Circle CEO Jeremy Allaire has called on bitcoin’s core developers to “step up” and create a more open, inclusive and well-defined process for the protocol’s development.
Describing the current state of development as “very ad-hoc, reputation based” and unwelcoming to new participants, he said that the amount of money being invested into bitcoin demanded “a more well-defined governance process and contribution process”.
“The whole industry should be contributing to the IP of bitcoin,” Allaire told CoinDesk ahead of the Bitcoin Finance 2014 conference in Dublin on 2nd July. “The reality is today that we’re shut out.”
In a wide-ranging interview, he said that a significant number of people currently on Circle’s waiting list would have full access by at least the end of July, that volatility was the key impediment to bitcoin’s progress, and that Circle was generally supportive of Ethereum developer Vitalik Buterin’s proposals for solving the problem of centralized mining.
Proper standards for bitcoin development
Pointing towards institutions like the World Wide Web consortium as a possible model, Allaire said it is time for the bitcoin community to develop a more sustainable system for the development of the core protocol, which is currently largely managed by a few core developers employed by the Bitcoin Foundation.
Although he declined to name any specific persons, he said that “all of the core developers, they need to step back and think about how do we get more IP contribution and what kind of process is needed to facilitate that”.
“For quite some time [bitcoin] was justifiably [managed by] a more narrow group of people operating in a meritocracy but now that this has got to something that entire industries are being built on, something needs to evolve there.”
His comments echo those made by bitcoinj developer Mike Hearn, an advisor to Circle who recently told Epicenter Bitcoin that development on the bitcoin core had ground to a “complete halt” and that it was “radically underfunded and underdeveloped”.
“The risk is that you end up with a hard fork scenario,” said Allaire, referring to a situation where the protocol is copied and developed as a separate project. “If it’s not addressed, I think that a range of ecosystem participants will just say we’re going to do a hard fork and try and do this in a more scalable community-based way.”
This isn’t the first time members of the bitcoin community have raised the issue of how the bitcoin protocol is developed. When current lead developer Wladimir Van Der Laan took up the role in February this year, he told CoinDesk that a top priority was improving the developer documentation in order to encourage participation.
Decentralising mining and regulation
Although the furore around ghash.io’s share of the bitcoin mining network has largely died down, the issue itself has yet to be solved. While there has been disagreement about whether centralized mining is a problem or not, Allaire said, “a truly distributed decentralized network … is really core to the DNA and the principles of bitcoin”.
Ethereum developer Vitalik Buterin recently proposed changing bitcoin mining to make it more resilient to specialised ASIC mining hardware and to allow for CPU mining so that the barrier for participation is lower, which Allaire said “aligned well” with internal Circle discussions about the issue.
“But I don’t agree that the sky is falling and all of a sudden there’s going to be double-spending attacks … because I think there’s an alignment of economic incentives,” he added, noting that he believes it is in the economic interests of mining pool operators to maintain trust in the system.
Although he suggested that large-scale investors would inevitably begin investing to secure bitcoin’s decentralized infrastructure, he said Circle, though venture capital-backed, was not “in a financial position to make vast global investments in [bitcoin] infrastructure right now”.
On regulation, he rejected the idea that venture-backed bitcoin businesses are embracing government regulation, saying that the high barriers to entry created by, for example, the US state licensing laws, were damaging to the long-term goal of bitcoin’s mainstream adoption.
“I’ve been clear that we have to eliminate [these barriers] so that young companies can get in,” he said. “Whatever regulatory approach governments take should be minimally viable. Ideally not new laws, but interpretations and adaptions of existing rules so that the timeline for clarity is shortened.”
Circle’s slow and steady approach
It is just over a month since Circle finally unveiled its bitcoin wallet service at the Bitcoin2014 conference in Amsterdam, and although Allaire declined to disclosed the exact number of current users, he said it was in the thousands.
“We’re being cautious,” he admitted, saying that Circle is focused on ensuring its systems can scale properly before opening its doors.
“If we just opened the doors today, we think we would just get inundated and everyone wouldn’t have a great experience.”
Although many of its users are people who have previously used bitcoin, he said that they had been “trying to identify users who are not existing bitcoin users” so that their userbase would extend beyond bitcoin’s early adopters. By the end of July, Circle will have accepted “significantly” more people who had already requested an invite, he added.
Circle has also recently hired former Bank of Ireland director Garrett Cassidy to head up the company’s European operations.
A primary focus for the company is price volatility, he said. Though he declined to offer detail on how the company plans to address the issue, he was skeptical that the issue would solve itself:
“Everyone says prices will stabilize. But that isn’t an answer if we really want [bitcoin] to get traction.”
In order to beat the peer-to-peer money transfer apps being developed by tech companies and banking institutions alike, he said, the bitcoin industry has to focus on its strengths, primarily its openness. Though companies like Circle carry some of the “baggage” of old financial institutions, he admitted, bitcoin’s nature as “a global open standard that is completely interoperable” gives it an edge over propositions like Paym in the UK.
“In five years peer-to-peer financial transactions will become an integrated part of everyone’s day-to-day living, whether it’s across the table or across the planet,” he said.
The challenge for bitcoin companies like Circle is to make sure they’re facilitating those transactions instead of traditional, non-bitcoin fintech companies.
Correction: A previous version of this article said that Circle would be opening to all people who had so far signed up. Circle has since clarified that they would be “accepting a significant number of invitees by August”, not “all”.