It's time to double down with Max and Stacey on Sputnik Radio.
Now coming up on the show, we talk to Jameson Lopp of BitGo, but first, as we all know,
the reports of Mark Twain's death were greatly exaggerated until they weren't, but nothing
has died more often than Bitcoin.
Yes, the original cryptocurrency has suffered more deaths than a cat in its ninth life,
or a poor sod trapped in a Shakespearean sonnet.
The official tally stands at 140.
That's 140 deaths in eight short years of life, or 17 and a half times every year?
That's more than once a month Bitcoin has died?
Does death become Bitcoin, Stacey?
Yes, apparently death agrees with Bitcoin, because all the times that it has died is
140 times over the past eight years.
The price has gone from a few pennies to a few dollars to a few dozen dollars to a few
hundred dollars to a few thousand dollars all along the way.
So it's always looking better and better as it climbs.
And once again, Bitcoin did hit just below $3,000 just a few short weeks ago, but today
the headlines in the mainstream media, CBS says, did a Bitcoin bubble just burst?
Bitcoin and other so-called cryptocurrencies have plunged in value in recent weeks, prompting
some observers to wonder whether there's a sign of market bubble bursting.
So the all-time high had been $2,952.40 on June 11th.
Now it's down towards like $2,200 as we record this.
So the price, is it dead, Max?
Death as use case.
You know, I've often thought about Bitcoin coming into existence at about the same time
as artificial intelligence, robotics, 3D printing, all kinds of mucking about the DNA cryogenetically
preserving folks, uploading your brain to computers, the great event horizon, the great
merging of man and machine.
I think the use case for Bitcoin that underreported is that you probably can take it with you in
some post-life experience, some so-called death experience.
So think of all those billionaires like Jeff Bezos, who wants to keep staying rich even
in death.
He can only do that via Bitcoin.
Well, there's one way to look at it, but the other way to look at it is when you look at
war because of course war is quite deadly.
There is no war more deadly than the civil war.
And this is what also uniquely coming at this particular 141st death is civil war.
The finance world is preparing for a Bitcoin civil war.
They're saying that Bitcoin may be the most popular, longest standing cryptocurrency,
but that doesn't mean its path forward is without potential conflict.
In fact, analysts are now predicting that the cryptocurrency is on the brink of civil
war that could put Captain America and Iron Man to shame.
So apparently it's an ideological rift.
And one side of the divide, we have the Bitcoin miners who oversee every transaction made
on the Bitcoin blockchain.
On the other side are the developers that have maintained Bitcoin's bug-proof software.
They're led by a group called Core.
It's a very complicated situation.
We have to talk to Jameson Lopp about this.
Jameson, it's moderate versus extremist, says Stephen Pair, CEO of BitPay.
Your thoughts?
So you're definitely correct that there is some rift between developers and miners.
But I think more fundamentally, the ideological rift that's occurring here is a difference
between the enterprise Bitcoin and its use cases and the cypherpunk Bitcoin and its use
cases.
Enterprise is really more interested in high transaction volume, low transaction fees,
seamless user experience, and having the ability to onboard as many users as possible because
that will then increase each enterprise's business and its valuation.
And the whole crypto economy will continue to rise at a faster pace.
While on the other hand, we have the cypherpunks who aren't quite as concerned about the day-to-day
business cases and are much more concerned with the security and the sovereignty of the
users.
So you really end up with this fundamental trade-off of we're arguing about should we
go for low transaction fees and high node cost operation to run a fully validating node
that gives you the ultimate security, or should we be targeting potentially higher transaction
fees but a lower cost of node operation so that it is cheaper for people to be self-sovereign
in this system?
Right.
And then on the enterprise side would be companies like BitPay that we quoted there, Stephen
Pear, the CEO, and on the cypherpunk side are the core developers, correct?
Pretty much.
It can get pretty tricky though.
I mean, even within my own company, BitGo is an enterprise.
We have conflicting views within different people at my company.
So it's really hard to draw a straight line down this quote unquote civil war.
But I would also say that it's really more of a potential secession.
But since this is a voluntary system, anyone is free to leave.
And it's not necessarily a war in the sense of that there will be some sort of attack
on the network.
Okay.
Let's talk specifically about that because there are various phrases and words popping
up.
Everybody in the world is just starting to get their head around the notion of Bitcoin
and cryptocurrencies.
But now we have SegWit, SegWit2x, UASF, something big is about to happen on the 21st of July.
What are these terms?
What's happening on the 21st?
Well, we're basically seeing a culmination of frustration of nearly a year now of not
very much progress being made with deploying the segregated witness feature out onto the
network.
And this is something that has been several years in the making and was first really made
available over a year ago now.
And we've really been waiting on miners to activate this feature to show that they are
going to be validating these new rules and making the segregated witness transactions
possible on the network.
And there's a number of different features that that enables.
But then on the flip side of things, you've got a number of people who are vehemently
opposed to it for one reason or another and want to take a much more simple straightforward
path of scaling the network just by increasing the block size.
All right.
And then the fear on the Cypherpunk side is that this would cut into the decentralization
aspect of the network.
You'd have power aggregating to these miners, correct?
Yeah, miners and enterprises.
So one of the fundamental things that people end up arguing about is what is the appropriate
cost of a transaction or appropriate cost of operating a node.
And that's why there is no real scientific answer to that.
It really comes down more to ideology and philosophy of what use cases and what strengths
of Bitcoin should we really be targeting.
OK.
So on the 21st, SegWit will or won't happen.
Is there going to be a hard fork?
Is there going to be a soft fork?
What would each of those look like?
What does a soft fork look like?
What does a hard fork look like?
Right.
So we have several different implementations that are currently out on the network.
And the interesting ones, other than the plain vanilla Bitcoin core that has been out for
over a year trying to activate SegWit, we have this user activated soft fork, which
basically says if you run it, then on August 1st, you will reject any block from miners
that is not signaling SegWit.
That's kind of an extreme way of going about things.
Technically, it is a soft fork, so it's still backwards compatible.
But it could cause a chain split, which causes people on the network to have different forks
on the blockchain and potentially disagree with each other.
But then we have this other thing that's called SegWit 2X, which kind of appeared around the
time of consensus in New York, and it's trying to activate SegWit in a way that is compatible
with the existing Bitcoin core deployment and could potentially be compatible with the
user activated soft fork, eventually resulting in that having no effect.
If SegWit gets activated before August 1st, then it would really be a non-event and everything
would go smoothly.
This is certainly what I am hoping will happen.
I'm cautiously optimistic.
We seem to have nearly 90% of the miner hashrate saying that they're willing to go forward
with the SegWit 2X, which would essentially prevent any chain splits or chaos from happening
on August 1st.
But we're really not going to know for another week or so once we start seeing those blocks
come in.
But the contentious thing about SegWit 2X is that it also bakes in this hard fork and
non-backwards compatible base block size increase that would activate 90 days later, which is
pretty much guaranteed to cause a chain split on the network.
So a number of contentious things on the horizon.
I'm just focused on the short term and hoping we can get past August 1st without any major
catastrophes that would cause me to have to do a lot of emergency work to make sure that
none of our customers lose any money.
Right.
Well, 90%, that sounds pretty high.
Do they have to go to 100%?
No, not really.
You could argue that it could be as low as 51%.
But of course, the higher it is, the safer it is, the fewer orphan blocks and chain reorganizations
that will happen.
Really, essentially, the smoother the deployment of this new feature will be.
Okay.
So if there's a hard fork, what happens to somebody owning Bitcoin right now?
Do they suddenly have two sets of Bitcoin?
What happens?
Yeah.
And so it's not even hard fork versus soft fork.
But really, if there is any sort of chain split, and a chain split can happen from either
type of fork.
And in fact, there are something like half a dozen different styles of forks that people
have dreamt up.
But yeah, so really the safest thing to do if you're a Bitcoin holder is nothing.
Don't make any transactions.
Your Bitcoins, your private keys, they will remain exactly where they are right now.
And if there is some sort of chain split, then that is a permanent chain split, then
you're basically going to have to wait on the various wallets and other software providers
to come out with instructions to say, well, this is how you safely split up your Bitcoin
A and your Bitcoin B and transact them separately.
Because there is something called a replay attack that could cause you to accidentally
send money on both chains when you didn't actually mean to.
And that's really one of the more controversial things and the things that people such as
myself are worried about, because it would require a lot of extra work for us to implement
to make sure that our customers are able to transact safely on multiple quote unquote
Bitcoins.
Yeah, it's an interesting, you know, part or piece or time in the history.
You mentioned at the beginning, it's a bit of an ideological split.
You know, I remember in the dot com era, the first few years were driven by punks, more
or less.
And there was tremendous sense of freedom.
People were calling it digital asset, and you had the John Trey Barlow issued the digital
declaration of independence.
Exactly.
And then you had the crash of 2001.
And what came out of that crash were the behemoths, the Amazons and Googles, and you had a few
players dominate corporate, you know, the enterprise came in and totally dominated in
the era, the early days were kind of dead.
Is there a possibility that we're seeing the end of this cyber cypher punk era, and regardless
of what the outcome is, we're entering now into kind of a post cypher punk era into more
enterprise driven corporate era of cryptocurrencies, Jameson?
You know, from an economic standpoint, it's certainly possible.
But I don't think that the cypher punks are going to give up or going to stop their work.
I mean, the cypher punks have as a group have been working, you know, since the mid 80s
to further their ideas and build software that continues to give more freedom to people
all around the world.
So it's tricky for me because I can see both sides of it.
I can definitely see, you know, quote unquote, enterprise Bitcoin that consolidates almost
to the point of being a, you know, slightly decentralized PayPal type system.
I can see that still having a lot of value and a lot of people using it and having an
exchange rate that also goes to the moon, but personally, I'm just not as interested
in that.
And I'm going to be focusing my own energies on a system that has a much longer term view
where I'm more concerned about the security at the individual level so that the average
person will continue to be able to afford to have a level of security with their financial
wealth that has never before been seen.
We don't have that much time left, but I want to quickly get your comments on Bitcoin has
kind of overshadowed gold glory and that's why gold has kind of stayed off the radar
at the moment in terms of the financial space.
But what about these ICOs, the initial coin offerings that are kind of dominating this
whole space?
Everybody's forgetting about the cryptocurrencies and the Bitcoin and ether and all that sort
of stuff and everything is about ICOs.
A lot of people call them scams.
What do you think about this?
Some of them may be intentional scams.
Some of them may be unintentional scams.
I haven't really touched any of them because I have extreme doubts.
I think there are very few of them that seem to make sense from a technical standpoint
of why would you actually need a token or a blockchain for this type of thing.
But I'm sure some of them will end up being quite successful, but if I was a betting man,
I would say the vast majority of them will end in tears.
All right.
Well, that's it for this episode of Double Down with me, Max Keiser and Stacey Herbert
on Sputnik Radio, thanks to our guest, Jameson Lopp of BitGo.com.
Until next week, bye y'all.