This Week in Bitcoin: Lead developer out as his vision gains traction

Mike Hearn’s exit causes fanfare, soul-searching

Mike Hearn, bitcoin developer and a key driving force behind Bitcoin XT, announced his departure from the bitcoin project in a blog post published shortly before a New York Times piece on the same subject. Hearn claimed the bitcoin project failed amid a crisis of consensus, referring to the recent blocksize debate. “But despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly,” Hearn wrote. The story was also picked up by Fortune , The Guardian, and the Financial Times.  Hearn, who left his job at Google two years ago to work on bitcoin full time, did hold out limited hope for similar blocksize-expanding solutions. “Where making an alternative to Core was once seen as renegade, there are now two more forks vying for attention (Bitcoin Classic and Bitcoin Unlimited).”

Bitcoin Classic turning the corner

In the wake of Hearn’s exit and the increasingly unlikely success of the Bitcoin XT hard fork (which would implement a phased increase in blocksize), a separate hard fork to immediately raise the blocksize limit from 1 megabyte to 2 megabytes is gaining community backing. Prominent exchanges Coinbase and Circle have announced support for the change, as have industrial miners BitFury and KnCMiner. Like Bitcoin XT, Bitcoin Classic would enact a hard fork if certain conditions are met by the network, including a majority of mined blocks under the new protocol and a four-week grace period after that milestone is reached.

Kraken acquires CAVirtex, Coinsetter

CAVirtex, a Canadian bitcoin exchange founded in 2011, and Coinsetter, a national U.S. based exchange founded in 2012, were acquired by Kraken in the largest ever M&A deal in the bitcoin space. Though Kraken is based in San Francisco, its volumes are mostly in Euros and the move will increase its U.S. dollar client base. “The consolidation of these three veteran giants is the largest exchange deal to date. Combined, we represent over thirteen years of bitcoin exchange experience in an industry that is only seven years old,” said Kraken CEO Jesse Powell. Clients of CA Virtex and Coinsetter will see their accounts automatically transitioned on January 26.

Citing heist, Crypsty exchange threatens bankruptcy

Alleging a heist in July 2014 that resulted in the loss of 13,000 BTC (worth $7.5 million at the time), and 300,000 LTC ($2.08 million), Crypsty has threatened bankruptcy in the absence of a buyer able to cover the losses. The loss was not immediately disclosed. “This of course was a critical event for Cryptsy, however at the time the website was earning more than it was spending and we still have some reserves of those cryptocurrencies on hand. The decision was made to pull from our profits to fill these wallets back up over time, thus attempting to avert complete closure of the website at that time,” a blog post by Crypsty explained.

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