Hello and welcome to another episode of the Bitcoin News Show.
I am your host Vortex and you guys are right here on the World Crypto Network YouTube channel.
One of the best places to find news and information about cryptocurrency.
Have an amazingly amazing panel for you guys ready here today.
First, I just wanted to get a couple of announcements out of here.
I just wanted to congratulate Charlie Lee for going full-time Litecoin.
Ladies and gentlemen, he has quit his job at Coinbase and went full-time Litecoin living the dream.
Awesome, Charlie. Just wanted to give you a thumbs up for that.
And then finally, Gabriel Devine, our very own Gabriel Devine.
Just wanted to welcome him back to the World Crypto Network.
Really glad to see him again on the Bitcoin group and doing his own interviews again.
So everybody definitely follow Gabriel Devine. Really glad to have him back.
So without further ado, I think we can go ahead and introduce the guests.
Just wanted to get the topics out of the way today, guys.
We're going to be talking about the user-activated software.
That's on everybody's mind.
And I really wanted to create a discussion around that and get everybody's thoughts.
We have some very important people here in the Bitcoin community.
And I really wanted to get their thoughts on this.
So first, let's introduce Mr. Eric Lombroso from Cyfrix.
How are you doing, Eric?
Hey, I'm doing great.
Awesome. Thanks so much for joining us and really loving your videos, your interviews, talking about the user-activated software.
I've seen you on a bunch of them, including even World Crypto Network, I think MadBitcoins.
So just really, really, really happy to, really thankful for you for explaining everything to us.
We got Mr. Jameson Lopp from BitGo. How are you doing, Jameson?
Doing well. I'm actually in the Valley this week, so it's nice to be visiting.
Awesome, awesome. The most manly Bitcoiner around, ladies and gentlemen, Mr. Jameson Lopp.
And John Light, joining us. Thank you so much, John, for joining us.
Longtime Bitcoiner. How are you doing, John?
If I can unmute. Thank you. Doing great.
Yes, yes. Glad to be here.
Thanks so much, man. Yeah, that Google Hangout mute is a little bit hard.
You have to hover over it. It's retarded.
But that's fine. So thanks so much, John.
And listen, we got your article linked in the show notes for everybody to check out to prepare for the user-activated software.
John has a great blog post for what you can do to prepare, what the outcomes might be.
It's just great. Everybody needs to check that out.
So thanks, John, so much for writing that article. Really, really appreciate it.
And finally, without further ado, the special guest for this show.
We have Mr. Simon Dixon from Bank to the Future. Simon, how are you doing?
Really good. Thanks for having me. First time on the show.
I'm normally in Hong Kong, but I'm in London this week.
So I've got Big Ben in the background and I'll be headed back to China next week.
And we can discuss some of the things we're up to there as we go through the topics.
Awesome. Awesome. Thanks so much, Simon, for joining us, man.
I've seen you around, too, talking about all sorts of stuff about Bitcoin.
You know, I really appreciate educating the community.
Though, of course, as you've said, now people are trying to be a little bit more excited about ICOs.
But we've got to steer them back to Bitcoin. People have got to steer back to the source, back to the main blockchain.
So let's start out right away with our topics. Our first main topic, the user-activated software.
Guys, I really want to get your opinion on this.
I have several questions here lined up that I'd like to go through, everybody.
But first, I just want to start out. We'll go with you, Simon, first, of course, the special guest.
Just wanted to get your thoughts. What is your opinion on the user-activated software?
Do you think we need it? Is it better than SegWit 2X? What are your thoughts?
Well, I think the main thing that this has done is that this scaling debate has been going on for so long.
It feels like forever.
And now we've got this date, 1st of August, where everyone can coordinate.
Everyone can figure out which side of the camp they're going to.
The funny thing is that the situation that we are risen with today is an unlimited number of different scenarios that could occur.
But to be honest, I'm really excited. Bitcoin is at the highest price it's ever been.
There's a lot of uncertainty in the market, but we've got a lot of new people coming to the market, a lot of institutions.
And this August 1st date, it's kind of like, I don't know what to draw it to, the analogy I want to give,
but there's probably loads of things that we're involved with every day that we just don't know that there's these ginormous debates if you're really geeky and into it.
I don't know, maybe the iPhone is debating whether to take one port off or something like that.
And unless you're actually involved deep into it, you'll just completely ignore this stuff.
And then suddenly the next iPhone comes out and there's another port on there that you didn't know about.
I think that's what's happening with Bitcoin right now.
To us, it seems like D-Day, the whole world is over.
Bitcoin is about to go through this massive change.
And yet the vast majority of people just holding their Bitcoins, have no idea, will make transactions on the day.
And they just don't really have much understanding of it.
But the fact that we've got this 1st of August date now is, I think, a massive progress that we're going to have a result.
I'm not sure exactly where it's going to go. I'm not sure what's going to happen next.
My thoughts are that we're probably going to stay with the status quo, but hopefully Segwit gets in with some way.
But I try to forecast what's happening next in Bitcoin.
And boy, it throws surprises at you all the time.
This market is such an exciting market and there's always so much to learn.
And so I'm excited to hear from the other panellists on some of the more technical ones about the game theory approaches right now.
But I feel that this is a year we're going to know where we're going next.
And once we get past this scaling, the sky is the limit. It really is.
Absolutely. And it really is maddening almost the number of outcomes that could actually happen.
When you really start thinking about all the game theory, Jimmy Song was interviewed on MattBitcoins and they were talking about just some of the ways.
Jimmy Song did a blog post about it and it was just thousands of words long, super long, and it was only on three scenarios.
So it's just a little crazy.
The most important thing to me, because I'm the guy that, you know, for the last couple of years,
I've been speaking with lots of fund managers, hedge fund managers all around the world.
You know, people managing most of the money in the world.
And my job for the last couple of years was to un-Blythe Masters or the institutions,
because Blythe Masters had gone around all the institutions, every fund manager in the world,
telling them about this amazing blockchain thing, private blockchain that, you know,
and my job was to actually get them all into Bitcoin.
And I was explaining how Bitcoin worked.
And, you know, pretty much all of them were going back and they were buying large, large, large orders of Bitcoin by the end of it,
because it was the only blockchain that actually did something from all the pictures they've heard.
And so that was always my job.
Now, if I had to go back to them and explain two Bitcoins, I think it's a stretch too far.
So I want to avoid two Bitcoins at all costs.
You know, I've got, you know, next week in China, I've got a tour with Jim Rogers.
We're doing 15 different cities in China.
That's the guy that co-founded with George Soros, a quantum fund.
And I really, really don't want to have to explain two Bitcoins and hard forks and segwit and two megabyte this.
I just want to go, you know, kind of back to the basic talk,
which is hard enough to understand about why Bitcoins are store of value and how it's going to change the world.
And so I can't wait to get back there.
Two Bitcoins is going to make make life very difficult.
So I just I just hope we get there.
And I think by the end of this year, we'll have a clear path forward, a scalable blockchain.
And that's exciting. That's really exciting.
Absolutely. And, you know, I myself can't wait to get back to tweeting just nothing but positive things about Bitcoin.
Just just just like just, you know, looking at the sky, everything's going to be fine kind of Bitcoin,
no more of this UASF, no more of this forking, just how Bitcoin is going to change the world.
And of course, as we know, Bitcoin is changing the world all over.
We just had I also link this into the show notes where Adam Meister's recent show this weekend,
Bitcoin had some people from Venezuela on how they were talking about it was just saving their lives,
just just literally saving their life.
And when they were taking out different bills and denomination of their currencies,
you know, these guys that were that had Bitcoin didn't care.
Right. They didn't care. It is a complete separation from their government.
So just really awesome. I linked to that in the show. Everybody needs to check that out.
So, yeah, Bitcoin changing the world still. I can't wait to talk more about that.
So let us go. Who do they have next? Well, now I don't remember. I think we're with Jameson next, actually.
Jameson, what do you think about what we've spoken about so far?
What do you think about this user-acted software? Is this really needed?
And, you know, what is your thoughts on what could happen? And tell us about what you think.
Well, you know, a lot of debates that happen the past few years with scalability
tend to come down to, like, who has the power in the system?
And we see a lot of people, especially, they're pushing for hard fork to much larger block sizes
that are essentially making arguments that, well, the miners have the ultimate power.
You know, they have the hash power. And I think this sort of hash power deference, if you will,
or looking to the Satoshi White Paper and interpreting it as hash power and Nakamoto consensus
is kind of conflating different forms of consensus with your meat space consensus,
with your machine consensus. And I think that from a theoretical standpoint,
the user-activated soft fork is correct. It is theoretically the most powerful weapon
that the quote-unquote community has, because it is a system of self-sovereignty
in that the users have the final say of what rules they're agreeing to.
But when you really start to look at the reality of the situation, it becomes a lot more complicated
of how do you actually roll out and deploy such a mechanism,
especially when the different methods that are currently available to us
seem to be somewhat contentious in and of itself.
So I'm not completely convinced that, like, BIP 148, for example, has enough support behind it
to really push us over the line. Of course, these things are always in flux.
Anything can change. The August 1st deadline is quickly approaching,
and as much as I wish I could say that the latest agreement with SegWit 2X
would be able to find a quote-unquote compromise and get everybody together on the same path again,
it is not really progressing as quickly or as amicably as I would hope that it would.
So I'm not particularly confident that that is going to result in something getting activated
before the BIP 148 deadline. So right now, it's definitely uncertain.
There seems to be more uncertainty than ever, and now we've got this additional time crunch
that has been placed on us.
Yep, the time is ticking down. August 1st is coming, and there's nothing anybody can do about it.
First, real quick, Jameson, just wanted to congratulate you on your Max Kaiser appearance.
I caught that as well. Explained things very well.
Just amazing, the technical details that you unleashed there in such short amount of time.
So just thank you for that, for talking about Bitcoin.
And yeah, things can change overnight. I really much have been telling people this on Twitter
and such and on my show for a while now.
Things can change so fast, they can literally change overnight.
Global sentiment can change in 24 to 48-hour period, people, because Bitcoin, there's no borders.
This is global, this is 24-7, and so everybody is paying attention to the same things at the same time.
And yeah, we have a lot of information, asyncrasy and things like that,
but it's still everybody is watching those blocks get confirmed, everybody is watching the price go up.
So everybody is in this together.
And so far, like you said, I understand you're not being too confident about SegWit2X,
because so far, according to the Wikipedia page that I also have linked on this show notes,
not one single developer is okay with SegWit2X.
And it's kind of funny, even Matt Carello even put an LOL instead of a no.
A little bit of a troll on SegWit2X.
So yeah, it's very interesting to see, but let's go with Eric next.
So Eric, what do you think about the conversation so far?
What do you think about user-activated software?
Are you worried that it's going to happen?
Are you glad that it's here?
And what are your thoughts on it?
Well, I've been in the trenches for over two years now, just people throwing different forks,
different consensus changes that they wanted to throw into the protocol.
And when I first started working on Bitcoin, I realized that it was really hard to change consensus rules.
That was just like a feature of the system.
The soft forking mechanism that was created was a really creative way to be able to avoid a lot of the logistics issues of deployment
just because you don't have to have everyone upgrade at the same time,
and you don't have really these chain split risks, as long as hash power supports it.
But now we have a situation where there's a divergence of interests, right?
So as long as there's no conflict of interests and everyone works cooperatively,
the minor activated soft forks are the safest way we know right now to be able to deploy a change to the network
that is the most likely to have almost no chance of really any significant glitches.
There's been a couple in the past, like BIP66, I think, had a couple issues, minor issues.
But really, if you look at the big scheme of things,
it's really caused almost no disruption at all in the markets or in commerce or anything like that.
So I think that that's the approach that we've sought.
When the block size increase proposals were first put forth into the mailing list a couple years ago,
it was clear. I think I was supportive of eventually finding a way to do that,
but a lot of us were very concerned that that was going to create divergent interests.
There's different costs to different parts of the system,
and I think that that kind of thing can externalize costs to other players.
Unfortunately, the way that the protocol works right now,
only minors are getting directly rewarded by running the protocol.
So it really created a landscape where it was very likely that there'd be some kind of divergent interest.
And then so when we worked on SegWit, the idea was to try to make it as little, not as uncontented as possible,
to kind of give everyone something that they wanted.
So bigger blocks, fix malleability, fix the quadratic caching,
be able to add new script types so we could do better crypto and stuff like that.
So we could compete with other smart contract platforms better.
So all these things that are getting rolled out and the thing like this,
obviously it's a big update, but we did not anticipate that there'd be certain contentions anyways.
A lot of issues that came out afterwards were things that we were not expecting.
So as you can see, it's really, really, really hard.
Even when you try to design a consensus change to be as uncontented as possible,
it's very hard to predict how different players in the ecosystem are going to take it
and whether they're going to have some kind of divergent interest that you might not be aware of.
There might be some issue with some incompatibility that you just did not know about before.
We've tried really hard as developers to go out and interact with the community
and do outreach and talk to different users and companies and miners and all the different players
and see really what their concerns are and whether they would support something like SegWit.
And we got a resounding yes from pretty much everyone by the middle of 2016.
We were like, yes, we're good to go.
And so that's why we deployed it as a miner-activated soft fork using BIP9.
But I think it turns out that, you know, I mean, obviously there's still some very divergent interests apparently.
And it's really, really hard to really get down to the bottom of it.
It's like, what is it that is really causing this contention, right?
We can speculate and everything, but there really has been no clear dialogue
that really kind of gets to the bottom of it.
And it seems like a lot of people are kind of posturing or, you know, like using,
you know, thinking of this like a poker game, trying to like, you know, get, you know, the bluff in there
and try to find ways to like, you know, exert leverage on other players.
And, you know, the game theory comes into play now.
So now we have a situation where there's a divergence of interest between different groups of the network
where for a while I thought that status quo was the best thing if that were to happen.
It's like, great, if people don't agree, then the system stays the same way and that's great.
Immutability is working fine.
But I think that right now we've kind of reached a point where there is a conflict.
It needs resolution.
We need to get to the bottom of what it is that's causing it or if not, we need to resolve it somehow.
I don't think that it's good for just like, you know, the optics and the development of this technology
and innovation for us to be stuck, you know, just arguing over a single technical parameter forever.
It just is ridiculous.
So we need to showdown.
And so I support a user-activated software because I think the dynamics needs to change.
Obviously, the miner-activated software is not working.
I think for a long time we really feared the possibility of chain splits.
And I see, you know, I agree with Simon that it is more complicated to explain to people
if you have to explain multiple blockchains and, you know, there's two different bitcoins,
you know, or three different bitcoins or whatever.
I think that part of the system is just having to deal with those scenarios
and understanding the implications and like not fearing them so much.
Yeah, the chain can split.
We don't really have control over that.
I think that a lot of misconceptions have like, you know, been around the idea that developers
can simply change consensus rules and everyone's just going to like, you know, accept whatever happens.
But that's not the case at all.
I mean, users are the ones that really ultimately dictate the rules of the network.
We can make recommendations.
And as you mentioned about, you know, the Wiki site, right?
It's like we posted in there like what our particular, you know, opinions are.
You see that not all core developers agree all the time on which proposals are the best on different things.
When it comes to consensus changes in particular, you know, the bar is set really high.
It's really hard to push a consensus change through Bitcoin Core unless there's a very high level of agreement
not only between developers but within the entire ecosystem.
And I think that right now we're just seeing that, you know, I think more and more people are realizing
that the status quo is just not, you know, untenable because we need a resolution to this.
So I'm hoping that, you know, it plays out smoothly.
I hope that, you know, everyone kind of works in their own economic self-interest
or at least in a way that, you know, realizes like the optimal outcome for the system for the majority of users really.
I think right now this whole idea of one CPU, one vote in the white paper is being, as Jameson said,
I think it's being very misinterpreted.
If the system were to work that way as far as like, you know, one hash, one vote,
I don't think Bitcoin would be very interesting at all if you apply that to consensus rules
because that would basically just allow anyone that has – it's just brute force, right?
And that's not a system that I find very appealing. I don't think most Bitcoin users do either.
I'm very concerned about – I shouldn't say concerned. I'm very – how should I say – what's the right word?
I guess Flabberg asked that people would keep on attempting this same tactic of trying to like, you know,
forge these kind of agreements and, you know, behind closed doors and get everyone to sign off
and that that would kind of work. It's already been tried, you know, several times in the past.
It's never worked. I don't think that that will ever work on Bitcoin.
I think that it's just inherently in direct contradiction to what, you know,
the principles behind Bitcoin and what actually keeps Bitcoin together.
Different companies might think, well, you know, we have the cloud and we have the power to be able to push this through
and whatever, but in the end, it's the users that matter. It's, you know, Bitcoin users and the markets.
And it just seems like the markets don't want this kind of contentious hard fork right now at all.
I know fees are getting high. Some people are getting a little upset because, you know,
it is pricing out some use cases maybe, but, you know, it's like maybe we're having like too much of a good thing.
It's the – you know, the price is reaching all-time highs. Today, it reached another all-time high, right?
So it's like, wow, you know, there's so much demand for this. So many people want this, you know,
and it's like it's a victim of its own success in a way.
I don't really like the narrative that, you know, oh, Bitcoin's failing and it can't scale because fees are so high or whatever.
I mean, it's a new technology and I think that we're going to be doing some amazing stuff with off-chain stuff,
second layer stuff. I think that we could still work on some block, you know, some block size limit ideas, you know,
at some point. But I think the incentive structure needs to be changed right now.
And I think that we need to change the dynamics. So I'm really – I'm really strong.
I'm really excited about August 1st. I think that it's a chance to really change this whole thing.
And I think that, you know, I'm really excited to see what happens.
Absolutely. And so much there to unpack. I mean, just great points, Eric.
I mean, it's just strange that, you know, after XT, Classic and BU continuously gets rejected by the market,
they still try to think that, oh, no problem. We'll just sign an agreement and everything will be okay.
It's really strange. I mean, because at this point, the market wants Segway, clearly, right?
After XT, Classic, Bitcoin Limited, the market wants Segway.
It is proven on the test set for over a year to be, you know, to work.
And it was just engineered just with extreme difficulty, you know, by you guys to make sure – by the core team
to make sure that it can please as many people as possible.
And again, it's very interesting to me that last year, you know, that you guys were under the impression
for the most part that the miners were okay with Segway, that, hey, everything was good.
And then now, you know, here we are. And we can try to speculate all that we want with ASIC Boost and things like that.
But look, unless Jihan and Bitmain, you know, come forward and start asking people like Eric,
or telling people like Eric what the actual problem they have is with Segway,
then we're not going to get anywhere and we're just going to have to user activate software.
I mean, this is just the way it is. If you're not going to talk, then the users will take action.
And I kind of feel that's kind of what's happening, because remember, the developers themselves, they're not dictators.
They do not control when the hard fork can happen. They do not control when a software can happen.
You know, they can write a bit, but if nobody runs it, it's not going to happen, right?
It's up to the users to enforce this and what they really want.
So very interesting comments, Eric. Thank you so much.
Let's go with John Light, Mr. John.
Again, just reminding everybody that you wrote an awesome blog post to prepare people for the user activated software.
That is linked in the video description below.
So, John, I just wanted to see what are your thoughts on the conversation so far
and what do you think about the user activated software? Are you excited? Are you scared?
Do you think it's necessary? Tell us your thoughts.
I'm not scared, certainly not scared, because there's one thing that I pointed out in a recent blog post
that's a point that I think is really worth stressing here as well,
which is that SegWit is the lowest common denominator across all of the proposals that have wide support right now,
whether you're talking about BIP-148 or BIP-141 or SegWit 2X.
The common denominator here is SegWit.
Everybody who signed the SegWit 2X agreement agreed to activate SegWit and thus voicing their support for SegWit.
Of course, everybody who wants BIP-141 and BIP-148 to activate wants SegWit.
So we have a very wide consensus, very wide agreement that miners and users agree to activate SegWit.
Therefore, I think that wide agreement on activating SegWit that August 1st is going to be a complete non-event.
That would be awesome if it was just yet another non-event.
I also seem to remember a whole lot of FUD about the last halving in 2016,
about how it's going to spiral down and the miners aren't going to be able to make profits and everybody's just going to quit, right?
They're just going to quit. No, that did not happen.
It went off without a hitch across the world, the entire world.
All these Bitcoin nodes enforced the rules that were written eight years ago and the supply, in fact, did have.
So a very amazing event and I'm hoping that we can pull off that same type of skills with this on August 1st, but we will have to see.
So with that aside, does anybody else have anything they want to jump in with before asking another question?
Well, I do want to get into really the nuance of that.
So that's kind of a high-level overview of how I feel about SegWit and the user-activated soft fork.
The nuance here is that the user-activated soft fork is happening within the context of this SegWit 2x agreement,
which for some unknown reason has decided to actually re-implement SegWit.
And instead of activating the existing deployment that's in production,
they have decided to activate SegWit using a new deployment method,
which means that they have to write new software and roll out new node software to everybody who they want to participate in this new activation.
And this to me is really the most baffling part of it because it seems to me like they're trying extremely hard to not activate SegWit,
even though that's what everybody who signed that agreement stated that they were going to do.
And so my question to any of the SegWit 2x people is, what is the reason for this?
How did you choose to re-implement SegWit and activate it with a totally new deployment
rather than simply activating BIP 141 or even 148 if you prefer a flag day and a lower activation threshold?
And then do a 2 megabyte hard fork in six months after SegWit activates.
That's what's new about this agreement, really.
What's new about this agreement is not activating SegWit.
That was already something that people have agreed to in the past, and this is already software that's in production.
What's new about this agreement is this idea that six months after SegWit activates, there's going to be a 2 megabyte hard fork.
So what I don't understand is why they had to basically bundle a SegWit activation with this 2 megabyte hard fork
rather than just say, well, let's activate via BIP 141 or 148,
and then after that we'll run some software that activates a hard fork in six months and see how that goes.
It seems to me that all they have done by basically choosing to bundle SegWit with a 2 megabyte hard fork
and re-implement SegWit in some new software, all they have done is simply delay the activation of SegWit even further,
and you have to ask, why did they do that? It's a legitimate question.
Yeah, no, I agree completely, John. I think it's really – right now we're seeing this new dynamic of people just –
besides signing the agreement, it seems like a bait and switch.
Other ones at least were more specific about what they intended to do.
XT was very particular about what it wanted to accomplish.
Bitcoin Classic was very particular about what it wanted to accomplish.
BU, but this one seems like it's a complete bait and switch.
Maybe other attempts also had other intentions in mind.
I think for instance, BU really couldn't activate anyways.
There was no activation mechanism at all.
People just had to kind of – the hash rate didn't really matter for activation
because if the markets didn't accept the blocks, then they're not valid, right?
So in this case, it just seems like, yeah, it seems like more delaying tactics,
or I would like at least some explanation that's sensible as to why this is being done.
It makes no sense to me whatsoever. So yeah, why are we doing this?
So I think from my perspective of what I've seen is –
so when this – I spent a lot of time with the miners in China.
It's around the corner from me in Hong Kong.
And when I sat down with these people, I can tell you this is all politics,
human emotions, upset people, egos. It's all of that.
It's simply – this agreement is not sitting down with the core developers
or other developers and figuring out how we actually implement this.
It's all a political signal of how can we – a business person or a group of business people
thinking what have we got to do to move forward here.
So they come up with solutions. And to me, as a non-technical person,
the obvious solution did seem like, well, let's do this two megabytes to satisfy people,
and then let's do SegWit, and let's satisfy everyone.
We can unify and move forward.
But once you put that past any of the developers or anyone that's actually qualified to answer on that,
they can actually tell you why that's ridiculous.
And so the motivation behind it is purely there's a bunch of upset people.
The Hong Kong agreement was apparently signed.
I was there in Hong Kong. People were upset that that didn't happen.
There was a bunch of altercations. Trust was lost.
There's communication barriers.
The developers are communicating in a different style than many of the people in China.
And then another thing is also it's – from my perspective,
I'm actually speaking with many of the Bitcoin community in China.
It's actually – people are actually upset just by that word, Chinese miners,
because they all actually have very different opinions and very different perspectives.
And many of the people in – many of them are big SegWit supporters.
Other of them – and so there's so much to this.
It's like just banding people together into these Chinese miners has upset a lot of people.
And that's still – it's just a way that we sort information to try and understand this.
But there's a bunch of different players that are upset about a bunch of different things.
And from having spoken to Jihan, he is somebody that's very upset with the communication
between core developers and miners.
And the ASIC boost was a thing that kind of added new information.
And nobody really knows the answer to that.
And I guess we're going to find that soon.
But this is purely human emotions at play here.
And then you guys are more understanding the technicals and the practicalities and implementation
and actually working on how this is actually going to happen.
Realize that this is a very stupid compromise.
But it's just a bunch of business people and non-techies trying to figure out how do we move forwards?
How do we get Bitcoin back to where we want to be?
Well, I mean – can I jump in just for a second?
Go ahead, Eric.
Yeah.
No, I just wanted to say some of us have really been working on these problems of how you deploy
new consensus rules on the network professionally for years now.
This is what we do.
This is our specialty.
And it's like a little bit strange that like people that are running these businesses
wouldn't come and ask our opinion about these things until they've already kind of decided
that they want to do something that we know is not going to work just because we've studied these scenarios.
You know, like I do this for a living.
This is what I do.
I study exactly these kinds of consensus scenarios and try to understand how different players might react
and how the protocol might affect – what can actually be done within the protocol, right?
It seems like when my advice has been solicited, for instance, like I was really excited about, you know,
going to New York and being able to talk to people and actually try to see if like, you know,
we might be able to bring better communications to that.
But it seems like, you know, people already had something in mind which, you know,
I know is not going to work.
It's just – I mean, it's not about like, you know, my own opinion of like, you know,
wanting to like be, you know, like my own ideology or whatever.
I mean, this is science.
Like we have a science for this.
We know the sentiment and like we know like how people tend to react to these things
just because we have a lot of data in the past, right?
We know how the markets react to this stuff.
It just seems like, you know, that's why I'm flabbergasted that like, you know,
we're not consulted about this before.
And then as far as like what Simon was saying about the miners in China,
I actually – you know, we actually had two meetings after the Hong Kong thing.
I had two meetings myself and as developers, we had one meeting in Palo Alto last year.
And I mean, we talked to them.
This was after the Hong Kong thing.
And they agreed.
All of the miners there, including Jihan and, you know, McCree from Bitmain,
agreed that Segway was a good thing, that they were going to activate, right?
I actually went there myself personally to meet with them in Beijing a few months ago
and tried to just listen to their concerns.
I didn't go there to sell them anything.
I wasn't there to sell them Segway.
I specifically told them, I'm not here to try to figure out a complete solution.
I just want to hear what you guys' concerns are.
What is it that's like bothering you and how might I be able to address it, right?
And, you know, like I felt like, okay, maybe we can like move forward.
But every single time that it, you know, like we come to two things
that seem very clear as a pattern, you know?
People say yes, we think Segway is a good technology, right?
But no, we don't want to activate it because of some other reason.
And the reason is always changing.
And maybe it's a cultural thing.
Maybe it's like a negotiation tactic or whatever you want to call it.
Like it's just, you know, but like that's just not the way that open source works.
And it's hard to explain sometimes to people that, you know,
open source development really cannot be pushed forward that way.
It just tends to delay it.
So I don't know.
I mean, I'm still open to talking to anyone that has, you know, concerns
and to answer any questions and to be helpful.
But like when people don't want to like, you know, discard your suggestions and advice,
it's just like you don't really feel particularly motivated to continue trying to help them.
And you just keep on pushing forward.
You just keep on working.
I mean, as Bitcoin Core developers, we continue to push forward and work on stuff
and add new features that are not consensus features necessarily.
Right now I'm working on Litecoin a lot just because it's, you know,
a really cool test bed where I can work on engineering again
and not have to deal so much with like the politics and all that.
And, you know, it's just you just keep on pushing forward.
And it's just like that's just the way you got to do it.
And we don't have control over this.
I feel like the, you know, I'm excited to see this conflict resolved.
So but I still want to see if we can find an amicable solution to this.
If we can't, though, it still needs to be resolved.
So, yep, for sure.
John, you had something?
Yeah, yeah, I have two points kind of responding to some of the insights
that Simon drew out based on his discussions.
The first one is that, you know, it's really irrational to bundle Segwit
with a two megabyte hard fork the way that it's been done
because whether Segwit is activated via Segwit 2X or BIP 141 or 148,
the signers to this agreement can always just run software
without the hard fork after Segwit activates.
And so, you know, I've seen speculation like, oh, the reason why they decided
to bundle it together is because then, you know, it's locked in.
Like everybody who signed it will have to sign the hard fork
and then no one will be able to renege.
And it's like, that's not how this works.
You know, once Segwit is activated, if all people really wanted was Segwit,
then they can just choose to run.
It doesn't support the hard fork later.
And you're just not going to get the hard fork in six months.
These kinds of agreements aren't going to force consensus
either onto the people who signed this or to the wider network.
And so it's irrational to think that, you know,
bundling them together is going to solve this problem
where you need consensus among the people who are running the software.
And further, you know, for the business people who are thinking, oh,
well, we just signed it because we think that this is the only way
to get Segwit at this point if the miners are blocking this.
Well, this gets down to the heart of the issue
and the topic that's at discussion in the show today,
which is the user-activated software.
Like, why did this come about in the first place?
The reason is because you don't actually need to sign these irrational agreements
with people who either don't understand how consensus works
or are pretending to not understand how consensus works.
If the miners don't go, for example, activating Segwit via BIP-140,
we do have an alternative activation mechanism
other than signing these irrational agreements,
which is a user-activated soft fork.
We don't need to make irrational compromises like Segwit 2x
and bow to these irrational demands to bundle things together.
We can do a technically correct thing, which is activate BIP-141
and give strong incentives to miners to upgrade as well
using an economy-backed user-activated soft fork.
If everybody who had signed the Segwit 2x agreement had instead,
or perhaps in parallel if that was politically feasible,
if they had instead said,
we're going to support the BIP-148 user-activated soft fork by August 1st,
we're going to be enforcing BIP-148,
I think the miners would get in line pretty quickly,
at least once as August 1st drew closer,
because miners need to make money from the blocks that they mine.
If the economy that signed this agreement,
the major exchanges, the major wallet developers,
the major brokers and other economic nodes decided after August 1st
we're rejecting any blocks that aren't signaling for Segwit,
then the miners have a choice.
They can signal for Segwit, or they can go broke.
Obviously, it's a tough choice for us to offer to the miners,
but if they're not doing what the users want,
this is our right to basically say,
look, we don't want to do business with miners
that aren't going to give us this beneficial upgrade
that solves a lot of problems in the network right now.
You have a choice. You can either come with us
with your own fork and try to either convince some of the economy
to join you on the other side, or you can go out of business.
This Segwit 2X thing, it's basically just proving
that miners can get the economy to do irrational things,
and I think that that's a bad precedent.
It is a bit of a strange situation, the Segwit 2X.
They're literally rewriting Segwit.
They're literally taking code that's already done and in production
and then attempting to modify it and stick it into this Segwit 2X
with a hard fork, and it does kind of baffle the mind.
It's also strange that they continue to threaten with hard forks.
Jihan has already threatened with a hard fork,
and people have threatened with hard forks before with XT
and things like that.
It's like, look, you can threaten all you want,
but at the end of the day, this is game theory.
You're going to go with what is economically sound,
or you'll go out of business, and no one, I think, in my opinion,
is going to want to mine a chain without Segwit.
It's just ludicrous, so yeah, very interesting stuff.
I think we'll go with Jameson.
Did you have any additional points?
Well, I think John's correct that technically it doesn't make sense
to try to bundle this, but I think that I can see some logic in it,
which is mainly a holdover of the past few years,
that the legacy that we've built of doing miner signaling of readiness
to do some sort of change.
And so while you can't technically force someone to follow their signaling,
we have been rolling out various functionality via miner signaling.
I think that if anything, that some of the miners,
especially Wing Chun and F2Pool, have really shown that
miner signaling is not really worth much at all
when it comes down to contentious activation of features.
But on the other hand, there's also been this misconception built up
that I think it goes back to the whole Nakamoto consensus,
machine consensus versus meat space consensus kind of flagration
where people are confusing all of these things,
where people are now thinking that miner signaling to enforce new rules
is equivalent to voting.
And this is not a fucking political game that we are playing here.
This, as many people have said, is game theory.
This is us trying to build out a system.
We have a nearly 10-year-long process now of rolling out changes to this system,
going through very long and yet sometimes hand-wavy meat space consensus
decision-making of trying to figure out what the best path forward is.
But once a feature has been highly vetted and the code is written,
has been tested, and a lot of people seem to be in favor of it,
once it's out there, the miner's job is not to vote on whether or not
they think that it's a good idea.
The miner's job is to run the code and let the users take advantage of all
of the hard work that has been put into writing, testing, and now deploying it.
So that's why Soft Fork may end up being the last straw of us proving to the miners
that they are not nearly as powerful as they think they are.
It may have been the result of years of consolidation and years of miners
becoming extremely wealthy that has resulted in them thinking that they run the system.
And if that's the case, then unfortunately they may have to learn a very hard lesson.
And the really unfortunate part is that it may end up being a hard lesson
for the rest of the community as a result, at least for a temporary period of time
when there may be some chaos of the system not performing quite as well as it should
if people had just fallen along the lines of the game theory that's already there
that they seem to be very ignorant or not want to believe in.
I wanted to just say one thing about what Simon said about the miners
not being all like this homogenous entity that everyone has the same thing.
I think that when we talk about miners having specific interests,
I do want to clarify that I have talked to a lot of different big mining pool operators
and they all have very different personalities.
I get along with several of them very well.
Some of them are very nice guys. I really, really like to talk to them
and I keep in touch with them today even.
So it's really only a small number of the mining pool operators and miners.
I think it's really important that people realize that the disproportionate amount
of house power that a small number of people control
and how that's totally antithetical to the whole notion of decentralization.
I think it's fine if people have found ways to become more efficient at something
and there's obviously going to be specialization in any field.
I think that professional mining is obviously an area of specialization now
that's become very much a professional enterprise.
But this kind of attitude or sense of entitlement that now it's like
because they can do that, now they can just change the rules
or somehow impose on the rest of the users of the system
that we should accept the specific compromises or changes that they want just because of that
or to stall changes that the rest of the user community wants
just because they happen to control more house power.
That's just not a system that seems very interesting to me.
That's why I'm supporting the user-activated software again and end to this
even though I think that status quo, if there were other kinds of situations,
maybe status quo would be the best option.
It just seems like it's necessary to demonstrate conclusively
that it's not the case that this whole myth that once you P1 vote actually means this.
Simon, did you have something you wanted to add?
Actually, I had a question of the guys here.
Does UASF open up a new attack vector in the future that we're not seeing right now?
If we set the precedent that we can do it this way,
does that set the motion that other players might come along?
I don't know. Is there new attack vectors coming here?
I think one thing someone mentioned was what if the US government wanted to activate a UASF
and they had the ability to put some hash power behind that?
Is there anything that we might not be seeing here that comes from this?
Absolutely anything like this will set a new precedent
and it could introduce new attack vectors.
I think we're in uncharted territory.
It's still this huge capitalistic experiment that we're all participating in.
We don't really know exactly how things might unwind later on.
I think that the attack vectors that we're seeing right now with the hash power though,
it's kind of like you patch one thing, one security hole,
and you introduce some other security hole.
Yeah, there could be other security vulnerabilities it introduces.
However, we know that there is a security vulnerability right now that is being exploited,
and that needs to be patched.
Whether this patch will introduce new opportunities,
it's possible that someone's able to...
I don't think that...
It's not really about hash power with the user-activated software.
It's more about market power.
Can markets really be manipulated that much to be able to have someone actually force this?
I think that the whole transparency of Bitcoin makes it really hard for someone to be able to...
I mean, obviously, markets can be manipulated. There's no question about that.
But whether a particular change in the protocol actually has markets for it or against it,
I mean, yeah, there could be someone that creates a campaign to kind of distort that
and create this whole maybe mob mentality that we need to enforce something right away
that maybe doesn't make too much sense.
But that can happen now anyways.
I mean, that's something that I think, no matter what we do, is an attack vector that exists.
So I think it's best to just patch the security holes that we know about right now
and do it in the way that we know that it's the most secure way that we can think of,
and then keep on learning and then see what we can do in the future.
Yep. Jameson or John, did you want to also comment on that question at all?
We have to remain versatile.
I mean, this is a system that is really built around security,
and we've already found that we didn't fully understand all of the incentives of the actors,
and we have no reason to believe that we fully understand all of the incentives of the actors in the system even today.
And this, I guess, kind of goes back to really my thesis that I wrote an article about
of how no one really understands Bitcoin,
and that we're really discovering more about it every day, every month, every year.
And it really is this thing that is very hard to describe and define,
because it's almost taken on a life of its own.
Yep, absolutely. And it is kind of strange.
I think that we now, speaking of not fully understanding,
I don't think we fully understood how much power Jihan had prior to Ant Bleed and ASIC Boost, right?
Yeah, if you look back and think about it, if Jihan knew about that and nobody else knew,
maybe that makes more sense when he was tweeting about things like,
they have no idea what's coming, right?
Well, we did not, but guess what?
Because Bitcoin is this open system, somebody leaked it, somebody found out,
and that should be the case going forward.
If there's ever something that's going to undermine Bitcoin,
at some point it will be outed by somebody,
because Bitcoin itself is protecting itself at this point.
It is now large enough to where it can protect itself,
should be able to protect itself from virtually anything that comes to mind at this point.
If you ask me, Ant Bleed, the combination of Ant Bleed and ASIC Boost,
that should have taken down Bitcoin.
Jihan could have flipped the switch, things could have split, just all sorts of crazy things.
But yet, here we are, new all-time highs, everybody more excited than ever before,
and we got this user-activated software taking back the power, giving the power back to the users.
And so this is just amazing times for me, I think.
So I think I'm going to just underline one more point from Jameson.
This is not a game, right? This is not a game.
There is game theory that's going to in place, that is in place,
that is going to wreck any of your thoughts that you think that you are in control.
Nobody is in control with Bitcoin.
If anything, the users are in control.
So very interesting points. Does anybody else have anything to add on this?
Otherwise, I'm going to ask another UASF question.
Okay, so then let me ask maybe Jameson and Eric this, because this is a bit more of a technical question.
You know, on that Bitcoin's interview with Jimmy Song,
Jimmy actually might have been on the Bitcoin group on the World Crypto Network.
Jimmy Song claimed that he had run the numbers and that ASIC Boost is only maybe costing
or giving Bitmain a couple of million dollars of your advantage, tops.
And I just wanted to know maybe from you guys first, Jameson, and then Eric,
does that sound plausible if ASIC Boost was the thing?
First of all, does that sound right, like ASIC Boost is only worth a couple million?
And B, does that sound plausible that, you know,
this might have been something that Jihan was using to not activate Segway?
We'll go with Jameson first.
I mean, maybe, maybe not. I mean, I'm not all that well-versed in all the details of Jihan's mining operation.
I'm not sure that it really matters.
I mean, I think that the bigger problem is simply how centralized mining
and chip fabrication has become at this point.
Whether or not there is like a 30% gain here and there,
you can make arguments about how good or bad that is.
Like, I think that we are so far away from what the ideal mining scenario would be
that I'm not really as concerned about that.
Like, long-term, you know, I've really held to the idea of really almost more of the biology,
have a toaster in everybody's house that's doing a little bit of completely trivial mining,
like, you know, near-perfect decentralized mining.
The question is just how do we scale out to that point?
And, of course, that could be a very, you know, decades-long type of problem.
Yeah, absolutely. Eric, go ahead.
Yeah, so I'd say that any advantage, you know, even if it's small,
in a zero-sum market where there are very slim margins is huge.
So I don't really think that, you know,
how much of an additional income comes just from the ASIC boost thing is really...
I mean, the point is it's a monopolistic practice.
It pushes out competitors, giving a particular miner a disproportionate amount of hash rate,
even if it's not entirely just about ASIC boost, just being able to do that for a while,
just collecting all the fees that are coming in from, you know, the congestion right now,
and the distribution of those fees is distributed according to the hash power of the pools.
Having particular players have a disproportionate amount of that hash power,
there's so many places where miners could potentially be getting revenues
directly or indirectly from something like ASIC boost.
So from a strategic perspective, it obviously is a centralization vector,
a strong centralization pressure on the network, and I think it needs to be fixed.
Absolutely.
Can I just throw in one more thing?
Also, I mean, there's obviously the whole patent issue, right, which is also a problem.
I mean, I think if it were to be something that, you know,
everyone could use ASIC boost or something like that,
we might be able to avoid the patent issue if it really was, you know...
I mean, it interferes with the protocol, so it just seems like, you know,
it would be in everyone's interest to just disable it completely,
and I think that, you know, whether or not Jimmy Song's numbers are correct,
I don't think that that's really the point.
Very interesting, very interesting. Okay.
So let me ask Simon this, see what he thinks of this opinion.
So, I mean, SegWit2X and, you know, all the previous fork attempts, Core,
or sorry, XT, Classic, BU, and then BU again, all these previous attempts,
they're all incompatible with Core, right, including SegWit2X.
I mean, is SegWit2X just yet another attempt to remove Core from development?
Well, I mean, that's what it looks like from...
I mean, a lot of people think that that's the optics of it.
Obviously, you know, just forking the repository
and trying to kind of, you know, have new developers jump in
and completely change it in ways that are, you know, incompatible,
and just like the way that I've seen the project emerge is really disturbing
given the initial statement that Barry Silbert showed me.
You know, the statement that I was shown was that SegWit2X was going to activate immediately.
I mean, everyone, I think, understood that that meant SegWit2X, SegWit2X,
as in the one that we have right now.
I mean, I think that most of the people that were agreeing to that statement
understood it that way.
At least several that I've spoken to understood it to be that way.
And then several afterwards did not sign the agreement,
and several since have told me that they just don't like the way that it's gone at all, right?
So I don't know.
It just seems like maybe the people that are trying to, you know,
like there's maybe like, you know, people that don't really understand the development process,
or I like to try to assume, you know, non-malicious intent.
So maybe, you know, that could be an explanation that just people that feel like
they can just throw money at stuff and get stuff done,
which makes sense in some contexts.
It doesn't make sense for a consensus network like this,
would feel that they could do to this also.
But it's just, yeah, I don't know.
It's throwing it more incompatibilities out there either is naive or it's a stalling tactic.
I don't see any rational reason to do it other than if you wanted to stall progress.
Yeah, I mean, I don't think that SegWit2 makes was an attempt to take core out of the equation.
It's clear, you know, that Roger gave his opinions about the core developers
and BU was an attempt to do that, an overhaul of the developers
and put a new system of developers in.
I just think it was trying to achieve what UASF has achieved,
which is putting a date and moving forward.
And I think Barry and everybody that signed that is going to be happy to say,
OK, well, UASF it is then.
This was our attempt to try and put a date in the diary.
Now we've got a date in the diary, so let's all move forward with that.
I think from my observation, there wasn't much more to it than that.
Sounds right. Does anybody have anything else?
Well, I just want to say that I think that initially the intention might have been exactly what Simon is saying.
And I'm hoping that, I mean, I think that maybe that is the case.
But whether or not that is the case, I mean, the project has clearly been hijacked.
The direction it's taken is clearly not that.
So it's not going to work.
It's clearly not going to bring the community together behind this thing to rally for it
and to make sure that everyone agrees to do this.
It's actually created more fissures, I think.
So it just seems like a non-starter at this point.
I think that the user-activated software is the only possible way forward right now
that seems plausible that might actually work.
So yeah, I agree.
Very interesting, very interesting. All right.
So let me just ask, if nobody else has anything else to comment,
let me just ask Simon then, when do you think the exchanges are going to start saying things?
Because Tone Vays was speculating that they have to start saying things pretty soon, in my opinion.
They really got to start speaking up for sure by the end of this month,
if not beginning of July at the latest.
They have to start saying what their plans are.
And so I was wondering from you guys, Simon first, when do you think they're going to start speaking up?
I think it's around the corner.
We're investors in Bitfinex, Bitstamp, Kraken, and many others, Coin, Bitso.
So we're invested in this whole community.
And I've been sending messages and then the Skype messages across.
They've just got to be very careful.
There's a lot of planning here.
Anything they say has got to be really, really thought of.
You can't just come out with an impulsive tweet here or anything.
You've got to really think through this stuff.
Everything has consequences.
But I think we're going to start to see something soon.
And yeah, the exchanges need to do that because at the end of the day,
a lot of people, as we said right at the beginning,
a very small percentage of Bitcoiners are actually involved or engaged in this actual debate and actually know it.
The vast majority don't have any idea of what's actually coming up or what's happening.
So the exchanges have a ginormous responsibility because not for lack of trying,
everyone tells people to take your Bitcoins off exchanges.
But the reality is that people don't.
So no exchange wants to lose a vast majority of people's money.
And they have to just take responsibility for people here.
And so I'm sure the announcements will come out here.
And I'm not too concerned about what the exchanges will do from here
because I think they've got a ginormous incentive and interest to make sure
that all of the people that have coins on their exchange are protected and they get to preserve that value.
But I think everyone's, again, there's another game theory between exchanges.
Who's going to be first?
So with Bitcoin Unlimited, Bitfinex made the first move to actually create a way of you speculating on Bitcoin Unlimited
versus Bitcoin Core or the Bitcoin that Core were developing.
And my experience as Bitfinex has been very innovative in this space.
And I think it's just coming soon.
It's just a question of making sure they've got all their ducks lined up.
The strategy is clear.
And they're communicating it in a responsible way.
Absolutely. John, we'll go with you next.
What do you think the exchanges are going to start speaking up?
And should we all start emailing our exchanges to tell them what's going on?
So one thing to point out is that most of the economy, at least the representatives of the economy in terms of the exchanges
and brokers and other large sources of liquidity have signed the SegWit2X agreement.
And so I think in the interest of trying to preserve the weak consensus that they have there,
I think the exchanges are not going to try to rock the boat.
But if time goes on and there's going to continue to be more pressure building,
if not from the leadership in the exchanges, certainly from their customers who are at least Bitcoin believers
and want to see this go through.
And so absolutely, I would encourage everybody who wants to see SegWit activate on the network
to encourage your exchanges and your wallet developers and everybody else who's running economic nodes
that essentially represents you on the network, tell them to enforce BIP 148
because that will ensure that SegWit on August 1st.
And if we have the economy behind us, it's going to also bring the miners over to our side as well
because miners want to make money and the economy is where the money is at.
And if the economy is on one side, it's pretty clear where the miners are going to end up as well.
So I would like to see the SegWit2X version of SegWit activate.
Whether we get SegWit through 141 or 148 or SegWit2X really makes no difference to me.
But the fact that they have to re-implement the software and do several rounds of testing
and deploy that software across a large number of nodes and stuff, that's all very time consuming.
Whereas BIP 141 is deployed in production today and so that's the fastest way to activate SegWit.
And BIP 148 is just a new activation method.
So I think, in my opinion, 141 and 148 are the fastest ways to get.
So if SegWit2X ends up taking longer than expected,
there's no reason at all why we can't take the very large amount of consensus that is around activating SegWit
and converting that into action and activate SegWit by August 1st.
Yep. Absolutely. Sounds good to me.
Jameson, what do you think about the exchanges?
When do you think they're going to get on board?
And maybe tell us a little bit about how BitGo is handling this user-activated software.
Yeah. So this entire debacle has put me in a pretty tricky position.
So, I mean, I am personally responsible for maintaining BitGo's fleet of full nodes,
which are used by, I don't even know how many customers, but lots of the big exchanges.
Now, as far as I am aware, I have not had any conversations with any exchanges about any of this.
Then again, I haven't really been a big part, like I wasn't in any sort of inner circle for SegWit2X.
Like everything that I said about SegWit2X, I said publicly on the GitHub issues.
And my personal opinion is that I would think that one of the best chances that we would have
of avoiding a messy situation on August 1st is perhaps some sort of fast-tracked BIP-91.
Basically anything that will activate the existing SegWit deployment on BIP-1 before that August 1st deadline
would avoid a lot of unnecessary trouble.
Whether or not it's SegWit2X or something else, I'm ambivalent.
I'm not as worried about the hard fort part about SegWit2X because that's another six months away.
So I would at least like to be able to see SegWit activated, working on the network,
see how it affects the network for a number of months before we then have to get back into another similar situation
of, oh no, another fork is coming up potentially. How are we going to deal with it?
So it's a really tricky situation for me and for BitGo because we cannot unilaterally make any decisions on our own.
We cannot claim to represent the very diverse array of customers and people that are on our platform.
I'm not even sure that if we sent out a poll along those lines, whether or not we would then make a decision
just based upon a poll. So I would say John is on the right track.
You should definitely be sending messages to all of your exchanges and other large economic entities.
Let them know what you think. I would like to see more and more trustworthy futures markets.
So it seems to me that if this type of situation can't be resolved easily at the technical level,
then it's going to come down to the financial, economic level and potentially even whales battling it out,
dumping the coins on whatever chain fork that they disagree with.
And I would definitely like to avoid that type of situation.
And if we think that it does come down to whales battling it out, I would prefer that they battle it out
in their own little cages called future markets so that they can leave the rest of us out of it.
But that's just my opinion. At the end of the day, as much power as I have over the full nose at BitGo,
I really don't have the decision-making capability or really even the right, I think,
to make a decision on behalf of all the people that are using our full nodes.
Jameson, just one point of clarification.
So I think Mike Belshi actually sent out the first email with the SegWit2x roadmap.
And so in some ways, BitGo is making these decisions on behalf of all of their customers.
And so while you personally cannot, as a company leadership level, BitGo was first incorporated.
There was a deliberate decision made to say, you know, we're going to run Bitcoin instead of, I don't know,
CCD or something like that. And so there's another deliberate decision that's going to be made to say,
we're running this new SegWit2x software instead of a Bitcoin core.
And so, you know, I want to clarify that point, even if just for the audience,
that while you personally might not be able to make this decision, you know,
there are lots of companies who are responsible for running economic nodes on behalf of their customers
who really do have the responsibility to make wise decisions on behalf of their customers.
And then it's up to the customers to decide, you know, am I going to stay with this company
and continue relying on them on their full nodes?
Or do I find a new UTXO provider or infrastructure provider to represent me on the network?
Yeah, sure. Though I will say that there may have been some initial misunderstanding
around BitGo's participation in this. And we have definitely not committed to running SegWit2x code,
at least as of today, as far as I'm aware. We have only committed to trying to help further that cause.
And, you know, I would like to see some sort of furthering.
Like I said, I really care about the Bit1 activation of SegWit.
But at the moment, BitGo is not running SegWit2x in production.
I think, you know, we will try to follow the testing schedule to try to help out with the testing
and perhaps eventual deployment of it. But at the moment, I don't even know if or when
we might switch our full nodes to run that software.
OK, thank you for that point of clarification.
Very interesting. Thank you, Jameson. Let's go with Eric. What do you think about all this?
So, I mean, there's very little room for error in this kind of software.
The smallest kind of bug can create havoc in the whole system, right?
So when we worked on SegWit, for instance, we spent months testing it on several testnets.
And, you know, just a lot of work went into making sure that it worked as it is.
And so the thing that we've deployed right now, which is activated on Litecoin and several other blockchains,
really has been very, very, very well tested.
Two months, or however long is left until, you know, whatever the deployment schedule,
I guess July something or something or other, is just really short even for much simpler changes in Bitcoin Core.
I mean, we would never think to deploy something that has been untested, that has this much, you know,
these many ramifications and implications for the whole system in this sort of a period of time.
It's just I feel it's very irresponsible.
I think that it's, you know, and especially given that the process is not really, you know,
it hasn't really received that much, you know, that much review.
And there's just so much that goes into making sure that this is safe.
So I would definitely, you know, advise exchanges to be very, very careful about what software they're running.
I think, you know, obviously there's inherent risk with any kind of changes to the software.
But I think that you can make pretty informed decisions about it, understand what the situation is, what the risks are.
And as far as BIP 148, even if the majority of the hash rate were not to go on there, you know,
you could think of it as kind of like an altcoin temporarily, right?
If it does come to overcome or to get over 50 percent hash rate,
then it would basically at some point reorg the other chain.
But I would like to see, like Jameson said, like people to have futures markets where they can battle it out there
and not have to drag the rest of us down into that.
I really hope, my sincere hope is that miners just activate Segwit.
That was my hope, that when Barry Silbert told us, hey, we're going to try to activate Segwit.
Great, let's activate Segwit, you know.
Activate Segwit that's out there right now running on 80 percent or more of the nodes on the network that are ready.
They're ready to go. It's been tested. It works fine on other networks.
Let's just do that. That's the least risky option for everyone.
I really do feel like Segwit 2X is being very irresponsible with their timeframes.
And they're clearly, we know the clear motivation why they're doing this, right?
They're trying to get in advance, get their signaling in in advance of the user activated software on August 1st.
That's the clear motivation.
But this is just super irresponsible trying to have two weeks of beta, two weeks of alpha, a couple of weeks of testing.
That is just ridiculous when you're talking about close to a 50 billion dollar network.
It seems quite ludicrous to me.
Absolutely. Yeah, I mean, this is just like something that, yeah, definitely it boggles me.
It's like I'm unflabbergasted.
We're at a loss for words, Eric. We're at a loss for words. We just don't know.
But I think that can about do it for the topics.
You know, I just have one quick question for everybody before we start asking Simon a couple of questions.
Just maybe if I can just go through one by one and get everybody's opinion of the state of Bitcoin.
Do they feel bullish? Are they are they scared? Are they excited?
So let's just go with Simon. Simon, what do you think about Bitcoin right now and its future?
Are you still excited as it was as you were in the beginning?
Well, I haven't sold a coin since I've been in Bitcoin.
You know, I spend them. We pay our staff with them. We do things with them. We use them.
But no, I mean, you know, I'm here for Bitcoin becoming more and more of a store of value,
becoming a global savings account for the world, becoming an exit for countries like Venezuela that really need an exit.
I'm here for it becoming, you know, a hedge against the systemic risk in banking.
And I'm here for having an incredibly amazing payment system attached to it where you can send any amount of value around the world.
And to me, expensive Bitcoin is still bloody cheap Bitcoin relative to the value that it actually produces.
And, you know, this is too important. You know, and I really appreciate the conservative attitude.
You know, I mean, you know, a bank to the future, we release technology, but we haven't got 50 billion on the line.
If we've got a bug or a problem, you know, we just, you know, we just say, oh, sorry, users, we put it in maintenance mode and then we fix the bug.
You know, that's not an option with Bitcoin. And this is far too important.
So, you know, if from from listening to everything that's come out through this through this debate, I'm still really bullish.
And I think one thing that's really come out is I think we're all wiser.
I think I've learned so much about Bitcoin that I didn't know.
I've learned, you know, and everybody has had to engage in this.
So that's it's been a tremendously useful thing.
But as soon as we get over this, I mean, I can't imagine what the effect on the price is going to be when we see SegWit activate.
And at the end of the day, everybody in this system, miners to developers to people being paid in Bitcoin,
to those who are engaging it, to newbies, to those who are investing in ICOs to make more Bitcoin,
they are all incentivized by, you know, this incredible experiment that actually has been created right now.
And we all need a better Bitcoin. But, you know, if if it means that the price is going to crash
and there's going to be some turbulence in in these decisions, then so be it.
But I promise you that what has happened and what has been created in Bitcoin, this story is never going to be repeated again.
You know, Ethereum story is different. Litecoin story is different.
The story of what Bitcoin has created is never, ever going to be created again.
And that means that whatever happens from this, everybody's going to get around.
And, you know, what needs to happen for everybody to reach consensus?
I'm not actually sure, but I know they will reach consensus in the end because this is too important for too many people.
So I'm completely bullish. And, you know, I'm not a short term speculator.
I'm a long time holder. And I don't really care if it needs to correct a couple of thousand in order to for everyone to be motivated
and to come together again, because I know that once it does activate and we get through this, you know, we're we're we're off to the races.
Absolutely. I mean, it's it's I can't imagine the price.
Like you said, if Segwit activates, I mean, come on, there's we're in five digits.
We've got to be in five digits. So very interesting.
John, what about you, man? What do you think? Are you are you still bullish?
Are you still in love with Bitcoin? What do you think about the state of Bitcoin right now?
I'm not going anywhere. Well, that sounds good to me.
It's on my shirt. Like just run it. Just just go.
Just run BTC, people. That's all you got to do is just invest in Bitcoin and your life will be amazing.
Jameson, it's not that it's not that simple.
You can put all your eggs in one basket. And, you know, this this this has been a bumpy ride from the very beginning.
But Bitcoin has survived far worse than what's happening right now and what could potentially happen on on August 1st.
And the the difference is some people that it could affect, which is not insignificant, but at the same time.
And I really just can't enough like there is no controversy.
Almost everybody is in unanimous agreement that we should activate SegWit.
The only disagreement is how is not really like the answer is very, very clearly obvious, you know, how we should do it.
But first, I don't sell coins. And I'm not I don't put a strategy anytime soon.
Certainly not over something that has as widely as widespread support as SegWit.
John is not selling his coins. People do not try to ask him to buy coins.
Jameson, what is what is your sentiment right now with with the state of Bitcoin? How do you feel?
Well, Bitcoin has experienced some minor setbacks if you get my drift.
But I think at the end of the day, Bitcoin keeps moving forward.
This is all about permissionless innovation.
You know, people can upset the game theory at times and install things, slow things down, cause more frustration.
This happens, you know, on on every side of the debate is people causing frustration with the other side because we can't just cooperate once in a while and get along.
But it doesn't matter because Bitcoin is not dead until there is consensus that it is dead.
And I think that this is really what we found at the scaling panel that I moderated in New York was that despite all of the disagreement about the path that Bitcoin should take,
we're all still extremely optimistic and bullish that one way or another we are going to take a path and and we are going to take that path together.
So while while it may not be a path that that some people are particularly enthusiastic about it, we're going to continue building the system.
I think a lot of the people who are involved in the system at this point are the builders because there's still a lot left to be built.
And and we're going to build in a way that doesn't require asking permission.
I think we may have made some mistakes in asking for permission.
And so this is something that I mentioned recently that, you know, even if worst case scenario of Bitcoin never got Segwit, Bitcoin never got Lightning Network, then that's not going to deter us.
We can already build payment channels based solutions that just aren't quite as optimized as what we would like.
And so, you know, if if we run out of road on one path, then we'll just take another path forward and keep on going.
And there's really there's no end to this until we all agree to give up on it.
No end to people. No end indeed.
Eric, give us your thoughts, man. What do you think about the state of Bitcoin? Are you excited still?
I'm very excited. I'm very bullish.
It's interesting because when I first got into Bitcoin, I thought it was a proof of concept. It's just a prototype.
And it's eventually going to maybe be replaced by something else.
But it's proved so resilient over the time.
And it's really we've found so many new cool things we can do on top of it.
All this payment channel stuff is absolutely fascinating.
I think the vision with that is just amazing what we can actually accomplish, like a whole decentralized Internet, you know, machine to machine payments.
You know, just what it enables all these use cases that are just not practical right now with with typical payment systems that exist right now.
So so I'm really, really excited about all that.
I think that we need to push through and and get this done.
And if I'm hoping that it'll happen on Bitcoin, if it doesn't happen on Bitcoin, it's not like I think that, well, that's the end of it.
I think that the technology is actually more important than the network itself.
I would love I would love to see Bitcoin succeed. I'm bullish on it right now.
I'm holding Bitcoin. I think that it's great to you know, I don't like it.
It seems like there's there's only upside right now.
But I don't want to, you know, make long term predictions as far as what's what you know.
I think there's so many things that can happen with this.
But but yeah, I'm very bullish right now.
Awesome. Awesome. So I think we're all in agreement here, people.
Bitcoin is going nowhere and we are going nowhere.
So very awesome. Thanks so much, guys.
We're just going to switch to the second half of the show here where we ask Simon some questions.
If you guys got to go, that's fine.
We understand. But we're just going to spend another 30 minutes here tops or 25 minutes here tops asking Simon a couple of questions.
I'll ask the first question, Simon.
I was just wondering here with with all the ICO investments, you know, recently passing VC funding in the block chain market over 400 million.
Maybe you can describe the state of ICOs right now and where you think this is heading if it if it doesn't crash, if it doesn't crash in the next year or two.
How does that affect your business and bank to the future?
You're still on mute, Simon. Sorry, still on mute.
Yeah, it's a really interesting question because it's I guess you've got to look at what you know, what's the future of this.
So ICOs have come around as a way of allowing retail investors to invest any amount that they want using crypto in the protocols.
Now, at the moment, you can't actually do that as a company because really ICO is a way of circumventing regulations.
And as a company, you can't actually, you know, issue equity on a block chain without actually following securities law.
Whether it's on a block chain or whether it's not, you still have to follow securities law.
So ICOs is a niche user case for protocols.
If ICOs actually becomes a way for companies raising funding,
then you've just got to look at what is the efficiency improvement there because if companies are raising finance for it,
then you still have to follow securities law because the definition of an investment contract
is the giving of money under the management control of others with the expectation of a return.
And everybody's investing in these ICOs right now.
They're giving money, which is essentially under the management control of the people running the code with an expectation of a return.
But at the moment, because it's kind of protocol, they're using ways around that.
So if it turns out that ICOs are actually something that can come disruptive to the IPO market, to the venture capital market,
then that essentially is what you're saying is regulations being disrupted.
And that is the question really.
Are governments around the world going to allow regulations to be disrupted?
And regulations were created as simply originally as a way of consumer protections
because in the 1920s, people lost a lot of money when people were selling securities.
So we're kind of in this very interesting phase at the moment.
Now, the problem with the ICO market that I see at the moment is that people are raising too much money too quickly.
And the other problem from the company side, that's a problem.
The reason, it might seem like a good problem to have,
but it means that people are receiving too much money without having proven what they can actually do with that money.
And it also creates skewed incentives where people become rich after the ICO.
And therefore, once they're rich after the ICO, they've got no incentive anymore to actually build the technology.
Their job is just to create a load of announcements that pumps the price at that point.
And so we're in this very, very strange scenario.
Now, while a lot of the new ideas and new protocols,
what they're tending to do at the moment is they're trying to shoehorn themselves into the ICO model.
So they're making their businesses really weird by trying to create a token.
And the analogy that I give is if the ICO markets disrupt the IPO markets,
then essentially Apple will delist from the stock exchange and say, I'll do an ICO.
Because why would they go through all the regulations and all that stuff,
and all the incredible costs that they need to go through of being listed on a public market when you could do the ICO unregulated?
And then in order to fit into the ICO model, what would you need to do?
Well, you're saying we're going to create our own currency.
This currency can only be used in order to purchase our products.
So imagine what would happen to the price of Apple tokens if all they could do,
if suddenly when you walked into the Apple store,
you had to actually purchase this weird fluctuating value currency,
and the cost of your iPad goes up and down every second based upon whether people are speculating on that.
How many iPads do you think Apple would be selling if they forced everyone to do that?
Well, immediately they'd create a little pump in the price,
but then they'd realize that actually consumers don't want to use these tokens to buy products,
and they don't want the price of their products to fluctuate.
So it's a very strange model, and it's all around this model of trying to circumvent regulations.
Now, a lot of the people doing these ICOs are actually creating a business model that just doesn't work anymore,
and so therefore everything's around trying to pump the price.
And everyone investing in the ICOs, because the ICO has no reflection of actually underlying value, net asset value,
because the value of these ICOs, if it was on a non-speculative market, is essentially the users.
So if you look at the history of Bitcoin, why is Bitcoin valuable now?
It's because it's actually got more users than it had speculators.
And so, you know, short-term, it used to be, you know, Bitcoin in the early days when I was around,
in those really early days, it was all about how many US dollars you could make out of owning Bitcoin.
And if everyone was honest with themselves, they were investing in Bitcoin to try and make more US dollars.
Well, now with Bitcoin, it's completely shifted. People are taking their US dollars and they're trying to get Bitcoin.
And because Bitcoin has become this store of value, and that means they've shifted from speculative value to utility value.
And there's a lot of user cases for Bitcoin that, you know, can only be used with Bitcoin, that can only be done with Bitcoin.
So the value of these ICOs are actually how many users are using them.
Now, the reason that Ethereum has suddenly become valuable is because people are actually using Ethereum now to create ICOs.
So Ethereum has become a crowdfunding platform and the utility of buying ETH is so that you can buy more ICOs
and then you can convert those ICOs back into Bitcoin and you can accumulate more Bitcoin.
So we've created this circular economy. And then the value really of these ICOs should be how many users do they have?
The answer is virtually none, because people don't want to take a token to buy a product that fluctuates in value, but they do want to speculate on that.
So, you know, you've created all these really interesting, strange models.
At Bank to the Future, because we have to follow regulations, we can't take on retail investors.
We can only take on high net worth and accredited investors.
And then you've got to ask yourself the question, if ICOs do become securities because they are disrupting the public markets
or they are disrupting the venture capital markets, then the token would just become a security.
It is close to a security now.
And in that case, you just have to follow the exact same rules that we've taken so long at Bank to the Future to comply with.
And then you've got to really ask the question, and this is kind of the thing we're debating as a team right now.
Is there any benefit in having a token that represents equity when you have to follow securities law?
My guess is that there may not be.
There might be. There might be some interesting form of smart contracts where you can enforce the legal contracts behind the equity.
And so these are kind of the things that we're going through right now.
But without a doubt, you know, the reason that the ICOs is because people are using them to make more ETH or to make more Bitcoin.
And it really doesn't matter if they build the product or something actually happens here.
It's just a question of how many announcements can you make where the original speculators are able to exit?
So, you know, when I first started speaking out on this topic, I started looking at some of the irrational behavior that we've seen.
You know, we had the speculative drive has got so high.
You know, like the storage, you know, we're equity investors in storage. We're also invested in the tokens in the ICO.
But, you know, at one point they were 50 cents and they were trading on the market at about 80 to 90 cents.
So you could buy them in the ICO for 50 cents, yet people were still paying 80 to 90 cents for them.
And this is the irrationality of new people coming into the market.
For example, the blockchain capital, you know, the blockchain capital, a lot of the investors were like, this is the worst investment ever.
It's only four times the net asset value right now.
You know, the value of the blockchain capital, they hadn't, you know, they've made a few investments, but the value hadn't gone up.
It was still worth one dollar, yet it was trading on the market at four dollars.
So people were paying three times the net asset value just simply because it was a token in an ICO.
So, you know, eventually these things have to return to utility.
But the thing is, fundamental analysis doesn't really matter in the short term.
As long as people are speculating and speculative value is a premium on top of actual utility, you've got this market.
But eventually it does need to return.
It's just a question of what is the black swan, what is the catalyst that's going to make that happen?
My guess is that it's going to be when, you know, the SEC comes along and put some enforcement action.
And that will be the catalyst because it takes away the main user case of Ethereum and the main user case of the ICO,
with the exception of, you know, some very niche businesses that have protocol funding.
But it's an incredibly interesting experiment.
I'm happy to speculate as much as anyone else on these ICOs.
And if there is a short term bubble that allows us to, you know, or me to increase my Bitcoin position, then I'll do that.
And then what we're seeing right now is, you know, for example, a bank to the future, we allow people to invest with altcoins if they want it.
We shape shift them all into Bitcoin and we allow people to invest with fiat.
Normally we had about 80 percent fiat investments, 20 percent Bitcoin investments,
but we're starting to see more and more altcoin investments that we're shape shifting into Bitcoin at the moment.
And so really it's good for the whole economy because what we're seeing is an increase in investment activity as people are becoming wealthier.
They're deciding to actually shift some of that into real value.
We're working with companies that have actually got customers, they've got users, they've got profits that have proven themselves of value at the moment and actually using them.
So overall, it's a nice ecosystem that's kind of building on each other.
And now our market's worth 110 billion dollars a market cap.
That's crazy. And maybe it's going to go to a trillion.
Who actually knows? But the one thing I do love about this whole market is that it was all created by us, by the free market from scratch.
Say what you want about ICOs, say what you want about altcoins, say what you want about Bitcoin and some of the companies.
This was all created by us and all of this wealth, this 110 billion dollars, whether that's a bubble, whether that's fake wealth, whether it's not,
whether that's more like 50 billion in reality because it's just Bitcoin, who knows?
But it's all been generated by the free market and we've had just one of the most interesting times in financial history to actually watch this whole experiment.
So at Bank to the Future, we're watching the market, we're actively investing.
And we still are focused on companies that have actually, rather than the idea funding, the later stage funding where they've got products that are being utilised, they've got revenues, they've got profits that are being generated or revenues that are being generated.
And still the larger companies, they can't take the risk of doing these ICOs, especially if it's for their equity.
So there's still a market. But the real question is, is equity a market that needs disrupting?
And my answer is there's lots of legal protections that come with equity.
Yes, there's liquidity, but one of the things that we're working on is how to get liquidity into the equity market in this niche sector of fintech and blockchain.
But we have to go through the slow process. We've got to confide with regulations.
We've got to do everything in the correct, compliant way because that's what it just takes longer.
But the market is proven. The desire for a secondary market is big.
Absolutely, absolutely. And a lot of good stuff in there.
I mean, it is crazy. We're over 110 billion now.
And I kind of tend to agree that as soon as the SEC comes in and declares Ethereum a security, it seems like a lot of that ICO value is going to come and flow back into Bitcoin.
The other thing that's worth mentioning is people think the SEC is the center of the universe.
But we've been doing this for several years now. And international regulators do care.
They've all got rules just like the SEC. The UK has the FCA. The Hong Kong has their regulators.
And we've had to comply with about 50 different financial services acts.
And when they care is when investors complain. And when investors complain is when they lose money.
And if the Dow hadn't refunded everybody, that would have been the one.
And so, you know, that was a very – it was kind of like they stopped the – Ethereum stopped themselves from having the regulatory challenges with the Dow at that point.
But then they also created this whole Ethereum, classic Ethereum problem where people started to realize that the blockchain has a great degree of centralization.
Yep. That's true. Very interesting. I think John had a question for you.
Yeah. I had two. One of them was actually going to ask about your opinions about the blockchain capital token.
Because that's a very interesting ICO where the token is actually backed by some real value.
You know, real value, not just in some speculative network that might be created, but, you know, real companies with customers and generating revenues.
But I think you commented on that already. My other question was about Bank to the Future itself.
What kind of companies are using the platform today?
And when does it make sense to raise money through a platform like Bank to the Future instead of any of the alternatives?
Okay. So the blockchain capital was, you know, I was really happy to see that. I was one of the presale investors in that.
You know, it's great to see what can happen when you combine traditional regulations with, you know, with this alternative market.
And my belief was that it missed two vital things.
Firstly, it made an assumption that overseas regulators don't care when we know they do because they contact us.
We've been engaging with these regulators for many years now.
And so they allowed retail investors from overseas outside of America to invest.
And, you know, what are the consequences for that? We'll see.
The second challenge with it was that once they said they filed it as a security, that means it is a security.
And so once it's a security, it means that in order to list that on a secondary market, it has to be listed with a securities exchange.
And a securities exchange, if they charge commission on those trades, is acting as a broker dealer.
And so they couldn't find an exchange that would list a security because there's no securities exchanges that are willing to list blockchain assets at the moment.
I mean, that would change. But then once you do list it and comply with regulations, you can only have accredited investors, locking periods.
US investors have certain rules. Australian investors have other rules.
Some of the things that we've been grappling with for an awful long time.
So the answer is I believe that there will be two markets in the future.
There'll be the regulated market and there'll be the market just like just exactly like Bitcoin is right now.
Bitcoin has two markets and they're both booming at the same time.
It's got the regulated market where you do your KYC, you go through an exchange, you buy your bitcoins and then you declare your tax.
Otherwise, the tax authorities are going to subpoena the data from the exchanges and wallets and centralized wallets at some point.
Or you do it the unregulated way, which is the peer-to-peer market, anonymous transactions.
You don't reveal your identity. You don't do your KYC.
The exact same thing will have to happen in the in the ICO market.
If a company or someone that is identifiable says that we're going to do an ICO, they'll have to follow securities laws eventually.
Or they'll try and circumvent securities law, in which case you'll have anonymous people raising funding, you know, kind of the way that Bitcoin was created.
But how much trust in the model of investing in companies are there under an anonymous model?
Well, I think if someone tried to create another version of Bitcoin anonymously right now, they'd have zero trust.
So it's interesting to see where those those those two markets evolve.
And yet you just have those two markets, really.
And that that was really the problem.
It's you know, and one of the things we're working on that we've been working on for a long time is making sure that we get that license because we are involved in, you know, we're a niche platform.
You know, we're a very specific platform.
We were just supporting this sector, the Bitcoin and blockchain sector, investing very aggressively.
In the last two years, we've invested $170 million in rounds listed on our platform.
And, you know, we'll go through the process of getting that license.
And then eventually, once we've got the secondary market license, there will be, I guess you could call it an exchange that will actually be able to do that and support the sector.
In terms of what stage we get involved.
So I originally when I when I when I gave my TEDx talk, I think it was in 2014.
I talked about the new model of funding, which would be, you know, you have ICOs raising seed funding.
Then you have online investment platforms and, you know, like Bank to the Future.
And then you have other platforms like crowdfunding and that type of stuff.
And I went through this this this model of what I thought it would look like.
What I didn't forecast is that the ICO market would start raising close to IPO levels of funding, which kind of skews the market and the incentive structure in quite a bad way.
Like we've seen at the moment.
So the type of thing that we're looking for mainly is we like for a company to have secured some kind of lead investor.
They've already secured maybe some venture capital funding.
Maybe they've just secured an angel investor that's gone through the due diligence process.
And then we'll co-invest on the same terms and make sure investors get all the protections and rights.
And we we pull our investors together and get the benefit of everyone acting as one investor.
But given the company's also the benefits of having lots of investors with a private forum.
So we want to see that, you know, while we do support some idea stage funding, we're looking for, you know, credible teams.
We're looking for, you know, similar things, really.
And some of our some of our deals.
So we did, you know, like we did storage.
We did made safe that would later go on to do ICOs.
And it creates a really interesting dynamic where the equity holders get millions in non diluted funding that goes to the balance sheet.
And then you've got kind of this this this interesting challenge between the token holders and the equity holders.
And these dynamics are going to be worked out, I think, as we progress with this market.
But, you know, we take everything on a case by case basis.
So we, you know, we get a lot of applications, five percent of the applications will go to an interview.
And then from there, you know, we've in the last two years, we haven't had one failed funding round.
And that's because we work with a few number of companies and we work to create their best pitch.
And, you know, we know what our investors like.
We've got we've got investors that have generated a lot of wealth in the crypto market that are looking to diversify some of that wealth into the companies that that are growing.
And we're getting, you know, some of the valuation increases are coming as this market grows right now is incredible because a lot of our companies have got bitcoins and things on their balance sheet.
So, you know, the valuation increases are really kicking in now.
So it's becoming a really interesting market as this whole thing has progressed.
But we'll also look at some earlier stage stuff and a lot of our other investors are just people that invest in fiat.
They're interested. They've heard this market.
And they like to use bank to the future as a way to build a very diversified portfolio because they don't necessarily know all of the companies and what they're doing.
So they invest a little bit in everything.
Yep. Very cool. Very cool. And sounds like exciting stuff over there, Simon.
I tell you, if I had more money, I would I would I would love to become a credited investor for keep your bitcoins and get get SegWit implemented.
And I'm sure all of everyone on this panel is going to be an accredited investor very soon.
Absolutely. Absolutely, people. Just hold on to those bitcoins.
Keep them safe in a treasure. And you should be good.
I do have one last question, unless anybody else has any questions or comments on what Simon said.
OK, just one last question, then we'll wrap it up, guys.
And so we've been going almost two hours now.
So just one last question, Simon. It seems that Bitcoin and cryptocurrency regulation talks are kind of happening all over the world right now,
including the recent hearings in the U.S. and Russia mandating identity checks for Bitcoin purchases and the upcoming Bitcoin exchange rules coming out of China.
I just want to know from your perspective, how do you think regulation is coming and progressing?
And where do you think it's heading in the next couple of years in the short term?
Like, how do you think it's progressing and where do you think we're going to end up in the short term?
I think we're going to see just the two markets.
I don't think we're going to see in the short term, you know, this very progressive regulation where people, you know, I mean, you know, the bit license was an attempt to it.
But the bit license just looks exactly like traditional regulations.
So I don't think you're going to see very progressive regulations where they accept things like actually anti-money laundering
works against consumer protections because you're forcing people to put their identity online.
And then if you combine that with a block chain where they can get their identity hacked, that's a ginormous consumer protection risk the regulators aren't really considering.
So I don't think they're going to work that.
I think we're just going to have two markets.
We're going to have Bitcoin like it is in Japan where the exchange, you know, but no one tries to regulate Bitcoin.
You know, people realize that at the protocol level.
But they, you know, in Japan, they regulate the exchanges.
And that's a very good thing for Bitcoin as well, because, you know, exchanges do have very, very high levels of consumer risks of people losing all their money and practices that regulations can actually help.
There's blockchain innovation that can help that certainly.
But as we saw with Bitfinex, you know, sometimes when you try and get too innovative with the blockchain and allow everyone to be able to see their balances, it creates new risks.
You know, than just holding them in a cold storage wallet, you know, sometimes.
So, you know, it's kind of an interesting time like that.
But in Japan, we saw, you know, that brought a ton of traditional brokers, banks that can now send Bitcoin that can integrate the API keys on top of these exchanges.
You know, that's very good for the market.
And it's stupid still, you know, it's stupid that a lot of the fund managers want to wait for an ETF till they invest in Bitcoin so they can introduce counterparty risk to a zero counterparty risk coin.
But the reality is that when you're dealing with the traditional markets in the traditional world, that's how they want to invest.
And that's the only way they can invest.
But those markets are booming.
And then at the same time, you have the way that Bitcoin was originally designed and created, which is the unregulated market.
And those unregulated markets are booming, just as disruptive, you know, just going to have a big, if not more impact where people can actually store value around the world, independent of governments, independent of central banks.
And whether, you know, that market's booming as well.
So you just have the two.
Eventually, you might get some kind of progressive regulations.
But I believe that the unregulated Bitcoin market will eventually dwarf the traditional market because the traditional market, with all its regulations, still has ginormous systemic risks that haven't been fixed since the last decades ahead.
So, you know, in 2008, the Federal Reserve had about 800 billion of debt and the financial system imploded because there was too much debt.
Now the Federal Reserve has five trillion of debt and the stock markets are at all time highs and the bond markets are at all time highs and everyone, you know, and property markets are still being pushed.
And they found new ways of getting consumers into debt.
Governments are taking on more debt.
Businesses are taking on more debt.
You know, and we are now still in the exact system, but a whole lot worse.
Now China's got rid of their savings and they've implemented a lot of their, you know, practices from the West and they're building out their, you know, heavy leverage banking system and people are, you know, taking on loans in order to invest and a lot of the following the Western model.
So we've got this, you know, these risks that are just piled up, piled up, piled up over decades.
And on the side, we've got this global store of value, this exit from that, you know, called Bitcoin.
And that's why no matter what happens in Ethereum, no matter what happens with these altcoins, no matter what happens with these ICOs that are all doing potentially innovative things, we've got no idea whether they're actually going to be value or not.
Bitcoin has to maintain itself as a store of value because these regulated markets are in ginormous systemic risks and we do need an exit.
We do need an opportunity for people.
And, you know, it's a really strange situation that we're in as Bitcoiners right now.
You know, as Bitcoiners, we've kind of seen this and I'm really glad that the whole market, you know, anyone that's been along this market, they're now, you know, they've generated good wealth.
There's $100 billion of wealth that's been created in this market.
And the word is spreading and getting bigger and bigger and bigger.
But my fear is that at some point when more and more people own Bitcoin, we're kind of rooting for the financial system to collapse, which is not a good thing.
Because the financial system collapsing is going to hurt a lot of people.
Your mom will be hurt, your grandma will be hurt, your sister will be hurt.
You know, a lot of people losing their pensions, their insurance policies, all that stuff is not going to be very pretty.
So, unfortunately, the more people get Bitcoin, they're kind of rooting for this thing.
But we'll see where it goes.
But, you know, unfortunately, we don't need to root for it because there's ginormous systemic risks in the financial system.
And thank God we've got competition in, you know, in government-based currencies now.
And thank God we've got this global store of value because a lot of people are going to need it.
My fear is that people are going to wait until they need it to when they actually need it.
But the more people that actually get on board, start experimenting with this stuff, start learning how to secure their own assets and start learning, you know,
that we've now got this system where you can earn your own money, you can spend your own money, and it's based upon a sound monetary policy.
And this is why, you know, the core developers, you know, it's so important for me because the miners, we're going to need a lot of hash power in the future.
We're going to need you guys, the core developers.
You know, you guys have got an eight-year track record or some of you might have come on later, but you guys have got us this far.
I've got a lot of faith in what you guys are doing.
You know, I wish I could understand more about what's under the hood, so I try to educate myself as much as I can.
But I know you guys know and understand things, you know, just like we understand things about traditional markets, you guys understand things.
And, you know, I believe that this conservative approach and never breaking Bitcoin as a store of value
in order for, you know, a few business people to get further forward with some impatience because they need this user case as a currency or a micro payment system.
Let's just not break store of value because it's such an important thing.
And whatever happens over the next and coming months, you know, this ecosystem is just incredible.
It's the most exciting time to be alive in financial history.
And this really, really matters.
This is way more important than what it originally was.
Back in 2011, when I gave that first, I was invited by Amir Taki to the Bitcoin conference in Prague.
And, you know, I was learning from the people at the conference what this Bitcoin thing could be.
And I wasn't sure whether it could be. I'm not sure if I believed it.
But, you know, today it is. And it's such an important thing.
And, yeah, so.
So many good points, Simon. I mean, just like I think everybody right now should just thank Core for their conservative approach.
I mean, thank you guys so much. Anybody who has worked on Core, even if you've just done a merge request, like thank you guys so much,
especially, you know, Eric, for being on the show as well.
Just thank all the Core developers because this is where we are right now.
We have this global store of value and we do not want to break it.
And, you know, as Simon said, there's going to be a couple of markets.
There's going to be, you know, the unregulated and the regulated for at least a few more years.
I mean, at least until we have some more forward thinking regulation, this is what we're going to be left with.
And so, you know, you just don't have to even root for, like, the collapse, right?
You don't have to root for the collapse. All you have to do is survive it.
All Bitcoin has to do is survive these freaking banks. These banks are doing it to themselves, right?
As Andreas says, all we have to do is survive the banking collapse. That's about it.
So thanks so much, guys, to my panelists. Thank you guys so much.
Looks like John just slipped out. Hopefully, he'll be right back in.
But thank you guys so much for joining us. Had a great, awesome time.
Over 460 people at the height. The chat is just scrolling by a mile a minute.
Thank you guys so much. Let's just say goodbye to our guests here first.
We'll say goodbye to Eric. Eric, where can we find you?
Hey, so, yeah, so you can find me on Twitter at Eric Lombroso, Eric underscore Lombroso.
Then you can find me. I put the I actually put them on the screen there.
You should be able to see them. So, yeah, that's probably the easiest way to get a hold of me or to find me.
And I guess I just want to maybe say a couple words that I think that different people, you know,
we're all working together to make Bitcoin great.
I think we all have different roles to play.
We all have different areas of expertise or specialization or different skills.
And we should really put those skills to best use.
We should really make the best use of the best people we have and the different things.
And so I think that some people are really great at different things than I am.
And I think that they should be doing that.
And I think that, you know, it's just like there needs to be more mutual respect in the ecosystem as far as really people understanding each other's value.
And I think that there's been too much just to focus on arguing about stuff that's silly in the end,
because we all want the same thing in the end as far as Bitcoin. We want it to be a success.
And so let's let's make that happen.
Absolutely awesome. I mean, great points, guys.
Look, I mean, it's not just about the core developers, right?
I mean, it's about it's about all of us. So do what you love, but do it with Bitcoin, right?
Because we all have something we all have something important to contribute.
Jameson, where can we find you, sir?
Easiest to find me on Twitter. LOPP is my handle. Just my last name.
I knew it was LOPP. Some people say it's loop. I'm like, no, dude, it's LOPP.
It's easy to see two O's instead of two P's. But it's like I said recently, just think pistol pistol.
Yep. And we got the three L's here, man. Light, Lombrozo and LOPP. That's that's the three killer L's.
John, where can we find you, man?
So my website is lightco.in.
And it's basically just a domain hack of my Twitter handle, which is Litecoin.
L I G H T C O I N.
Looking forward to chatting with people on the interwebs.
Awesome, awesome. All of us here on Twitter and I definitely list everybody's Twitter handle in the description.
So everybody here has amazing contributions on Twitter, you know, from stats to insights to everything you can think of.
Everybody needs to follow everybody here on Twitter.
Simon, thanks again, man, so much for joining us out of your busy schedule.
I know you have been a bank to the future. I'm sure it's you're all over the world all the time, man.
So thanks so much for joining us and just tell us where we can find you.
You grab me on Twitter at Simon Dixon is taken. I'm at Simon Dixon twit.
Awesome, awesome. So thanks so much, Simon, guys.
Thanks so much, everybody, for joining the show. You can of course find me on Twitter.
I tweet about Bitcoin once in a while. You can find me at the one vortex.
So thanks, guys, so much for joining us.
We'll be back again in two weeks with Charlie Shrimp as the next special guest.
And until then, guys, just keep on talking Bitcoin. See you later.