KnCMiner founder: Conflicts of interest are controlling Blockstream

Translator's note: The original author Sam Cole is the founder and CEO of Bitcoin mining company KnCMiner. Currently, KnCMiner's own mining pool accounts for about 4.21% (50P) of the entire network. KnCMiner has received a total of US$29 million in two rounds of financing. Regarding the debate on Bitcoin's expansion, Sam Cole prefers to expand through hard forks. The views in this article only represent the author himself.

Bitcoin is controlled, whether it is liked by some well-funded companies, most of which I call pre-revenue. (This is not a bad thing), Bitcoin is just starting to take off, and if we can get out of the current chaos (translator's note: referring to the expansion dispute), no one really knows what the future will bring. I run a (bitcoin) company, so I feel I can comment on some of the company's situations. Companies that receive VC funding must demonstrate what we call shareholder value. Even when the company starts to have revenue, you still have to maintain this shareholder value.

Shareholder value is basically the company coming up with some plan and getting shareholders to agree that the plan is good. Then, you have to deliver on it. If you do that, then shareholder value goes up and everybody is happy. The pressure is incredible, but we have to remember that we are talking about serious money, too.

This reminds me of something important.

There is a company in the Bitcoin space that has a very different approach to core development than us. KnC wanted to recruit some core developers very early on, and we just wanted to support the development of core, not to destroy the open source development community.

We ended up supporting core developers through the Bitcoin Foundation, like many others. We really thought about inviting developers to join our team, and we tried that. Blockstream took a different approach and hired core developers into the company. This sounded like an OK idea at first, after all, many core developers have full-time jobs at many companies. The difference here is that this company hired not just one developer, but these developers have high positions in the management team.

The conflict of interest is much bigger than I expected. Let me explain, as far as I know, Blockstream has no product on the market yet, which is fine, they are just getting started. But what they are trying a lot are layer 2 solutions. (One is attached to the Bitcoin blockchain, or what we call off chain solutions, and the other is side chain) Now, layer 2 solutions will use Bitcoin as a settlement layer, although I agree that it is a fantastic settlement layer. If layer 1 is good enough, then this layer 2 is not necessary. Only when the Bitcoin blockchain becomes full (layer 1 is not good enough) will we need to use layer 2 solutions, and this is the problem. Now you have a company that needs to generate so-called shareholder value and is under a lot of pressure to do so, if Bitcoin is used as a settlement layer, this company has the potential to make high revenue, and this company has hired some major core developers.

Through coordination and cooperation, the core developers at Blockstream could mitigate the current problems Bitcoin is experiencing with a simple piece of code. However, they cannot do this and they must oppose it because it reduces the value of layer 2 solutions, thereby eliminating shareholder value. I am not saying it will continue, but this conflict of interest is very obvious.

My next blog post will give an overview of Segwit and the comparison between hard forks.

Original article: https://medium.com/@KnCSam/companies-6eb2e218379#.jdwqow4pw
By Sam Cole
Translator: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/kncminer-sam-cole)