Last updated on October 21st, 2016 at 11:34 am
Every week Bitcoin makes further progress in the world economy: Larger and larger businesses are accepting it as payment, governments continue to grapple with regulations, and a complex digital infrastructure is growing on top of the core protocol. Such innovations speak to the technological ingenuity of the human race at a time when legacy financial networks are failing the average person.
But not everything is going great in the world of Bitcoin. According to Epicenter Bitcoin’s recent interview with developer Mike Hearn, progress on the protocol has come to a “complete halt.” Features that have been planned for years are not getting implemented for multiple reasons — chief among them, professional developers have steadily lost interest in the Bitcoin platform due to heated disagreements and lack of funding.
Hearn hopes to solve this problem with Lighthouse, a new app he’s developing that will allow decentralized crowdfunding through the Bitcoin network. In addition, Hearn’s new company Vinumeris will allow targeted, market-driven funding of special Bitcoin upgrades. Bitcoin enthusiasts and industry leaders will be able to directly contribute to projects that improve the Bitcoin code, and help build the decentralized infrastructure that the internet deserves.
Identifying the Problem
Mike Hearn is a former Google engineer who now works on Bitcoin full time. He contributes to bitcoinj, a Java library that interacts with the blockchain and serves as the basis for wallets such as Hive. He also has a very frank perspective on the current state of Bitcoin, and I previously reported on five problems that he sees developing in the Bitcoin ecosystem.
One of those problems is Bitcoin’s volunteer-based infrastructure. Although for-profit companies like BitGo and Coinbase do plenty of great work with Bitcoin distribution and security, the actual protocol itself is open-source and has nobody inherently funding it. Bitcoin itself is not a company — instead it’s a “public good,” in Hearn’s words. Therefore, it needs special mechanisms for public funding.
This was partly why the Bitcoin Foundation was created — to help fund Bitcoin development by institutional means. According to Hearn, however, the Bitcoin Foundation actually employs very few people to work on Bitcoin core:
The only people doing any kind of heavy lifting on the protocol today are people paid by the Bitcoin Foundation. And when I say ‘people’ I mean just Gavin [Andresen] because actually, there’s only three people paid by the Foundation to work on Bitcoin code-wise. And of those, Wladimir [J. van der Laan] and Cory [Robertson] both refuse to work on the protocol, partly because of social issues that have come up. Basically progress on the Bitcoin protocol has ground to a halt. Complete, complete halt. So this is a crisis period for Bitcoin in that sense.
So essentially, the only person doing real work on improving the core Bitcoin code is the Bitcoin Foundation’s chief scientist, Gavin Andresen. Features which have been considered for years — including variable transaction fees depending on confirmation time desired — have been stuck in limbo because there aren’t enough people willing or able to implement them. Hearn makes the argument that a better funding model is needed to compensate developers such as himself and Andresen.
A Lighthouse in the Distance
A critical component of Hearn’s solution is Lighthouse, an application that enables assurance contracts directly through the Bitcoin network. It’s a feature that was built in to the Bitcoin protocol by its creator Satoshi Nakamoto, but until now there wasn’t an application that made it easy for anyone but hardcore developers. With Lighthouse, Hearn hopes to utilize the Bitcoin protocol in a brand new way on a mass scale. If Lighthouse makes assurance contracts easy for the average user, it will revolutionize crowdfunding on the Bitcoin platform.
In the hypothetical example above, a musical artist has set up a project that will allow him to collect funds needed to create a new album. If the fans pledge a total of 20 BTC to the project, the artist can claim the funds and use them to work on the project. Notably, the funds are only claimable if the full amount is pledged, and they can also be revoked before the threshold is reached. This puts a lot of power in the hands of contributors, who may be hesitant to donate their valuable Bitcoins. Lighthouse allows donators to reconsider their pledge and essentially take it back before the crowdfunding session is over.
The ability to revoke a pledge is not exclusive to Lighthouse — other crowdfunding platforms like Kickstarter allow backers to cancel pledges, but strongly discourage it. Hearn also concedes that more complex platforms can be built on top of Lighthouse that have different rules for campaigns. Lighthouse is merely an app that streamlines the assurance contracts feature of Bitcoin — it’s up to developers and entrepreneurs to create actual companies that use Lighthouse to capitalize on this underused feature.
Kickstarter for Bitcoin Core
One of those people is Mike Hearn himself. In addition to Lighthouse, he’s in the process of creating a for-profit company called Vinumeris — a website that uses Lighthouse as a primary means of funding Bitcoin feature development. Hearn will be the only developer accepting projects at first, because Vinumeris is first-and-foremost a way for him to make a living. This falls in line with his reasoning that developers should be able to work on Bitcoin itself, without relying on institutional help:
People should be able to quit their job and upgrade Bitcoin in some way, and not have to work for the [Bitcoin] Foundation. They should be able to do other things.
For now, Vinumeris is a work-in-progress. It also remains to be seen whether people are willing to part with their Bitcoins in order to essentially pay Mike Hearn for his work on the protocol. However, he claims to have been in talks with companies like BitPay and Coinbase and that they’re open to the idea of donating toward his projects:
There’s plenty of work to do … Running out of work is not an issue. The question is to what extent will the Bitcoin community step up and fund it. Because the companies have their funding, they’ve got their profit, they’ve got their venture capital, and they need Bitcoin to work well. So my plan is mostly to get these companies to pledge.
It will be interesting to see how many projects get funded through Lighthouse and Vinumeris, but they have the potential to seriously kickstart the development of new upgrades for Bitcoin. Smart contracts, micropayment apps and autonomous businesses are all among the possibilities inherent in the code. Bitcoin just needs a dedicated, paid group of developers who can bring such fascinating features to the masses. Perhaps Mike Hearn’s Lighthouse will help make it happen.