This is an entry in CoinDeskâs Most Influential in Blockchain 2017 series.
âFree! Weâre free!â
Jihan Wu may not have created the âBCH Talkâ WeChat thread, but he was among the first to celebrate the formal creation of the blockchain for which the channel was named, making his feelings known on August 1 to the more than 500-member channel.
But then again, those in the messenger chat were already well aware of how Wu, the co-founder of Bitmain, one of the worldâs largest providers of bitcoin mining hardware, software and related services, felt about bitcoin cash.
In the days before the cryptocurrency had formally forked from bitcoin, creating a $5 billion network from a few changes to its code, Wu was a not infrequent participant in the chatroom.
Designed to serve as a forum about the new effort to boost bitcoinâs block size (the rule in the code that effectively puts a constraint on the volume of transactions), Wu had already weighed in by posting everything from news articles to technical tools to advice on when users should sell their bitcoin in exchange for bitcoin cash.
âDonât fall into the trap. Donât pay too much. Donât give Core too much money,â he wrote.
In this way, the comments give nod to the central controversy surrounding Wu â his outspoken antagonism of bitcoinâs developer team, and the influence he wields that effectively puts him in a rare position to wage such a public conflict.
Indeed for much of the internet, Wu emerged as the arch-nemesis of the developers working on the Bitcoin Core software for his views on the cryptocurrencyâs technical roadmap, ones that would not only lead to outsized scrutiny on his business practices, but grow to ensnare all projects and efforts affiliated with Bitmainâs brand.
At points, it was hard to tell fact from fiction, or which was more instructive.
Take ASICBoost, a theory that aimed to link Wuâs public stance against the groupâs preferred scaling path, Segregated Witness, to technologies designed to boost Bitmain products. Or AntBleed, a supposed piece of code that would enable the company to control all its miners, making them run software that would block the update.
As the fight progressed, worsening over the course of 2017, public debate turned to vitriol, with Wu often relegated to shouting obscenities at perceived enemies on Twitter, Reddit or wherever else there was dialogue.
Issued in the heat of passion, âFuck your mother if you want fuck,â emerged as perhaps Wuâs most infamous tweet.
Itâs telling that a sentence so inarticulate could say so much about the state of debate.
But those reading the above might be left with the obvious question, how could the co-CEO of one of the largest companies in one of the hottest global technology sectors be driven to public profanity? And to not only supporting, but helping popularize a competing software?
Wu, who declined to be interviewed for this piece, appears to want to say little on the subject, keeping dialogue short and apologetic in a mainstream press push this summer.
Yet, industry representatives who have worked with Wu suggest a nuanced explanation for his public perception, one deeply interwoven with the history of cryptocurrency itself.
In a way, they contend that he seems to epitomize two of the technologyâs underlying sociological conflicts.
As a native of China, Wuâs public persona has been impacted by bitcoinâs east-west culture clash, one that has pitted Western bitcoin developers brought up in a democracy, against bitcoinâs miners, often business people, hailing from one of the worldâs few powerful communist regimes.
Like other founders and entrepreneurs, Wu, who has an economics degree from Peking University, is also predisposed to a fail-fast mentality, one at odds with developers who favor a security-minded approach.
The latter disconnect is one that has played out in high-profile meetings between the groups, whether in New York, Hong Kong or across message boards, but is by no means unique to Wu. Neither is Wuâs involvement in scaling, which traces back to these early efforts by bitcoin businesses to lift its perceived capacity constraints, most notably the 1 MB limit on block space that can be added to the blockchain at intervals.
Originally viewed as a short-term way to prevent spam, its removal would nonetheless require all software users to upgrade and enact the change. Such a path was opposed by developers, who view bitcoin as a kind of opt-in sovereign money and have felt the change could disenfranchise users, and supported by businesses, who saw the limitation as a bottleneck on new users and funding.
Wu, however, wasnât always so adamant about a larger block size.
Though he may have been most synonymous with an agreement forged this year in New York, he was also a signatory of the Hong Kong agreement, a controversial 2016 meeting, the failure of which was, those involved say, the root of the bad blood between the groups.
Yet, those who attended the meeting describe Wu as someone willing to stake out a middle ground, at least early on.
But as the Hong Kong Agreement broke down, SegWit testing went on for much of the year, straining relations between the two groups, and distrust began to mount.
âWu became more and more radical after what happened to the Hong Kong agreement. His position was if the devs werenât holding their side of the agreement, I donât need to run SegWit,â said Guy Corem, whose former firm Spondoolies-Tech was considered an early contender for Bitmainâs crown.
By the time business leaders assembled in New York this year, Wu wasnât just another seat at the table. Not only was Bitmain one of the few companies left selling mining hardware, but it owned three mining pools: BTC.com, ConnectBTC and AntPool, its largest flagship offering.
Essentially, Wuâs firm had enough hardware to block any software change.
And the explanation for this was simple. While mining had become big business, there were few big businesses doing it.
From bitcoinâs release in 2009 until early 2013 when it eclipsed $100, bitcoin was just a plaything, a toy for the ultra nerdy. But as it continued its rise, people started researching â nobodies had just made hundreds of thousands of dollars interacting with bitcoin, and others wanted in.
And once they found out that they could get in, just by putting some computing power toward verifying transactions, or âmining,â it was all over â the race was on.
A slew of companies started up, selling graphics processing units (GPUs) to mine bitcoin, and as the price continued up, even more specialized hardware, ASICs, were created. Before you knew it, individual hobby mining was nothing but a cost suck. But not all the companies selling shovels, so to speak, were successful.
Butterfly Labs, an early U.S. market leader, was shuttered by U.S. regulators. KnCMiner succumbed to a combination of lawsuits, poor performance, and eventually, bankruptcy.
And these were just two of the more public meltdowns. The founders of China-based ASICminer actually disappeared without a trace in one of bitcoinâs true unsolved mysteries.
Bitmain, however, didnât.
Instead, it became the largest bitcoin-specific hardware manufacturer in the world by not over-innovating on product and choosing to perfect their delivery model. For example, Bitmainâs competitors now cite an innovation credited to Wu called âfranchise miningâ as a game-changer.
Effectively, Bitmain would guarantee that it would buy back miners if customers put up a certain amount of funds at purchase.
âIt made mining much less risky for the miner,â Corem says.
As described by investor Roger Ver, such acumen has made Wuâs firm one of the âmost successfulâ ever to base its business model on bitcoin. Ver goes so far as to claim Bitmain is the âlargest bitcoin company in terms of revenue, employee headcount, customers around the world.â
The company did not respond to requests for comment on the matter.
Even long-time critics acknowledge the success, with Samson Mow, the former chief operating offering of BTCC, a bitcoin mining and exchange service thatâs been criticized publicly by Wu, pinning the success on the strength of the companyâs strategy.
âThey had a more efficient miner than the other guys. Others over-engineered and made their miners too expensive, whereas Bitmain made it functional and efficient,â Mow says, adding:
âA slightly different direction killed one company and kingmade another.â
Corem agrees, pushing back against claims that any trickery led to Bitmainâs success over his former firm.
âBitmain won over us. It was fair and square, nothing malicious. Nothing about patents; they were simply a better business,â he says.
But if Wu is a villain, itâs his handling of his influence on scaling where that transformation really started.
Often overlooked, however, is why it was necessary for miners like Bitmain to approve bitcoin software at all. Originally designed on the premise that all users would run the software on their own computers, developers argue the emergence of mining pools, like Bitmainâs AntPool, was never envisioned. As all the miners mining together, they also vote together, essentially selecting en masse the software theyâd run.
Direct democracy in what changes would be made to bitcoinâs software, so to speak, had been replaced by collective representation, meaning miners now had power over decision-making.
Adding to those fears was that it remained unclear just how deferential mining pools were to the wishes of their users, or whether they could use their power to force an agenda.
On the ground evidence to accusations, though, appears inconclusive.
Mining pools like ViaBTC and BTC.Top, for instance, are often alleged to be âcontrolled by Bitmain,â though it seems in practice theyâve made decisions that put their business model over any ideology (ViaBTC still enables pool operators to mine bitcoin or bitcoin cash, along with a slew of other protocols, as does BTC.top).
But critics, like Mow, take issue with Bitmainâs practices and its relationship with customers of these pools, who have few options other than do business with them.
âYou can say heâs a good business guy, but ⦠at BTCC he would threaten miners in our pool. He would say that he wouldnât sell to people if they didnât leave our pool. If itâs a good ecosystem and weâre all friendly, we should be able to support software without fear of reprisal,â Mow says.
And itâs perhaps on this topic that Bitmain has faced the most damning criticism â that Wu doesnât quite understand the balance that needs to be struck between furthering an open-source ecosystem and promoting his own private companies.
Case in point for some is that Bitmain now accepts bitcoin cash exclusively for new miners, a mandate that has come under fire by some, like Mow, who deem the move against the free market ideology Wu is said to support.
Interestingly, itâs something that Wu seems to have acknowledged, tweeting earlier this year that âopen-source cultureâ is not only unfamiliar to him, but unpopular domestically in China.
But if Wu is the king of mining today, he might also have reason to worry about his crown.
While Bitmain is one of only two companies globally that develop, build and deploy mining chips (Georgia-based Bitfury being the only other present in three verticals), the same circumstances that created the companyâs dominant position could quickly change, those familiar with the mining business say.
Mow, for instance, argues that bitcoinâs rising price is good for consumers, who are now making more than they were a few years ago. With this economic freedom, he argues buyers may be able to more freely make decisions based on ideology.
âMiner efficiency is going to be a bit less of a focus because of the price. Itâs not about having the cheapest miner and the cheapest price,â he says.
Coupled with that, the capital expansion bitcoinâs price rise has caused has enabled new competitors to spring up, coming to market with millions in investment and alternatives that promise a more open-source ideology.
Others arenât convinced about competitors, though.
Jiang Zhuoer, founder of BTC.Top, for one, isnât phased by such boasts, arguing that even the $30 million raised by one new entrant, Haolong, is âtoo littleâ given the costs of researching, developing and prototyping miners. âIn the chip industry, $30 million is not enough,â he says.
Haipo Yang, founder and CEO of ViaBTC, remarks similarly in statements that seem to nod to Bitmainâs success: âYou know, building a miner and building a mining company are different. Selling is a very complex thing.â
Still, more hobbyist entrants arenât the only competition. If announcements by Japanâs GMO Internet are any indication, large public companies may soon come for a slice of the mining pie.
Then thereâs always the chance that one supply chain issue, or maybe even a chokehold at a foundry (Bitmain uses the Taiwan Semiconductor Manufacturing Company, also used by graphics cards and computer chip makers like Nvidia), could cause a blow to the company bottom line.
So, where some see a villain, others see an impassioned capitalist, much like Ver or Barry Silbert â Westerners who have funded no shortage of companies and offered no shortage of opinions on how bitcoin should develop.
Far from someone trying to corrupt bitcoin, they see Wu as simply a powerful supporter whose controversial opinions have been warped by misconceptions.
âHeâs misunderstood, especially on social media,â says Yifu Guo, the creator of the first bitcoin ASIC.
According to Guo, Wu might not understand Twitter, at least to the degree other users do.
âNobody in China does this Twitter thing. Itâs not a part of the culture,â he says. âBut the West does that, âI troll you all day, every day,â and he canât handle that. He gets triggered.â
Other defenders often cite the nature of free-market economics, the freedom and the frustration of permissionless innovation like the kind bitcoin provides, as a reason Wu is misunderstood.
âJihan has been demonized by people who just make up bullshit,â according to an industry analyst who wanted to remain anonymous. âIf Satoshi was allowed to create bitcoin, why canât Jihan? If he didnât need permission than why does Jihan?â
Itâs not an unfair criticism of Bitmainâs detractors.
But for all the permissionless innovation bitcoin was built upon, the space has become more black or white, more right or wrong than many could have predicted. And whether youâre a hero or a villain depends from which side people are judging you from.
To bitcoin cash supporters who believe in a bigger block size, Wu is very much a hero, someone willing to stick up for what he saw as inequities and hypocrisies, and even better, put his money on the line.
With the advent of bitcoin cash, it seems the debate will only continue, this time with real-world results. So itâs likely the conspiracy theories will continue also, and that the mistrust of one of bitcoinâs most powerful people will go on.
According to Ver, thatâs merely the nature of the human condition.
âWhy do people love to conspire about things like the flat earth or bigfoot or stuff like that?â he tells CoinDesk, adding:
âItâs more likely the earth is flat than Jihan is trying to destroy bitcoin. He poured his life and soul into this for years.â
Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.
