WBD018 Audio Transcription

Bitcoin Scaling and Lightning Network with Jameson Lopp

Interview date: Friday 25th May

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 interview, I talk in depth with Jameson about Casa, their solution, his role and what keeps him awake at night. We also discuss other critical topics in Crypto such as his thoughts on Bitcoin scaling and the Lightning Network.

“Bitcoin is an open collaborative project, where we are trying to organically determine what the optimum form of money is.”

— Jameson Lopp

Interview Transcription

Peter McCormack: Jameson, hi.

Jameson Lopp: Hello, good to be back.

Peter McCormack: My first repeat guest.  Our first interview was probably one of the most popular I've had, so thank you for that and it's probably set up a lot of the other things I've done, so thank you.  A few changes for you since I've seen you last?

Jameson Lopp: A little bit.

Peter McCormack: I think whilst I do want to talk to you a bit about scaling and all those things that happen, actually it would be good to hear about your move from BitGo to CasaHODL.

Jameson Lopp: Yes, just Casa.  We're trying to get the Casa Twitter handle since somebody's squatting it and not using it.  We're CasaHODL on Twitter for now but Casa pretty much everywhere else.

Peter McCormack: How did that come about, what happened?

Jameson Lopp: I was approached by Jeremy Welch late last year, just cold emailed saying, "Hey, want to grab a drink, talk about Bitcoin?"  And we hit it off, it was pretty clear that we both had a similar perspective on these systems, and we both agreed that just general private key management is a problem that has not yet been solved for the average person. 

This is why I've been at BitGo for three years and despite all the really cool innovations and stuff that's happening in the space, I'm still pretty focused on plain old boring private key management stuff.  I just think that there are a lot of issues that the average person still has to overcome if they want to be their own bank, and this is something that Bitcoin has really fallen short on its promise.  I'm hoping that we can fill in the gap here and really lower the learning curve for people and what they have to actually do in order to be sovereign unto themselves and hold their own money.

Peter McCormack: What are the main issues you identify with being your own bank and holding your private keys?

Jameson Lopp: It really mostly comes down to IT stuff, like boring data practices, which pretty much nobody actually wants to do.  Even technical people like myself often are just too lazy to actually go through routine maintenance-type stuff, making sure you have basically decent redundancy that you think through and can cover all kinds of different disaster scenarios. 

Really, what we want to do at Casa is provide a software and hardware solution that has already thought through all these different edge cases and then we'll also provide support services if the user gets into certain edge cases where they do need help from us.

Peter McCormack: BitGo are also working on their own custody solution, right, Kingdom Trust?

Jameson Lopp: Yeah, there two sides to the same coin where BitGo is working on an institutional custody solution, but Casa is going the other direction and we're specifically building non-custodial multisg; it's a 3 of 5 multisig.  Casa will hold one of those keys as a recovery service for certain disaster scenarios, but in general the user is going to have custody of their own keys and of their money. 

We want to facilitate that because just looking at the ecosystem in general, I feel like it is moving in a direction that I don't really like, towards more people putting their funds in trusted third parties.  That's why we're here in the first place is trying to avoid doing that and avoid the systemic issues that result from that.

Peter McCormack: Where do the other four keys go if it's five keys on a multi?  It's 3 of 5 on a multisig, right?

Jameson Lopp: Yes.

Peter McCormack: Where do the other four go?  To me?

Jameson Lopp: So, yes.  The default setup will be that you'll have one key on your phone in the secure element and then you'll have three other hardware devices.  Now, you can either bring your own or we'll probably use a reseller for the popular ones as well; so Trezor, Ledger, eventually maybe KeepKey.  Really, we want to support any popular key hardware device, because what we're trying to do is pull in and merge the ease of use of a mobile app, but also have the security properties that you get from these hardware key management solutions. 

So, the Casa app is currently iOS, we're going to have an Android version, and that's how the user is generally going to interface with the wallet.  But all of the high security stuff, the actual key management storage and signing is going to be done by your various hardware signing devices.

Peter McCormack: Okay, so if I had three Trezors or three Ledgers, what would be the recommendations for where I would store them, because if I just keep all three at home it's not very useful?

Jameson Lopp: That would be terrible.

Peter McCormack: Yeah.

Jameson Lopp: We're also going to recommend a diversity of devices; we want to eliminate every possible single point of failure, which includes, if you're being super paranoid, potentially hardware issues.  We're still in such early days that Trezor and Ledger are having vulnerabilities found within their own firmware and hardware.  So, you would hopefully have a Trezor or a Ledger and a KeepKey, for example.

But we're recommending that you have one hardware device at home, perhaps one at an office or a friend's house or some other semi-access-controlled place and then a third one at perhaps an even higher access-controlled place like perhaps a bank vault or something.

Peter McCormack: Right.

Jameson Lopp: So, the idea is that you already get great security by just using a singlesig hardware wallet; that makes it really hard for someone to actually hack you and steal your money.  But there's still other types of loss, of course: natural disasters, your house burns down.

Peter McCormack: Gun to your head.

Jameson Lopp: Yeah, you lose it, so then physical attackers.  The idea of taking this hardware key security to the next level by having multiple geographically-distributed keys just makes it that much more difficult to lose enough private key data or to have enough private key data rounded up and stolen and taken from you.

Peter McCormack: If you followed the best advice and best practice, your maximum exposure probably in any single location is two keys with your phone and your hardware device, say if you were at home?

Jameson Lopp: Right.

Peter McCormack: If you wanted to go and move some funds, you would have to go to one of the other locations; that sounds sensible.  You would probably also then want another device, almost like a hot version of your cold wallet in that, if you had significant savings, you would keep them in the Casa wallet.  You don't want to be going to work or to your bank every time you want to move half a Bitcoin or something.

Jameson Lopp: It may even be a poor description to call Casa a wallet; it's probably more accurate to call it a vaulting solution, because we are intentionally making it very difficult to spend money out of this particular set of keys.

Peter McCormack: Is there a scenario whereby say they lose two keys, is that a disastrous scenario or is there a recovery option?

Jameson Lopp: If you lost two keys, then you would end up having to go through a Casa-aided recovery, where you would have to go get your other two keys and then reach out to Casa and have us get the key that we're holding for you.  We'll basically walk you through an authentication process to make sure that it's actually you, then sign a transaction with our key that you can sign with your other keys and then basically rebuild your wallet. 

So, the interesting thing that's fairly unique to what we've designed at Casa is that we're actually telling the user not to store their recovery seeds.  The reason for this is that we have a thesis that requiring users to keep any digital information secure is basically a nightmare scenario unto itself, and we go back to the whole IT best practices thing where it's not reasonable to expect users to do that. 

So, by removing the need for them to secure this data and encrypt it and back it up and basically manage it, we get a couple of interesting things, one of which is that now we're only dealing with really physical devices which are tangible, they're much easier to reason about where they are located and what the access control to them is.  Also, now if you lose one or more of your hardware devices, we basically have a key rotation mechanism in the software app. 

So, you can basically go into your app and say, "I lost this device" or, "It's compromised" or, "I don't know what happened to it and I need to replace it", and we will basically have a wizard in the app that walks you through recreating your wallet with the existing four set of public keys and then a new one from your new device, and then transferring your money to that.  We want to make that a seamless experience.

We're really just trying to build other best practices into the software as well, such as reminders saying, "Every so often, we're going to actually ask you to prove that you still have these keys".  We'll basically do health check-ups.  This is coming back to the whole IT practices again; that we need to do what we can to ensure that the user is keeping track of the keys and that they're safe. 

So, really the main thing that you're going to see in the Casa app is what we call the key shield and it's really going to basically show you a health status check of what's going on, and if that security starts to degrade, we're going to annoy you more and more and more.  This is one of the learning experiences that I think is what we're really going to be working on figuring out over the coming year or so, is how much of these best practices and guide rails can we build into the software itself in order to prevent the user from shooting themselves in the foot and getting backed into a corner.  Also, just to try to reduce the level of touch that the user has to come and basically get handholding from us, the experts.

Peter McCormack: It sounds to me like the biggest risk is the user themselves following best practices, not signing up to your service and then taking all their keys and putting all their hardware devices in a drawer at home.

Jameson Lopp: Yeah, and obviously we can't force the user to do anything, but we can do stuff like with regard to that, what I want, and I have an open ticket for this, is for the app itself to actually make a note locally of the general area of where the signing is done, whether they're given the device; and if the radius is too close together, then we might throw up a warning for that and be, "We've detected you might be keeping your keys too closely together and you should probably spread them out more" and stuff like that.

Peter McCormack: What is your role within all this?  Are you heading up the engineering?  Are you part of a team?

Jameson Lopp: Yeah, at the moment we've got three different engineers.  My role is primarily back-end infrastructure and just general security practices, thinking about the architecture of the application.  I'm all over the place; I am helping out to do some low-level technical stuff, but I'm also just trying to think both adversarially of what all the failure conditions are and think about just best practices and how we can help the user in an automated fashion.

Peter McCormack: What keeps you up at night, what are your deep fears with this?  I remember seeing a tweet you put out actually to do with Ethereum smart contracts that need to think more like aerospace engineers, because they are disaster scenarios when things go wrong; the parity multisig wallet was obviously quite a scary thing.  What keeps you up at night?  What worries you?

Jameson Lopp: That is something that I'm worried about once again, because we've already received a ton of interest in having this type of vault solution for Ethereum, the ERC-20 and everything under the sun.  So, I wrote a blog post about this, about my journey of helping build the Ethereum infrastructure at BitGo and it really was a nightmare, because whenever you're trying to do multisignature functionality on one of these blockchain protocols that does not natively support multisig, Ethereum is the main case that I can think of, Monero didn't have multisig until recently, but most of the other popular chains do have it; so, when it's not a native function to the protocol, you have to basically write your own, so you have to write a smart contract that simulates multisignature operations. 

So, this is not that far removed from your "rolling your own crypto".  And that is the worst thing that you can do in the cryptographic space, because now you have to go through audits and rigorous processes to basically stress test it and do as much as you can to ensure that the code is actually doing what you think it's doing.  We found, having three different audits on our multisig smart contract, they just kept finding more things and finding more things. 

Interestingly, you referenced the parity bug, the first version of the BitGo multisig smart contract had that same bug and it got caught in an audit and we fixed it.  Then when it happened to parity six months later, we were, "Oh, smack.  This is actually a really common mistake that's easy to make" and I'm sure there are plenty of other mistakes that are easy to make. 

That's one of the problems with solidity; it's very developer-friendly but it's also easy to make a script that looks perfectly innocuous, but because you miss one little declaration or because you don't understand how the solidity code is getting compiled down and then interpreted by the Ethereum virtual machine, something might be actually going on at the back end that's not obvious from just looking at the code.

So, smart contract development is in a scary place right now from a security perspective.

Peter McCormack: Wow.  Who's this targeted at?  Is it a retail customer or is it institutional or is it high-net-worth individuals?  Where are you targeting this?

Jameson Lopp: Initially, this is going to be targeted at high-net-worth individuals.  We're starting out as a very boutique solution and the entry price point is around $10,000 a year, so you can extrapolate from that unless you've got a few million dollars' worth of crypto --

Peter McCormack: It's not worth it.

Jameson Lopp: -- it may or may not be worth it.  It depends on what you value your time at.  One example I use with my own solution, I basically put a calendar event in and on an annual basis, I re-evaluate my own cold storage solutions, update them and whatnot.  I end up spending at least a full day each year going through and updating all my stuff and geographically distributing data around the world basically to make it robust. 

That's a pain and I don't enjoy doing that, but I guess I'm so far on the edge of paranoia with regard to security that I'm willing to do it.  I don't know many other people who are willing to put a full day every year into doing a comprehensive evaluation and refresh of their security set-up.

Peter McCormack: I've also seen your guns, they're part of the process!  What is the onboarding process then for a customer?  Say I was to sign up, how do you onboard?  Is it an experience where they come to you, or is it an experience they set up back at their home or office or something?

Jameson Lopp: Yes, so we'll definitely support anyone who wants to come to us.  Over the long term, we hope to have locations all over the place where people can get face-to-face support.  Otherwise, we're happy to do a video or audio conference to help walk people through it.  The more technically sophisticated people I anticipate will not need handholding in actually setting it up. 

It'll just be a more manual account-opening process of us actually creating your account and getting some authentication information from you, because we are going to be very security conscious and not allow you to do a number of standard things that most web apps do, like change your password or change your email address or stuff like that.  Any of those sensitive operations, we're actually going to require some sort of video authentication for us to allow that type of thing to happen simply because that's where a lot of the social engineering and phishing and stuff happens in the crypto space and we want to avoid that as well.

Peter McCormack: Even at the point of onboarding, I'm guessing you wouldn't be recommending they set all four of their keys up at the same time, because then they are at that point a single point of failure.  Would you set up one, go and distribute it; set up the second, go and distribute it?

Jameson Lopp: That would be preferable.  Yes, for each step you're moving around.  This is another reason why I think it's great that this is a mobile app, because then you can have the software itself be moving around to the different locations where your offline keys are being stored on hardware.

Peter McCormack: If a customer did do something stupid and they lost their three hardware devices and they only had their mobile, is that, "You're screwed"?

Jameson Lopp: Yeah, that would be a game over scenario.

Peter McCormack: Game over.  Is there any insurance scenarios that you guys are looking at?

Jameson Lopp: No, the thing about insurance is that we actually did that at BitGo.  What you basically end up doing is buying a cyber insurance policy.  We just found that the amount of money that you have to pay for it does not meet the demand that you get from customers.

Peter McCormack: Right, okay, I understand.  There are a number of competitors in the space; Coinbase, they've got their vault, you've got the Xapo vault.

Jameson Lopp: Actually Coinbase is deprecating their vault solution the last I heard.

Peter McCormack: Are they really?

Jameson Lopp: I think they were telling everyone to move their funds out of it.

Peter McCormack: Interesting.  I actually don't mine their vault, because even though you're entrusting custody to them, I thought it was a very good solution and for some people that's better than managing your own funds.  I trust them quite a bit.  I didn't know about that, but Ledger are doing a vault and so there's a lot of competition in the space.  Is what you're doing unique?  Is anybody approaching it in a similar way to you?

Jameson Lopp: I'm not aware of any others that are doing multisig with off-the-shelf consumer key signing devices.

Peter McCormack: That's pretty cool.  Are there any internal attacking vectors you have to look at as considerations for your team?  What are you doing with regards to that?

Jameson Lopp: Yeah, thankfully not from the private key standpoints and Casa will only ever have one of five.  The main thing that we have to worry about is making sure that when a transaction is initially constructed, nobody goes in and tries to swap out addresses or anything.  Now, this is actually an easier problem to solve with a cold storage solution than with hot wallets, because you have so much time between each step of the process. 

So, basically what we do is then at each step of the process when you are resigning, we redisplay the details of the transaction to you.  Without getting too deep into the protocol, once you construct a Bitcoin transaction and sign it once, it's not possible for someone to modify aspects of it and then ask you to sign it a second time; it would break, because the signature covers the whole transaction and all the details.

Peter McCormack: What about a bad actor who's not interested in theft but more interested in creating some kind of technical time bomb that just destroys the infrastructure; is that a possibility that you guys are looking at; is it something that's under consideration?

Jameson Lopp: Yeah, a worst-case scenario would be if Casa's servers got completely blown up and in that case, you would get some failures actually trying to communicate with our server.  Your wallet would still be safe; you just wouldn't be able to spend out of it.  That is a scenario where we're going to have to develop basically an offline recovery tool that uses other open APIs.  I'm pretty sure that the work has already started on that; BitGo has a tool like that which is hosted on GitHub.

Peter McCormack: There's a lot to think about.

Jameson Lopp: That is just one of those very edge case scenarios.  The nice thing is that just due to the key distribution, it's not a safety or security issue; it's a convenience issue.  If that did happen, then even if all of the Casa employees had something terrible happen to them and they could no longer work on Casa anymore, for whatever reason, you could still hire another developer to then write and basically simulate the transaction signing and collection process.

Peter McCormack: Are your servers distributed as well so there's no single point of failure on, say, the data centre or anything?

Jameson Lopp: We're using Amazon Web Services.  They have some levels of redundancy there.  A lot of other big services use various virtualised cloud services and you can argue about how decentralised this is.  Obviously it is controlled by one company, but what I found over the years is that the downtime on these big providers is extremely minimal.

Peter McCormack: Also, I think it was you I heard say you can build and sometimes you have to build centralised things on top of decentralised infrastructures; it doesn't work the other way.

Jameson Lopp: Right.

Peter McCormack: When's the launch?

Jameson Lopp: We are basically ready right now.  We've got HD support, SegWit support, fee estimates, pretty much all of the basic stuff that you want from a decent Bitcoin wallet.  So, I expect us to start slowly onboarding.  We've got a very long list of interested people; we're going to start onboarding a few early customers, get feedback from them, see what we need to tweak to improve the experience before we really just go headfirst into it.

Peter McCormack: You're launching with just Bitcoin?

Jameson Lopp: Yes, and we are a Bitcoin first company, so we are prioritising Bitcoin generally.  Like I said, we've already had so much interest in basically any other valuable chain that it's just a matter of time, I think, before we add others.  Doing the Ethereum stuff is tricky, because I want to avoid doing smart contracts.  We actually just hired a guy, Nick Newman, who was in the ETHDenver Hackathon and won some awards for his key splitting stuff. 

That's what I would like to see is actually Shamir's Secret Sharing-type of more flexible off-chain multisig, where you're still doing singlesig on chain for Ethereum ERC-20.  The only downside is that the hardware key signing stuff doesn't seem to support that.  It's to be determined; we are talking with hardware vendors about that, but I'm not sure how it's going to work out.

Peter McCormack: I completed the form on the website and it asked you which other ones he wanted, because he listed the ones and that gave me an idea of your roadmap.  I think I added Monero and Dash.

Jameson Lopp: Yeah.

Peter McCormack: Cool, sounds very cool, very interesting.  You're obviously aware of the interviews I've been doing recently.  I met with Craig Wright, very interesting experience.  I went over to Tokyo to see Roger, I've interviewed Samson, I've interviewed you yourself and Charlie, and whilst I had my own bias I'm starting to try and take more of an impartial view because of the toxicity around even my choice of interviewing guests.

Jameson Lopp: Yeah, sure.

Peter McCormack: I've been told, "You've given a platform to a scammer or a criminal".  I don't agree with it, but I think it's better to try and look neutrally, impartially to try and understand everything that's going on, and I've got a bunch of questions for you. 

I've listened to your interview with Roger, The Debate, I think four times now because it is a real eye-opener on both sides.  But I'm going to go through a few steps on this.  I listened to a really interesting interview with Adam Back the other day and he was asked a question which I asked Samson, but I think would be a good one to ask you.  I can't even remember if we covered this in our first interview but what is Bitcoin to you?

Jameson Lopp: Well, to me Bitcoin is an open, collaborative project where we are trying to organically determine what the optimal form of money is, or at least subjectively, amongst anyone who's interested enough in participating in the discussion of what money should be like.  We now have this new form of automating consensus with machine algorithms. 

It is from this result of cypherpunk ethos and ideology we're now moving into a crypto-anarchy voluntarius society.  There's a lot of different things that are going on with it, which is what makes it so confusing for people, especially just the fact there is no authority can be very confusing for people who are trying to seek a source of truth.

Peter McCormack: That's a really good point.  You know I've got limited technical experience, but if we're trying to create a new form of money that's for everybody and everyone's encouraged to do their research, there's a lot of people like me who don't understand the technical details, there's so much.  But they're encouraged to do their own research and there sometimes is some elitism with trying to find the truth. 

My fear is for a new user who might come to Coinbase, they will see Bitcoin and Bitcoin Cash and might not know what they are.  One friend might say, "Bitcoin Cash is the real Bitcoin because it's XYZ" and others will say, "No, that's bullshit, it's Bitcoin".  Then you can go onto Reddit and suddenly I have really struggled to find an impartial source to say, "This is A, this is B, these are the pros and the cons".  It's very tribal and very toxic, so I think the technical stuff is really important.

Jameson Lopp: The thing is though, when we're creating this voluntarius network, truth becomes subjective because it is you.  If you are operating from the standpoint of running a fully validating node, which means that you are checking all of the rules and checking all of the data that's coming in and making sure nobody's breaking the rules, this becomes tricky because then you have to ask, what are the rules?  Well, the rules are the rules that you decide that you agree to and you want to verify. 

So, what you're trying to do is check all of these rules to ensure that the data on your machine is a verified source of truth, but that truth is now subjective based upon what you agree to.  That's why, if someone believes that Bitcoin Cash is the real Bitcoin it doesn't so much matter that they say that; what matters is that they are using software and basically using the protocol that is enforcing the rules that they have decided is the real Bitcoin.  So, from their perspective, this is the real Bitcoin because they're validating this particular set of rules.

Peter McCormack: You are a big proponent of full nodes, and we did discuss that before, but not everyone's going to have heard the first interview.  Tell me why you find full nodes are so important for what is being done with Bitcoin.

Jameson Lopp: It's the only way that you can get the strongest available security model and the strongest available privacy within Bitcoin.  That's because you are receiving and ingesting all of the data from a variety of other nodes on the network, and then you are checking it yourself.  So, this means that if anyone out on the network is trying to send you invalid data and for you, they can't do that; you cannot be defrauded in the sense that someone is breaking the rules to which you are agreeing. 

Also, from a privacy standpoint, because you are not going out onto the network and querying specific addresses or specific transactions, but rather you're getting everything and then looking at it locally and determining which ones are relevant to your wallet and your activity, there's no way that network observers who are out on the network, and there are plenty of them believe me, there are plenty of companies out there that are observing this activity, because you're just not making those specific queries, they can't possibly know what you're interested in. 

Therefore, it makes it more private because people don't know specifically which parts of the blockchain may be related to your own transactions.

Peter McCormack: But not everybody does create a full node, right?

Jameson Lopp: Right.

Peter McCormack: But you encourage people to look into it.

Jameson Lopp: Yeah.

Peter McCormack: I think I'm going to try this; I think I'm going to have a go as just part of my experience.  Where would somebody start?

Jameson Lopp: I have a number of blog posts that I've written that outline how to do this.  It really depends on your level of technical expertise.  If you're comfortable with downloading software and running it, there are a lot of good guys out there.  Bitcoin.org has a whole guide on how to run a full node and it also talks about more advanced stuff like network configuration.  If you want to help the network and allow extra connections to come in so that you can help propagate data, that's one way to do it that's a little more involved, because you have to decide, what machine do I want to run this on?  Preferably, it's going to be a machine that's connected to the internet and online most of the time. 

From an easier standpoint that requires less work, plug-and-play nodes are the way to go, although the only one that I'm aware of that's still shipping on a regular basis is the Bitseed.  That's a few hundred dollars and you plug it in, it turns on, it automatically boots up all the software and everything, and then all you would really need to do to take advantage of it is to figure out which wallet you want to use, because not all wallets support connecting directly to your own trusted node.

Peter McCormack: Right, okay.

Jameson Lopp: But I cover all that in some of my articles as well.

Peter McCormack: I'll dig some out and put that into the show notes.  As I research things and I've been trying to get my head around everything, it seems to me that the argument about the scaling debate is really about two different views on what Bitcoin should be today, not what it should be in the future, what it should be today and the trade-offs which are associated with that. 

It feels like one side says, "This is money and it should operate like money and peer-to-peer quick, fast payments" and the other side is a belief that can come in the future, but right now it's digital gold and there are trade-offs with that.  I've heard you talk about these trade-offs but I think it would be really nice for you to talk about that here.

Jameson Lopp: I think a very simple way to put it is, we're talking about some people who are prioritising the current user experience versus some other group of people that are prioritising a long-term view of the security of the network itself and the ability for people to maintain their autonomy within the system.  To get more specific and technical, what we're really talking about is prioritising low transaction fees at the expense of potentially high cost of full node operations, which means high cost of validating the entire history of the blockchain versus people who are prioritising low cost of full validation and node operation at the expense of potentially high transaction fees.

Peter McCormack: There's no common ground in this debate today.

Jameson Lopp: Right.

Peter McCormack: Which feels like to me, actually therefore this is a fair split test we're seeing.

Jameson Lopp: Yeah, I think so.

Peter McCormack: I can't see that either side can, with 100% certainty, say where they're going to be in 10 years.  So, therefore, what are your overriding thoughts about the existence of Bitcoin Cash?

Jameson Lopp: It's interesting, we're sitting here today, and I think about two hours from now, Bitcoin Cash is doing another hard fork to increase their block size to 32.

Peter McCormack: 32 megabytes.

Jameson Lopp: Yeah, even though the average Bitcoin Cash block size is about 50 kilobytes, so they're not even anywhere close to the 8-megabyte block size they currently have.  This is just their perspective and their narrative of wanting to have as much headroom as possible in order to avoid creating a fee market and avoid ever having backlogs on the network. 

I guess the weird thing is that a lot of the stuff that Bitcoin fans will say against Bitcoin Cash, in terms of long-term cost of operating nodes and being self-sufficient within the system, that can't possibly come true unless Bitcoin Cash actually becomes popular.  There's this weird paradox and as long as Bitcoin Cash is less popular than Bitcoin, then it's never going to even have a chance to test the changes that it's made to its own network and we're not ever going to actually see what happens when you have a popular blockchain with very large blocks.

Peter McCormack: Do you have any fundamental issues with it existing though?

Jameson Lopp: No, not from the perspective of this is a permissionless system and anyone should be allowed to create forks and change whatever they want to.  You can get into the argument of some of those people that are saying Bitcoin Cash is the real Bitcoin or they're just saying Bitcoin and they mean Bitcoin Cash and sometimes they put BCH in parentheses; there's definitely some questionable marketing stuff.  Back when I was actually a big proponent of Bitcoin XT --

Peter McCormack: Yeah, I read about that.  Interesting.

Jameson Lopp: I really felt like it is certainly possible for a protocol, blockchain, whatever, network to change and for the new version of it to become that same name.

Peter McCormack: Is that a Mike Hearn project?

Jameson Lopp: Mike Hearn and Gavin Andresen, yeah, but we saw that happen with Ethereum.  The Ethereum protocol is no longer compatible with the original Ethereum protocol.  There's actually a very strong argument to be made that Ethereum Classic is the original Ethereum.  But due to the events around the DAO and all that, the consensus changed to say, "You know what, we're going to abandon the current protocol and all migrate to the new protocol" and this is now Ethereum. 

I think that could have happened theoretically with Bitcoin Cash; they could have gotten enough consensus to say this is the real Bitcoin and the old thing is Bitcoin Classic or whatever, but it didn't, and now we're seven or eight months later and they're still just repeating the same thing, they're still trying to cover that gap where the consensus just isn't there. 

I question whether or not it's possible to pivot an entire network many months after the fact.  I think it's definitely possible if you have an inflection point at which the Schelling point of consensus pivots and says, "This is the new one and there's consensus and it's obvious".  I really think that type of thing has to happen within a matter of hours or days in order for an entire network to change like that.  So, I'm highly sceptical that it's something that you can do months or years after the fact, although the Bitcoin Cash folks are definitely trying.

Peter McCormack: Why were you a proponent of XT, what was it about it that you liked at the time and why has your position changed on that?

Jameson Lopp: It was for many of the same reasons that people are in favour of Bitcoin Cash, which was that transactions started getting slower, fees started going up and the user experience was degrading.  That was actually right around the time when I went full-time Bitcoin.  Before then, I'd just been an enthusiast and had some side projects and so I was a user, I felt like the user experience was degrading and from my own experience working with big data cloud computing-type stuff, I was looking at it from a capacity planning standpoint.  In capacity planning for large-scale systems, you always want to have a lot of room, headroom for growth.  You never want to be running at 90% or 100% capacity; you want to be running at 60%, 70% capacity so that you can handle spikes, ebbs and flows and whatnot.

I basically changed my mind that capacity planning was the correct perspective for this type of system.  I think I was taking a very centralised authoritarian top-down view of capacity and planning the future of a system, but instead, once I actually got to BitGo and I started doing back-end infrastructure, basically indexing and ingesting information from these blockchains over and over and over again, I indexed the Bitcoin blockchain probably hundreds of times during my tenure at BitGo.  It was a constant struggle to continually try to squeeze more performance out of my software so that I could index the blockchain in the same amount of time, because these blockchains only add data, they only get larger and larger.  It becomes a greater and greater challenge to then start from nothing and ingest the whole set of blockchain data. 

What I was spending a lot of my time doing was saying, "Crap, it takes a whole day for me to index the Bitcoin blockchain" and then a few months later, it might take two days and a few months after that, it might take three days and then get to the point where it takes a whole week to run this indexing service.  So, it was a constant battle for me to try to find more performance that I could squeeze out of it to get it back down.

Peter McCormack: Wow.

Jameson Lopp: That was when I started realising that, yeah, the Bitcoin blockchain is still only 100 to 150 gigabytes back then; now it's 170 or 180, and that doesn't sound like a lot, but when you're having to actually ingest and validate the whole thing, it is a lot.  If you are taking an extremely long-term view of these systems like I am, I'm trying to think, extrapolate ten years from now, what's it going to be like if someone is just getting into Bitcoin and they want to ingest and analysis and validate the whole Bitcoin blockchain.  If it's a few hundred gigs, then I think it should be doable but if it's terabytes, then it's going to be a real nightmare.  That's why I ended up flipping and becoming a lot more conservative about how much data we allow to go into this shared resources.

Peter McCormack: That's a hell of a journey to go through, that's a lot of practical steps you've had to go through to realise that.  So, does that give you a little bit more empathy for people, therefore, who do support Bitcoin Cash?

Jameson Lopp: Yeah, because I get it, I've been there, I fully understand it and I feel the pain.  I've had to deal with support tickets of many users over the years who don't understand, "Why is my transaction not confirming?" or "Why is the fee so much higher today than it was on Sunday?"  Yeah, the user experience, we have a lot of work to do and I am very optimistic that second-layer networks are going to allow us to fix a lot of those things.

Peter McCormack: What would be a better way to educate this to people than what seems to me like toxic shaming and tribalist insults?  By the way, I put a post up yesterday on r/btc and r/Bitcoin.  I don't like Reddit, by the way, I think it's horrible, but I put it up on both just to give it to both sides.  I said, "I'm interviewing people from both sides.  I'm trying to be impartial.  This is the journey I'm going on; this is what I'm trying to learn.  This is my audience", just to put it out for both sides.  There's a handful of people on both sides who would say, "Yeah, support you.  I think that's great".  Then you've got, "You're a fucking idiot, you don't know what you're doing.  Have you set up a node?  Have you read the whitepaper?" and inside, you just get tribal insults. 

What do you think is a good way then to try to educate people on the best way for us to get away from this war that's not doing anyone any good?

Jameson Lopp: Well, we can't stop anyone from doing that.  You can't stop people from trolling or being negative and pessimistic and what have you.  You can only control yourself and so that's why I just try to be optimistic and educational and answer as many people's questions as I can with my limited time.  But this is all part of the experiment and so the experiment is not only technical; I think it's also social. 

Peter McCormack: Very interesting.

Jameson Lopp: It gets tricky though because so many people seem to believe that Reddit is the Bitcoin community and that could not be further from the truth.

Peter McCormack: You know when Roger made the offer to buy; I wish someone would make the offer just to close it down; I think it doesn't do any purpose.

Jameson Lopp: Yeah, yeah.

Peter McCormack: It's interesting you say it's a social experiment as well; what do you mean by that?

Jameson Lopp: In terms of the governance aspects, this crypto-anarchy voluntary network, what we see happen as a result of it is that people get frustrated because Bitcoin is not doing what they expected Bitcoin to be doing.  Because there is no real definition or authoritative roadmap for what Bitcoin is, people come in with different perspectives and they have different visions.  Then sometimes the user experience changes and they're, "Oh, Bitcoin's not Bitcoin anymore" and they get really frustrated and they try to change Bitcoin. 

Like I said, I was in that camp; I did that, been there, done that.  It was a learning experience and it was very frustrating and I was a very negative person for probably close to a year.  Around the 2015 time, I was very frustrated.

Peter McCormack: Did you get involved in the battles?

Jameson Lopp: Yeah, some of it.  So, actually I was a moderator of the Bitcoin XT subreddit and this is why r/btc is so funny to me, how they're, "Oh, we don't censor or do anything like that".  I did that before r/btc.  I got so fed up with Theymos and people getting silenced on the Bitcoin subreddit, I didn't create it, it already existed, but I basically directed a bunch of people to go to r/BitcoinXT and I was, "You know what, I'm going to be the moderator of this and I'm not going to do anything, so we'll have no censorship on there". 

Within a few months, it devolved into just complete crap and then a few months after that, Roger came along and he pulled a bunch of people and said, "You know what, we're going to do r/btc".  He has moderators and he keeps the activity going on that.  That's where one of the Schelling points for Bitcoin Cash is now on r/btc and Bitcoin XT is pretty much dead; there are just spam posts every once in a while on there.

Peter McCormack: What happened to Bitcoin XT, because I read a post by Mike Hearn, essentially his departure?  I felt quite sad reading it, I felt sorry for him.

Jameson Lopp: Yeah, technically it still exists.  I think there are one or two developers, but the last I checked there's only a few dozen Bitcoin XT nodes that are running.  So, it exists.

Peter McCormack: What do you think when people say, "Pete, you shouldn't interview Roger, you're giving a platform to a scammer"?  What's your opinion on that?

Jameson Lopp: That is a very hard thing to evaluate, because scam can be in the eye of the beholder.  Now, Roger is a businessman, he's an entrepreneur and he's definitely a marketer.  He was one of the earliest marketers for Bitcoin and so now he's changed what he thinks Bitcoin should be like, he's marketing a different network, a different brand.  He definitely does things on the marketing side that piss a lot of people off and may have resulted in confusion happening.  Of course, it's really hard to actually get a gauge on how good or bad that has been.  It is what it is.

I personally don't hold any ill will against him.  I completely understand where he's coming from and what he's trying to do.  It's just I think that he's fighting an uphill battle and so it's really hard on him to do this.  Once again, it's hard to get metrics but my general gauge of consensus amongst these different networks is that around 80% of people are pro-Bitcoin and the conservative vision for its future and doing scaling on other layers; and then maybe 10% or 20% are more on the Bitcoin Cash, large blocks, good user experience now, low fees, don't worry about cost and validation type of thing.

So, it gets especially odd when the minority group makes arguments like, "Well, most people would actually be on our side if it wasn't for censorship".

Peter McCormack: Yes.

Jameson Lopp: That could make sense if Reddit was the only place where discussions around these protocols happen, but there are so many other places where there isn't moderation, especially on Twitter, there's also Telegram and Slack groups and IRC and WeChat.  There's such a diversity of discussion in the ecosystem that I don't think the censorship argument really works anymore.

Peter McCormack: What about the view that people shouldn't interview Roger and he shouldn't be talked to?

Jameson Lopp: That's freedom of association.  Nobody should be telling anybody else who they can associate with.

Peter McCormack: I thought you'd say that.

Jameson Lopp: Yeah.

Peter McCormack: I agree with you in that there does seem to be a lot more people supporting the Bitcoin route; I'm not going to call it Bitcoin Core, of course.  But there is a certain amount of coercion and shaming if you ever question block size and I've experienced that.  There's almost times that I feared having an opinion or having some empathy towards what Bitcoin Cash is doing for fear of shame.  Are you aware of this?

Jameson Lopp: Yeah.  This goes once again back to the fact that you can't police people within this type of community.  So, some people basically devolve into making fallacious arguments or just trying to make others feel bad rather than spending time to make a rational, long, drawn-out argument.  This is a very sophisticated argument and it's also not a black and white thing, it's about trade-offs; so, it's an opinion and almost ideological.

Peter McCormack: I think one of the things I've noticed, and I'm probably a hypocrite and people can find examples, but when Roger makes the point about dying babies, a lot of us would agree it's ridiculous.  But I believe in some ways he believes that's right, and I think there's a connection.

Jameson Lopp: Certainly.

Peter McCormack: But a large number of opinion leaders will, say, go on Twitter and take a photo of the Bitcoin.com booth and say, "Can't find any dying babies here", and you're almost being taken into a tribe where if you exit from it, you'll be humiliated.  I wonder how useful that is, because what I'm finding is actually by being impartial, I'm learning a lot more; I'm definitely more swayed towards what Bitcoin's trying to achieve off chain, but I have some empathy for what's trying to be achieved on chain as well.

Jameson Lopp: By being impartial, you will get attacked by both sides.  I was like that --

Peter McCormack: And attacked for being impartial.

Jameson Lopp: Yeah.

Peter McCormack: And told you're not impartial.

Jameson Lopp: Like I said, around 2015, I was very pro Bitcoin XT and then I think around 2016, I was neutral, I was being impartial and saying, "You know what, I see both sides".  I got attacked probably the most during that period.

Peter McCormack: Yeah.

Jameson Lopp: I had a lot of, I guess, high-profile people in the community attacking me for going too easy on this person or that person, whatever.  Then these days I'm more defensive, I guess, of my own perspective and I don't really try to come out and say that the Bitcoin Cash perspective is wrong; I just say I disagree with it and it's for a variety of reasons.  A lot of people, I think, say stuff like, "Oh, it won't work".  That's also a loaded term.  I think that it'll definitely work if you're willing to make the right trade-offs.  That's what we're all talking about here is trade-offs.

Peter McCormack: In some ways, could it be good that it exists, because I've heard you say that a block size increase on Bitcoin is inevitable at some point if the network expands enough?

Jameson Lopp: Yeah.

Peter McCormack: Therefore, if it's inevitable at some point, isn't it quite good that Bitcoin Cash happens, because you can observe from far the challenges they're facing?

Jameson Lopp: If they actually get popular enough so we can observe it.

Peter McCormack: Of course, yeah.

Jameson Lopp: Yeah, yeah.  One Bitcoin maximalist view is that all other networks are test networks for us to observe and then potentially make changes as a result of.  Although if I recall correctly, there have been very few cases where Bitcoin has implemented changes as a result of something that it saw on another network.

Peter McCormack: Remind me, do you consider yourself a Bitcoin maximalist?

Jameson Lopp: Mostly.  That's mostly from an economic standpoint of if we really are trying to create the best form of money, then it makes sense to converge on one form, because that's the whole point of money; to get rid of having to hop through all kinds of other assets. 

It's weird though now with the "tokenise all the things" perspectives and the blossoming of many blockchains is that, I don't think that it's possible to have thousands and thousands of tokens or a world where everyone has their own tokens they issue, because there's a level of mental friction that is involved just in trying to keep track of all this stuff.  Personally, I don't want to keep track of more than maybe ten different assets, because it becomes a technical nightmare. 

But on the flip side, I'm starting to wonder if the advent of second-layer networks could actually swing us back in the other direction of being able to support both the diversity of thousands of crypto tokens, but get rid of that friction by being able to use the second-layer networks to seamlessly switch between them.

I could foresee a future where if someone wants to get paid in Basic Attention Token and you only have Litecoin, but we've abstracted away all of the complexities of decentralised exchange, like permissionless peer-to-peer exchange and so you can open up your Litecoin wallet and pay somebody in Basic Attention Token, I could potentially see that being a scenario where crypto becomes one amorphous thing, because we've just abstracted it all the way.  Whether or not that actually ends up happening, I don't know.  I'm just saying I could potentially see that as a future.

Peter McCormack: Let's talk about second layer and you talk about it in plural; most people are aware of obviously Lightning Network.  Are there any other second-layer technologies that you're interested in at the moment or are you primarily focused on Lightning?

Jameson Lopp: Primarily Lightning, although I think the semi-equivalent on Ethereum is Raiden.  I'm not sure how far along that is.  Lightning seems to be well in the lead and has the most adoption and the most development behind it.

Peter McCormack: How much exposure do you have to it yourself and is it something you have to be aware of working on Casa?

Jameson Lopp: Since Casa is a cold, basically vaulting solution I don't foresee us having any Lightning implementation.

Peter McCormack: You just have a personal interest then because of what it means for Bitcoin?

Jameson Lopp: Yeah, I'm trying to keep track of the developer activity and the general adoption.

Peter McCormack: I've read a lot about Lightning Network.  How would you explain it and what the benefit of it is and why that is the route to scale Bitcoin?

Jameson Lopp: The easiest way that I've been able to describe Lightning Network is actually by looking at the internet itself.  If you look at the infrastructure of the internet itself, it's actually this seven-layer model.  The very low level, layer zero, is the ethernet layer and that is the actual physical wires that are connected together, you put electrons onto those wires and that's how the data then gets sent over them and people are able to get the packets. 

Now, the thing about the ethernet layer is it is a global broadcast to the entire network type of mechanism.  If the entire internet was only an ethernet layer, we wouldn't be able to stream this podcast, for example, because everyone else who is streaming a podcast will also have to go through our computer and it very quickly blows up and gets well past the even 100-gigabit bandwidth speeds that most computer internet hardware's able to handle.

What do they do to make the internet scale?  Well, they built layers and the really important layers are the TCP/IP layers which are these routing layers.  They basically say, "Okay, we're going to connect all of these wires together, but instead of broadcasting and flooding the entire network, now we're going to use another protocol to basically find the shortest route so that the data only has to go through the fewest number of people on the network in order to get to the final destination".

You can make an argument that this "centralises" the usage of the protocol but it's still censorship-resistant, because you can very easily route around any nodes on the network that decide not to forward your data.  This is why the internet was developed by governments, because they wanted a communications network where you could have nuclear bombs drop and take out large portions of the network and still be able to route data around; basically a self-repairing, self-healing type of network.

Now, how does this relate to Bitcoin?  Well, Bitcoin and really every other blockchain protocol right now, if you create a transaction and then it goes out globally and floods the entire network and gets stored by every computer that's on that network, this once again is totally not scalable.  If you want to do anything more than a few transactions per second, everybody's hard drive is going to fill up if you're pumping gigabytes of data through it on a minute or hourly basis. 

So, what do we do to fix that?  We actually do the same type of thing; we build routing layers on top of the base protocol.  What Lightning does is it allows you to anchor into a blockchain, it could be Bitcoin, Litecoin, any blockchain protocol that has some basic primitive attributes around multisignature and timelocking.  Once you anchor in and you get that transaction in the chain, now you've basically established a channel, a route between yourself and one other person on that network.  This payment channel technology has existed since I want to say 2012 or 2013 but only been used by a few different pieces of software. 

Lightning takes that idea of payment channels and turns it into a whole network by adding routing capabilities so that now, you can push value to the other person at the end of your channel and then they can actually route it through other channels to eventually get to the final destination, much like how the internet itself works, although it is a bit more complicated and there's a lot of game theory involved.

Peter McCormack: I've read there's still issues with routing, problems to be solved.

Jameson Lopp: Yeah, there's plenty of problems to be solved.

Peter McCormack: Is this just a time thing?  Is it just going to take time to get it done or are there real challenges that might not be able to be solved?

Jameson Lopp: I really think that it is time and resources and the fact that no one has done this particular type of network before, that there are unknown unknowns.

Peter McCormack: Okay.

Jameson Lopp: We can't positively 100% say these are all the capabilities of what we'll be able to do on date X.  It's also why I push back against a lot of people who are, "When is the Lightning Network going to be active?" and I'm, "Well it's not a binary thing.  Technically it already is active, it's just in a beta state where you probably don't want to commit much money to it, because there are almost assuredly some edge case bugs that are still out there that could cause you to lose money".

Peter McCormack: Over time, confidence will grow as…

Jameson Lopp: As there's more activity, as there's more value in it.  With these adversarial networks, you can never be 100% sure how strong they are from a security standpoint until you commit real value to them.  That's how we know that the Bitcoin blockchain has at least $100 billion something worth of security behind it, because there's a huge bug bounty and if anyone can completely break the protocol, then they're a billionaire.  Believe me, there are plenty of people who have tried.

Peter McCormack: I never thought of it like that, as a bug bounty, but yeah.

Jameson Lopp: All of these things are bug bounties and that's why doing security in this space is so crazy, because once you start to put real value behind things, that's when the real test begins.  You can write all the unit tests you want and do all the code audits you want, but it's not until there's real value sitting out there waiting to be attacked and stolen.

Peter McCormack: Quite interestingly, as it grows, there's a whole honey pot of Bitcoin that's essentially taken off-chain and put into the Lightning Network.

Jameson Lopp: Yeah.

Peter McCormack: Does that worry you at all in some ways?

Jameson Lopp: It's just going to open up new types of attacks they're going to have to defend against.

Peter McCormack: So, it'll be a new form of anti-fragility, a whole other layer of anti-fragility for the network?

Jameson Lopp: There's also multiple ways to look at it, but there are multiple types of attacks and of course, Lightning Network is going to be less secure than having your funds stored on chain, preferably in a cold wallet if we're talking about a lot of money, because it's not possible to build a more secure layer on top of a given layer; you can only have the same or less security when you're building layers on top of each other.

Peter McCormack: When I've looked at it, I initially had a bunch of questions and thoughts.  I honed them down to a couple of things that stand out for me.  I'm not too worried about the tech; give it time and see what happens.  Yes, it seems to be taking a long time, which is obviously frustrating and I'm sure frustrating for everyone involved, but I understand it's hard.  You saw a tweet I put out about the private keys are essentially exposed and you rightfully said, "Treat it like a hot wallet, like a wallet you carry around with you.  Don't have more than you should".

Jameson Lopp: Right.

Peter McCormack: My slight concern with that is your Lightning wallet will still need to have a relationship with the mainchain.

Jameson Lopp: Yes.

Peter McCormack: If you are from, say, Venezuela which has a great use case for Bitcoin at the moment, say you're in Venezuela, say you're only putting $10 a month in of Bitcoin, that's all you can afford.  If the fees on the mainchain are too high, you're going to have to keep all your funds in the Lightning Network and for what might be $10 for them might be $1,000, $10,000 for us.  It feels like potentially the mainchain will become a tool of the wealthy.

Jameson Lopp: In terms of the on-chain transactions that are required for opening and closing channels, there's actually also a lot of work being done there.  Basically, what you're saying is there's going to be a huge incentive to try to figure out how to make it cheaper to get into and out of the Lightning Network, especially if fees end up plateauing at a high level.  This is actually something I put a tweet out a day or two ago about some of the technologies that are being developed around here.  One of them was channel factories.

Peter McCormack: Got that written here.

Jameson Lopp: Yeah, I was just talking to Christian Decker on Sunday and he was, "Oh, channel factories are actually deprecated now".  If you look at Eltoo software, what they've actually built in there is like a channel factory on steroids, but the idea is making it possible for a multitude of parties to come together and share in the opening and closing of these Lightning channels.

It's also possible that not everyone is going to be using Lightning in their own device wallet.  They can still actually be using Lightning from a custodial solution, like a lot of these people at Coinbase, for example; they already have their private keys with a trusted third party.  Coinbase can very easily facilitate Lightning transactions and let people make their Bitcoin transactions, but over the Lightning network; and Coinbase would handle all of the complexities on the back end with regard to channel opening and closing maintenance.

Peter McCormack: That's almost certainly not going to happen from what I've read about the KYC AML issues with Lightning Network; it won't be possible for regulated exchanges to be able to use Lightning Network.  I don't know if you know about this.

Jameson Lopp: I've heard these arguments and I'm not sure whether or not that's actually going to hold up.  I think it's actually very important for exchanges to support Lightning Network.  This article I wrote two or three years ago actually showed some simulations around general channel rebalancing stuff.  I think that exchanges are going to play a pretty role in that. 

Maybe it won't end up being centralised exchanges, maybe it'll end up being decentralised exchanges.  There are certainly a lot of questions that are going to be around that, but I know BitGo, for example, when I was leaving they had already started working on Lightning support.  BitGo provides back end for a lot of Bitcoin exchanges, so I don't think that BitGo would be going to that trouble unless they thought that their customers were going to be wanting to use it.

Peter McCormack: I guess we'll have to wait and see.  I read quite an interesting article from Andreas where he said it's very unlikely that the likes of Coinbase will be able to, because of the KYC issues, but we'll have to see.

Jameson Lopp: People also thought it was unlikely we would ever see a regulated exchange trade Zcash.

Peter McCormack: True.

Jameson Lopp: But just yesterday, Gemini announced it.

Peter McCormack: I know.  Why do you think?  I assume because it's got optional privacy?

Jameson Lopp: Yeah, maybe they're only going to support the non-shielded transactions, but I don't think it really matters.

Peter McCormack: That would be bad for Zcash then, because that would just increase the number of non-shielded transactions and make it less secure.

Jameson Lopp: I was on the privacy panel at the conference and we talked about this.  I made the argument that even if you're making a shielded transaction deposit to Gemini, they still know who you are; you're only protected against other people on the network maybe not knowing that.  Privacy issues are a whole other fun thing.

Peter McCormack: Yeah.

Jameson Lopp: I am interested in Lightning, not just from the scalability, but also from the privacy standpoint.

Peter McCormack: I just want to get back to one point.  Going back to the mainchain, with a very busy network and a very successful network it's still small block sizes.  Is there a fee for using the mainchain that would concern you or do you just not care if it was $100, if it got to $1,000; is that no issue?

Jameson Lopp: I think it's more about sustained fees.  We did see some spikes due to a variety of different issues at the end of last year, where fees were going up pretty insane amounts.  It's a complex thing both with how fee estimation works across the system and with the incentives for customers, users and large enterprises and wallets in general to be better at how they use block space.  So, I am in favour of high fees happening when people are using block space inefficiently.  This becomes an incentive for companies to do better to optimise their software. 

If we get to the point where we see SegWit adoption is pretty much maxed out, right now we're around 40%, if it got up well past 50%, so pretty much everyone was using that, and it looked like we had pretty much maxed out what we could do with Lightning Network and we were getting sustained high fees, that's when I think it's worth talking about.  Maybe we are at the point where we should look into increasing block size, because there's not much more efficiency that we can gain.

You're going to get some pushback from people, so they're going to tell you we can still do Schnorr signatures and other aggregation stuff and do more efficiency improvements; I expect that to happen over the next year or so.  I think the real question comes down to if we get to the point where no one has any more proposals for how to squeeze more efficiency out of the system and there's so much demand that the fees are higher than they need to be to sustain miners and keep the security of the system intact, then your back's against the wall and you should really start seriously talking about solutions for increasing block size at a rate that is manageable.

Peter McCormack: Okay, because the interesting there is, is the block size down to fees at that point, because a fee market is like a standard open economy, right?  And, if we had a successful Lightning Network, then people have a choice whether to pay the fees or not.  My worry is that the mainchain will become a tool of the wealthy.  I think I looked at something like $10 eliminates something like a fifth of the global population.  I'm guessing but I'll try and get the accurate figures to share, but at $100 it's something like the majority of the world would not be able to use the mainchain.

Jameson Lopp: Right.

Peter McCormack: Is that something that would bother you or do you think Bitcoin is… I guess what I'm saying is, I'm not asking us to be socialists but do you think Bitcoin should be developed in a way that it should be open to anyone and everyone to use or should it be just follow what happens with the economy, just be an open economic, fair value system?

Jameson Lopp: I think the ultimate goal is for everyone to be able to use Bitcoin.  The problem you run into is then whether or not you're willing to make security trade-offs.  So, if we really get to a mainstream adoption level and there's no other obvious path forward than allowing more data to go into the blockchain, then people start having arguments about costs.  Once again, it's cost of transaction fee versus cost of node operation.  There is no number that you can definitively settle on to say this is too high or this is too low; it's all subjective.

Peter McCormack: Yeah of course, yeah, okay.  I think we've done a lot!  I know you've had a few interviews this week, so thanks again Jameson.  Any closing thoughts you want to add?  What have you got going on the rest of this week?

Jameson Lopp: I'm at Consensus and yet I'm not at Consensus.

Peter McCormack: There's a lot of us like that.

Jameson Lopp: Yeah.  The space has changed so much in the past few months.  One of the main differences that's happened for me is that I'm getting contacted by wealth management companies and institutional investors and stuff.  That's actually what I'm spending a lot of my time here doing, is speaking to people who have a lot of money and they're trying to figure out whether or not they want to participate in these new systems. 

I'm just continuing my educational quest, but now I have a slightly different audience and I do think that this could very well be the year of institutional money coming into Bitcoin.  I know there have been various projects and interests over the past few years.  I'm hoping that some of those are starting to come to fruition.

Peter McCormack: It's funny, I don't know if this has happened to you, it probably has, but I'm just starting to see natural use cases that work for me.  I was using Medium the other day and it's, "Do you want to sign up and you can get paid for your content?"  I looked and then it asked me to put my bank account in and I was, "Can't be bothered".  But if it had been Bitcoin-based, it would have been, "Here's my wallet" and it would have been a lot easier.  I'm starting to feel that in all different directions, we are very much approaching a real tipping point that isn't just about speculation.  You have that feeling?

Jameson Lopp: It is, it's all about the use cases and getting more companies to start making it an option.  But I am once again really more excited about Lightning and once I see that starting to be integrated at places, I think that'll potentially get me actually spending Bitcoin on a regular basis because I very rarely touch any of my hardware devices.  It's mostly because the First-World financial system is pretty good for me.  I have very few cases where I need a level of privacy that I would want to use crypto assets for.  That's a whole other conversation and something that I've been working on for a few months with regard to my privacy in the real world and from a legal standpoint, due to me becoming a more high-profile figure who's getting new types of attacks against myself.

Peter McCormack: Right, okay.  Tell people how to get hold of you.

Jameson Lopp: It's www.lopp.net, you'll find everything you need.

Peter McCormack: Do you want to say any final thing about Casa?

Jameson Lopp: Casa, we are starting out a really high-tier, boutique solution, but I am hopeful that as we learn a lot over the next year or two, that we will be able to lower our price point, make ourselves more available to the common person and really the ultimate goal is to help the average person be their own bank without having to go through all the hassle that you have to do today.

Peter McCormack: Excellent.  Well, hopefully one day I will have enough money to be able to use it.  Thanks again, always a pleasure.  Enjoy the rest of your week.

Jameson Lopp: Thanks.