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Bitcoin

A culture war is brewing between bitcoin’s old and new money

A prolonged slump in the price of bitcoin has wiped out more than US$100 billion in wealth this year, which has incited a panic among investors over how to stabilise the cryptocurrency

PUBLISHED : Monday, 06 August, 2018, 6:55pm
UPDATED : Monday, 06 August, 2018, 7:52pm

Satoshi Nakamoto, the pseudonymous creator of bitcoin, may be long gone, but his early followers are still around and their identities still unknown. They go by aliases, such as Cobra, and frequently spout unpopular, pseudo-anarchist rhetoric.

As the cryptocurrency’s price soared in recent years, bitcoin’s old money and new money coexisted with only occasional conflict. But this year, a prolonged slump has wiped out more than US$100 billion in wealth, and the ensuing panic over how to stabilise the currency has incited a Gatsby-esque class war.

One point of contention right now involves the ownership of Bitcoin.org. Nakamoto registered the web domain a decade ago and handed it over to some early cryptoheads for safekeeping. The site still exists as a destination to evangelise bitcoin and educate newcomers. The main proprietor is Cobra, with support from another anonymous user, Theymos.

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In a recent post on the coder site GitHub that has racked up more than 100 responses, there are calls for the removal of Cobra. People are expressing concern over his views and what it might mean for the digital currency.

“It would be wise for the responsibility to be shared between multiple parties rather than a single individual,” Nicholas Moroz, a consultant on blockchain technology, wrote in an email.

On Twitter, Cobra spreads the messages of conspiracy theorists, rallies for the release of a convicted criminal and preaches against government regulation. He has also voiced support for a competing currency, called Bitcoin Cash. Some of the largest holders of bitcoin bought in years ago and could further depress the price if they switch to another currency.

“People on GitHub are asking it to be turned over because they mostly are uncomfortable that I don’t hate Bitcoin Cash enough,” Cobra wrote in a message to Bloomberg.

The initial vision for bitcoin was to create a form of money free from government or corporate oversight. But for all the talk of decentralisation, bitcoin old-timers still control some of the main venues where changes to the currency are documented and debated.

Cobra is also a co-owner of Bitcointalk.org, a popular online hang-out where Theymos is an administrator. Theymos moderates the Bitcoin section on Reddit, which has more than 900,000 subscribers.

Cobra assured his critics on GitHub that they can trust him: “I won’t deny I can be erratic at times, but there’s a difference between ‘difficult to work with’ and outright malicious intent.”

The bitcoin community is still shaken after losing a prominent disciple last year. Roger Ver, who used to be known as Bitcoin Jesus, is now a supporter of Bitcoin Cash. He has said the original bitcoin “is no longer bitcoin”.

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The alternative, a spin-off that claims faster and cheaper transaction processing, is closer to Nakamoto’s original vision, he has said. Ver overhauled his website, Bitcoin.com, to promote Bitcoin Cash.

Much of what is known about Cobra comes from messages posted to online forums and on his Twitter account, which he created in October. His world view is clear: He is not fond of banks or government. “Collaborating with statists and regulators is a path of weakness,” he wrote in a tweet last month. He suggested driving finance companies into bankruptcy by selling them junk coins en masse. He name-checked Goldman Sachs and Morgan Stanley.

One of Cobra’s recent pet projects is to secure a pardon for Ross Ulbricht, who was convicted of money laundering and other crimes for operating the Silk Road, an infamous online marketplace for illicit goods.

Last month, Cobra called Ulbricht “a legend” and “a true thought leader” in a tweet. “We won’t forget about you. We will get you pardoned and released.” Two days later, he retweeted a post by Alex Jones with a link to an InfoWars article titled, “The Secret To Winning The Culture War”.

This sort of hyper-libertarian outlook was common among early adopters. It’s not the prevailing point of view for today’s bitcoin pragmatists. Support from financial institutions and pension funds are believed to be key to increasing the digital currency’s price.

Bitcoin has a market cap of about US$130 billion, and billions more have been invested in companies built around it. “Bitcoin is an excellent candidate to become a global reserve currency. There’s going to be some competition for control,” said Bruce Rout, a mathematician who took part in the GitHub discussion. “That’s an enormous amount of power and an enormous amount of money.”

This year’s rout has not instilled confidence. Some 300 hedge funds that invest in cryptocurrencies are seeing 40 per cent declines in their returns this year, according to the Eurekahedge Crytpo-Currency Hedge Fund Index. This class of investor is more concerned with legitimacy than freeing a convict.

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Although the influence of Cobra’s website has waned over the years, Bitcoin.org retains value. Last year, cryptocurrency currency domain name Eth.com fetched US$2 million in a sale. Cobra said he has no plans to sell or refocus the site around Bitcoin Cash.

The safeguards around Bitcoin.org allow Theymos to take over in an emergency, like if “Cobra was hit by a bus or something”, he said. Theymos, who was identified as Michael Marquardt by the US Justice Department in a 2014 subpoena in the case against Ulbricht, is against a change in ownership for Bitcoin.org.

“While domain names like Bitcoin.org are inherently centralised and therefore subject to at least some fallible humans, I find the idea of handing Bitcoin.org to some politicisable non-profit organisation to be very distasteful,” Theymos wrote in an email. “In some sense, the whole point of bitcoin and the cypherpunk movement from which it spawned was to escape politics.”