WBD273 Audio Transcription

Shit Bitcoiners Say with Rusty Russell

Interview date: Tuesday 27th October

Note: the following is a transcription of my interview with Rusty Russell. 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, Rusty and I discuss the lightning network, open-source development, narratives and overzealous Bitcoiners.

“This irrational exuberance is where I’m like you know what… calm the fuck down, this stuff is not promised to you, number will not always go up, it is not guaranteed to hit $100k, $288k or whatever fucking number you want and even if it does hit $1 million, you wonder what $1million will be worth at the time.”

— Rusty Russell

Interview Transcription

Peter McCormack: How are you, man, are you well?

Rusty Russell: Yeah, good; I am good.  It's actually the first week of school holidays here, so I spent the day with the kids and it's nice weather, so we went for a ride and everything.  They weren't all that keen about that, but I did say, "Hey, we'll ride to the chocolate factory", and that kind of got them out of the house.  So, that was good, yeah, good times.

Peter McCormack: What time is it there?

Rusty Russell: It is 7.30 pm, so it's late-ish.

Peter McCormack: And, you're having coffee?

Rusty Russell: I am actually having a coffee, and I would not normally do this, but I want to stay awake for this because, you know, you throw some curveball questions in there.  I'm really comfortable talking about tech stuff, right; you want to ask me questions about Lightning or the Bitcoin protocol and stuff like that, that's great. 

But, a broader-ranging conversation, I want to be on the ball, because you're always best off talking about something that's your home ground.  If you wrote some piece of software and people want to talk about it; great, easy, right?  If they ask a question you can't answer, it's because it's a really good question. 

When you go outside your area of expertise, you've got to start, you know, you've got to stay awake, right, because next thing you know, there's a 30-second sound bite out of you saying that, "Ethereum is like lipstick on a pig", and that's it; that's what you'll be known for! 

Peter McCormack: So, you're worried I'm going to fuck with you?

Rusty Russell: You're going to cut that, right?!

Peter McCormack: No, this is all going in now, man.  Well, the one thing we can talk about is NFTs, because I have this weird ability to trigger people and they think I create drama on purpose; I don't.  I just put a thought out there and it just triggers and then a big debate starts and then everyone calls me a boomer and a fucking moron.  But, I've been dealing with NFTs.

But, I just want to talk about the coffee, because I gave up coffee, how long ago?  Had I given up last time we spoke; I can't remember?

Rusty Russell: I think you'd given up alcohol, I don't know that you'd given up coffee.  I think that's insane.  Everything in moderation, right, even moderation.

Peter McCormack:  I've done nine days now without coffee and I tell you the weird thing, I'm having the weirdest dreams, dude, the weirdest dreams.  I had a dream the other night where I was living in this dystopian future and I'd committed one of these future crimes.  I don't know what it was, but they were going to terminate me.  And, I basically died, so I basically got executed in it, and I felt my body shutting down.  And, the moment I died in the dream, I woke up; it was so weird.  I've had weird dreams since giving up coffee, so I don't know what that shit does for you!

Rusty Russell: You've talked me out of ever giving up; that's for sure.

Peter McCormack: Now, I'm just having water; it's so boring.  Anyway, man, we should talk Bitcoin, we should talk NFTs, we should definitely talk Lightning.  Actually, let's start on Lightning.  Where are we at with that?  I don't really know, but my thing with Lightning at the moment is, I always just refer back to myself.  I'm very transparent about how I use Bitcoin.  It pisses people off, yeah, I don't know what an xPub is, sorry; I've got my security practice in place; I don't really understand privacy as much; I use Bitcoin quite casually.  And, I know that pisses people off but, you know, fuck them.

But my thing with Lightning is, I don't have a need for it right now.  So, I have a need for Bitcoin, a genuine and definite need.  I invoice in part Bitcoin, I've told you this before; I pay people in Bitcoin; I tip in Bitcoin.  I use it and I'm happy to use it.  I like Bitcoin.  I actually use it both as a store of value and a medium of exchange and for both purposes, I like it.  It works for me. 

I don't have a use case for Lightning right now.  I have used it; people have tipped me and stuff, and perhaps if I owed somebody -- actually, a couple of times I've paid people in Lightning, because it's been like $5 I've had to pay them for something, so it's not worth paying the on-chain transaction fee.  And, I have a wallet with some Lightning in, some Lightning Bitcoin, but I don't have an ongoing need.

I think that's going to be an evolving need as Bitcoin grows and more people are using it, then perhaps I will use it more, but right now I don't have a need.  So, I've not been really following what's been going on.  My only thing I've noticed is the bloody Ethereum guys saying, "Well, we've got more wrapped Bitcoin on Ethereum than there is locked up in Lightning", etc, and that kind of bullshit.  So, what's going on; where are we at with Lightning, man?

Rusty Russell: So, this is a good question.  In fact, my question about Lightning was never really about the tech.  There are tech problems, we'll sort them out, we'll work our way through, right?  But, it was always like, if we build it, what happens if nobody comes?  What if we build this great, fast payment rail thing for Bitcoin and it turns out there wasn't much -- maybe the store of value thing dominates; maybe everyone's like, "Well, why would I spend Bitcoin, because all I do is basically buy it and put it in my cold wallet and crack it open like a piggy bank?  I don't actually want to pay people in Lightning".

The other problem is that Lightning is different.  So, Lightning enables use cases that are not there today.  So, if you have a Lightning wallet, you can receive as well as send.  Things are really asymmetric in most worlds; so, if you look at Visa and Mastercard, there's a huge difference between getting a credit card and becoming a payment provider, right, becoming someone who can receive credit card payments.  These are completely different things.  Their whole industry's built up around helping you receive credit card payments, because it's hard.

On Lightning, there's no difference.  If you can send payments, you can receive payments pretty much the same.  So the problem is, now you're creating an industry for things that didn't exist before and since they don't exist, they're not going to jump on, like, "Oh, great, we'll just …" so there are probably a few users that go, "Great, Lightning's perfect!"

But, the real use cases for Lightning will be for things that don't exist today, right.  And, how long will it take somebody who had that in their head, they really wanted to do something, but they couldn't; they went, "Oh, fuck it, it's not going to work; it's just not going to work", and then they find out about Lightning?  And they go, "Oh, well that's the missing piece.  That's what I needed.  Wow, I can build it", and everyone goes, "Wow, that's awesome", and everyone starts using it.

So, you're kind of building this industry for payments and it's got these capabilities that we haven't really had before.  And, society shapes itself around what it has and so, those businesses don't exist; the businesses that would allow you to tip 5 cents a minute, they simply do not exist, because it doesn't make sense at the moment.  Well, it does now on Lightning, but it doesn't magically create an industry overnight, right?  Somebody's got to come up with a killer use case and go, "Well, actually, it makes sense now".

So, we now have a completely different style of payments; it's actually harder.  If you just had like a PayPal, well it would be pretty easy, right?  You'd get your business plan, you'd steal their customers, maybe it's cheaper, whatever it is.  That's a straightforward pass; you can see that would succeed or fail.  But, when you've got something that's really different, it's just weird

On the surface, it's kind of like credit card payments, but on the other hand it's completely different.  There's no credit involved; you actually receive the cash; you're holding in your hot little hand for the giver of the goods; and, for some use cases, I imagine that would be incredibly compelling.  But, those use cases don't exist yet because if you needed that, well you were fucked already; you didn't have any way of doing it.  So, Lightning has this kind of bootstrap problem.  And like any tech project, this stuff takes longer. 

The paper dropped over five years ago, "Oh, cool, we could do this".  But actually making it work, actually getting all the stuff in place to make it work and robust and everything else, and it's still not there; there's still robustness stuff that I want to see fixed and all the dev want to see fixed.  There's still more privacy stuff I would like to go in.  Hell, Taproot will give us a shit load more work, but there's a whole heap of cool stuff we can do once we've got that; it will make it more private and everything else; better on-chain footprint; and everything else.  

So, there's a whole pile of stuff that we still want to do on the tech side, but then there's this whole other side of who's going to actually use it.  Recently, we enabled multi-part payments, which means that it used to be pretty much, if you wanted to pay $10, you were good; if you wanted to pay $100 on Lightning, now you were in trouble, right, now you were struggling.  That's kind of gone away recently.  With multi-part payments, you can do a $100 payment without really a problem, so that has opened up a few new use cases.  But at the $100 point, just fucking use Bitcoin, right?

For most people, that's established.  Why would you -- if the use case for Lightning is, those cases will make Bitcoin payments the same amount, why bother with all the tech; what's the point?  So, this really, from a technical point of view, I'm like thank God we haven't onboarded like a hundred million people yet; that would be a nightmare, right, just all the support issues.  But on the other hand, you know, it's always, "It's not ready, it's not ready", but it's never fucking ready, right?  There's always something else you can do.

But, yeah, the question of who is going to end up using it?  I do not have a crystal ball.  I suspect there may be somewhere where the cool thing is receiving payments; the cool thing may be the ability to receive payments without permission.  Everyone thinks that we have these few vendors and there are a lot of people paying, because that's the way the field is slanted at the moment; but, it's not necessarily that way.  In Lightning, if you've got a Lightning node, you can receive as well as send, right, so there's no difference.

So, maybe the killer use case is going to be something where people are actually receiving small amounts of money; maybe that's going to be a thing.  I honestly don't know.  And, my previous experience with building tech is that, you know, open tech particularly that anyone can go and use, is what will happen is someone will use it and either you will go, "Fuck, that is brilliant, why didn't I think of that?" or you will go, "That is the stupidest thing ever, no one is ever going to use that", and you will be so wrong.

So, I know from previous experience it's in my skillset; I can build these things, I can make them work, we can refine them and do everything else.  But, if someone else is going to come in and they're going to go, "Hey, I've actually got the killer use case for this", and I do not know what it is, and I don't know when it will be, right?  So, we will iterate, we'll get more users, people will get better with onboarding and stuff like that, and it may just naturally grow like that.  But at some point, there will either be a killer use case, or there won't.  We'll be going, "It's been ten years, we're still waiting".

Peter McCormack: Well, I mean, the litmus test is porn.  If porn doesn't take it, you're fucked!

Rusty Russell: Well, porn and drugs, right.

Peter McCormack: Porn and drugs, man.

Rusty Russell: I happen to be a strong believer.  I know you've had some personal experience with having to get medication that was not available otherwise.  I personally feel that our drug lords are completely out of control, so I have no ethical issues with people using internet money to get their needs met or find things that they want.  And, you've got to be pretty robust, you've got to be pretty private in order to get that.  But, that tends to be bigger amounts.  But, maybe it doesn't have to be; maybe you just buy weed over Lightning, right, and maybe it's $20, or whatever.

So, I think these use cases are probably things that we will see, but you need a fair bit of infrastructure before you can get to that.  You've kind of got Bitcoin already, so that's your competitor in most cases.  Are you better than Bitcoin?  And, this is from experience, right.  So, I've been working on Offers, which is like a second-level invoice, which does a whole load of cool stuff.  It's a much more natural kind of thing.  If you want to receive payments once a month for something, you have an Offer and it does it all for you, and your wallet then hails, requesting invoice and doing all that stuff.  But, from a user point of view, it's way nicer.

And, there's a whole load of tech that has to go into that that we've been slowly building, so what exactly will make us turn the corner?  I see improvements in the Lightning Network every month.  We have these spec meetings, people work on fantastic stuff, Lightning Labs are doing great work, Async are doing great work.  There are other teams as well producing stuff, some of it deep tech stuff, other real use cases and stuff like that.  Which one will take off?  God knows.

Everyone talks about they want paywalls to go away, they want to pay for paywalls, and it's like …  But people need the -- the main problem with Bitcoin is, it's not the money you have in your pocket, right.  That's the main hurdle; you don't have it.  And then, for technical reasons, it needed to be in some currency, but if someone had -- if Satoshi Nakamoto had come up with a method of transferring USD around the world in an uncensorable manner and everything else, that would have won; I have no doubt.  That would have been a way easier sell.

Peter McCormack: Well, I know what you're saying, because I'm increasing all my subscriptions for content now, because there are so many paywalls, but we're a long way from someone like the New York Times going, "Yeah, well let's just add Lightning"; we're a long way from them caring about something like this because there are so many different hurdles to go through; but, the main issue is volatility.

But isn't what Jack Mallers -- because, I haven't taken too close a look at Strike yet, but isn't that what he's kind of been doing with Strike?

Rusty Russell: Yeah.  Look, you can argue it's too early, but he's definitely bridged that gap, right, of going, "You can accept Lightning and they can use your credit card and it all just works".  That's amazing, and there are certain industries where I can imagine that that is incredibly powerful.  And, that's a fun thing I found interesting, is coming back to the point about, that's enabling vendors, right?  That's vendors loving Lightning, because they don't have to ask anyone's permission; they don't have to sign up for an account; they don't have to talk to their bank or get a point of sale system or anything like that.  They basically accept this and away they walk.

So, joining that gap's really interesting.  Whether the timing on that is right is another question, but you see certain niches, right; that could be huge.  So, I think what Jack is doing is great and I'm a huge fan, but I don't know if that is the thing that's going to make it take off?  The volatility's not really an issue for them, because you're kind of paying right now, so it's adjusted to whatever currency.

Peter McCormack: It might be a case of just, it's a time thing.  I don't think I'm alone in my Bitcoin experience in that the Bitcoin I have is distributed in multiple places.  I have my long-term, cold storage, multisig, geographically-distributed, you are not getting your hands on my Bitcoin stuff.  But I also have a small amount available to me, and I have a small amount in my Lightning wallet, because I have, I wouldn't say a daily need or weekly need for Bitcoin. 

There are things I have to have it for now and I guess maybe over time, there will just be transactions that will just be easier to do from what I keep in my Lightning wallet.  It's going to be, "Yeah, just send me a Lightning invoice"; it's going to be easier.  And, maybe it's just one of those things that will grow over time.  Is it one of those things that you're all talking about?  Is there any part of it that's demotivating because it hasn't seen this take-off yet and so much work has gone into it?

Rusty Russell: Peter, I'm old, right, so I didn't expect this to happen in five years.  I kind of went through this before with Linux where it went from this crazy, hippy idea that, fuck, that's not how you make software; you don't get a bunch of hippies over the internet, a bunch of failed procrastinating students to write your operating system.  That's just not how it works, right?  Operations are written by big corporations, they're big machines, and everything.  Seriously, get real.  That story has changed. 

Nobody bats an eyelid now.  People use Linux because it's the best tool for the job, but it took 25 years; it took a generation inside IT.  Now, you're looking at changing people's money.  Short of a crisis that makes everyone move faster, that is also going to take a generation.  Bitcoin is still this new, young, 11-year-old kid that may not be around tomorrow.  It's still an experiment.

And it's interesting.  A dev said to me a couple of weeks ago, "It's crazy that this beta experiment that we have, it's holding billions of dollars on it".  So, yeah --

Peter McCormack: What is the deal with Linux?  I've never used -- I've like literally never -- this is probably the latest thing people will get angry about, but that I won't understand.  I've never used Linux.  I mean, I might have without knowing it, but I was a Windows PC kid growing up and now I'm a Mac guy.  And I know people are like, "Oh, but you shouldn't use that for privacy", etc; I don't care.  It works for me, it works for my family.

I've never touched Linux ever, I wouldn't even know what I was doing.  I'm sure it would be like me looking at an android phone; I'd look at one and go, "What?  Where are the Apps?  Where's Word?  How do I do an Excel spreadsheet?"

Rusty Russell: It would literally be like looking at an android phone, because android is actually Linux underneath.  And, there's a lesson here, because in -- so, Linux started in 1991.  I was a latecomer to Linux; I wasn't really hacking on that until 1997, so six years in.  And, in 1997, it was like, "We're going to take on Microsoft".  We knew who the enemy was.  Linux was going to take the zest off from Microsoft.  They had a 90+% market share; that was going to be Linux's.  Of course, everyone's going to see the light; we're all going to change, right?

And, we knew exactly who the enemy was and what we were doing.  This was very motivating; this is what we're aiming for, right, and it never happened; it still hasn't happened.  It's still 1% market share, just above the noise floor of market share.  We exist and you can find people who use it and that's about all you can say, and that's after 25 years.  But, all 500 of the top 500 supercomputers run Linux, which we never saw that coming. 

When Google needed a competitor to the iPhone, because smartphones were a thing, they chose Linux as their base.  So, we're kind of in one of these two areas that were never on the plan.  And we sucked at the area that we thought we were doing.  And that's the thing I always take home from the Bitcoin experience.  It's like everyone's sure that we're either overthrowing the government, or we're defeating Visa and Mastercard, PayPal, whatever it is. 

And I was sure as well, in the Linux days, of what we were doing, and it turned out we built something really cool; people went and did things we didn't expect with it; and it did nothing that we expected.  It does really cool stuff, don't get me wrong.  I loved Linux, I had an amazing career developing it because it was fantastic being a core Linux developer, but yeah, it was such a trip because it was never where we kind of expected to be.

Peter McCormack: But, what is the deal with Linux; why do people like you love Linux; why is it different from, say, a Mac or a PC, because I have no idea?  I just know that it is the nerd's choice of PC.

Rusty Russell: Yeah, it is, because it's open source, so it's parts exposed.  So, if I really need to, I can, in theory, dig down and figure out exactly what's going on.  And, if you're a developer, that's great.  You can go as far deep into it as you want and figure out what's happening. 

And so, to understand, so remember that the previous major attempt, prior to Bitcoin, of building open source cash, peer-to-peer cash, was DigiCash, and that was the mid-1990s.  This is pre Linux becoming a big thing and dominating the industry as the poster child of open source, free software.  So, you did your proprietary thing, right, that's how you did stuff back in those days.  The idea of releasing the source code so anyone could use it and anyone could host it wasn't a thing back then.

So, of course David Chaum, DigiCash, did the centralised thing, because that's how you did stuff.  The world has changed so much that there wasn't, you know, fast-forward to 2008; of course, Satoshi Nakamoto releases his as open source, because that's the new reality, that everyone expects stuff to be open source; they can inspect it all.  And, the poster child of the open source is Linux, right, because it's all open source and you can go in and hack on it and fix it or break it and do whatever you want.  So, if you're a dev, that makes a huge different to you.  You don't hit this brick wall.

So, if I'm working on Windows, I find a bug or there's something, I have no idea, I have no idea what's going on inside.  And, if I did figure it out, I wouldn't be able to fix it.  Microsoft do not appreciate you distributing your own copies of Windows, it turns out.  So, yeah, so that's like …  As a dev, it's a no-brainer, but you can also see why that is completely unimportant for somebody who is just an end user and doesn't care.

Now, look, there are a whole load of fairness and ethical issues about, hey, you know, I think there's worrying issues about having critical software that is not accessible and transparent and viewable, and that's in the hands of a single party, it's extremely dangerous.  But, it's not the kind of compelling day-to-day reason that for non-devs makes a difference.

So, in my experience, the world's shifted.  People looked at me fucking weird when I went to work on this free, hobbyist thing.  And the first time I got a contract to join it full time, I didn't know if it was going to last.  These people were actually sending me money to write software for free, and release it on the internet; real money.

Peter McCormack: Pretty cool.

Rusty Russell: I'm like, "That's pretty cool!"  I was like, well that's cool, this will last six months and it will be over.  20 years later, it's still going.  Then, I start working on Bitcoin and my Linux friends are like, "Rusty, what the fuck are you doing?  Like seriously, is this your midlife crisis?  You had a perfectly great Linux career as a top Linux coder; what happened?"

Peter McCormack: You got the Porsche, man!

Rusty Russell: I wish!  No, from a dev point of view, I saw the same kind of story.  So, I changed jobs and starting hacking on Bitcoin full time.  I joined Blockstream, because they were the only ones doing serious, deep Bitcoin work at the time, and just after the Mt Gox crash.  So, Bitcoin was dead, it was all, you know, horrible, etc, but I remember Linux went through a same crash. 

Linux went through a crash in 1999.  It was the poster child, you know, it was the dotcom boom, it was …  And then, everyone was announcing, like seriously, it was all, "We're doing a Linux trial; it's going to be huge; we're going to do a Linux desktop", whatever, and the stock price would take a bump.  The stock price would go up because they would make some Linux press release.  It was insane, and everyone was doing all this stuff!

And then suddenly, boom, it was over: dotcom crash; tumbleweeds; nobody's talking about Linux anymore.  It was night and day.  It was amazing to see it turn around from these huge trade shows, giant things, to nothing, nobody's doing it; it's dead; it was a fad; it's all over.  And, I'm kind of like, "Oh, yeah", but it turned out that next time the world had a crisis and was looking at stuff, Linux was ready, and I went, "Oh, this sounds a lot like the Bitcoin story, right?

So, my wife said to me I'm much nicer to live with when I'm working on something I'm passionate about and so, yeah, I restarted my career.  I went, "Cool, I'm going to be the new kid on the block".  So, I went to Blockstream, I went, "I'm going to like hack on Bitcoin; I'm going to be a Bitcoin dev; this is going to be awesome!"  And, I went across there for a month and it happened that a month before that, the Lightning paper dropped.

So, I read it, couldn't understand it, read it again, couldn't understand it, read it with a nice glass of red wine, took notes, finally figured it out.  I wrote a series of blog posts going, "Cool, okay, so here's the primer on how to understand the paper".  And then, Greg Maxwell, who was CTO of Blockstream at the time, at the end of my month across in the Bay area said to me, "Oh, by the way, we think you should write a Lightning implementation".  It was kind of bait-and-switch, right; I'm like, "I need to work with all these bitcoiner dudes, right, I'll be the new kid, I'll work on Bitcoin and everything", and he went, "You should go over there".

Peter McCormack: Yeah, but come on, man.  When Greg Maxwell tells you to do something, you do it.

Rusty Russell: And also, it was perfect, right, because Joseph and Tadge, who'd written the paper, had no intention of doing anything with it.  They were like, "Yeah, it's an interesting idea", and I'm like, "How can you do that?"  You can't just go, "Here you go; you can do that".  So, no one else was going to do it, so I went, "Fuck, it has to be done".

And, it was a greenfield project, it was perfect, right.  It was cool, new tech and everything else.  So, that was it; that was me.  I never got to be the Bitcoin Core dev that I had intended to be.  I'd even learned C++ which, for reference, is a fucking horrible language; but, you know, I'd relearned it on the plane on the way back.  But yeah, never happened, so here we are.  I don't know how we got here from your question, but, yeah.  It's funny, because I'm probably --

Peter McCormack: Well, you're on it now, man?

Rusty Russell: Well, yeah, we started the spec stuff and we all met together and by then, of course, Tadge and Joseph had spun off a company to work on it, which they've since left, but Lightning Labs, fortunately Roasbeef, as now CTO, was a fantastic pick, as was Elizabeth, and the two of them carried it through; and the Async guys were great as well.

So, we all got together and we started thrashing out, okay, how are we going to interoperate.  Now that, for me, is the important bit.  The software comes and goes, but standards have this way of sticking; you're stuck with stuff.  If there are other things out there that do it a certain way, well that's it, you're stuck, so you've got to get that stuff right, painful as it is.  So, that was always my background, right, try to get a community together, try to build it.

And, the Lightning community's really friendly, the dev community anyway.

Peter McCormack: All devs are friendly, dude.

Rusty Russell: I think so.

Peter McCormack: You never see them out there on Twitter fighting like everyone else.  Maybe they do, like, parody it; parody a cow to give shit to podcasters about their sponsors, mother fucker!

Rusty Russell: [Laughing] yeah, there is that; the shit bitcoiners say.

Peter McCormack: There is that.  We should get into that, dude.

Rusty Russell: Let's derail this and go there, yeah.  So, it got me, right, because people are, and I remember this back in the day from the Linux, it's like, Linux was going to solve world hunger.  In fact, the password on our machines that's now secret -- I just checked; it's not the password anymore.  On the machines at the lab, it was linuxwillnotsolveworldhunger, right, which is obviously a joke, but there's a grain of truth in it.

There were "enthusiasts", shall we call them; young, this is the coolest thing they've ever discovered, it's amazing, it's going to change the world.  And look, I love enthusiasm and I love Bitcoin too, I think it's fantastic; but, you know what, it will either sell itself on its own merits or it won't.  And, throwing this ridiculous hopium at people is not helping anything.

For example, people are like, "Number Go Up, it's the best thing we have; that attracts people to Bitcoin".  The problem with Number Go Up, if that is the reason you buy Bitcoin, you get into Bitcoin because Number Go Up, someone else will promise you Number Go Up more!  Some shitcoin will come along and go, "Well, Number Go Up more" and they will, there will be a bump here, and you will jump on that and you will get rekt, you know, because you have no idea.  You've only been sold on Number Go Up.  And so, other Number Go Up more; that's where you will go, right?

And I realised that devs want to attract people.  Look, we want more people in the Bitcoin space; two reasons: one, because we like Get Devs.  Some number of them will become devs, or they'll build stuff that hires devs, or whatever; and part of it is, you want people finding stuff useful, right?  Somebody comes along, "It's cool, I found Bitcoin really useful.  It works really well for this".  That's the users you want, right.  You want users who are like, "Yeah, I found your thing, it's great for this", because those are the users who go, "Oh, but wouldn't it be great if you do this?" and you go, "Oh, yeah, we could do that.  Let's move in that direction", you can refine.  Those are the users you want.

If you're a trader, if you're trading shitcoins, that's not the user you want; you want the dumb money, man.  You want the stupidest people you can find to come in hard and just throw all that money at it, right.  Sell your kidneys so you can buy more Bitcoin.  That is the kind of shit you will post on Twitter.  And, that is a completely different set.  Those people call themselves bitcoiners, and maybe that is in the definition of bitcoiner, but I'm not interested.

Peter McCormack: There is no definition of bitcoiner.

Rusty Russell: I know.

Peter McCormack: There is no definition of bitcoiner, because people say it and then they narrow it to, "Well, you're not a bitcoiner if you don't do A, B and C".  It's like, "Well, no, hold on".  I don't like the idea of creating a definition, because a definition is subjective.  For me, you're a bitcoiner if you hold Bitcoin.  If you hold Bitcoin or attack Bitcoin, you're a bitcoiner but you're hostile.  But not like, "Oh, you're a bitcoiner only if you CoinJoin and xPub", etc.  I just don't like a narrowing of it.

But, look, I will throw something at you, because I think it comes down to yourself, your own personal goals and incentives.  So, you say it's cool if there are users because you might get more devs, because you want more devs; of course you want more devs.  And then you'll say a trader wants people, dumb money, to dump on it, and that's natural; that's a part of the trade in the ecosystem.  But, we get price discovery from that.

And then, I guess the people who want to take down the government want to build an army and they say, "Well, each round of Number Go Up, we'll get a new army of people who came for the gains, but stayed for the hard money".  I think what ends up happening is that the aggregate is where we are.  The aggregate of every person, every user, every experience just creates what we have and what we are in the ecosystem.

Rusty Russell: Yeah, absolutely.  Yeah, but you get to choose.  Who do you convince; who do you spend your time on, right?  And, somebody chasing mad gains, Number Go Up, there are probably other places you could do that, right, there are probably other things you could do.  And anyone who's trying to make price predictions and tell you, "Oh, you know …", particularly short termism, right, I think it's one thing to lay out an objective thesis as to why you think Bitcoin will go up over time.  Hal Finney did it, there's a long history of people going, "Well, if you believe this narrative then here are the numbers you're kind of looking at"; great.

But, people who are giving you a date, like, "Last time we'll ever see it below $10k", or, "It's going to be $100,000 in 2021", or stuff like that.  Or, what was one of the earlier ones?  I was looking back through the things I retweeted and one of them was, "If Bitcoin doesn't pass $100,000 by whatever date, I will give away all my sats to people who retweet this", or something equally stupid, on public TV which, when you think about it, is not even a thing; that's not even a thing, dude, that's not even a thing.  What the fuck?

You see, McAfee's a nut job and no one should consult him for anything.  He's also a dangerous nut job, so everyone's scared to say it, but I just download every mention of McAfee I see everywhere in everything, because he's not a bitcoiner, he's not anything to do with the world that I'm in, right, and the guy just annoys me.

Peter McCormack: Yeah, but we'd all tune in to watch it!

Rusty Russell: Nope!  I'll open my laptop and get some coding done.

Peter McCormack: I would!

Rusty Russell: Wait a minute; no one's ever going to … anyway, yeah, it's stupid, right?  So, the thing is that the guy who said, "I'll retweet this and I'll give away sats if something -- if it goes about $100,000, I'll give away, you know, whatever, however many sats to everyone who retweets this", but hold on; that's never going to happen.  This is like an intelligence test.  If you retweeted that, you're an idiot.  You have just self-selected -- and I'm sure you'll get plenty of, "Oh, but it might happen".  It won't happen; you're free money won't happen.

Also, if you train people to expect free money on Twitter, you are not doing them any favours; history has shown this.  So, if we use these scammer-like methods to attract people, we are just going to attract people who are going to get scammed; it's very clear.  And there are a lot of ways to get scammed in Bitcoin.

And, it's easy to say, "Oh, well no real bitcoiner would ever fall for these scams", but I'm sorry; a lot of bitcoiners have.  I got done in Mt Gox.  Don't put your money on an exchange.  I was trying to sell it to be fair, right.  The number went up, my wife went, "Hey, we should sell some of that", because I'd bought some play money, and it was like $100 worth of Bitcoin.  Suddenly she's like, "Oh, actually that's worth real money now; half of that's mine; we should sell some".

So, I went to the biggest exchange in the world and I hit transfer and I sold it and I'm like, "Awesome; now to withdraw the money", and a month later I'm like, "So, what's happening with the money?"

Peter McCormack: Oh, man.

Rusty Russell: And then, another few weeks went by and there are rumours going around, so then I went, "Okay, fuck it, I'll transfer it back into Bitcoin and try to get Bitcoin back out", but I never got all the Bitcoin out; the whole thing fell apart.

I don't think everyone should have to get rekt to get into Bitcoin.  I like to think that there is a nice way that people go, "They're interested in Bitcoin".  To be fair, the only person I know who independently, a friend of mine, came up and said, "I'm interested in Bitcoin", I sat down and gave him the talk, right? 

Here's your hardware wallet, remember your seed, take it off.  This is a long-term investment; think 5-10 years, right.  It's going to be extremely volatile, so don't watch the price every day.  If you're still convinced then sure, put some money away that you can afford to lose, just put it away, come back in five years, let's talk about it, right.  And by the way, give me a copy of your seed.

First thing he did, lost the seed for it.  I only found out because a month had gone by.  By fortune, fair enough, I had kept a copy, "Here you go, not a problem, knew this would happen".  Because, a month had gone by and the price had doubled and he wanted to sell.  And I'm like, "Well, hey, look, it's your money, here you go", and he sold out.  But, hey, not bad; made a couple of thousand bucks, all good.

Of course, the price then skyrocketed.  Potentially it would have made more, and also he didn't listen to my whole long-term, think about this in terms of years not weeks, kind of shit.  Yeah, so I'm hopeless at selling Bitcoin.  I'm like, no, I'm going to stick with the dev side.

Peter McCormack: Yeah.  Can I tell you?  I know you don't want people to get rekt, but getting rekt for me was the best thing that happened for me in Bitcoin, in hindsight, because I'll tell you; it did two things for me.  Firstly, I've lost a fuck load of money; that's not a good thing.  But, it changed my entire attitude towards Bitcoin, shitcoins and respect for the Bitcoin I hold, keep it safe, don't spend it, keep accumulating, long-time horizon.  I had to get rekt to learn that.

Now, some people will learn that without it, but for me it really worked.  But, it worked outside of just Bitcoin.  It made me really think about saving and saving for the future and what I spend money on.  It really did that because historically, Rusty, I'm so shit with money, man.  Honestly, I spend money on all kinds of nonsense.  I've nearly bankrupted myself twice from seven-figure positions.  I am a moron with money.

Ever since getting rekt in 2018, all I've done is increase my personal savings position and wealth and been very, very careful with money.  I mean, I might be alone with that, other people might do, but I'm not saying people should out and get rekt.  It was just a really good -- like, I'll look back on that in five or ten years and go, that was the best thing that happened to me financially.

Rusty Russell: But, to be fair, you were rekt, you went up and down; you didn't go down.  So, when Gox went under, I read a whole heap of threads, because you know, I was looking at working in an industry just after Gox, and joining Blockstream.  I was like, if I'm going to be a dev looking after this money, I forced myself to read through those fucking threads.  The ones where, "He was doing really well, Bitcoin was up, it was all good", and it's like, "Even if I've got 50%, it's all good, that's great.  I took my kid's college fund and I put it into Mt Gox; how do I tell my wife?"

And I'm reading these people pouring their heart out on Reddit and forums because they're just fucked, man.  They didn't go up and down, they just went down.  They've lost everything at this point.

Peter McCormack: Yeah, but that's anything.  Rusty, you could do that on the stock market, you can do that at a casino.  If you're putting your kid's college fund into anything and losing it, you're a fucking idiot.  That wasn't you, was it?!

Rusty Russell: No, no.  He thought he had buffer, right.  He didn't expect the whole floor to go out from underneath him.  He didn't expect the exchange to just vanish and take all his money.  People were like, "Oh, but look, you'll get it back eventually with the settlement and shit".  It's like, dude, I bet you his marriage has gone; he won't get that back from the Mt Gox settlement.

I mean, so I don't want to be a part of attracting people to getting rekt; I just don't.  I don't think that's ethical; I don't think it's moral; I particularly don't want to take their fucking money about it, right.  Look, Pete, this is going to be a life experience, I'm going to take $1 million off you and I'm going to circulate that into other scams and, trust me, you'll thank me in a couple of years' time.  I think that is not really the kind of bet that I'd make.

I understand that it is the volatile positions that are all part of the joy of Bitcoin and to be fair, this whole saving thing, so hodling; that's just what my grandparents used to call saving, I love that meme.  There are some memes that really grate me the wrong way, but the whole idea that, you know, maybe you should think about putting some more money away, and actually it doesn't really matter whether it's in Bitcoin; just put some fucking money away.  Changing that time preference is a theme that I really love about the Bitcoin community and I agree; thinking in those terms actually improves things across the board; it does definitely give you perspective.

Look, our society encourages consumption, like a shit load, and pulling back a little bit from that is probably damn healthy.  You don't necessarily need Bitcoin to do it but I think, if that becomes the thing bitcoiners are known for, a saving technology, I think we've actually achieved something.  But, in the bull times, that is not what people are pitching, right.  There's a lot of guaranteed free money.

Since I started the, Shit Bitcoiners Say, account six months ago, every account that I follow has been asserting that, "We are on the edge of a bull market, man.  All the signs, man.  It's about to happen", and it's been about to happen for six months, and it will be about to happen for -- you know, eventually they'll be right, I hope.

But the price could go sideways for five years, right, it could do nothing.  But according to these guys, "You've got to sell your kidney now, man; you've got to get in because it's going to be rare, it's going to be …", all this stuff and I'm like, "Dude, calm the fuck down, you don't know.  If you knew, you'd be able to get those futures options and make even more money, and you're not doing that.  And the reason you're not doing that is that you're not actually prepared to put your money where your mouth is". 

It's easy to talk shit on Twitter and produce this narrative.  They can make a bull market by just talking about it enough and, hey, maybe that's how it happens?  I don't know.  I guess people are irrational.

Peter McCormack: Yeah, but they're only talking to other bitcoiners?  A lot of what the Twitter is about is bitcoiners talking to bitcoiners about Bitcoin.  So, they're saying something about Bitcoin and then a bunch of bitcoiners are going, "Yeah, you're right", but they're not actually talking to anyone new.  They're not going -- yeah, look, I get it.

But, listen, I'm with you on the hodl meme.  I think the hodl meme is a great meme for life.  It's a meme I can explain to my children and it teaches them something.  What about Bitcoin Fixes This?

Rusty Russell: Oh, fuck.  It's one of those, I have a hammer and I'm going to turn everything to a fucking nail, or I'm going to hit it whether it's a nail or not.  The Bitcoin Fixes This meme is surely past its use-by date now; can we just kill it; can we just get it out of here; just go, "No, Bitcoin Fixes It is over"?  There are genuinely a couple of things that Bitcoin fixes; war is not one of them; just putting it out there.

Peter McCormack: Okay, I'm going to debate this with you.

Rusty Russell: Bitcoin will stop war?  So, this is a libertarian talking point, right, "If we defund government, they won't be able to declare war".  Okay, so I agree.  Bitcoin-based governments will lose more wars than others, if that's what you want; great.  Let's flip it around a bit.  If you're not prepared to fund wars, you'll lose them; okay.  So, maybe you want to lose more wars; so, go for a Bitcoin-based economy.

But, frankly, I think you'll find that everything else gets cut first.  It tends not to be the military industrial complex that starves in these cases.  Eventually, yes, you'll run out of money in whatever you do; you'll hyperinflate with Bitcoin or without.  You will eventually run out of money and you'll have to stop.  The problem is, a long time before you run out of money for wars, you run out of money for everything else people care about, like social services, healthcare and all these other things that people like.

So, this whole, "Bitcoin will prevent wars" thing is hopium at best.  I just don't think there's any direct line you can draw here.  When countries were on the gold standard, actually statistically there were not less deaths in war than there are now, so I'm not quite sure where this is coming from, other than we hope it's true.  I had this debate with people; they called me out because I said this, and they were on the edges, right, on the edges.

Peter McCormack: Who called you out?

Rusty Russell: I'd have to look back through my Twitter.  I think Stephan Livera actually.

Peter McCormack: Maybe Saifedean?

Rusty Russell: Oh, yeah, he did.  Look, all respect to Saife.  I still consider him the primary comedian in this space; I have a huge respect for his work.

Peter McCormack: The primary what?

Rusty Russell: Comedian.  I think he's hilarious.  I think he's brilliant, because his deadpan presentation of economics and his critique of modern art is -- he's reached a level I couldn't hope; I'm just a dev.  Doing this is kind of a bit of a snarky side, right.  I love the dedication of someone like that, so I've always been really impressed with what he does.

Peter McCormack: Yeah, it's not modern art though; it's degenerate art, to give it its correct term.

Rusty Russell: Yeah, of course, degenerate art, yeah.  Economics is complicated, man; I don't understand it.

Peter McCormack: But, I mean, he's completely wrong.  He's completely wrong with modern art, and that's fine.  But, look, I like the libertarian argument and I think I would like to be a libertarian, I'd like to live in a libertarian world, I just don't think there are enough libertarians for it to work.  If everyone was naturally libertarian-inclined, then great, but humans are flawed, greedy, evil, angry, monstrous and we just want to fight, fuck and steal.

Rusty Russell: Look, there is a rational place to have a debate about the competence of government, the size of government, how much influence it should have, and certainly I've already referred to drugs.  I believe there are whole places the government has gone where it shouldn't have gone, it has no business, etc.  And, I think that's a healthy debate.

The libertarian end of, "Hey, taxation is theft", kind of stuff; it strikes me as very much the anti-vaxxer kind of argument, right, and I'm going to get a lot of shit for this, because I have friends who are libertarian.  But, taking for granted all the infrastructure that is there, and starting in this world where this stuff already exists and going, "I don't understand why we're paying so much taxes.  I don't understand where all this money's going …".

If you ever work for a big organisation, you understand that this shit just isn't efficient.  I worked for IBM.  It's private sector but, man, I have no idea what half of those people -- I have no idea what 80% of those people did.  So, this idea that, "Hey, man, the private sector would be so much more efficient …".

And the other thing that gets me, right, is you've got these libertarians who are also these dietarians.  "There are these carnivores; we're being fed all this junk food and everything else".  Hold on, that wasn't the government that did that, was it; that was the private sector feeding you all that shit and giving you nutritional advice on eating McDonald's three times a day.

Peter McCormack: That's not exactly true.

Rusty Russell: Really?  You're going to blame the government for shoving that stuff down your throat?

Peter McCormack: No, but there are government guidelines and recommendations that have come, and there are also certain, I'd have to go and research it, but there are certain policies and subsidies for farms to produce certain things like, what's the corn syrup bullshit in the US?  It's not just -- look, we are responsible for our own decisions, but you can put some of it back at the blame of the government.

We were told for years that too much red meat would cause cancer and then we were told recently, actually no, it's okay.  So, I see both sides.  Look, I don't think a carnivore diet's healthy.

Rusty Russell: The governments are not the ones producing the majority of this food.  The majority of this food that we're complaining at is not being produced by the government; it's being produced by the private sector.

Peter McCormack: Yeah, of course, but people are institutionalised.

Rusty Russell: So, if the government wasn't involved and there was no regulation and it was all left to the private sector, that is exactly the shit you would be eating.  So, you can't have both.

Peter McCormack: Yeah, potentially, but you still get those guidelines and advice.  In some ways, sometimes I'm like, okay, we should have free choice.  But, isn't it great that we have certain regulations around certain things.

For example, I watched the Nathaniel Rich, one of my favourite journalists.  He works for Vanity Fair.  He did an excellent piece on Quadriga.  He also wrote an excellent piece that ended up becoming the film, Dark Waters, which was about DuPont and them poisoning the waters.  And, I just wonder in a libertarian world, would they have got away with that for longer; do you get more greedy people poisoning the water, because there are no regulations?

Look, the free market will say that the free market will develop regulations.  I'm not convinced in every scenario it will, so where's the middle ground?

Rusty Russell: So, the free market's like, "Oh, well, come back to insurance", and stuff like that.  If you've ever been hostage to an insurance company, you'll realise that you've got regulation then, but you now have no recourse.  They're like, "Well, you could set up your own insurance company"; yeah, good luck with that.

For example, if you ever get on one of the blanking blacklists, so there are various lists done generally by private agencies, not by the government, that indicate risk scores for people and stuff like that; it's very non-transparent.  In many countries, it's not regulated at all.  And, it's the private sector going, well, we've outsourced our risk management to this other company that has all this data and we'll ask them; should we give this person a bank account?  The answer comes back no. 

You have no appeal over that; you have no idea why you're on the list.  You may find out that you're on the list; you don't know who put you on there and for what.  "You're just a high-risk individual and I'm sorry, we're not prepared to offer you service at this time".  And, you know, libertarian; it's great that they're free to decide not to offer you that service, right, because this is not the government after all.  They have rights, they can choose who their customers are and if you can't get any banking services because of it, hey, congratulations, that's the free market.

This stuff, there are reasons for regulations.  Somebody said really early on, "The purpose of Bitcoin is to teach libertarians why regulations exist in the first place", and that's obviously somewhat of a joke, but there are reasons that a lot of these regulations exist, right.  And, look, the crypto libertarians are very active on Twitter.  I absolutely agree with you that there are good discussion points to be had amongst this, but throwing out the baby with the bath water isn't always the problem.

The idea of, "We should just get rid of all the government"; that's like, "Have you ever thought of actually getting involved in government?"  You know, if you actually really hate the way things are, you should get involved.  And maybe if you have long enough where nobody gets involved and everyone just gives up and goes away, then your government turns into a complete shit pile, but I don't really think that -- well then, your parents should have been more active; they should have got involved and done stuff if it's too late for you.  And I'm sorry for your country if that's the case.

But, I've always felt that if you really feel strongly about this stuff, get involved, man; go do something; move to a smaller country.

Peter McCormack: Sometimes, it's a tough conversation to have, because I try and have the conversation because, when you try and talk about Bitcoin to friends, if your starting point is, "Look, let me talk to you about inflation, how inflation works", because a lot of people I know, they just think inflation's one of these things that we happily accept.  "Yeah, it's just a part of a healthy economy to have inflation".

If you actually explain to them that, especially interest rates as they are now, that you're losing purchasing power, it's essentially -- I do consider it essentially a bit of a theft.  And you can explain to them and then you can say, "Look, over 20 years, it's quite serious the purchasing power you'll lose.  But, if you wanted to, Bitcoin is scarce, so you can buy some Bitcoin and there is a chance that if Bitcoin continues to be successful, over a long-term period, you can hedge part of that.  And perhaps you need to hedge a little bit with gold, etc".

I can have that conversation and it makes sense to people.  But, if I sit down at the table and say, "All governments are evil; everything they do is evil; you're not a free person, you're a slave to a government; tax is theft.  But, with Bitcoin, if we all buy Bitcoin, we can take down the government.  We won't have any governments anymore, but what we can also do is we also have gun rights and we can all get guns and we can all protect ourselves.  And, the people with the most money, we're going to live in this thing called a 'citadel', where we're going to have armed guards protecting it and our own secret economy". 

And sometimes I want to have this conversation; sometimes I even want to mock it.  But, even attempting to get into the conversation …  And look, Rusty, the reason I want to have the conversation is, yes, we don't have as much freedom as we would have in a libertarian society.  But, is there a certain amount of freedom that's worth sacrificing for a safer society?

Now, look, I know they'll come out, there's that quote, what is it; "Anyone who gives up [whatever it is] liberty for safety has neither", I get that argument.  At the same time, we have some form of civilised society.  If we went to a stateless society, would that be better, or would the trade-offs be worse?  Would we be in a situation where it's like Mad Max?  I honestly and genuinely don't know, because I've never seen a libertarian society, but I definitely want to have the conversation. 

But, even attempting to have the conversation, you have people go, "You fucking statist cock!  Fuck yourself!  Go and suck your government's dick!"  And it's just like, "Well, hold on, I'm just trying to have the conversation here".  Try and have the conversation, because if the option is binary; state is cut or liberty, then it's very difficult to actually make progress.

Sorry, I'm going on a bit here, but the reason it's important to make progress is like, well, how do we make society better?  So, for example, I had a really great interview with Erik Vorhees that I always refer to.  He's a great libertarian and I really appreciate his time.  He said something really important to me, because I talk about the big red button to switch off the state.  He said, "Look, could we just directionally head to a smaller state; can we ever get to that point?"  Maybe we can't, and I don't know. 

And the other thing I don't know is even if we have the big red button, I've talked about this before, you know, I've been reading Maslow's Hierarchy of Needs, and looking at the way humans are; do we end up just rebuilding everything again, because we have groups of people and then we need governance and then we have leaders.  It's a very complicated area, but I think for just to be very binary of, it's either liberty or statism, and you can't try and navigate the in between, is really hard.

Rusty Russell: Yeah, look, I have a huge sympathy, as I think do you, for this idea of, look, there are places the state needs to be a lot smaller.  And, I think it's healthy to have people across that spectrum going, "No, hold on, just on principle, I object to this expansion of the state, because I think it's a bad idea". 

That doesn't mean I object to every expansion of the state, and it doesn't mean that I feel that everything the state does is wrong.  And I certainly don't feel that if we threw it all out and tried to start again, that we would do better the second time; because, we would try to build something, because we need structures in order to manage stuff and make things work.

I know libertarians will say, "True libertarianism has never been tried", but yeah, because you go, "Well, what about Somalia?  They have no state; you could go to Somalia".  "Well, that's not real libertarianism", "Well, why not?"  I mean, that's that whole big red button argument, which is very binary and not very productive.

There are certainly areas where the state could be smaller.  I think we're headed to a world where -- I think chaotic transition is bad; I think that's worse.  However bad things are, chaotic transition makes it worse.  So, if your state collapses; that's worse. 

There's definitely an argument that says the state will always try to expand, and I think there's definitely a job there to push back on it.  I mean, look at surveillance, right?  Surveillance used to be something that was selective and difficult to do and expensive and had all these safeguards.  In the electronic age, surveillance is cheap and can be done by anyone and we've slipped into that mode without really having a discussion about it.  That hugely concerns me.

I think privacy's really important, especially given, as I've already said, I don't believe all our laws are currently just.  So, at what point does that become, well, you know, am I unable to lobby against laws I don't agree with because I'm worried about the information people have on me. 

I worry about a particular case like, so Pete, when you finally give up and go into politics yourself, and it turns out that somebody approaches you with an envelope and they've gone, "Here's all your private conversations that you've had with people".  Are you going to let that influence you, or are you going to leave politics?

That kind of backroom dealing scares the shit out of me, because you wouldn't know it's happening, and there would be people who will legitimately use that power because they think it is important.  They're like, "Well, we've got to get Pete's vote on this defence bill because, you know, terrorists; our country's future is at stake.  I don't like it, but we've got to use it against him.  We've got this information, we've got to use it".

And these will be perfectly, maybe not law-abiding technically, but these will be upstanding members of whatever service it is, GCHQ in your case, who are like, "Hey, I don't like it, but we've got to do it.  Pete's a bit of a nutter, he wants to reduce the size of our defence industry, we've got to just hobble him a bit, just to get us through this".  And then, it becomes a habit. 

That scares the shit out of me; the lack of privacy, particularly for public figures.  So, you know, I understand a lot of the arguments about small government, but I don't think Bitcoin is going to fix this.

Peter McCormack: Let me throw an intermediate argument for you.  What if Bitcoin just has the ability to reduce the size of the state; what if it does that?  What if Bitcoin has the ability, rather than doing it via lower tax income for the government?  Because, I had a chat recently with Giacomo and Neil Woodfine, a really great one; it was about toxicity.  But, we ended up getting into the state and the idea that Bitcoin is already reducing -- it's already taking tax revenues from the state.  But, my argument is that it's having no noticeable effect because even if it is, the government can just print more.  The government isn't running out of any amount of money because of Bitcoin right now. 

But, what if Bitcoin does something different?  What if it's an awakening for more people about privacy and it's an awakening about savings and an awakening about the economy and therefore, we have more people who are willing to push back?  So, rather than it just happening via a change to the money, it happens via politics, because there are enough people who are now fed up and pissed off?

There are certain places I've been to where Bitcoin's really easy to explain.  So, when I was in Argentina, Bitcoin's a lot easier to explain there than it is here.  When I was in Venezuela, again, to certain people, Bitcoin's really easy to explain to people in Venezuela, right?  But, what if it becomes easier to explain because we start to get a better understanding of the overreach of the state and we can just push back a bit; what if it does that?  That would be a positive.

Rusty Russell: I don't quite see the pos to it, though.  I mean, you've got to get people -- either the currency's got to get so bad that it becomes self-evident that they need something else.  Now, convincing them that the something else isn't the US dollar is then the question, right; because, that's been the classic, "We'll just stash some USD in here", you know, whatever you can get for your local currency and try to use that. 

Bitcoin's harder to use than US dollars, right, it just is.  Maybe we're making inroads on that.  The USD's not getting easier to use and Bitcoin perhaps is getting easier to use but still, you need the internet connection, there's more stuff that you need.  You need a working phone; you need not to get Goxd or hacked or told your electrum node needs to upgrade and click on the wrong link and shit like this, all these ways that people use money. 

So, you've got to get over all that, you've got to get your education in place so people can actually look after it.  They've got to look after their seed phrases, or whatever it is they've got.  But, you know, maybe you get over that and maybe it becomes usable enough, and maybe they have Lightning, or whatever, and they can do it.  But, I don't think it fundamentally changes the big spenders in the world, the USD printing still continues and everything else.

Now, potentially what happens is by having a reference economy that people can look at going, "Well, Bitcoin's kind of going, now we can see inflation and we have an easy way to flip out of it", then maybe that puts pressure on governments to actually tighten their belts and actually stop printing money; maybe.  There's an interesting idea around there.

There was always this idea that one purpose of Bitcoin could be to make governments go to a Chaumian Ecash kind of system.  So, governments could have done this 20 years ago.  They could have gone, "Right, here we are, we're centralised, sure, but we're going to let you anonymously transact on the internet with our currency; here you go".  They could have flipped that switch 20 years ago.  Now, the patterns have expired; they can do it without even paying the royalties, right; they could literally do that.

There are a number of reasons they don't, and the main one is the money system of control.  They've got addicted to the fact that they can control who uses their money now, thanks to the electronic world.  They can control it, right, and they don't want to give that up, but maybe the needle gets pushed back.  Maybe the existence of Bitcoin makes them go, "Hey, you know what, maybe we could release a genuinely censorship-resistant, but centralised currency".  It turns out the Australian dollar would be a great candidate for this, but our politicians are too stupid.

But, if they saw the writing on the wall, countries could kind of go this direction.  "Okay, well they're going to be doing anonymous stuff anyway, we might as well reap the benefit and have it in our currency".  So, maybe that becomes a thing; maybe they get more fiscal discipline; but, these are big maybes and Bitcoin has to get a lot bigger before it can have those kinds of effects.

Gold already exists, so you've got to make a reason why gold wouldn't do this job.  Why hasn't gold saved us from money printing; other than the fact that we've been printing gold, right, because fake gold?

Peter McCormack: I guess a couple of reasons.  I guess, as a disparate group of bitcoiners versus a disparate group of gold bugs, we can achieve more because it's digital.  If you call Bitcoin, the digitisation of gold, there's a lot more we can do with that.  We can hide it; we can teleport it; we can do a lot more things with it.  So, I think that's one of the reasons; we can spend it.

So, Rusty, one of the obvious answers to that is a circular economy in Bitcoin does damage to the government over time if it's big enough.  You can't really do that with gold.  I can't phone you up, Rusty, and say, "Rusty, can you build me some Linux app thing for me?" and you're like, "Yeah, it's going to cost you 50 million sats", and I can just send it to you.  But, if you're like, "It's going to cost you half an ounce of gold", it's like, well, how the fuck do I get that to you?  So, that gives us a big difference; I think that's one of the primary differences.

Plus, also, I can send it to you and nobody knows, ideally.  Yes, they can analyse the blockchain, but there are ways around that. 

Rusty Russell: There are two things you've said there about localisation, right, because we could do this if we lived in the same village.  If I were around the corner in Bedford, looking very, very lost, then we could do this gold exchange, we could do it privately, we could do all those things, assuming I had some scales with me and I could measure it and I could check it.  I don't know; I don't know how you check what gold is, but hey, we'd all become experts if we had to.

Peter McCormack: And you could cut bits off?

Rusty Russell: Yeah, that's right.  I could chill it, melt it, whatever it takes, right; we could do that.  I mean, the internet of course allows a small group of people to do this, because they can be spread around the world; they don't all have to be in the same place.  So, I get the internet argument for that.  Critical mass is probably lower because previously, you would have had a critical mass all in the same physical place to make this work.  Now, maybe you've only got 10,000 core people, but they're distributed around the world, but that's okay because you've got the internet and it bridges that; so, maybe that's a thing.

But, on the flipside, you've got -- I will bet good money that gold will be worth something in 30 years.  Bitcoin's only been around 11.  So now, you're betting on something lasting four times as long as it has already.  That's just not a certain bet.

Peter McCormack: I agree, I agree.

Rusty Russell: As much as I love the technology and everything else, you look at it and you go, "This is 11 years old".  I have a 12-year-old daughter.  For the record, she is not Satoshi Nakamoto.  But, there is a reason she can't drive yet; I'm not letting her on the road.  Bitcoin's a bit like that.  Until it gets to 25, it's still early.  It's still, we don't even know if this is still going to be around.  Things could break horribly soon.

So, the uncertainty over that level holds it back.  Now, that is simply solved by time.  If Bitcoin were 25 years old, if it were 50 years old, then we wouldn't even be having this conversation.  There wouldn't even be a, "Well, of course, Bitcoin's always been around.  You old-timers remember the time before that, but then you remember the time before the internet, so fuck you".  So, we're still in that stage where it's early.  By any measure, it's early.

A sane human being doesn't trust something that's 11 years old; not for core infrastructure; not betting your life on.  For very sensible reasons, you don't do that.

Peter McCormack: So, what is Bitcoin then?  Is it, for you, is it digital gold?  You know, there are two questions.  It's like, what is it; and, what can it be?  I did a recent interview with Robert Breedlove, Vijay Boyapati and Parker Lewis, who I consider, in terms of writing, actual writing, the three best writers in Bitcoin; the three of them, excellent writers.  So, I wanted to get them on and I asked them what Bitcoin is, and I actually got three different answers, which is cool, but also fascinating.

But, I also then asked, we also went into, what can Bitcoin be; that's the follow up; Bitcoin is this, but what can it be and what can it achieve?  And there is definitely sometimes a group think, say, on let's call it Twitter, for example.  There is a group think around Bitcoin that you can sometimes slide into, and I've done it myself and then I've felt like I have to step back.  But, there is a group think and sometimes it takes maybe away from what it is, or what it was; it takes people in new directions.

But, it's an interesting question to ask other people.  I have my ideas of what it is, but what is it for you?

Rusty Russell: So you, early on with interviews, you used to ask people this.  You'd say to them, "What do you think Bitcoin is; define Bitcoin?" kind of thing, which I thought was interesting.  For me, Bitcoin is an attempt to create an open-source internet cash, right.  It's a software project, fundamentally.  So, it always irks me a little bit to have people try to apply these huge themes to it. 

For example, people are like, "Well, it's hard money", and everything else.  Well, kind of.  That's sort of a side-effect of what it is.  Obviously, Satoshi had to pick, how is this thing going to work out; what is the rate of issue going to be?  And, you can pull a number out of your ass.  You go, "Well, okay, 1% a year.  No one will miss 1%; we can do that". 

But, he chose a mathematically neat function of halving, so it ends you up on 21 million, and everyone's like, "Oh, hard money".  So, it kind of fell out.  There are only a certain amount of numbers you can pick and zero was an obvious one.  Okay, let's pick 0% inflation; it will eventually become zero; that makes some degree of sense.  But, this is the problem with Bitcoin.

There are three Bitcoin phases and you can tell, and it's written in the code; the protocol insists that there are these three phases.  The first phase was that really early on, Bitcoin was fucking useless.  Bitcoin was not even toy money, it was just a toy.  The main competition to Bitcoin, when it was first released, was SETI@home.  You could spend your free computing cycles on SETI@home, or you could mine some Bitcoin.  At least SETI@home, you could talk to other people and go, "That's cool, I'm contributing to the search for extraterrestrial intelligence".

With Bitcoin, you were like, "Cool, I've mined some Bitcoin".  Well, now what do you do?  First, you've got to find a friend who's geeky enough, convince them to set up a Bitcoin client, and then you can send them some Bitcoins; which is doubly useless because it's completely worthless and why did you even bother.  So, there was this early stage when it was basically -- it wasn't anything. 

So, the phase 1 was like, Bitcoin is completely a developer toy with these grand fantasies that maybe one day, it will actually be worth something and it will become an internet money.  But, it was a protocol; it was a breakthrough in computer science that you could do this, distribute it, proof of work, how cool code is that, nice.  It was a step forwards in the evolution of this peer-to-peer cash idea, right?  Okay, great.  That was phase 1.

And then there's this phase 2, and we're in phase 2 now.  Phase 2 is -- so, the original was like the free money phase and now we're in Satoshi's free offer.  The network's still being subsidised, money's still being poured in by the protocol, and that's the main source of funding for miners, the infrastructure; it's all being paid for from the free airdrop that happens in every block reward.  That's where we are now. 

So, that's fun; it has kind of become real money; you can send it; it's actually kind of useful and things; but, it's heavily subsidised.  But, yeah, there are fees in it, but they're trivial; you can pretty much ignore them, but still not completely ignore them.  In the first phase, you could completely ignore them.  You could send Bitcoin for free, whatever else, and you didn't have to worry about double spends because, what, like is there one other guy using Bitcoin going to cheat you?  Fuck that, no.  And if they did, it wasn't worth anything anyway, so who cares?

So, we're in this second phase where, yeah, we're kind of figuring things out and there are a few things.  But, there's a third phase of Bitcoin and we're not there yet and we don't quite know when we're going to get there; probably 10 years, maybe 20 years.  Every time the price doubles, it pushes back this date by four years.  But, sometime, we have to pay for it. 

It was very, very clear; one day, this safety infrastructure that we've built, this securing of the network, is going to be paid for; not by a wealth tax, or existing holders, but by people who transact.  Now, this was a conscious and deliberate decision on Satoshi's part to go, "No, we're not going to have an inflation tax and we're not going to do a broad-based wealth tax.  We are literally going to charge people to use the network, and that is how we're going to fund it".

Now, whether you think that's a good idea or not, whether economists will say, "Oh, 1% inflation's definitely better", whatever else, he kind of had to pick a number because, being decentralised, there's no one to choose.  You couldn't go, "Well, we'll have a board of directors", whatever.  If you could do that, you could just get this hold on the money, right, there'd be ways.  So, he had to pick a number and he chose zero eventually.

And, that means we're going to have a third phase.  This third phase is going to be the paying phase; pay for the piper, right?  The free offer runs out.  The free money phase that's at the moment; this is not the natural state of Bitcoin.  And this is written there; you know exactly what's going to happen.  And, hell, I read the whitepaper, I'm a dev, I looked at it, and you can see this is what Satoshi's said; this is what's going to happen.

So, when the block size debate came about, I think the devs were kind of blindsided, but it was there all along; we were going to make this transition, man.  And, this is not even the final one.  It's going to get really hard down here.  It's either going to succeed or fail at this point because if it's worth it, people will pay for it and if it's not, they won't and it will all fail.  And we don't know what will happen there.  You could make guesses, whatever, but we haven't done it yet, so we don't know.

That's pretty scary, and it's almost certainly going to lead to civil war in the Bitcoin ecosystem.  That will make the block size wars look trivial.

Peter McCormack: Well, okay.  It's a fair point because attempts to debate it, there's a bit of pushback.  There's a bit of pushback on attempts to debate it because, you know what it's like, the question is, what happens if there are not enough rewards, there are not enough people paying to use the network to provide enough security for the miners?

Rusty Russell: Yeah, that is a very good question.

Peter McCormack: Literally, what happens?!

Rusty Russell: Right, okay.  And, there are the absolutes who are like, "No, this is what we agreed to.  Fuck you, we'll go down with the ship".  There are the ones who are like, "Well, okay, if it was bad enough, we would consider, hey, that was a great idea, it was an ideal, it was a good idea, but we're not going to go there".  And then there are the people who are just like, "Well, obviously we have to do this"; the miners.

So, let's look at three groups: the miners, the people doing transactions and the hodlers.  The hodlers are going to be like, "Fuck you.  We were sold on this idea of 21 million.  Everyone knows how many Bitcoin there are", and personally I believe this is what, for me, makes it a trivial decision.  Fundamentally, a lot of people bought in on this idea of 21 million coins, and to do anything else is bait-and-switch, or pivot, as they would say as a startup.

Peter McCormack: Agreed.

Rusty Russell: It's bait-and-switch.  It's like, our clients do this all the time, "Oh, we're going to do this and then we'll change".  You cannot change it, right.  Now, "cannot" is a big word.  What if things were so terrible that it was obvious you had to change?  But, the problem is, it will never be clear how terrible it is.  It will never be so obviously damaging, "Oh, okay, they're not paying as much as we want; maybe the security's not as high as we want", but it's unlikely to ever fall to zero.

And the miners, of course -- so, the hodlers are there going, "No, this was the deal".  The miners will be, "Free money?  Fuck, yeah".  Absolutely, they will back it.  They will absolutely back it.  Rational miners will back inflation, because the money goes straight to them; fucking A.  And the big transacting companies will join with the miners, right, because they're the ones paying the fees. 

On behalf of their users, their exchanges, or whatever, if they're still as dominant on the network as they are today, they'll be going, "We are bleeding billions of dollars to secure the network.  Fuck you, people, you should be paying for it.  You people out there just holding your coins, we need inflation, man, so you can pay for it".

So, this causes civil war at this point, and it's not very clear to me who will win.  It will be a much more polished affair than the last one.  You'll have economists come in and say, "Look, inflation is good; it's necessary; here are the reasons".  There'll be very refined arguments as to why we obviously had to.  Satoshi Nakamoto, whoever he was, huge respect, obviously wasn't an economist, didn't understand, you know; all this will get rolled out.  There will be a lot of push, and very polished push.

The miners will be ready to go; they'll be on it.  That's absolute simplification, right.  Some of the miners are big hodlers as well.  Some of the miners will be, "Well, actually, maybe it hurts the competition more than it hurts me", so you know, there is a range.  And, this is where actually I get the whole Bitcoin toxicity thing, right.  If you say, "No, this is my hard fucking line and I'm going down with the ship", this is a pretty good line to hold; because at the end of the day, you're going, "Hold on, if Satoshi Nakamoto still has more than 40 coins …".

We definitely know he has 40 Bitcoin because he sent 10 to -- he made a blockline and sent 10 to Hal.  So, Satoshi has 40 Bitcoin.  I don't think you can convince me that there is an ethical argument to take those 40 Bitcoin, to erode those 40 Bitcoin from Satoshi, which an inflation would do.  It's a broad-based axe.  And so, if the experiment fails, sorry, that's one thing; but, deliberately taking those coins from an anonymous founder is a betrayal of trust.  So, I don't think we have a choice.

Peter McCormack: Of course.

Rusty Russell: I don't think we have a choice.  I don't think we can flip and become a scam.  I think, however worried we are, I think we have to keep going forward, try to come up with something else.  I do not think that we can introduce inflation.

Peter McCormack: No, I'm with you 100%.

Rusty Russell: People will try man. 

Peter McCormack: Yeah, someone will.  Someone will fork it, someone will do Bitcoin inflation, whatever.  That will happen, almost naturally; and almost certainly, it will go the direction of Bitcoin cash?

Rusty Russell: I don't know.  Okay, so there are several pressures if you look at the big exchanges, right.  One is, this is coming up at some point and I don't know when it will be.  When will we cross that threshold; when will they start going, "Well, shit, this is costing us too much"; I don't know.  Because, you know, miners go up and down.  At some point, miners will be bleeding, they'll be hurting.  However much they might be like, "We hate the idea, but fuck, we're going to close the doors; we really need this"; if things come together at the right time, there will be a big push with a lot of big players jumping onboard on that.

Now, maybe the first war has taught them enough, but maybe we'll have forgotten by then.  Maybe it will be 15 years' time and, you know, it will be old memories and, "No, this time it will be different", whatever, and they will push for it.  I don't know; I honestly don't know what will happen.

But, the other thing of course that worries the big exchanges is privacy.  What if we actually become more fund driven?  What if we get Taproot and signature aggregation, the idea that we can share one's signatures between a whole heap of things?  So, you and I, Peter, we'll just, you know, our machines will connect and we'll privately produce this kind of CoinJoin and we'll do it because it's cheaper. 

It's cheaper, so fucking everyone will be doing it; everyone's CoinJoining and suddenly the exchanges are like, "What the fuck?  We thought we had a handle on Bitcoin and now, hey, you know what?  Let's fork the coin.  But, we want to do it for economic reasons, we want the inflation rate, we want the inflation, let's fucking fork it and take out -- not take out; simplify the ways some of those nasty privacy concerns.

"Frankly, look, Bitcoin's price is down, man, because of regulation that's required Coinbase to do this Bitcoin.  But, if only it could remove some of these drug dealer and child pornography, they're the only people who use this privacy feature, and we kind of wound it back to a place we were comfortable with, then it will be good for everyone, man.  Number Go Up".

Number Go Up, Peter, and that's what we're here for, right?  Number Go Up.  And, that's the problem with the trade; Number Go Up.

Peter McCormack: But, is there any kind of idea around when the subsidy reduces, like how many halvings away do you think -- do you think we're like two or three halvings away from that?

Rusty Russell: Yeah, so like ten years, another three halvings.  But, you know, how secure does the network -- how much do we have to pay for the network?  We don't know the answer to that, we really don't.  There are other things that can threaten the network, but the obvious one is, "Hey, if I can basically spend $100 million and overwhelm the Bitcoin network, we're kind of fucked", because presumably you could make more money fighting it than joining it, kind of thing.

There is some level that's too low, but where is it?  You'll find out after we've crossed it.  After somebody fucks over Bitcoin by buying a shit load of second-hand mining equipment and doing it at 51% of tax and it destroys, whatever, then, "Okay, right, now we know it's too low".  But, until that moment, you can never tell.

And, this is what we saw with altcoins, right.  Until it had been attacked, how did you know they were insecure?  Maybe nobody cares enough yet and when they do …  So, it's going to be really hard.  Maybe, fuck it, maybe you get a 51% attack.  Maybe the miners will force a flag operation, they do a 51% attack, they go, "This is why we need to pay our miners more!"  I don't know, maybe we get to that point.

There are really hopeful signs that that won't happen.  Miners will still fucking struggle, because miners' rule in life is to struggle.  It's a cutthroat business.  It's horrible, man.  You order all these machines, because the price is up; so does everyone else in the fucking world, right.  They all come online as the price dips, so they definitely go up, but now you've got them so you've got to run them, right, unless they're really, really in the shit; somebody's going to run them.

So, the price leads and then 6-12 months later after the action's over, then the miners will come online.  It's a horrible business to be in, and disclaimer of course, Blockstream is in that business.

Peter McCormack: Dude, you're talking about 2018 for me.  I gave it a go and lost half a million dollars.  It was brutal.  Do you know what I should have done?  I should have flipped the S9.  I bought the S9s, I should have flipped them immediately.  I'd buy the machines for 2,000, whatever.  People were buying -- because I had them, because you couldn't get any; people were buying them for 5,000.  I should have flipped those fuckers, man.  Oh, that was painful.

Rusty Russell: But, you know you're not the only one.  Obviously, everyone else was going, "No, these things are worth …", whatever.  In retrospect, yeah.  Look, like anything, if you'd known, if you knew the future, you could make money anywhere, right?

So, look, the future's going to be interesting; I know that much.  And, there have been moments where the block reward from fees has been significant, so it's not completely out there that this wouldn't happen.  But, there are a whole heap of business models that no longer make sense.  Like, no, you realise that if your job is giving free transactions to other people and paying for it, there's a shelf life on that; that's going to peter out.  And, there are good and bad ways for companies to work around that.

One is just to bring everything in-house.  Well, you know, you can trade Bitcoin here, but you can't remover them, because that costs money.  Trade Bitcoin, right?  "We have 22 million Bitcoin you can trade, man".  So, it could go either way.  I think the devs are cautiously optimistic that this thing will work, but hell, you know, again, this is part of the -- it's not an unreasonable thing to worry about.  People can handle whether it is or isn't, but I don't think anyone's come up with an iron-clad proof, and the iron-clad proof will be, when we have managed it.

Given that that is ten years away, again, we're hitting -- talk to me when Bitcoin's 25 years old, and then I will have a much better story about competing with gold.

Peter McCormack: Well, at least we get to see it every four years, we get to go through that cycle and see the impact of the drop in the block reward.  And you know what, this halving, hash rate's going up?

Rusty Russell: Yeah.

Peter McCormack: Hash rate is going up, so at least we get to see it.

Rusty Russell: I do not understand why.  There are two things I don't know about it: marketing and all that; actually, there's a whole shit load of things.  Other than devving, I know nothing about anything.  So, I have no idea why, right, what's happening.  Is it this lag; is it this irrational exuberance?  It was like, "Hey, man, mining's going to be the next big thing", and people jumped into it. 

Historically, it's always been better just to buy on the market than it has been to mine, if you're looking at returns; so, I don't quite understand what the addiction is with mining.  But, I like it, right?  Blockstream went into mining.  There was a big argument saying, "Hey, you know what?  Every company should have a little bit of hash rate.  Everyone in this space should be holding a little bit, because it gets a lot harder to build a cartel when you've got these lots and lots of little players, right.  So, for all kinds of different reasons, they're not going to gather together and form one big group.

So, I think what's great is if every company out there has, and every big player has just that little bit of hash power on the side.  It's particularly cool because if you never quite know how much hash rate is out there, it becomes really hard to attack, because you don't know what number you need to hit, right?  "Oh, it's about this much hash rate", but what if there are idle hash rates in there? 

What if people are underpowering their mines to save power, because it's not quite economical; but if Bitcoin were under attack, they were going to ramp it up?  Suddenly, you're facing 50% more hash power than you expected.  That would be a pretty cool scenario, because that uncertainty makes it harder for an attacker.

So, people are doing pretty innovative things with mining off waste gases and stuff like this.  It's like, hey, more diversity in the ecosystem is critical.  Now, obviously, the more we have of that, the better.  But, it's really fucking hard to be decentralised; it's really fucking hard.  You have to have -- you're not decentralised if a handful of players control most of the currency, because it doesn't matter what you do, they could dump it, they could fork it, whatever else.  And sure, you don't have to; you could run your own node.  But, if you have no one to trade with, you're wiped out anyway.  If it's no longer serviced as money, you've lost.

So, you can't have too much user concentration.  You can't have too much developer concentration.  If there's only one person who understands the code, well who's reviewing what the fuck they're doing?  And, if they get hit by a bus, even if it turns out they weren't actually trying to scam you which, by the way, they were, but if they get hit by a bus, you're still in the same situation.  Like, "What the fuck?"; someone discovers a vulnerability, but there's no one to report it to and it all goes straight to shit.

So, you need a huge diversity of devs; you need them all watching each other; you need a huge amount of -- one of the most important adverts in Bitcoin recently has been trying to bring people up on being a Bitcoin core dev.  If you're a developer, come along, figure out how it works so you can find out mistakes, bring your ideas and just there should be as many people as possible watching this. 

And, people come up through the ranks, and re-reading the documentation and checking stuff and stuff like this.  Do all that stuff; that's really important.  And then the mining side; everyone is, "Mining is obvious; 51% attack is a deep problem".  But then, there were mining pools and shit.  Well, mining pools actually get to choose which transaction, so yeah, we haven't got 51% of miners; we've got mining pools that control half of it, right, and they've been dicks in the past.

Let's just say that there are some people in this ecosystem who are ethically flexible, I would say.  And, part of that is that Bitcoin, for a long time, wasn't considered money.  It's kind of like play money; it's a token.  The same reason that casinos give you chips, because they don't feel like real money.  And so to some extent, I think, scamming people from this thing were like, "We're not taking real money".  But, people got scammed.  They were like, "Well, it's not real money". 

That's why people send one ace to get two, and whatever, because they don't think of it as money.  You wouldn't do that with money.  You're not going to send someone $100 in the mail and expect to get $200 back; you're just not going to, because money actually matters.  But, if you think of it as play tokens still, well you know …

I mean, there's this idiot who went up 1 million and back down again, right, because it's not real money.

Peter McCormack: Fuck off!  But you know, you're right and you can go fuck yourself, but you are right as well.  You are, you're absolutely right, I did that because it didn't seem real, and it felt like it would go up more and more.  Just when I look back …

Rusty Russell: Look, I cannot throw stones.  As I said, I got Goxd.

So, coming back to, Shit Bitcoiners Say, this irrational exuberance is where I'm like, "You know what; sometimes, everyone, calm the fuck down.  This stuff is not promised to you.  Number will not always go up.  It is not guaranteed to hit $100,000, $288,000, whatever fucking number you want.  And even if it does hit $1 million, you wonder what $1 million will be worth at the time".

So, when you think it will stop wars or everything else, just realise that every time, there are side effects that you didn't intend as well.  My latest tweet was literally, "Pierre tweets --", and I want to quote him exactly here, because I wouldn't want to do him a disservice.  That's right, "Bitcoin accumulation might create more wealth than you expect".  And I'm like, "Bitcoin accumulation might lose you more than you expect", because both of these statements are true.

Man, did I shit for mine!  And like, you know, "You should be thinking about get Goxd?

Peter McCormack: Did you?  I'm going to look that up.

Rusty Russell: Oh, yeah, my last tweet.  Look at all these risks.  If you're not -- seriously, you should not be promoting this stuff without telling people, "Hey, by the way, here are your steps.  Don't get screwed on altcoins; don't go into DeFi because it's offering you 3,000% a day interest, or whatever; here are the things to avoid".  And, if you're not hammering that message home, who are you trying to attract?

Peter McCormack: Right, okay, so I've got that tweet open.  So, the first reply is Udi, and Udi's great.  Udi's practical and realistic.  He's a bitcoiner, he thinks shitcoins are shitcoins, but he'll say realistic things like, "Most of these things shouldn't happen to most people.  However, realistically Bitcoin's value might drop over time".  He is right.

Pierre replied, Person of Experience to yours, etc.  Wlad.  There are just so many people on here who've blocked me.  Oh, "Cry, boohoo".  Look, you weren't given that hard a time, or does it get worse down the bottom?  Usually, it's the bottom where you click on the, "See more replies".  They're all the, "Fuck you, wanker!"

Rusty Russell: Some people were like, "Yeah, look, I totally get it".  They're like, "Yeah, you have to be aware of this".  That is the entire point, right.  This is the thing; people are determined to build this Number Go Up, it's all good narrative and I'm like, "Woah.  There are still issues here".  For a dev, the most important thing -- look, I love this stuff.  I want to believe it.  This is what I'm fighting against.

I love the idea that Bitcoin's going to go fucking to the moon, I'm going to be driving more Lambos than I can count, whatever, but as a dev?  I've got to focus on the issues.  The problem is that Bitcoin has things that need fixing.  There's stuff we can do better that we need to do better.  I've got a list as long as my arm of stuff just to work on Lightning, and there are all these Bitcoin improvements that would be great to happen and, hell, it would be easier if it was easier for newbies and, damn, it should be a lot easier to back up a wallet than it is and, scanning QR codes is a pain in the arse; all this stuff.

As a dev, this is the stuff you think about; let's try to fix some stuff.  And this wild hopium of going, "Man, all I've got to do is sit back and hodl and someone's going to build a citadel around me"; I'm like, "Dude, if that's your aim in life, is to basically do nothing and build up this elaborate construction that lets you convince yourself that that is the most valuable thing you can do?  I'm not really interested". 

I like people that want to build stuff, who are actually trying to help and build things; not people who are basically going, "I just have to sit back and Bitcoin's going to go to $1 million".  Well, hey, maybe it will.

Peter McCormack: Yeah, but that's not popular, man.  You've got to join the hype machine.

Rusty Russell: It's only interesting to me if it attracts people who actually want to contribute, build something, or build a business on it, or they start using it, or they find some cool new thing to do with it; that's awesome; that's exciting; that's the shit I want to hear on Twitter.

Just continue trying, through a variance of memes, to try to A/B test and find out the perfect meme to push this, to break into mainstream.  And for most people, "break into mainstream" does not mean a lot of people understand the fundamentals of Bitcoin and start to worry about deflation and all this stuff.  They're not thinking, "Oh, I really wish people had a more nuanced view of the Fed".  That makes you like literally want more people to dump more money into Bitcoin. 

When I talk about Bitcoin, I'm never talking about the price.  And, full disclosure here; Blockstream pay me a bonus in Bitcoin, so I do hold some Bitcoin.  So, Number Go Up is great for me, but it's not what gets me up in the morning; it's not what makes me excited about Bitcoin.  It's about this technology and the fact that we can use it for enhanced privacy and to make some really interesting things.  It's not even the monetary side of it.  It's the fact that we can do things with Bitcoin that we couldn't do before.

And, we can get some stuff back that we used to be able to do with cash.  We can get that back again with Bitcoin, if we get this right.  But, there's still a lot to go; there's still a lot of shit.  We shouldn't have to be explaining xPubs to people, right?  I didn't know what an xPub was two years ago.  It's an obscure bit of wallet software.  And, I've written a wallet, so if people have to know what an xPub is, we've lost.

Peter McCormack: Well, that was my view.  It seemed to upset a few people.  I don't know; I have a way of upsetting a few people.  But, I just like to put pointed questions out there.  But, that one wasn't.  That was just a conversation on Twitter and somebody mentioned xPub and I was, "What was that?", because I'd never heard of it.  I mean, I think I'd heard of it; didn't know what it was. 

And then, we have a week of people shouting, yelling, complaining, "Well, you shouldn't be a Bitcoin podcaster if you don't know what an xPub is".  "No, that's the exact reason I should be a Bitcoin podcaster".  This is the exact reason I should be and the exact reason you aren't, because you're going to go on there and you're going to talk about this shit like everyone knows it and expects it, and you've got no idea that most people don't care, haven't got the skills.

And then, that upsets other people and they're like, "Well, you're anti-intellect".  I'm not anti-intellect; I'm just saying, I know what people are like, I know how humans behave, I was a UX designer, I understand how people are.  But, it just gets into all that stuff, etc.

Rusty Russell: Look, my friend who lost their pass phrase and sold a month later has a PhD; he's not dumb.  And this is the thing; people are not dumb, they're busy.  They have other shit going on.  However smart they are, they're not going to drop everything and go down the rabbit hole before they invest, or figure out exactly how to set up their 28-way multisig, you know, which is where I think services like Casa, which obviously is a sponsor of your podcast, are great. 

Peter McCormack: Well, I do always openly declare and admit they're a sponsor of mine, especially if I'm tweeting about it, because you never know when Shit Bitcoiners Say might …  Actually, do you know what; it's funny.  So, I didn't realise Shit Bitcoiners Say was you at first; I just hadn't made the association with the pictures.  And then, when we agreed we were going to do this, I went through it and I was like, "Ha ha, you've picked on him".  I was like, "Oh, fuck, there I am".

I was like, "Hold on, you've called me out, I have declared this", and I think you had to admit it below!  I think it's the only one where you kind of apologised.  Woohoo!

Rusty Russell: Yeah, absolutely.  Your second tweet, you mentioned it.  I received the first tweet and I'm like, "The fucker needs to know!"  And, this is an issue, right.  So I think, because we're in an "industry", and I use that in finger quotes because I think, you know, there's Bitcoin and there's a whole heap of other shit that wants to be Bitcoin and tries to blur the lines as much as possible.  For me, there's this Bitcoin industry and there's this kind of surrounding industry that's of questionable value.

But, because I think there is so much unethical shit in this, I always, you know, every time I talk about Bitcoin, I stand up and say, "By the way, I own Bitcoin, I have a significant stake in Bitcoin because of a historical accident that Blockstream insisted on paying me in Bitcoin.  Of course, I said, 'No way, keep your funny internet money.  I'm nervous enough going to work for a startup again for the first time in 20 years'".

I joined a startup in 1999 just before the end of the dotcom boom last time.  I was like, "I'm never fucking doing that again; that was the stupidest decision ever".  So, when my wife, and I totally credit her, said, "No, you should do it, go for it.  We can pay off the house eventually.  You can go, run away and join a startup again and leave your perfectly good, solid job and go play with your funny money", and she was absolutely supportive of that, which was amazing.

But they said to me, "What's your risk capital, Rusty, how much of your salary do you want in Bitcoin?" and I'm like, "Woah, crazy internet dudes, no; I'll take your fucking money, thank you; I'll take your dirty USD and I will just spend that on my kids and mortgage!"  And they said, "Look, we have a policy of a minimum".  So, I took the absolute minimum which, in retrospect of course, was the most foolish financial decision I have ever made.  I should have done the opposite and gone, "No, give me all your Bitcoin!"

But either way, I do now hold Bitcoin, and that's great.  It's built into a nice little bonus, you know, it's fantastic.  But, it's important to declare these things; you should declare your interests upfront, because I think there are so many people out there who don't, who are obviously shielding stuff that they have undisclosed interests and they're getting paid to shield and all this shit.  It is completely a Wild West out there.

I think you have to go the other way and be incredibly explicit.  Literally, my employment depends on Bitcoin, my reputation depends on Bitcoin, the last five years I've spent developing Linux, if this Bitcoin things fails, that's blown; I have basically gone shit.  Then I'm a 47-year-old programmer looking for work.  That is not a good picture.  There is rampant ageism in the industry and I'm like, well, okay, old guy who was on the failing technology team; yeah, sure, we'll hire you.  I'd probably get paid slightly more than a janitor if I'm lucky.

So, I'm invested in Bitcoin in a way that --

Peter McCormack: I wouldn't hire you!

Rusty Russell: You see?  That's fair, I'm an arsehole on Twitter; you should never hire me!

Peter McCormack: No, I wouldn't hire you.  I don't want some old dude!

Rusty Russell: Yeah, absolutely.  It's hilarious, because this is the first job I have ever willingly gotten up at 5.30am in the morning to attend for the last five years.  So, the spec calls; we have these spec meetings for Lightning, and they're at 5.30am Adelaide time, which pisses everyone off because daylight saving happens and everyone's like, "Oh, shit".  So, at least Lightning devs know obscure facts about daylight saving time in Australia.  But, I hate fucking getting up in the morning; but, I do it for this; I will do it for Lightning because I love this stuff.  It's so exciting.

I remember Adam Back saying to me once, "You can't sleep because of Bitcoin".  It's like, this stuff can just take over your brain.

Peter McCormack: Dude, it does.

Rusty Russell: Yeah, and it's fascinating and there's all this stuff.  So, I don't consider myself an OG, right, but you get to hang around some of them sometimes, you know, the real OGs.  And, yeah, it's fascinating, the perspective they have and some of the way they discuss things.  There's an informal Blockstream rule, for example, not to speculate on the identity of Satoshi Nakamoto.  And I was like, "Oh, that's a bit -- I wonder why that is; that's kind of gauche?"

But, there are some really good reasons to do it.  One is that you look like a dick.  There's no good way to do it.  So, it's gauche, right.  But secondly, if you pretended to care about privacy technology and stuff, this whole privacy idea that you should have privacy, you probably should put your money where your mouth is and not actually actively speculate on trying to Gox the guy who founded the currency; that's probably not where you should go.

And thirdly it's just, if you realistically spread the idea that someone is Satoshi Nakamoto, you're dropping a whole pile of shit on them.

Peter McCormack: You might get them killed?

Rusty Russell: Yeah, that's right.  I mean, God knows what would happen.  It's just grossly irresponsible.  I feel, among the OGs, there's almost another reason and I think that's because -- maybe I shouldn't say this, I don't know; but, in the back of your mind, you've got to be thinking, "Well, maybe it's one of my friends?"  It's probably not, but maybe.  Maybe I don't want to poke this bear, because maybe it turns out, "Oh, shit, it was that other dude", right?

So, I think some of the OGs are like, "Well, look, actually we don't want to look into this too much, because it could turn out like, 'Wait a minute; I recognise that.  Shit, it was you all along'".  Peter McCormack's Satoshi Nakamoto; fuck!

Peter McCormack: Dude, it was, man.  It was always me, always me all along.  But I agree, the whole speculation is nonsense.  Just get away from it.  I also wrote, I don't write often, but I wrote an article once.  I said, "It doesn't actually matter; he left".  I mean, he might still be in the project with somebody else, but as Satoshi, he's left; he abandoned the project to do something else; he's left it for everyone else; it really pisses me off when people say, "Woah, Satoshi would …".  You don't know what Satoshi would have thought, or what he thinks.  Just shut up.  Be man enough to just stand by your own words and what you think and don't try and use somebody else's.

It's like these interpretations of the whitepaper which, by the way, I think both ways are actually a little bit disingenuous.  So firstly, I think it's disingenuous to say what Roger Ver does to say, "It has to be cash, therefore it has to be like physical money all the time".  I also think it's disingenuous to say it's the complete opposite, because pretty much in the opening paragraph, it talks about using it for online commerce.

If it's talking about using it for online commerce, then it has to be thought of in that way.  I just think, bury it, forget the whitepaper, read it for contextual purposes, but don't use it for any evidence-backed argument.  Make your arguments based on what happens now.  And also, look, things evolve.  Who knows what Satoshi would think of it now?  He might think, "Do you know what, this has evolved to something else and is really cool; it's really cool what it has been".  Or, he might hate it; nobody knows, so shut the fuck up.

Rusty Russell: So, the only caveat to this that I think has relevance, where you can quote the whitepaper without, you know, is that if people today bought in because of stuff they read in the whitepaper, then that has validity.  If people went, "But, I read the whitepaper and it said Bitcoin was this [or] I got involved because it said there would only ever be 21 million; there would be a fixed cap".  It doesn't say 21 million; it says there will be a fixed cap and it will transition to fees.

Then you go, "Okay, cool, that is legitimately something that was a promise made that people bought into, so changing that is a bait-and-switch and we shouldn't do it".

Peter McCormack: I agree with that.

Rusty Russell: This is the thing about Bitcoin; it's kind of finished.  Look, there are refinements and stuff, but it basically is going to be the same thing it is in 20 years.  Maybe we get some privacy tech, maybe we get some cool tweaks, but fundamentally, this is what it is.  Maybe we even change the hashing function, or other technical changes; but basically, it is what it is.

We might get cool new scripting, or whatever else, and we might build other stuff, cool stuff on top for sure that doesn't exist; but fundamentally, you can judge it based on what it is.  And it will succeed or fail on -- he kind of presented this, his paper, or his implementation, and that's it.  And it's been tweaked since then, but there's been no massive remodel.

The shift has been in the world.  Obviously, we've gone from stage 1 to stage 2, we're going to stage 3; but, it's been this kind of constant and so you can evaluate it, which is kind of nice.  You can look at it and go, "Well, maybe it will be slightly better".  And, I'm a big blocker, right.  I think we're going to have to agree some block size at some point.

Peter McCormack: What?!  Dude!  Explain your thesis on this.  You're a long-term big blocker; or you think right now, you think we should do something, because I think there's a difference?  There's, I believe right now, or like Roger Ver, this needs to be cash, we need lower fees; there's that kind of big blocker.  Or, there's a big blocker that says, "Look, I expect that some point in the next 10, 15 years, we might need an increase in the block size" because I think, I could be wrong, but I even think someone like Pierre has said, at some point he thinks that needs to happen.  They're two different mindsets.

Rusty Russell: Yeah, so okay, there's one thing -- yes, I think in the long term, we have to agree some block size somehow.  We had a bump with SegWit; we kind of put some stuff into an appendix and we said the classic thing like when you're a college student and you've got to write 1,000 words and you're like, "Shit, I can't fit it all"; you put it in an appendix.  That is exactly what SegWit is; we can chuck this stuff in an appendix.

That trick only really works once, and there's a limit on how much, you know, like okay, you only have 4,000 words in the appendix; that was very simple.  Now, we could add another appendix and put stuff in, but the obvious stuff is already there.  We could rip some more stuff out, or we could do some dodgy shit, but basically at this point, you want more room; we kind of need a hard fork, right.

So, if we want more room, and I think we will want more room, I think things are improving to the point where we can probably do a modest increase over time.  And the thing is, if we increase, we can always decrease, we can always have mechanisms to drop it, because that's compatible.  But, we can't increase without a hard fork. 

Now, we've never had a hard fork before; this is the other thing.  It's going to take years, man.  Everyone has to upgrade, and I mean everyone.  That's a five-year process.  You have to first, everyone has to talk about it; we have to figure out what are our options; decide on our options; implement it; see if everyone's got buy-in; and move in these baby steps, "Okay, so I think everyone agrees on this.  Okay, now we can deploy it; now we can look it; now it's going to kick in", and then, now the clock's ticking and it's committed and in two years' time, everyone had better upgrade their software.

This is a long fucking process and what annoys me about the block size debate is it poisoned the well for this.  You can't have this debate without getting really emotive about, "Oh, but you're trying to …".  I'm like, "No.  If we're going to do this, it's going to take a long time; it has to be done really carefully.  We need numbers".  What is happening to global internet rates?  And the numbers on that are all shit; I've tried to do it and it's like, "Er, what percentage per year; what can you count on in the future?"

But, what are the other critical parameters?  Bigger block size, then the more shit you've got to remember because the more stuff you can jam in there.  And, yeah, there are tricks that might be happening with UTREEXO and other stuff that maybe gets around that.  There's a lot of stuff that has to be decided before we even come up with a number.

And then we come up with a number, okay, we think this reasonable; and then you get everyone to agree on the number; and then, you know …  This is a big, long process and we can't start it until the wounds have healed from the whole, "No fucking way.  You can't enlarge blocks, you big blocker!" whatever.  We're still not there yet.  We can't have a civilised discussion, it seems.

Peter McCormack: Well, there are a couple of points I'd want to make on that.  If you accept that at some point you have to raise the block size, I think you're accepting the fact that you're always going to be looking at raising the block size.  So, you might have to raise it in ten years.  But then potentially, you might have to do it again in another decade.  You're shaking your head, but potentially you might.  Oh, you're thinking put in a way for it to linear growth?

Rusty Russell: Yeah.  You've got to have some formula and we get to do this once.  Now, I'm sympathetic with the idea that, no, fuck it, it's too dangerous to change any of the rules in Bitcoin and we should be headed towards a world where it doesn't fucking -- no soft forks, no nothing; it never changes.

Now, we want to delay it as long as possible, because there's cool stuff we can do.  But, at some point, it becomes too dangerous.  At some point, you go, "No, it's too big, it's too important".  It will get too political, because we're humans, and we're not going to be able to change it.  So, if we can't change it in the next ten years, maybe we can't change it, maybe we're stuck with it.

So, there is a window on the other side where it's too long.  And, don't try doing it in the middle of the civil war, by the way; don't try doing it in the middle of the whole -- you know, at the same time?  That would suck too.

Peter McCormack: But, is there a risk of a minor bait-and-switch sits there on board, the date hits, everyone upgrades, but I don't know, a miner carries on mining the old chain, ends up solving a bunch of blocks, and then a bunch of people are like, "Oh, shit, I want to stay on the old chain"?  That, to me, sounds like one of the biggest risks.

Rusty Russell: Totally, yeah.  And, that's why you need such a long -- you need everyone in the universe to know this is happening.  You really need five years.  It's going to take …  Okay, even once you've decided everything, the structure, etc, it's all deployed and everything else, then this timer starts ticking.  All right, now, it's got to be two years.  You can download any software from today; for the next two years it will be compatible.  Anything older than that will get forked off.  It will literally take at least that long.

It will have to be literally, if you didn't do anything, you'd probably upgrade the last two years, so fuck, you're real good.  But the thing is, there will be a fork.  And this is the one thing we learned from Ethereum, is that if there can be a fork, there will be a fork.  Even if there isn't actually any good reason to fork, the exchanges make a shit load of money on forks; so, they will have a fork; they'll keep the old fork alive.

If there's money to be made here, man, there will be a consortium who will continue the original fork, not for any kind of, "We're looking at bla bla …", whatever reasons, or however they'll spin it, but simply because forks mean trade, right, and trade means money for exchanges; they don't care who wins and who loses.   So, there is actually a whole ecosystem who are incentivised to promote a fork.

So, even if it were completely consensual and basically, the only people who didn't upgrade were that one guy who forgot and has his machine blocked in a basement for two years and he gets forked off the network, or whatever; even so.  Because originally, there was this idea that we could make the old fork do it in such a convoluted way that the old fork would never have any transactions in it anymore, so you couldn't accidentally be left behind.  But I think these days, we've accepted that there will be people who want to fork and so, you have to let them.

If you didn't think anyone wanted to be on the old fork --

Peter McCormack: And, you can kill off the old chain?

Rusty Russell: Well, if you were convinced that nobody actually -- the only people on the old fork were there accidentally, then there's an ethical thing to say, yeah, we should nuke the old fork; make it so that that can never be continued, in some way.  I don't think you can make that argument now.

There will be people, you may disagree with their reasons, but they will want to fork the coin, they'll want to be on the old fork so they can trade and all that stuff.  So therefore, you have to let them; you cannot nuke the old one.  This is actually, one of the core devs made this argument, and I think it's valid; we've learned that. 

Originally, people were leaning towards this whole idea of nuking the old one so it was unusable, so if you were left there by accident, you wouldn't see blocks being made with any transactions.  It would look like empty blocks.  But, I don't think you can do that anymore, because I think it's very clear that there will be people who actually want to be on the fork, and who are you to say that they can't do it.  So, we won't be doing it that way.

But, yeah, these are the kinds of things that need to be discussed calmly and rationally like adult human beings, and we're just not there yet; we're still hurting.

Peter McCormack: Well, you can even have it as a calm conversation initially, but if you ever get to the point where it looks like it might happen and there's people that disagree, it won't be calm; it will be war again!  So, I don't think we'll ever see a hard fork, unless one out of necessity, because of some, I don't know, some unique problem within the protocol.  But, I'm not a dev; I just don't see a hard fork coming.

If it does happen, I see two chains, and which is which?  And it becomes that whole, you know, like the privacy issue.  That could become another civil war, but topic for another day, man.  Look, we've rattled through two hours here without even trying.

Rusty Russell: Wow!

Peter McCormack: Good effort, man.

Rusty Russell: And we didn't even talk anything useful.  I think it was all mainly shit.  I mean calm, nuanced, intellectual discussion between two people who have no idea what they're talking about!

Peter McCormack: Shit Bitcoiners Say, man!

Rusty Russell: Absolutely.

Peter McCormack: Well listen, Rusty, I do want to say thank you.  People won't know that privately, you've been messaging me for quite a long time.  I know you've followed the show for a long time, bits of advice here or there, so I do want to say thanks for that; that's really appreciated.  And sadly, it's taken this long to get you on.

I did want to do it in person, because I used to do all of mine in person.  I've never been to Australia and I thought that's where it would happen.  But, here we are in lockdown world and that's the way we had to do it, but look, thanks.

Rusty Russell: Yeah.  When we get to the other side of this, absolutely you need to come and visit.  It will be fantastic and we'll do this in person with beer, because that's how I think the fuzzy discussions about Bitcoin, I prefer to be drunk, or at least slightly; somewhere there, right?  With a beer in hand, it's always just better! 

You can follow me on Twitter, you can follow me @rusty_twit, you can google me.  I'm kind of all over the place; I work for Blockstream on Lightning.  And, you can also follow @SayBitcoiners, which is Shit Bitcoiners Say, but that's only really if you feel like you need some kind of insulin shot against the straight glucose that you're being drip-fed from crypto Twitter about how Bitcoin is going straight to the citadel, or whatever the fuck it's talking about!

Peter McCormack: Wicked, man.  Listen, glad to do this, love talking to you, this is a great episode, man.  Stay in touch and good luck with everything, bro.

Rusty Russell: You too. Thanks, Peter.