“The End of the Bitcoin Experiment”

On March 13, Liu Jiaolian’s WeChat account published an article titled “Don’t Buy Bitcoin”, which introduced the economist Niels van der Linden’s public opposition to Bitcoin in 2011, which aroused the interest of many friends. Later, on March 17, the article “Federal Reserve Rate Hikes Landed, Bitcoin First Falls and Then Rises” mentioned Mike Hearn’s several concerns about the development of Bitcoin in 2016, one of which was that Bitcoin computing power was concentrated in China.

Today, let’s take a closer look at the circumstances under which Mike Hearn raised these concerns and pronounced a death sentence on the future of Bitcoin. Mike Hearn published this article on January 14, 2016 (Beijing time on January 15), titled “The resolution of the Bitcoin experiment” [1].

When Mike Hearn used an article to sentence Bitcoin to death, the price of Bitcoin was about $429. Today, the price of Bitcoin is around $41,000.

Let me briefly explain that Mike Hearn was originally an engineer at Google and had close communication with Satoshi Nakamoto in the early days of Bitcoin. Even when Satoshi Nakamoto disappeared, he first posted his last post on the forum and then sent a private email to Mike Hearn. Satoshi Nakamoto did not even reply to Gavin Andresson's email, and his last known communication was with Mike Hearn. All this history is recorded in my book "The History of Bitcoin".

Mike Hearn later quit his eight-year job at Google to work on Bitcoin full-time, but by the time he wrote this article in 2016, he had become so embroiled in a feud with other major developers that he decided, as he wrote in his article, to “stop working on Bitcoin and sell all his Bitcoins.”

Why? Why did Mike Hearn do this? Because he had already sentenced Bitcoin to death in his heart.

He said: Bitcoin has failed because the community has failed.

He added: Imagine if you had never heard of Bitcoin, would you consider using such a payment network:

* Cannot move your existing money

* Out-of-control, unpredictable, high and rapidly increasing fees

* Allowing buyers to return their payments by simply pressing a button after shopping in the store [Note by Liu Jiaolian: He was probably complaining about the RBF feature that was newly added to Bitcoin at the time]

* Suffering from a large backlog of unprocessed, fragmented payment transactions [Liu Jiaolian Note: refers to the transaction congestion problem before Bitcoin expansion]

* …controlled by China [Note by Liu Jiaolian: referring to the problem that most of the global computing power was concentrated in China at that time]

* …the companies and people who built it are in a “civil war”? [Note by Liu Jiaolian: refers to the protracted expansion dispute from 2015 to 2017]

Mike Hearn mused to himself: I guess the answer is no.

Later in the article, he mainly talked about the capacity problem faced by Bitcoin at that time, and how he participated in proposing the "democratic" solution of Bitcoin XT (BIP 101) - that is, allowing miners to vote on whether to expand the capacity limit of the block.

In fact, Mike Hearn has a logical contradiction here: on the one hand, he complains that Bitcoin computing power is "monopolized" by Chinese miners, but on the other hand, he proposes that miners vote to make decisions.

We know that in the early design of Bitcoin, Satoshi Nakamoto quietly set a size limit of 1 megabyte for each block in the Bitcoin blockchain, which led to a natural limit on Bitcoin's throughput. Based on the size of each Bitcoin transaction, it can be inferred that there are about 7 transactions per second. The number of transactions per second is the TPS (Transaction Per Second) that was later used by countless people for speculation and hype.

I will not go into the specific technical details here. In short, this throughput problem greatly troubled the entire Bitcoin community at the time and caused serious divisions.

Mike Hearn criticized bitcoin.org maintainers for removing Coinbase’s wallet from the site simply because Coinbase’s CEO publicly supported Bitcoin XT (in fact, Coinbase Wallet also added support for Bitcoin XT). He said this is a form of censorship.

The developer theymos who was criticized responded on Reddit [2] saying:

Bitcoin is not a democracy. Not a miner democracy, not a user democracy. Switching to XT is not a vote for BIP 101 - it's abandoning Bitcoin in favor of a separate network/currency. It's a good thing you have the freedom to do so.

Theymos then said this famous quote:

One of the great things about Bitcoin is its lack of democracy: even if 99% of people use Bitcoin, you are free to implement BIP 101 in a separate currency, and Bitcoin users cannot democratically force you to use the real Bitcoin network/currency. But I have no obligation to allow these independent forks of Bitcoin to exist on r/Bitcoin, and I will not do so.

"One of the great things about Bitcoin is its lack of democracy," this sentence was used by Mike Hearn to complain about.

But from a political philosophy perspective, theymos is undoubtedly right. There is no tyranny of the majority — democracy — in Bitcoin because there is no coercion built into its design.

The majority cannot force the minority, and the minority cannot force the majority.

Mike Hearn is willing to create his own forked coin, and he has complete freedom to create a forked coin. However, he has no right to promote or require Bitcoin to develop according to his wishes.

This is what theymos said at the beginning: You can promote BIP 101 as an idea. You cannot promote the actual use of BIP 101 on r/Bitcoin. (Only) when the idea reaches consensus, it can be launched.

Bitcoin relies on consensus, not democracy, let alone power.

Later, Wu Jihan, based on his position of power, called on a large number of Chinese miners to bring computing power to disrupt the market, but failed. He then angrily hard forked out BCH (Bitcoin Cash). A few years later, BCH has already declined.

Later, BM promoted a million TPS and launched EOS under the support of a group of big Vs, making a lot of money. A few years later, EOS became mediocre.

Times have changed. Who would have thought that today Bitcoin's computing power has been completely de-Sinicized, the adoption of technologies such as Segwit has achieved effective capacity expansion without expanding the physical size, and the price of Bitcoin has risen a hundredfold. Challengers who proposed hard forks or alternative solutions have all failed in the test of time.

Perhaps until today, many of them still do not understand what consensus is.

Perhaps until today, many people still believe that the advantage of the majority or the power of a few interest groups is the most important and effective means to force everyone to reach a consensus.

People who hold this idea may never understand the design philosophy and true value of Bitcoin.

Satoshi Nakamoto said that Bitcoin is an experiment in money. Is this experiment "finished" as Mike Hearn said? No, far from it. It is still going strong and soaring.