant to ensure that the computers processing transactions would not be overwhelmed.
But Satoshi had suggested that the limit should be temporary, and as the number of transactions inched closer to the cap, delays started to occur and transactions were not going through.
When Hearn began pushing for changes to the core bitcoin software to allow for larger blocks of transaction data, he faced resistance. Gregory Maxwell, a largely self-taught programmer who had worked on Wikipedia and the Mozilla web browser, said larger blocks of transaction data would be harder for ordinary computers to process. The result, he warned, would be to hand control over the network to big companies that could afford powerful computers.
For Maxwell, slower transactions seemed to be a secondary issue to protecting bitcoin from centralised sources of authority. Hearn retorted that the technical issue wasn’t such a big deal; ordinary computers could mostly process the larger blocks of data. More important, he argued, was that bitcoin needed to succeed as a cheaper, faster payment network, such as PayPal or Visa.
If bitcoin wanted to compete with mainstream payment systems that could process thousands of transactions a second, it would have to do away with its limit of fewer than seven transactions a second.
As the debate grew increasingly fractious, friendships among the core developers fell apart. Hearn and Andresen decided last year that the only way forward was to give the vote to the people using the software. They put together a version of the software — largely the same as the current software, but with an allowance for more transactions — called Bitcoin XT.
If a clear majority of the system’s users downloaded the software, it would become the new law of the land — what is known in open-source terminology as a fork.
The release of Bitcoin XT was viewed by Maxwell as a betrayal. It was democratic, but he said decisions about the core software should be made by technical experts — not by populist campaigns.
Maxwell and his supporters tried to engineer a compromise. They organised meetings in Montreal and Hong Kong for leading developers to discuss ways to scale bitcoin. Andresen went to the first, where Maxwell’s allies announced a more gradual plan for increasing network capacity. But Andresen and Hearn felt the recommendations didn’t go far enough.
Despite the discord, Hearn has not lost faith in all of the ideas behind bitcoin. The start-up in New York, where he has taken a new job, R3, is developing networks for banks to enable cheaper and faster ways to trade assets of all sorts.
This work lacks the purity of maintaining bitcoin, but after months of sleepless nights, fretting about betrayed promises, Hearn says: “I want to be in a professional environment again where people are grounded in some sort of business reality.”-New York Times