The Invisible Politics of Bitcoin: Governance Crisis of a Decentralised Infrastructure

INTRODUCTION
Since its inception in 2008, the grand ambition of the Bitcoin project has been to support direct monetary transactions among a network of peers, by creating a decentralised payment system that does not rely on any intermediaries. Its goal is to eliminate the need for trusted third parties, particularly central banks and governmental institutions, which are prone to corruption.

Recently, the community of developers, investors and users of Bitcoin has experienced what can be regarded as an important governance crisis – a situation whereby diverging interests have run the risk of putting the whole project in jeopardy. This governance crisis is revealing of the limitations of excessive reliance on technological tools to solve issues of social coordination and economic exchange. Taking the Bitcoin project as a case study, we argue that online peer-to-peer communities involve inherently political dimensions, which cannot be dealt with purely on the basis of protocols and algorithms.

The first part of this paper exposes the specificities of Bitcoin, presents its underlying political economy, and traces the short history of the project from its inception to the crisis. The second part analyses the governance structure of Bitcoin, which can be understood as a two-layered construct: an infrastructure seeking to govern user behaviour via a decentralised, peer-to-peer network on the one hand, and an open source community of developers designing and architecting this infrastructure on the other. We explore the challenges faced at both levels, the solutions adopted to ensure the sustainability of the system, and the unacknowledged power structures they involve. In a third part, we expose the invisible politics of Bitcoin, with regard to both the implicit assumptions embedded in the technology and the highly centralised and largely undemocratic development process it relies on. We conclude that the overall system displays a highly technocratic power structure, insofar as it is built on automated technical rules designed by a minority of experts with only limited accountability for their decisions. Finally, drawing on the wider framework of internet governance research and practice, we argue that some form of social institution may be needed to ensure accountability and to preserve the legitimacy of the system as a whole – rather than relying on technology alone.

I. BITCOIN IN THEORY AND PRACTICE
A. THE BITCOIN PROJECT: POLITICAL ECONOMY OF A TRUSTLESS PEER-TO-PEER NETWORK

Historically, money has taken many different forms. Far from being an exclusively economic tool, money is closely associated with social and political systems as a whole – which Nigel Dodd refers to as the social life of money (Dodd 2014). Indeed, money has often been presented as an instrument which can be leveraged to shape society in certain ways and as Dodd has shown, this includes powerful utopian dimensions: for sociologist Georg Simmel for instance, an ideal social order hinged upon the definition of a “perfect money” (Simmel, 2004). In the wake of economic crises in particular, it is not uncommon to witness the emergence of alternative money or exchange frameworks aimed at establishing different social relations between individuals – more egalitarian, or less prone to accumulation and speculation (North, 2007). On the other hand however, ideals of self-regulating markets have often sought to detach money from existing social relations, resulting in a progressive “disembedding” of commercial interactions from their social and cultural context (Polanyi, 2001 [1944]).

Since it first appeared in 2009, the decentralised cryptocurrency Bitcoin has raised high hopes for its potential to reshuffle not only the institutions of banking and finance, but also more generally power relations within society. The potential consequences of this innovation, however, are profoundly ambivalent. On the one hand, Bitcoin can be presented as a neoliberal project insofar as it radicalises Friedrich Hayek’s and Milton Friedman’s ambition to end the monopoly of nation-states (via their central banks) on the production and distribution of money (Hayek, 1990), or as a libertarian dream which aims at reducing the control of governments on the economy (De Filippi, 2014). On the other hand, it has also been framed as a solution for greater social justice, by undermining oligopolistic and anti-democratic arrangements between big capital and governments, which are seen to favour economic crises and inequalities. Both of these claims hinge on the fact that as a socio-technical assemblage, Bitcoin seems to provide a solution for “governing without governments”, which appeals to liberal sentiments both from the left and from the right. Its implicit political project can therefore be understood as effectively getting rid of politics by relying on technology.

More generally, distributed networks have long been associated with a redistribution of power relations, due to the elimination of single points of control. This was one of the main interpretations of the shift in telecommunications routing methods from circuit switching to packet switching in the 1960s and the later deployment of the internet protocol suite (TCP/IP) from the 1970s onwards (Abbate, 1999), as well as the adoption of the end-to-end principle – which proved to be a compelling but also partly misleading metaphor (Gillespie, 2006). The idea was that information could flow through multiple and unfiltered channels, thus circumventing any attempts at controlling or censoring it, and providing a basis for more egalitarian social relations as well as stronger privacy. In practice however, it became clear that network design is much more complex and that additional software, protocols and hardware, at various layers of the network, could (and did) provide alternate forms of re-centralisation and control and that, moreover, the internet was not structurally immune to other modes of intervention such as law and regulation (Benkler, 2016).

However, there have been numerous attempts at re-decentralising the network, most of which have adopted peer-to-peer architectures as opposed to client-server alternatives, with the underlying assumption that such technical solutions provide both individual freedom and “a promise of equality” (Agre, 2003) 1. Other technologies have also been adopted in order to add features relating to user privacy for instance, which involve alternative routing methods (Dingledine, Mathewson, & Syverson, 2004) and cryptography (which predates computing, see e.g. Kahn 1996). In particular, such ideas were strongly advocated starting from the late 1980s by an informal collective of hackers, mathematicians, computer scientists and activists known as cypherpunks, who saw strong cryptography as a means of achieving greater privacy and security of interpersonal communications, especially in the face of perceived excesses and abuses on the part of governmental authorities. 2 Indeed, all of these solutions pursue implicit or explicit goals, in terms of their social or political consequences, which can be summed up as enabling self-organised direct interactions between individuals, without relying on a third party for coordination, and also preventing any form of surveillance or coercion.

Yet cryptography is not only useful to protect the privacy of communications; it can also serve as a means to promote further decentralisation and disintermediation when combined with a peer-to-peer architecture. In 2008, a pseudonymous entity named Satoshi Nakamoto released a white paper on the Cryptography Mailing list (metzdowd.com) describing the idea of a decentralised payment system relying on a distributed ledger with cryptographic primitives (Nakamoto, 2008a). One year later, a first implementation of the ideas defined in the white paper was released and the Bitcoin network was born. It introduces its own native currency (or unit of account) with a fixed supply – and whose issuance is regulated, only and exclusively, by technological means. The Bitcoin network can therefore be used to replace at least some of the key functions played by central banks and other financial institutions in modern societies: the issuance of money on the one hand, and, on the other hand, the fiduciary functions of banks and other centralised clearing houses.

Supported by many self-proclaimed libertarians, Bitcoin is often presented as an alternative monetary system, capable of bypassing most of the state-backed financial institutions – with all of their shortcomings and vested interests which have become so obvious in the light of the financial crisis of 2008. Indeed, as opposed to traditional centralised economies, Bitcoin’s monetary supply is not controlled by any central authority, but is rather defined (in advance) by the Bitcoin protocol – which precisely stipulates the total amount of bitcoins that will ever come into being (21 million) and the rate at which they will be issued over time. A certain number of bitcoins are generated, on average, every ten minutes and assigned as a reward to those who lend their computational resources to the Bitcoin network in order to both operate and secure the network. In this sense, Bitcoin can be said to mimic the characteristics of gold. Just as gold cannot be created out of thin air, but rather needs to be extracted from the earth (through mining), Bitcoin also requires a particular kind of computational effort – also known as mining – in order for the network protocol to generate new bitcoins (and just as gold progressively becomes harder to find as the stock gets depleted over, also the amount of bitcoins generated through mining decreases over time).

The establishment and maintenance of a currency has traditionally been regarded as a key prerogative of the State, as well as a central institution of democratic societies. Controlling the money supply, by different means, is one of the main instruments that can be leveraged in order to shape the economy, both domestically and in the context of international trade. Yet, regardless of whether one believes that the State has the right (or duty) to intervene in order to regulate the market economy, monetary policies have sometimes been instrumentalised by certain governments using inflation as a means to finance government spending (e.g. in the case of the Argentine great depression of 1998-2002). Perhaps most critical is the fact that, with the introduction of fractional-reserve banking, commercial banks acquired the ability to (temporarily) increase the money supply by giving out loans which are not backed up by actual funds (Ferguson, 2008). 3 The fractional-reserve banking system (and the tendency of commercial banks to create money at unsustainable rates) is believed to be one of the main factors leading to the global financial crisis of 2008 – which has brought the issue of private money issuance back into the public debate (Quinn, 2009).

Although there have been many attempts at establishing alternative currencies, and cryptocurrencies have also been debated for a long time, the creation of the Bitcoin network was in large part motivated in response to the social and cultural contingencies that emerged during the global financial crisis of 2008. As explicitly stated by Satoshi Nakamoto in various blog posts and forums, Bitcoin aimed at eradicating corruption from the realm of currency issuance and exchange. Given that governments and central banks could no longer be trusted to secure the value of fiat currency and other financial instruments, Bitcoin was designed to operate as a trustless technology, which only relies on maths and cryptography. 4 The paradox being that this trustless technology is precisely what is needed for building a new form of “distributed trust” (Mallard, Méadel, & Musiani, 2014).

Trust management is a classic issue in peer-to-peer computing, and can be understood as the confidence that a peer has to ensure that it will be treated fairly and securely, when interacting with another peer, for example, during transactions or downloading files, especially by preventing malicious operations and collusion schemes (Zhu, Jajodia, & Kankanhalli, 2006). To address this issue, Bitcoin has brought two fundamental innovations, which, together, provide for the self-governability and self-sustainability of the network. The first innovation is the blockchain, which relies on public-private key encryption and hashing algorithms to create a decentralised, append-only and tamper-proof database. The second innovation is Proof-of-Work, a decentralised consensus protocol using cryptography and economic incentives to encourage people to operate and simultaneously secure the network. Accordingly, the Bitcoin protocol represents an elegant, but purely technical solution to the issue of social trust – which is normally resolved by relying on trusted authorities and centralised intermediaries. With the blockchain, to the extent that trust is delegated to the technology, individuals who do not know (and therefore do not necessarily trust) each other, can now transact with one another on a peer-to-peer basis, without the need for any intermediary.

Hence Bitcoin uses cryptography not as a way to preserve the secrecy of transactions, but rather in order to create a trustless infrastructure for financial transactions. In this context, cryptography is merely used as a discrete notational system (DuPont, 2014) designed to promote the autonomy of the system, which can operate independently of any centralised third party 5. It relies on simple cryptographic primitives or building blocks (SHA256 hash functions and public-key cryptography) to resolve, in a decentralised manner, the double-spending problem 6 found in many virtual currencies. The scheme used by Bitcoin (Proof-of-Work) relies on a peer-to-peer network of validators (or miners) who commit their computational resources (hashing power) to the network in order to record all valid transactions into a decentralised public ledger (a.k.a. the blockchain) in a chronological order. All valid transactions are recorded into a block, which incorporates a reference (or hash) to the previous block – so that any attempt at tampering with the order or the content of any past transaction will always and necessarily result in an apparent discontinuity in the chain of blocks.

By combining a variety of existing technologies with basic cryptographic primitives, Bitcoin has created a system that is provably secure, practically incorruptible and probabilistically unattackable 7 – all this, without resorting to any centralised authority in charge of policing the network. Bitcoin relies on a fully open and decentralised network, designed in such a way that anyone is free to use the network and contribute to it, without the need for any kind of previous identification. Yet, contrary to popular belief, Bitcoin is neither anonymous nor privacy-friendly. Quite the contrary, anyone with a copy of the blockchain can see the history of all Bitcoin transactions. Decentralised verification requires, indeed, that every transaction be made available for validation to all nodes in the network and that every transaction ever done on the Bitcoin network can be traced back to its origin. 8

In sum, Bitcoin embodies in its very protocols a profoundly market-driven approach to social coordination, premised on strong assumptions of rational choice (Olson, 1965) and game-theoretical principles of non-cooperation (von Neumann & Morgenstern, 1953 [1944]). The (self-)regulation of the overall system is primarily achieved through a system relying on perfect information (the blockchain), combined with a consensus protocol and incentives mechanism (Proof-of-work), to govern the mutually adjusting interests of all involved actors. Other dimensions of social trust and coordination (such as loyalty, coercion, etc.) are seemingly expunged from a system which expressly conforms to Hayek’s ideals of catallactic organisation (Hayek, 1976, p. 107ff).

B. FROM INCEPTION TO CRISIS

1. A short history of Bitcoin
   The history of Bitcoin – albeit very short – consists of a very intense series of events, which have led to the decentralised cryptocurrency becoming one of the most widely used forms of digital cash. The story began in October 2008, with the release of the Bitcoin white paper (Nakamoto, 2008a). In January 2009, the Bitcoin software was published and the first block of the Bitcoin blockchain was created (the so-called Genesis block) with a release of 50 bitcoins. Shortly after, the first Bitcoin transaction took place between Satoshi Nakamoto and Hal Finney – a well-known cryptographer and prominent figure of the cypherpunk movement in the 1990s. It is not until a few months later that Bitcoin finally acquired an equivalent value in fiat currency 9 and slowly made its way into the commercial realm, as it started being accepted by a small number of merchants. 10

In the early days, Satoshi Nakamoto was actively contributing to the source code and collaborating with many of the early adopters. Yet, he was always very careful to never disclose any personal details, so as to maintain his identity secret. To date, in spite of the various theories that have been put forward, 11 the real identity of Satoshi Nakamoto remains unknown. In a way, the pseudonymity of Satoshi Nakamoto perfectly mirrors that of his brainchild, Bitcoin – a technology designed to substitute technology for trust, thus rendering the identification of transacting parties unnecessary.

Over the next few months, Bitcoin adoption continued to grow, slowly but steadily. Yet, the real spike in popularity of Bitcoin was not due to increased adoption by commercial actors, but rather to the establishment in January 2011 of Silk Road – an online marketplace (mostly used for the trading of illicit drugs) relying on Tor and Bitcoin to preserve the anonymity of buyers and sellers. Silk Road paved the way for Bitcoin to enter the mainstream, but also led many governmental agencies to raise several concerns that Bitcoin could be used to create black markets, evade taxation, facilitate money laundering and even support the financing of terrorist activities.

In April 2011, to the surprise of many, Satoshi Nakamoto announced on a public mailing list that he would no longer work on Bitcoin. I’ve moved on to other things he said, before disappearing without further justification. Yet, before doing so, he transferred control over the source code repository of the Bitcoin client to Gavin Andresen, one of the main contributors to the Bitcoin code. Andresen, however, did not want to become the sole leader of such a project, and thus granted control over the code to four other developers – Pieter Wuille, Wladimir van der Laan, Gregory Maxwell, and Jeff Garzik. Those entrusted with these administration rights for the development of the Bitcoin project became known as the core developers.

As the popularity of Bitcoin continued to grow, so did the commercial opportunities and regulatory concerns. However, with the exit of Satoshi Nakamoto, Bitcoin was left without any leading figure or institution that could speak on its behalf. This is what justified the creation, in September 2012, of the Bitcoin Foundation – an American lobbying group focused on standardising, protecting and promoting Bitcoin. With a board comprising some of the biggest names in the Bitcoin space (including Gavin Andresen himself), the Bitcoin Foundation was intended to do for Bitcoin what the Linux Foundation had done for open source software: paying developers to work full-time on the project, establishing best practices and, most importantly, bringing legitimacy and building trust in the Bitcoin ecosystem. And yet, concerns were raised regarding the legitimacy of this self-selected group of individuals – many of whom had dubious connections or were allegedly related to specific Bitcoin scams 12 – to act as the referent and public face of Bitcoin. Beyond the irony of having a decentralised virtual currency like Bitcoin being represented by a centralised profit-driven organisation, it soon became clear that the Bitcoin Foundation was actually unable to take on that role. Plagued by a series of financial and management issues, with some of its ex-board members under criminal investigation and most of its funds depleted, the Bitcoin Foundation has today lost much of its credibility.

But even the fall of the Bitcoin Foundation did not seem to significantly affect Bitcoin – probably because the Foundation was merely a facade that never had the ability to effectively control the virtual currency. Bitcoin adoption has continued to grow over the past few years, to eventually reach a market capitalisation of almost US 7 billion dollars. Bitcoin still has no public face and no actual institution that can represent it. Yet, people continue to use it, to maintain its protocol, and to rely on its technical infrastructure for an increasing number of commercial (and non-commercial) operations. And although a few Bitcoin-specific regulations have been enacted thus far (see e.g. the NY State BitLicense), regulators around the world have, for the most part, refrained from regulating Bitcoin in a way that would significantly impinge upon it (De Filippi, 2014).

Bitcoin thus continues to operate, and continues to be regarded (by many) as an open source software platform that relies on a decentralised peer-to-peer network governed by distributed consensus. Yet, if one looks at the underlying reasons why Bitcoin has been created in the first place, and the ways it has eventually been adopted by different categories of people, it becomes clear that the original conception of Bitcoin as a decentralised platform for financial disruption has progressively been compromised by the social and cultural context in which the technology operates.

Following the first wave of adoption by the cypherpunk community, computer geeks and crypto-libertarians, a second (larger) wave of adoption followed the advent of Silk Road in 2011. But what actually brought Bitcoin to the mainstream were the new opportunities for speculation that emerged around the cryptocurrency, as investors from all over the world started to accumulate bitcoins (either by purchasing them or by mining) with the sole purpose of generating profits through speculation. This trend is a clear reflection of the established social, economic and political order of a society driven by the capitalistic values of accumulation and profit maximisation. Accordingly, even a decentralised technology specifically designed to promote disintermediation and financial disruption can be unable to protect itself from the inherent tendencies of modern capitalist society to concentrate wealth and centralise power into the hands of a few (Kostakis & Bauwens, 2014).

The illusion of Bitcoin as a decentralised global network had already been challenged in the past, with the advent of large mining pools, mostly from China, which nowadays control over 75% of the network. But this is only one part of the problem. It took a simple – yet highly controversial – protocol issue to realise that, in spite of the open source nature of the Bitcoin platform, the governance of the platform itself is also highly centralised.

1. The block size dispute
   To many outside observers, the contentious issue may seem surprisingly specific. As described earlier, the blockchain underpinning the Bitcoin network is composed of a series of blocks listing the totality of transactions which have been executed so far. For a number of reasons (mainly related to preserving the security and stability of the system, as well as to ensure easy adoption), the size of these blocks was initially set at 1 megabyte. In practice, however, this technical specification also sets a restriction on the number of transactions which the blockchain can handle in a particular time frame. Hence, as the adoption of Bitcoin grew, along with the number of transactions to be processed, this arbitrary limitation (which was originally perceived as being innocuous) became the source of heated discussions – on several internet forums, blogs, and conferences – leading to an important dispute within the Bitcoin community (Rizzo, 2016). Some argued that the one megabyte cap was effectively preventing Bitcoin from scaling and was thus a crucial impediment to its growth. Others claimed that many workarounds could be found (e.g. off-chain solutions that would take off the load from the main Bitcoin blockchain) to resolve this problem without increasing the block size. They insisted that maintaining the cap was necessary both for security reasons and for ideological reasons, and was a precondition to keeping the system more inclusive and decentralised.

On 15 August 2015, failing to reach any form of consensus over the issue of block sizes, a spinoff project was proposed. Frustrated by the reluctance expressed by the other Bitcoin developers to officially raise the block size limit (Hearn, 2015), two core developers, Gavin Andresen and Mike Hearn, released a new version of the Bitcoin client software (Bitcoin XT) with the latent capacity of accepting and producing an increased block size of eight megabytes. This client constitutes a particular kind of fork of the original software or reference client (called Bitcoin Core). Bitcoin XT was released as a soft fork, 13 with the possibility to turn into a hard fork, if and when a particular set of conditions were met. Initially, the software would remain identical to the Bitcoin Core software, with the exception that all the blocks mined with the Bitcoin XT software would be “signed” by XT. This signature serves as a proxy for a poll: starting from 11 January 2016, in the event that at least 75% of all most recent 1,000 blocks have been signed by XT, the software would start accepting and producing blocks with a maximum block size of eight megabytes – with the cap increasing linearly so as to double every two years. This would mark the beginning of an actual hard fork, leading to the emergence of two blockchain networks featuring two different and incompatible protocols.

The launch of Bitcoin XT proved highly controversial. It generated a considerable amount of debate among the core developers, and eventually led to a full-blown conflict which has been described as a civil war within the Bitcoin community (Hearn, 2016). Among the Bitcoin core developers, Gregory Maxwell in particular was a strong proponent of maintaining the 1 megabyte cap. According to him, increasing the block size cap would constitute a risky change to the fundamental rules of the system, and would inherently bring Bitcoin towards more centralisation – because it would mean that less powerful machines (such as home computers) could no longer continue to handle the blockchain, thus making the system more prone to being overrun by a small number of big computers and mining pools. Similarly, Nick Szabo – a prominent cryptographer involved since the early days in the cypherpunk community – declared that increasing the block size so rapidly would constitute a huge security risk that could jeopardise the whole network. Finally, another argument raised against the Bitcoin XT proposal was that increasing the block size would possibly lead to variable, and delayed confirmation times (as larger blocks may fail to be confirmed every ten minutes).

Within the broader Bitcoin community, the conflict gave rise to copious amounts of flame-wars in various online forums that represent the main sources of information for the Bitcoin community (Reddit, Bitcoin Info, Bitcoin.org, etc.). Many accused the proponents of Bitcoin XT of using populist arguments and alarmist strategies to bring people on their side. Others claimed that, by promoting a hard fork, Bitcoin XT developers were doing exactly what the Bitcoin protocol was meant to prevent: they were creating a situation whereby people from each side of the network would be able to spend the same bitcoins twice. In some cases, the conflict eventually resulted in outright censorship and banning of Bitcoin XT supporters from the most popular Bitcoin websites. 14 Most critically, the conflict also led to a variety of personal attacks towards Bitcoin XT proponents, and several online operators who expressed support for Bitcoin XT experienced Distributed Denial of Service (DDoS) attacks.

In the face of these events, and given the low rate of adoption of Bitcoin XT by the Bitcoin community at large, 15 Mike Hearn, one of the core developers and key instigators of Bitcoin XT, decided to resign from the development of Bitcoin – which he believed was on the brink of technical collapse. Hearn condemned the emotionally charged reactions to the block size debate, and pointed at major disagreements among the appointed Bitcoin core developers in the interpretation of Nakamoto’s legacy.

But the conflict did not end there. Bitcoin XT was only the first of a series of improvements which were subsequently proposed to the Bitcoin protocol. As Bitcoin XT failed to gain mass adoption, it was eventually abandoned on January 23rd. New suggestions were made to resolve the block size problem (see e.g., Bitcoin Unlimited, Bitcoin Classic, BitPay Core). The most popular today is probably Bitcoin Classic, which proposes to increase the block size cap to 2 megabytes (instead of 8) by following the same scheme as Bitcoin XT (i.e. after 75% of bitcoin miners will have endorsed the new format). One interesting aspect of Bitcoin Classic is that it also plans to set up a specific governance structure that is intended to promote more democratic decision-making with regard to code changes, by means of a voting process that will account for the opinions of the broader community of miners, users, and developers. Bitcoin Classic has received support from relevant players in the Bitcoin community, including Gavin Andresen himself, and currently accounts for 25% of the Bitcoin network’s nodes.

It is, at this moment in time, quite difficult to predict where Bitcoin is heading. Some may think that the Bitcoin experiment has failed and that it is not going anywhere; 16 others may think that Bitcoin will continue to grow in underserved and inaccessible markets as a gross settlement network for payment obligations and safe haven assets; 17 while many others believe that Bitcoin is still heading to the moon and that it will continue to surprise us as time goes on. 18 One thing is sure though: regardless of the robustness and technical viability of the Bitcoin protocol, this governance crisis and failure in conflict resolution has highlighted the fragility of the current decision-making mechanisms within the Bitcoin project. It has also emphasised the tension between the (theoretically) decentralised nature of the Bitcoin network and the highly centralised governance model that has emerged around it, which ultimately relied on the goodwill and aligned interests of only a handful of people.

II. BITCOIN GOVERNANCE AND ITS CHALLENGES
Governance structures are set up in order to adequately pursue collective goals, maintain social order, channel interests and keep power relations under check, while ensuring the legitimacy of actions taken collectively. They are therefore closely related to the issue of trust, which is a key aspect of social coordination and which online socio-technical systems address by combining informal interpersonal relations, formal rules and technical solutions in different ways (Kelty, 2005). In the case of online peer-production communities, two essential features are decisive in shaping their governance structure, namely the fact that they are volunteer-driven and that they seek to self-organise (Benkler, 2006). Thus, compared to more traditional forms of organisations such as firms and corporations, they often need to implement alternative means of coordination and incentivisation (Demil & Lecocq, 2006).

Nicolas Auray has shown that, although the nature of online peer-production communities can be very different (ranging from Slashdot to Wikipedia and Debian), they all face three key challenges which they need to address in order to thrive (Auray, 2012):

definition and protection of community borders;
establishment of incentives for participation and acknowledgment of the status of contributors;
and, finally, pacification of conflicts.
Understanding how each of these challenges is addressed in the case of the Bitcoin project is particularly difficult, since Bitcoin is composed of two separate, but highly interdependent layers, which involve very different coordination mechanisms. On the one hand, there is the infrastructural layer: a decentralised payment system based on a global *trustless *peer-to-peer network which operates according to a specific set of protocols. On the other hand, there is the layer of the architects: a small group of developers and software engineers who have been entrusted with key roles for the development of this technology.

The Bitcoin project can thus be said to comprise at least two different types of communities – each with their own boundaries and protection mechanisms, rewards or incentive systems, and mechanisms for conflict resolution. One is the community of nodes within the network, which includes both passive users merely using the network to transfer money around, and “active” users (or miners) contributing their own computational resources to the networks in order to support its operations. The other is the community of developers, who are contributing code to the Bitcoin project with a view to maintain or improve its functionalities. What the crisis described above has revealed is the difficulty of establishing a governance structure which would properly interface both of these dimensions. As a consequence, a small number of individuals became responsible for the long-term sustainability of a large collective open source project, and the project rapidly fell prone to interpersonal conflict once consensus could no longer be reached among them.