Hey everybody, absolutely fantastic episode of The Bitcoin Show.
We are joined by very special guest, Jameson Lopp.
He's a cypherpunk and angel investor.
He's the co-founder and CTO of the Bitcoin security provider, Casa.
He's an expert on all things Bitcoin security, privacy, and everything in between.
We talked to him about some of the recent developments in Bitcoin,
what adding complexity to Bitcoin looks like,
the differing opinions among Bitcoiners about what Bitcoin should be now and in the future.
Overall, it's a great show.
It's co-hosted by Trevor Owens and Aubrey Strobel.
It's an absolute jam.
Hope you enjoy it.
Good morning, ladies and gentlemen, or good afternoon to you wherever you are in the world.
This is The Bitcoin Show.
We run this show on Tuesdays at 12 p.m.
Eastern Time, where we speak with some of the brightest minds,
the best thought leaders in the Bitcoin space about all things Bitcoin, past, present, and future.
So excited about today's show.
I'm your host, Pio, here with my co-host, Trevor Owens,
investor in Bitcoin startups, partner at the Bitcoin Frontier Fund,
CEO of Ninja Alerts, and host of The Ordinal Show,
very talented Twitter spaces host in his own right.
And Aubrey Strobel, the host of The Observation on YouTube and other platforms,
just a big-time Bitcoin content creator,
former head of communications at Lolly, among other very, very notable positions.
Couldn't be more excited to have both of you as co-hosts.
Aubrey, how's it going this morning? Or afternoon, depending on where you are.
It's afternoon. I'm actually in Cape Town right now, so it's going good.
Thanks for having me.
Oh, yeah, absolutely. This is going to be a jam.
So excited to have you here.
Trevor, how's it going with you, buddy?
How's the lack of beard life going for you?
I mean, you took the words out of my mouth or off my face.
You know, I'm super excited to talk with Jameson today,
currently the reigning king of best beard in Bitcoin.
You know, I think I would have given him a run for his money a few months ago,
but unfortunately, I lost a dumb bet.
So I am, you know, it's coming back in.
I'm using Rogaine and DermaRolling every day,
but it's going to take a long time to get to that level that Jameson's at.
Well, that leads me to this week's extremely special guest.
I wasn't going to bring up the beard disparity,
that kind of like competition that no one's talking about,
but everybody knows about between you and Jameson.
But ladies and gentlemen, this week's guest is a cypherpunk,
an angel investor, the co-founder and CTO of Bitcoin security provider, Casa,
an advisor to AnchorWatch, CCSS, and other organizations,
and most importantly, just an absolute expert when it comes to all things
Bitcoin security, privacy, and technology.
The man himself, Jameson Lopp.
Thanks for joining us, Jameson.
Good morning and good afternoon.
Glad to be here.
I will say I object to the term thought leader.
I prefer to think of myself as a thought spewer,
and I'm just fortunate if people decide to pay attention to that.
A very, very humble response.
So really excited to get things kicked off.
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and where it fits in the world these days.
If you have any questions or comments for Jameson,
let us know in the comments. You can click on the bottom right,
that little purple bubble there, and you can write any questions that you have.
Later in the show, we will let audience members on stage to directly ask questions,
you know, themselves.
But just to kind of kick things off, Jameson,
I thought that it would be definitely relevant to discuss, you know,
just some basic security standards that everybody that owns Bitcoin,
you know, should understand.
Obviously, you're extremely knowledgeable when it comes to security,
and there's different depths that people can reach when it comes to securing their Bitcoin.
I'd love if we could just kind of kick things off briefly,
talking about some basic security standards that anybody that owns Bitcoin should follow.
Yeah, well, I mean, at a really high level,
the way that I start off trying to describe Bitcoin security is you have to ask yourself,
you know, are you taking your security into your own hands,
or are you hoping that someone else will take care of it for you?
And of course, there's a lot of things that can go wrong when someone else is doing it,
and you don't necessarily know what they're doing.
So the point that I generally try to get across is, you know,
I'm a big self-custody advocate, which means you are holding your private keys
because they are literally the keys to the kingdom of your Bitcoin.
And if you look at the entire space of threats and attack vectors,
and you compare self-custody versus trusted third-party custody,
there are basically the same types of vectors that exist for self-custody
also exist with a third-party custodian,
but then a third-party custodian has additional threat vectors on top of that.
So, you know, you're basically, you're paring down the sort of complexity
and number of things that can go wrong simply by taking custody of your keys.
And, you know, this is really high level,
not even talking about the million different ways that you can take custody of your keys.
So, and this is why not your keys, not your coins
is such a very strong meme and narrative in this space.
Yeah, I'd love to hear it.
And, you know, obviously there's different ways of self, of, you know, approaching self-custody.
You know, I think about a recent mainstream Bitcoin moment,
I'd say was Balaji and his tirade about, you know, Bitcoin going to a million dollars.
I'm sure people have asked you about this, or brought this up to you a number of times.
You know, part of that was he was just reminding everyone to remove their coins,
you know, from exchanges.
I guess if I was going to ask you about multisig, for example,
what would you say the most important concepts that people should understand about multisig wallets,
you know, would be?
Right, so there are trade-offs.
Well, there are trade-offs with everything.
But to be clear, you know, multisig, or you could call it just multi-keys,
is where instead of having a single key,
or a set of deterministically generated keys that are protecting your Bitcoin,
you actually have multiple keys.
And an easy way to think of this, without getting nerdy and technical,
is just think of how like a safety deposit box at a bank works,
or, you know, a nuclear launch mechanism at a military facility.
They don't have one key or one button that needs to be pushed
in order for a sensitive mechanism to be operated.
Rather, they have multiple keys that need to be, you know, operated,
preferably by multiple different humans.
In our case, we do support having multiple different humans,
but we're thinking more about having multiple different devices,
or multiple different geographic locations.
Basically, the whole point of adding this additional complexity
is to increase your robustness, to eliminate single points of failure.
So, you know, when you're increasing the bar of what is required
in order to spend the Bitcoin,
it does make it more difficult for you to spend your Bitcoin,
but it also makes it far more difficult for an attacker to spend it
and to steal your money.
And hopefully, if you architect it correctly,
you're also making it more difficult for a single catastrophic event
to cause you to lose access to your money.
Which arguably is actually a much bigger threat
than having some hacker or physical attacker come to steal your coins.
Right, it's much more likely that you're the reason that you lose your coins
versus a nefarious third party, you know, actually targeting you.
And, you know, speaking of that, I think about some technology,
like, for example, you know, the seed phrase component of Bitcoin.
Do you think that this may be too much of a behavior change
for, you know, mass adoption, for example,
like for Bitcoin to actually properly reach mass adoption?
Does there need to be some sort of change with seed phrases?
Like, what do you see the future of seed phrases being?
Well, I still laugh whenever I open up a new hardware device
and I look at the usually, you know, single sheet of paper that comes with it,
which just gives you, you know, 24 lines and says,
"Hey, write down your seed phrase on this and keep it safe."
Because, you know, it makes it seem really easy and user-friendly,
and it is, you know, at least to initially get set up.
But there is an entire, you know, mountain of security knowledge
behind that phrase, you know, "keep it safe,"
that, you know, the vast majority of people are,
they're just not security-minded or adversarial-minded people.
Even technical people like myself tend to be lazy
and not want to do just standard best practices
when it comes to doing things like data backups.
It's, I think, asking a lot of people to give them
what is tantamount to, you know, sort of like radioactive material.
You know, this is very highly sensitive, hazardous material,
but it doesn't look that way, right?
You just see a couple dozen English words,
so people don't really, I think, think of it
in terms of the sensitive nature that is really linked to it.
So, you know, this is why, amongst other things,
I think that, you know, putting people into a position
where they're actually generating keys on multiple devices
and putting them in physical locations
where they can actually more easily think about the security properties
and just, you know, getting them separated into different physical locations
immediately protects you from so many different classes of threats and losses
that, you know, that's really what we've been trying to do for a number of years
is architect user-friendly setups where you just tell the user,
"Hey, you follow these few directions,"
and then they don't have to know about the million different things
that could go wrong that you're protecting them against.
So, you know, that's basically what I want to see happen
is, you know, we want to have the convenience of,
"Hey, just write down these couple dozen words,"
but without the potential foot guns
where we're potentially setting people up to shoot themselves in the foot
because they are not thinking through all of the things that can go wrong
and we're not guiding them down the path of best practices
to protect them both from themselves and from potential attackers.
Yeah, I'd imagine it's not the norm for people to confirm
that their seed phrase is accurate through a test
before they actually load funds into a wallet or send funds to a wallet.
I love the kind of angle that you took there.
We'll definitely get to CASA and what CASA is.
I see that Trevor has his hand raised. Trevor, what's going on?
Yeah, I just want to dig deeper on that.
I think the thing is about seed phrases and just even setting up a wallet
is maddeningly deep.
And I'm curious, you know, Jameson,
are there alternatives to the seed phrase approach
that you think will gain popularity?
And what are those best practices for when you have a seed phrase,
like splitting it into multiple locations?
You know, do you put one in a bank?
Do you bury one in the woods?
You know, do you keep one with different friends?
Like what are some of those tips?
And then what are some of the alternatives that you're interested in
or think could be promising in the future to make this easier for people
other than education?
Yeah, so this is unfortunately where it gets really complicated
because if you're architecting really a key management
or seed phrase backup solution,
you are creating a game.
You know, you have to think through, you know,
what are the rules of this game?
You know, who has access to what?
How adversarially minded do I want to be about it?
You know, I keep repeating the same thing,
which is single points of failure.
You know, whenever you can find, you know,
if there's one thing that can go wrong
that would cause you to completely lose access to your coins,
obviously that's when you want to change something
about the architecture of your keys and your backups.
So, you know, I have many lengthy articles on this subject.
And at least when it comes to like your standard,
you know, single signature wallet where someone just has,
you know, 12 or 24 words and they want to figure out
how do I back this up?
And obviously just writing it down on a piece of paper
is a single point of failure.
You know, the paper could get destroyed
in a house fire.
It could get, you know, we've even seen this happen.
It could get picked up by a maid.
It could get thrown away
because somebody thinks it's just garbage.
You know, they don't know what it is.
It could get picked up by an attacker
as a like crime of opportunity.
If you just have it in a desk drawer somewhere
and someone breaks into your house
and they're looking around
and they happen to know what it is.
So, so many things that can go wrong.
You know, even if you put it somewhere
that's quote unquote, well, traditionally safe,
you know, like a safety deposit box
at a bank or some other institution,
you know, that is more physically safe
against sort of natural disasters
and catastrophes and whatnot.
But it's still not safe against single attackers.
You know, banks have been known to drill open boxes
without informing the owners.
There's still of course, potential for coercion
from nation state actors.
You know, there's a number of ways
that people can still get in there.
So in this case, if you're trying to back up,
you know, a single key wallet,
then I recommend doing something like SeedZore,
which is a pretty easy way of splitting your seed phrase
into a couple different pieces.
Now, the downside there is that I think the default
is that it does a two of two backup,
which actually is another single point of failure.
So, you know, if you have these two pieces of metal
or whatever that have your split seed phrase on them
and you lose either one of them,
now you're still out of the game.
So you actually need to make, you know,
multiple copies of these two of two backups.
But, you know, that just, I think, starts to show you
the rabbit hole that you start going down
because you're trying to balance this trade-off
between, you know, accessibility and recoverability
and preventing, you know, a single person or a single thing
being able to lock you out of your money
or steal your money from you.
Yeah, I love the way you're kind of, you know,
giving people so many different scenarios.
Moisture is another thing, right?
If moisture makes contact with the piece of paper,
that's, you know, fire and moisture seem to be
some of the most common ways
that people can lose their seed phrases.
You've obviously already brought up hardware wallets.
What would you say is the best Bitcoin hardware wallet?
And are there, you know, ones that, you know,
people should really know about
that maybe they don't know about?
Ooh, this is highly subjective.
I mean, the short version is stay away
from any of the hardware wallets
that are not extremely popular.
Stay away from any of the hardware devices
that are basically knock-off Android phones.
You know, I--and so at Kasa, we support hardware wallets
that we, of course, believe are user-friendly and secure.
You know, big fan of Trezor, Ledger, Cold Card, Foundation.
There are--you know, if we're not just talking about security,
there are some usability aspects
that I think are pretty neat,
especially with the, like, Foundation-style,
you know, QR code scanner stuff.
I believe Jade actually has also recently
added support for this,
but suffice to say that I find using
the animated QR code standard
for doing the data transmission,
signing, and other operations
to be more user-friendly
as opposed to having to plug into a computer.
This is a hard lesson that we've learned
over the years at Kasa,
is that just having a much more complicated technology stack
with, you know, browsers, operating systems,
drivers, you know, USB permissions,
there's just a lot more things that can go wrong
when you're having to physically plug in
one of these devices to a computer
in order to use it.
So I really do like the standalone device.
And then, like, Cold Card,
I think supporting NFC is great, too.
And, you know, the hardware device market
is becoming more diverse in what's out there.
You know, Seed Signer is a very different take on it,
but, you know, still great usability and air gaps.
And then, you know, SATS card, NFC-style stuff
is more on the extreme user-friendly side
but doesn't have the same level of security
because it, you know, doesn't have
an actual integrated screen with buttons
where you're able to independently verify
what's going on there.
But, yeah, I mean, the short version is stick to the big names
and you should generally be okay.
And the reason for that is that from a security perspective,
you want to be using a company that is making enough money
that they're spending money to attack themselves
and do research.
And so I would say Ledger is probably the leader
in that regard with the Ledger dungeon guys.
You know, they're spending probably millions of dollars,
you know, attacking as many of the other hardware devices
out there as possible.
And that's really what we need in a security environment
where so many people's life savings are at stake.
- Yeah, Ledger, obviously one of the biggest names
in the business.
I'm a fan of Trezor myself.
You know, Jameson, you've mentioned CASA,
you know, obviously your organization.
How exactly does CASA work?
How does CASA play into this?
- Well, we are not a hardware company.
We build on top of the great platforms
that these other devices out there have created over the years.
And really what we're doing is we're acting
as a multi-signature coordinator
where I would say our value add comes
from a couple of different perspectives.
Basically, we make a really user-friendly mobile app
which just allows you to interface
with your key management hardware devices.
So we are a non-custodial company,
aka we help people help themselves be their own banks.
We help you self-custody
and get into a self-custody architecture
that is extremely robust
where you don't have to know all the ins and outs
of everything that we're protecting you against,
though we certainly have plenty of materials
that explain our architecture.
But the idea is that you'll create a two of three
or a three of five setup.
So you'll have either three keys or five keys.
And one of those keys can be on your phone,
which can be convenient, but of course is less secure
because it's on a Internet-connected device.
And then one key will be offline that is held by CASA
and really only used for emergency backups.
And, you know, we create different types
of authentication protocols around what's required
to request a signature from the CASA key
if you really need it.
And then the rest of your keys are gonna be distributed
both geographically in different locations
and distributed on different hardware devices
that we support, you know, all those major brand names
that I already mentioned.
And, you know, the idea here is that you're putting yourself
into a position where you can be human
and you can make mistakes.
You can lose a key, even two keys
and the higher number of key setups
and still recover from that.
And you're not trusting CASA
because you are independently verifying the details
of your transactions on these other hardware
and firmware stacks that CASA has no control over.
So, you know, it can certainly be inconvenient for us
sometimes because, you know, we don't have control
of the user's wallets and the ability
to necessarily debug everything that's going on
very easily.
But, you know, it's one of the trade-offs that we make
because I can sleep easier at night
knowing that even if CASA's infrastructure gets hacked,
there's no keys that are going to get leaked and stolen
and, you know, have people's life savings taken.
Well, I think a user-friendly trustless solution,
you know, is obviously very needed in the market.
Trevor, you have your hand raised again.
Go ahead.
Yeah, I wanted to ask, Jameson,
does CASA do anything with wills
in the event of a customer passing away?
And what are your thoughts on that topic?
I know on Ethereum there's quite a few
kind of crypto-will type of smart contract products.
Have you looked into those at all?
And what's your thought on succession?
I'm not sure if it's called succession planning,
but essentially wills in the Bitcoin and crypto space.
Yeah, we've had an inheritance offering
for several years now,
and it has been tweaked and modified a bit over the years
because it was really initially a lot heavier
on the legal side of us, you know,
helping people work with their attorneys
and, you know, figuring out how to, you know,
get this process really imbued
into their last will and testament
and make sure that the appropriate people
would have access to the necessary keys
in order to be able to facilitate
executing whatever was in that will.
Now, there have been entire books written about this.
I do highly recommend reading
Pamela Morgan's Cryptoasset Inheritance Planning Guide.
I learned a lot from it when it came out several years ago.
But the challenge with this
is that you're walking an extremely fine line
between architecting a secure setup
where presumably only you have access to your funds
while you're alive,
but then you magically want the properties
of that setup to change when you pass
so that, you know, some predetermined entity
or group of people then have access to it,
but, you know, probably don't have access to it
while you're alive.
So essentially, this can--
if you try to do it in too smart of a way,
you know, you can run into
what is essentially the Oracle problem.
And this is also one of the problems
that I have with people who are doing dead man switches
is that--
this could certainly be ignorance on my part,
but I have yet to come across a dead man switch solution
that I would have 100% confidence in.
You know, because you have to ask yourself the question,
"Okay, I could set up a dead man switch
and I could test it now, you know,
and let it time out and trigger and see if it triggers."
But, you know, how do you get to the point
where you're 100% confident
that if you get hit by a truck,
the dead man switch will trigger?
And in many cases,
when people are setting up inheritance
with a dead man switch,
that dead man switch is a single point of failure.
So, you know, that's the thing that unnerves me.
So I think that, you know, good inheritance solutions
really do need to have humans as part of the process
because there's going to be some subjectivity involved,
you know, with KASA's solution.
You know, if you want us to sign a transaction
as a part of an inheritance recovery process,
then we're either going to need
some sort of, you know, legal, verifiable death certificate
that shows that our client has passed
and/or, you know, you'll need to have
pre-approved identities of your executors
or whoever is going to be, you know,
working on that inheritance facilitation process.
So it is extremely complicated.
And as a result, there is a large design space
of ways to do it wrong
that will create single points of failure.
- Got to think that those features and products
are only going to become more prominent in the space
as time goes on.
And ladies and gentlemen, I also pinned the guide
that Jameson mentioned by Pamela Morgan to the top.
So Jameson just mentioned this
as a very good inheritance planning guide.
I'm going to go to Trevor.
Trevor, if you have a follow-up for Jameson
and I'll sync with Aubrey on the back end.
- Yeah, so a little bit more of a technical question is,
you know, how easy or how much of an advantage
does a like Turing complete or more expressive language
like or environment like EVM have
compared to what we have on Bitcoin
with like hashed Timelock contracts?
I know that Ethereum recently approved ERC4337,
which works with, you know, multi-sig wallets
to give more flexibility for what can be done there.
Do you have any thoughts on like
the kind of technical differences
between Bitcoin and EVM
and how that advantages pros, cons?
Obviously, Ethereum probably gives you enough rope
to hang yourself with,
but, you know, what are the actual limitations
on with what you can do with Bitcoin?
- Yeah, exactly.
I mean, the EVM is far more complex
than, you know, Bitcoin's own script interpreter.
So, you know, I'm not a quote unquote
smart contract developer.
And even at Casa,
we do not want to be smart contract developers.
So that was one of the big things
that was, you know, keeping us from adding Ethereum support
for many years is that, you know,
we were evaluating the space
and looking to see if there was some sort of standard
multi-sig smart contract
that we could actually be confident in.
Because when I was at BitGo back in 2016,
I was there and I got to watch us
write a multi-sig smart contract.
And that was a year long process
and going through multiple audits
and seeing the horrors of the edge cases
and vulnerabilities that can happen
even when you're writing a fairly simple
smart contracts in Solidity.
So what, you know, are the trade-offs?
Yeah, I mean, the biggest one, like you said,
is more rope to hang yourself with.
It's so much more complex that from what I've seen,
and this is not my area of expertise,
but when you look at a lot of the hacks
that happen around, you know,
exploiting smart contracts themselves,
you know, sometimes it's really stupid naive stuff,
like just, you know, not setting some sort of sanity check.
But in many cases, I've seen it be, you know,
really low level stuff where you can get lulled
into a false sense of security
with the ease of reading and writing Solidity.
You know, pretty much anyone,
I think who is a decent programmer can read Solidity
and have a good understanding of what it's doing.
Like even I can, even though I never wrote
any Solidity myself.
But unfortunately, like unless you understand
how that Solidity code is actually getting compiled down
into the actual instructions that are being interpreted
and executed by the EVM,
you can still have, you know, vulnerabilities introduced.
And, you know, I'm sure that some of the tooling
and ability to do sort of more verification
to find stuff like that has improved over the years.
But, you know, it still seems to me
just from the really, really high level
of tracking security incidents
across the entire crypto asset space,
it seems to me that the bulk of them these days
are happening at the smart contract level.
And in some cases, it's the sort of smart contract,
smart contract versus smart contract issue
where like when you have smart contracts
that are interacting with each other,
it's just like the complexity gets totally blown out
and a lot of really crazy edge cases can show up.
And that's when people manage to find ways
to pull in a lot of profits
against other people's expectations.
So I, you know, from a security perspective,
I really like Bitcoin and its limited scripting ability.
Though, you know, even with Bitcoin script,
we're getting improvements there
with things like many scripts
that's gonna make it easier
to be able to do more complex stuff on Bitcoin.
Like even though functionally,
we've always been able to do
more complex quote unquote contracts.
I would say the most complex Bitcoin contracts these days
are likely the hash time lock contracts
that are primarily used for lightning related wallets.
But there's still a lot of complex stuff
that you can build
with some of the basic functionality of Bitcoin script.
It's just been very developer unfriendly
because really nobody wants to be writing
this fourth style, you know,
stack based programming language and debugging it.
Like that's just not a very common way
of writing code these days.
- And you talk about adding complexity to Bitcoin.
Obviously you mentioned the lightning network.
I've heard you describe yourself, Jameson,
you know, as a technologist that, you know,
you do research within the Bitcoin ecosystem,
but then you also do research
outside the Bitcoin ecosystem,
you know, looking for effective technologies
and, you know, different things
that are interesting within the space.
Have you seen anything that would make for,
you know, make an L2 more effective,
whether it's lightning or something else,
like anything that you've seen out there
that you think would be cool
to kind of take from to implement onto Bitcoin?
- For sure.
You know, we've been seeing more research
into the rollup technology.
We're seeing more research with, you know,
zero knowledge proofs and snarks
and even a bit more discussion around
actual protocol changes and various types of covenants.
But, you know, any of the proposed protocol changes
are always gonna be a lot more contentious and slower.
So I certainly have hopes for various things
that are going to come down the pipeline,
but there has been no shortage of research
over the past few years.
The question really is, you know,
how can we get to the point where there is,
you know, sufficient rough consensus
that adding some basic, you know,
protocol level functionality
will greatly increase the potential
for doing experimentation that does not actually
put Bitcoin itself at risk,
but experimentation that will be a part
of the Bitcoin ecosystem and hopefully as a result,
you know, create more functionality
and then get more value to flow into the Bitcoin ecosystem.
- Very well said.
And, you know, when I was thinking with Aubrey
before this discussion, she definitely brought up
the importance of discussing privacy with you
and I totally agree with her.
You're seeing pop, you know, more conversation pop up
around central bank digital currency, CBDCs,
and it's starting to feel like
they might be coming sooner rather than later.
I guess, what do you make of the recent
kind of inflow of discussion about CBDCs?
How do you see the CBDC situation playing out
and, you know, what will it mean for Bitcoin?
- Yeah, I mean, central bank digital currencies
are a concept that I think we've been talking about
for quite a few years because it's a very natural
progression for authoritarians
to use cryptography for their own benefit.
I mean, just stepping back at a really high level,
you know, cryptography is an interesting double-edged sword
and I think not many people think of it like this.
I think when most people hear crypto or cryptography,
they think of privacy and secrecy
and that's because they're thinking of encryption.
And it's kind of funny because I even see
fairly well-respected people in this space
often say stuff about how Bitcoin
is protected by encryption.
And it's kind of a faux pas.
I mean, it's technically incorrect.
Like, there is no encryption in Bitcoin.
There is cryptography, but that cryptography
is mostly in the form of digital signatures
and cryptographic, like, one-way hashes.
There's no encryption like you see
with a lot of other, you know, popular privacy technologies.
So, you know, where are we gonna go with all of this?
It's hard to say, but I think that CBDCs
are an inevitability and that's because,
sort of going back to this double-edged sword,
what does cryptography give us?
It gives us two primary functions.
The first one is privacy,
and that is generally accomplished by encrypting data.
You know, public-private key pairs,
you're basically encrypting your data
to a public key pair that belongs to someone or something
that can only then be decrypted
and read by whoever has that private key.
That is an extremely strong privacy assurance
as long as the keys themselves are in a secure architecture.
But the other aspect of cryptography
is actually like verifiability and auditability.
And this is where, you know, the digital signatures
and tracking things with public keys comes into play.
And so, you know, as I'm sure people are aware,
Bitcoin is incredibly robust for many different reasons,
but one of them is actually the transparency
and auditability of everything that happens on the blockchain.
So, you know, the trade-off here
is that we have pretty crappy privacy characteristics,
but we have very strong auditability
and verifiability of Bitcoin.
So, you know, really anyone with a halfway-decent computer
can run a node and verify
the entire 14-year history of Bitcoin
and be 100% confident
that no one is breaking the rules of Bitcoin.
So, you know, what happens with all this?
Well, we can expect that authoritarians,
central banks, nation states,
who knows, probably even private corporations,
will take the auditability
and verifiability aspects of cryptography
and use them against us to their own benefit.
You know, central banks will be able to do this
and essentially write their own rules,
run your own private blockchain network
or distributed ledger network, whatever.
It doesn't really matter because all of the "nodes"
on that network will be authorized,
permissioned participants,
and they will be able to arbitrarily change the rules.
They will be able to tell you how to spend your money.
They'll be able to easily take your money away from you
if they disapprove of whatever you're doing.
So I think we should expect that, you know,
any authoritarian or institution
is going to leverage these technologies
in whatever way they find suits them
and empowers them the best.
And, you know, that's just the nature of technology
and neutral tools is you should expect
everyone will use them however they find them most empowering.
So the best that we can do,
you know, we can't stop that from happening.
The best that we can do is continue to try to empower individuals
by using free open source technology
that is more "fair."
Yeah, definitely not a great idea to think about
when you sort of think about the potential that it can have
when a government's implementing it.
You know, speaking of authoritarian government,
last week we saw Coinbase receive a Wells notice from the SEC.
Yesterday Binance sued by the CFTC
for violating trading and derivatives rule.
We had Nick Carter on the show two weeks ago.
We talked to him about, you know,
the paper that he wrote, Operation Chokepoint.
He described it as, forget about Chokepoint,
now it's Operation, you know, Decapitation.
I guess, how do you view the recent action
from the United States government against cryptocurrency?
Is this like an administration specific thing?
Like, how could, you know, do you see this playing out?
Yeah, this has actually been playing out as I've expected,
at least in the sense that I've always felt like
the sort of novel nature of Bitcoin
and what it is means that it can be seen
in a variety of different ways.
And the result of that when you're looking at things
like government agencies is, once again,
we should expect that each government agency
is going to try to define Bitcoin
and, you know, every aspect of crypto ecosystem
in whatever way gives them the greatest authority
and jurisdiction over it.
And so it's going to be amusing,
but in a kind of dystopian way,
to see different nation states
and different agencies within nation state justice systems
kind of fight with each other over their turf.
So I think we're starting to see some of that
between stuff like CFTC and SEC.
And I think there's general consensus
that SEC has been highly, you know,
political over the past few years
and has not been a very logical or reliable organization.
Yeah, yeah, well said.
And, you know, just to shift back to technology a little bit,
obviously Bitcoin ordinals has been a big topic of conversation
over the past month, month and a half, feels like longer.
You know, what's your impression of the protocol?
Like how do you feel that ordinals
will impact the future of Bitcoin?
I've had a fairly bemused
taking a stand back take on it all.
You know, I've never really been that interested
in like NFTs or art or anything like that.
I do own one NFT, but that's a whole other story.
I found it amusing for sort of historical reasons.
But I like what is going on in the sense that, you know,
this is the type of permissionless protocol development
that we need to be seeing more of.
And, you know, it's amusing to see folks acting
sort of puritanical or authoritarian
about how Bitcoin quote unquote should be used.
So, you know, I have been following along, you know,
from that aspect, even though I'm not personally interested
in this particular application of the technology.
As a technologist, it's just good to see
any experimentation and innovation
because while, you know, I'm skeptical
that this will turn into the same size and style
of NFT market that we've seen happen on other networks,
it nonetheless, you know, could create an interesting niche
and some various cultural and narrative offshoots as a result.
Trevor, go ahead.
Yeah, so, I mean, Ordinals was developed by Casey Rodemar
and he also, I believe, was working on Grin before.
And I saw that in your blog post on Bitcoin maximalism,
you were talking about how you were intellectually interested in Grin
and then some maxis were giving you backlash for it.
I'm curious, just to like understand about like that timeframe,
what was Grin and like, do you see any type of like lessons learned from that
that maybe informed the development of Ordinals
or yeah, just generally, how do you think the Grin
being kind of a reference point, I think maybe,
and I'm not sure if maybe ties you and kind of Casey on the same path,
you know, Bitcoin maximalism from then to now?
Yeah, so, the short version is,
I will always be interested in any privacy enhancing technology
and if it's not happening on Bitcoin, you know, that's a shame,
but I will still look into it.
So, you know, I was running Zcash, for example,
before they even had their mainnet launch,
like I was running beta node software, I think in 2014 or something.
Always been interested in Monero, I was interested in MimbleWimble,
which took a number of years of technical discussions and development
before it had its first launch.
With Grin, I think, you know, Grin kind of failed
due to some poor economic decisions
and I think there was some weird stuff going on
with some like VCs and industrial miners and stuff.
It was a number of years ago, though, so my details may be foggy.
Though I believe that MimbleWimble has more recently been implemented
on top of Litecoin.
So, you know, MimbleWimble is not dead as a technology,
it's just unfortunate that, you know,
Grin did not succeed as a standalone network
for the implementation of that technology.
But, you know, that's the great thing about technology,
you know, try and try again.
It's okay to fail, you know,
failure is how we learn and continue to improve.
It's interesting they're trying to tie that into Ordinals development.
I don't think I really have anything off the top of my head.
You know, this is permissionless development.
I don't think Casey was shopping his idea around asking,
"Hey, should I do this?"
He just went ahead and it has organically created a community
over the past few months.
And that interest has then sparked, you know, actual money and resources
where, you know, people are building wallets and explorers and exchanges
and really like just the rest of the infrastructure that one needs
to have, you know, a full featured technology ecosystem
where people are economically interacting with each other.
So, you know, that I think is the sort of success story
that has happened with Ordinals that did not happen with Grin.
You know, there's a number of...
There were other aspects of like the way that Grin was implemented
that just did not make it easy for, you know,
other infrastructure providers to add support for it.
Yeah, it'll be fascinating to see how it continues to develop.
Aubrey, let's see if we have you back here.
Let's try it again. Hopefully it's working now.
I don't know how long ago it was, but it was pretty funny.
It was something like, you're called like a Bitcoin maximalist
by altcoiners and a shit coiner by bitcoiners or something like that.
I don't know if that's exactly what you said, but I thought it was funny.
And I think this is interesting because there's a lot...
There's obviously like a large debate going on right now.
And to some extent, it feels like the community is at war with itself.
How do you think we move past that?
Because I feel personally like it's holding back
a lot of the growth of Bitcoin currently.
Yeah, I mean, there is definitely some fracturing going on.
But I also think that this is a natural evolution.
Sort of made some references to religion in my post.
I didn't go too deep into it.
But essentially, when you have a belief system,
I think that it's basically an inevitability
that you hit certain inflection points.
And the size of the community of a given belief system
grows to the point that some points of friction and contention arise.
And that just happens as a result of people discussing
what they believe with each other.
And the fact that humans are complex social creatures
that once you get a large enough group of humans together,
it's impossible to have 100% consensus on all of your beliefs.
And so inevitably, the size of the communities continue growing
and sort of tribalistic nature starts to arise.
And we...
This is...
Once again, it's kind of darkly amusing
in the sense that we have probably 99.9% in common with each other
in what we believe.
Like if you're doing Bitcoin stuff,
and even if you're doing crypto stuff.
And of course, it's a very huge diverse ecosystem these days.
But we have far more in common than we have different.
But the sort of human nature is such that we somehow manage
to suss out the smallest of differences.
And then some people inevitably take those to the extreme
and are very negative and basically use the small differences
as ways of separating people and saying,
"I'm better than you because you believe this and I believe that."
And I think that has really happened
over the past three years or so,
partially as a result of the whole ecosystem continuing to grow,
partially because I think effects of the pandemic
and people being locked inside
and spending a lot more of their lives online
and participating in discussions like this.
And perhaps even the fact
that we haven't had enough external enemies.
Even though I would say there's no shortage of external enemies,
if people aren't feeling sufficiently threatened by external enemies,
then I think they end up looking for enemies internal to the community.
So yeah, I mean, what do we do to fix that?
I guess my conclusions from the blog post were sort of a lot of boring tropes
of like the golden rule,
do unto others, don't be an asshole.
But also we have to recognize that there are going to be assholes.
And so then you just have to ask yourself,
how are we going to deal with them?
We cannot, in a voluntary community,
the most that you can do,
absent some sort of legal justice system is ostracize.
So if you see people who are exhibiting behavior
that you believe is reprehensible,
I think there are obviously other things you can do
before you get to that point.
And you can try to talk to them
and you give them opportunities to improve.
But the final piece of, I guess, justice that you can implement
is block, mute, and move on.
Yeah, I mean, very well put.
What else can you do, right?
Trevor, you have your hand raised.
Go ahead.
Yeah, so I've noticed among some Bitcoin Maxi communities,
there's a very, like an attitude kind of against building.
There's kind of like, "Oh, don't try that."
Or people want something to be perfect
in order to be worthy of trying.
And there's almost too much debate
and not just enough of an attitude of like,
"Let's just build cool shit."
I'm curious, with Ordinal specifically,
we've seen that change a lot in a big way.
And I think it's caused a lot of people
to kind of come back to Bitcoin.
I think of like looking at the history of Bitcoin,
a lot of early Bitcoiners end up building
the rest of this industry, right?
Even Vitalik, he started Bitcoin Magazine
and then went on to do Ethereum.
And we've seen, if you just Google a list
of like Bitcoin billionaires,
people who not were billionaires and then bought Bitcoin,
but were not billionaires and then invested so heavily in it,
they've gone on to build a lot of different stuff
in the space, not just Bitcoin only.
I'm curious, do you think that that culture of building
will attract more of the right people to Bitcoin
that will help it to reach more of a mass adoption?
Or just generally, what are your thoughts
on how Bitcoin can get to a billion holders
in a world where we have USD denominated in Bitcoin
and not the other way around?
- Yeah, I think there is a whole other in-depth topic.
And this is another topic that I have been touching on
recently and will continue to talk about,
which is kind of, you could just call it
the ossification argument.
But the ethos of Bitcoin is very different
from pretty much everything else.
And it's far more conservative in terms of
talking about changes,
really talking about doing anything novel.
And so that's why we haven't really seen protocol changes
happen more frequently than every few years.
It's because there's such a high bar
to reach this rough consensus to make changes.
And that bar seems to keep getting higher and higher,
which is probably the correct way to go.
But the open question is,
at what point does the bar become so high
that we're literally unable to make any improvements,
at least at the base protocol layer?
So there's obviously pros and cons to this.
And this also ties into one section of my recent essay
where I talk about what I call Bitcoin monetary maximalism,
which is really the idea that Bitcoin
is the best money that we have available.
Like it has properties that you can't reproduce
with these other networks that arguably make it
a better, more reliable, more sound monetary system.
And you wanna preserve those properties.
And there's quite a few properties, I believe,
that are kind of quote unquote inviolable,
that are important for Bitcoin
to retain its monetary soundness.
Now, the fact that we want to prevent
any of those properties from changing,
and we want to continue to be able to offer the assurance
and confidence that Bitcoin is sound money,
is then what creates this contention
with people who want to continue to improve it.
And that usually means the technologists like myself,
who we see a system as being alive
and as needing continual maintenance,
continual improvement,
because if you're not continuing to improve
your complex technological systems,
then they are going to degrade,
or at the very least,
they are not going to remain competitive
with other technologies that may arise.
And you have to kind of balance
the monetary soundness perspective
against the let's use this
as a broader technological platform
to create a whole ecosystem perspective.
And you understand that some people
just aren't gonna see eye to eye on that.
And so there's certainly a number
of Bitcoin proponents out there
who believe that Bitcoin should only be money.
And if we try to do any non-monetary stuff
on top of Bitcoin, then that's just too much of a risk.
Whereas on the other hand,
they also generally see all of the other crypto projects
and networks and assets as being in competition with Bitcoin.
And of course, this is highly arguable topic.
I would argue that most of them
are not trying to directly compete with Bitcoin,
even if they do offer some of the same basic
value transfer functionality.
But if we want Bitcoin to become a much more complex
and fully featured ecosystem,
then I think the way that we need to go
is we should strive to find a way
to make minimal changes to the Bitcoin protocol
that will then open up the ability
to experiment more outside of the Bitcoin protocol,
but you're still connected and anchored to it.
- And Trevor, I think you had one quick follow-up
before you have to jump, is that right?
Do we still have you, Trevor?
- Yeah, yeah, I just wanna say, I agree with that.
I don't think that the protocol needs to change,
but there's a lot of opportunities,
like you just said, to open the door
to development on other layers
like Lightning Stacks, et cetera,
where those things can be new use cases
and ways to use Bitcoin
so that it's a better medium of exchange can be unlocked.
But I also seem to see resistance
to even like application development on top.
I've seen maxis be like,
oh, well, we don't need more,
application development's just gonna taint
the incentives of like companies
are gonna steer protocol development.
And I did have one final question for you, Jameson,
which is from a money perspective,
imagine a completely hypothetical world,
which is always a fun question,
where Bitcoin has the same properties it does now,
Ethereum has the same properties it does now,
but you can use Ethereum in the real world
as a medium of exchange for everything.
It's accepted everywhere as a medium of exchange.
But Bitcoin is not.
What's your opinion on which the better money is?
- I mean, that's, it kind of takes you back
to the whole issue of,
does money need to be a store of value
or a medium of exchange, chicken and egg argument?
I would say, if we're looking at like payment rails
type systems, I believe the aggregate value
of all of the, at least like retail payment rail systems
pales in comparison to the value of stores of value,
like gold and whatnot.
So, but I'm not an economist.
The sort of counterpoint there would be that,
if your crypto asset is acting as a payment rail
and it's in as many locations as like Visa and MasterCard
and whatnot, then that obviously is a huge network effect
and will generally just increase the awareness,
if not the adoption of the technology.
So, pros and cons on both sides.
From a network perspective,
it definitely gives more of an edge to be widely accepted.
And I'm certainly hopeful that we will see that
continue to happen, at least with Lightning.
But, this kind of takes me back to what I said a minute ago
about minimal changes to the Bitcoin protocol.
I don't see a path for Bitcoin to be mainstream
like Visa level adoption, even with Lightning,
unless we do make some scalability improvements
at the base layer.
One example would be adding some op codes
that allow us to do L2, that's E-L-T-O-O style,
batch Lightning channel management,
where that could give us orders of magnitude,
more scalability of being able to onboard
and off-board people like to and from the Lightning network,
where right now it's not great.
You can have a single person potentially making
10 different on-chain transactions
to get their channels set up and then have to maintain them.
And it would be far more efficient
if we could have a thousand or 10,000 people
sharing those same on-chain transactions.
- Extremely hypothetical question there from Trevor.
Pretty funny stuff, Trev.
Aubrey, I saw that you had your hand raised.
Was there a follow-up that you wanted to ask Jameson?
- It was kind of back to the religion comment,
'cause I was reading through the vlog post
and I don't know if you wanna go back
to the religion argument, but I do wanna bring up
that obviously I think we all can agree as Bitcoiners
that we are all striving for mass adoption.
And the religion comparison is interesting to me
because I've been thinking about it
and then as cults don't scale, religions sort of do.
And if we're using that analogy,
for example, the Catholic Church is around,
it's obviously global, massive, and it is rarely changed.
Either Bitcoin should become sort of a religion,
it is a religion, or it's more of a cult
that needs to kind of not be a cult anymore
and be more open, specifically on like political leanings
and that kind of like ideology
that's come about in the last three years.
- That's an interesting thought.
I mean, my initial reaction would be
that an organized architecture
is fundamentally incompatible with the way
that Bitcoin operates and how it changes.
So I think that that nature is what has resulted
in the culture of Bitcoin to be more cult-like
because what happens is we have our own
quote unquote scholars, if you will,
whether they be like white paper scholars
or code scholars or economic scholars.
And this diverse set of people come in
with their own perspectives and interesting takes
on what Bitcoin is and possibly what Bitcoin should be.
And they craft their narratives
and they manage to form followings
of like-minded people who agree
with whatever they're saying.
So that's why we have this fairly diverse,
but fractured, I think, set of beliefs
and internal conflict within Bitcoin.
It's because I think it's not even possible
to put yourself forward as an authority over everything.
The best that you can do is engage
in the free market of ideas.
And this is part of, I think, the optimism
that is required, not just for Bitcoin,
but really I think for any nascent technology
that still has a lot of development
that needs to be done is you need to have a vision
for what do you want it to look like
in 10 years, 20 years, 30 years, or whatever.
Because we need to keep trying to herd the cats
in hopefully a similar direction,
even if we're not all 100% agreeing
on exactly what Bitcoin is and should be.
- Ultra reasonable response, Jameson.
And I know we're approaching time here.
You've been very generous with your time so far.
Just a couple more concepts that I'd love to hit on.
You talked about technology on top of Bitcoin
and adding complexity to Bitcoin.
Something that comes to mind for me right away
would be stable coins on Bitcoin.
And I've heard you discuss the idea of stable coins
on Bitcoin on other podcasts.
To me, it does seem like Bitcoin would be the ideal place
for stable coins if they're implemented the right way,
whether it's on a layer two.
I mean, realistically, I think it would have to be
a layer two, but obviously I'm not a technologist
like you are.
Do you see a future with stable coins on Bitcoin
and what does that future look like if so?
Jameson, I think you're muted.
- There we go.
I think it's also inevitable in the sense that
just from a sort of capital markets perspective,
stable coins aren't stable coins like three
out of the top 10 crypto assets.
Now, even though they are hilariously centralized
single points of failure,
there is no arguing that they don't provide
an enormous amount of utility
to an enormous number of people.
So it's definitely going to happen.
I'm still extremely skeptical about like,
quote unquote, algorithmic stable coins.
So I would expect that probably,
at least for the foreseeable future,
most of them will still be centralized issuers,
but the utility is there, people are going to build it.
And I look forward to helping people
manage their stable coins on Bitcoin.
- To the point and last concept,
artificial intelligence,
big, big kind of topic of conversation in 2023.
And I've heard you again, talk about it on podcasts.
To you, does artificial intelligence have a role
in the future of Bitcoin
or the future development of Bitcoin?
- I sure hope not.
And the reason for that is at least all of these
like large language models and the AI of today,
and what is it really doing?
It's kind of ingesting whatever like the most popular
form of thought is at the moment.
And so, once again, I'm not an expert in this area,
but I certainly suspect that all of these
current generations of AI,
and maybe even many in the future,
I don't know if it's like a solvable problem
or people have ideas on how to solve it,
but they're incredibly biased.
And they're biased based on what the data is
that is out there on the internet for them to ingest.
So, I'm incredibly skeptical about trying to use them
to build the future of humanity,
because there's always gonna be the sort of garbage in,
garbage out problem.
So, I certainly want,
when it comes to like developing Bitcoin,
I believe that what we're doing here is
we are trying to codify the essence
of the perfect form of money.
And we really need, I think, to have actual humans
who are collaborating with each other
to try to determine what rough consensus is.
I don't, I certainly would not at this stage
trust any sort of AI or code
to be able to determine rough consensus.
It's not even really a quantifiable thing.
- Gotcha, a great response.
Obviously, it's a complex topic.
Ladies and gentlemen, that's our show.
Jameson, thanks so much for joining.
Any closing thoughts that you'd wanna leave
for the audience based on anything that we've talked about
or anything that we didn't get to touch on?
- Basically, this is a community project.
Sure, Bitcoin is worth hundreds of billions of dollars,
but it is still an open permissionless system.
And the main thing that I want people to take away from it
is that you should not allow anyone
to stop you from contributing.
You should not allow anyone to tell you
that you're not a quote unquote real Bitcoiner.
Fuck that noise.
Continue to do whatever you think is best
and the market will work itself out.
- Oh, damn.
Jameson. - Damn, Philos.
- Giving them the business.
Let 'em cook.
Ladies and gentlemen, thank you so much for listening.
Shout out to Jameson for joining us today.
Make sure that you check out Casa @CasaHodl on Twitter.
That's @CasaHodl.
And make sure you follow Jameson.
Check out the articles that he's written,
the podcast that he's been on.
If you want to share this podcast,
it will be uploaded to Spotify and to Apple Podcasts.
Monster shout out to Aubrey and Trevor,
my two co-hosts on this show.
Make sure you follow both of them.
Subscribe to Aubrey's Twitter channel.
I mean, excuse me, YouTube channel, The Observation.
That's youtube.com/theobservation.
And check out the different organizations
that Aubrey is affiliated with.
Make sure that you follow Trevor.
Check out NINJA Alerts if you're into that.
Check out the organizations he's affiliated with.
And Jameson, just one last thank you.
Thank you so much for joining us, man.
This was a blast.
- You bet. Thanks for having me.
- Absolutely.