As The Independent reports, Hearn exposed the problems within Bitcoin in a post on his Medium blog. He announced he will be selling the contents of his Bitcoin wallet and no longer taking part in Bitcoin development. He left Google in 2014 to work on Bitcoin development full time.
Hearn blames Bitcoin’s failure on the ability of a few powerful people to control the whole network. He says the system is “on the brink of technical collapse” and the currency no longer offers any extra value over traditional financial systems.
The network behind the Bitcoin block chain is now being used to capacity and can no longer handle any more traffic. The system can only process about three payments each second, leading to longer backlogs of transactions waiting to happen which in turn increases traffic further.
Hearn also notes that much of the block chain is now controlled by just a few mining pools. Over 50 percent of the computing power currently producing Bitcoins comes from just two Chinese mining pools. The monopoly they hold on the entire marketplace is preventing the block chain from growing, slowly crushing the whole network.
Bitcoin was designed so that a miner would require control of 49 percent of the hashing power to be able to dictate changes to the entire network. Now that two groups hold over 50 percent of the power, the entire system is close to falling into total disarray.
Because they control so much of the block chain, the two Chinese miners tend to be the first ones to validate transactions and get new blocks of Bitcoins, worth around $10,000 each. This is partially enabled by the Great Firewall of China which slows Internet speeds to and from the country to a crawl.
If the block chain were to grow and allow block sizes greater than the current limit of 1 megabyte, the Chinese miners would suddenly be put at a major disadvantage because their Internet connection to the rest of the world would slow down their transactions.
Other miners would validate new blocks first and the Chinese share of the block chain would decrease. Because of this, the two most prominent Bitcoin mining groups worldwide steadfastly refuse a block limit increase, stifling the entire network in the process.
In essence, Bitcoin is being compromised by self-interested miners and conflicts of interest that are preventing it from growing. The lack of growth and development means the system is now pushed right to the limit, slowing down transactions, decreasing reliability and making it far less viable as a practical financial system.
It is still possible to revive the network but only if all the involved parties agree on a plan of action. In the meantime, Hearn says Bitcoin is going into “exceptionally dangerous waters” it has never navigated before as elements of the technology behind the system start to fall apart.
