Will Open Letter To Bitcoin Community Calm the Market?

by Tim Sloane 0

32 developers released an open letter to the Bitcoin community today urging everyone to remain calm:

“Bitcoin is many things to many people. However, the development and maintenance of Bitcoin is a human endeavor. Satoshi sought review and cooperation, and the subsequent work by Bitcoin’s developers has made the system more secure and orders of magnitude faster. The Bitcoin developer community is dedicated to the future of Bitcoin, looks after the health of the network, strives for the highest standards of performance, and works to keep Bitcoin secure on behalf of everyone.

We’re committed to Bitcoin and responsive to the needs of the community. For the past five years, we’ve written code and managed over 50 Bitcoin releases and reviewed more than 45 formal proposals to improve Bitcoin’s performance, security, and scalability. Technical discussions, while heated at times, are always focused on improving Bitcoin.

Much work has already been done in this area, from substantial improvements in CPU bottlenecks, memory usage, network efficiency, and initial block download times, to algorithmic scaling in general. However, a number of key challenges still remain, each with many significant considerations and tradeoffs to evaluate. We have worked on Bitcoin scaling for years while safeguarding the network’s core features of decentralization, security, and permissionless innovation. We’re committed to ensuring the largest possible number of users benefit from Bitcoin, without eroding these fundamental values.

There will be controversy from time to time, but Bitcoin is a security-critical system with billions of dollars of users’ assets that a mistake could compromise. To mitigate potential existential risks, it behooves us all to take the time to evaluate proposals that have been put forward and agree on the best solutions via the consensus-building process.”

This letter comes on the heels of a rapid decline in the value of bitcoin, driven by the controversy around a potential modification to Bitcoin’s block size, that caused a ‘Flash Crash’ as described in the WSJ article “BitBeat: Bitcoin Price Drops on Block-Size Debate, ‘Flash Crash’.

It doesn’t appear that the open letter has soothed the savage beast that is the Bitcoin community as the value of bitcoin has remained relatively steady since the letter was published. Clearly the Bitcoin community is fearful that any technological change may bring Bitcoin crashing down. This fear is not unwarranted as Bitcoin has experienced several near death experiences in the past.

In March of 2013 a change made to Bitcoin’s open source code to improve performance utilizing an updated database engine created a 6 hour interruption in service. A similar brownout occurred in July of this year when miners colluded to game the system. But it isn’t only technology that puts bitcoin at risk because Bitcoin is much more than just a computer algorithm. Bitcoin’s operation embodies social science (e.g. the behavior of the miners, developers and other bitcoin communities), political science (e.g. the voting process that determines future enhancements), economic theory (e.g. bitcoin value, incentives that keep miners mining), and computer science (e.g. software and oh so many other ways), to name just a few. There is no model that can predict the outcome of any operational change to the Bitcoin platform. Should anyone create such a model it would surely win them a Nobel Prize in Economic Sciences.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

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