Hello, how are you all? Welcome to the third episode of the What Bitcoin Did podcast. I
am your host Peter McCormack and I am a full-time Bitcoin and crypto trader, blogger, podcaster
and soon to be miner. Yes, I am now going into the mining game. I've been looking at
it for a while. I've been talking about it with my buddy Chad and I have finally bought
my first bunch of mining gear. So this is going to be delivered at the end of January
and hopefully we'll be having it set up by February. I have been sharing all the details
about this with my Facebook group, why I'm going to be doing it and I will probably be
sticking some articles about it up on my website. I've gone into it for a couple of reasons.
Firstly, I've got super busy with the podcast and the website. So I wanted a way of hedging
my investing and actually mining bitcoins rather than just trying to buy them or sell
them at a profit. And secondly, just to increase my knowledge, you know, by being involved
in Bitcoin mining, I will understand it a bit more. So yes, I will share more information
about this in the future. So in the first two podcasts, I interviewed crypto traders
and I don't want to do this every week. I think it could get a bit repetitive asking
the same questions, but also I think as traders, it's really important we understand the market
we're trading in. So I want to meet as many different and interesting people in the space
that we can learn from so we can broaden our knowledge and have a deeper level of understanding
of how blockchain and crypto works. And in this third episode, I've got another gem.
I feel really lucky to do this because I've got a Bitcoin badass, Mr. Jameson Lopp. He
first came on my radar during the scaling debate, something which at times I struggled
to understand, but he kept popping up on Twitter when the key kind of leading figures within
Bitcoin were discussing the scaling issues. And he always came across as someone super
intelligent. And the points he made were ones that swayed me to understand and the philosophical
reasons for wanting small blocks. But he also stuck out for another reason. If you check
out his Twitter profile, he's got a huge beard, he's got a make Bitcoin great again cap, he's
smoking a cigar and then he's got the odd tweet where he's firing out guns. So he just
came across as this kind of really interesting dude with a really good following and a really
good philosophical approach to what Bitcoin is. And so I wanted him on the podcast. I
emailed him. He said, Yep, he's up for doing it. I agreed I would fly over and see him
here in North Carolina. But I didn't just want to do the interview with him. The thing
with the guns kind of stood out for me in that I don't really understand guns. I don't
really like them. There's a clear correlation between guns and shootings in the US. But
at the same time, I felt like there was some kind of link between gun ownership and the
right to do this and what that meant to Jameson but also then the financial freedoms of Bitcoin.
I don't talk to him about guns in the podcast. It was something I talked to him about a lot
offline during the day. But he agreed to take me to a gun range to show me you know what
it's about and actually let me fire a gun. Like I said, never shot one and I was quite
nervous but it was a really interesting experience. Both listen to him talk about guns and what
they mean to him, but also in going to the range, handling the gun myself shooting one
and meeting and talking to the people there and it wasn't an experience I expected at
all. When I was talking to the people there, what I realized is that guns are a part of
the fabric of their life. You know, people walk around with guns every day. One guy told
me he owned 30 guns. Another guy said he had 40 guns. For them, owning a gun and learning
how to hold a gun and shoot one is no different from in the UK for someone learning to drive
and owning a car in terms of what it means to them. You know, when I leave the house
and I grab my keys and my phone and my wallet, for these people I spoke to, the gun is just
another part of that list. And I'm not validating this. I'm not saying guns are good. What I
wanted to do was just understand what it meant for these people. And you know, it was a weird
experience. You know, the room we went into to shoot the guns, it kind of felt in some
ways like a bowling alley in that we had these lanes which were for us. And when you looked
around there were a wide variety of people. Next to us was an old couple in their 70s.
There were two young lads together. There was a guy and his pregnant wife. There was
another guy on his own who was there before we got there and it was carried on after we
were gone. And I guess, you know, the best thing I can compare it to is like a bowling
alley. It was just entertainment for these people. But at the same time, gun ownership
has a serious meaning to them. And you know, it wasn't what I expected at all as because
I guess I felt like guns were like they are in the film. They just fire and, you know,
they just shoot bullets. But actually, the experience of hearing one and holding one
is entirely different from what I expected. They're so much more powerful. They're really
loud and they are kind of scary. So, I mean, I would be lying if I said I didn't enjoy
the experience, but I'm not sure how much I'd want to do it again in the future. I definitely
don't want to own one. I definitely don't want guns in England. If it was up to me,
they would be banned everywhere and they'd be gone. They do cause too much damage to
society. And even talking to Jameson, he accepts the correlation between the number of gun
zones and shootings. But owning a gun is a part of the constitution and is part of their
freedom and understanding this and spending the day with him, talking and understand this,
help me understand him as a person better and help me understand what Bitcoin means
to Morgan because everything to him is about freedom. Everything is about protecting yourself
from the state. Everything is about protecting yourself from others. An entirely different
experience from what I've lived growing up. So, look, I apologize for the long interview.
If you look on my Twitter or my Facebook, I've posted up photos and videos from the
experience. I'm not miserable doing it. I'm clearly enjoying myself, but I thought it
was worth explaining why I wanted to speak to Jameson and why I wanted to have the full
day with him because it helped me understand him better as a person. You know, outside
of this, he's absolutely dedicated to Bitcoin and helping others. If you go and check out
his website, it's full of helpful advice. And the night before the interview, he actually
invited me along to a meetup he'd organized with Jimmy Song, who was doing a presentation
on the three antifragilities of Bitcoin. I'm not sure what he made of me. I think he is
used to much more intellectual, deep debates about Bitcoin tech and philosophical arguments.
And I was there trying to get him to help me help you understand the technical sides
of Bitcoin because one of the reasons for so much success and so much growth is the
amount of people coming into the market. But most of us just don't really understand what
SegWit is, what Lightning Network is, what blocks are and how it all works. And I wanted
to speak to somebody like him to help that get across. So like I said, I'm not sure what
he thought about me, but I am really grateful for him. He was very warm and hospitable.
He gave me a whole of his day and he gave me a deeper understanding of Bitcoin. But
conversely, I've come out of this realizing how little I do know and how much more I do
need to understand. So I'm going to be going through his website, going through the resources
and making sure I continue to understand as much as I can. And I suggest you do the same.
I will share all the important links to the things I found from him, articles and interviews
and specific things I think we should all take time to read. So yes, again, apologize
for the long intro, but I thought it was worth explaining why I spent the day with him and
the things we did. And look, as per previous weeks, if you want to help the show, there's
a few things you can do. And I do appreciate everyone who's helped so far. So firstly,
look, if you haven't subscribed to the show on iTunes, please do. The show will appear
there before it appears on the website. So as soon as it's uploaded, you will get a notification
on your phone within the podcast that you can download it. Also, if you like the show,
you think it deserves it, please go and give it a five star review on iTunes, because it
helps us within the listings. You can also follow me on Twitter or Instagram. My handle
is at what Bitcoin did on both of them and feel free to reach out to me. You can also
check out my website and sign up to the newsletter. The website address is www.whatbitcoindid.com.
And finally, please do share the show with your friends on social media. As I mentioned
last week, I'm always looking to meet new and interesting people. I would go anywhere.
I just want to get a broad spectrum of people on the show so we can all increase our knowledge.
So if you want to be on it, or you know anyone you think will be good for the show, please
do get in touch. Okay, I think I've spoken enough. That's quite a long intro. So I apologize.
But look, I really hope you enjoy the show. And I really hope you enjoy everything Jameson
has to say. As ever, I always welcome feedback. Okay, thank you.
Jameson, hi. Thank you for having me here in your home in North Carolina. Most of the
people who subscribe to my podcast are really techies. So to have somebody with the technical
background you have is great. And yeah, so could you just give us first a background
about how you got involved in tech and then Bitcoin and your engineering background?
Sure. So I have been a tech guy since I got my first computer when I was in probably fifth
grade. And you know, my parents were always having to pry the keyboard out of my fingers
and you know, shut down the internet and do anything they could to try to get me to go
outside and play like a normal kid. So I've always been interested and fascinated by the
internet and just the ability to, you know, project your will out, you know, into cypher
space and learn, really absorb as much information as you can. And that really resulted in me
once I got to university looking at all my various options and, you know, checking and
crossing all of the majors off the list. And the only thing that was left was computer
science. So did a computer science degree here at UNC Chapel Hill and got right out
into the real world and started working for an online marketing company, just doing a
lot of statistical analysis, really changing what I was doing with tech over the years
as the technology evolved and became more and more of a back end engineer, like working
on really low level stuff. So after I was doing that for five or six years, I eventually
heard about Bitcoin. I don't even remember, like there was no aha moment for me. I'm sure
I heard about it a number of times and dismissed it. And then eventually something came along
probably on Slashdot in 2012. And I said, okay, you know, this thing is not going away.
Maybe I should look into it. And once I did, I realized, you know, it's actually a very
elegant system, solves some interesting problems. And really from there, I just started diving
down the rabbit hole as many people tend to do, especially if they've got the technical
chops. So started doing my own projects, forked the Bitcoin Core software and added in a bunch
of metrics logging that turned into what you can now see at statoshi.info, really just
sort of operational dashboard of like Bitcoin node and did a number of other projects over
the years, eventually to the point where in 2014, 2015, you know, there was a lot of venture
capital flowing into the space. And I realized, you know, I was spending so much time thinking
about Bitcoin and learning about it that I might as well try to just get paid to do it
so that I didn't have to do my day job and do the Bitcoin stuff. So I've been working
at BitGo for nearly three years now, and have been progressing along as the company is growing
there. And now I'm leading a team of four different backend infrastructure engineers
basically building the really low level stuff at BitGo that helps us keep track of all the
blockchain data and do the actual cryptographic key signing, really all the functionality
that the rest of our engineers can then build our wallet and our platform and SDKs on top
of.
Okay. And on your website, you talk about being a cypherpunk or aligning yourself with
the kind of philosophical viewpoint of a cypherpunk. Can you kind of explain what that is to the
rest of us who wouldn't know, wouldn't understand that?
Sure. So back in the 1980s, a bunch of nerds who were getting really interested in this
internet thing that was getting developed, they saw the potential for the internet and
the technologies that were going to be built on top of it. They also saw the potential
for misuse by nation states and basically creation of surveillance societies. And they
realized that we need to have strong privacy, preferably by default when we're using these
new technologies. Otherwise, they're just going to get co-opted by governments and agencies
and even private companies to just suck up all of our data and strip all of our privacy
away. And I think we've seen over the decades that has become the norm where people have
very little privacy, at least online, and they seem to be okay with it. They don't really
think about it that much.
So the cypherpunks, they were focused on building privacy enhancing technologies. So that resulted
in things like PGP, which was for email encryption and a lot of other cryptographic protocols
that get used on a day-to-day basis now by most people just under the hood when they're
using the internet. And one of the side projects that a number of people did was try to create
digital money. And I don't even know how many projects there were, but probably dozens of
different projects over the years that ended up crashing and burning. And people kept trying
and failing, trying and failing. And then after the 90s, it really slowed down. I think
DigiCash went under in the late 90s. And nobody really was trying to do digital money anymore.
And then out of nowhere in 2008, this Satoshi Nakamoto figure appears on the cypherpunks
mailing list and says, hey, I think I figured it out. And actually the initial reaction
from most of the cypherpunks was twofold. It was either sort of feigning disinterest
of like, look, everybody's tried these things. It's not going to work. You shouldn't bother
with it. Or it was active, you know, this is why it's not going to work. These are specific
reasons why your system is going to fail. And so really there were only one or two people
that responded positively to it. And one of those was Hal Finney. He really saw the potential
of the system. And he and Satoshi started working together and they fixed a lot of bugs.
And then eventually, you know, a few months later, the first software got released and
Bitcoin was born, you know, on January 3rd, 2009.
How important do you think privacy is? And the counter argument that government sometimes
needs surveillance to protect us. So for example, in the news this week in the UK, we've heard
of nine terrorist plots that have been foiled, one including to assassinate our prime minister.
So there is a counter argument. How do you feel about that as an argument?
Right. So, you know, the argument is we can take everybody's privacy away and then nothing
bad will happen because we can stop people from doing bad things. That is an extreme
trade-off to make because then ultimately the question comes down to like power and
trust, right, is if you're stripping away everybody's privacy and somebody, some entity
is then going to ingest and analyze all of this data, probably some government intelligence
agency, then, you know, what happens when there are bad actors at that agency? What
happens when they start misusing all of the data? You know, how are they held accountable?
And then I think ultimately you'll hear people say, oh, well, other government agencies will
hold them accountable. But, you know, eventually the buck has to stop somewhere and there's
going to be some, you know, single executive authority at the top of this hierarchy that,
you know, becomes the single like trusted point of failure where they can basically
screw over everybody because of the power that they have amassed.
And then if you relate this back to Bitcoin and money and management of money and management
of wealth, do you think that's one of the primary reasons Bitcoin has been successful
because of privacy?
I think it's really more about the sound money aspects of having a set of rules that the
users are agreeing to. Really, Bitcoin has terrible privacy properties at this point.
They're going to get better, but it's going to be a long road. So while, you know, in
2011, 2012, Silk Road, darknet markets, all of that stuff was really what helped bootstrap
the system. And it was because a lot of these users were saying, oh, it's great, you know,
you can put money and you can do illegal things with it. It wasn't that you could do illegal
things with it because of privacy properties, but rather because of the permissionless,
you know, non-authoritarian aspects of it. Like there was no middleman who could censor
your payments. Like that's why the darknet markets were able to rise so much. We then
later found out that, you know, actually government agencies can get in there and do a lot of
analysis and try to track people down. So the privacy aspects are not that great. You
know, we have better technologies now like Monero and Zcash. And, you know, I think we're
going to see stuff like confidential transactions eventually get into Bitcoin or, you know,
MembleWemble is something I'm very interested in. So there's a lot of people working on
that, but that is not the fundamental value proposition of the system, I think, to most
people. I think it's the sound money aspects of, you know, money is this abstract concept.
And this is one of the reasons I got into Bitcoin is because I feel like money is something
that is owned by humanity in general because it is this mutual agreement. We all have to
agree upon the properties of the money that we're using to exchange value with each other.
So why would you want a money that is basically dictated by a handful of people who are operating
behind closed doors, you know, whether that be a few bankers or a few government authorities,
like why should they have all that power when now we have the ability to create a system
where everyone who wants to can give their input and everyone who wants to can choose
what rules they want their money to follow and then enforce them with, you know, as little
as a raspberry pie running at home.
And you mentioned the Silk Road and the dark web networks and e-commerce stores. How important
do you think Silk Road was in the success of Bitcoin? Do you think it would have been
a success without it or do you think it was a real driving force?
I think it gave us a big boost. It was the killer app of Bitcoin in the early days. It
showed that Bitcoin cryptocurrencies enable types of economic interaction that are not
really possible outside of those systems because nobody can stop you from, you know, transacting
in the way that you want to on these systems.
And do you see Ross Ulbrich then as some kind of hero or do you agree that you should be
able to create a dark web where you can sell anything?
Yeah. You know, my perspective is that Ross Ulbrich is a software engineer who was providing
a software service and some people may have used that for bad things, but I don't think
that the, you know, moral culpability of other people using his system makes him a bad person.
I don't think there's like a transitive property, you know, of bad things because I'm sure that
there are people who use software that I've written and use it to do bad or illegal or
immoral things and that doesn't like transfer to me as a person.
Now, you know, you can get into all the legal aspects of, you know, oh, he tried to have
people killed and all this other stuff and, you know, that was actually a huge setup.
Corrupt government agents that coerced him into doing that stuff and he never got charged
for it.
But it is terrible to see that, you know, he may be locked up for his entire life for
non-violent crimes.
Some people would argue that the Silk Road enabled violent crimes, but at the same time,
what then is the difference between the Silk Road and Google and Facebook where you can
find illegal terrible things through Google and you can act on illegal and terrible things
through WhatsApp and Facebook?
So fundamentally, is there a difference?
Yeah.
I mean, I think each person is only responsible for, you know, what they themselves are doing
and, you know, directly causing harm to other people.
You know, when you start getting into this, oh, you're indirectly causing harm because
of someone else who's causing harm, you could then get into the whole like six degrees of
separation thing and say, oh, well, we're all Hitler then, right?
Okay.
All right.
So what is the real Bitcoin?
The real Bitcoin is whatever you are running the software to enforce the rules that you
are agreeing to.
So the real Bitcoin is whatever you believe it is.
Now what is the real Bitcoin in terms of like global Bitcoin usage?
That's a lot harder to define.
It's this ethereal, you know, mesh overlap of consensus of what everybody is agreeing
to.
It's like a least common denominator type rule set because, you know, there are people
out there who are running node software, for example, that would accept 20 megabyte blocks
on the Bitcoin network.
And that's the only thing that they changed.
But other than that, they're running, you know, consensus compatible rules with the
current main Bitcoin chain.
So they are quote unquote like in consensus with the main Bitcoin chain.
It just so happens that they would also accept other things.
So you know, you could say, you know, consensus is as consensus does.
And once you fall out of consensus, you're now on something else.
And then we have to argue about whether it's Bitcoin or not.
So you talk about consensus and most of the people I know involved in Bitcoin now are
really just investing and speculators.
They don't know or understand what consensus is.
So to the average person, the average new person who's hearing about Bitcoin and joining,
what does consensus actually mean?
Well, there's human consensus and there's machine consensus.
And really like the revolutionary thing that Bitcoin did from a technical standpoint is
figure out how to do a decentralized machine consensus.
So that basically means that you can have computers all around the world who all they
have to do is install the software, get on the internet, and they automatically start
talking to the other computers on the network and exchange data, validate it.
And if they're all in agreement that the data is all following all the rules, they're agreeing
to the same rules, then they are in consensus.
And so that means that from a technical standpoint, like your node will accept the exact same
transactions that the other nodes have accepted and your node will reject the transactions
and blocks that other nodes would reject.
So you're running the same rules and essentially like mirroring each other in terms of the
data and the technical standpoint.
But what this is really doing is it's just automating the human consensus, which is what
do the humans agree upon like should be the properties of a good sound monetary system.
So the humans have some agreement of what they're wanting to see happen.
The developers are trying to transcribe that into code that is robust and it works in adversarial
conditions and then the rest of the people out on the network, enterprises, independent
node operators, really anybody who wants to participate can then look at the code, say
yes, the code looks good, I download it, I run it.
And we continue on in consensus, you know, potentially changing rules along the way if
we agree to it.
So it's a very hard thing to define outside of the machine level.
Like we can say, yes, like these are the technical things that our code is accepting or rejecting.
But then the really tricky part is, you know, how do you kind of reach out into the ether
and pull these like human consensus concepts and rules and transcribe them into like real
code?
That's what a lot of people are arguing about, you know, what should the rules be?
How can we change the rules?
How do we move forward?
And people tend to get really frustrated because some people are more conservative than others
about trying to change these rules.
And you often talk about how important nodes are for the network.
You encourage people to have a node or to operate a node.
A lot of people won't understand what it is or how to do it.
So can you explain what a node is and how that differs from a miner and then we'll probably
move on to talking about how that is actually so relevant to the scaling debate.
Okay.
Yeah.
So in order to have the strongest security model in one of these permissionless crypto
asset systems, you have to download all of the data, the entire history of transactions
and the blockchain of that system, and you have to validate it all.
You have to check every piece of data to make sure that no one is breaking the rules, no
one is trying to defraud anybody.
This is how you get into what you may hear called a trustless state.
It's where you are not relying upon anybody being honest to you because you're getting
data from a number of different sources and cross-checking it and validating it.
And once you get to the latest block and the latest transactions that are happening on
the network, you can now be sure that no one has lied to you because you've checked all
of the data yourself.
So the only way to do that is to run a full node.
And at the moment on Bitcoin, you can do this on something as small as a Raspberry Pi, though
it will take you a few weeks probably to get it up and running.
But really any decent desktop or laptop that has a couple hundred gigabytes of hard drive
space should be able to run a node just fine.
Now we get into a lot of the scaling debate arguments and a lot of that comes down to
trade-offs of how much should it cost to run a full node versus how much should it cost
to create a transaction and store it on the blockchain.
So we get into all of these trade-offs and the ideological differences about the best
way to continue increasing Bitcoin adoption.
So is it a case of if you scale by increasing the block size, you make it more difficult
and more expensive to run a node, so you essentially are making a more centralized system and therefore
more open to individuals or groups taking control of how it should operate?
Is that essentially what we're talking about here?
Yeah.
I mean, that's what the debate comes down to.
And then qualitatively, I believe that is correct.
Then it becomes very tricky to say quantitatively, well, okay, what should the acceptable cost
of running a full node be?
What is the average person who is tech savvy enough to run a full node?
What are they willing to pay?
And I ran some polls on this a couple of years ago and the numbers were pretty low.
People did not want to spend more than like $10 or $20 a month to run a full node.
Now depending on whether or not you have your own dedicated machine or you're running it
in the cloud, the cost can vary significantly.
But I think it was pretty clear that once you get to the point where it costs more than
$100 to run a full node for a month, then only really large enterprises are going to
be doing that.
And this is scary to a lot of people because, for example, the SegWit2X New York agreement,
that was basically a lot of large enterprises saying, okay, we're going to take the governance
of Bitcoin and we're going to change what the software that our nodes are running and
then we'll have our own little network and it doesn't matter whether or not the rest
of the Bitcoin network follows us because we have all the economic power.
And that failed for a number of reasons, but if Bitcoin was already in a state where they
were the only ones who could afford to run a full node, probably would have succeeded.
Okay, so it's interesting.
So actually, I want to work through the scaling thing because when I came into Bitcoin, well,
came back at the start of the year, I just came as an investor and I started to use Reddit
as a place to research.
Very quickly came across the subreddit of forward slash Bitcoin and the subreddit forward
slash BTC.
And honestly, it's taken me probably six to seven months to form an opinion and finally
realized actually, I don't like either subreddit, but I'm definitely a small blocker.
Can you try and help people understand who the two different camps are and how the split
came about for people who don't know?
Sure.
So there's a lot of obviously minutiae and people having slightly different opinions,
but to generalize the quote unquote small blocker versus large blocker, or you could
generalize it as off-chain scaling preference versus on-chain scaling preference, the difference
here is the trade-offs that people are willing to make.
So the people who want to do on-chain scaling like right now, they have a much higher time
preference.
They believe that Bitcoin needs to grow on adoption by a huge amount as quickly as possible.
Get as many people making transactions on the blockchain as possible to capture as much
value as possible and to give Bitcoin the attributes of what they consider to be a digital
cash system, which should be fast payments, very, very low transaction fees, and preferably
just continue working the same way that it has been for a number of years.
Now over the past few years, as adoption has continued to rise, Bitcoin has become more
expensive to transact and more difficult to transact.
We've run into a lot of issues with congestion and creating fee markets and stuff, and this
has frustrated a lot of people who were early adopters using it back when almost nobody
was using Bitcoin, and you could just pay like a one-penny transaction fee and get confirmed
to the next block and never have any problems.
Actually, I saw that on your website because I didn't even realize originally the minor
fee was an optional contribution just for thanking them.
You didn't actually have to pay a fee.
I didn't really know that.
Yeah, there was also a concept of transaction priority, which was basically looking at the
age of the outputs that you were spending.
So each block back in the day had something like 10 or 20 kilobytes of space reserved
for high priority, zero fee payments.
So basically, if you had not spent your Bitcoins in a long time, you could spend them for free
and get a prioritized transaction.
And that went away a couple of years ago as the fee market emerged.
Now you have to pay to play as it goes.
So on the other hand, we have the small blockers or the people who want to do off-chain scaling,
which is obviously much more challenging.
It's requiring creating entire new systems that operate as layers on top of Bitcoin.
And this is with Bitcoin as on-chain as the settlement layer.
Correct.
And this will keep the cost of operating a no down, which keeps the system more honest.
So we're happy with that.
Yeah.
So the downside, of course, is that right now in the interim where the off-chain solutions
are not really usable yet, they're still in a really beta phase, it means people still
have to do everything on-chain.
And because so many people are trying to create transactions on-chain, the fees to compete
to get in the chain are going up and up and up.
And that frustrates a lot of people who would prefer to be able to make Bitcoin payments
for small value.
So if you have to pay a $5 transaction fee, it no longer makes sense to send $5 or $10
or $20 even.
This is changing.
Do you think these people really are actually that bothered because of the use case?
They want to use it right now or do you think it's an ideological annoyance?
And actually, there's other options that they can use.
It's both.
I think a lot of the loudest people are first world folks who have access to other payment
rails and they could use cheaper options.
But there are also plenty of people who are in third world countries that have a terrible
currency, Venezuela, Argentina, and those people, they can't afford to spend several
dollars just on a transaction fee because they're only making so many dollars a day.
But are these people even operating with the technology to use cryptocurrencies and do
they have the ability to transact?
I can see wealth protection in Venezuela and Zimbabwe, but I can't see the average guy
using it for daily life yet.
Right, right.
I think they're still mostly using it for a store of value.
But even if they're mostly using it for a store of value, if they're incrementally adding
to their wallet every few days, then they're going to be building up a lot of tiny value
outputs that are then going to be really expensive to spend when they do want to spend it.
So this is very hard to answer because I can see it both ways like, yes, I think that everybody
in Bitcoin, regardless of their scaling preference, agrees that the long term goal is for Bitcoin
to be usable by everyone everywhere for as low fees as is possible while still trying
to maintain the rest of the principles of the system that give it so much value in the
first place.
So you think we should just be patient and wait for the right tech?
That's what most of it comes down to.
And what kind of timescale do you think for the right kind of...
We talk in Lightning Network, what kind of timescales do you think people should expect
this to be something that becomes usable?
I'm expecting Lightning Network to become usable next year, definitely by the end of
next year.
But you can already quote unquote use it on the Bitcoin main network right now.
It's just the wallet software is still in a very early stage where you don't want to
actually be risking a lot of money doing that.
There are a lot of problems that have yet to be completely sussed out or even run into.
And I had a very lengthy article I wrote two years ago about all of the problems that we
could run into with the Lightning Network.
And there are going to be problems because we're building something that has never existed
before and we don't know all of the edge cases, the things that we're going to run into.
But the reason that I'm bullish on it is because I have spoken to and met with all of the people
who are expending their skills and their resources to building this technology.
And they're not going to give up if they run into a problem.
They're engineers, they see a problem, and they work on it until they have a solution.
Okay.
And because of this scaling debate, we now have this new fork problem I see where although
it's Bitcoin allows you to create forks, it's the way it is, it's freedom, but at the same
time, I mean, I read this morning about Bitcoin God that's coming out on Christmas Day.
I don't know if you heard about that.
I did.
At the same time, so for me, where this all kind of took shape was with the user activated.
Was it a soft fork?
Soft fork, yeah.
Was that Luke-Junior was kind of involved in that?
So I believe that the entity who first really came out publicly and wrote code to do it
was Shaolin Fry, another pseudonymous entity out there, who I believe was also a Litecoin
developer.
Okay.
So yeah, that was I think BIP 148, and I think there were a few other BIPs as well because
there are various ways that you can do this.
And yeah, it's interesting that the user activated soft fork movement was a very interesting
sociological phenomenon.
The hats from Samson Mao are interesting, like human signaling mechanisms.
I've got my hat collection.
But it also triggered a lot of folks got really upset.
But mainly the enterprise folks who I guess believe that they have a bigger claim to Bitcoin
and defining what it is than the users.
So what...
I mean, on a technical level, it was beyond me to understand it, but what it felt like
is that it proved and it validated the need for nodes.
And it proved that the users were in charge, not the miners and not the corporations.
How did the user activated soft fork actually happen?
How did users control this?
Yeah.
So whether or not it proved anything is hard to say because you could argue that the user
activated soft fork for Segwit was quote unquote averted by Segwit 2X.
But the whole idea behind it was that the BIP 9 activation mechanism, which is something
that has been used in Bitcoin to activate soft forks for a number of years, and a soft
fork is just a backwards compatible change, that has traditionally used mining hash power
to signal when it is safe to activate.
So basically the miners have to put some data into their blocks that says, we are now running
software that is going to validate this new consensus rule.
And once like 95% of the past several weeks worth of blocks are all signaling that, then
the software says, okay, we are in a safe place where we can activate it and start rejecting
anyone who is not validating this new rule.
And that worked pretty well, I think three or four different features were soft fork
into the protocol over a few years, and they were not contentious, it was never a problem.
But then when we got to our first contentious change with Segwit, the miners realized that
they could use this activation mechanism as a veto of sorts, where all they had to do
was nothing, and now the feature doesn't get activated, and they can use it as a bargaining
chip to try to say, okay, we want larger block sizes or this or that.
And the counter to miners vetoing activation of stuff is users vetoing the miners not activating
it.
So that's what the UASF is.
So they use their block rewards.
Yeah, yeah.
So that's what the UASF is.
It is the veto of the veto.
If you're not activating this new rule by this time, we are rejecting your blocks, we're
not paying you any of your block rewards, and you're going to have to either change
or die.
Because you won't be able to pay your power bills at the end of the month.
Exactly.
Interesting.
Okay.
So from that, afterwards we got Segwit, which I don't understand, a lot of people don't
understand, but from what I can understand, it was a optimization of the code, taking
out something that wasn't really needed.
And then we had a couple of things happen.
We had Bitcoin Cash come along as a hard fork.
Now, I'm not a fan of it, from everything I understand, it is essentially a more complicated
PayPal.
But I, at the time, respected it as something they wanted to do.
So I just want to talk about Bitcoin Cash, and do you call it Bcash?
Usually.
And do you call it to defend the Bitcoin name?
Yeah.
I say Bcash mostly in text form.
When I'm speaking, I'm fine saying Bitcoin Cash, but I think especially in text form
and on websites and web apps, I would prefer to see Bcash just as a disambiguation.
It kind of sounds cooler than Bitcoin Cash anyway.
Yeah.
But at BitGo, we've had so much support and engineering resource consumption due to user
confusion of sending Bitcoin to Bcash addresses or vice versa.
And basically, people just not understanding that these are two completely different incompatible
networks.
Okay.
So why does Bcash exist?
Why do you think it exists?
It's the culmination of frustration by the on-chain scaling movement.
And after several years of not being able to force Bitcoin to change in the way that
they wanted, eventually Bitmain funded Amore Seche to develop Bitcoin ABC, which at the
time I believe they were calling it a backup failover option if Segwit2x didn't go through.
And then for some reason, they changed their stance on that.
And they said, you know what?
We're doing it anyways, which was probably a good thing for them because Segwit2x was
really screwed up and would have failed if it had actually tried to activate.
So the weird thing is they only gave us a two-week notice that they were going to create
this new network.
And that resulted in a lot of us scrambling and arguing with them because I believe at
first they were not going to have replay protection.
And so we were screaming at them like, you better have replay protection.
And thankfully, they added that in.
And then it's been an interesting learning experience because we've learned a few other
things now that are going to need to be best practices for these type of hard fork altcoin
airdrops.
So the address format, for example.
So it turns out you can have replay protection, but if you don't make the address format change
to be invalid, then people are still going to lose money by sending coins from one network
to an address on the other network, which of course never shows up there because they're
just sending them on the wrong network.
Okay.
So you called it a movement, but there's really a few players in there that kind of made it
happen and without them it wouldn't have happened.
So we're talking Jihan, Roger, a couple of others who seem to be in the background, but
those primarily.
So I understand the argument for Jihan.
I understand his argument.
He's a miner.
He's a businessman.
He's making money.
There's an economic reason for him.
And there may or may not be the ASIC boost issue.
Yeah, may or may not be.
I don't understand the Roger Ver argument so much in that he originally, when I first
read Digital Gold, he seemed like just a cool guy who'd done a lot for Bitcoin.
I don't understand, he almost feels like he should have ideologically been on the small
block size.
So I don't understand what's happened there.
Do you have any idea?
Do you have any thoughts?
Well, Roger has gotten very frustrated with Bitcoin Core.
I guess he has had a lot of interactions with core developers over the years that have not
ended well for him.
And so I think in general, he does not like the Bitcoin Core philosophy.
Let's explain who Bitcoin Core are.
Sure.
So from a historical standpoint, Satoshi Nakamoto created Bitcoin and the Bitcoin repository.
For a number of years, it was just called Bitcoin or Bitcoin QT.
And then sometime around like 2011 or 2012, Mike Hearn and Gavin Andreessen, who were
two Bitcoin Core developers at the time, decided that we needed a better name and they settled
on Bitcoin Core.
I think there were a number of protests against that name because core is kind of antithetical
to a decentralized project.
But for whatever reason that name change went through and it's been called Bitcoin Core
ever since.
And now it's weird because you hear a lot of FUD from people saying that Bitcoin Core
is a single authoritarian group of just a few people who are mostly Blockstream employees
and all of this other nonsense where really Bitcoin Core is an open source code repository
that hundreds of people contribute to.
I have some minor contributions to it myself.
Anybody who wants to can contribute to it.
On the other hand, now on the larger block, like Bcash side of things, you've got like
Bitcoin Unlimited, Bitcoin XT, Bitcoin ABC, got a number of different repositories there.
But if you really look at those, each of those repositories has like two or three developers.
So they might appear to be more decentralized, but I think if you look at like terms of total
developer power and resources, Bitcoin Core is actually more diverse, more spread out.
And so one of the arguments is that Bitcoin Core may be slow to develop, but at the same
the counter argument is actually they're taking the time to make sure there's no fuck ups.
Yeah.
I mean, there's no argument that they are conservative.
And really I've been a software engineer for 10 years, pretty much always in the like web
app development space and web app development software engineering in general is so different
from crypto assets protocol engineering.
The closest thing that I can really help to describe crypto asset engineering is more
like aerospace engineering because the tolerances are basically zero.
If you fuck up, it's really hard to revert.
Like once you get a code change in and it gets deployed out onto the network, because
you are not deploying it yourself, it's other people coming in, downloading it and running
it.
You don't have the power or the authority to go and push out code fixes to everybody
who's running your code.
And I guess, I mean, the price went up again last time, we hit nearly $13,000.
I think so.
You know, we're over $200 billion now for Bitcoin.
And I think in some ways, what happened, I'm going to jump around a bit here, but what
happened post cancellation of SegWit2X and the issue with the Jeff Garz, it kind of proved
that actually he did a job at proving the value of core because there was a problem
with like...
There were several bugs.
Yeah.
Like very bad bugs that would have essentially fucked up Bitcoin.
So yeah, so that is specifically a case and there are very similar cases that happened
with Bitcoin Unlimited last year, I believe, where the entire network crashed like four
different times because they had less, I guess, talented or just developers who had as much
experience writing their code and they had far fewer developers in general on their repository
doing the peer review of the code.
So these various bugs get introduced into the software, the software gets deployed out
onto the network and then somebody comes along and actually looks at the code and says, oh,
look what I found.
And then they create a tool in like 30 minutes that can remotely shut down and crash all
the nodes on the network.
And so this is an interesting kind of juxtaposition because everybody thinks of Bitcoin as this
really strong, robust, anti-fragile system.
And that is true for a number of reasons, but the protocol, the code itself is actually
incredibly fragile.
You can screw up this protocol by adding one line of code that has a bug and is in the
wrong place or is using an uninitialized variable, any a million things that you can screw up
and do wrong to basically create a tiny little chink in the armor of the protocol that then
an attacker gets into exploits and then they can take the whole thing apart.
Okay.
So, okay, I'm going to come back to the Segwit2x stuff.
Just want to go back.
So Roger fell out with Core because what, he was trying to get them to do things he
wanted?
Yeah.
Well, I mean, I think most of this really comes down to frustration and time preferences.
He wanted, he correctly saw that the fees on the network are going up and that certain
use cases were getting priced out of the network.
And that was very disturbing to him because he sees Bitcoin as peer-to-peer digital cash.
It should be fast.
It should be cheap.
He is seeing that the nature of Bitcoin is changing in a way that he does not like.
And he spoke to Core developers, I'm sure many, many times, and the solution that they
come up with with off-chain scaling is not something that he's particularly fond of because
he thinks that it's maybe vaporware or just take way too long to actually get implemented.
And he wants to see evolution happening at a faster pace.
So can you empathize with him at all?
And can you philosophically see what he's doing and...
Oh, yeah, yeah, yeah.
Because I was a big blocker.
I mean, the first real big movement for big blocks, Bitcoin XT, was a proposal to increase
to like 20 megabyte block sizes.
And that was like two or three years ago.
And at the time, I had just become a full-time Bitcoin software engineer at BitGo.
And I was like, yeah, we're seeing backlogs and the users are complaining and it's causing
and costing more to do stuff.
And if we just kick the can down the road and increase the block size by a lot, then
yeah, all of these problems will be alleviated for us.
And it took me probably most of a year to eventually come around and realize what the
trade-offs of doing something like that would be.
I think that's the thing for most people.
Because when I first saw it, I was kind of like, well, a big box makes sense.
Yeah.
But lower fees and it'll be faster.
I can be a store of wealth and I can have a currency, of course.
But then once you get...
It's almost like bad comparison, but when Jamie Dimon is critical of Bitcoin, I don't
think it comes down to he thinks it's a Ponzi or it's a bubble.
I think he just doesn't understand it.
And I think once you get into Bitcoin and you start to understand it, what it means
for you, then you get to the point where, like I did, where actually I could not support
big blocks because you want to keep it decentralized.
So...
Okay.
That's really interesting.
Okay.
Yeah.
I mean, I've spent a lot of my time at BitGo actually writing software that parses the
blockchain.
And I've seen how over the years with the Bitcoin blockchain at like one megabyte sizes
can only increase by something like 50 gigabytes per year.
But I've seen that even with that, over the years, I have struggled as an engineer at
BitGo to continue refining my software to be able to scale and keep up with the data
because when you're building a system or even just a full node that has to parse that entire
blockchain, every time you have to parse the entire blockchain and then you do it again
later, it's just more work and it keeps becoming more and more work over time because you're
never deleting data, you're just adding more and more data.
So while it might not seem like we're adding a lot of data, I take a very long-term view
of this and say, well, what's it going to be like in 10 years or 20 years?
And so I did have an article recently about SPV scaling and general cost of running a
full node where I tried to take the perspective of the big blockers and do visa scale transactions
and figure out what is the cost of running a full node on this network that they are
envisioning with zero fees and 1,000 transactions per second.
And it very easily balloons out to server, you end up having like needing grids of server
farms with thousands of hard drives in raid arrays together.
So it can only be afforded by the corporations who will then have control.
And people make fun of the Craig Wright quote, the $20,000 node or piss off quote, but like
the numbers that I was coming up with were way more than $20,000.
Wow.
What do you make of that guy?
I mean, I know you did like, I haven't listened to it, but there's like an hour and a half
interview with you about him or something on your website.
Yeah.
And I met him at a conference and you know, pretty personable guy.
He has a bit different stage persona.
He gets, you know, even more flamboyant.
But in general, I think he's a good salesman.
I'm not sure that he's like a good engineer.
I'm still waiting to actually see any software get developed or produced by Inchain.
Why do you think he, well, I'm not going to say pretended because who knows, but why do
you think he came out and said he was Satoshi?
So my understanding of like some of the things I've read and hear say is that he somehow
got into an agreement with Calvin Air who was, I believe, a poker, online poker entrepreneur.
I believe he's a billionaire and it sounds like he somehow got into an agreement with
Calvin Air to get a substantial sum of money and that somehow the whole Satoshi Nakamoto
and Tulip Trust Coins was like a part of that and that he had to convince Calvin for that
and now he's trying to convince other people.
But I'm sure it all comes down to money.
But there's some quite key people in the history of Bitcoin who've come out and said they believe
he is.
Yep.
And I don't understand that.
Well, and that's the whole bamboozled bit, right, of you know, there are a few people
that say that he signed a message with a Satoshi key and then there's a lot of other evidence
actually of him falsely signing things with a fake Satoshi key.
I believe there was some evidence where like Greg Maxwell showed that he had like backdated
some signatures or was using software that didn't even exist at the time.
But I think the long story short is like there's a lot of really confusing stuff around here
but it's like Occam's razor, right?
So if someone is Satoshi and they want to prove that they're Satoshi, there's zero need
to have a private ceremony.
The entire point of asymmetric cryptography is that you can use your private key to sign
a message that you then release publicly to the world where anyone can validate it.
So you know, I would say any of us who are like deep in the technicals of this are not
going to believe anyone's claim that they're Satoshi until they actually publicly release
a message signed with a key that is known to have been like from an address or block
you know, mined by Satoshi back in the day.
All right.
Look, a controversial kind of question.
Is Satoshi even relevant anymore?
In that the reason I asked the question is I often see an argument Satoshi would have
wanted this and they cherry pick parts of the white paper.
Yeah, Satoshi's vision.
It's Satoshi's vision but at the same time it seems to me that Satoshi got a lot of help
from other people.
He didn't have all the answers and also by stepping out of it, he's no longer part of
Bitcoin.
He's chosen to not become part of it so therefore it's up to the people who are left doing it.
So is he relevant anymore?
Not in terms of the future of Bitcoin, he is relevant in a historic context.
And a hero.
Yeah and I cover that pretty well in my Nobody Understands Bitcoin article where I actually
went into a lot of detail where I showed the things that Satoshi got wrong and fixed in
those first couple of years.
There were a lot of bugs, there were a lot of unintentional things in the software and
there was a lot of evidence that even Satoshi did not fully understand what they had built
and that other developers like Hal Finney and other of the early contributors came in
and actually explained to Satoshi like this is actually what this piece of code does,
we need to fix this.
So this protocol is organic, it's alive, it is going to continue to morph and it will
be affected by the ideology and skills and personalities of the people who decide to
contribute to it.
Do you have any thoughts on who it is or would you not even share it if you did?
No I have no real thoughts, I mean just for fun the other day I posted some anagrams for
Satoshi Nakamoto.
And what is it the one, a man took a shit in the week?
Yeah.
That cracked me up.
Sure you know IMNSA took oaths.
There's a satan one as well, right?
So you know sure there are probably very few number of people who have the technical qualifications
to build something like this and they very well may be one or more of the you know well
known cypher punks.
That would be like top candidates or you know could be some folks in government intelligence
agencies who do cryptography and this type of stuff.
I read a great conspiracy theory that it's the government and it's a way of clearing
their debt whereby there's the wallet with what is it like a million so at the point
where bitcoin hits like a million dollars a coin it will clear the national US debt.
I just I don't believe it but I thought it was a great conspiracy theory.
Okay so look just going back so we've got Bcash now, it exists but there is still a
war and it still feels like that Bcash doesn't just want to exist on its own but it actually
there are bad actors who wanted to try and destroy bitcoin at the same time.
Do you have any opinions on the price of Bcash and what's been happening and manipulation
and movement of money because there was at one point an inverse relationship and it's
not always there but it felt like there was waves of selling of bitcoin to buy Bcash to
push the price up and I'm a trader right I know you're not really a trader but I'm a
trader and it became one of those very obvious pumps.
Do you have thoughts about this?
Yeah well especially in the early days there was an inverse relationship so what was happening
and what will happen with any of these altcoin airdrop forks is that as technically sophisticated
holders get access to the money on the other chains you know as the software gets developed
and released to allow them to do that then the people who really care and this is going
to be like the fringe folks who are ideologically aligned with one side or the other they're
going to express their opinions on the market by dumping one side and exchanging it for
the other side.
The vast majority of people from what I've seen don't care they're not aligned with one
side or the other and to be honest from a investment standpoint the conservative thing
to do is nothing and you hold both coins and then if one of the coins goes to zero then
you're safe because you've got the other one and you know presumably one would subsume
the other like the value would get sucked from one into another and so yeah we saw some
pretty coordinated pumps are trying to do the flippening of Bcash which I profited off
of pretty well and I hope that they do a few more because I still have some of my Bcash
left but this is also one of the things I tweeted about where I said so there are some
trade-offs when you're doing these airdrop forks one of the pros and one of the reasons
why I think they're becoming more prevalent is that you can instantly overnight get a
huge market cap and it's a mostly fake market cap because like I said the vast majority
of people don't even have access to their coins to sell them even if they wanted to
on the other hand one of the cons to doing this is that you in order to sustain your
trading price you have to pay what I was calling the exit tax which means you're going to have
to buy out everybody who is like completely against your fork and is going to dump all
of their coins on that fork which and we've seen suspected large movements of Bitcoin
from suspected Roger Verre wallets so do you think he is having to pay to try and prop
this up and how much I'm assuming I mean it feels like he's missed the opportunity now
he had a few weeks to do it otherwise it's kind of I can't see Bitcoin coming back down
now from like twelve and a half thirteen thousand dollars to be I think that that fights over
yeah I think there was some evidence showing that he was basically setting some big buy
walls at like point one yeah but then I think what we found happened like during that time
when I when people suspect that he sold a lot of his bitcoins for B cash we later learned
that there were some big like institutional investors that came in and just bought up
a lot of bitcoins so you know that may be a transfer you know away from Roger to the
next generation of Bitcoin holders like the institutional level folks and it feels like
now with Roger he's kind of I don't want to talk about him too much and I'd actually I'd
actually like to meet him and talk to him I'd happily have him on this you know but
it feels like he's becoming more unstable publicly yeah and he is talking a lot about
money so he's giving arguments about trying to help people who haven't got much money
in developing countries and then almost gloating about sizes of wealth and money at the moment
and becoming very unstable do you think this is affecting him oh yeah what do you think
is going on here yeah I mean this is just more frustration you know he has his vision
for Bitcoin in the future and there's so many people who are pushing back against that and
you know he's made some flubs but really like this is one of the crazy things about this
space is how popular some of us have become and I think that Roger probably has like two
hundred thousand Twitter followers and like there's nothing that can prepare you for that
and so sometimes he might say something that could have been phrased better I know he said
something the other day that could have been phrased better and then he gets a lot of backlash
for it so I don't know like maybe if he doesn't have a PR agent maybe maybe he needs to invest
some money in that or just you know cool off on on the public expression of some of these
things and let other people take over you can stop the sentence before the word but
yes that's pretty cutting okay so all right so moving on to bcash we covered that we then
had the New York agreement which seems very centralized way of coming to an agreement
which would lead to the acceptance if we had segwit we would get the 2x following that
we had a cancellation of it what's your kind of whole view on the whole thing that happened
here and and your opinion on the New York agreement the people behind it and why ultimately
it collapsed so the governance of this system like we said really hard to define and what
I think we're seeing happen and this is not the first time that this has happened is that
people are experimenting with the system they're poking the system they're trying different
tactics and then seeing how the system reacts and so you know we had bitcoin xt bitcoin
classic bitcoin unlimited then New York agreement segment 2x they're all trying similar but
like slightly different variations you know to to force contentious consensus changes
to the network and so far those all failed and then we had bcash which for all intents
and purposes succeeded so as soon as bcash succeeded 100 other people are copying that
model because it was successful so you know this is part of the the freedom of the permissionless
systems of you can do whatever you want and people are going to fail a lot and then when
they succeed other people are going to glom off of that success and try to duplicate that
model do you believe the lack of replay protection with segment 2x was a direct attack on bitcoin
but was ultimately they're undoing because of the backlash from it yeah that was a really
tricky problem I mean we had to spend weeks of engineering effort building our own like
manual replay protection and that was kind of one of the disappointing parts of segment
2x getting called off is we didn't get to use any of that we still have the code so
if there is you know non replay protected fork in the future we're much more ready for
it and you could argue that that makes the ecosystem more robust as well because lots
of engineers throughout the ecosystem were working on building that type of functionality
but really one of the reasons that I was disappointed about the falling apart is that I wanted to
see the market speak and you know I was ready to like dump all my segment 2x coins and I
want to see the bet with Charlie Lee oh yeah yeah I mean I think everyone didn't see that
bet but you know that that was that was one of the biggest I would almost call it non
signals that was happening during the entire thing is that once we got to somewhere between
like two months to one month before segment 2x was supposed to activate I noticed that
none of the the 2x proponents were willing to put their money where their mouths were
I was actively engaging people trying to get them to do swaps with me I offered up Jeff
Garzic yeah and I didn't even think he'd respond to me because I had 300 Twitter followers
at the time but but anyway he came back with its different argument he said the reason
for no replay protection was to protect thousands of different types of wallets right right
so the argument the argument was that because they were upgrading Bitcoin you know they
weren't forking away from Bitcoin because they were upgrading Bitcoin if they added
replay protection then that would make all of the existing lightweight wallet software
incompatible so because they wanted to force everybody to be compatible with them then
it needed to be the exact same transaction format right and then no one would do any
swaps I offered him a swap yeah of course you wouldn't do it and then so quite interestingly
I sold all my Bitcoin the night before it was cancelled huh it was a really interesting
coincidence so as a trader I'm I'm always there's only two times I've ever sold on
my Bitcoin once was during the Ethereum flipping in which worked out good for me and I was
in Vegas and I was just getting annoyed with the wall I could only see a scenario where
the price would drop so I sold everything woke up in the morning I sort of got cancelled
a scenario I hadn't seen and then the price shot up it's like a shit but then it dropped
back down so then it got cancelled but then we were kind we go back to the point where
the code was proved to have some fatal flaws in it that could have could it have actually
brought the network down what would the scenario have been the network would have ground to
a halt there would have been no new blocks because there were some issues with the requirement
for a block greater than one megabyte of size to be created at a certain height and that
was like part of the consensus rules but then it was like the mining logic to create that
block was not set correctly and so the only way to get around that would have been to
have manually set some different configurations in your node config file which of course nobody
would have done so the basically what would have happened was the whole network would
have ground to a halt for a number of hours until people figured out oh wait why aren't
we creating any new blocks has Jeff come out with a reason for why this happened I think
he mostly tried to pawn it off as it was a problem where the block height that they had
put in their like press releases did not match the logic of the code but but the the short
version is that the only way that it would have worked would have been if miners had
manually updated config files which you know no one ever expressed in any of the segwit
2x documentation that that was going to be a requirement so this validates why core are
so good and why core are needed for bitcoin and quite good timing then so having been
through all these challenges i was uh with bitcoin i was also like last night at your
meetup where jimmy song presented about the three anti-fragilities of bitcoin so which
really covering why why is bitcoin so resilient and do you think it will continue to be attacked
or do you think it's proven itself now bitcoin needs to continue to be attacked in order
to become more strong but it's resilient the you know he went over a number of different
reasons but i think the the simplest explanation is that it's resilient because of the people
behind it and we uh while we might seem small compared to the rest of the world there are
many of us and we are very spread out so there's like there's no event that could happen that
could uh make enough of us stop working on on increasing the usability of the system
so as long as there are enough people who are devoted to continuing to improve the system
then it's okay if there is an event that causes something terrible to happen because we'll
just fix it and move forward and you know nothing like that has happened since i guess
2013 or so but there have been events in the past where there were bugs or inconsistencies
found and people grouped together and got them fixed within a matter of hours and that
will continue to be the case and you know may get fixed even faster these days now that
there are so many more of us participating in the network how big do you think bitcoin
can get and i mean in terms of use use case and price i mean because you you seem to be
in both camps of you care about it as a philosophical project but you also care about wealth creation
yeah so i'm interested in both angles from you yeah so i believe that there is more value
to be captured from the like the store of value use case of course there are innumerable
use cases to bitcoin especially when you start looking at it as not a money system or even
a ledger but when you just start looking at it as a database with interesting properties
so then you can start building all kinds of stuff on top of it you know even rare pepe
isn't pepe cash and you know there's really no limit to the possibilities we do bitcoin
kitties absolutely but they're going to be even more expensive than the crypto kitties
on ethereum so i don't really see a ceiling for the price because there are so many different
potential use cases that could happen but you know the simplest just being like replacing
gold as a store of value or replacing like sovereign monetary reserves you know they're
i don't even know how many trillions of dollars worth of like monetary reserves probably make
more sense to to be held in a crypto asset type system rather than fiat and of course
if that were to be the case and bitcoin didn't change at all from a technical standpoint
then the nature of bitcoin might continue to change to the point at which you know it
costs thousands of dollars to do a transaction on the network but that all of the transactions
that are happening are for millions of dollars or billions of dollars because it's like international
you know settlements between nation states so i mean that's one extreme possibility but
of course we want for the average person to be able to access this system otherwise it's
not really empowering individuals to the extent that we want so i definitely want to continue
to see us you know try to bring the the cash like properties back to the network especially
on these second layers and even third layers there's there's no limit to the number of
layers that might get created so you know the the only thing that i'm really sure of
is that it's going to continue to evolve it's going to continue to get weirder but this
is kind of like the state of the world itself right every everything keeps getting weirder
as technological innovation continues to accelerate you know not just linear changes but exponential
changes do you think we need a stable price and we will get to a stable price at some
point or do you think it's not relevant yeah well i mean what is stability right so whenever
someone talks about stability they're they're really saying will it be stable relative to
some other asset because every every price is relative so you know is are we going to
get stability relative to the us dollar well if bitcoin really becomes mainstream then
the dollar might become volatile well i mean some people argue the bitcoin one bitcoin
is still worth one bitcoin yeah but the dollar price is is plummeting it's plummeting but
things in the shops aren't priced in bitcoin yet right so if they were it would be and
i i personally don't think we're going to get to a stage where certainly i had this
argument 20 the other day we're in lead in economic powers bitcoin is going to all cryptocurrencies
are going to replace fiat i think it's a symbiotic relationship i can't see governments even
allowing it because they will lose control um do you think nation states any nation states
are actually investing bitcoin uh i don't know if nation states are but you know we
are seeing like sovereign wealth funds start to talk about it so you know it started off
with just individuals those crazy crypto anarchists um and then over the years it's become you
know high net worth individuals start to diversify into a little bit more you have your small
family offices then your large family offices and now it's wall street institutional investors
or even starting to see like national pension funds i've heard of it's like sweden or finland
you know looking at putting you know small percentage of their huge pension funds into
crypto assets and so eventually um you know i think the imf the international monetary
fund has actually spoken about how you know it probably will make sense at some point
for them to start holding crypto assets as part of their reserves so it's not a huge
leap from that standpoint to see uh you know smaller nation states you know those that
have the least to lose by taking this risk because i think that the first nation state
that does get into bitcoin is going to have a huge first mover advantage especially if
there is then a cascade effect after that yeah and and that's i think this is you know
we can see this happening because of the movements in price i mean i often get asked people what
do you think the price is going to do and you never know but it's keeps beating every
single expectation you know so some people said 10 000 by the end of the year but looks
like we could beat 15 000 you never know yeah you know somebody said 25 to 40 next year
we could be 60 to 80 with no idea but it feels like all the people with big money who were
looking are thinking shit we need to get in quick that said what else do you think we
need to happen with bitcoin for it to integrate with the fabric of society and to become more
mainstream because it is still quite complicated for the average person i think the cash out
thing's cool oh yeah but what what other things do you think need to happen to make it just
become every day well the the biggest problem here is that this is a paradigm shift um so
what we see happen a lot like with the users that i interact with um is just people have
become accustomed to having trusted third parties who will fix their fuck-ups so this
is a lesson in personal responsibility and that is the question of like how long will
it take for you know the the culture to change its perspective of you know responsibility
or financial responsibility um you know that could take generations so i would be afraid
you know the technology might outpace the ability for society to actually keep up with
it um you know maybe in the interim bitcoin gets used more by machines uh you know setting
up micro payment networks like internet of things economy that you might go in that direction
um but yes this uh personal responsibility is very difficult to teach though bitcoin
teaches harsh lessons to people every day you know who get into it without having the
personal accountability that they probably should so do you think people should spend
more time learning and understanding bitcoin and oh yeah and what kind of things should
they be learning you know i i said to you i'm a year in and i'm still learning is you
know um what kind of things should people be focusing on um well there's just the general
you know security practices and having good backups um so uh you know i have a ton of
educational resources on my website but the biggest problem is just you know most people
are not nerds they don't have like it practices at all and i would i would argue that in general
everyone should have at least you know some amount of information technology understanding
because even if you're not into bitcoin most of our lives now are digital and like you
need to have you know backups and recovery mechanisms because catastrophes happen natural
disasters happen um it's just you know if somebody's house burns down today then they
might lose their digital photos and videos and some stuff but they're not going to lose
all of their money because their money is probably in a bank not in a thumb drive under
the mattress or something so what we're really seeing these days is like i think the most
losses that happen in bitcoin are not people getting hacked it's people who buy bitcoin
and put it on a computer or a paper wallet or something forget about it for a few years
and then now what's happening a lot is they they hear about the price and they say oh
i've got some of that bitcoin and then they go try to recover it and they discover that
either they threw out the data or it got corrupted or any number of things happened to it and
now they lost everything right okay and we've seen a growth in um hardware wallets which
seem to have simplified the like when i first started people talk about paper wallets cold
wallets and you know what it just seemed too weird and too scary um people said you should
know your keys and again i've always felt that actually a hardware wallet just seems
to be one of the safest routes for me do you have viewers on hardware wallets do you have
preference what people should be doing definitely uh i tend to recommend trezor and ledger yeah
i'm a big fan of ledger because they are supporting a number of different crypto assets um so
and then in fact i had someone ask me this the other day they said you know i'm just
getting into the space and i'm buying all these tokens but it's really hard to find
a wallet that will hold all my stuff in one wallet and i'm like look you're you're actually
you're approaching this from the completely wrong standpoint you're you are trying to
trade security for convenience because you want you're telling me you want to put all
of your money into one piece of software created by one or two developers you know where if
there's a bug in that that gets exploited congratulations you just lost all of your
assets across all of the blockchains so that's like the you know the risk of centralization
to a t right there do you think there's a risk though if people start to hold significant
amounts of wealth in their hardware wallets if they're in their personal possession in
the future there's going to be a lot of reason to be coming to people's houses and attacking
them and saying give me a give me a trezor do you think this is a risk yeah um we've
only heard a few incidents of stuff like this happening but it has already become an issue
especially if you're very public about being in this space there have been a few people
who have been kidnapped and you know basically tortured until they handed over their private
keys the real the like the only way around that from a technical standpoint is to not
have direct access to your private keys so you know i've written about this as well of
you know using multi-signature aspects to kind of split up your data amongst other like
people in your family and friends so you can you can actually create what i would say is
better than bank level security if you're willing to put the effort into it so you know
the problem now you know even if you for example have a bunch of private keys or a hardware
wallet and you go like put that in a bank safety deposit box you know if the like access
codes to get into that hardware wallet are also there then that's still a single point
of failure and you know depending upon what your threat model is if you're going like
ultimate paranoia you know state level actor threat model then you should assume that there's
like no physical location that is safe you know agents are going to go into that bank
they're going to make them open up your deposit box and they're going to take everything
you have the only way really around that is to split it up into many different locations
and you know preferably encrypt it i recommend using shamir's secret sharing scheme for example
so that it really becomes like a puzzle okay interesting so there's the elephant in the
room with regards to the environmental impact of bitcoin and i've had quite a few people
turn to me and say yeah but pete this is terrible is this something that we're all kind of ignoring
and trying to pretend isn't there and should should should the community be community be
looking at this i don't think it's being ignored um i think it's actually like a fundamental
aspect of bitcoin security is that you need to make it extremely expensive for an attacker
to be able to rewrite the history of the blockchain and the way that we do that is that we make
you prove that you have expended like a certain amount of energy in order to add data to the
blockchain so there are you know people who will say oh bitcoin is using more electricity
than ireland or you know a small nation state or what have you but from my experiences talking
to a lot of miners miners aren't going out there and like building electrical generation
plants and like creating new electrical generation sources that didn't exist before what they're
doing is they're scouring the earth to find excess energy and then they're building their
mining facility next to wherever that excess energy is located like the only the only example
that comes to mind um and i'm not even sure if they built the plant but i know that there
was some mining that was going on in sweden where they were using like geothermal energy
um and i'm not sure that that really even matters for the debate because you know that's
not doing carbon emissions or really hurting the environment like geothermal is a renewable
resource you know we're also seeing more people using um some solar but really mostly hydro
yeah hydro is big yeah so you know hydroelectric power is like 24 7 as long as the water is
there and tends to have a lot more excess energy and so especially in china and in the
northwest of america there's a lot of hydro energy that is extremely cheap because it's
so plentiful like washington state washington state yeah yep uh and so what the miners are
doing is they're going and they're building their warehouses and stuffing them full of
equipment as close to those hydroelectric plants as they can i've um so i met a miner
recently uh guy called chad over in la and he's got a mining operation in dallas and
uh i've decided to get involved in it with him but the numbers we've actually started
to look you know can we get a hydro dam and it's all seems a bit funny yeah well and i
actually i met someone uh locally just a few weeks ago who they did something even more
innovative where they purchased a uh tire reprocessing facility i've read about this
yeah he just he did a pr piece a week or two ago to was it on your twitter yes yes that's
where i saw it and uh and so they they had a plant that was already up and running and
they basically they burn these old tires down and get the constituent petroleum and other
uh byproducts separate them out sell those but one of the interesting byproducts of this
process is that it generates a lot of electricity and originally what they had been doing was
selling it back to the power grid here in north carolina for a few cents per kilowatt
hour and then they realized we could be a lot more profitable if we just use that electricity
ourselves to mine cryptocurrencies wow so that's what they've been doing and so you
know they didn't steal energy from anywhere uh they were already creating the energy they
just sort of redirected it to a different use okay so i just wanted to ask you about
a few other projects outside of bitcoin because we've talked a lot about bitcoin and i'm just
going to name a few and just can you just tell me what you think about them and okay
so litecoin yeah good project good project i mean you know charlie lee is a pretty cool
guy he uh he knows what he's doing now it's kind of weird um you know now that we have
bcash there's like you could basically anything you can do with bcash you could do with litecoin
plus litecoin has segregated witness is going to have lightning network um yeah if you want
to do cheaper faster payments i mean i would use litecoin instead of bcash just for ideological
reasons um okay uh dash that one that's you know i've never really been a fan of dash
my understanding is they've also got a huge pre-mine um all of the interactions i've had
with dash people have been like very marketing heavy um when a huge amount of their master
node no their minor rewards go back into the uh into the project to actually finance projects
yeah so they they they are treating it much more like a commercial project yeah yeah so
um i'm not really heavy on the technical details there though my understanding is that they're
basically using you know a form of coin join to you know give some privacy properties to
the the transactions but it's still all in the clear so unless they've got some like
really innovative stuff coming down the pipeline um i know that they were doing some on-chain
scaling stuff as well which isn't that interesting but you know it's there are other projects
like uh memble wimble and and monero and zcash what's memble wimble so memble wimble is
a completely new crypto asset that is using what i would call extreme on-chain privacy
and extreme on-chain scaling okay it's available now people use it it's a test network just
came out i'm not sure when the production network is going to come out hopefully next
year sometime but um andrew uh paulstra at uh blockstream is one of the guys who is working
on it there's also several anonymous developers and uh like memble wimble i think is one of
the most promising new crypto asset projects that is out there but it's very very new it's
very cutting-edge tech okay monero yeah monero which i love by the way i'm a big fan uh also
ricardo you know fluffy pony uh hilarious guy also good developer they've got a pretty
good roadmap and you know they're putting releases out and you know they're hard forking
every six months or so but it's fine it's like it's part of their model like everybody
seems to agree to it doesn't seem to be contentious um they're going to have scaling issues you
know monero is less scalable on-chain than uh than bitcoin though they i think they might
be looking at using bulletproofs and other stuff to help reduce the the size of their
transactions but yeah i mean i think they have some pretty good engineering talent they're
gonna continue uh monero probably is the best like privacy coin right now because while
you could argue that zcash has more like academic privacy and it's shielded transactions what
really matters is whether people use it and you know monero uh ring signatures are on
by default like everybody's using them for every transaction zcash only like 10 to 20
percent of transactions are actually using them i was also seeing something recently
just the other day that was showing that you know if you're shielding a transaction and
then unshielding it not long after that you can still there's still a lot of linkability
going on so zcash very interesting uh but i think they have even more work to do to
become like really strong privacy coin okay i had zcash on my list um got a few more ethereum
ethereum is just so different from a philosophical perspective uh from really mostly any of these
other assets you know they've got the move fast and break things type approach and with
regard to the security model they're also like more okay with using the like ask a friend
security model it's actually pretty hard to run a fully validating node on ethereum that
goes through the entire history of their blockchain i've got an article that i've been working
on for a while that i'll hopefully post soon about like all of the challenges that i've
run into um because i've really spent about a year uh working on ethereum infrastructure
at bitgo so we have an ethereum product now and it's been a challenge both at the very
low level like node layer and also at the like smart contract layer so i think i had
some tweet where i quipped about um you know cyber security is a nightmare crypto asset
security is a super duper nightmare but smart contract security is like a 1000x crazy nightmare
on top of all these other things uh do you know much about eos and is it a potential
threat to uh ethereum i don't know a lot about it but uh it also seems to be mostly
marketing and hype driven uh i haven't really heard anybody say that they're like impressed
with the technical aspects of it um but i know less about eos than probably any of these
other things i haven't really spent any time looking at it from a technical standpoint
iota oh god yeah because this one i mean you know on a trader level the prices have shot
up i've not bought it i don't understand it yeah i've been watching it too it's several
billion dollar asset which makes no sense it's uh fourth on market cap now yeah so iota
is insane that it has gotten to where it is right now because it's using you know this
directed acyclic graph which is not a very proven like secure uh data structure but the
the more concerning thing about it is that you know it seems to be using some closed
source coordination software that nobody actually knows how it works except for the developers
behind it um and you know there was a lot of drama with uh some i guess exploits that
were found you know they were like rolling their own crypto but um for me personally
i i downloaded the iota source code because i noticed that it was written in java which
as far as i'm aware none of these other crypto assets are written in java and i'm primarily
a java developer so i was like oh this is cool i might be able to actually you know
read it and understand it and i looked at their code base and i was like this is a hot
mess like i would fire somebody who tried to you know write this type of code at bitgo
um there's like no documentation i could not you know read the code uh to understand what
it was actually doing and so as a result i was like i would never put any money in this
because i can't understand it um it seems to be a miracle that is working uh at all
but then again you know if it is essentially a like centralized data store then you know
anybody can do that so we'll see uh i would like to know you know what it actually costs
to like run a node on the iota network whether or not that's doing a full validation of their
whole history or if it's using snapshots of some sort you know i'm not even sure what
the security model is but the problem with a lot of these things is that they can be
crappy like they can have weak security models um and you know be exploitable in in different
edge cases but if they work most of the time then sure you know they they can get a fair
amount of usage and a fair evaluation until some catastrophe hits well the reason i'm
asking this is you know however we feel philosophically about crypto assets the majority of people
put in money in is for wealth creation for an easier life to be an early adopter to see
some kind of benefit and now we're seeing hyper growth and hyper movements in price
my personal view is i'm putting the majority of money into the things i think will be here
in three to five years that won't suddenly crash and be gone and some of these projects
i i feel are potentially risky for people putting money in they could they could lose
a lot of money yeah i've only got one left on that list is ripple ah well that's a fun
one because we have we we have a ripple wallet at bitgo so i have experience you know running
ripple nodes and stuff like that so ripple is not particularly interesting to me because
i just see it as a banking protocol i've also had a number of issues running our ripple
nodes just from resource consumption but you know they they do a fair amount of transaction
volume you know they've built a network my understanding is you know they pre-mined a
ton of xrp and who knows how many billion dollars worth they have sitting in their ripple
bank and they've been using that to create their network you know build banking relationships
so i suspect that ripple is probably a pretty strong company but note that i say ripple
is a pretty strong company like it is not a like as far as i am aware it is not a decentralized
open community project it is mainly a company driven banking protocol so it's not really
a cryptocurrency i mean you could argue you know it uses cryptographic you know aspects
of it but yeah again unless it kind of really goes back to what i originally said of like
money is this concept that is is open for humanity to to decide like how to use and
my understanding of ripple is that you know they have basically some sort of trusted or
federated validator network where like if you want to be a validator node on the network
that is basically being the workhorse for their consensus mechanism then you have to
get approved by them in order to do that so it doesn't really fit my definition of like
a sound money i think that it can be a very successful banking protocol but i would not
you know store the vast majority of my wealth in that system okay you mentioned wimble
mimble mimble wimble sorry i'll dig it out put it in the show notes are there any other
projects do you think are really cool that interest in tech that people should take a
look at you know they could be coins out now and anything else you think people should
look at um the main problem now is that the ecosystem is so large and especially you know
with the ico we didn't even cover that yeah is that like i can't even keep track of it
and like i i get you know probably 10 emails a day of all these tokens and stuff and i
keep hitting unsubscribe spam unsubscribe so like i'm trying not to keep up with it even
very hard um so you know i'm sure that some of there are a few like you know gems out
there in the rough but but there's also so many scams um i'm i'm really mostly concerned
about bitcoin um and trying to keep bitcoin as kind of like a thought leader in the crypto
asset space of like this is how you safely you know upgrade a permissionless system um
that hopefully other uh permissionless systems will end up following okay and before we shoot
off good words before we go off and shoot some guns um just final question it's been
great um future for bitcoin and future for you you know near and distant future where
do you think bitcoin is going and what about yourself and your interests yeah i mean i
think that for the near term future we're gonna see the most change come you know due
to the institutional investments that are coming into the space and you know that is
going to continue to change use cases and nature of bitcoin itself but then i'm hoping
that we can swing the pendulum back the other way in a number of uh of facets um one from
like the mining standpoint i want to see us you know redecentralize mining and two from
the like general user standpoint uh want to get us back to the point where bitcoin actually
becomes usable for like regular day-to-day payments and can really fulfill that promise
of digital cash but this is you know ground that no one has tread upon before so there's
there's so many unknown unknowns um it just comes down to like how does the community
react to it and you can kind of take a nihilistic point of view as well of you know if we agree
that bitcoin is going to continue to you know be in an adversarial environment i have to
deal with all kinds of issues then the outcome is binary either bitcoin can overcome all
of the issues that that are faced with or it can't um and i'm leaning towards the can
side uh because the number of people who are willing to to fix issues continues to grow
and people uh you know become more invested both from a financial standpoint philosophical
standpoint what have you so i think the the main thing is just you know keep the the network
effect going keep the ball rolling um not not be too worried about like what other people
are doing this whole flippening thing i think is so dumb i mean ethereum should be ethereum
bitcoin should be bitcoin b cash should be b cash oh and yes i mean there is some overlap
of their you know competing in certain ways but they can also you know be their own unique
like ideology and personalities and for yourself so my my goal it has never really been you
know bitcoin at a at a much higher level my goal is to use my technical skills to empower
individuals and it just so happens that crypto assets are a really straightforward way of
doing that so i am interested in using my resources in any way possible to affect the
lives of as many people around the world as possible to give them more freedom and more
power and the ability to to interact globally you know whether it's like just communications
or economically or what have you you know try to get the rest of the world plugged in
to this new economy that we're building great okay that was amazing thank you so much
so what did you make of that i hope you all enjoyed it it was quite different from the
previous two shows with luke and nick but i hope you appreciate what i'm trying to do
with this podcast in getting different people on and i hope you took a lot from it Jameson
is just a really cool and interesting guy he clearly loves bitcoin he clearly loves
the community and he wants to do everything he can to support it i know we went into quite
a bit of technical detail and i don't understand it all myself but i think it really is important
when getting involved in crypto and bitcoin and trading we understand the tech especially
you know when i was asking about specific coins you know he's raising things that kind of mean
that some of these investments might not be as good as they appear because there might be issues
with the tech you know when we're investing in coins it is important that we do our research
and we invest in things that will grow because there will come a time when the market dips and
some of these projects might not exist some of these projects might not grow or that we might
actually lose money on them so i suggest you go to the show notes you go and look up Jameson's
website you follow him on twitter and you just start to get your head around the technical stuff
as i said at the start of the show please do leave us a review on itunes it really really
does help please do follow me on social media and give me a shout if you have any questions
the website again is www.whatbitcoindid.com and hopefully i'll have another show out for you
next week okay i hope you all have a great trading week and i'll see you soon