Welcome to PayPod, the show that features thought-provoking interviews with leaders
and entrepreneurs in the payments and financial technology industries.
From credit card processing to Bitcoin, we cover it all.
So if you want to know what's happening right now in the payments industry, stay tuned.
Now here's your host, Scott Hawksworth.
Hey, how's it going, everyone?
Welcome to another episode of PayPod.
We are all in on the Bitcoin discussion as of late, and this show is no exception.
I've got another expert guest for you who is going to be helping us explore the Bitcoin
and cryptocurrency resources out there, talking a bit about learning about all of this while
also sharing his thoughts and insights on the world of Bitcoin at large.
And our guest this week is Jameson Lopp. In addition to writing, tweeting, and chatting
about Bitcoin, Jameson also maintains one of the most comprehensive online resource
hubs when it comes to all things Bitcoin.
You've probably heard several of our other guests mention it, but if you need a refresher,
it can be found at Lopp, L-O-P-P dot net.
So we are really happy to have him on the show.
Jameson, welcome to the show.
Great to be here.
To start us off, can you tell us just a bit about your journey into the world of Bitcoin?
What led you to it, and why did you start your comprehensive resource list?
Sure.
So it really started for me back in 2012, I think I read a Slashdot article about Bitcoin.
And I'm pretty sure it was not the first time that I had done that.
For some reason, it struck me that I kept hearing about this Bitcoin thing that I assumed
was just going to get hacked and everybody was going to lose their money.
But Bitcoin kept coming up over and over again in these tech circles.
And so it was at that point that I decided to actually start looking into it, read the
white paper, and decided that I needed to play around with it because it actually seemed
like a very elegant system from a computer science standpoint.
Once I actually sent a wire transfer off to this random bank in Japan for some website
called Mt. Gox, and then I got my first bitcoins, that's when I really started feeling like
it was a real thing once I was able to actually use them and manipulate them.
That really just started the journey down the rabbit hole.
I wanted to better understand how the system worked, and so I started creating open source
projects and just talking to people about it and got fully sucked into it and was just
using every opportunity that I could to better understand it and discuss it with people.
I just felt like the idea of money is this abstract concept that kind of belongs to humanity
at large, and the idea of money being an open project where anyone can collaborate to best
determine the optimal form of money for everyone was something that was very intriguing to
me, both from a computer science standpoint and a sort of libertarian and moral standpoint.
And how did you end up creating this resource list as part of your journey there?
What led you to saying, hey, I need to collect all of this information?
It originally started because I was running a number of different groups.
I was running local meetup groups, and then I also started the Mensa Bitcoin interest
group.
And it was actually when I started the Mensa group, I decided just to go and create a short
list of educational resources.
There were maybe like 10 or 20 URLs on that list because I knew that most of the people
who I was going to be talking with had never done anything in the space before.
And that started out on its own little website, and I just kept adding more and more things
to it over the years because it was very self-serving.
I kept getting people asking me the same questions over and over again, and it became a very
time consuming thing for me to go and find these resources over and over again.
So I really created it as an index for myself so that I could just refer other people to
it.
And then eventually, a couple of years ago, I was like, you know what?
This is getting enough activity that I might as well put it on my redesigned website and
open source it and make it so that anybody can actually contribute to it.
So that resource, and actually my whole website is now open source, and it gets several pull
requests every week of people who want to add or modify things on that list.
Wow, that's awesome.
And one thing you also touched on that we'll explore a bit later is your initial skepticism
of Bitcoin.
And I think that's something that, again, we'll explore in a bit here, but I just want
for our listeners to keep that in mind because that is something that I think a lot of people
have initially, and then you dive in further and then you just see there's so much more.
And I'm curious, Jameson, what to you is today the most exciting thing about Bitcoin?
Why make it such a focus with what you're doing on your day to day life?
Well, for a number of years, it was mostly about the technology and about the ability
to create a monetary system that is disconnected from banks and nation states.
But these days, after the multi-year contentious scaling debate, we really learned a lot about
how Bitcoin works from a governance standpoint, or you could even say lack of governance standpoint.
And that's what I've really been focused on a lot, at least during my free time when I'm
not building technology, is this idea that we're still trying to understand what Bitcoin
is in terms of how does Bitcoin evolve to become a better form of itself.
And I just gave a pretty in-depth explanation of that in Korea, where I was basically making
an argument that what we have done with this new type of internet protocol is we've actually
automated bureaucracy.
And the result of automating bureaucracy by running code, running these fully validating
nodes that check everybody's work on the network, is that we've also inverted bureaucracy.
This is no longer a top-down pyramid structure like command and control system, which traditionally
every form of bureaucracy is, whether you're talking public or private type of institution.
Instead, it's a bottom-up type of system where the consensus organically emerges from the
various individual actors on the network.
And that is what is so mind-bogglingly difficult to really wrap your mind around.
And that's why we've had so many arguments about this over the years of, well, do miners
control Bitcoin or do developers control Bitcoin or do users control Bitcoin or do exchanges?
And I think that it's like it's none of the above and all of the above.
It's not really something that I guess can be easily quantified or pointed at.
And it is that kind of vagueness that can lead to a lot of people being very frustrated
because it can result in deadlock and lack of movement in a specific direction for long
periods of time.
But it also is what makes the network so robust and resistant against control of really any
type of specific actors.
It's very difficult to change.
In many people's minds, that's a flaw, but in other people's minds, that's a feature.
This is a payments podcast.
I come from the payments world, which is just drenching with bureaucracy and this top-down
idea and rules and regulations and things like that that have been set at the top.
And these whole systems have been built.
So when you talk about Bitcoin and inverting that, the wheels just start turning and you
start to wonder how could this apply to something like our traditional financial systems?
How could this apply to something as simple as a new business being able to set up and
accept Visa cards?
And what differences there are when you have it inverted like that?
It's very difficult to say how the traditional systems can, I guess, try to adapt or try
to merge in support for this new system.
But I think the most important thing is that the existing systems are not going to be able
to co-opt it.
They will have to figure out how to work alongside the new systems.
I think that's 100% right.
We've talked about the great resource page that you created.
And so many people, they might be listening to this show or they just finally see that
latest CNN article about Bitcoin's price and they're like, you know what, I want to find
out more.
I'm interested in this.
If you could off the cuff design some kind of Bitcoin crash course, at a high level,
what kind of educational path would you recommend someone follow?
How long should they commit to research for making that decision to buy?
Or what kinds of subjects or aspects of Bitcoin are good to focus on for someone who's just
like, I'm just getting my feet wet here?
Yeah, this is one of those things where I don't think it's possible to prescribe a specific
set of resources or a specific path because this is such a multifaceted ecosystem that
has come up that, you know, like you said, you are coming from the payment space.
So you may approach Bitcoin from more of a payments background and an interest in payments.
And so for that type of thing, you know, I would end up basically pointing you more in
the direction of off-chain scaling and lightning networks and payment channels and stuff like
that.
But a lot of people probably are not technically sophisticated or they're not developers.
And so, you know, they should not take the same path that a technical person might want
to take, which would be, you know, really diving under the hood and understanding how
the protocol and the network and the implementations all work.
Instead, if they're more interested in, you know, the sound money perspective, then I
would point them in a different path.
And this is why there are so many different subsections on my site is because, you know,
while I think that you should definitely start off with the getting started section, which
literally begins with, you know, explain it like I'm five type of high level analogy.
And then it's kind of a choose your own adventure as to, you know, what is most interesting
to you and why you might think Bitcoin would be something that you would want to invest
in or store your value in or use for some particular use case.
So there's so many ways that you can approach it and so much educational material out there
that, you know, I think to go through all of the stuff that is listed on my particular
page, which last I checked was about 500 different websites, that would easily take a year if
not longer.
You know, this is a sort of a aggregation of many years of research that I've been
doing basically full time, both as I'm working and really most of the rest of my free time
as well as a hobby and just something I'm enthusiastic about.
So it really comes down to you figuring out what you're most interested in.
And the same thing applies to the question of, well, if I do decide that I'm interested
in this system and I want to help the system grow and evolve, how do I contribute?
I get that question a lot as well.
And most people seem to think that the only way to contribute is by learning how to write
code and developing the protocol or developing applications around it.
And that's certainly not true either.
I mean, like I said, this is a very diverse ecosystem.
And so we're going to need business people, entrepreneurs, marketers, people who build
out every type of system that we see in traditional companies in the financial space as well.
And that could be also finding unique use cases for it, where the things about Bitcoin
that you'll find if you get really, really deep into it is that even the quote unquote
Bitcoin wizards who arguably have a deeper level of knowledge of the protocol than anyone
else simply because of the amount of time they've spent working on it, even they have
not fully explored the boundaries of what is possible with this protocol.
And that kind of goes back to what is really exciting about Bitcoin to me is that there
is still a lot left to be explored.
There's plenty of room for innovation.
And that can be very challenging to explain at a technical level.
But it is one of the things that makes Bitcoin so unique is that it is an evolving organism.
And in fact, like Ralph Merkel, a famous cryptographer actually described Bitcoin as a new form of
life.
And so that's why for some of us who are super obsessed with it, there's always something
interesting that is happening in this space, whether it's social drama because of things
that are happening between different individuals or technically interesting things because
of new applications and new ways of using the protocol are basically being invented
slash discovered.
Absolutely.
And I really love your answer there because it just makes so much sense.
It's okay if you're new to Bitcoin and you want to learn more about it.
Sure.
You can let the explain like I'm five kind of thing and really get your solid base.
But then really think about what do you know going into this?
What do you want out of Bitcoin going into it?
And then it's kind of like the next logical step.
Well, after you're learning about this, now you should be thinking about how can you take
what you've learned about Bitcoin, where your expertise does lie, and how can you apply
that to it going forward, bringing it into payments?
Someone who's listening to the show, and they've been in the payments industry for years and
years and years, and they have so much knowledge about how our existing payment systems work.
Well, if you learn about Bitcoin, and you come from that perspective, well, then you're
the type of person who can apply that to your existing knowledge and really drive it forward
and innovate without having to do like crazy code or anything like that with saying like,
Hey, I know these relationships, and I know these businesses, you know what I mean?
Yeah, I mean, there's a lot of options out there.
Once you have a little bit of Bitcoin knowledge, and then can combine it with some other expertise,
I think that's where the real magic can happen.
You have a great tweet that is pinned, which gives some advice to Bitcoin newcomers, I
have to explore this, you answer some common questions.
One of those questions I saw is, when should I sell and your responses, one word never,
I think there's a meme around there, which I've seen, it's just, it's keep calm and
HODL, H-O-D-L, Jameson, why do you think folks should never sell just hold, hold, hold, hold?
Yeah.
So once again, it comes down to your perspective.
Now, there are some people who are in this space as professional traders, and all that
they care about is, you know, moving numbers around and ending up with a larger number.
And even within the Bitcoin space, and I've talked to a lot of traders, the more traditional
traders and the newer generation of crypto traders, one interesting thing that I found
from a lot of the OG crypto traders is that they tend to not think in terms of fiat, instead,
they trade in order to increase the total amount of Bitcoin that they have.
But the reason at a more general level outside of trading of why I say you should never sell
is because I think, you know, one of the main reasons that people put their value into Bitcoin
is because it is meant to be a sovereign store of value that is uncorrelated with traditional
systems.
So putting dollars or yen or euros or whatever into Bitcoin and keeping it there is kind
of a hedge or a bet against nation states and banks and their monetary policies.
And so if you believe that Bitcoin offers a more predictable and more sound store of
value, then you're not storing your value there in order to get more fiat.
It's really you're storing your value there so that you don't have to expose yourself
to those monetary policies.
And we're in a kind of weird early state right now where crypto is still very small, even
though there has been a lot of mainstream media coverage, there's still very few people
who are actually using these new systems.
And so we do have a lot of volatility.
And so yes, the purchasing power of your crypto can go up and down by crazy amounts.
But if you're in this for the long term of, you know, decades, if we do get to the point
where these systems are truly used as mainstream stores of value and medium of exchange, then
you shouldn't need to quote unquote, sell your crypto for fiat, you should be able to
just buy goods and services directly with the crypto.
Now how long will it take before we really get to that point is up for a lot of debate.
Right.
I'm curious, because I think this really does connect to the future of Bitcoin and getting
to that point where there's more mainstream adoption and things like that as a store of
value.
What are your thoughts on how governments might regulate these cryptocurrencies or Bitcoin
specifically?
Is it already happening?
I know there's talk.
Will it happen at a greater pace soon?
And what kind of impact do you expect governments to have on how Bitcoin continues to develop
and its price when we talk about regulations?
Oh, it's definitely happening.
I think that every government agency will try to exert as much control over Bitcoin
as possible.
And we've already seen that happen in the United States with various government agencies
defining Bitcoin as different things, basically, you know, whatever puts it under their purview.
But the main thing that I tell people regarding government regulation is that governments
cannot regulate the actual protocol and network.
That would be like governments trying to regulate the internet itself.
If you look at how some governments do regulate the internet, they are regulating the kind
of points of ingress and egress, you know, the ISP that are controlling a lot of the
flow of traffic or in terms of like China and the Great Firewall.
They're trying to control basically the egress from the Chinese internet to the rest of the
global internet.
And so, you know, there's definitely plenty of points of control where governments can
exert pressure, but just due to the global nature of this protocol, I think there's always
going to be enough wiggle room for various actors that are operating within the network
to evade various points of government regulation.
And in fact, we saw a lot of that happen when China clamped down a year or two ago is that
a lot of the Chinese crypto enthusiasts, they just moved most of their activity to Hong
Kong as a result of that.
And I think we're going to just continue to see that happen over the years.
But then a lot of people also ask me, well, you know, do you think that governments could
kill Bitcoin?
And I think that would be extremely difficult.
But I also find it at this point to be implausible.
And that is at least in part due to the fact that we're seeing a number of politicians
come out, at least in America, and say, you know what, like, I own crypto, I think this
is a good idea.
A number of them have been even accepting it as, you know, campaign donations.
So I think that we're already starting to kind of infect some of the minds of the politicians
and incentivize them not to try to kill the golden goose.
It's really interesting, you know, your point about it moving.
So it's like if a government, say the United States or whatever, if they said, well, we're
going to shut down all the exchanges, and so you can't get USD from turning your Bitcoin
into that or whatever they would do, then it would just go elsewhere.
People would figure a way around that.
And then they'd be like, okay, well, I'll put it in the end.
And then I'll then I'll get it to USD or whatever I would do.
Right.
Yeah.
So kind of going off of regulation, there's a thing that regulation, stability and price
or the lack thereof are factors that can really impact how a lot of folks in I think the payments
and traditional finance industry view Bitcoin and cryptocurrencies and their viability because
there's this sort of double edged sword where it's like the very thing that is a strength
of Bitcoin, its decentralized nature and things like that is also there's a risk associated
there from a business and finance perspective of, well, we don't know what's going to happen
with this.
So why would we invest heavily in this or move this way?
How do you see these types of things maybe changing over time with Bitcoin?
Do you think that regulation could be good and help open up the floodgates to mass adoption?
Or will something else help in opening up these floodgates and then finally get businesses
and traditional financial markets to say, hey, you know what, we've got to go all in.
And then then it's more than just a CNN article.
Now you're really talking.
I think that there is a big time component to it that Bitcoin is about to turn 10 years
old but only really got into the eye of mainstream folks maybe two years ago and that this is
the type of thing where Bitcoin needs to become stable enough.
And I don't just mean like from a price standpoint, but stable enough of a global platform that
it basically becomes trustworthy.
And so you can kind of make parallels to the internet itself, for example, of the internet
didn't get adoption overnight and a lot of people were incredibly skeptical and dismissive
of it for decades as the internet was being built out and it was originally just seen
as a toy technology for nerds in their basement to kind of type text to each other in these
various chat rooms.
It took a long time for the necessary infrastructure to be built up around it.
And I think that's generally the case for any type of distributed network protocol.
So we're 10 years in and I suspect that 10 years from now, the ecosystem is going to
look radically different and that if we can get through those 10 years without completely
screwing the system up, then it's going to have a much more solid reputation for businesses
and other entities to basically plug into.
So can you envision a future in 10, 20, 30 years, whatever, where maybe more traditional
financial investment mechanisms like IRAs and 401Ks and so on have offerings for Bitcoin
and other cryptocurrencies?
Can you envision that future and maybe think about what that might look like?
Yeah, I mean, we're already partially there.
I actually converted my IRA into Bitcoin a number of years ago, though I had to use a
self-directed IRA, which was a lot more complicated in order to do that.
And we already are seeing a number of vehicles that allow you to get exposure to Bitcoin,
whether that's through GBTC or some of the other semi-exchange traded funds.
I guess none of them are in the United States.
But there are already so many initiatives.
I think there's at least half a dozen, maybe a dozen, even more of folks trying to build
those on ramps into the traditional investment platforms that it seems like it's only a matter
of time before they're going to find the right combination of things that will allow the
SEC and other government agencies to basically sign off on them being traded in traditional
vehicles.
Absolutely.
Okay, I only have a few more questions here.
At the top, we were talking about your great resource hub.
Do you have like a few of maybe your favorite ones, favorite Bitcoin resources that you
think are like, hey, this is a really great one, whether it's a white paper or a website
or what have you?
Well, I'm a data nerd, so I'm a big fan of the statistics section and the visualizations
section.
Those are easy ways, I think, for people to get a better grasp of the system and how it's
operating from a visual standpoint rather than having to read lengthy amounts of text
and try to get these complex concepts built into their head.
For a lot of people, it's easier just to look at some pretty charts and stuff to figure
out what's going on.
Absolutely.
All right, we have a segment that we like to end with, which is our rapid fire question
segment.
Jameson, are you ready?
Ready.
Make a prediction about the future of Bitcoin that you expect will happen in the next 12
to 24 months.
I mainly see a lot of focus on the Lightning Network happening.
In terms of that, one of the things that I'm most interested to see happen is for exchanges
to start plugging into the Lightning Network.
I've written some articles about this even a few years ago where I basically showed some
models that came to the conclusion that from a liquidity standpoint, the Lightning Network
is going to be very difficult to make robust from a liquidity standpoint until the exchanges
are plugged into it.
I think that once that happens, we'll really start to see it take off.
Right now, we're seeing a lot of interesting experimentation phase, but from actually becoming
a full-fledged payment network, I think is going to need those liquidity providers.
I actually recently recorded an episode where we talked all about the Lightning Network,
especially from that payments perspective.
I'm fascinated to see where that goes as well.
I didn't realize that it wasn't part of the exchanges just yet, so it sounds like we could
be getting closer and closer to really the doors blowing open on this one.
What's one cool piece of technology, either payments or fintech related or not, but unrelated
to Bitcoin that you came across recently that impressed you?
This year, I've gotten very interested in virtual reality.
To be specific, I got the HTC Vive Pro, and even more specifically, the thing that really
pushed me over the edge to go this route is seeing the wireless technology that has been
developed.
The HTC also came out recently with their native wireless.
There used to be some other aftermarket stuff that worked okay, but now I got this system
with full HTC, everything, top of the line, bleeding edge desktop that can actually run
it because you do need some pretty beefy processing power.
I haven't really been a gamer, basically ever since I got into Bitcoin, I basically gave
up gaming as one of my hobbies.
Now this, I feel like is a true gaming experience of actually being able to go into other worlds
and basically getting one step closer to that ready player one type of world.
Of course, eventually, I think that virtual reality will come along with a number of things
that we're seeing in Bitcoin and blockchain based systems.
We are seeing stuff like Decentraland where you can buy virtual plots of land and having
a digital currency that can be native to the internet and to these worlds is also going
to be important.
As a gamer myself, I got to make sure I talk to my wife before I get something like that
because I disappear into that.
In the next five years, Jameson, do you think most people around the world will make a purchase
with either Bitcoin, Apple Pay, some other thing?
Which one and why?
Well, Apple Pay is definitely far in the lead, but of course, Apple has a huge distribution
platform that they can already push things out to.
Bitcoin has a lot of catching up to do and there's no central marketer for Bitcoin.
Bitcoin doesn't have a marketing budget or a sales budget or anything like that.
It has to be much more organic and viral and so I think that results in it being a lot
slower in adoption, but it also means that we can expect to see more of an exponential
adoption curve.
Of course, it's not going to be a smooth curve as we've seen over the past few bubbles, but
I do expect that that cycle is going to keep on happening, keep on happening and that after
another bubble or two, Bitcoin will be far beyond Apple Pay.
That's mainly because in order for people to get into a public permissionless system,
they don't have to go through any gatekeepers like Apple or Visa or other folks that are
basically making sure that you have a bank account.
Absolutely.
Jameson, I wanted to thank you so, so much for joining me today.
This was super informative.
Thanks again, Jameson.
Sure.
Absolutely.
So that completes our show today.
Thanks so much for listening and don't forget to subscribe if you like the show.
You can do so on iTunes, Google Play and many other platforms.
So until next time, I'll see you then and thanks again for listening.