Bitcoin lead developer Mike Hearn to end involvement with the currency

After developing software for Bitcoin for five years, Mike Hearn has sold his coins and is backing out.

Bitcoin was down 10 per cent yesterday after Hearn, said in a blogpost that he was ending his involvement with the cryptocurrency and selling all of his remaining holdings as it had "failed".

Hearn, who is one of the five senior developers who had spent over five years working on the web-based currency, said he would no longer be taking part in development.

"Despite knowing that bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly," Hearn said in his post on blog-publishing platform Medium.

Hearn and Gavin Andresen, successors to Bitcoin's elusive creator Satoshi Nakamoto had been at odds with the other lead developers over whether the "blocks" in which bitcoin transactions are processed should be enlarged.

Each block currently had a capacity of one megabyte, which according to Hearn was "an entirely artificial capacity cap", and allowed a maximum of just three payments to be processed per second.

In August, Hearn and Andresen released a rival version of the current software, called Bitcoin XT, which would raise the block size to 8 megabytes, to allow procession of twenty-four transactions every second. While that was only a fraction of the 20,000 or so that Visa could process, it would increase every year, so that bitcoin could continue to grow.

In his article on Medium, Hearn said, "Bitcoin is an experiment and like all experiments, it can fail."

"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."

Bitcoins, are a decentralised digital alternative to currency that started in 2009. There was no central holding entity, like a bank or a government, which meant the Bitcoin community controlled transactions.

According to Hearn, individuals and companies, that spoke in favour of increasing the limit size of incoming transaction were silenced - banned from forums and hit with DDOS attacks as described by Forbes.

The New York Times reported that over the last six months, developers had received death threats and service attacks that had brought down entire regions of internet.