Coinbase CEO: Core Team is a "Systemic Threat" -

Coinbase CEO: Core Team is a “Systemic Threat”


Editor’s Note: This article has been modified to correct a misquote. This article originally quoted Brian Armstrong as saying that the Core team was a “Systematic” threat to Bitcoin, when he actually said Core was a “Systemic” threat.

Coinbase CEO and co-founder Brian Armstrong recently published a Medium blog post titled, “What Happened At The Satoshi Roundtable.” In this post, Armstrong calls for an immediate block size increase to 2 MB, the creation of a new Bitcoin development team, and called the Core team a “systemic threat” to Bitcoin.

Also read: IOTA: Internet of Things Without the Blockchain?

Coinbase CEO: We Need a New Development Team

Coinbase CEOThe post started as an overview of the failure to reach consensus at the most recent Satoshi Roundtable meeting in Florida. However, Armstrong quickly transitioned into an attack on the Bitcoin Core developers, arguing that they are impeding the progress of Bitcoin:

“The conversations initially focused on various compromises that could be made to kick the can down the road on scalability. But as the conversations went on, I became less and less concerned about what short term solution we pick because I realized we all had a much bigger problem: the systemic risk to bitcoin if Bitcoin Core was the only team working on bitcoin.”

Armstrong launched 3 major arguments against the Core development team, saying that while they are very smart people, they:

  • “Show very poor communication skills or a lack of maturity
  • “Prefer ‘perfect’ solutions to ‘good enough.’ And if no perfect solution exists they seem ok with inaction
  • They believe that Bitcoin “will not be able to scale long term,” and that “any block size increase is a slippery slope to a future that they are unwilling to allow.”

Attacking the Core team’s “perfect” solution, segregated witness, the Coinbase CEO admitted that it “is a well done piece of technology,” but believed that it would be a risk to use it as a scaling solution due to current circumstances in the Bitcoin ecosystem.

Specifically, Armstrong was worried about the upcoming block reward halving in Summer 2016. He said that, once the halving occurs, the cost of mining a block will rise to $500 USD. If the market price of bitcoin remains at current levels, then Armstrong fears that a large portion of the mining network will go offline due to hardware becoming unprofitable.

Armstrong argued that such a large drop in hashrate would cause the entire network to become incredibly slow as full blocks are met with only a few miners. In a “worst case” scenario, this decline in miners could increase confirmation times to a point where each block would be at 140% capacity, and the network would “start accumulating a backlog.”

In order to avoid such a frightening scenario, Armstrong argued that we need to take “a path forward” that accomplishes 3 major goals:

  • An immediate block size increase to 2 MB.
  • “Communicate with the Chinese miners about this upgrade path.”
  • “Long term, we need to form a new team to work on the bitcoin protocol

The Coinbase CEO’s fears about the future of Bitcoin are not isolated. After a large increase in transaction times for several days this week, some people in the community worried that slow transactions would become the “new normal” for Bitcoin. Although the network eventually sped back up, the fear about full blocks remains.

What do you think about Brian Armstrong’s reaction to the Satoshi Roundtable meeting? Let us know in the comments below!

Images courtesy of Coinbase and Pixabay

Evan Faggart

Evan Faggart

Evan is the Senior Editor of He has a bachelor's degree in History with minors in Economics and Political Science. When he's not acting like he knows what he's doing in the newsroom, Evan is most likely playing video games. Follow Evan on Twitter @EvanFaggart.

  • facepalmfrank

    If someone cannot comprehend that then they are either Blockstream shills or retarded.

  • Evan

    I hope at the very least we can get a an increase to 2 MB if only to buy time for another solution.

  • In search of a Japanese Wife

    Brian is one of the few people showing leadership here. I wish him well.

  • Evan

    Do you think he is on the right side of the debate? Do we need new developers?

  • In search of a Japanese Wife

    If you look at the charts on you can see that transaction counts actually exponentially increase of late. It is not just transaction counts it is also USD value transferred on a daily basis that is increasing exponentially. Adoption is happening at a very high rate over the last few months. Unless block size is allowed to increase the netwerk will become unusable for many situations that bitcoin is currently dominating (micro payments / gambling etc). I think we need to get rid of a few ‘core developers’ that are in the way of this, Brian is saying that a little more politely by saying we need ‘new developers’.

  • Evan

    Great point, I agree.

  • Expanse <3

    Slow transactions in bitcoin is not normal though.

  • Expanse <3

    I think there’s nothing to be afraid for.

  • It’s always good to have a plan “C”. ;)

  • Well surely you should step and submit your BIP

  • Evan

    “C” for Classic? :D

  • Alice Wonder

    I was not a fan of classic but I was a fan of coinbase. Now I have seen the light. The CEO is arrogant and dangerous. I can not use or promote coinbase anymore.

  • Alice Wonder

    If you have an ounce of intelligence you can see that the increase in transactions is a spam attack of transactioins with intentionally low TX fees, for the purpose of making it look like there is need for a larger block now.

  • Alice Wonder

    @Evan – the block size is only one way to increase TX rate. At some point there will need to be an increase, but hard forks should only be done when absolutely necessary.

    SegWit is another solution to increase the TX rate bitcoin can handle, and it does not require a hard fork. It is therefore logical to try that solution first. And that solution has been going through extensive testing and should be released in April – next month.

    If the TX rate continues to increase, then a hard fork to use a larger block size may be needed but we should wait until it is actually needed because there may be several things that can also be fixed at the same time.

    Hard forks should be rare and we should get as much out of them as we can. Therefore they should only be done when there really is no alternative. Right now there is an alternative.

    Classic (and XT) was not about 2 MB blocks, that was the excuse they used to try and trick us into accepting them. They are about seizing power over development of the network and protocol.

  • In search of a Japanese Wife

    Any of the current BIPs that increase the blocksize will do…There are so many now it is beginning to cause problems in of itself – I would not like to add to that – but I think you know that.

  • In search of a Japanese Wife

    I am aware of that there are some people saying this is a spam attack, but the truth is difficult to dicern on this. My analysis suggests it is not a spam attack but is and actual increase in usage.

  • In search of a Japanese Wife

    So your solution is to do nothing till we need to do something – and then panic cause it was not done when it should have been? You would not make a very good farmer.

  • Alice Wonder

    Not difficult to discern at all. Just look at the absurdly low TX fees. Also noticed that it has ended.

    I find it both interesting and troubling that the sudden spike in transactions happened just before the Coinbase CEO gave his rant and ended right when he did.

    Can I prove a link? No, but it sure as hell looks like a social engineering attack to get people who don’t understand how the blockchain works to believe he is right in claiming we need bigger blocks.

    Truth is bigger blocks wouldn’t have helped because miners ignore TXs with absurdly small fees even when they have room in the block for them. We could have have 2 TB blocks and the unconfirmed transactions would have sky-rocketed because they had small fees. And it is good for miners to ignore TXs with absurdly small fees because it keeps the bulk of the spam transactions out of the blockchain.

    I had no trouble sending and receiving transactions during the spam attack because I don’t use absurdly small fees. The fees I do pay however are much smaller than what credit cards charge. Usually I pay the equivalent of a US penny or two per transaction. Sometimes as much as a nickel if there are many inputs involved.

  • Alice Wonder

    No – my solution is to let SegWit increase the TX capability, and SegWith is coming in April. That buys us more time to determine what else may need to be included in a hard fork.

    Also, with LN we may see a lot of micropayments moved off the blockchain into side chains which would alleviate the pressure. How effective LN (Lightning Network) will be remains to be seen, but SegWit gives us almost the same TX increase capacity that 2 MB blocks would and does not require a hard fork.

  • Alice Wonder

    Oh – and “the block size is only one way to increase TX rate” was a type, missing the word NOT before the only.

  • In search of a Japanese Wife

    People with a vested interest in either side-chains or mining profits are the biggest roadblock to this moving forward. Sidechains are not the answer (as only the people building the side-chains are actually using them – they are not mainstream enough to solve any problems). The miner blockers are simple short sighted greedy people.

    Segwit is at best a bandaide, not a solution, and is overly complex for what it actually does – there is a lot more risk there then just doubling the block size.

  • In search of a Japanese Wife

    “I had no trouble…” – yes the world does revolve around you. Plenty of wallets and sites are having trouble. That’s a fact.

    “Also noticed that it has ended…” I do not know where you get your info from, maybe you could tell us? I say that because your statement is completely incorrect (but I think you know that don’t you).

  • Alice Wonder

    Whether side chains are a solution or not remains to be seen. The point is SegWit gives us time to find out. One of the beautiful potentials of LN is it will allow websites to monetize based upon content being worth paying for.

    Right now most websites monetize based upon add revenue only, which results in fluff articles with keywords and link networks trying to game search engines.

    They get the users there, and show them advertisements. That’s the revenue. It results in many things that should be one page spread out over 10 pages.

    But that revenue stream is dying as ad blockers become more and more mainstream and as users get tired of tracking cookies and malware in advertisements.

    Micropayments would allow a user to pay a small amount for each article, which will be necessary as advertising revenue declines from ad blockers. At the same time it will motivate websites to provide quality content because the revenue is then based upon whether or not the user is willing to pay, not based upon whether or not the user was served advertisements.

    side chains allow for that kind of revenue system to potentially work without bloating the blockchain forever for each article each user pays a nickel to read.

    Will it work? Time will tell.

    With respect to SegWit being a bandaid, it should be noted that SegWit actually wasn’t designed to increase TX rate, that’s a side effect. It was designed to solve other serious issues with the blockchain such as transaction malleability.

    The fact that it also increases the transactions per block however gives breathing room before a hard fork is needed. Yes there will be one needed to increase the block size, but waiting until there is an actual need lets us make sure that when it happens, everything that should be done in the hard fork is done in the hard fork.

  • Alice Wonder

    The wallets that are having trouble are wallets that have poor code that pays a small fixed TX fee. There will always be clients with poor code. Don’t use them.

  • Eric quesnel

    Thank you, @Alice Wonder.. It is so hard to find the people with actual objective knowledge, and a mature way to articulate it.

    I stopped using coinbase last year when I noticed Federal agencies mucking things up. Brian Armstrong is not a technical person at all, he is into marketing. It is silly some of the things he says. The fact that he goes on tangents, spewing on about things he knows very little about shows the true content of his character. (Pretty obvious when you see Brian stating that when miners drop out transactions will take longer, must of forgot about the dynamic change in difficulty when hashing power changes. Blocks will always average to about 10mins/block)

    The fact is, Bitcoin “Classic” is simply another alt-coin with a deceptive name. Litecoin, Dogecoin, Digitalcoin, etc were all hard forks from qt, and core. Bitcoin “classic” is no different. Bitcoin XT, Classic, ETH, etc, only purpose that I have seen, has been to divide the community. (Good ole’ divide and conquer, right? ) . Bitcoin is a humanitarian project, it is not a tool for greedy little piggies. I am so glad the core team sees through the bs..

  • votingmachine

    “Specifically, Armstrong was worried about the upcoming block reward
    halving in Summer 2016. He said that, once the halving occurs, the cost
    of mining a block will rise to $500 USD.”

    That makes no sense. The cost of mining is completely unrelated to the bitcoin reward size. The miners will be paid less bitcoin. But their costs are exactly the same … computers, time, electricity … none of that changes.

  • earonesty

    August is the new April?