You're listening to the only place on the internet that offers the perfect blend
of high quality premium cigars and cryptocurrency news and commentary.
Welcome to Cigars and Crypto.
Now here's your host, Invest Noir.
Good morning, ladies and gentlemen. Welcome to another episode of Cigars and Crypto.
And let me tell you how happy your boy Noir is this morning.
I have the opportunity to speak with Master Yoda himself, Jameson Lopp. Sir, how are you today?
Not bad, though. I'm currently short on cigars, so I need to rectify that.
That's no problem. I will definitely help you with that.
Thank you so much for joining me this morning. Let me jump right in, my friend.
How did you get into cryptocurrency?
Well, I took the nerdy path. So I'm a computer scientist by trade. I had been
out of college for about 10 years and was, you know, regularly browsing nerdy news sites like
Slashdot. And this Bitcoin thing, it kept coming up and I kept dismissing it as something that,
you know, was going to get hacked and everybody was going to lose their money.
And so I didn't really spend much time looking at it the first few times because I was dismissing
it, which I think most people do. But then it just kept coming back and kept coming back.
And eventually I decided, OK, I should at least, you know, read a little bit about it.
And I read the white paper. And from a computer scientist standpoint, I thought, hey, you know,
this is actually a very elegant solution to a problem that I've never even thought about
before. And, you know, maybe there's actually something worth looking into here.
And then just more from a philosophical standpoint, once I started thinking about
money, because most people, they'd go their entire lives without really thinking about
how money works. They just use it. And I was the same way. But once I really started thinking
about how money works, it made sense to me that money should be an open collaborative project
where anyone who wants to can contribute to it, because money is just this abstract concept
that belongs to humanity as a whole. I don't think that the operation of money should be
dictated by a closed group of people. That's a very interesting concept. I had a
wonderful discussion with Stefan Lovera and Kitang Golubdis a couple of weeks ago.
And we touched on that exact same thing, how people don't really understand what money is.
They just use it for a specific use case, but they don't get how pervasive money is in the society
and how it's used to control a lot of things outside of just your single purchase.
So let me touch base on that a little bit. When you think of money, so that my listeners
understand, what do you define as money? Well, I mean, money is just a common agreement
among people of a way of denoting who owes who what. And the reason that we have money
is basically as an efficient mechanism to get rid of something that is called the
double coincidence of wants. And that's a really fancy way of saying to bypass the bartering system.
Because if you don't have some sort of medium of exchange, then you have to directly go out and
find someone who has exactly what you want and also wants exactly what you are willing to trade.
And of course, that can get really complicated and has a lot of overhead on the sort of mental
side of things and the work required to correctly match people up. So when we can get rid of the
need for bartering and just have a single unit of account, then that allows people to just
exchange goods and services for that unit of account, and then have some level of confidence
that they will in the future be able to exchange any of that unit of account for whatever they want.
So this is really more of an efficiency type of thing.
That was a beautiful explanation. Money, to me, is, as you said earlier, a social contract.
It is an agreement between two people for the exchange of a value or service with a monetary unit.
And that monetary unit should ideally be accepted by anyone for anything.
When people realize that the power behind money is the power that it is given by the people and not
by central banks or issuing entities, your view on money really changes. And that, to me, is the
appeal of Bitcoin specifically, giving individuals the power of knowing what money is. And that's
defining what money is for them. Absolutely. And once you really start looking into the history of
money, you realize pretty quickly that the idea of money being defined by some small organization,
government, bank, whatever, is actually a fairly new concept. And that there have been a variety of
forms of money throughout history that were just socially settled upon organically based upon what
was available at the time. Totally agree. I totally agree. So let me jump into something else really
quickly. First and foremost, as an individual who has benefited from what you have done, I want to
take a moment to thank you for lop.net. Ladies and gentlemen, l-o-p-p dot n-e-t. I want to thank you
for that, sir, because when I got into crypto Twitter, that was the first resource that I was
directed to by my friend, Mansa Godson. He said, if you want to know about Bitcoin, you need to go
here. And when I visited the website, any and every single one of them said, I'm going to
take any and everything that you would want to know about Bitcoin, about the economic side,
about wallets, about how it works, the technicals, links to the white paper, any and everything that
you would want to know about Bitcoin, you can find there. What precipitated, what made you build
lop.net? Interestingly enough, it's the same answer to almost everything else that I've built
over the past seven or eight years that I've been in this space. And that is self-serving,
because it's saving me time. Essentially, I started building this catalog of resources
because I was spending so much of my own time answering the same questions over and over again.
And every time I did that, I would have to go search for the same resources and just
collaborating with some other people to collect them all and put them in one place. I found,
saved myself a lot of time and saved almost everyone else time whenever they wanted to look
for anything, because the very nature of this space is that it is highly distributed and there
is no central authority in any of the variety of aspects of the space, including the educational
aspects. And so while I do produce a fair amount of unique educational content myself, there are
many other people who are very good at educating people in other ways, since I mainly focus on the
technical side. And this has been probably one of my most time-consuming projects because it is an
ongoing thing. The space continues to evolve. New websites, new content comes out that I need to
add. Occasionally, some people leave the space and stop maintaining things, and I have to remove
that content to make sure there aren't dead links. But it has helped me stay on the sort of cutting
edge of the research and education in the space, because I'm constantly on the lookout for what
I can put on here. As is the case with anything else I'm working on, feedback is always appreciated.
And I've put a lot of effort not only into curating the content on the page, but trying to
make it as user-friendly to as many different people and many different ways that people may
be accessing it. But there's always room for improvement. I think it's a fantastic resource.
I frequently refer people to it when I am trying to onboard people. I have the benefit and the
pleasure of enjoying the company of some really nice cigar smokers. And we tend to talk about any
and everything under the sun. And I guess I was talking about Bitcoin and cryptocurrencies a
little bit too much, because now the conversations at the lounge revolve around crypto and the markets
and things like that when I walk in the room. And so I want to thank you for making my life easier,
because I'm able to point people to lop.net when they have questions and they begin that descent
down the rabbit hole. A question for you. One of my main objectives, both as an individual,
as a content creator and as a business owner, is onboarding people. My sole goal and purpose
outside of my nine to five job is adoption of cryptocurrencies. I've had the benefit of
having discussions with some of the best and brightest people in the space, definitely including
you. And I'm hoping to get your take on what we need to foster and nurture adoption in the space.
For a very long time, I've tried the talking points or taking the developer's view when I'm
trying to onboard people by talking about double spins and transaction times and block height and
block speed. And those things don't tend to resonate with people because they don't really
care about those types of things. What do you see as the best way to promote adoption
in cryptocurrencies? Yeah, this is a very complicated question. I've tried a number
of different approaches myself over the years. And when I first got interested in the space,
I was basically evangelizing Bitcoin to everyone that I came across. And eventually I realized
that most people just don't see the value add of the system. And that is mainly due to the type
of people who I was interacting with, which was generally middle-class, well-off people who have
good access to financial infrastructure and probably haven't really had many problems with
the existing system, at least not that they have noticed. And so with those type of people,
I was often taking a very long-term type of approach of, well, don't you see that your
money is slowly being debased year after year? But it's a hard argument to make because it is
generally imperceptible, at least to people who store their value in US dollars, because the
inflation amount is fairly low and the timescales we're talking about make it hard for people to
realize unless they're fairly old and they can remember what it was like to buy a gallon of milk
for 10 cents or buy a gallon of gas for 50 cents. And so you end up having to kind of have a
discussion with each person individually to figure out what is their perspective and what might be
the things that trigger them. And there are a variety of different reasons why people may
be interested in Bitcoin. If they're technical, they may be interested in the technical aspects.
If they are fairly libertarian or anti-government or anti-bank, then they're probably going to be
more interested in having a system that is outside of the control of any of these authorities.
Otherwise, it's probably a lost cause to try to convince people who have access to credit cards
that this is an interesting new payment system. You probably have to go along the path of some
of the more philosophical and ideological stuff, because if someone has good access to financial
infrastructure and they're not doing anything that is currently considered taboo, then they
probably just don't see much need to search for alternatives. And so I kind of flipped a question
on its head now and say, well, do we really need to be going out and evangelizing to everyone we
meet that, hey, this Bitcoin thing is really cool and you should be using it? Or should we be taking
the kind of opposite approach and trying to find the people who need Bitcoin the most?
And that would be people who are in countries that have terrible economic and monetary systems,
the people whose value is getting hyperinflated away and they can see the need for a better store
of value. Or for the people, even in first world countries, who are doing things that are like gray
market area, whether or not that is like dealing with drugs that are legal in some areas, but not
other areas and are generally shut out of the banking system, or whether that is people who
are like working in the sex trade, whether illegal or legal, they tend to get shut out of the banking
system. It's really, I think more of a question of, we know that in general, most everyone would
benefit from Bitcoin in some way in the long term, but there are certain classes of people who would
benefit more today. And those are the people who are probably going to be more likely to actually
invest time educating themselves to figure out, well, how do I use this system? Why should I use
this system, et cetera, et cetera? And so that's why I don't really go around anymore and try to
evangelize to random people or even friends and family that they should be using the system,
because if they don't see obvious value in using the system, then they're just not ready for Bitcoin,
Bitcoin's not ready for them, and that's okay. We don't have to try to push for mass adoption
immediately. If we continue to improve the system, then the value should become obvious to other
groups of people over the long run as the network continues to grow. And if you look at the history
of Bitcoin adoption back in 2010, 2011, and so on, the first real adoption spurt
actually happened as a result of dark net drug markets. That was the first real use case that
showed the utility and the value of a censorship resistant payment network. And there are many other use
cases that Bitcoin can facilitate that cannot be facilitated by the existing system. And I think
that we need to more look at making those use cases more user friendly. So whether that's talking
about micro payments, which is something where lightning network comes into play, or cross border
remittance type stuff, I'm more interested in sussing out the use cases where Bitcoin obviously
shines over the existing system and hoping that by building those out, that if you build it,
they will come, or at least the people who need those use cases and that functionality will find
it. And then naturally that will grow the network and sort of a viral feedback loop will occur where
the more people we get into Bitcoin, the more they're interacting economically with others and
saying, Hey, I prefer to receive my payments in Bitcoin. That kind of organically evolves
the network over time. And from a technical standpoint, I think that that's probably a better
way to go about it as well. Because quite frankly, from a scalability standpoint, we can't onboard
everybody in the world right now. It actually makes more sense to me that we're onboarding people,
you know, one class of use cases at a time. And that way we have more time to continue to evolve
the system because this is far from a complete system at this point. I think you touched on
something that makes a lot of sense. Niche markets and niche use cases. I think about medical and
recreational marijuana producers, retailers, how they could use Bitcoin. And I totally agree
with you that we are not at a point in the history or technology of Bitcoin to onboard everyone in
the world. And that is a great segue into my next question. Do you think the technologies that are
currently being discovered and worked on right now in the Bitcoin space will create a new
ability to onboard more people? And I'm referring to things like SegWit, privacy features like
MimbleWimble, Schnorr signatures, layer 2 technologies like Lightning. Do you think those
things are going to really help to build the infrastructure that we need to onboard more
people going forward in the future? Yeah, I mean, we need as many different scalability options
as possible. I don't think that there's any single technological improvement that is going to
make any of these blockchain systems scalable in the way that won't require massive trade-offs
in the security model. And so Lightning is something that we've been focused on for the
past year or so at CASA. And Lightning, despite all of the user-friendly interfaces that we've
built at CASA, there are still many complicated things that we have not been able to abstract away
and hide from the user. And so while having second layer networks fundamentally gives us
a much better level of scalability and how many transactions can be processed, it also adds a lot
of complexity, which means even more engineering work has to be done to basically shove that
complexity underneath the hood and hide it from users. And so a really good example of that
is the fact that in order to use Lightning, you have to create these channels and you have to fund
them with on-chain transactions. And then you have to worry about balancing liquidity across
the channels to make sure that your payments don't fail and that you can find routes to make
the payments across the network. All of these things are problems, but will probably still
require years of work in order for us to build enough software and logic where we have learned
what all of the failure cases and edge cases are and we can have the software handle them automatically.
But right now, if someone actually wants to use the Lightning network, at least in a non-custodial
way where they're running their own node, it still requires a fair amount of technical sophistication.
And so as a result, it's still a fairly early stage hobbyist thing for people who are really
interested in the cutting edge. But that type of stuff, future improvements to basically
aggregate channels and aggregate transactions so that many people can be transacting with each
other, but on the blockchain, it just looks like one single transaction. That gives you both
scalability improvements and privacy improvements. I'm hoping that that type of aggregation
technology for signatures and transaction construction will come along and it's still
going to be a long process due to the conservative nature of Bitcoin engineers, is that as much as we
would all love to have a network that is capable of onboarding the entire world tomorrow, we want
to do it in a way that doesn't require massive trade-offs to the security and the ability for
people to operate essentially in a quote unquote trustless manner on this network. And that
basically means that we're going to have to do this piecemeal one little bit at a time
sort of baby steps year by year so that it can be very frustrating for people who are used to
watching the pace of technological adoption go really quickly because there's this natural
friction where it's almost like aerospace engineering mindset of there are a lot of people
in Bitcoin who believe that this is our one shot at doing this right. And that if we make a mistake,
that it's catastrophic. We may not get another good shot at building a system that is quite
the level of Bitcoin. Basically, this goes into some of the more philosophical and ideological
issues of sort of the quote unquote immaculate conception of Bitcoin. The fact that it was
created and bootstrapped and it has no authoritative leader or founder who can wield power or influence
over the system, I think it would be very difficult to recreate the set of conditions that allow
Bitcoin to evolve in the way that it has because I mean, you can look at the thousands of other alt
coins out there and see that while some of them have gotten kind of close, none of them really
have that same level of distribution of power. Jameson, let me ask you one last question.
Where do you see the future of Bitcoin, cryptocurrencies and blockchain technology
in the next three to five years? Well, one of the most exciting things about the space is that
it's so cutting edge that it's hard to predict what it'll be like in five years. I mean,
if you asked this five years ago, I never would have been able to say, oh, we'll be
transacting on these second layer networks that are highly private and highly scalable, etc, etc.
In fact, I probably would have told you something about, well, we need to have on chain scaling and
create much larger blocks in order to facilitate everybody's transactions. And so I think the one
thing that I am confident of is that the system is going to continue to evolve possibly in ways
that we can't imagine if there are more technological breakthroughs from all of the research that is
going on. But I am confident that in general, the space is going to continue to trudge along towards
becoming more mainstream. We are going to see more traditional financial companies that are getting
into crypto, whether it's Bitcoin or some other blockchain or their own blockchain-based networks.
And in general, cryptocurrency and crypto assets are going to become a larger part of mainstream
life. I'm not going to go to the point of predicting that everything is going to be put on a
blockchain because that is silly for a variety of different use cases. But I think that we're going
to see normalization and we're going to see continued improvement in the user experience
to the point that a number of people may very well end up using Bitcoin and related technologies
without even knowing it. And I think that that is basically a requirement in order for this
technology to go mainstream because I look at it similar to the way that the internet itself has
evolved where people are using these applications on their phones that they have no idea what the
level of complexity is of all of the code and the networking and the communication going back and
forth and even the encryption protecting a lot of that data. It's all abstracted away. And I think
it's all abstracted away. And all the user really knows is, hey, I'm tapping on different parts of
the screen on my phone and it's doing stuff. And so I think that is the goal ultimately for
trying to get Bitcoin to a mainstream adoption level is that we're going to continue to
make it more user-friendly and we're going to continue to make the security and the best
practices actually baked into the hardware and software so that we can reduce the level of
education that is required to operate safely in this space. I mean, if you look at my educational
resources, you could easily spend probably months or half a year trying to dig through them all.
And I like to believe that I've ingested the vast majority of that concept myself over the past
number of years, but we can't possibly expect the average person to even scratch the surface of that.
And so we need to continue to build out the software, the applications within the system so that
it actually becomes a trustworthy thing where people are confident that they can buy their
hardware wallet or set up their software wallet, and they don't have to worry about shooting
themselves in the foot and losing all of their money. And that is something that I've been
working on for the past five years now is just this very low-level security system.
Low-level security and usability of these protocols. And I think we still got a long
ways to go, but we've made a lot of improvements over the past few years. And I definitely can't
wait to see how many more improvements will have built out over the next three to five years.
Jameson, thank you so much for teaching me today. Thank you for teaching my listeners as well.
I really do appreciate you joining me on the show, and I appreciate all that you do
for the ecosystem. Thank you so much for your time, sir. Promise me you'll have a good day.
Have a good day. Thanks. Glad to be here.