Mike Hearn leaves the Bitcoin project and incidentally fires up momentum for Bitcoin Classic. Here are the cryptocurrency highlights of week 2:
- Mike Hearn dropped a bombshell this week, as he announced that he would leave the open-source Bitcoin project and had sold all of his remaining BTC. In his emotional blog post Hearn concludes that “Bitcoin has failed” and that “it has failed because the community has failed”. Censorship, hash power centralization and Bitcoin reaching the limits of its transaction capacity have pushed Hearn to his decision to walk away. Hearn concludes by referring to Satoshi Nakamoto, as he writes “I’ve moved on to other things” in his closing paragraph. Hearn will continue to work for startup R3 that leads a consortium of 42 of the world’s largest financial institution in exploring blockchain technology.
- Bitcoin Classic gained strong momentum as a result of Hearn’s departure. Like Bitcoin XT, Bitcoin Classic alters Bitcoin’s block size limit via a so-called hard fork should a network majority accept the new software. The difference with Bitcoin XT is that Bitcoin Classic applies only small changes to the limit. The limit would double the current limit to 2MB, and once more in two years time. The limit would thus end at 4MB. In Bitcoin XT, the limit would continue to double until it would reach 4GB. Bitcoin Classic is currently backed by major payment services Coinbase, Xapo and blockchain.info. Miners Antpool and F2Pool also expressed their support, along with other miners giving Bitcoin Classic a theoretic support of 72% of the total network hashrate.
- Cryptsy has announced that it is insolvent as a result of a hack attack one and a half years ago in July 2014. The hack caused a loss of 13,000 BTC and 300,000 LTC. This was never disclosed to the public, and the exchange hoped to get away with this by continuing to run on fractional resererves and eventually repaying its users from profits. A recent increase in withdrawals ruined this plan, and has caused Cryptsy to follow in the footsteps of the infamous MtGox. Digiconomist had predicted this in March 2014, concluding that it would only be “a matter of time before Cryptsy faces a serious accounting or security failure”. In hindsight, this prediction became a reality just four months later.
- Barry Silbert’s Digital Currency Group acquired the leading Bitcoin and blockchain media company CoinDesk. The value of the acquisition was not disclosed, but CoinDesk will be moving its headquarter to New York as a part of the deal. CoinDesk also announced Consensus 2016, an annual blockchain technology summit, to be held in May. Several speakers have already been announced as well, notably including the CEO of Digital Asset Holdings Blythe Masters.
- The price of Bitcoin crashed after Mike Hearn published his post on Bitcoin. The digital currency lost 18 percent of its value, dropping $81 to about $369 per coin. In total, this translates to a loss of more than 1.2$ billion in market capitalization. One of the few cryptocurrencies that seemed benefit from Bitcoin’s demise was Ethereum. The latter has a gas limit (comparable to Bitcoin’s block size limit) that is automatically adjusted based on an exponential moving average, hence it has fewer restraints on its growth potential. The value of Ether increased by roughly 30 percent to a current exchange rate of almost $1.30.