The world of bitcoin has been enduring some body shots lately. The bitcoin faithful have been tested by divisive community arguments, hardware exploit, and renewed claims of censorship by community figures. Blessed with rapid supporters, an all time price record, and renewed interest from many media organizations, bitcoin has been trending upward even with significant detractors. The news from within bitcoin may not be positive, but does it really matter long term? Bitcoin is absorbing the bad news and continuing to chug along. Whether development is moving forward, or moving laterally, the price is only moving up. Not all is well, however.
The blocksize argument, aimed at effectively scaling bitcoin, has polarized the bitcoin community like perhaps no other debate. Avid bitcoin believers on both sides, typically unified against the outside world and mainstream organizations, have found themselves at odds over the merit of increasing the blocksize of bitcoin, or simply defining what consensus means. The bitcoin community is a strange mash-up of political viewpoints, but the flavor of strong libertarian democracy tends to dominate. As a result, many possessors of bitcoin feel an intense sense of ownership that extends to having a voice in how bitcoin should be run. The absence of a government or central structure with strong leadership means many voices contend to find a solution, and the belief that consensus means 100% of users agreeing, leaves bitcoin in the lurch when it comes to implementing new ideas. Uncompromising political beliefs tend to overshadow productive compromises elsewhere, creating a weak point in a community overrun with idealists.
Not to be outdone by community disagreement, the legacy of scams and exploits has continued to find new additions in the form of ASICboost, Antminer, and the seemingly ongoing fleecing of Bitfinex users. This unappealing underbelly of bitcoin is further exposed by the semi-related but constant stream of darknet arrests targeting illicit sellers and buyers. Regardless of actual relation to bitcoin, these arrests often involve bitcoin or sites where bitcoin is the main payment method. This bad PR for bitcoin is unintentional and unwanted, but has become unavoidable. Of course this isn’t as bad as the contradiction of a community claiming to end government control but supporting internal censorship of contrary ideas.
None of this can be discussed openly, thanks to censorship on the biggest forums like /r/bitcoin, /r/btc, and bitcointalk. The original censor of commentary deemed to be counterproductive, Theymos maintains a strong monopoly on his site, BCT, and on the popular subreddit, /r/bitcoin. His unbending dedication to avoiding certain discussions coupled with his personal financial interest has led to toxic division. Not helping matters is the now opposition figure Roger Ver, a long time advocate of bitcoin who has found himself on the wrong side of the law and of a large swath of the bitcoin community. On the other popular bitcoin subreddit, /r/btc, Ver holds sway over content and discussion, presenting a different view on scaling and development.
In a fascinating disconnect, none of this negative news has negatively impacted the price. This astonishing fact could be a sign that the price of bitcoin has very little to do with the “fundamentals” underpinning the digital asset. In all likelihood, the price of bitcoin probably has much more to do with the utility of the asset as a means of avoiding capital controls and traditional banking systems in controlled economies. Exchanges act as pools of liquidity, and the plausibility that some exchanges are acting primarily as intermediaries for users avoiding capital controls is not far fetched. Secret order books and complete lack of outside audits leave many nefarious options on the table. For the average bitcoin believer, the price is a signal of intent. For better or worse, in the midst of chaos, the price is strong. How long will bitcoin be able to keep it up?