WBD003 Audio Transcription

Bitcoin Philosophy and Tech with Jameson Lopp

Interview date: Friday 8th December

Note: the following is a transcription of my interview with Jameson Lopp. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this podcast, I chat with Cypherpunk and BitGo engineer Jameson Lopp aka @lopp. We discuss both the philosophical and technical aspects of Bitcoin, the scaling debates, forks and the various leading personalities in the community.

Interview Transcription

Peter McCormack: Jameson, hi.  Thank you for having me here in your home in North Carolina.  Most of the people who subscribe to my podcast aren’t really techy, so to have somebody with the technical background you have is great.  Yeah, so could you just give us first a background about how you got involved in tech and then Bitcoin and your engineering background?

Jameson Lopp: Sure.  So, I have been a tech guy since I got my first computer when I was in probably fifth grade, and my parents were always having to pry the keyboard out of my fingers and 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 project your will out into Cypherspace and learn, really absorb as much information as you can. 

That really resulted in me, once I got to university, looking at all my various options and checking, crossing all the majors off the list, and the only thing that was left was computer science.  So, I 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, 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.  Then eventually, something came along, probably on Slashdot and 2012 and I said, "Okay, this thing is not going away, maybe I should look into it".  Once I did, I realised it's actually a very elegant system; it solved 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 satoshi.info, really just an operational dashboard of Bitcoin node, and did a number of other projects over the years eventually to the point where, in 2014/15, there was a lot of venture capital flowing into the space and I realised 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 I have been progressing along as the company is growing there.  Now, I'm leading a team of four different back-end infrastructure engineers basically building the really low-level stuff at BitGo that helps us keep track of all the blockchain data and do the actually 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.

Peter McCormack: Okay.  On your website, you talk about being a cypherpunk or aligning yourself with the philosophical viewpoint of a cypherpunk.  Can you explain what that is to the rest of us who wouldn't know and wouldn't understand that?

Jameson Lopp: 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, basically the creation of surveillance societies; and they realised 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.  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.  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.  People kept trying and failing, trying and failing; and then after the 1990s, it really slowed down.  I think DigiCash went under in the late 1990s and nobody really was trying to do digital money anymore. 

Then, out of nowhere in 2008, this Satoshi Nakamoto figure appears on the cypherpunks' mailing list and says, "Hey, I think I’ve figured it out".  Actually, the initial reaction from most of the cypherpunks was twofold.  It was either 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, "This is why it's not going to work.  These are specific reasons why your system is going to fail". 

So, really there were only one or two people that responded positively to it.  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.  Then eventually, a few months later, the first software got released and Bitcoin was born on 3 January 2009.

Peter McCormack: How important do you think privacy is and the counterargument 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 counterargument.  How do you feel about that as an argument?

Jameson Lopp: Right.  So, 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 power and trust.  If you're stripping away everybody's privacy and somebody, some entity, is then going to ingest and analyse all of this data, probably some government intelligence agency, then what happens when there are bad actors at that agency?  What happens when they start misusing all of the data?  How are they held accountable? 

Then I think ultimately, you'll hear people say, "Oh, other government agencies will hold them accountable".  But eventually, the buck has to stop somewhere and there's going to be some single executive authority at the top of this hierarchy that becomes the single, trusted point of failure where they can basically screw over everybody because of the power that they have amassed.

Peter McCormack: 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's been successful because of privacy?

Jameson Lopp: 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 in 2011/12, Silk Road, darknet markets, all of that stuff was really what helped to bootstrap the system, and it was because a lot of these users were saying, "Oh, it’s great private 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 non-authoritarian aspects of it.  There was no middleman who could censor your payments.  That's why the darknet markets were able to rise so much. 

We then later found out that 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.  We have better technologies now, like Monero and Zcash and I think we're going to see stuff like confidential transactions eventually get into Bitcoin.  Mimblewimble 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. 

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 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, whether that be a few bankers or a few government authorities?  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 as little as a Raspberry Pi running at home?

Peter McCormack: 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 the real driving force?

Jameson Lopp: 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 transacting in the way that you want to on these systems.

Peter McCormack: Do you see Ross Ulbricht then as some of kind hero, or do you agree that you should be able to create a dark web where you can sell anything?

Jameson Lopp: Yeah.  My perspective is that Ross Ulbricht is a software engineer who was providing a software service.  Some people may have used that for bad things, but I don't think that the moral culpability of other people using his system makes him a bad person.  I don't think there's a transitive property 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.  That doesn't transfer to me as a person.

Now, you can get into all the legal aspects of, "Oh, he tried to have people killed" and all this other stuff and, "That was actually a huge set-up by corrupt government agents that coerced him into doing that stuff and he never got charged for it", but it is terrible to see that he may be locked up for his entire life for non-violent crimes.

Peter McCormack: Some people would argue that the Silk Road enabled violent crimes, but at the same time, what then is the difference between 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?

Jameson Lopp: Yeah, I mean I think each person is only responsible for what they themselves are doing and directly causing harm to other people.  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 six degrees of separation thing and say, "Oh, well we're all Hitler then", right?

Peter McCormack: All right, so what is the real Bitcoin?

Jameson Lopp: The real Bitcoin is whatever you are running software to enforce the rules that you're agreeing to, so the real Bitcoin is whatever you believe it is.  Now, what is the real Bitcoin in terms of global Bitcoin usage?  That's a lot harder to define.  It's this ethereal mesh, overlap of consensus of what everybody is agreeing to. 

Maybe it's like a least common denominator type rule set, because there are people out there who are running node software, for example, that would accept 20-megabyte blocks on the Bitcoin network.  That's the only thing that they change but other than that, they're running 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. 

You could say 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.

Peter McCormack: 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?

Jameson Lopp: Well, there's human consensus and there's machine consensus.  Really, the revolutionary thing that Bitcoin did from a technical standpoint is figure out how to do decentralised 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 are all in agreement that the data is all following all the rules, they're agreeing to the same rules, then they are in consensus. 

So, that means that from a technical standpoint, 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.  You're running the same rules and essentially 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 humans agree upon 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, anybody who wants to participate can then look at the code and say, "Yeah, the code looks good".  I download it, I run it and we continue on in consensus, potentially rules along the way if we agree to it.

So, it's a very hard thing to define outside of the machine level.  We can say, "Yes, these are the technical things that our code is accepting or rejecting", but then the really tricky part is how do you reach out into the ether and pull these human consensus concepts and rules and transcribe them into real code?  That's what a lot of people are arguing about; what should the rules be; how can we change the rules; how do we move forward?  People tend to get really frustrated, because some people are more conservative than others about trying to change these rules.

Peter McCormack: 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.  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 so relevant to the scaling debate?

Jameson Lopp: 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 have 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, although 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 of 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; 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?  We get into all of these trade-offs and ideological differences about the best way to continue increasing Bitcoin adoption.

Peter McCormack: 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 centralised 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?

Jameson Lopp: 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?  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 $10 or $20 a month to run a full node. 

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.  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 hat 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". 

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, it probably would have succeeded.

Peter McCormack: It’s interesting.  Actually, I want to work through the scaling thing, because when I came into Bitcoin, well I 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, I came across the sub-Reddit/Bitcoin and the sub-Reddit/BTC and honestly, it's taken me probably six to seven months to form an opinion and finally realise, actually I don't like either sub-Reddit, but I'm definitely a small blocker.

Can you try to help people understand who the two different camps are and how the split came about for people who don't know?

Jameson Lopp: Sure.  So, there is a lot of obviously minutiae in people having slightly different opinions but to generalise, the "small blocker versus large blocker", or you could generalise 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, 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 in 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 a 1 penny transaction fee and get confirmed in the next block and never have any problem.

Peter McCormack: Actually, I saw that on your website because I didn't even realise that originally, the miner fee was an optional contribution just for thanking them.  You didn't actually have to pay a fee; I didn't really know that.

Jameson Lopp: Yeah, there was also a concept of transaction priority, which was basically looking at the age of the outputs that you are spending.  Each block, back in the day, had something like 10 or 20 kilobytes of space reserved for high-priority, zero-fee payments.  Basically, if you had not spent your Bitcoins in a long time, you could spend them for free and get a prioritised transaction.  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.

Peter McCormack: This is with Bitcoin as on chain as the settlement layer?

Jameson Lopp: Correct.

Peter McCormack: This will keep the cost of operating a node down?

Jameson Lopp: Yeah.

Peter McCormack: Which keeps the system more honest; so, we're happy with that?

Jameson Lopp: 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 getting into the chain are going up and up and up.  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.

Peter McCormack: 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 they can use?

Jameson Lopp: 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 terrible currency: Venezuela, Argentina.

Peter McCormack: Zimbabwe.

Jameson Lopp: Yeah.  So, those people can't afford to spend several dollars just on a transaction fee, because they're only making so many dollars a day. 

Peter McCormack: 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.

Jameson Lopp: Right.  I think they're still mostly using it for store of value.  But even if they're mostly using it for 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. 

This is very hard to answer, because I can see it both ways.  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. 

Peter McCormack: You think we should just be patient and wait for the right tech?

Jameson Lopp: That's what most of it comes down to.

Peter McCormack: What kind of timescale do you think for the right kind of -- are we talking Lightning Network?  What kind of timescales do you think people should expect this to be something that becomes usable?

Jameson Lopp: I'm expecting Lightning Network to become usable next year, definitely by the end of next year.  You can already "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. 

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 am 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.

Peter McCormack: Okay.  Because of the scaling debate, we now have this new fork problem, I see, where although Bitcoin allows you to create forks, it's the way it is. 

Jameson Lopp: It's freedom.

Peter McCormack: It's freedom, but at the same time, I read this morning about Bitcoin God that's coming out on Christmas Day.  I don't know if you heard about that.

Jameson Lopp: I did.

Peter McCormack: For me, where this all took shape was with the user-activated, was it a soft fork?

Jameson Lopp: Soft fork, yes.

Peter McCormack: Was that Luke Dashjr that was involved in that?

Jameson Lopp: I believe that the entity who first really came out publicly and wrote code to do it was shaolinfry, another pseudonymous entity out there, who I believe was also a Litecoin developer.

Peter McCormack: Okay.

Jameson Lopp: Yeah, that was I think BIP 140A and I think there were a few other BIPs as well, because there are various ways that you can do this.  Yeah, it's interesting that the user-activated soft fork movement was a very interesting sociological phenomenon.  The hats from Samson Mow are interesting, like human signalling mechanisms.  I've got my hat collection!  But it also triggered a lot of folks who got really upset, but mainly the enterprise folks who I guess believe that they have a bigger claim to Bitcoin in defining what it is than the users. 

Peter McCormack: 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 do users control this?

Jameson Lopp: 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 "averted" by SegWit2x.  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".  Once 95% of the past several weeks' worth of blocks are all signalling 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".

That worked pretty well, I think; three or four different features were soft forked into the protocol over a few years and they were not contentious, there was never a problem.  But then when we got to our first contentious change with SegWit, the miners realised 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". 

The counter to miners vetoing activation of stuff is users vetoing the miners not activating it.  So, that's what they --

Peter McCormack: They use their block rewards?

Jameson Lopp: Yeah.  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're rejecting your blocks, we're not paying you any of your block rewards and you're going to have to either change or die".

Peter McCormack: Because you won't be able to pay your power bills at the end of the month!

Jameson Lopp: Exactly.

Peter McCormack: Interesting.  From that, afterwards we got SegWit, which I don't understand, a lot of people don't understand.  From what I can understand, it was an optimisation of the code, taking out something that wasn't really needed.  Then we had a couple of things happen: we had Bitcoin Cash come along as a hard fork.  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.  Do you call it Bcash?

Jameson Lopp: Usually, yes.

Peter McCormack: Do you call it that to defend the Bitcoin name?

Jameson Lopp: 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.

Peter McCormack: It sounds cooler than Bitcoin Cash anyway.

Jameson Lopp: 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; basically, people just not understanding that these are two completely different incompatible networks.

Peter McCormack: So, why does Bcash exist; why do you think it exists?

Jameson Lopp: 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 Amaury Séchet to develop Bitcoin ABC, which at the time, I believe they were calling it a backup failover option if SegWit2X didn't go through.  Then, for some reason, they changed their stance on that and they said, "You know what, we’re doing it anyway", 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.

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, "You'd better have replay protection", and thankfully they added that in.  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 types of hard fork altcoin airdrops. 

So, the address format, for example; 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.

Peter McCormack: You called it a movement, but there's a really few players in there that 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.

Jameson Lopp: There may or may not be the ASIC boost issue.

Peter McCormack: Yeah, may or may not be.  I don't understand the Roger Ver arguments so much in that he originally, when I first read Digital Gold, he seemed like Mr Cool Guy; he'd done a lot for Bitcoin.  I don't understand; it 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 ideas; do you have any thoughts?

Jameson Lopp: 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.  I think in general he does not like the Bitcoin Core philosophy.

Peter McCormack: Let's explain who Bitcoin Core are.

Jameson Lopp: Sure.  From an historical standpoint, Satoshi Nakamoto created Bitcoin and the Bitcoin repository.  For a number of years, it was just called Bitcoin or Bitcoin QT.  Then some time around 2011 or 2012, Mike Hearn and Gavin Andresen, 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 antithetical to a decentralised project.  But for whatever reason, that name change went through and it's been called Bitcoin Core ever since. 

Now, it's weird because you hear a lot of FUD from people saying, "Oh, Bitcoin Core is a single authoritarian group of just a few people who are mostly Blockstream employees", and all 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 Bitcoin Unlimited, Bitcoin XT, Bitcoin ABC, you've got a number of different repositories there.  But if you really look at those, each of those repositories has two or three developers.  They might appear to be more decentralised, but I think if you look at terms of total developer power and resources, Bitcoin Core is actually more diverse, more spread out.

Peter McCormack: One of the arguments is that Bitcoin Core may be slow to develop; but the counterargument is actually, they're taking the time to make sure there's no fuck ups.

Jameson Lopp: Yeah, there's no argument that they are conservative and really, I've been a software engineer for ten years, pretty much always in the web app development space.  Web app development, software engineering in general is so different from crypto asset 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. 

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 is running your code.

Peter McCormack: I guess -- the price went up again last night.  What did we hit?  Nearly $13,000?

Jameson Lopp: I think so.

Peter McCormack: We’re over $200 billion now for Bitcoin and I think, in some ways, I’m going to jump around a bit here, but what happened post cancellation of SegWit2x and the issue with Jeff Garzik kind of proved that actually, he did a job at proving the value of Core because there was a problem with --

Jameson Lopp: There were several bugs.

Peter McCormack: Yeah, very bad bugs that would have essentially fucked up Bitcoin.

Jameson Lopp: 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 four different times, because they had less talented, or just developers who had as much experience, writing their code and they had far fewer developers in general on the 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".  Then they create a tool in 30 minutes that can remotely shut down and crash all the nodes on the network. 

This is an interesting juxtaposition, because everybody thinks of Bitcoin as this really strong and robust anti-fragile system.  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 unutilised variable; a million things that you can screw up and do wrong to basically create a tiny little chink in the armour of the protocol that then an attacker gets into, exploits, and then they can take the whole thing apart.

Peter McCormack: I'm going to come back to the SegWit2x stuff; I just want to go back.  So, Roger fell out with Core because, what; he was trying to get them to do things he wanted?

Jameson Lopp: Yeah, well I think most of this really comes down to frustration and time preferences.  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. 

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 is particularly fond of, because he thinks that it may be vapourware or just take way too long to actually get implemented and he wants to see evolution happening at a faster pace.

Peter McCormack: Can you empathise with him at all and can you philosophically see what he's doing?

Jameson Lopp: Yeah, yeah because I was a big blocker.  The first real big movement for big blocks, Bitcoin XT, was a proposal to increase to 20-megabyte block sizes and that was two or three years ago.  At the time, I had just become a full-time Bitcoin software engineer at BitGo.  I was, "Yeah, you know, we’re seeing backlogs and the users are complaining and it's 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".  It took me probably most of the year to eventually come around and realise what the trade-offs of doing something like that would be.

Peter McCormack: I think that's the thing for most people, because when I first saw it, I was like, "Well, big bucks make sense; lower fees and it'll be faster.  I can be a store of wealth and I can have a currency, of course".  But then 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, like I did, where actually I could not support big blocks because you want to keep it decentralised.  So, okay, that's really interesting.

Jameson Lopp: Yeah, I've spent a lot of my time at BitGo actually writing software that parses the block chain.  I've seen how, over the years, with the Bitcoin blockchain at 1-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 block chain, every time you have to parse the entire block chain 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; 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 needing grids of server farms with thousands of hard drives and RAID arrays together.

Peter McCormack: So, it can only be afforded by the corporations who will then have control?

Jameson Lopp: Yeah, and people make fun of Craig Wright quote, the "$20,000 node or piss off" quote, but the numbers that I was coming up with were way more than $20,000.

Peter McCormack: Wow.

Jameson Lopp: Yeah.

Peter McCormack: What do you make of that guy?  I haven't listened to it but there's an hour and a half interview with you about him or something on your website.

Jameson Lopp: Yeah.  I met him at a conference and a pretty personable guy.  He has a bit different stage persona; he gets even more flamboyant.  But in general, I think he's a good salesman.  I'm not sure that he is a good engineer.  I'm still waiting to actually see any software get developed or produced by nChain.

Peter McCormack: 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?

Jameson Lopp: My understanding of some of the things I've read and hearsay is that he somehow got into an agreement with Calvin Ayre who was, I believe, an online poker entrepreneur; I believe he's a billionaire.  It sounds like he somehow got into an agreement with Calvin Ayre to get a substantial sum of money and that somehow, the whole Satoshi Nakamoto and Tulip Trust coins was 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.

Peter McCormack: But there's some quite key people in the history of Bitcoin who've come out and said they believe he is, and I don't understand that.

Jameson Lopp: Well, and that's the whole bamboozled bit, right?  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 Greg Maxwell showed that he had backdated some signatures or was using software that didn't even exist at the time. 

But I think the long story short is there's a lot of really confusing stuff around here.  It's like Occam’s razor.  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.

I would say any of us who are 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 from an address or block mined by Satoshi back in the day.

Peter McCormack: All right, look, a controversial kind of question: is Satoshi even relevant anymore?  The reason I ask the question is I often see an argument, "Satoshi would have wanted this" and they cherry pick parts of --

Jameson Lopp: Yeah, Satoshi’s vision.

Peter McCormack: 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.  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.  Is he relevant anymore?

Jameson Lopp: Not in terms of the future of Bitcoin.  He is relevant in an historic context.

Peter McCormack: And a hero.

Jameson Lopp: Yeah.  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 others of the early contributors came in and actually explained to Satoshi, "This is actually what this piece of code does.  We need to fix this".

So, this protocol is organic, it's alive, it's 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.

Peter McCormack: Do you have any thoughts on who it is, or would you not even share it if you did?

Jameson Lopp: No.  I have no real thoughts.  Just for fun the other day, I posted some anagrams for Satoshi Nakamoto.

Peter McCormack: I saw that.  What was it, the one, "A man took a shit" or something?

Jameson Lopp: Yeah.

Peter McCormack: That cracked me up!

Jameson Lopp: Or, "I am an SA took oaths".

Peter McCormack: There's a Satan one as well, right?

Jameson Lopp: Yeah, yeah!  Sure, there are probably a very few number of people who have the technical qualifications to build something like this, and there very well may be one or more of the well-known cypherpunks that would be top candidates.  Or, you know, it could be some folks in government intelligence agencies who do cryptography and this type of stuff.

Peter McCormack: 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 $1 million a coin, it will clear the national US debt.  I don't believe it, but I thought it was a great conspiracy theory. 

Okay, so 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 actually there are bad actors who want 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 the manipulation and movement of money?  Because at one point there was an inverse relationship and it's not always there, but it felt like there were waves of selling of Bitcoin to buy Bcash to push the price up.  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?

Jameson Lopp: 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, 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 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 an investment standpoint, the conservative thing to do is nothing and you hold both coins.  Then if one of the coins goes to zero, then you're safe because you've got the other one.  Presumably, one would subsume the other, the value would get sucked from one into another.  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, have to pay what I was calling the exit tax, which means you're going to have to buy out everybody who is completely against your fork and is going to dump all of their coins on that fork.

Peter McCormack: And we've seen suspected large movements of Bitcoin from suspected Roger Ver wallets.

Jameson Lopp: Yeah.

Peter McCormack: Do you think he's having to pay to try to prop this up and how much?  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 from $12,500, $13,000; I think that fight's over.

Jameson Lopp: Yeah, I think there was some evidence showing that he was basically setting some big buy walls at 0.1; but then I think what we found happened, during that time when people suspected that he sold a lot of his Bitcoins for Bcash, we later learned that there were some big institutional investors that came in and just bought up a lot of Bitcoins.  That may be a transfer away from Roger to the next generation of Bitcoin holders, like the institutional-level folks.

Peter McCormack: It feels like now, with Roger, he's kind of -- I don't want to talk about him too much and I'd actually like to meet him and talk to him.

Jameson Lopp: Sure.

Peter McCormack: I'd happily have him on this, but it feels like he's becoming more unstable publicly.

Jameson Lopp: Yeah.

Peter McCormack: 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?

Jameson Lopp: Oh yes.

Peter McCormack: What do you think's going on here?

Jameson Lopp: Yeah, I mean this is just more frustration.  He has his vision for Bitcoin in the future and there's so many people who are pushing back against that.  He's made some flubs but really, one of the crazy things about this space is how popular some of us have become.  I think that Roger probably has 200,000 Twitter followers.  There’s nothing that can prepare you for that.  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, maybe if he doesn't have a PR agent, maybe he needs to invest some money in that or just cool off on the public expression of some of these things and let other people take over.

Peter McCormack: He can stop the sentence before the word "but".

Jameson Lopp: Yeah.

Peter McCormack: That's pretty cutting.  Moving on from Bcash, we covered that.  We then had the New York agreement, which seemed a very centralised 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 whole view on the whole thing that happened here and your opinion on the New York agreement, the people behind it and why ultimately it collapsed?

Jameson Lopp: The governance of this system, like we said, really hard to define.  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.  So, we had Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited.  Then New York agreement, SegWit2x.  They're all trying similar but slightly different variations to force contentious consensus changes to the network.  So far, those all failed.

Then we had Bcash which, for all intents and purposes, succeeded.  So, as soon as Bcash succeeded, 100 other people were copying that model because it was successful.  This is part of 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 glob off of that success and try to duplicate that model.

Peter McCormack: Do you believe the lack of replay protection with SegWit2x was a direct attack on Bitcoin, but was ultimately their undoing because of the backlash from it?

Jameson Lopp: Yeah, that was a really tricky problem.  We had to spend weeks of engineering effort building our own manual replay protection.  That was one of the disappointing parts of SegWit2x getting called off is we didn't get to use any of that.  We still had the code, so if there is a non-replay protected fork in the future, we're much more ready for it.  You could argue that makes the ecosystem more robust as wel,l 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.  I was ready to dump all my SegWit2x coins.

Peter McCormack: I want to see the bet with Charlie Lee.

Jameson Lopp: Oh, yeah.

Peter McCormack: Yeah, I mean I think everyone wanted to see that bet.

Jameson Lopp: That was one of the biggest, I'd almost call it non-signals that was happening during the entire thing; is that once we got to somewhere between two months to one month before SegWit2x was supposed to activate, I noticed that none of 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.

Peter McCormack: I offered up Jeff Garzik and I didn't even think he'd respond to me, because I had, like, 300 Twitter followers at the time.  But anyway, he came back with a different argument.  He said the reason for no replay protection was to protect thousands of different types of wallets.

Jameson Lopp: Right, right.  So, the argument was that because they were upgrading Bitcoin, 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.

Peter McCormack: Right.  Then no one would do any swaps.  I offered him a swap.

Jameson Lopp: Yeah.

Peter McCormack: Of course, he wouldn't do it.  Quite interestingly, I sold all my Bitcoin the night before it was cancelled.  It was a really interesting coincidence.  So, as a trader, there's only two times I've ever sold all my Bitcoin.  Once was during the Ethereum flippening, which worked out good for me.  I was in Vegas and I was just getting annoyed with it all.  I could only see a scenario where the price would drop, so I sold everything.  Woke up in the morning, I saw it got cancelled, a scenario I hadn't seen, and then the price shot up, sack of shit, but then it dropped back down.  So, then it got cancelled.

But then we'll go back to the point where the code was proved to have some fatal flaws in it, so could it have actually brought the network down?  What would the scenario have been?

Jameson Lopp: 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 1-megabyte size to be created at a certain height and that was part of the consensus rules, but then the mining logic to create that block was not set correctly.  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. 

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?"

Peter McCormack: Has Jeff come out with a reason for why this happened?

Jameson Lopp: I think he mostly tried to palm it off as it was a problem where the block height that they had put in their press releases did not match the logic of the code.  But the short version is that the only way that it would have worked would have been if miners had manually updated config files, which no one ever expressed in any of the SegWit2x documentation that that was going to be a requirement.

Peter McCormack: 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 with Bitcoin, I was also last night at your meet-up where Jimmy Song presented about the three anti-fragilities of Bitcoin, which really coverin, why is Bitcoin so resilient and do you think it will continue to be attacked or do you think it's proven itself now?

Jameson Lopp: Bitcoin needs to continue to be attacked in order to become more strong.

Peter McCormack: Okay.

Jameson Lopp: But it's resilient.  He went over a number of different reasons, but I think the simplest explanation is that it's resilient because of the people behind it.  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 no event that could happen that could make enough of us stop working on increasing the usability of the system.  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. 

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.  That will continue to be the case and it may get fixed even faster these days now that there are so many more of us participating in the network.

Peter McCormack: How big do you think Bitcoin can get, and I mean in terms of use case and price?  You seem to be in both camps of, you care about it as a philosophical project, but you also care about wealth creation.

Jameson Lopp: Yeah.

Peter McCormack: I'm interested in both angles from you.

Jameson Lopp: Yeah.  I believe that there is more value to be captured from 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, then you can start building all kinds of stuff on top of it, even Rare Pepes and PepeCash.  There's really no limit to the possibilities.

Peter McCormack: Can we do BitcoinKitties?

Jameson Lopp: Absolutely but they're going to be even more expensive than the CryptoKitties 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 the simplest just being replacing gold as a store of value or replacing sovereign monetary reserves.  I don't even know how many trillions of dollars' worth of monetary reserves probably make more sense to be held in a crypto asset-type system rather than fiat. 

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 it cost 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 international settlements between nation states.  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 try to bring the cash-like properties back to the network, especially on these second layers and even third layers.  There's no limit to the number of layers that might get created.  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 like the state of the world itself.  Everything keeps getting weirder as technological innovation continues to accelerate, not just linear changes but exponential changes.

Peter McCormack: 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?

Jameson Lopp: Yeah, well I mean what is stability?  Whenever someone talks about stability, they're really saying, will it be stable relative to some other asset, because every price is relative.  So, are we going to get stability relative to the US dollar?  If Bitcoin really becomes mainstream, then the dollar might become volatile.

Peter McCormack: Some people argue 1 Bitcoin is still worth 1 Bitcoin.

Jameson Lopp: Yeah.

Peter McCormack: But the dollar price is --

Jameson Lopp: Is plummeting.

Peter McCormack: -- is plummeting.  But things in the shops aren't priced in Bitcoin yet.

Jameson Lopp: Right.

Peter McCormack: If they were, it would be -- and I personally don't think we're going to get to a stage where certainly, and I had this argument on Twitter the other day when leading economic powers, Bitcoin is going to, or 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.  Do you think nation states, any nation states are actually investing in Bitcoin?

Jameson Lopp: I don't know if nation states are, but we are seeing sovereign wealth funds start to talk about it.  It started off with just individuals, those crazy crypto-anarchists and then over the years, it's become high net worth individuals start to diversify into a little bit more.  You have your small family offices and then your large family offices, and now it's Wall Street institutional investors.  We're even starting to see national pension funds for individuals, like Sweden and Finland, looking at putting a small percentage of their huge pension funds into crypto assets. 

Eventually, I think the IMF, the International Monetary Fund, has actually spoken about how it will probably 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 smaller nation states, 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.

Peter McCormack: Yeah.  I think we can see this happening because of the movements in price.  I often get asked, "Pete, what do you think the price is going to do?" and you never know, but it keeps beating every single expectation.  So, some people said $10,000 by the end of the year but it looks like we could beat $15,000; you never know.  Somebody said $25,000 to $40,000 next year; we could be $60,000 to $80,000.  We've no idea, but it feels like all the people with big money are looking and 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 App thing's cool.  But what other things do you think need to happen to make it just become everyday?

Jameson Lopp: The biggest problem here is that this is a paradigm shift.  What we see happen a lot with the users that I interact with is 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 how long will it take for the culture to change its perspective of responsibility or financial responsibility; that could take generations. 

So, I would be afraid the technology might outpace the ability for society to actually keep up with it.  Maybe in the interim, Bitcoin gets used more by machines, setting up micropayment networks and internet of things economy; that might go in that direction.  But yes, this personal responsibility is very difficult to teach, although Bitcoin teaches harsh lessons to people every day who get into it without having the personal accountability that they probably should.

Peter McCormack: Do you think people should spend more time learning and understanding Bitcoin; and what kind of things should they be learning?  I said to you I'm a year in and I'm still learning.  What kind of things should people be focusing on?

Jameson Lopp: Well, there is just the general security practices and having good back-ups.  So, I have a ton of educational resources on my website.

Peter McCormack: Yeah, I will share that.

Jameson Lopp: The biggest problem is just most people are not nerds; they don't have IT practices at all.  I would argue that in general, everyone should have at least some amount of information technology understanding, because even if you're not in the Bitcoin, most of our lives now are digital.  You need to have backups and recovery mechanisms, because catastrophes happen, natural disasters happen.  It's just 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's probably in a bank not in a thumb drive under the mattress or something.

What we're really seeing these days is, 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 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.

Peter McCormack: Right, okay.  We've seen a growth in hardware wallets, which seem to have simplified the -- when I first started, people talk about paper wallets and cold wallets.  Do you know what?  It just seemed too weird and too scary.  People said, "You should know your keys" and, again, I've also felt that actually a hardware wallet just seems to be one of the safest to me.  Do you have views on hardware wallets; do you have a preference what people should be doing?

Jameson Lopp: Definitely.  I tend to recommend Trezor and Ledger.  I'm a big fan of Ledger, because they're supporting a number of different crypto assets.  So, in fact I had someone ask me this the other day.  They said, "You know, I'm just getting into the space.  I'm buying all these tokens, but it's really hard to find a wallet that will hold all my stuff in one wallet".  I'm like, "Look, you're actually pushing this from a completely wrong standpoint.  You are trying to trade security for convenience, because you're telling me you want to put all of your money into one piece of software created by one or two developers 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 the risk of centralisation to a T, right there.

Peter McCormack: 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 Trezor"; do you think this is a risk?

Jameson Lopp: Yeah.  We've only heard a few incidents of stuff like this happening, but it is already becoming an issue, especially if you're very public about being in this space.  There have been a few people who have been kidnapped and basically tortured until they handed over their private keys.  The only way around that from a technical standpoint is to not have direct access to your private keys.  So, I've written about this as well; of using multi-signature aspects to split up your data amongst other people in your family and friends.  You can actually create what I would say is better than bank level security, if you’re willing to put the effort into it. 

The problem now, even if you, for example, have a bunch of private keys or hardware wallet, and you go, "Put that in a bank safety deposit box" if the access codes to get into that hardware wallet are also there, then that's still a single point of failure.  Depending upon what your threat model is, if you're going like ultimate paranoia, state-level actor threat model, then you should assume that there's no physical location that is safe.  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 preferably encrypt it.  I recommend using Shamir’s Secret Sharing scheme for example, so that it really becomes like a puzzle.

Peter McCormack: 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 ignoring and trying to pretend isn't there; and should the community be looking at this?

Jameson Lopp: I don't think it's being ignored.  I think it's actually like a fundamental aspect of Bitcoin's security.  You need to make it extremely expensive for an attacker to be able to rewrite the history of the blockchain.  The way that we do that is that we make you prove that you have expended a certain amount of energy in order to add data to the blockchain.

So, there are people who will say, "Oh, Bitcoin is using more electricity than Ireland or 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 building electrical generation plants and 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.

The only example that comes to mind, 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 geothermal energy.  I'm not sure that really even matters for the debate, because that's not doing carbon emissions or really hurting the environment.  Geothermal is renewable resource.  We're also seeing more people using some solar, but really mostly hydroelectrical power.

Peter McCormack: Yeah, hydro is big.

Jameson Lopp: Hydroelectric power is 24/7, as long as the water is there, and tends to have a lot more excess energy.  Especially in China in the Northwest of America, there's a lot of hydro energy that is extremely cheap because it's so plentiful.

Peter McCormack: What, like Washington State?

Jameson Lopp: Washington State, yes.  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.

Peter McCormack: I met a miner recently, a guy called Chad over in LA, and he's got a mining operation in Dallas.  I've decided to get involved in it with him, but the numbers we've actually started to look, "Can we get a hydro dam?" and it all seems a bit funny.

Jameson Lopp: Actually, I met someone locally just a few weeks ago who, they did something even more innovative where they purchased a tyre reprocessing facility.

Peter McCormack: I've read about this.

Jameson Lopp: Yeah, he did a PR piece a week or two ago to publicise it.

Peter McCormack: Was this on your Twitter?

Jameson Lopp: Yeah.

Peter McCormack: Yeah, that's where I saw it.

Jameson Lopp: They had a plant that was already up and running and basically, they burn these old tyres down and get the constituent petroleum and other by-products, separate them out, sell those.  But one of the interesting by-products of this process is that it generates a lot of electricity.  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 realised we could be a lot more profitable if we just use that electricity ourselves to mine cryptocurrencies.

Peter McCormack: Wow.

Jameson Lopp: That's what they've been doing.  They didn't steal energy from anywhere, they were already creating the energy, they just redirected it to a different use.

Peter McCormack: I just want to ask you about a few other projects outside of Bitcoin, because we've talked a lot about Bitcoin.  I'm just going to name a few and can you just tell me what you think about them.  So, Litecoin?

Jameson Lopp: Yeah, good project.

Peter McCormack: Good project.

Jameson Lopp: Charlie Lee is a pretty cool guy, he knows what he's doing.  It's weird 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.  Yeah, if you want to do cheaper, faster payments, I mean I would use Litecoin instead of Bcash just for ideological reasons.

Peter McCormack: Dash?

Jameson Lopp: That one, I've never really been a fan of Dash.  My understanding is they've also got a huge premine.  All of the interactions I've had with Dash people have been very marketing heavy. 

Peter McCormack: A huge amount of their master node, no, their miner rewards go back into the project to actually finance projects.

Jameson Lopp: Yeah.

Peter McCormack: They treat it much more like a commercial project.

Jameson Lopp: Yeah.  So, I'm not really heavy on the technical details there, although my understanding is that they're basically using a form of CoinJoin to give some privacy properties to the transactions, but it's still all in the clear.  Unless they've got some really innovative stuff coming down the pipeline -- I know that they were doing some on-chain scaling stuff as well which isn't that interesting, but there are other projects like Mimblewimble and Monero and ZCash.

Peter McCormack: What’s Mimblewimble?

Jameson Lopp: So, Mimblewimble is a completely new crypto asset that is using what I would call extreme on-chain privacy and extreme on-chain scaling.

Peter McCormack: It’s available now; people use it?

Jameson Lopp: 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 Andrew Poelstra at Blockstream is one of the guys who’s working on it; there's also several anonymous developers.  Mimblewimble, 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.

Peter McCormack: Okay.  Monero?

Jameson Lopp: Yeah, Monero --

Peter McCormack: Which I love by the way.

Jameson Lopp: No, I’m a big fan.  Also, Riccardo, Fluffypony, hilarious guy; also, a good developer.  They've got a pretty good roadmap and they're putting releases out and they're hard-forking every six months or so, but it's fine.  It's part of their model, everybody seems to agree to it, it doesn't seem to be contentious.  They're going to have scaling issues.  Monero is less scalable on chain than Bitcoin, although I think they might be looking at using bulletproofs and other stuff to help reduce the size of their transactions.  Yeah, I mean I think they have some pretty good engineering talent; they're going to continue.

Monero probably is the best privacy coin right now, because while you could argue that ZCash has more academic privacy in its shielder transactions, what really matters is whether people use it.  Monero, ring signatures are on by default; everybody is using them for every transaction.  ZCash only 10% to 20% of transactions are actually using them.  I was also seeing something recently, just the other day, that was showing that if you're shielding a transaction and then unshielding it not long after that, there is still a lot of linkability going on.

So, ZCash very interesting, but I think they have even more work to do to become a really strong privacy coin.

Peter McCormack: I have ZCash on my list.  I've got a few more: Ethereum?

Jameson Lopp: Ethereum is just so different from a philosophical perspective from really mostly any of these other assets.  They've got the move fast and break things-type approach.  With regard to the security model, they are also more okay with using the 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 all of the challenges that I've run into, because I've really spent about a year working on Ethereum infrastructure at BitGo.  We have an Ethereum product now and it's been a challenge both at the very low-level node layer and also at the smart contract layer.  I think I had some tweet where I quipped about cyber security is a nightmare; crypto asset security is a super-duper nightmare; but smart contract security is a 1,000X crazy nightmare on top of all these other things.

Peter McCormack: Do you know much about EOS and it is a potential threat to Ethereum?

Jameson Lopp: I don't know a lot about it, but it also seems to be mostly marketing and hype driven.  I haven't really heard anybody say that they're impressed with the technical aspects of it.  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.

Peter McCormack: IOTA?

Jameson Lopp: Oh God.

Peter McCormack: Yeah, because this one, on a trader level, the prices have shot up.  I've not bought it.  I don't understand it.  But it’s gone…

Jameson Lopp: Yeah, I know.  It's a several billion-dollar asset which makes no sense.

Peter McCormack: It's fourth on market cap now.

Jameson Lopp: Yeah.  IOTA is insane that it has gotten to where it is right now, because it's using this directed acyclic graph which is not a very proven secure data structure.  But the more concerning thing about it is that it seems to be using some closed source co-ordination software that nobody actually knows how it works, except for the developers behind it.  There's a lot of drama with some, I guess, exploits that were found; they were rolling their own crypto. 

But for me personally, 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.  I'm primarily a Java developer, so I was, "Oh, this is cool.  I might be able to actually read it and understand it".  I looked at their code base and I was, like, "This is a hot mess".  I would fire somebody who tried to write this type of code at BitGo. There's no documentation.  I could not read the code to understand what it was actually doing.  

So, as a result, I would never put any money in this because I can't understand it.  It seems to be a miracle that it's working at all but then again, if it is essentially like a centralised data store, then anybody can do that.

Peter McCormack: Okay.

Jameson Lopp: We'll see.  I would like to know what it actually cost to 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.  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.  They can have weak security models and be exploitable in different edge cases.  But if they work most of the time, then sure, they can get a fair amount of usage and a fairer valuation until some catastrophe hits.

Peter McCormack: The reason I'm asking this is, however we feel philosophically about crypto assets, the majority of people putting money in is for wealth creation, for an easier life, to be an early adopter, to see some kind of benefit.  Now we're seeing hyper-growth and hyper-movements in price, my personal view is I'm putting the majority of the money into the things I think will be here in three to five years that won't suddenly crash and be gone.  Some of these projects I feel are potentially risky for people putting money in; they could lose a lot of money.  I've only got one left on that list.  It's Ripple.

Jameson Lopp: That's a fun one because we have a Ripple wallet at BitGo, so I have experience running Ripple nodes and stuff like that.  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 they do a fair amount of transaction volume; they've built a network.  My understanding is they premined a ton of XRP and who knows how many billion dollars' worth they have sitting in their Ripple bank.  They've been using that to create their network, build banking relationships.

I suspect that Ripple is probably a pretty strong company but note that I say Ripple is a pretty strong company.  As far as I am aware, it is not a decentralised, open community project; it is mainly a company-driven banking protocol.

Peter McCormack: So, it's not really a cryptocurrency?

Jameson Lopp: You could argue it uses cryptographic aspects of it.  Yeah, it goes back to what I originally said, money is a concept that is open for humanity to decide how to use.  My understanding of Ripple is that they have basically some sort of trusted or federated validator network where, if you want to be a validator node on the network that is basically being the workhorse for the consensus mechanism, then you have to get approved by them in order to do that.  It doesn't really fit my definition of sound money.

Peter McCormack: Okay.

Jameson Lopp: I think that it can be a very successful banking protocol, but I would not store the vast majority of my wealth in that system.

Peter McCormack: Okay.  You mentioned Wimblemimble.

Jameson Lopp: Mimblewimble.

Peter McCormack: Mimblewimble.  Sorry, I'll dig it out and put it in the show notes.  Are there any other projects you think are really cool, interesting tech that people should take a look at?  They could be coins out now.  Anything else you think people should look at?

Jameson Lopp: The main problem now is that the ecosystem is so large and especially with the ICO token --

Peter McCormack: We didn’t even cover that.

Jameson Lopp: Yeah, is that I can't even keep track of it, and I get probably ten emails a day of all these tokens and stuff, and I keep hitting "unsubscribe, spam", "unsubscribe".  So, I'm trying not to keep up with it; it's very hard.  So, I'm sure that there are a few gems out there in the rough, but there's also so many scams.

Peter McCormack: Yeah.

Jameson Lopp: I am really mostly concerned about Bitcoin and trying to keep Bitcoin as like a thought leader in the crypto asset space of this is how you safely upgrade a permissionless system that hopefully other permissionless systems will end up following.

Peter McCormack: Before we shoot off -- good words.  Before we go off and shoot some guns, just a final question, this has been great, future for Bitcoin and future for you, near and distant future; where do you think Bitcoin's going and what about yourself and your interests?

Jameson Lopp: Yeah.  I think that for the near-term future, we're going to see the most change come due to the institutional investments that are coming into the space.  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 facets: (1) for the mining standpoint, I want to see us really decentralise mining; and (2) from the general user standpoint, I want to get us back to the point where Bitcoin actually becomes usable for regular day-to-day payments and it can really fulfil that promise of digital cash. 

But this is ground that no one has tread upon before, so there's so many unknown unknowns.  It just comes down to how does the community react to it.  You can kind of take a nihilistic point of view as well of, if we agree that Bitcoin is going to continue to be in an adversarial environment, have to deal with all kinds of issues, then the outcome is binary.  Either Bitcoin can overcome all of the issues that it's faced with or it can't.  I am leaning towards the "can" side, because the number of people who are willing to fix issues continues to grow and people become more invested, both from a financial standpoint, a philosophical standpoint, what have you. 

So, I think the main thing is just keep the network effect going, keep the ball rolling and not be too worried about what other people are doing.  This whole flippening thing I think is so dumb.  Ethereum should be Ethereum.  Bitcoin should be Bitcoin.  Bcash should be Bcash.  Yeah, there is some overlap of their competing in certain ways, but they can also be their own unique ideology and personalities.

Peter McCormack: For yourself?

Jameson Lopp: My goal has never really been Bitcoin.  At a much higher level, my goal is to use my technical skills to empower individuals.  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 interact globally; whether it's just communications or economically or what have you, try to get the rest of the world plugged in to this new economy that we're building.

Peter McCormack: Great, okay.  That was amazing.  Thank you so much.

Jameson Lopp: My pleasure.