The debate about bitcoin’s scalability should be viewed as a positive indicator, not a negative one. Instead, it has delivered a barrage of negative media that might have affected bitcoin’s price. The reverberations around bitcoin developer Mike Hearn’s departure from bitcoin continue, but bitcoin’s price has begun to recover while the global stock market is tanking.
The recent price activity is only one reason Martin Tillier, a financial advisor writing in Nasdaq whom we’ve sourced before, has concluded: “Reports of Bitcoin’s Death Are Greatly Exaggerated.” Tillier thinks the discussion about bitcoin’s scalability disproves Hearn’s negative prognostication about bitcoin.
Bitcoin Gets Slammed
Hearn’s statements calling bitcoin a failure has unleashed the widest wave of bitcoin negativity to date. Some think the negative media barrage sabotaged bitcoin’s price which tumbled around 15% following his announcements.
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But bitcoin’s price has since recovered some of the ground it lost, and Tillier isn’t surprised.
Many believe Hearn’s defection was grounded in the lack of support for his own solution to bitcoin’s scalability challenge, BitcoinXT. Hearn might have been projecting his own solution’s failure onto bitcoin.
Others saw Hearn as trying to generate interest in R2EV, a startup serving big financial institutions for which he serves as chief platform officer.
Tillier, however, is reluctant to speculate on Hearn’s motives. Doing so turns one of bitcoin’s strengths into weaknesses: its diversity of opinion.
Why Hearn Is Wrong
Instead, Tillier challenges Hearn’s claim that bitcoin has failed. He claims the fact that a discussion is taking place on the currency’s scalability reflects its success. Scalability has become an issue only because bitcoin use is growing. If bitcoin were not growing, scalability would not be an issue.
How best to achieve scalability needs to be discussed, Tillier noted. But the fact that the discussion is taking place before the bitcoin network reaches capacity is a sign of strength.
Democracy and decentralization are messy by their very nature, Tillier reminds his readers. But they can facilitate decision making. The participation of multiple minds can afford greater wisdom than centralized decisions.
In an earlier CCN article, Tillier noted that the scalability debate has provided an opportunity for bitcoin to demonstrate its inclusive, democratic, open-source nature which would benefit the currency. This demonstration did not seem to be happening when the bitcoin price suffered following Hearn’s departure, but a positive outcome remains possible.
If consensus on scalability arrives before the network reaches capacity and the solution works, the benefits of the open source system will be more apparent.
What The Market Tells Us
In light of bitcoin’s more recent price improvement while the stock market has delivered its worst early year performance, Tillier said the market has spoken and decided that as commodities and stocks collapse, “bitcoin is far from a ‘failure.’”
“To paraphrase Mark Twain, then, it would seem that reports of Bitcoin’s death are greatly exaggerated,” he wrote.
The bitcoin network’s challenge continues as the currency’s popularity grows. But that is a good problem to have.
“I simply hope that the debate going forward ignores the personal and focuses instead on the reason that the network needs scaling, and on finding an agreed upon and workable update.”
Featured image from Shutterstock.