Bitcoin is dead, long live Bitcoin

Tencent Technology News, January 18, Fred Wilson, partner of Union Pacific Investments, recently wrote in his personal blog AVC that there have been a lot of debates in the industry over the past year about the future of Bitcoin technology. The Bitcoin community may face a serious crisis this year, but the crisis is also an opportunity to solve the problem.

The following is the full text of the article:

Over the past year, I have written several articles on AVC analyzing the debate over Bitcoin block size. The core of this debate is whether Bitcoin's blockchain technology can be universalized to develop multiple different blockchains to achieve multiple different purposes. In other words, whether the Bitcoin blockchain itself can be improved to achieve these purposes.

I think the question can be simply summarized as: Is Bitcoin gold or is it a Visa credit card? If it is gold, then Bitcoin itself contains wealth and can be used to measure the value of other goods. If it is a Visa credit card, then Bitcoin is just a transaction network that can help wealth be quickly transferred around the world.

Mike Hearn, one of the early members of the Bitcoin Core development team, wrote in a blog post this week that "Bitcoin has failed." In the post, he pointed out that due to the deadlock over Bitcoin's block size, among other obvious problems, he believes that Bitcoin is a failed experiment.

When a heavyweight in the Bitcoin community makes a statement like this, we should pay attention. I read his article several times carefully. I generally agree with his description, but I am not ready to declare Bitcoin dead. However, I insist that Bitcoin is just an experiment and therefore may fail, and I still hold this view. I personally own a certain amount of Bitcoin, but in my personal asset allocation, Bitcoin ranks very low, even lower than my red wine collection. And I am not even a dedicated red wine collector.

At Union Pacific, in every investment we make in Bitcoin, we consider the failure of Bitcoin as a core risk factor. We will not stop doing that. So we will keep our eyes open for what could go wrong with Bitcoin. But on the other hand, we will also keep our eyes on the potential of Bitcoin and how important this technology is.

I personally think that sometime this year, the Bitcoin mining industry will diverge. At the same time, we will see new core developers and new rules for how the core developer team makes decisions. However, this could lead to a sharp drop in Bitcoin prices, a collapse of the Bitcoin network, or something worse. Such a problem would cause the entire "house of cards" to collapse. Anything is possible, even the return of "Satoshi Nakamoto" would not help.

The Bitcoin experiment has been going on for 6 years. The Bitcoin ecosystem has received a lot of venture capital. Many of the companies that have received funding are trying to develop valuable businesses based on Bitcoin technology. We have invested in at least one such company. The competition between these companies and the goals they set have had a certain impact on the development of Bitcoin, and the success or failure of Bitcoin in turn will determine the success or failure of these companies. Therefore, I believe that investment behavior will return the Bitcoin community to rationality. This trend is about to appear, or it is already appearing.

Sometimes it takes a crisis to bring everyone together. The finalization of the US federal budget was one such example. The debate over the Bitcoin block size may also be resolved in the same way. So if we are facing a crisis, we should take advantage of it. There is no better time than now.