What is up? A good Friday for everyone joining us today from wherever you are listening to us at this global...
and globalize it, right? World of Crypto.
I think today a good day in the markets overall.
Like, we're not seeing a lot of things going down, which is definitely good taking into account the last few days
because we saw a small, small, small, let's put it like this, very small Bitcoin correction.
But for the Uni holders out there, I think that you guys are having quite a day.
I think for everyone that has some Uniswap tokens on their back, just like the rumors about it,
potentially distributing rewards to token holders, just like the dividend, let's put it like this,
for the ones that have a little bit more of a Tridify background, probably can kind of like understand that it is an interesting thing
that can potentially happen and it can actually have a trickle-down effect in the Cryptosphere.
Maybe Uniswap would be the first one to do this. Maybe we have others doing this later. I don't know.
Let's see what the future holds. I see Jameson Lopp is already with us right now.
Lopp, I want just to check your mic just to make sure that I can hear you.
You can hear me and we can have like a smooth conversation.
So please just say something, I mean, a quick hello to the audience here before we officially kick it off.
Hello, good morning, good afternoon, wherever you are.
Yeah, Lopp, I mean, I can hear you. I mean, sound and clear, loud and clear, perfectly sound, like no problem at all.
If you can hear me well as well, I think that we can officially kick it off. Is it OK for you?
I think we're good to go.
One hundred percent, Dan. And right now it's time for your CMC Live of this Friday.
It's officially Friday. I think it's our first Friday Live. So for everyone joining us today,
I mean, welcome to another CMC Live. Today we are covering Bitcoin from privacy to ETF.
We're going to unpack actually a ton of different topics with Lopp here today.
And for the ones that don't know Lopp, I will go through your Wikipedia About section there
that says that you are an American cypherpunk, software engineer, columnist, Bitcoin advocate,
also co-founder and CTO of the Bitcoin security provider Casa, which we'll be talking about just in a few minutes.
But also prior to joining Casa, you also served as software engineer in Bitcoin.
One thing that your About section on Wikipedia doesn't mention is the second to none awesome beard.
Congrats on that. I do have a mustache. I haven't had like the time to grow a beard.
I don't think that I have the skills actually to make it look as good as yours.
So congrats on that and welcome to CMC Live. Big, big pleasure to have you here.
And by the way, I think you just mooted yourself right now, so you can unmute and I think it will be better.
Let's see if it works fine.
All right. I should probably just keep it on. The app was a little bit wonky there trying to flip it.
But yeah, the beard is a labor of love. You know, it takes a couple of years to really grow it out.
And I would say, especially as I've lost the hair on the top of my head, it's really migrated down to the beard.
I spend more time and effort cultivating the beard than I ever did my regular hair.
I mean, definitely can tell that by your profile picture and stuff, but congrats on that.
That is not easy stuff. I do feel like I had a beard like in the old times, let's say a couple of years ago.
And I just like, bro, I don't think I can handle it anymore.
Maybe the mustache gives me like a little bit more time to take care of other stuff.
So that's the route I've chosen to take.
But I mean, just looking at your background, like a ton of interesting things that we could just like probably spend half an hour, one hour,
just go through the things that you have done in the market and like related to crypto already.
But I want to take a step back and understand a little bit more of your background on how you actually got into crypto, like on Bitcoin specifically.
And also, I think that you probably have shared this story in many different, I mean, podcasts, videocasts and whatever you have been to before.
But I want also to know like your experience after just like, okay, you are now introduced to Bitcoin and you tell us this story.
But after that, when you try to just onboard more people to BTC, how is that process?
Is that actually successful on your end?
Not at all, it's frustrating sometimes that it is for all of us.
Like, tell us a little bit about it as well.
Sure. Well, you know, when I really first got into the space, Bitcoin was the main thing.
This was 2012.
There were altcoins, of course, but back then, altcoins were a very different beast because they were pretty much all just copy and paste clones
of the Bitcoin code with a few small tweaks.
So it was hard to take many of them seriously.
So I would say I have never really been a "onboarding to Bitcoin" type of guy.
I certainly tried that for the first few years when I was interested and I would talk about Bitcoin to my friends, family, colleagues, really anyone who would listen.
And I was met with a lot of rejection.
And it took me a while to understand why that was.
And I think a part of it was it was so early and I sounded like a crackpot.
But also, I wasn't really offering a solution to problems that people in my sphere were having.
Basically, people that I was friends with, these are first world types, like they had decent financial infrastructure.
They had bank accounts and credit cards and were generally not getting their transactions censored.
And to talk to them about what my main pitch was about inflation and about how the value of your money was eroding, it was very difficult for people to grasp.
It wasn't until 10 years later when a lot of people in America and other first world countries finally really started to feel inflation.
And I felt more vindicated.
But back then, it was a much more theoretical thing.
And so I would say I actually kind of gave up trying to directly convince and onboard people, at least in real life.
And even to this day, I explicitly avoid telling people to go buy Bitcoin or invest, to do really anything with their money.
I don't want to be a financial advisor.
I don't want to tell people how they should be taking risk with their own assets.
Rather, I approach it from an educational perspective.
And so anyone who has been to my website, you just go to Bitcoin.page, you'll see that there's thousands of links in dozens of different categories.
And I've cultivated these over the past 10 years.
And so my main thing is, people who come to me and ask, should I buy Bitcoin or whatever, my go to retort these days is, look, if you have to ask, the answer is no.
What you should be doing is going and doing more research, educating yourself and getting yourself to the point where you feel like you have to buy it.
You have to hold on to some of this asset because of whatever properties it offers, that it's ultimately going to be a good long term thing for you.
So I don't want to be telling people what risky things that they should do, because I don't know what everyone's individual situation is.
I don't know what their risk profile is, but I do know what the properties of these systems are and the features and the things that they can offer.
And so I feel like education is the best way to get people to then make their own individual decisions, because after all, that's how a market works.
The market should be composed of millions, if not billions of individual actors all making their own decisions, not just listening to me or to people on YouTube or other social media who are basically hawking get rich quick schemes.
Couldn't agree more, like I think being from Brazil myself, not having, for example, English as my first language and just like being able to travel to some other countries, I mean, in South America and going to, for example,
South Africa and other not developed countries, I tell you that that's exactly what I feel lacks for many people is just like that perspective on understanding what are the issues that some are facing, that you're probably not facing when you are in a fully developed country, such as the US or some, I mean, major majority of countries in Europe, etc.
So you actually don't see the struggle that some people have in other regions.
And I think that Bitcoin are not also is like probably appeal to solve some of the problems that those people, even in those countries have, but mainly for the underdevelopment of countries, as you said, inflation and many other things.
I think that's key for people to understand.
Key point for me is now trying to understand like where did you from like just being in touch and understanding Bitcoin, reading the white paper at 2012, as you mentioned, just like how do you got from that point to actually build something such as Casa?
And for the ones that don't know what it is, if you can just give us like a quick overview on what Casa does and how people can actually get to know it better and potentially use it also, I feel like that's very important.
And by the way, for the ones that don't know, don't speak Spanish or Portuguese, Casa also means house, right?
I don't know if that's the reason why you name it like this, but it's actually the meaning in those two languages.
So please tell us a little bit about it.
Sure, it was a long road.
So 2012 was when I first came across the Bitcoin white paper, I think on Slashdot, which is kind of a technology nerdy news site.
And it was when I read the white paper that my mind was blown.
And why was my mind blown?
Well, I'm a computer scientist, and I was reading this white paper, which explained both a problem, which is the double spending problem, like how do you create a ledger and digital assets that's distributed, not controlled by anyone and do that in a way that prevents people from, you know,
spending the assets multiple times.
I had never thought about the problem before.
But when I read the solution, which was using proof of work combined with basically blasting out all of the transactions to the entire world, you're replicating it across a huge number of different servers.
I thought that this was pretty amazing because it was the exact opposite of how I as a computer scientist would have even approached the problem.
And the reason for that is that when we are taught as software engineers to design and build and architect systems, we're taught to try to do this in the most efficient and performant way to use the least amount of resources to to accomplish the problem.
And Satoshi solved the problem by making it take an incredibly overwhelming amount of resources to run the system.
And so, you know, that gives you some interesting properties.
Of course, it makes it expensive to rewrite the history of the system.
It also tends to make it very difficult to scale the system to have a high throughput, high number of transactions.
But that was just what got me intrigued initially from a technical perspective.
It was about a year, year and a half later that I decided to try to dive deeper into Bitcoin.
And that's when I actually forked Bitcoin Core, the repository, and created a version of the node software that had a bunch of extra metrics collection.
I called that Satoshi.
That project still runs today and has been referenced by developers a number of times over the years.
Basically, it helps us better understand what's happening inside of Bitcoin nodes from a performance and metrics perspective.
And it was about a year after that that I started applying to Bitcoin jobs.
That's when I started working at BitGo and I came on and worked there for three years building infrastructure, running nodes, managing transactions, sending queues and doing all kinds of instrumentation and metrics along a similar vein.
And while I was there, I learned a lot about security.
And we learn about security often through the mistakes that people make.
And there have been a lot of mistakes that people have made over the years.
People have lost a lot of Bitcoin to hacks, thefts, negligence.
And I was just absorbing this and then had the opportunity to basically make a very small adjustment to what I was doing.
And instead of offering security services for enterprises and large organizations, because BitGo was mainly helping exchanges and other large companies manage their hot wallets.
I said, you know, I think there is a big gap in the market where we have not yet taken the same approach and tried to make it easier for individuals to have extremely high levels of security.
So this is where the promise of being your own bank comes into play, where it's always been possible to be your own bank in these systems.
But I would say it's a pretty high bar, a high mountain of knowledge that you have to climb if you really want to do it well.
Of course, you know, go and buy a hardware wallet that'll get you like 90 percent of the way there and protect your keys from pretty much all the online types of hackers and majority of types of thefts that happen.
But when you get into all of the ways that you can shoot yourself in the foot and basically lose access to your keys, that's where a lot of effort has to go in to thinking about all of the edge cases.
And so that's really what KASA is, is we provide a self-custody system where you don't have to read a ton of documentation to put yourself into a really robust setup.
Basically, you follow the instructions in our app and you can talk to our support specialists if you want, and it puts you into a distributed key setup so that you can have peace of mind, that you can be human, you can make mistakes, things can go wrong.
And even if you suffer a loss, compromise or theft of one of your keys, it's not going to be catastrophic because your funds are actually secured by multiple keys that are distributed in multiple locations on multiple different types of hardware and software.
And the reason for all of this diversity is that it's basically strength through diversity.
From a technical perspective, we call it the power of additive security, but it basically means we understand that nothing is perfectly secure and we should assume that things will get compromised and fail.
But you want to architect your self-custody setup so that whatever failure you experience only affects one key in the system, and that is not sufficient for you to lose access to your money or for some attacker to gain access to your money.
So that's kind of the high level, is putting people into a position where not only can they be their own bank, but they can be confident that they can be their own bank and that they're not going to suffer from a catastrophic loss.
I think that's one of the major things that is keeping a lot of people from going into self-custody, is that they're just afraid.
And there is reason to be afraid because there's a lot of ways that you can make mistakes and screw up.
It's a very large design space when it comes to architecting your own wallet setup.
So you come to Casa and we have already done all the hard work with decades of combined experience amongst our security-minded folks to architect a setup that is as close to bulletproof as you can get.
That's actually awesome, to be honest, Bob, because I do feel and I do know a lot of people that I either try to onboard to crypto at some point or that are already in crypto, to be very honest with you, and not for a short period of time.
I would say there are some crypto OGs that I do know that are still afraid of just being their own bank.
And because of that, they'd rather just find insanely ways just to mitigate risk here and there, split accounts, do this, do that.
And just like those are things that I do believe Casa kind of solves that problem.
This is something that I'll be honest, I didn't know, I didn't knew about Casa before we jumped into the conversation.
Of course, when we just started to talk, "Hey, let's do a CMC live," etc., I started to look into it.
And to be very honest, I think that is just like a second to none type of thing.
And I think it solves a ton of problems for many people that are listening to us right now.
I see 1,300 people listening, more than that, listening to us at this very moment.
I think that those people should definitely look into it.
And to do this, you just click on Lopp's profile here, you'll be able to find everything there.
Otherwise, just go to his Twitter, you also find all the links necessary to jump in and understand better what Casa is about
and how you can potentially start to use it.
But more than that, Lopp, I want to ask you something.
You've been in BTC, or you've been around, let's say, since 2012, right?
And I think that already looking backwards, and I think that for us that are a little bit "older,"
we can look back and say, "2012, I do remember those years," etc.
But it's been already 12 years since you've been there.
And it doesn't seem like that, at least from my perspective.
Pretty sure you are more or less on the same boat.
But I want to understand from you the changes in Bitcoin through time.
I think that in 2012, Bitcoin white paper, etc., it has some sort of an ideal, a value,
things out of it that people started to realize what is Bitcoin, what is the purpose of Bitcoin, the vision, etc.
And a lot has changed since.
I think that it goes from the community members itself, I think right now, of course, much more eyes into Bitcoin network updates,
like different possibilities you have right now to build on-chain as well.
So just wanted you to type into that, like, being able to be part of all those years in the Bitcoin history.
Like, how do you see that evolution of Bitcoin, and do you see this as positive, negative?
This is also that I wanted to chime in a little bit with you to get your feel for it,
because I do feel like a lot of Bitcoin maxes actually do not like a lot of the things that are happening lately on Bitcoin
when it comes to just, like, ordinals and just, like, those block size wars that are going on, etc.
So, like, what are your takes on all of this?
This is, I would say, one of the more fascinating aspects of the ecosystem.
You know, I'm a technologist, I spent many years digging into Bitcoin from a technological perspective.
But the open-ended question, and I think the question that we'll never fully answer,
is, you know, what is Bitcoin?
And I mean that from the philosophical sense of, what should Bitcoin be?
You know, what should this protocol and network offer to the world?
This is also one of the reasons why I originally got interested in the space,
not just because of the technical solution, but the fact that this was a completely new approach to money,
and it was taking this open-source, community-driven, volunteer, collaboration type of approach.
And that's, I think that's probably, it's arguably the most "fair" way to approach some sort of open system, like money.
You know, what is money?
It is this abstract concept where we're all just kind of agreeing upon how we keep track of who owes who what.
And it seems pretty ridiculous to me that an idea, a concept as basic, as fundamental to human civilization
should then be controlled by, like, a dozen people who meet behind closed doors.
It seems like that should be a process that should happen completely out in the open,
where anyone who cares enough can contribute their ideas, their resources, and try to help improve.
And that's also related to kind of some of the stuff we were talking about earlier,
with the fact that early on it was very difficult for me to talk about Bitcoin,
especially just in the first world country since.
I think that also is important when we're talking about contributing to the system itself,
that this system, the strength of the system comes from diversity.
And that's in many different ways, you know, diversity of miners, diversity of people running nodes,
but also diversity of just people talking about it and coming up with ideas and proposals
and arguing about what it should be, what the attributes of the system should be,
what functionality it should offer to the world.
Because, quite frankly, I cannot put myself in the shoes of people in third world countries.
I have not lived that experience. I do not know the problems that they have to deal with in their day-to-day life.
I mean, I may theoretically know it, but I'll never fully understand it the way that these people
who are actually living through that experience have to do it.
And so, in order for Bitcoin to be, I think, the best that it can,
we need to have people from all different walks of life coming in and contributing and saying,
"This is what the optimal form of money would be like for us."
So, we're talking about an over a decade long history, which we could easily spend all day talking about.
Entire books have been written about it.
And the way that I would describe it from a really high level, because you kind of touched on some of the strife,
the conflict, the anger that happens, especially on social media.
My explanation for that, because I've seen this happen many times over the years,
and my explanation is that people come into Bitcoin, they read about it, they learn about it,
they build their own mental model of what Bitcoin is.
And then, over time, as more people adopt the system, as perhaps small technical changes happen to the system
and functionality increases, then various attributes of actually using the system may change.
And in some cases, if the user experience changes, then certain groups of people may get disillusioned
because their mental model of Bitcoin gets broken.
And so, a very obvious example of that is from the block size wars and the changes that happened in the 2015 to 2017 era.
So, before 2015 or so, so few people were actually using Bitcoin that you could pretty much always be guaranteed
to make the minimum transaction fee of one Satoshi per byte and get your transaction confirmed in the next block in about 10 minutes.
And so, a lot of people started building their mental model around, "Well, this is how Bitcoin is, and this is how it will always be."
And so, when enough people started using the system, we started bumping up against the different limits
for how many transactions could get confirmed in a block, and we started seeing fee markets,
which were basically auctions for that scarce block space.
User experience changed for some people, and their mental model of Bitcoin was broken,
and some of them said, "Well, Bitcoin itself is broken because my user experience has changed."
And that's a completely valid point.
And of course, that led to a multi-year debate around what Bitcoin should optimize for,
which was basically, should Bitcoin optimize for a low cost of creating a transaction at the trade-off,
at the expense of potentially high cost of validating and auditing the entire system by running a fully validating node,
or should Bitcoin optimize for maintaining a low cost of auditing the system with a fully validating node
at the expense of higher cost of transacting on-chain.
And so, of course, the community ended up siding with the latter,
and we ended up having multiple Bitcoin forks as a result, and those experiments have played out,
and I would say have not been particularly successful with trying to chase after the medium of exchange optimization.
But I think that that type of thing is going to continue happening,
because we're continuing to, from a development perspective,
work on this sort of pathfinding of what is Bitcoin,
what should this system continue to be operating and offering to people,
and to kind of bring us more to present day with some of the conflicts that are happening.
You know, you get into the sort of arbitrary data and data filtering debate,
which I think can mostly be summed up as,
should we be creating a lot more subjective rules around what data people are putting into the blockchain,
or should we just take an economic approach and say,
look, if you follow the rules of the protocol and you pay the money to get your transactions prioritized,
then you should be able to use the blockchain to put arbitrary data into.
And, you know, I fall more on the economic side of things, of like,
look, you may not agree with some of the data that people are putting into the blockchain,
but this is a free market.
And so I personally, I've called myself like a Bitcoin monetary maximalist
in the sense that I think Bitcoin has one of the strongest claims of being sound money
within the whole digital assets ecosystem.
But I'm also a technologist, and I've always been interested in non-monetary use cases of the Bitcoin blockchain.
And that's because Bitcoin is fundamentally a database.
It is a database that is terribly non-performing.
It's the worst performing database I've ever seen, but it has some very interesting properties,
and you can build all types of things off of this database by leveraging those properties.
So I also want to see people continuing to experiment with using Bitcoin as a database
to build other, you could call them cryptographically sound systems
that are kind of anchored into the Bitcoin blockchain.
Because I'm not so egotistical as to believe that I individually know
what specific things are going to make Bitcoin the most valuable system that it can possibly be.
I think the only way that we can get there is through experimentation and letting the market play out.
I couldn't agree more to be honest, and I feel like from the way that you put things in your perspective,
you sound like very much a libertarian person, like someone that believes, correct me if I'm wrong by the way,
but just like someone that believes that actually what the people that are using Bitcoin right now,
the devs and the users in general, they should decide what is up or not, good or not for Bitcoin in general.
Of course, there are some things that you touched on a word that I feel like is very right, which is experimental.
Because coming from a content creation background myself, I'm not a tech guy, I'm not a dev,
I'm not one of those, but content creation I feel like is very similar to when you're creating code,
because at the end of the day you're creating something, and there is a lot of trial and error going on.
Some things that you do that you believe are going to be just completely game-changer.
A lot of people use it, in our case a lot of people like it, and most often than not that doesn't happen like this.
Sometimes you build something that is simpler, but some people can just build something on top of that,
those types of things, and that actually becomes let's say something that will propel the usage,
or something like that at the end of the day.
So basically, what are your thoughts in terms of the experiments that have been already happening on Bitcoin,
something that you'd say has been more successful, less successful,
some things that you believe are going to be the things moving ahead in the upcoming months and years?
Because I don't think we can predict the future.
Like three to four years from now, it's really, really hard to tell what's going to happen with Bitcoin
and the crypto market as a whole.
But just like, what do you think are the experiments worth to be highlighted so far?
And also please share with us a little bit of your involvement also with the Taproot Wizards,
which I know also is like a couple of initiatives that are out there.
Wizards is one of them that are actually trying to bring those experiments into Bitcoin.
Right. Yeah, so my Twitter avatar is a Taproot Wizard.
And this is not an explicit endorsement of like the NFT market or anything.
I mean I really--I mostly did it just to trigger people and to get them thinking.
And it was basically a way of me signaling that I'm in favor of allowing people to experiment
and that I don't think that we should be wasting our time trying to play the sort of whack-a-mole game
of having people build stuff on Bitcoin and then whack them by changing the protocol
or changing the filters in the nodes that basically say, "OK, we're actually going to block this data
from being distributed across the network," because I think that that's not a good use of developers' time.
Really, very few serious developers want to spend their time playing that.
Developers generally want to be spending their time building things
and allowing people to then leverage those tools to build other things.
So I've been following along the various ordinals and inscriptions debate stuff.
Personally, I haven't been interested in any of the sort of tokenization projects
or anything that had been happening.
But what I have found more interesting is a variety of renewed interest
in talking about more complex Bitcoin scripting from the perspective of,
if you looked into the Quantum Cats project, that was actually pretty technically sophisticated.
So once again, I still may not care about the sort of having a cat NFT,
but I am interested in this new approach to talking about technical proposals and changes to Bitcoin
that basically involves creating memes-based narratives around them.
I have no idea whether or not that's going to be effective, but I do find it amusing.
In particular, the Quantum Cats project, which got tied into some of the OpCat proposal stuff,
which is really low-level technical proposal,
they were doing some interesting stuff with Bitcoin scripts and I think recursive script stuff.
But this is just the type of experiment that is interesting for me to see,
not because I necessarily know or believe that it's going to be hugely successful,
but because if we're not doing that, then I think we're guaranteed to be less successful.
Like I said, I kind of see it as a pathfinding through all of the potential things that Bitcoin could do.
So I've also been interested in seeing a renewed debate around proposals that can lead to more Layer 2s.
And now, of course, even this week, we're starting to have more debates about what is a Bitcoin Layer 2,
what constitutes a project that is deemed sufficiently cryptographically tied to the Bitcoin main blockchain
that we should call it a Layer 2, versus a project that may be so weakly tied
that you could argue that they're only really using Bitcoin from a marketing perspective.
But I want to see things like zero-knowledge roll-ups happen to Bitcoin.
And it's theoretically possible, with the right changes, where we're seeing more people talk about BitVM.
I don't think that that's going to be production-ready for a long time.
But that type of stuff, allowing more expressive scripting and development and then tying it to Bitcoin,
that's the type of thing that I think is foundational technical building blocks
that are a requirement to enable more creative use of the blockchain.
So I don't know what the best uses are going to be or what's going to be ultimately the most valuable,
but it is especially interesting to me if we're talking about things that could
essentially give certain Bitcoin Second Layers similar functionality
to what you see on Ethereum or EVM-based smart contracts.
That's really well put. And I feel like one of the things you mentioned,
there are a lot that we can unpack there, of course.
But when you talk about potential roll-ups, L2s, etc., that's been one of the big things that actually,
in the beginning, I think when you think of Ethereum in the past few years,
after this high summer, we started to talk about L2s and then different types of roll-ups.
Now everyone is talking about L3s, and L2s may not be the thing.
It seems like every time people just come up with a different hate on those things,
just in a way of turning those things down and shifting the narrative here and there,
which is just funny to see. And I think the main takeaway for the people that are listening
is just at the end of the day, we're all witnessing crypto history right here.
And it goes from everything that has happened with Bitcoin lately, not just that,
but also Ethereum, etc., as you mentioned, just like Ordinal, the quantum cats, etc.
All of that is part of a history that only us, only the people that are here right now,
are going to be able to see it live. All the others are just going to barely know about it.
For example, they know how many people were around when the CryptoKitties,
one of the first NFTs, were actually around on the Ethereum network.
So that's kind of like history for the ones that were there.
For the ones that came later, just like, yeah, you kind of know about it,
you heard about it here and there, but you don't necessarily, I mean, was there to live it
and to experience it, as you mentioned, just like experimenting, being part of those things,
I think, is one of the most important things if you want to just like build
kind of a robust background for yourself in crypto.
And I think that all the things that you highlighted, I'll tell you,
like I'm very much on the Bitcoin side of things. I'm very much outside looking in.
You know, I'm, of course, a Bitcoin holder, etc., just like I am a crypto maxi overall,
but I am not involved, for example, in the Bitcoin development and stuff.
So just seeing those things, like following up those things, but not being part of that,
it's also interesting for me to know a couple of other things that you mentioned
that are potentially doable as the, I mean, a Bitcoin, a virtual machine,
and all the things related to a potential roll up, etc., just like L2s.
Are they actually L2s or not? All that discussion.
I'm pretty keen on seeing what the future holds.
And I think that you kind of gave us like a grasp on what may happen
in the upcoming months and years, etc.
And one thing that I'd like to ask you is you read, of course, the Bitcoin white paper in 2012.
Like, from your perspective, do you think that this was actually
what Satoshi first envisioned for Bitcoin? Yes or no?
And following up on that question and building on top of this,
I think also I'd like to ask you not just in relates to the Bitcoin network development,
but also about the ETF.
Do you think also that's something that is like kind of like part of the Bitcoin ethos
or not quite sure? Like, what are your takes on those two things?
Right. So, first of all, one of the main things that I tend to bring up
with regard to Satoshi is that I think spending time speculating
about what Satoshi would have wanted is a complete waste.
The way that I look at it is, you know, Satoshi gave us a great gift
and they cobbled together a variety of technologies that already existed
but had never been put together in the right way before.
They basically, they put the puzzle pieces together
and gave us this incredibly new robust system.
And that system has taken a life of its own because what I've said many times is,
you know, Satoshi's greatest gift to the world was Bitcoin
and their second greatest gift to the world was leaving Bitcoin
and basically disappearing because I believe that a leaderless project
is far more robust because it doesn't have the single point of failure.
And we don't have to worry about a sort of benevolent dictatorship
like most open source projects have.
So, you know, what Satoshi would have wanted is no longer relevant
because they're no longer contributing, at least that we are aware of.
This is where it gets a lot more complicated.
We're trying to figure out what is the optimal thing for everyone
or at least the least harmful changes to everyone.
I think though if you look at some of the earliest writings
and discussions that happened back then,
you would note that almost everything that has happened has been predicted.
A number of these things were basically inevitable.
I think a lot of people will point to some of Hal Finney's early posts
where he was saying, oh, one way you can scale Bitcoin
is basically with Bitcoin banks, a.k.a. what we're already doing now
where a lot of the Bitcoin is held by custodians, exchanges, and now ETFs.
Is that a part of the Bitcoin ethos?
I think you could argue either way.
It's one way of scaling the system and kind of scaling it through trust.
So personally, obviously, I find that distasteful,
but I also find it inevitable.
I recognize that for a variety of different reasons,
a lot of people don't want to take the responsibility of custodying their own funds.
It is what it is.
I think it does make at least financial exposure to these assets
more mainstream and widespread and open, available to more people.
From that perspective, it's all right.
I worry about if it becomes the most popular way of "using Bitcoin"
because if you look at the ETFs,
I think all but two of them are using Coinbase for their custody.
One chart that I saw last week was that basically 90% of the Bitcoin
across all of the dozen or so ETFs is held by Coinbase.
That is an extreme point of centralization that I am particularly worried about
because let's say that trillions of dollars flow into Bitcoin through these ETFs.
I would consider that to be a potential point of systemic risk
if we saw the pendulum swing and that a large portion of Bitcoin
was no longer held by individuals in self-custody
but was all held at Coinbase, for example.
That makes the system more fragile
because a company is generally subject to things like nation-state attacks
or even insider attacks.
I don't have any reason to suspect
that Coinbase doesn't have good internal security controls.
I think they have great internal security controls
as far as we can tell from a historical perspective,
but it's still a potential single point of failure
because it is one organization, one entity.
Where are we going from all of this?
It's one of those things where we just have to keep paying attention
and I will continue fighting the good fight as it were,
trying to get more people into self-custody by making it easier to do so.
This has been one of the greatest challenges over the past decade.
Those of us who are building self-custody software and services,
we're basically fighting against human nature
because human nature is to take the path of least resistance,
to do the most convenient thing that takes the least amount of work
to try to achieve our goals.
One thing that has made me a bit disillusioned over the years
with regard to things like privacy and security
is that it's kind of like trying to sell insurance to people.
People feel like they don't need it until usually it's too late.
So I hate using fear-based marketing to tell people,
"Oh, these are all the terrible things that could happen to you
if you don't prepare for them."
But that's kind of what it comes down to.
That's right.
And to make a parallel on this,
it's like a relationship or something that you just value this when you lose it.
That's basically the same thing.
People don't understand the actual value of it
until they went through something that they completely lose all their coins
or whatever happens, and they just feel like,
"Yeah, I should have done it differently before I had the chance,
but I didn't take it, so right now I'm actually looking at it, and it's gone."
So I agree 100% with you, but as you said,
it's just human nature to go the easiest path possible.
We are always going to choose that.
Nine out of ten humans are going to choose the easiest path,
and that's definitely a problem.
So I think that education, just trying to educate people, that's the reality.
What can happen, show real stuff that happened to others,
maybe learning from others' mistakes
and not waiting for you to just go to the same mistake in order to learn,
I think that's the best way to go about it.
And guys, for everyone that is listening,
you have heard it here almost 10,000 times already.
So just make sure to take care of your own crypto
and just own your own crypto, own your keys, etc.
That's something that we always highlight here,
and I think that CASA, for example,
just brings you another layer of possibility for you to do that
without all the "human risks" that you guys can feel afraid of.
"Oh, I cannot do this. I think I'm going to mess it up."
So you can just have a provider to help you do this,
but also at the same time with a reasonable exchange.
Let's put it like this.
And I like the things that you mentioned about Coinbase as well
because there are some things about the ETF
that a lot of people don't bring up.
A lot of people just see the bullish side of things.
They don't see, for example, the way that BlackRock, for example,
already controls a lot of the miners.
They are just like big shareholders on miners.
They now have the ETF product as well,
so they are kind of like over the whole Bitcoin chain.
Let's put it like this.
They have presence in many steps along the way.
So that's another thing that a lot of people come and talk about
and just like to mention that, hey, the ETF is good, yes,
but it's not all good.
There is a downside to it as well,
and I think that that exchange is not clear in many of the people's heads,
and I'm glad that you just shined the light a little bit
on some of these other issues and potential issues.
We don't know if they are going to become issues,
but there are some potential things for us to keep an eye to for sure
when we think about the ETF and stuff.
But as you mentioned, Satoshi, I have one question for you about it
and then one later about Bitcoin specifically.
So we can kind of wrap it up.
It seems to have been already almost 15 minutes in conversation,
and to be very honest, the time went by really, really fast here.
I did not realize that we were already 48 minutes into this conversation.
So I want to ask you a quick take on Satoshi specifically,
something that people already brought up in the chat here
and something that I think always triggers the curiosity of many people.
Since you are around Bitcoin for a long time,
do you know or do you think you may know who he is?
Only one person, maybe more than one person.
What are your takes on it?
And also, one last question about it.
Do you think there are any chances that he can potentially
just do something with his own wallet?
I don't think so, but I'd like to get your opinion on it.
Sure. Yeah, this is part of the Satoshi myth that people bring up a lot.
Obviously, I have my own speculation about potential Satoshi candidates.
It would be unethical for me to point the finger at anyone.
I wrote and published a lengthy report about a year ago
that basically outlined a lot of evidence for why Hal Finney is not Satoshi.
I basically showed that Hal Finney was doing things,
like in the middle of running a race, for example,
with a lot of documented evidence,
while Satoshi was also having activities,
sending transactions and emails and so on.
I also showed just a lot of differences between Hal and Satoshi.
One of the reasons that I did that is because I just kept having people
do the whole wink-wink, nudge-nudge, we all know Hal was Satoshi type of thing.
It annoyed me. Also, whenever you point the finger at someone,
you're making them a target.
This is why it's unethical to say that a specific person is Satoshi.
You're saying this person may have tens of billions of dollars worth of Bitcoin,
and that will make them a target.
I don't care what you think. That's just the plain truth of it.
Even if they're dead, you're making their family a target.
I think it's an immoral thing to even speculate about.
Who could it be? It could be a lot of people.
I think that there's a non-negligible chance that Satoshi is no longer alive.
That's a convenient way to explain how they have managed to not spend
billions and billions of dollars worth of early-mined Bitcoin.
The other explanation, of course, if Satoshi is still alive,
is that they know it's simply too dangerous.
Bitcoin is simply not private enough to be able to get away with moving those funds.
As soon as any of those coins that people have tagged as potentially being Satoshi's coins
start moving, then we're going to see a whole lot of people
paying attention to where they're going and trying to track them.
It would be very difficult to be able to actually liquidate any of that money,
especially if we're talking hundreds of millions or billions of dollars,
to liquidate it in a private way.
I think that if Satoshi was still alive, they would realize
that it's probably not worth the risk for them to do so.
If Satoshi is alive, then they very well could have participated in the system
in other ways early on and have mined or received Bitcoin
in other ways that are not linked to what we call the Potoshi pattern,
which is a kind of a unique signature of a bunch of coins
that were mined in the first couple of years there
and that a lot of people are keeping a very close eye on.
I try not to speculate about it too much because, like I said earlier,
I also think that the particular identity of Satoshi is irrelevant.
They're no longer participating in the system.
You could worry about Satoshi dumping their coins,
but this is also possibly a bit controversial in this chat room,
but I think that focusing on the exchange rate of these tokens
is not the right way to be approaching these systems.
You should be interested in these systems because of what they empower you to do.
Of course, over the long term, they may empower you
by making you more financially independent and wealthy and stuff,
but I think that if you're just sitting there all day looking at price tickers,
you're going to be wasting away a lot of your life.
I say this as a technologist and as a builder.
I think that you want to be contributing to these systems.
You don't have to be a coder to contribute,
but I think that just speculating all day long,
that's just playing this game of human psychology.
The exchange rates of any of these tokens is what I would characterize
as a random walk, at least over the short term.
I don't know when Bitcoin is going to hit $60,000 or $100,000 or $1 million or whatever.
I would honestly say that the people who are going out there
and making claims about when the exchange rate is going to hit a certain price
are full of shit, and you should not be listening to them
because they are probably trying to drive you to do certain things in the system.
Focus on what Bitcoin can do for you to empower you,
and perhaps it would make sense for you to help getting other people educated
as to how the system can empower them as well.
I believe over the long run, if we continue to provide value to people,
then this is Metcalfe's law.
The value of a network increases as the number of participants in that network increases.
Some people look at that and say, "Oh, it's a pyramid scheme,"
but that's not how pyramid schemes work.
I mean, they do work from the total number of participants,
but in this and any other type of asset,
there is a value that is an aggregate of everyone who is participating,
so the more people who are participating, the more value there is overall.
But that's why I focus on education,
is because I just want people to see the value in the system,
and I don't necessarily know what aspects of it they will find most valuable.
I agree with you, and when you mention Metcalfe's law, for example,
this is something that on my conversation with Raul Paul,
which, by the way, for the ones that want to just revisit that,
there is a link here, coinmarketcap.com/community/lives,
you'll find all our previous conversations.
And Raul Paul, just from real vision, you probably know the name a lot,
and he mentioned also about the exact same thing when talking about
just like Ethereum, Solana, and some perspectives that he's had
for this upcoming bull market, let's say, or this upcoming year,
this cycle that we were just getting into,
and he was mentioning about the exact same thing,
which I think it's a fit for many of the different networks,
and I think that just like right now, it's time for us to understand how,
for example, in the Ethereum's case, how this is going to be affecting L2s,
if he's still going to affect the L1, how that is going to happen,
like if that effect ends up trickling down,
like different potentially, just like in different ways,
it will affect different L2s, et cetera.
So that's something that I'm also eager to see how the future will unfold
for everyone using different networks right now
and using different players also to play around with either DeFi or NFTs.
I mean, no matter the technology, no matter what you're doing,
but I think that a lot of people here are actually involved somehow,
some way into those "new things" into crypto.
And as you mentioned, a lot of things about Bitcoin and just like Satoshi
giving us a gift, right, for us to kind of like build upon it,
I think that many of the things that he also,
and I think that you have mentioned it across other interviews,
like not necessarily that he made "mistakes,"
but things that were actually improved from his previous and initial thoughts, et cetera.
I want to ask you something that goes,
I know it's a broader question, but I think I kind of need to ask you that
because I want to get your perspective on it.
Like, thinking of Bitcoin specifically, and to be very clear with everyone,
listen, we are not talking about anything related to price action,
but I want to understand, like, what would you think, like,
being part of the, I mean, of BitGo in the past,
like working on Bitcoin in the past and also now working, like,
building Casa and just, like, being so involved with Bitcoin,
what do you think would mean, and let's not take it a little, I mean, a lot longer,
but just, like, let's think of, like, three years, five years from now,
maybe, like, next cycle, that kind of stuff,
if the cycle structure keeps happening and all that.
What do you think would be considered, from your perspective, a success for Bitcoin?
Like, what do you say, you know,
Bitcoin has accomplished what it was supposed to by this time,
or at least it's in the right path to get it done?
Like, what are your thoughts on this?
Yeah, well, this, what is the successful end goal for Bitcoin?
This kind of ties into what I talked about about 30 minutes ago
of us still continuing to try to answer the question of what is Bitcoin.
I think that's a controversial question in and of itself,
of what should Bitcoin offer to the world, and what does winning look like?
I would say the most important thing is that Bitcoin as a system continues to operate.
So, you know, we have a trillion-dollar asset now,
and, you know, if the system starts breaking down,
you know, if blocks aren't coming in at a regular pace,
and the various guarantees of the system are no longer guarantees,
you know, that's going to be very bad,
and a lot of people are going to take their money out of the system
because they no longer feel like it's safe.
So the most important thing is that we understand
what the inviolable properties of the system are,
and I've written about that extensively,
but you're basically making sure that people can continue to use the protocol
and to store their wealth and transact in a permissionless fashion if they want to.
But this is where it gets tricky of, you know,
what does mainstream adoption look like for Bitcoin?
And, you know, the unfortunate aspect of the direction that we're going right now
is that due to the transaction throughput limits
and the fact that we have not finished scaling Bitcoin,
there's still a variety of ways that we can improve scaling the technology.
Right now, it's not really feasible for even probably 1% of the world
to be what you might call a sovereign Bitcoin holder, you know, in self-custody.
And so this is where the whole debate around Layer 2s comes into play,
and now we're seeing more debates and questions around, you know,
is it even possible for someone to hold a Layer 2 token
and have that level of security and permissionlessness be considered good enough
to store their wealth in?
This is kind of the current cutting edge of the controversial debate around Bitcoin
and how it should change or not change
and how we should continue to scale out the system.
So at the moment, I think Bitcoin does a good job for securing wealth
for organizations and very wealthy people.
And the question that we need to keep asking ourselves is
what tradeoffs are we willing to make
and what do we want to be able to offer to the other 98%, 99% of the world
so that they can leverage some level of having this permissionless money
where they don't have rugging risk, essentially,
because of perhaps like a centralized Layer 2 that could fail
because it has different sets of rules and game theory around it
than the actual base Bitcoin layer.
So yeah, I mean, the short version is there's currently no perfect solution out there,
and we still have a lot of work to do,
and that's why I think I'm going to still be contributing to this space
for the foreseeable future as long as I feel like I have opinions
and skills and knowledge and the ability to make arguments
about the ways that we should evolve this system
because we can't stop building now.
There is a bit of a movement to "ossify" Bitcoin and stop changing the protocol,
but I think that that would end up with us making some tradeoffs
that in the long term would actually lead to centralization
and less secure outcomes for the vast majority of the world.
Those are some bold words, and I think that you hit the nail right in the head.
I just don't think that we can stop building right now.
I think there is a lot that we're still to just do,
not just for Bitcoin but for the crypto market as a whole,
a ton of things to be built, and as you said,
I think Bitcoin just being the size that it is right now
and just being the face of crypto, because let's face it,
it is at the end of the day, and just what you guys have been doing is awesome.
And I'll be honest with you, Lop, I think that our conversation today
was probably one of the most insightful ones that I have had here on CMC Live.
Personally speaking, of course, I cannot tell from the audience,
but I'm pretty sure that the audience felt the same.
I mean, that's one of the reasons why we still got a thousand people
listening to us at this very moment.
So thank you very much for sharing all your thoughts
and just your perspective on many different topics
and just the way you're able to put them out,
I think is one of the main differentials of having you here
because you're just able to put things simply
in a way that people can understand, even some more technical stuff.
I think that for our audience here, that ends up being a spectrum
wide of new users, savvy users, just like OGs, etc.
There are all kinds of people here listening to us,
and I think that it's valuable for absolutely everyone
that's stuck around for more than an hour listening to us to chat today.
As I said, immense privilege and pleasure to have you here.
I'd like to just open the floor for you, for you to share anything
that we didn't have time to touch during the live,
that maybe you want to make people just like to leave this live
with that really sticking on their heads, maybe some message
or something that you wanted to share that we didn't have time to go through.
So please feel free to do it, and again, thank you for coming.
Hope to see you here on CMC Live sometime soon.
Yeah, well, you know, it's a complicated space, right?
So even seeing some of the comments scroll through,
there is simply not enough time for any of us
to fully understand everything that's happening in this space.
I focus on Bitcoin because even when I'm focused on Bitcoin,
I can't keep track of all of the conversations and developments
that are happening in that one particular ecosystem,
much less trying to keep track of the tens of thousands
of other projects that are out there.
So it can be very overwhelming.
If you want to contribute to this space, I think it's best
to narrow your focus on a small number of projects.
And really, I tell people that you should be investing in education
before you should be investing money because if you're investing money
into things that you haven't invested a lot of time educating yourself about,
it's much more likely that you're going to get wrecked.
That's a great message to share 100%.
Lopp, thank you again very much for coming.
From everyone tuning in today, just remember on Monday at 3 p.m. UTC,
we do have the Monday or weekly crypto forecast with me and Alice,
our head of research here, to unpack a little bit of the things
that took place in the last week and forecasting a little bit
of what's going to happen in the upcoming week of crypto
so you can basically prepare yourself for what's happening.
It goes from TA to token unlocks, market analysis, takeaways, news, events, etc.
We cover all that in between 30 to 45 minutes,
so make sure to set your reminders by going to coinmarketcap.com/community/lives.
You'll find all lives there.
Next week, we also have Pudgy Penguins live, and we also have a gaming,
which is a CMC Incubatee project.
We are going to have them to talk a little bit about
what they are building in the business as well.
But on Wednesday, Luca Netz, the CEO of Pudgy Penguins,
is going to share with us everything that they have been doing
to take Pudgy Penguins from less than 1/8th floor price
to now up to 22 flipping bored ape and all that.
He's going to share all of us about the Walmart strategy
and in-real-life type of stuff, so make sure to set all your reminders.
Lopp, thank you very much again for joining.
See you guys here.
And remember, guys, while we talk about many different things,
absolutely none of this content is financial advice.
Make sure to do your own research.
Besides that, all the rest, all the same, just make sure to keep safe,
be safe out there, do your own research, and keep hodling.
Bye-bye. See you, Lopp. Take care.