First 2016 Bitcoin Crisis At The Doors

Mike Hearn leaving the Bitcoin Core team causes a value free fall, but what is behind his quitting? A conspiracy to kill Bitcoin is going on?

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First 2016 Bitcoin Crisis At The Doors

Another Bitcoin Core developer, Mike Hearn, has left the team on 14th of January. The consequence was an abrupt drop in the value of Bitcoin and a lot of discussion all over the net. But what are the real motivations behind Hearn’s leaving?

Mike Hearn

Mike has developed the Java version of the Bitcoin software, and has been working with the technology for around five years. He left a good job as a security engineer at Google, just to risk his career in the Bitcoin world. This should make him a person above any suspicion.

“I’ve spent more than 5 years being a Bitcoin developer. The software I’ve written has been used by millions of users, hundreds of developers, and the talks I’ve given have led directly to the creation of several startups. I’ve talked about Bitcoin on Sky TV and BBC News. I have been repeatedly cited by the Economist as a Bitcoin expert and prominent developer. I have explained Bitcoin to the SEC, to bankers and to ordinary people I met at cafes.”

But we must not forget one thing: the interests behind Bitcoin and cryptocurrencies are huge, and I’m not talking about the miners’ Bitcoin reward. If there’s something that can relieve humanity from the perverted money production system of Central Banks, it’s Bitcoin (and probably nothing else).

Bitcoin developers continuously receive death threats, and Mike could have been among them, especially after the big fight that took place on the block size change. On word of Mike, he’s leaving because the Bitcoin experiment has failed, and the situation he is painting is surely not an easy one, but how much can he be trusted in this situation?

Hearn is the one that tried to sneak “Blacklisting code” into Bitcoin XT: a piece of code that would “mark” Bitcoins, and would prove useful in case of theft, but he didn’t document it anywhere, and also pushed another “hidden” technical feature to neutralize the use of Bitcoin over the TOR network, justifying the addition as a prevention against DDoS attacks on Bitcoin nodes.

Bitcoin Core Developer Mike Hearn

Conspiracy Theory

Hearn quitting comes exactly in conjunction with an interesting thread on Reddit, that explains how much Bitcoin is doomed, how it is inferior to Ethereum and “must be replaced”. The thread link has been spammed to a lot of users.

But there’s more: in November 2015, Hearn joined R3CEV, a new cryptocurrency project backed by 30 large banks from all over the world.

First of all, by joining a project funded by banks, Hearn clearly shows that he never understood (or was going to follow) the deep motivation behind the creation of Bitcoin: removing the ground under the Central Banks’ feet.

Coincidences in life happen all the time, but in business? Not so much. Is it possible that Bitcoin is undergoing an organized assault to destroy its value?

Another interesting thread on Reddit brings up what seems to be irrefutable proof that Hearn is in cahoots with the R3CEV organization for the destruction of Bitcoin.

This week really seems the one chosen by somebody to spread FUD (Fear, Uncertainty, Doubt) over Bitcoin.

Bitcoin has several enemies: banks and governments in primis, but we shouldn’t forget competing cryptocurrencies. And this project R3CEV is a conjunction of both.

Apart from the traditional monetary world, if there’s somebody that has a lot to earn from the fall of Bitcoin, it’s the altcoins. A lot of people have spent a lot of time on altcoins and alternative blockchain projects. Some of these have also been funded with hundreds of thousands of dollars, in some cases millions and some of these investors have a lot of power in their hands.

Fran Strajnar, Co-founder of BraveNewCoin, says that we probably shouldn’t care too much what banks are doing:

“The reality is that we are 100% going to see 5-6 major blockchains for different uses. This cannot be stopped as anybody can write a blockchain now, but the question is: what does this mean for bitcoin. Should Bitcoin even care what these guys do? I would say let's not care what the banks do. Bitcoin is already here and has its own problems for scaling. if these problems are solved, Bitcoin will do its own thing. We will have 2 different communities: Bitcoin & 'Distributed Ledger Industry', doing different things in different sectors, and maybe 10-15 years from now, people will start to want interoperability between these private chains and Bitcoin.”

Fran Strajnar, Co-founder of BraveNewCoin

Here we have a group of 30 banks that have invested an unknown sum of money on a new blockchain project, and they probably need to defuse Bitcoin, if they want to have success with their project.

The opinion of Oleg Khovayko, Computer Science expert and CTO at Emercoin, is that R3CEV is a laboratory, an entity external to banks that allows them “play” with the new technology without being affected by the stringent bank regulators:

“Banks are strictly regulated. Because of this, every serious bank has a powerful legal department, and every bank action is approved in there.

Cryptocurrency, instead, is “terra incognita”, something that seems to have some relationship to money, but it is not safe for a bank to treat, and nobody knows what benefit the blockchain can bring to banks yet.

So, banks set up this consortium and cooperate to create an external entity: R3CEV. If anything happens in that, they won’t be affected.”

Oleg Khovayko

The Standard

However, a replacement for Bitcoin is far from easy to produce, for a simple reason: Bitcoin is the standard.

There was a time when Windows wasn’t as good as it is now, it was terrible, and in comparison to MacOS and AmigaOS it was really terrible. Despite this, Windows kept selling much more than anything else, because it was already spread over millions of users, it had a huge applications park, and PC parts were cheaper, in some cases much cheaper, than Macs and Amigas. It was crappy, but Windows was the standard de facto.

Later on MacOS was recovered and rebuilt by that marketing and managing genius of Steve Jobs, but Amiga died. If it hadn’t been for Jobs, MacOS would have died as well.

With Bitcoin, we are in the same situation: Bitcoin is not the best technology out there, there are some that are technologically superior, but Bitcoin is the first that has set foot.

It’s hugely adopted when viewed in respect to other cryptocurrencies and a lot of people have put money in it, some have put a lot, some much less, but everybody in the Bitcoin community has interest in keeping it alive and seeing it walk up its path.

At the moment, Bitcoin is the standard de facto, and by a long shot. A conspiracy to kill it shouldn’t be watched like something strange or improbable, quite the opposite: there’s business, and there’s fight, and this is exactly what’s happening.

But killing Bitcoin is probably harder than anyone can imagine. A group willing to kill Bitcoin, should not only manage to kill hopes in all those anarchists and people who understood what Central Banks are, it should also manage to implement such a huge infrastructure like Bitcoin already has.

Bitcoin Lifebelt: Investments For 1 Billion USD

Bitcoin is today floating quietly over around one billion dollars invested by a lot of people, in a lot of different platforms, services, venues, applications. No other cryptocurrency features a similar mass of money as part of the asset, and very possibly no other cryptocurrency will for several years.

Thanks to these investments, Bitcoin is already used as real money in a lot of places, thanks to the adoption of large store chains like TigerDirect, Dell, Microsoft, and many others and the SHIFT Card from Visa in partnership with Coinbase recently released allows users to pay in Bitcoins in any of the 38 millions of venues where Visa is accepted around the planet: on a population of around 7.4 billions, that’s around one shop every 200 persons. No other cryptocurrency is so well widespread, and by far.

The First Crisis Of 2016

2015 has been a very interesting year, and many forecast an even more intense 2016, but this doesn’t mean the path will be covered in roses: Bitcoin has passed the ignoring and laughing phases, and is now in the fighting phase.

We must never forget that a lot of people that entered the cryptocurrency sector are not in it for any ideal: they are in it for money. It’s a large market with an incredible expansion forecast in the next few years. These people wouldn’t blink an eye if Bitcoin dies: enough when their business will flourish.

What we are seeing here is only one of the battles Bitcoin will have to go through in its near future. As Hari Seldon would have said: this is just the first crisis of 2016. The Bitcoin community will have to get ready for stormy seas.

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