Bitcoin has gone from the leading light for the future to a flaky, shaky infrastructure.
This is the result of the Mt.Gox meltdown, along with other exchanges since. In other words, the essence of bitcoin – the blockchain and the algorithms – are all perfectly fine and make eminent sense. The issue is that the infrastructure being built for trading bitcoins is a compete Wild West, amply demonstrated by the implosion of Mt.Gox and the issues that followed.
This occurred to me once more as I picked up an interesting meme over the weekend that shows the ongoing dissent in the Bitcoin community.
The dissent is about the level of control being wielded by the Bitcoin Foundation, and whether the Bitcoin Foundation behaves in the interests of the community or for themselves.
The accusations have been made before but revived by a newly, vocal member of the bitcoin community, Tom Butterfield.
Who is Tom?
He didn’t really exist two months ago, and then wrote a controversial piece on medium (deleted since) about how most bitcoin news services were taking money for articles.
For a mere $250 you could get your brand new, flaky shaky bitcoin exchange up and known amongst the key bitcoin communities worldwide.
There’s nothing illegal about the news services doing this, but the reactions were interesting.
Probably the most logical reaction came from Cryptocoins News:
Paid articles are somehow wrong? Which news publication doesn’t accept paid articles or advertorials? I thought… Wait a cotton-picking minute… this journalist is saying the site I write news for is dishonest and malleates the truth? The Truth? Who is this self-appointed policeman who’s encouraging users to stop reading our news!
Anyways, it led to lots of debate online, and some other interesting dialogue from Cryptocoins News:
“Writers interested in writing on the topics of Morals, Truth and Cash could look into the centralized control being practiced by Bitcoin Foundation sponsored Bitcoin.org’s Press Center. Notice who they select to speak “on behalf of Bitcoin” and which voices they seek to silence. What they want the mainstream media to hear about Bitcoin and what not. Surprisingly, their reactionary thoughts and opinions are recorded for all to see in public discussions here and here.”
This just reflects the chaotic nature of the Bitcoin community today. A community to which the Bitcoin Foundation is trying to bring order.
For example, the Bitcoin Foundation does support bitcoin.org so that it is regularly updated and the info is made available in more languages, but they do not control the content. The content is individually managed, and content is decided by the group that foudned and currently run the service, which is not the Bitcoin Foundation.
There’s also a lot of conspiracy theories out there, post the Mt.Gox meltdown.
For example, Tom followed up with another update on issues with the Bitcoin Foundation in a piece that appeared on 31st July 2014 titled: Pissed about Bitcoin Prices? Some of the blame falls on the Bitcoin Foundation (deleted yesterday).
This article was dripping with the sort of stuff that gets court action, accusing the leaders of the Bitcoin Foundation of various illicit activities such as having direct involvement with the Willy Bot on MtGox that caused the collapse and getting funds out of MTGox after its collapse, when no-one else could.
In March, this prolific blogger about all things bitcoin announced war against the Bitcoin Foundation, and specifically its leadership, for allowing the Bitcoin community to lose millions over Mt.Gox.
He stated, as does Tom, that they were complicit in the failure as friends of the Mt.Gox leadership, and should step down.
Much of this anger is directed at the Bitcoin Foundation because the Foundation has stepped up to represent the fledgling market. A market that wants to exist without government and, from what I see, without governance.
That is why they resent a centralised leadership in any form, and the Bitcoin Foundation is being seen as a centralised leadership. The community want decentralised anarchy, or so it seems, which is why I’ve said so often that Bitcoin will not work without regulation.
Intriguingly, TwoBitIdiot (real name Ryan Selkis) retracted his claims shortly after declaring war, and openly apologised at the Bitcoin Annual Members meeting two month later:
As many of you might know, I’ve been pretty critical of some of the policies and individuals associated with the Bitcoin Foundation. I did want to say that I think that the organization is positive and has done phenomenal work. I’m excited about the new board of directors and one comment before my question. I wanted to echo a private apology that I made with Jon for being overly critical in some of the events of early March and I wanted to just do that publicly. That said, I think a lot of the issues that I’ve had with the foundation had to do with transparency where you’re representing an industry that relies on a public blockchain which is radically transparent.
He also blogged as much shortly afterward.
Reading through the lines of all of this, I get a sense that there are many people who were seriously affected by the losses on Mt.Gox, and want to take their anger out on someone. That someone is the central leadership of the Bitcoin Foundation.
The anger is directed there because everyone thought Mt.Gox was stable. Instead, it was a flaky shaky exchange that the Bitcoin Foundation should have alerted to the community as an issue well before its collapse (Mt.Gox continued to trade for almost a year after the issue was known by the core Bitcoin constituency).
The Bitcoin Foundation is clearly resented by some of the Bitcoin community for acting as the representative of this community. This is because they see the Foundation acting as an de facto Bitcoin Government, and yet Bitcoin is meant to have no government.
Finally, if the claims about the leadership of the Foundation having any involvement in the Mt.Gox failure are ever found to be true, then you have all the more reason to see why Bitcoin (a) needs regulation and structure and (b) will fail.
I'll write more on the Foundation tomorrow, as this story is only showing one side of the bitcoin. The other side is the achievements the Foundation are making in moving bitcoin forward to be a realistic alternative digital value store.
On a final, final note, Tom Butterfield’s conversation moved onto Reddit, where he responded to requests to show that he actually had some substance to his claims. Then he disappeared.
This then kicked off another Reddit thread: Mysterious disappearance of Tom Butterfield?
Does anyone know what happened, or is happening, with Tom Butterfield? (He's the blogger who conducted the "sting" a few weeks ago on Bitcoin news websites to expose those that accept paid-for articles on bitcoin products and services)
Just a few days ago, he posted a link here to a new blog entry on medium.com wherein he claimed to have definitive proof that Jon Matonis and others in the Bitcoin Foundation are corrupt, involved with the Willy Bot on MtGox, and that they were even able to withdraw millions of dollars from MtGox after it was shut down in February for everyone else. He claimed to have all their financial transaction data, shell company information, and even emails proving all of the above.
However, just two days ago, he started posting some of the financial data here on reddit and stated that he was in the middle of uploading the rest of the evidence to his blog.
That's when things got really strange.
First, his Twitter account was deleted or blocked, and then his reddit account here (with gold), was also deleted completely. (Note: the original financial data he posted is still here, so I doubt the mods took action against his account for posting it).
His blog at medium.com has sat untouched since (likely because it's tied to his deleted Twitter account), and I haven't seen him post anywhere else either.
Anyone know what happened or where this guy went? Did anyone see the rest of his evidence before he disappeared?