Hello and welcome to the crypto sky podcast today we have another amazing episode I recently
conducted an interview with Jameson Lopp many of you are familiar with him but if you are
not he is a major figure in the crypto space and is currently working with Casa as an engineer.
I met Jameson at Cryptolina where I heard him speak on security and when he mentioned
he would be down to do an interview I was really excited I'm glad I was able to have
him on and we covered some more technical aspects including the lightning network and
Bitcoin scalability issue we also talked some about what money and Bitcoin actually mean
to Jameson and the differences between the two I really hope you enjoy this interview
and before we get to it I would like to officially announce my first sponsor for the podcast
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into the interview
hello Jameson I just want to say thank you for coming on the crypto sky podcast and welcome
you it's great to be here all right so talk a little bit about how you got into crypto
and then kind of what your background was beforehand well I was a computer science major
at UNC Chapel Hill and was just working in web application development for a number of
years and at some point in time I ran across a slashdot article about Bitcoin and you
know that then turned into a multi-year type of process before I really decided to go full
time and switch my career okay so what was kind of one thing that really captured you
in the crypto space there were two things I would say and it was it was both just the
philosophy and ideology that was being perpetuated here and then of course there was also the
technical side of things which really piqued my computer science interests you know for
a number of reasons I thought that this type of system was just going to get hacked and
everybody was gonna end up in tears and sorry that they were even trying to use it in the
first place but over time I realized that the system was not going away and I probably
had missed something interesting so what is a cypherpunk to someone who's not really familiar
with that term and then kind of how do you align with that with that ideology it's a
pretty broad thing is generally anyone who is interested in privacy and perpetuating
stronger privacy via the use of technologies and that's especially via the use of cryptography
so this is anyone who thinks that those type of technologies gaining greater adoption will
result in social change okay so kind of go into detail about what the Silk Road was and
then kind of how it played a role in the development of Bitcoin well it was a darknet market really
the the first of its kind where you could actually exchange all kinds of illegal goods
we finally had this censorship resistant type of money this cryptocurrency and it it was
one of the first businesses of its kind but it became a huge successful business like
I don't even know how many hundreds of millions or billions of dollars worth of goods were
transacted through it but it really helped to bootstrap Bitcoin because it showed that
it's enabled a new type of economic interaction and then I think it also showed that it's
actually possible to engage in these types of shady transactions in a way that is safer
than usual for most people since you're you're no longer having to physically meet with people
that you probably don't trust yeah definitely so to someone who's really unfamiliar with
kind of the tech behind crypto just go into detail a little bit about what blockchain
is and what it's actually doing so at a very high level blockchain is just a data structure
it's it's a way of storing data where you are putting the data together in batches which
are called blocks and then you're using a cryptographic hash function to create a fingerprint
of each block and that fingerprint also includes a reference to the block before it which as
a result is what really chains them together from a cryptographic standpoint and what this
does is it gives you some tamper evidence properties so such that like if anyone tried
to go back in history in the blockchain and change a single piece of data then it would
break that cryptographic chain of hashes and would be very easy for someone to then automatically
check and see that there had been some sort of tampering and so that is one of the building
blocks of bitcoin just the data structure and then there's a number of other things
that make bitcoin work as well as it does especially around the mining and then the
network of nodes and how they propagate the data and and so it was really Satoshi Nakamoto
bringing all these different building blocks together to create a unique system that people
had been trying to build for decades yeah and something that i've kind of found really
interesting while getting into this space is how important bitcoin is to people it's
more than just a currency it's more than just an asset it really means something to them
kind of touch on that well that's kind of getting towards the ideological aspect of
it of this was actually another reason why i got involved early on is that it's just
the idea of of money being this concept that i believe belongs to humanity in general and
as such it seems to make a lot of sense for concepts like that to be open collaborative
projects so i thought it was really cool that you know we're trying to create this optimal
form of money that is available for anyone to give their input into as to like how they
want to see it evolve yeah so kind of touch on how important privacy is to you personally
well it's become a lot more important over the past few years as i've had a lot more
people paying attention to me and and in fact after an incident that i had last year where
the police and swat team showed up at my house i have actually spent quite a few resources
trying to improve my real world privacy and it's been a very long road very educational
experience and i'll be posting details about like all the things that i've learned over
this year yeah definitely so do you actually believe people are ready to fully control
their privacy and currency it's something i mentioned with desiree and it's something
that i've kind of been thinking about i'm not really sure if people are you know what
are your thoughts on that yeah i mean it's this counterbalance between um having like
self-sovereignty and having uh personal responsibility where in order to you know take on more power
for yourself you are also taking on additional responsibility and so i i think there's a
reason why we have evolved the structure of our society the way that it has gone where
we basically centralize a lot of aspects of our lives around specialists because it's
the most efficient way to get things done so you know we don't have to know how to do
everything we just do a few specific things and we're really good at them and then we
rely upon other people to do their specific things but this results in you know creating
stuff like bank structures where you have specialists that are just doing the security
around your money and other assets and so when we we talk about you know bitcoin giving
people the ability to be their own bank that that has always been true but it's never been
particularly easy and that's why i've spent the past three plus years still just working
on very low level key management problems while you know there's a lot of people who
are doing really mind-bending stuff trying to push the envelope i'm still personally
just sticking to really simple stuff because i think that we haven't quite got to the point
where it's it's easy enough for people to secure their own private data so i guess the
the short version is no i don't think that people are ready yet but i don't think the
technology is quite ready for the people yet and so that's why i'm i'm building it yeah
definitely so what does money actually mean to you i know you know most people see it
as a dollar bill you know something else what does it mean to you uh to me it is actually
stored time um i see it as you know you are your when you're providing value to someone
you're this is kind of going back to the specialization stuff you're basically saving someone a lot
of time when you're a specialist and you're providing a service because you can do it
a lot more efficiently than them and so i kind of see a lot of these transfers of value
as actually you know people creating and storing time and then you know passing this sort of
liquid time around in order to spend their own time however they want to so on the other
hand do you see bitcoin as being the same as money or maybe something totally different
yeah well so it's tricky because when people talk about like what is money you usually
have these few standard things of you know store of value medium of exchange and unit
of account and and right now you know bitcoin's still very young and it seems to be doing
all right on the store of value side but we still have a long ways to go on the medium
of exchange side and even further to go on the unit of account side so there's a strong
argument to be made that bitcoin is not money yet though people are certainly using it as
a monetary instrument in a number of different ways yeah so who do you see bitcoin's attended
audience being do you see it being the financial elite do you see it being everyone you know
what are your thoughts on that i mean ultimately everyone because one of i think the most important
aspects of this system is that we are trying to like rest the control of the financial
system away from just a few elite parties so what are some steps that bitcoin needs
to actually take to become a currency and is something you just mentioned you what are
some actual steps bitcoin needs to take just need to become a lot more scalable from a
technical standpoint and we also need to work on the usability of the product so that you
know the average person can actually just pick it up and use it it it basically needs
to be as simple as you know your facebook or snapchat or twitter or whatever other apps
and so that's that's one of the things i think that we're still struggling to find the right
trade-offs of this like security versus usability and i think that we're making some pretty
good steps at casa which is my current startup so do you see another coin like maybe a lightning
a lightning excuse me a litecoin or you know something of that sort being more of a currency
or do you see bitcoin kind of molding and adopting that role i suspect that over the
long run we're going to see interoperability between a lot of these networks continue to
increase especially as second layer networks like lightning network come out and so it
may end up being that you know crypto in general becomes more of a homogeneous thing where
it's like everything is bitcoin because even if if you you you have bitcoin and you want
to pay somebody else and litecoin because they only accept litecoin i expect that there
will eventually be a very simple way in your wallets to actually make that transaction
in a fast and trustless fashion okay and this is something you mentioned just kind of explain
what lightning network is and the process behind it yeah it's it's extremely complicated
from a technical standpoint yeah but suffice to say that you're using cryptography and
aspects of these main blockchain networks like bitcoin and lightning or litecoin and
whatnot and you are basically anchoring into those blockchains to to open up a direct connection
with somebody else on the network and this is like establishing a channel with some value
in the channel and you can then update the balance of that channel and basically push
the value back and forth between the different people who have connected and this becomes
a lot more interesting when you then realize that you can network a bunch of people together
and just have them pushing value around and so this is kind of the idea of like how to
build a high speed routed second layer network on top of a blockchain that is a lot more
private a lot more scalable and it's really the same type of architecture that we saw
the internet itself get built through so if anyone goes and looks at like the OSI model
for the seven layer stack that comprises the internet itself you'll see that similar type
of layering approach is actually what allowed the internet to scale as well so what are
some of the problems lightning network is facing and then kind of how far away do you
see it being from actually being truly usable you know everyday use case well it was only
a few months ago that the three main implementations actually got all in sync with each other so
that they could generally talk to each other and so now the main thing is trying to work
out a lot of reliability issues and you know finding the various edge cases that could
cause your payments not to get routed or your node to have to like close channels and it's
just you know figuring out all the nitty-gritty stuff under the hood so that ultimately people
shouldn't really have to be worrying about any of that so I would expect you know it's
probably going to be at least another year or so before it becomes robust enough that
you see mass adoption of people using the lightning network to make payments okay and
do you see that the lightning network having security issues where the transactions are
quicker or do you think that would be figured out as well so the the lightning any second
layer network really can't have better security than the layer under it you are going to be
making some trade-offs but the the scalability improvement is I think going to be worth it
and and also a lot of the issue with like building out this network is just that nothing
like this in particular has ever been done before and there's a lot of questions around
like how the capital formation needs to happen and how you'll manage different liquidity
issues moving money around the network and so it's it's going to be a trial and error
learning experience for sure yeah and this is something you talked a bit about with Peter
you know I see it being more of like a hot wallet you know something you mentioned where
people maybe store a little bit less Bitcoin than they have to where they can move it around
easily and then they still have their cold storage wallets and you know that sort of
set up definitely so to someone who's not familiar explain what a Bitcoin node is and
then how someone can run one and kind of why they would want to sure so this is how you
actually get the strongest security and strongest privacy properties while using Bitcoin because
there are many different ways that you can use Bitcoin different types of wallet software
and whatnot but by running a full node you are validating the entire history of the blockchain
and as a result not trusting that anyone is being honest to you because you've checked
everything yourself and you also get better privacy from this because whenever you're
using like a website based wallet or a lightweight mobile wallet those are actually going out
and querying for specific addresses and can very easily create privacy leaks and people
can like figure out basically which bitcoins you own when you are running a full node you're
downloading everything and checking it locally so there's no one out there who sees that
you're only interested in specific data but then you know this this gets into a lot of
other like philosophical aspects of like the governance of these protocols and whatnot and
really when you are choosing the rules that you are enforcing yourself that is what gives
you the most autonomy in these systems.
So do you see you know the proof of work algorithm maybe having advantages over proof of stake
long term or do you see it being a disadvantage and what are your thoughts?
There's definitely pros and cons.
You can definitely make like efficiency arguments and say that proof of stake doesn't cost as
much to the environment or whatever but proof of work I think is better because you're using
resources external to the system in order to secure it whereas with proof of stake you're
using the system itself to secure itself and it doesn't really make a lot of sense to me.
So it creates I think proof of stake can create problems with fairness or egalitarian aspects
of securing the system because you know once you're in there and you have a certain percentage
of ownership then the only other way for someone to compete with you is for them to actually
essentially pay you by you know buying more of those tokens and inflating the value whereas
when with proof of work they just need to go out and buy a bunch of electricity and
they can start competing with you.
So how do you see Bitcoin scaling outside of Lightning Network which we talked about
a bit how do you see it scaling?
Well there's going to be a whole lot of different software and experiments that happen and so
we've seen one of these things of course is side chains where Blockstream is rolling out
their liquid network basically for exchanges to conduct faster transfers between each other
and also we're seeing more things like TumbleBit and ZeroLink and like new types of wallet
and mixer projects that are coming along and you know over time I expect that you know
we're going to see services popping up to basically help people improve their privacy
and scalability with all kinds of different technologies so while Lightning Network gets
talked about the most it is not by any means like the only interesting development that's
happening in the system.
So do you see third party chains being successful you know in scaling Bitcoin?
You mean like the like private permissions chains or?
Yeah that sort of you know off chain scaling solutions.
Yeah I mean I think that there's going to be such a huge diversity of different block
chains and software and you know different levels of privacy and permissions you know
a lot of them are just going to find their own niches and ensure I mean a number of them
will probably be in the financial technology space but more on the like traditional banker
side of things but that's part of the great thing of you know open permissionless technology
is everybody's just going to keep building and the market will figure out like which
products fit in which sector is the best.
Yeah definitely.
So do you personally believe lower fees or quicker transactions are more important for
Bitcoin's long term success?
Yes well so if we're talking about long term success then we want to get all those aspects
of money and of course the medium of exchange is an important one of those so I think that
it will be important in order to actually go mainstream for people to be able to transact
with each other in a fast cheap fashion I mean we want it to be as cash like as possible.
So compare some of the pros and cons of decentralization versus centralization and there's something
we touched on earlier you know just kind of talk a little bit more about that.
Well generally more centralized is going to be more efficient to do things you know more
performant but you're going to be making trade-offs and usually creating single points of failure
so it is generally I would say like less robust against extreme types of attacks or failure
scenarios whereas the decentralization you're generally creating more robust like anti-fragile
system where sure like some pieces of the system might get hurt or die off or you know
get shocked by some sort of event but if they're sufficiently distributed there will always
be some that survive and then you know re-coalesce to become stronger than they were before.
So do you see one side having an advantage when it comes to actual cryptocurrency you
know whether having a head man you know like Litecoin you know Tron or do you see you know
more of a decentralized like Monero or Bitcoin where they don't really have a head man?
It seems to be important to have someone in the lead at least in the early stages of a
project otherwise you know it could be very hard for that project to create its own identity
and you know be able to have like a roadmap for the future but over the long term it also
seems important that they're not be a leader because otherwise that person becomes a single
point of failure if something terrible happens and they get blamed for everything.
Yeah that's another thing to look out for do you see decentralized exchanges being a
good thing for the space and then ultimately being successful?
I definitely want to see them become successful because it's once again like going back to
the single point of failure issue is that like when we have one of these huge exchanges
gets hacked then it creates a shock that hurts the entire system whereas if we were only
using decentralized exchanges then it would be more distributed where sure like individual
people would get hacked every now and then but you wouldn't have a shock that has you
know like hundreds of thousands of bitcoins getting stolen and creating panic in the markets.
And this is something I actually didn't have written down but I wanted to ask you what
do you think you know what are your thoughts on the media presenting Bitcoin you know either
in a very negative light or very positive light what are your thoughts on that?
Well they're going to sell whatever is the most like outrageous thing that they can sell
they're just trying to get eyeballs and so it's just funny to catalog the more extreme
things especially the folks that are like very almost transparent about they're basically
just like shilling the bags that they own and trying to get other people to buy them.
Do you think there has to be kind of more credible sources in the crypto space that
are presenting information or do you think it'll grow and the more traditional media
sources will kind of learn and get it right?
Yeah I mean I think they'll get it right eventually it's just kind of like looking back at the
90s and seeing those TV shows where the news anchors are like what is internet?
How does this at symbol email thing work?
And yeah I mean they'll catch up eventually but just the fact that like there's no real
authority in the system means that you can't really have like official sources of information
and that has been one of the interesting things is seeing like a lot of the disinformation
campaigns that go on in the space.
So how do you compare Bitcoin and then blockchain as a whole to kind of the internet when it
was first starting out?
Do you think it's very similar?
Do you think there are differences?
What are your thoughts?
No I think there's a lot of similarities you know widely misunderstood going to see a lot
of misapplications of technology also just a lot of experimentation and so that's why
I think people are often making the comparisons to the early 90s or even late 80s of saying
well yeah I mean this is very interesting new network that we're starting to build but
the infrastructure has barely even begun to be built out and so very early days very hard
to actually use but there's a lot of you know promise in the fundamental technology.
And you mentioned it being difficult to use you know what are some of the obstacles the
masses are facing when they're trying to get into crypto?
It's just a very different system so the one of the biggest differences of course just
being around personal responsibility is that you know now you literally own your money
you don't have just some IOUs in a bank account and so if you screw up you're done there's
no one who can help you so you know the learning curve is a lot higher and it's a lot less
forgiving to get into the system and so that's why I tell people to invest in education before
they invest actual money into it because otherwise they could easily end up losing their money.
So and this is something you mentioned earlier as well you're working with CASA just kind
of touch on what CASA is and then kind of what your role is with them.
Well it's our first service is basically a three of five multi-sig vault product where
the idea is that we're trying to merge the usability of mobile phone app with the security
properties that you get from these hardware key signing devices and so the idea being
that you're gonna create a wallet and then have three different hardware devices distributed
around and in order to spend you're gonna have to go you know to multiple locations
and get enough you know signatures from these hardware devices before you have a fully valid
transaction that can be broadcast out on the network.
So not your everyday wallet but it's for like high net worth individuals who really are
interested in being their own bank.
So what are some things people need to focus on as far as keeping their crypto assets secure?
Well the main thing is to make sure that the hackers can't steal your private keys and
also that you can't lose your private keys and some thing that I've actually been talking
about a lot recently is that it seems like people lose their data more often than their
bitcoins or other assets get stolen from them.
So I actually think that it mostly comes down to boring old like IT practices of making
sure that you have backups and you know off-site redundant storage type of stuff and this is
one of the reasons that I think that we still got a long ways to go is because we can't
really expect people to necessarily maintain good IT practices.
So do you personally see Bitcoin always holding the top spot always being the biggest cryptocurrency?
I think there's a pretty good chance of that for the foreseeable future now I mean nothing
lasts forever and there may be something comes along that's an order of magnitude better
and manages to get a much greater network effect built around it but from what I can
tell it just seems like a lot of the resources and development is happening in Bitcoin and
it's managing to keep a pretty good lead because of that.
So and this is something I've kind of been thinking about recently do you see the possibility
of maybe blockchain technology succeeding but cryptocurrencies failing in your blockchain
within IBM different business solutions but all the currencies that we're used to ultimately
failing?
I don't know it seems hard because it seems kind of analogous to saying like back in the
80s well do you think that all these like bank to bank intranets will succeed but the
internet will fail seems to be a similar type of issue.
So what are some things you enjoy outside of crypto?
Lots of nerdy stuff I actually I haven't done much gaming for a while but I'm very interested
in virtual reality and planning on getting a VR rig set up I don't watch sports but I
sometimes play sports I'm good at most of the racket based stuff and I'm also a fan of like
fast cars and motorcycles so I've done a few track days which have been pretty crazy.
Yeah that's pretty cool.
So where do you personally want to be in five to ten years you still want to be at Casa
do you still want to be a Bitcoin do you maybe want to be retired on an island?
I mean it's really hard to say because it moves so fast in this space but you know long
term I've been kind of moving away from doing a lot of day to day programming stuff and
I'm just doing more high level outreach and in general like trying to understand what's
going on in these systems so I want to do whatever I can to continue to help build these
systems out and get greater adoption.
So that's all the questions I have for you I'll let you kind of wrap things up and give
us your closing thoughts.
Yeah well I think like one of the reasons I end up doing a lot of presentations and
talking a lot of podcasts is because this is a pretty complex and fast moving space
and people are just trying to keep up and figure out what's going on but one of my main
concepts that I'm trying to get across to people is that you know nobody fully understands
what's going on in this space we're all just you know trying to figure it out as we're
going along but you know if we can work together then I think that's going to be the most important
thing is just for everybody to collaborate and not get too frustrated because it is going
to be a confusing space for the foreseeable future.
That's all for the interview as always thank you so much for listening I really hope you
enjoyed this interview and learned something from Jameson I have more amazing guests coming
on in the following weeks so I hope you will tune back in if you would like to support
the show please remember to share it via social media and if you are listening via iTunes
subscribe and leave a positive review that's all for the episode and I'll catch you next
week.