All right.
It's Mike.
You're listening to KOP on Columbia.
It's Radio Orbit.
My guest this evening is Jameson Lopp.
Jameson is a professional cypherpunk.
He's the creator of Statoshi, and he's an infrastructure engineer at CASA.
He's a builder of technology and someone who is extremely active in the Bitcoin and cryptocurrency
development arena.
He enjoys sharing his knowledge with others, which is why he is with us today.
So without further delay, we will say hello, Jameson Lopp.
It's a pleasure to welcome you to Radio Orbit.
Hi, thanks for having me.
Yeah, you bet.
Well, you're a busy guy, so I appreciate you spending the time with us.
And I'd like, first of all, for my listeners who may not know who you are and what you're
about, if you could give us a little bit of background, kind of where you come from, maybe,
and how you kind of got into technology to begin with and eventually into cryptocurrency
and Bitcoin and blockchain technology.
Sure.
Where to begin?
Well, I come from a very long line of North Carolinians.
I was a third generation graduate from the University of North Carolina at Chapel Hill,
and I got my computer science degree there.
And I was really spending the first 10 years of my career working for a online marketing
firm, doing a lot of backend data manipulation, processing large amounts of raw data to help
investors better target their potential customers and learned a lot about online privacy as
a result of that because I was basically stripping a lot of people's privacy away to help other
people make a buck.
I see.
Okay.
And I got into Bitcoin around 2012 or so, and I was fascinated in that both from the
technological perspective because it was solving some unique problems that had never been solved
before and also from the philosophical perspective of more of a libertarian freedom to define
money.
I kind of felt like from a moral standpoint that the concept of money is something that
belongs to humanity in general, and therefore it makes sense for money itself to be a sort
of open collaborative project where anyone who wants to should be able to contribute
to that.
So I thought that was just a lot more interesting as opposed to monetary systems that are primarily
controlled by a small group of politicians and bankers behind closed doors.
Yeah.
One of the questions that I had that was a little bit lower on my list, but I might as
well bring it up now, I had the questions of privacy, individual sovereignty, and liberty.
And I think that there are a number of people, and you just kind of touched on it there,
that consider Bitcoin an opportunity to sort of regain some of those things.
Yeah, definitely.
From a technical standpoint, it gets really complicated.
And one of the main things that I've been doing and the reasons I went full time in
this space about four years ago is that there's still a huge gap between having the ability
from a technical standpoint to give more privacy and sovereignty to people versus having a
level of usability and user friendliness where the average person can actually attain that.
So that's why I've really been focused a lot on the security aspects of this space,
because while Bitcoin has always had the promise of being your own bank, as we often say, there's
been a really, really steep learning curve to doing that correctly, and quite a few people
have lost their money.
Some of them have lost it to attackers, but a lot of them have just lost access to it
due to all of the technical sophistication that is required.
It's generally just like IT practices and having good backups and all these other mundane
things that even more tech savvy people like myself just don't want to deal with.
So we've still got a long way to go, I think, before the privacy and sovereignty that we
want to see is actually available for the average person.
Right.
OK.
But perhaps the fundamental groundwork is being laid.
Definitely.
OK.
All right.
In the introduction, I mentioned that you were the creator of Statoshi.
For people who are not familiar, what is that?
So one of the most popular Bitcoin protocol implementations, the software out there that
is actually helping you connect to the Bitcoin network and download all of the transactions
and validate that nobody is breaking the rules, is that software is called Bitcoin Core.
And what I did was I created a fork of Bitcoin Core, which basically means I copied it.
And I have a copy where I am modifying the code on my own.
And I just added a bunch of metrics and data collection there.
So I was kind of taking what I had been doing in my day job for eight years and collecting
a lot of metrics and then displaying them on the dashboard so that people could better
understand what was actually happening inside of the Bitcoin software.
And this has been, I think, fairly valuable for people in general that are interested
in Bitcoin, but especially for developers who are trying to better understand what's
going on in the software so that they can decide what changes need to be made.
Right.
OK.
I'm going to assume that most of my listeners at least have a rudimentary understanding
of what Bitcoin is and what cryptocurrency in general are.
So I don't want to talk too much about actually what it is.
People can go out there and find out on their own if they need to.
And as a matter of fact, I think it's a good time to mention your website.
If you go on the Internet and you go to LOPP.net, that's LOP.net, you'll find Jameson's website.
And there's a tremendous amount of information.
If you go to that Bitcoin link, it's actually stunning, by the way.
What a collection of resources you put together there.
Yeah, I was actually just running my regular maintenance script to check for dead links
earlier today and noticed that there's over 500 links on that page.
Well, it is something else.
And once I get this up on the Internet, I'll make sure that I that I link up to all your
stuff as well.
But once again, that's LOPP.net and there are a number of different links up on the
top there.
But if you click on Bitcoin resources, you will find pretty much everything that you
could ever want to know.
I think about Bitcoin.
There's a whole bunch of information, including all the early stuff, the white paper in many
different forms, and then all kinds of courses and papers that have been written and projects
and just a whole bunch of stuff.
So if you really want information, you can go there and get it.
And in the meantime, we'll assume that people understand a little bit about what we're talking
about.
So I'd like to ask you about the state of the blockchain in general.
We're almost at 10 years for Bitcoin being around.
And for someone who's been deeply involved in it for quite some time, maybe you could
give us a sort of perspective on Bitcoin back in the day and the the state of the blockchain
and state of Bitcoin right now.
Yeah.
Well, you know, this is it's really an adventure.
I feel like we're still exploring what is possible with this technology.
Yeah, me too.
So from a technical standpoint, it's definitely a lot easier to get involved and start using
wallets and and and even doing more complex like smart contracting interactions these
days on these blockchain networks.
Mainly what we've seen a lot of focus on is, I guess, the scalability aspects, because
while some people don't want to admit it, blockchain is actually the least efficient
and slowest form of database that I believe exists currently.
So it's it's extremely challenging to scale these things, especially to a level of global
adoption.
It's it's the type of engineering that the closest thing that I can really describe it
as is like aerospace engineering.
And that's because there's very low tolerance for failure.
If you have like a single bit or bite that is not in sync amongst the various nodes on
the network, you fall out of consensus and basically the whole network turns into chaos
and people start running around and trying to figure out what's going on.
So you have to be extremely diligent and precise in making changes to these protocols, because
just the slightest, slightest issue that causes a difference in different machines and how
they process the data will potentially be catastrophic for the network as a whole.
Has anything like that ever happened in the past with the Bitcoin network, to your knowledge?
Yes.
So there have been a few different consensus failures throughout its history.
And in fact, we had a fairly close call just a few weeks ago where a critical bug was discovered
single line of code.
Yeah, I remember there was on the Bitcoin subreddit, I think there was a conversation
about I'm sure there were other other places as well.
Yeah.
Yeah.
So so thankfully that bug was discovered and fixed and nobody exploited it.
And there are some reasons why it's unlikely that it would have been exploited.
But nevertheless, if it had been exploited, then people could have potentially used that
to drastically inflate the monetary supply.
And that would probably be one of the worst things that could happen.
Actually back in 2009 or 2010, there was a bug that was exploited and somebody created
like 100 billion bitcoins out of thin air.
Of course, people noticed that very quickly and the bug was fixed and they basically rewound
the blockchain a little bit to go back before that bug.
It was only it only I think existed for a matter of hours.
And so today that that transaction that block no longer exists in the history of Bitcoin
and we're still adhering to the monetary policy.
But even even from another standpoint, a bug was found a few years ago, which it was kind
of a joke and it was released on April Fool's Day.
But it was a real bug that one of the protocol developers realized that while over the next
few hundred years of the protocol running, yes, indeed, we would cap out at around 21
million bitcoins.
Right.
And there was this overflow bug that would have caused the whole inflation to start over
again.
And so actually what would happen is you would get 21 million bitcoins like every four hundred
years, basically forever.
So, you know, they fixed that bug, even though they didn't have to fix it for like four hundred
years.
So it's kind of a joke.
But that's kind of what I'm talking about when I say like, we're still exploring and
trying to understand these things because we have a general idea of what we want the
system to do.
But what the system actually does sometimes surprises us.
Right.
OK.
All right.
So I want another question that I had down on my list is the dangers to Bitcoin.
What might occur potentially that could cause Bitcoin to fail?
And since we're talking a little bit about that right now, I guess that would be one
of the potentials.
So, you know, this is when we start to get less technical and get more philosophical.
Yes.
And, you know, we could spend the entire time talking about various technical failures that
could happen.
Right.
Because, you know, there's a lot of unknown unknowns out there.
All kinds of crazy stuff could happen.
You know, we could also talk about like nation state level attacks of what happens if a government
basically confiscated all of the mining hash power within their jurisdiction and started
using it to attack the network.
The best way that I can describe my general thoughts around this, though, is that what
we have is we have this network that is running an automated consensus protocol on basically
100,000 machines around the world that are staying in sync and replicating data and validating
it and making sure that everybody's following the rules that their human operators have
agreed to.
And, pardon me, for those unfamiliar, this is the decentralized nature of the Bitcoin
network.
Correct?
Yes.
It's that, you know, everyone who wants to fully validate the state of the blockchain
itself can just run the software, connect to this mesh peer-to-peer network, download
the data, validate it, and make sure that nobody is defrauding them by doing things
like double spending or creating money out of thin air.
Right.
All right.
So, back to your thoughts on the potential dangers.
Yeah.
So, we have this distributed network.
Nobody actually controls the network.
It is, you know, each node on the network is controlled by some human or organization.
So there are any number of technical issues that could happen that cause the machines
on the network to fall out of consensus.
And as developers, we try to do everything we can to prevent that from happening.
But because of the just complexity of both the code and the hardware running the machines,
it's almost inevitable that eventually some sort of edge case will be found.
And it may be found before it gets exploited and may be found after it gets exploited.
And what happens in these cases where someone basically finds an exploit and breaks the
human rule, but still manages to like stay within what the machine protocol is validating
is that we basically have to consider that the machine consensus has broken.
And so we have to fall back to what I consider to be the foundation of the entire network,
which is the human consensus that is behind it.
And of course, the human consensus is much more difficult to, I guess, define because
it is just, you know, a group of hundreds of thousands or if not millions of humans.
And you know, they're all they all have their own diverse perspectives and they argue with
each other about various things.
And it's only really in the more extreme situations where something is clearly broken that the
incentives are strong enough to get us to all align and to come together very quickly
and say, you know, we need to fix this, otherwise the network is basically unusable.
But that's why I think that even the most extreme examples of technical failures that
could happen, such as like nation state level attacks or, you know, an exploit that allows
someone to create a bunch of money out of thin air, I think that those extreme examples
actually make it easier for us to fall back to the human consensus level and make a change
the software that basically fixes or negates that attack or exploit.
And then we update our code and the machines start talking to each other once again.
And we are, you know, once again in consensus on the machine network.
So that is why I think that these type of networks are actually extremely anti fragile
where sure, you can temporarily break them, but the humans are going to organize, figure
out how to fix it and move forward because we all are incentivized to do so.
You know, that's something that Nassim Tlaib talks a lot, a lot is anti fragility.
And I think that he's a fan of the Bitcoin network for that.
For one of those reasons, maybe you could expand on that a little bit.
Yeah, another, I guess another great talk along these lines, Andreas Antonopoulos has
a fairly famous talk where he calls it the Bitcoin bubble boy and sewer rat.
Yes, he basically, that's fantastic.
Yeah, he shows, you know, it's kind of like building up an immunity, right?
If you want to be exposed to as many terrible and gross things as possible, because that's
how your immune system learns from them and adapts to them.
And it's the like, whatever doesn't kill you makes you stronger kind of mantra.
And so that's why I think, you know, it's great that it's also natural that, you know,
as Bitcoin becomes more valuable in general, that creates a bigger incentive for attackers
to basically allocate greater and greater levels of resources to trying to attack the
network. And then those attacks, even if they succeed temporarily, just continue to make
the network more and more robust as humans, see them happening, and then patch the code
to prevent that exploit from from ever happening again.
Okay, you did an AMA and asked me anything on hash note a couple days ago.
And I was fortunate enough to have you answer a question, very simple one that I asked.
And it was about the future potential dangers.
And you said that, that you believe that the most likely cause if there was something that
was really catastrophic to Bitcoin, that it would be apathy, it would be everyone just
deciding that it was no longer worth it.
And as long as people maintain their interest and their efforts in the space, that it's
really relatively safe.
Exactly. And so, you know, there, of course, there's a few different ways that that might
get triggered. If some technology came along that was an order of magnitude or more improvement
upon Bitcoin, right, then that might cause people to become apathetic about trying to
improve Bitcoin and then, you know, incentivize them all switch to that. Otherwise, if some
and I don't, I don't even, you know, it's hard to even imagine if something happened
that caused the network to break, for which there seemed to be no technical solution,
then, you know, that could also cause the same level of discouragement and apathy and
cause people to just throw up their hands and quit.
Right. OK. All right. So so in general, the state of the blockchain now, 10 years into
it, you feel it's relatively stable? I mean, I know there's a lot of development that needs
to be done still, and we're still in the early stages, but the network itself is strong.
I think that Bitcoin is doing very well. But then if we start talking about blockchains
in general, it gets a lot more complicated and interesting due to the perspectives that
people are applying to them. Yeah, I had I had a question about altcoins
here. Maybe it's a time to at least talk a little bit about that. Bitcoin obviously was
the first and certainly the largest, most secure of all the networks out there. But
there have been a whole plethora of new coins and tokens and blockchains for this and that
that have come on to the space in the last five years or so. What are your thoughts in
general and anything you'd like to say about those?
Yeah. So the main thing that I try to get across to people is, you know, you hear this
buzzword, the blockchain buzzword coming up very, very often all over the place. And these
days we have so many different type of networks that are based upon blockchains that I think
it's ingenuous to just describe these things as blockchains. So from a technical perspective,
a blockchain is just a type of data structure. There's nothing really special about it. Another
way to describe a blockchain would actually be as a cryptographically linked list of historical
data. And that type of data structure is not new. It's existed for probably 20 or 30 years.
Now the only reason that that is an interesting data structure is because it gives you this
tamper evidence property so that if someone manages to go and screw with the data, it's
very easy for you to see where along the point in time and history that the data has been
altered, because it's all dependent upon each other due to the cryptographic link basically
between each piece of data. You run the checks on the cryptography and it tells you, you
know, this doesn't match anymore. Someone must have altered the data. Bitcoin uses that.
That's only one piece of the Bitcoin protocol. It's also using a lot of interesting functionality
to replicate the data around the network and to verify that the data is correct. And then
more interestingly, it uses this proof of work algorithm to make it extremely computationally
and thermodynamically expensive for anyone to go back and rewrite a significant portion
of the history of the blockchain, because they have to basically burn a lot of electricity,
which they cryptographically prove they have burned by finding the right hashes. So that
is like one specific security model, which is fairly unique. And now what you're seeing
is you're seeing a lot of other organizations create networks that they're using the blockchain
bit, but they may not be using the proof of work bit, or they may not be using a more
open and distributed development process. And so essentially a lot of these blockchains
are more akin to a single company. They're basically run by one team or one company.
And that company, that team may even have further permissions within the protocol to
make arbitrary changes that they don't have to run by everybody else on the network. So
you end up with very different security models between these things. And some people describe,
they try to use different descriptions of saying, well, this is a public permissionless
blockchain, or this is a public permissioned blockchain because they're gatekeepers, or
this is a private permissioned blockchain. And what we're seeing with a lot of like
the enterprise for business blockchains is that they tend to all be permissioned and
then they may be public or private depending upon what functionality they're providing.
But it's just such a mixed bag. It's, I think, very hard to have an overall description of
saying this is what's happening in the blockchain space because it's just exploded into a diversity
of different projects.
Yeah. It's really hard to say which, if any, will be valuable at this point. I have a hard
time saying that none of them will be, but I have a pretty easy time saying that a lot
of them won't be. So I guess we'll just have to wait that out and see what happens, you
know?
Yeah. I mean, I think you're going to end up with like a, you know, power law distribution
where a few networks manage to capture most of the value. And that's also because, you
know, networks, the value of a network is dependent upon its size. And so as these other
networks are going to end up being smaller, their value is actually going to be orders
of magnitude less. And then of course, there's also the arguments about open versus closed
systems. And you can actually look back at like the development of internet, where back
in the nineties, when the internet was becoming a thing, there were actually a lot of banks
that decided that they wanted to build their own private intranet to talk to each other.
And over time, the internet grew so large and so valuable and just became the standard
for communicating that these banks had no real choice but to stop using their private
networks and hop onto the internet with everybody else because that's what the most valuable
network was.
Yeah. You know, speaking of banks and their networks, I'm always interested in seeing
the stories about fraudulent activity and hacks and ripoffs that occur in the banking
sector through Swift and other mechanisms. But it's pretty frequent if you look for
that stuff, you'll see hundreds of millions of dollars pretty frequently being stolen
or fraudulently moved from one place to another. And do you have any thoughts about that and
how Bitcoin, crypto in general might be able to make that a little bit safer?
Yeah, well, so, you know, we kind of flipped the security model on its head, where instead
of like centralizing a lot of the value and data into a few silos where we have trusted
custodians that need to keep it safe. Instead, we're trying to spread out the sensitive aspects
of the system. We're trying to push the security out to the edges, basically to the users.
But you know, because this is an open voluntary system, we can't force people to go into that
model. So we do end up with things like Coinbase and enlarged exchanges that are essentially
acting as wallets. And, you know, being custodial providers for people. You know, the main thing
that I'm interested in is trying to build a system that doesn't have like the same systemic
risks as the existing system. And that means that we are pushing more control out of these
large trusted providers. That's why I think it's also very important that we continue
to make it easier for people to handle their own security, because otherwise, they're going
to throw up their hands and just say, Okay, I'll let this trusted third party handle everything.
And then we're basically going back to the same model that we've been using.
Yeah, right. There's a there's a psychology involved as well, where people are used to
having somebody sort of take care of their money for them, they put it in the bank, or
they give it to their investment banker, and he takes care of their portfolio, and they
consider themselves, you know, able to kind of get at it whenever they want to. But most
people, at least in the West here have never been in a situation where there was, you know,
an economic crisis that was large enough where they couldn't get at their assets.
Yeah, so that's actually also why it's interesting to see, you know, different perspectives between
citizens of different countries. And, and part of the reason why I stopped trying to,
I guess, evangelize Bitcoin, so much to people in first world countries, is because quite
honestly, they, in many cases, don't get it. Like, unless you're a really hardcore like
libertarian or anti government or anti bank person, right, you probably don't have a lot
of friction in your day to day life, because you have great access to a highly developed
financial system, right, that is probably working almost all of the time, unless you
get your identity stolen or something. But the rest of the world doesn't have that the
rest of the world, many, many people just, they can't get access to traditional financial
infrastructure, because you know, they don't have the appropriate documentation, or they
don't have enough money to qualify to get a bank account open. And so, you know, I think
those people actually have a lot more to gain from an open financial system, like what crypto
is providing.
Absolutely. And, and for those unaware, we're talking numbers in the billions here, probably
a conservative number, half the people on the planet do not have access to the sort
of elite financial services that we have here, many of us, at least in the West. Many of
those people do not even have, like Jameson says, even the necessary requirements fulfilled
to get a bank account. They all have smartphones, though, or many, many of them are getting
them. So that's a, that's a way to sort of sidestep or leapfrog the older technology
and maybe jump into this newer one.
Yeah, it's, it's something where, you know, these people, they, they are going to be willing
to put more effort, I guess, into learning how to be their own bank, because it's, it's
really the best option that is available to them. Whereas you could, you could even say
that we're kind of spoiled here in America and a lot of first world countries, especially
America being such a service oriented economy, we're used to being able to just call somebody
up on the phone and, and have them fix our problems for us.
Yeah. Yeah. And a lot of places in the world, they got to fix their own problems.
Yes.
Okay. So let's take a short break here and we'll play a piece of music and then we will
come back and talk with my guest, Jameson Lopp, a little bit more. Once again, on the
web, you can find him at lopp.net. That's lopp.net. And like I said earlier, I mean,
just a fantastic resource if you're interested in Bitcoin and the history and the current
state of technology and there's videos and all kinds of stuff there that would be really
helpful for somebody who's trying to learn about what's happening in this new sort of
adventurous space that, that Jameson is right in the middle of. So, all right, just a minute
to Jameson. We'll be back in a second. Okay.
All right.
It's Mike. You're listening to Radio Orbit on KOP and Columbia 89.5 FM.
All right. I'm back with my guest, Jameson Lopp, and thanks for sticking around, man.
My pleasure.
Hey, you know, you have a real interesting Twitter page as well. So I'd like to mention
that if people want to get ahold of you or follow you, what's your actual Twitter handle?
Yeah, it's just my last name, L-O-P-P.
All right. So if you go to Twitter, just look for at L-O-P-P. And there's a lot of stuff
that Jameson puts up there on his Twitter feed. That's a lot of times interesting, sometimes
funny and sometimes links to other folks that are doing interesting things. So keep your
eye on that if you, if you'd like to. And once again, on the web, it's lopp.net. All
right. What else do I want to ask you about here? How about, what was all the story about
Segwit? I mean, I know pretty much what it is, but for people who didn't really understand
what happened with that, I think I read a story recently that the network was now at
about 50% adoption. Correct me if I'm wrong, but what is that and what does it mean exactly?
Yeah. So how to get into this without boring people with technical details.
Yeah.
Essentially, it all comes down to the scalability. Like we talked about earlier, it's very, very
difficult to scale these types of decentralized networks. And one of the main philosophies
behind a lot of developers in the Bitcoin space is the idea of self sovereignty. And
part of that means that we want it to be possible for the average person, or at least the average
technically minded person, to be able to run a fully validating Bitcoin node. Because that's
what gives you the strongest security model when you're using Bitcoin. Basically, when
you hear the word trustless, that is the type of model that you're getting when you are
running a full node and using it to verify the transactions that you're receiving. Because
you are checking every single transaction on the network to make sure that nobody's
breaking any of the many, many, many rules of the Bitcoin protocol.
Okay.
And so one of the results of that is that it means that when you want more transactions
to happen on the network, that it's going to use more computational resources, bandwidth,
disk space, CPU, whatnot.
All that stuff, yeah.
And so there are some people out there who they are prioritizing having more and more
transactions on the network so that we can get to global mainstream adoption. But the
trade-off there is that if you put too much data out on the network and into the blockchain,
that starts to price people out from being able to fully validate the entire system.
So we have this really weird set of trade-offs that has resulted in a schism if you were
amongst people in the Bitcoin community. And so on one side, we have what are colloquially
referred to as big blockers who want to have huge amounts of data on the network.
All right. And that's the Bitcoin cash guys, I guess.
Yeah, yeah. So they are prioritizing low transaction fees at the expense of potentially a high
cost of validating the entire blockchain. And on the other side, the colloquially referred
to as small blockers, we have the folks who are prioritizing low cost of full validation
of the system at the expense of potentially higher transaction fees.
And the reason why the transaction fees come into play here is that when you only have
a certain amount of space in the blocks and that space gets filled up, then it turns into
a kind of auction bidding war where you have to pay more in order to incentivize the miners
to put your transaction into the block because they can only put so many transactions in.
Right, right. Now, Segwit comes into play here because it
was a way, it's kind of a hack, but it's a way to get more transactions into essentially
the same amount of block space. And what that is doing is it is basically taking the signature
data out of the block itself and putting it sort of off to the side, not in the main block.
And so Segwit actually stands for segregated witness. The technical aspects of that are
that we are segregating the quote unquote witness, which is the signature data, which
is one of the most important things when you're validating that the person spending a Bitcoin
actually should have the right to spend that Bitcoin. And so this this turned into a very
big like philosophical and technical debate. Oh my gosh, it was an online war for months,
you know? Yes. And so basically there were a bunch of
miners and other other folks that were blocking the activation of this feature on the Bitcoin
network. There were a number of reasons why they may have been doing that. There was this
one thing called ASIC Boost, which was another type of hack that some of the miners were
using to improve their own hash power. And it turned out that Segwit actually broke one
way of doing ASIC Boost. So, you know, there were some financial incentives at play. And
then there are other folks who are just kind of ideologically against the idea of separating
the signatures into a different part of the blockchain. So, you know, we actually ended
up having a split of the Bitcoin blockchain into Bitcoin, which activated Segwit, and
then Bitcoin Cash, which has rejected the idea of Segwit and instead has just created
much larger block sizes. So, they've actually done a few different protocol changes over
the past year. And now, supposedly, their theoretical limit is around 32 megabyte blocks,
which is about 32 times larger than what the network was allowing to be processed a little
over a year ago. Whereas with Segwit, we actually kind of got rid of the idea of block size
and we have what is an effective block size between like two to three times larger than
the original one megabyte block size.
Okay. All right. Now, you know, the internet itself, if I understand correctly, the actual
architecture of it is sort of layered. I know there's at least a number of different sort
of layers on the internet architecture. And I know they're starting to talk about that
with Bitcoin as well. I know Lightning Network is something that is in its infancy still,
but definitely seems to be making some waves and having a positive impact. Could you talk
a little bit about layering and why that's important and how that might also be a part
of the future here?
Yeah. So, the sort of Bitcoin developer mindset towards getting to global mainstream adoption
is by using layering because this is a tried and true way of scaling decentralized networks
like the internet itself. And so the best way that I can actually describe, you know,
what Lightning Network and then other second layer networks are doing is to directly compare
them to the architecture of the internet. And the internet is actually a seven layer
stack, whereas the lowest layer, the base layer is called ethernet. And that is just
like the physical wires that are connecting different computers and routers together.
And when you put a piece of data out onto this base ethernet, it actually gets broadcast
to everyone on that network or at least on that local network. And that works pretty
well at a small scale. You're just sending the data to everyone and whoever wants the
data gets it pretty quickly. And there's really, it's very low complexity. But it doesn't work
well if you want to scale up to a network that's the size of the internet itself, because
just think about what would happen to your computer if everyone who is streaming YouTube
videos had to also send that video stream through your computer and everyone else's
computer in the entire world. I mean, it's just going to overwhelm your hardware resources.
So in order to make a more scalable architecture, we create these other layers where with the
internet there's TCP IP, which is basically a routing layer. And what that does, it allows
you to instead of globally sending to everybody on the network, you can find a route that
is just a few hops so that you can just send the data from yourself to one other computer
to another computer and then it reaches its final destination. This is much more efficient
because you're sending the data through the fewest number of participants on the network
as is required to get between your two different destinations. And that is basically what we're
trying to do with lightning network. So if you think of the way that Bitcoin itself works,
if you're creating a regular Bitcoin transaction right now, then what happens is your node
will broadcast that out onto the Bitcoin network and then every other node will receive that
transaction and rebroadcast it to every other node. It's called a gossip protocol, but it's
really the same way. It's very simple. It's very straightforward. It's easy to understand.
But once again, it means that if we have a billion people creating Bitcoin transactions
and you're running a node, then you have to receive and relay all billion of those transactions
every day that people are making. And so obviously your hard drive is going to fill up your internet
connection is going to slow down, et cetera, et cetera. And so instead we create these
routing protocols. Lightning network is one of them where you basically use cryptography
and time locking and some other functionality of the main Bitcoin protocol to create a new
network where you can update the value of what we call a payment channel between yourself
and someone else on the network. And you can update that privately where you're only sending
that data between yourself and the other person in that payment channel. And then we basically
connect all of those payment channels together. So if you want to pay Charlie, but you're
not connected to Charlie, then you can pay Bob and Bob is connected to Charlie and they
basically route the money through themselves so that it gets to its final destination.
And the reason this works really well is actually if you've ever heard of seven degrees of Kevin
Bacon, so if you think about this, this is actually related to network graph theory where
you can have a graph, a network graph that is the size of the entire human population.
And with only about seven hops, you can go from any person on the earth to any other
person on the earth. And that same type of network graph theory applies here where we
can create a network of nodes that is potentially a billion or many billions of nodes. And you
should be able to get from any node on the network to any other node on the network and
only like seven or eight hops. It's just a lot more efficient, a lot more private, a
lot more scalable. And like you said, this is a very new technology. No one has built
anything quite like this before. So we're still learning a lot as we're going along.
But we're about two or three years into it right now. And I would say that Lightning
Network became fairly usable for technical people at the beginning of this year. So I'm
hopeful that, you know, over the next year or so, it will continue to become easier and
easier even for less technical people to use.
Okay. I saw something on your Twitter feed earlier today. It was something that was mentioned
that you called neutrino.
Yeah. And so that is a new lightweight client that is actually more private than the existing
lightweight Bitcoin client. And once again, it flips this privacy model on its head. But
the entire idea being that, you know, a lot of people that are using these networks aren't
necessarily going to want to run a fully validating node because that's going to have higher resource
costs. You probably wouldn't want to run one on your mobile phone, for example, because
it would drain the battery and use the bandwidth up a lot faster. But this is just another
example of creating more user-friendly wallet software that has also got better privacy
and better security.
Okay. Speaking of security, I have a note here to ask you about the relationship between
scaling and security, because I think that's really the sort of where the rubber hits the
road because you got to be able to scale. But if you can't do it securely, it sort of
blows the whole model up.
Yeah. Generally, what we talk about is, you know, how is scaling up a network and, you
know, putting more load on it, putting more data and traffic on it. How does that change
the centralization of the network? This is a very hard thing to measure because centralization
is, it's a tricky word. You know, there's many, many different metrics that you could
try to measure centralization from, and people will argue about them endlessly.
Yes, I see it all the time.
Kind of like what I was referring to before is like the cost of running a full node is
going to directly impact how many people are running a full node.
Right.
And so, you know, a lot of this is kind of spitballing and, you know, theoretical. But,
you know, if it costs $1,000 a month to run a full node, then I can pretty much guarantee
you that only really large enterprises are going to have the incentives to do that.
Right, right.
So, if you only have large companies that are doing this, then have we really created
a technology and a network that's that much better than, say, Visa or MasterCard or PayPal?
Right.
I think a lot of people would say no.
Yes. Yep.
Now, the problem, what that then comes down to is if only really large companies or really,
you know, wealthy entities are running the software that is actually checking the rules
on the network and validating everything, then that means they're the ones that can
then change the rules.
And so, this is when we start to get into the, like, quote unquote governance of the
system.
And, you know, even governance is a very tricky word because this is really more of a system
of anarchy than of any well-defined governance rules.
Right, right.
All right.
Let's see.
What else do I have here for you?
What about what an average user can do?
Because, you know, there are some people out there that maybe have some Bitcoin.
Maybe somebody gave them some Bitcoin or they are curious enough that they downloaded a
wallet and maybe bought a little Bitcoin or traded for some.
But in any case, they've got some Bitcoin and maybe they've got it in a local wallet
or something like that.
But is there anything that people like that can do to sort of help the network or to,
you know, just in general, sort of help the community?
Yeah.
So, you know, this is another one of the issues that I guess comes up with with freedom and
sovereignty is like because no one is really in charge of the network, no one is in charge
of deciding how you should contribute to it.
And so for a lot of people, that may just mean that, you know, they try to stay active
on social media and try to just talk to people to understand what's happening or, you know,
give their input.
Right.
For more technical people, they may be building applications or infrastructure that help the
network.
You know, there's even, there's plenty of use for people, you know, doing their own
type of marketing.
I kind of joke about this, but, you know, we have a pretty active means of meme production
within the crypto asset community.
Oh, yeah.
Memes are a very strong way to, I guess, capture and keep people's attention.
And you know, when I referred earlier to apathy being one of the greatest weaknesses of these
networks, then things like memes that can keep people engaged actually become somewhat
important.
Yeah, they really do.
And there are some fantastic ones.
I mean, there are some that just kill me, you know, when I see them.
There's some really clever and creative people out there.
Yeah.
So, you know, it really comes down to whatever your particular skill set is.
You know, I have a lot of people that come to me and they're like, you know, I am not
at all technical, but I want to help, you know, write code for Bitcoin.
And, you know, that's a great aspiration.
But I don't have a simple answer to that other than, you know, going to a university and
getting a computer science degree.
Because while you can definitely learn a lot about programming, you can learn how to write
code online.
There's plenty of online courses to do that.
That is far from the level that you would need to be working in a cryptographic security
protocol, or even working in finance in general, you know, crypto or otherwise, the stakes
are so much higher that you really need to have like an in-depth knowledge of the theory
behind computer science so that you can understand all the different aspects of secure software
engineering.
It's very different than just like normal web development, you know, which is what I
was doing for about 10 years before I got into that.
Right, right, right.
What kind of personal projects are you working on right now?
Do you have anything?
And I don't mean, you know, for yourself, I mean, but is there anything in particular
with regard to Bitcoin that you're sort of concentrating or focusing on right now in
your own development?
So, you know, my day job is with CASA.
Yes, yes.
What does CASA do?
I think they're a security firm, aren't they?
That's right.
So, you know, I worked at BitGo for three years doing enterprise, multi-sig, non-custodial
security, basically helping large enterprises like exchanges run their hot wallets, which
is a very, very sensitive operation because you're keeping private keys online and creating
transactions in an automated way.
So, you know, these are the types of entities that are getting targeted by hackers because
they're huge honeypots with a lot of money behind them.
Exactly.
So, I pivoted earlier this year CASA, which is similar in that it is a non-custodial multi-sig
wallet product, but it's different in that our target customer is not enterprises, but
rather high net worth individuals.
So, it is really meant to be a wallet for an individual, but it is basically trying
to merge the user experience and user friendliness that you get with a mobile app with the security
aspects that you get from dedicated hardware key management devices like Trezor and Ledger.
So, it's a three out of five multi-sig wallet and you have one set of keys on your phone
with the mobile app and then you have three different hardware devices that you keep in
geographically separated locations.
That gives you robustness against hackers because, you know, the keys are always offline
on the hardware devices and it also gives you robustness against physical attackers
because they would have to get into multiple access control locations.
But finally and perhaps more helpful is that it kind of forces the user into a more robust
data security model where they're protected from much more mundane things like house fires
or natural disasters.
That I think is almost a bigger security threat for people to lose access to their private
keys than to have them forcibly taken.
So, we're basically, we're trying to build software that helps guide users through best
practices so that they don't have to spend a lot of time scaling that steep learning
curve.
Yeah, okay.
All right, here's one that people are always bringing up to me these days and I don't like
to argue with them so I'm going to ask you, what's a good way to discuss the energy requirements
of the Bitcoin network?
There's a trend right now among Bitcoin detractors to really scream and holler about the amount
of energy that's being used and that it's contributing of course to global warming and
everything else.
Do you have any comments on that perhaps?
Absolutely.
Now, there are a lot of ways that you can defend the security use, the energy expenditure
of the hashing operations that are keeping the blockchain secure from the computational
standpoint.
You'll see people that start basically referencing the fact that Bitcoin incentivizes miners
to find the most efficient energy uses or energy sources and actually to find, I recall
correctly, I've seen people refer to it as stranded energy, energy that is being produced
somewhere that is not being consumed and by that I mean things like there are like pockets
of natural gas up in Antarctic regions and stuff and people have kind of plopped mining
operations on top of them to burn those off.
There are a lot of operations that are happening at hydroelectric facilities and that actually
makes sense because these hydroelectric dams can output a large amount of power 24-7 around
the clock but of course the actual usage of people around them is going to fluctuate more.
So I've seen some large miners say that a lot of electric producers prefer to have mining
operations on hand because they result in a more stable load on the grid rather than
having a lot of fluctuation.
I see.
Yeah.
That makes sense.
You know, while you can come up with these arguments to defend the sort of eco-friendliness
or whatnot of the energy expenditure, I try not to do that because I don't believe that
it means defending.
I believe that the market is basically speaking for itself and that any of the detractors
who are offended by the energy expenditure to secure Bitcoin, they're not going to be
able to do anything about it unless they make a better offer to the market.
The market has already determined that it wants to pay this level of money basically
to secure the network against computational attacks.
So if they want the Bitcoin ecosystem in general to stop paying for that, then they're going
to have to come up with some other form of security that is, I guess, more efficient
and better offer for people to take up on.
Okay.
Yeah.
I've thought that it might actually incentivize green energy producers and developers to actually
come up with some more advancements in their own field.
Well, yeah.
I mean, in general, renewable energy is going to be cheaper over the long run, whether that's
hydroelectric or solar or whatever.
We're already seeing that just because of the pace of innovation in the energy space
that costs for renewable energy are dropping every year, whereas costs for fossil fuels
tend to stay about the same.
I think that hydro and solar are already well below the cost for coal.
I forget what the cost of nuclear is.
Nuclear is probably still pretty cheap, though.
All right.
One last one for you here.
The future.
What do you see?
I know it's, again, just a sort of philosophical question, but what do you see for the future
of Bitcoin and cryptocurrency in general?
Well, Bitcoin has one of the largest ecosystems in terms of just people that are invested
in it and contributing to it, making it better.
And so it's got this network effect going for it, where there are a lot of people out
there who talk about flippenings and other protocols and networks that will overcome
Bitcoin.
But I think that we're very well positioned because most of the people in this space have
a very long-term vision.
And while other technologies may come and shoot up in popularity, I don't think that
they're going to basically withstand the test of time.
And part of that reason is because Bitcoin is a fairly narrowly focused protocol.
We're not trying to be everything for everyone.
We're not trying to be like a kitchen sink protocol, which creates a lot more complexities,
ends up being a lot more difficult to scale and make everybody happy.
So I'm confident that we're going to keep seeing better privacy, better scalability,
and that it's not necessarily going to be overnight huge improvements, but rather it's
going to be the result of hundreds, if not thousands, of people that are making small
incremental improvements day after day, year after year.
And over time, those add up to be huge improvements.
Right.
Do you have anything in general to say about your fellow developers and programmers that
are also working on these things?
Just that in general, while this can be a fairly contentious space and sometimes people
get into heated arguments and sometimes it even gets bad enough that some people will
basically rage quit and go off and do something else, I think that in general, we are ideologically
aligned sufficiently that we have the same goal in mind long term.
And this is true even between communities like Bitcoin and Bitcoin Cash, where on the
face of it, it feels like they're so diametrically opposed, but the reality is that we all have
the same goal, which is ultimate global adoption of an open protocol that is outside of the
control of any specific group.
Absolutely.
It feels so polarized simply because of a small ideological difference in what path
we take to get there.
Right.
All right.
Well, that's a great place to wrap it up, I think.
I want to thank you very much, Jameson.
It's been a very interesting conversation and thanks again for spending some time with
me here and I look forward to the future and I sure appreciate all the work that you've
done and the effort that you're putting into this project.
It's remarkable.
Thanks for having me.
All right, once again, that's Jameson Lopp and you can find him on the net at l-o-p-p-dot-n-e-t
and you can also find him on Twitter at l-o-p-p.
It's just at Lopp.
All right.
Take care of yourself, Jameson, and we'll stay in touch.
I'd like to do this again sometime.
Great.
Thanks.
All right.
Take care.