On January 14, 2016, Mike Hearn — one of the earliest Bitcoin contributors and a developer who had corresponded directly with Satoshi Nakamoto — published a lengthy blog post titled “The resolution of the Bitcoin experiment” on his personal blog (blog.plan99.net, hosted on Medium).
In the post, Hearn declared:
“Bitcoin has failed.”
He announced that he had sold all of his bitcoins and was leaving the project entirely. At the time, Bitcoin was trading at approximately $400.
On why Bitcoin had failed:
“What was meant to be a new, decentralised form of money that lacked ‘systemically important institutions’ and ‘too big to fail’ has become something even worse: a system completely controlled by just a handful of people.”
Hearn argued that an “entirely artificial capacity cap of one megabyte per block, put in place as a temporary kludge a long time ago, has not been removed,” and that the failure to increase the block size had rendered Bitcoin incapable of scaling.
On Satoshi’s original vision for scaling:
Hearn quoted Satoshi’s response to early bandwidth concerns:
“The bandwidth might not be as prohibitive as you think … if the network were to get [as big as VISA], it would take several years, and by then, sending [the equivalent of] 2 HD movies over the Internet would probably not seem like a big deal.”
He also noted that Satoshi had told him directly that Bitcoin “never really hits a scale ceiling.”
Bitcoin XT:
Prior to this post, Hearn had developed Bitcoin XT — an alternative Bitcoin client that proposed increasing the block size from 1 MB to 8 MB initially, doubling every two years until reaching 8 GB. The project failed to gain sufficient adoption, which Hearn cited as evidence that the governance model was broken.
Aftermath:
The blog post caused an immediate media firestorm. Bitcoin’s price briefly dropped, and the post became one of the most widely cited criticisms of Bitcoin’s governance. Hearn subsequently joined R3, a blockchain consortium, where he co-led the development of Corda, an enterprise distributed ledger platform.
In a historical irony, Bitcoin’s price would rise dramatically in the years following Hearn’s departure — reaching nearly $20,000 by December 2017, and eventually exceeding $60,000. Technologies such as Segregated Witness (SegWit) and the Lightning Network were introduced to address the scaling challenge through alternative approaches.
[Hearn later reflected in a 2018 Reddit AMA on r/btc that the Bitcoin Cash community should “liberate themselves from just proceeding along the path Satoshi imagined and be willing to think radical, even heretical thoughts.”]