All right. Welcome back to the Bitfinex Livestream. I'm your host, Ricardo Martinez. We're broadcasting
live from the Plan B Forum in El Salvador, and I'm being joined by Jameson Lopp, who just
finished doing his panel. Jameson, how are you?
Nice and warm.
Nice. How was the panel?
Too short. You know, we were expected to talk about all the different Covenants proposals
in less than half an hour, which is totally undoable. How many are there now?
I mean, it depends on how you count them because some of them are only partial and you have
to have multiple groups, but there's like eight or nine at least.
Okay. And like the other night when we were hanging out in the Sheraton, we were talking
about the Covenants a little bit, and you were saying that you're not sure which one is the
most favored. Did you guys come to a consensus on which one would be the best one?
We definitely did not. But I will say that there's some rough consensus forming on the
Bitcoin wiki. There's a page for Covenants support. And in my opinion, it looks like the
most consensus is forming around CTV, which is Check Template Verify, OpCat, and Op CheckSig from Stack.
Now, like if they do like a soft work or whatever to like put these into the protocol, would
all of those come in at once, like at the same time? Or is it still kind of...
That would be nice. But you know, we're still, I think, a ways away from actually talking about
activation parameters. And like if you had to guess, I know this is like impossible to predict,
but if you had to guess, like what kind of timeline are we looking at before we see something
like this in Bitcoin? I mean, everything in Bitcoin seems to take multiple years to do.
So like I would be surprised if there was even much movement on it this year. And you know,
it could be another year or two, if ever.
Yeah. Fair enough. So you had the panel and then you discussed Covenants, but you have a
presentation later today. Are you allowed to talk about what you're going to talk about?
Of course. I mean, it's related to a topic I've been discussing for about a year now. It's just
the general development progress in this space, you know, ossification. We actually touched on it a
little bit in the panel of like, even before we talked about some of the different proposals,
there's the open question of, well, should we even be talking about proposals to change Bitcoin?
Do you, are you a fan of ossification or do you think that we still need to keep improving the
protocol? No, I mean, I think ossification is a generally negative thing. But I mean,
I do think it's inevitable. But as a result, we should consider this to be an incentive to try to
work as hard and fast as possible to improve Bitcoin as much as we can while we can.
Yeah, I could see that. Like I know there's, it's a very polarizing topic because some people are like
really gung ho, like die hard, like don't change anything, leave it the way it is. And then other people
want things like covenants. So it seems to be like a divisive topic in the Bitcoin community
to a certain extent. Yeah. And I mean, this is a really broad sweeping statement, but I would say
a lot of that is because Bitcoin has been so successful. And so there are a lot of people and
institutions, various entities out there that have a ton of money in Bitcoin. And so they are afraid
of screwing something up and effectively losing all their money. And so now, you know, we've got that
incentive and that fear of loss that's pushing up against the incentives as well. What about the other 95% of
the world that isn't into Bitcoin or, you know, isn't a whale hasn't really become wealthy and they could
really, really benefit from better scalability, better security, uh, better privacy, like many different
potential things that we could improve. Yeah. I think, uh, personally, I'd like to see covenants come in just
because I believe like for layer twos to function in an optimal way, like for, for more people to use layer twos,
uh, we need covenants, like for things like arc and for lightning network. And, and, uh,
I want that to happen because I want to see Bitcoin be used as like a medium of exchange. Like,
Sure. I don't want to see it solely as a store of value. I want people to actually use it as like digital cash.
And for that to happen, we need layer twos to be able to scale to the masses.
Yeah. And the, the, basically the tools that we have for building layer twos are incomplete. And,
um, you know, when we, when we started building lightning, it was incomplete. We had to do three
soft forks to get the stuff that would, that made lightning really feasible. And I think it's not
outrageous to expect that we'll need to do more soft forks to enable more functionality to enable more layer
twos. How many times have you been to El Salvador now?
Uh, second time. So, uh, it's been over three years, uh, you know, came right after the Bitcoin
law got passed. Okay. Nice. How are you seeing El Salvador like on this trip, as opposed to the first
trip? Have you seen like a lot of change, a lot of growth? Like what have you taken away from,
from this experience? No, there's a lot of noticeable development. I've, you know, seen and been inside
a number of new buildings that didn't even exist the last time I was here. Um, I would say it feels
safer in the sense that, um, you know, there's just far fewer like armed guards standing around everywhere.
There's still some, uh, but a lot less than there were three years ago. Um, and in general, uh, just feels
optimistic. Yeah. It, I was talking to somebody yesterday during one of the interviews and we were
talking about how there's like a tangible optimism here that you can kind of just like feel in the air.
Um, and I would totally agree with that. Like people here seem like hopeful for the future.
Um, on this trip, have you had a chance to go out to like El Sante or like Berlin or any of these like
circular economy projects that are here? Nope. Been stuck in San Salvador. Ah, okay. At the conference
the whole time. How's the conference been? So far, so good. You know, um, I usually don't attend a ton of
talks at the conferences because my time is better spent networking. Yeah. I do the same pretty much.
Uh, is there any talks that you have caught that you, that you've taken the time to go sit down and watch?
Uh, yes. Um, let's see. I was, I was at the, uh, the lightning talk, uh, where they were, you know,
discussing the pros and cons and continued challenges of trying to build out lightning network. Um, you can
tell that there, there definitely has been some, you know, loss of enthusiasm and optimism, you know, as we've,
uh, you know, discovered more, uh, problems with turning lightning into a mainstream thing.
But, um, you know, related to that and the covenant stuff there, there are a number of improvements that
some of these covenants proposals would make to lightning as well. Do you think that lightning's role
is going to end up being like a settlement layer between like different layer twos?
I think that's one of them. And, you know, that's one of the interesting, uh, dynamics that has changed
over the past few years where, you know, back in 2015, 2016, 2017, um, everyone was really talking
about, you know, lightning for fast, cheap payments, because the main thing that we were competing with
at the time was, of course, it was a larger block size debate because fast, cheap payments were very
important for some subset of people. So that was the main thing that lightning was focused on. Nobody even
thought about a future in which there might be many different layer two networks and, and lightning
would be like the glue between them. And, uh, that seems to be slowly coming to fruition because also,
if you look at, for example, Ethereum and the layer two landscape on there, one of the big complaints
that people have about how that ecosystem has developed has been basically fracturing that you've
got, uh, you know, dozens, if not more of these different layer twos on Ethereum, but they can't
talk to each other. There's no way to, to actually like send, uh, money from one layer two to another.
So I think if, if we could have lightning really be the bridge between a diverse ecosystem of layer
twos on Bitcoin, then that would, uh, you know, make our layer two ecosystem even more vibrant, uh, than
ethereums or other networks.
I've been thinking about it. And I think like that may be like the role that lightning kind of fulfills
because like ecash for instance, they're trying to settle between mints using lightning. Uh, mercury layer
is also like using, uh, lightning as like a way to, um, like once you swap your UTXOs in mercury layer,
you can like settle out to like a lightning channel or something like that. Uh, there's like other talks
of like different like layer two projects that I've heard that are like using lightning. Lightning's
also on Noster, which isn't really like a layer of Bitcoin, but it's kind of peripheral to Bitcoin.
So like, I'm kind of seeing it like maybe fulfill this role of where it's going to be like the glue
or like the, the rails between these different, uh, like Bitcoin layer twos. Are you like,
what do you, what are you most excited about in Bitcoin right now?
Oh, you know, I'm, uh, I would say I'm more concerned than excited and that's actually,
that's I think the main impetus for my talk. Uh, the title of my talk is the curse of success.
And it's basically that like we've, we've done so well now that, you know, we're afraid to keep
trying to innovate and take the risks required for that. So, um, yeah, I mean,
I'm excited that there seem to be more proposals, uh, over the past year or two than there were.
Like we, we seem to have, you know, an acceleration of proposals for improvements to change Bitcoin.
But on the flip side of that, uh, there seems to be more and more, um, rejection of any proposals.
So it's, it's, it's, it's, it's almost becoming more polarized, right? We, we've got, we've got like
more developers who are very optimistic and like, there's so many things we can do to improve Bitcoin.
And yet we've got more and more people mostly who have become very wealthy in Bitcoin who are now too
afraid, uh, that something might break. And so it's really a diametric, uh, type of, of issue.
And, you know, that's why I think I've spent so much time talking about it over the past year.
Okay. That's it. That's an interesting insight that you have, uh, with like over the past year,
like people were trying to break Bitcoin, doing things like ordinals and like ruins and like these,
these like weird little hacks to like use the protocol in a way that it wasn't intended.
And then that kind of kicked off like this arms race for like people to build these like side
chains and things like on Bitcoin that are going to do like tokenization and like Ethereum style,
like smart contracts and stuff. And there's a website called L2 watch that tracks like,
there's like 85 different ones that are currently like in different stages of development.
Yeah. What do you think about all this like Ethereum style, like Defi, like capabilities that they're
trying to like bootstrap onto Bitcoin? Yeah. I mean, I think that's good that some people
want to compete with some of these other networks. Um, and you know, you can argue about, you know,
how valuable it is. And, you know, I think a lot of people would point to Ethereum and show that like,
it's been fairly stagnant from a adoption perspective over the past few years. And, um, you know,
for the past couple of years, I guess Solana has been, you know, the big DeFi system.
Yeah. So taking the lead. So, I mean, you know, you can have lengthy debates about like,
should Bitcoin even be trying to compete with these other things? Um, I think that if people
want to expend their resources, making Bitcoin more competitive in those venues, then that's all
the better for, for Bitcoin. Of course, this can become contentious. If, uh, for example, those use
cases start using a layer one block space, that's when people get upset. They're like, oh, you know,
you're, you're using Bitcoin for non-financial stuff. Yeah. Um, and that is really more of a
philosophical question. It's like Bitcoin doesn't care what you're using it for as long as you're
following the protocol. And I think that people should be allowed to use the protocol, uh, for whatever,
they want and, uh, try to figure out what is the most economically valuable uses of the protocol. Um,
you know, maybe it's not a medium of exchange, you know, maybe it is some sort of more esoteric,
uh, financial construction. But as we saw, you know, so many people got really, really upset with the
ordinals and inscription stuff about, you know, spamming the chain. And I said all along, look,
I'm neutral about this. People should be allowed to do it. I don't know whether or not they'll be
successful. In fact, we should expect that the vast majority of experiments will fail. That's just,
that's how life works with like companies and, you know, trying new things, uh, trying to find your
product market fit. And here we are today and the men pool is practically empty and nobody's doing the
ordinals and ruined stuff anymore. So at least where it stands right now, you know, they did not
manage to get a like sustainable economy bootstrap for the stuff that they were doing.
And that's fine. That's what people predicted too. I remember like when that was going on and the fees
were high, like a lot of Bitcoiners were saying like, ah, that's not sustainable. They're not going
to be able to keep paying these kinds of fees. Like this is going to fizzle out at some point. And it
seems like it's kind of done that. Yeah. Yeah. But like, because of ordinals, like it is kicked off.
Like there's like, I just talked to, uh, Andreas, this guy from Sequencia, he's building like a side
chain that has like, you know, like tokenization and stuff for Bitcoin. And there's like, uh, like mint
layer that there's all these different ones that like, I can't even keep up with how many there are,
you know, to like keep tabs on like what people are actually doing, but it's, it's kicked off like a flurry
of experimentation on Bitcoin, like building like side chains that have like these other, like more
web three style like capabilities, I guess. So I was just interested to get your thoughts on it.
Yeah. And that's fine. Uh, but you know, with this proliferation of dozens and dozens of those
networks, they're all going to find major challenges and actually bootstrapping to the point where they
have sufficient network effect that they are sustainable economically in some form. So once again,
even with all of those, I would expect like 90% of them are not going to last. Um, and that's okay.
I mean, look at liquid liquid's been around for years and like people are just like starting to
use it now. Yeah. Yeah. Liquid, uh, at least in terms of like total assets on liquid, it barely
changes by more than like one or 2% per year. So there's not many people piling into it. I think
there has been a bit more development happening on it, but that, that has yet to like really bring in
much new adoption from what I've been able to tell. All right. And then my last question is like a lot of
people here particularly at this conference have been talking about tokenization
and, uh, like tokenization of real world assets. There's a whole bunch of people that are interested
in that at this conference. What are your thoughts about tokenization?
Well, once again, I think anyone should be able to do whatever they want. Uh, I haven't
yet like wrapped my mind around, uh, how tokenizing a real world asset, uh, does anything for it in terms of
security. Cause it seems to me like you still have to physically secure that thing. So as far
as I can tell, it's really just more of a, uh, you know, financial opportunity thing of like,
if you want to be able to trade real world assets or like partial pieces of real world assets and
financialize them, then this is a way to do that. That's not my wheelhouse, but if people want to do
it, go for it. Yeah. I think it's like also like modernizing the markets. Cause like traditional markets,
like close, like on the weekends and like at night and stuff. And like the Bitcoin market is like 24/7.
So like they, I think they're excited about the possibility to have like these markets in operation
around the clock and, and, you know, financializing it, like you said. Yeah. It just like, you know,
I'm the security guy. So I, I take a paranoid approach to stuff. So I'm like, okay, what happens
if you, you know, tokenize your house and then someone hacks the token and now they own your house?
Yeah. Do they get to come and kick you out? You know, there's so many weird edge cases
that I think people haven't really thought through. Yeah. It'll be interesting to see,
see how it unrolls because like I said, there's a lot of people here that are interested in it,
but thanks so much for coming on the show and doing the interview. It was a pleasure and, uh,
good luck with your presentation later today, man. Thanks.