Bitcoin’s struggles – four hard lessons in community governance

two-guys-arguingYesterday I posted a feel-good story about how RethinkDB used Github to build their NoSQL database with the help of a passionate open source community. But a recent New York Times piece on the ecosystem struggles at Bitcoin is a corrective. Communities are potent business assets, but they splinter when confronted with leadership turmoil and ideological disputes.

In A Bitcoin Believer’s Crisis of Faith, Nathaniel Popper of the New York Times paints a portrait of a Bitcoin community in disarray. As developers leave the community or divide into factions, Bitcoin itself could be in jeopardy – or so the article implies.

Hopper’s piece references the recent departure of developer Mike Hearn, who left a job at Google’s Swiss headquarters two years ago to throw his lot in with Bitcoin (all told, he’s been a Bitcoin developer for five years – to mark his departure, he sold the rest of his Bitcoins).

Hearn was amongst a core group of developers who took on the maintenance of the software that governs the creation of new Bitcoins and manages the financial transactions network. Upon Hearns’ departure he posted a blunt blog post which made clear his departure was based on Bitcoin’s fractured community:

Why has Bitcoin failed? It has failed because the community has failed. What was meant to be a new, decentralized 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. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result, there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.

His disappointment over the community’s turmoil is palpable:

Bitcoin has gone from being a transparent and open community to one that is dominated by rampant censorship and attacks on bitcoiners by other bitcoiners.

The network’s ability to handle a high transaction volume is no trivial thing. Resolving that problem was reportedly a cause of the rifts, which led to a proposed fork in the Bitcoin code base that ruptured the community further. The high ideological stakes made this tough: some Bitcoiners believe that the proposed solution would put control of Bitcoin back in the hands of the financial institutions they hope to undermine. The story gets ugly, with death threats and intentional malware attacks.

So why hasn’t this dispute caused Bitcoin’s price to fall through the floor? Hopper:

Mr. Hearn says he thinks that getting the opposing camps together will now be very difficult. He believes that the dangers of the current impasse have not been reflected in the price of Bitcoin because the full debate has been censored in many of the online forums where Bitcoin is discussed.

I don’t have an inside angle on Bitcoin, so I’m not in a position to call Bitcoin a “failure” as Hearns does. But I do see lessons from this struggle for enterprises looking to build their own communities, or tap into open source.

1. Be clear about the limitations of democracy and autonomy, Nothing backfires in enterprise communities as badly as promising a democracy, when in fact community members do not have a deciding vote. People can sniff out faux-democracy. In most cases, a clear line of authority in key decisions is not only preferable, but accepted. That was evidently the case with Bitcoin also, where up until 2014, a long-time developer, Gavin Andresen, acted as a sort of benevolent dictator with final say on key issues. After he moved on from that role, Bitcoin was thrust back into a murkier situation where ideals and factions clashed.

2. Institute codes of conduct and process rules from the beginning. Like Reddit, Bitcoin seems to struggle with the hardcore/ugly side of a “free” ethos. When no topics are off-limits – and suddenly some are prohibited – the free speech ethos collapses. As members fought back against what they perceived as censorship, some created their own forum. Hearns:

Eventually, some users found their way to a new uncensored forum. Reading it is a sad thing. Every day for months I have seen raging, angry posts railing against the censors, vowing that they will be defeated.

This new forum is probably a healthy response to a feeling of censorship, but it fractures the community further. Siloed conversations can never lead to consensus. One of RethinkDB’s co-founder posted a “Github issue etiquette” blog that outlined the proper workflow, including owning up to mistakes. It also includes some behavioral codes of conduct. A clear code of conduct means that those who believe that “anything goes” can be dealt with if they post content that is cruel, offensive, or divisive. (I also like these “future of work” values/guidelines from Goodworkcode, as well as OpenStack’s community code of conduct.

3. Beware heavy-handed censorship, but don’t give in to “anything goes.” Some enterprise communities are intolerant of dissenting views. This may come in the form of blogs or comments that are deleted without explanation. If too much of this type of heavy-handed moderation occurs, folks will create a separate forum just like Bitcoin members did. Being open about why rules are enforced – and using those enforcements rarely but consistently – is the key.

4. Treat your community managers like superheroes. I remain baffled by the lack of organization status, financial investment, and overall elevation of community managers. This is one of the hardest jobs to do well. If you claim your ecosystem is important, than the managers who know who to empower community members, and step in with sensitivity when conflicts arise are invaluable. Mark Finnern, former Chief Community Evangelist at SAP and the founder of Playful Enterprise, recently published useful community guidelines that fill in some gaps here: 10 (was 7) Criteria to Add the Right Mix of People Into Your Enterprise Tribe [E-Tribe]. Bitcoin isn’t necessarily in the position to recruit and cultivate community managers in a structured way – but your company is.

Final thoughts

I am NOT taking the view that these tips could solve a community predicament as complex and Bitcoin’s. Though Bitcoin did lose some value last week (13 percent), it has not cratered. A recent post by Rupert Hackett, Bitcoin is not dying, offers a contrasting view while acknowledging community issues that led to Hearn’s departure.

While the future of Bitcoin has implications for financial innovation, its success or failure won’t stop the inevitability of digital currency. And Bitcoin’s underlying technology, the blockchain, is now receiving the institutional investment to proceed on its own course (IBM, Intel, et al)

Fortunately for enterprises, community problems rarely have such high stakes. Enterprise communities have the opposite problem – generating the passion that Bitcoin’s community has in abundance. Open source brings potential, but the culture that drives it often differs from the culture inside company walls. The time to wrestle with that is now.

Updated point four slightly for clarity, 1/21/2016. I also changed the title slightly to “important”.

Image credit: two businessmen arguing © photoniko –

Jon Reed

Jon Reed

Jon Reed

Jon Reed

mm – leading Bitcoin News source since 2012

Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. The information does not constitute investment advice or an offer to invest.