WBD283 Audio Transcription

Bitcoin Vs Altcoins with Dan Held & Erik Voorhees

Interview date: Tuesday 1st December

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

In this interview, I talk to Dan Held, the Director of Business Development at Kraken and Erik Voorhees, the founder and CEO of ShapeShift. Dan and Erik debate Bitcoin vs altcoins, DeFi, decentralisation and security.

“Bitcoin has been forged in an environment of hostility, from the very beginning. It is an explicitly counter-cultural, transformative technology, which if successful, will change much of how the earth works and is going to have a gazillion enemies, 100%. Zcash and Ethereum are not enemies of Bitcoin.”

— Erik Voorhees

Interview Transcription

Peter McCormack: Right, Dan, Erik, good to have you both back on the podcast.  It's been a while since you've been on, Erik; Dan's been on more recently, so I'll say hello to you first.  How are you, Erik?

Erik Voorhees: I'm very good.  Thanks for having me back on; it's been too long. 

Peter McCormack: Yeah, well you're always welcome, you know that.  Dan, my good friend, I haven't seen you in ages, are you well?

Dan Held: It's been too long, this COVID and not being able to go to Bitcoin conferences; it's driving me a little crazy.

Peter McCormack: Yeah, I know.  You know how much I travel normally and try to get over to America every month or two and I think it's February the last time I was over, so a long time for me.  Before we start, did either of you just watch that crazy-arse press conference with Sidney, what's her name, wow, and Rudy Giuliani?

Erik Voorhees: No, what was it?

Dan Held: No?

Peter McCormack: The claims of massive fraud against the American people, using machines from Venezuela, which enabled fraud to be committed there, by people who are friends with Chávez; this election's been stolen from the American people; and, they are patriots and they are going to bring justice to America.  I can't repeat exactly what they said, because I don't remember, but it was kind of crazy, man. 

I'll start with you, Erik.  How are you feeling about it all at the moment, because it's kind of crazy times, obviously it's a very contested election with two sides who equally believe they've won, and it looks a lot more messy than the Al Gore/Bush situation?

Erik Voorhees: I'm just really glad that I don't give a shit who won!  When you see them as diametric opposites and one is good and valorous and the other is the epitome of evil, I can imagine this being really stressful and both sides think the other is evil and it's like the end of the world.  But, when you actually step back from politics and realise that they're actually this far off from each other, and they differ more in appearance and mannerism than they do in actual policy, it's kind of relieving.

So, I don't care too much and when people say the election was stolen, I don't really care, because most people don't vote anyway and I think the whole thing's a sham.  So, in some sense, you just kind of watch it from afar, and it's kind of the same way with the banking system, where I used to care a lot more about it; now I feel distant and safe from that nonsense.

Dan Held: Yeah, I think to extrapolate on that, when people go, "Oh, who are you voting for; which side do you hope wins?" and I go, "As a libertarian, I'm equally disappointed with whoever wins".

Erik Voorhees: That's a very kind way to put it!

Peter McCormack: Well, I know both of your feelings; Dan, from having spent time with you; Erik, from a couple of interviews but, Erik, also from hearing your cameo performance in Bitcoin Billionaires when I was out jogging during the last lockdown.  I'm guessing you've read it or heard it?

Erik Voorhees: I've read parts of it; I have not actually read the whole thing.

Peter McCormack: Did you download it and do an Erik search and read all your bits?!

Erik Voorhees: No.  I'm a little worried if I read the whole thing, I will get mad about things that weren't accurate.  And, on some level, it doesn't matter, so I don't want to worry too much about it.

Peter McCormack: Well, I feel like from the time I've known you and spent with you, that it represented you as I know you.  So, I think it was pretty fair.

Erik Voorhees: Yeah.  I'm guessing it was the things that were omitted from that book which are more interesting.

Peter McCormack: You can tell me at the next round table; we'll cover it there.

Erik Voorhees: Yeah.  I do want to say that I think the Winklevoss brothers, I think they deserve a fair amount of credit because, when they got involved in Bitcoin, it was certainly long before anyone reputable was doing that.  They not only stuck with it after that first bubble back then and after BitInstant fell apart, but they stuck with it through multiple bubbles and continued to cheerlead it and support it through all the ups and downs, and they had a lot of reputational damage risk that they could have taken and they stuck through it.  So, they deserve a lot of credit for that.

Dan Held: Yeah, I agree.  I remember the San José 2013 Conference; Erik, you might remember that one?  You know, we had just come off the March 2013 bubble when it went from $10 to $260 back down to $100 and the Winklevosses were, I think, the keynote speakers.  But, it was just a little bit surreal because it was just this hobbyist sort of movement that had now become something more tangible.

There were hundreds of people in a big conference area and there were famous people that I knew their name.  The Winklevosses were the first really well-known people to get into Bitcoin that were public.

Erik Voorhees: Yeah.  That conference was definitely the one where I felt like, oh, this is turning from little Mitch Clay thing into something real, and that was still so many years ago.

Peter McCormack: Well, I think this year's really interesting.  I just did an interview with Brandon Quittem talking about The Fourth Turning, talking about how Bitcoin's relevant, and I was trying to explain that what's been happening over the last few months feels, for me, very, very different from 2017.

I didn't really properly experience 2013; I didn't know what was going on; I was just aware of Bitcoin as something you could buy as a CFD, which I did and made a lot of money and spent a little bit of Bitcoin on the Silk Road, but I wasn't in the Bitcoin world.  But, what feels really different between now and 2017 is that, it still felt a little bit like something that could be banned, something that could fail, a little bit rock and roll; but, this last few months, it's felt like something that now is just a genuine, credible investment, a credible part of the market.  Anybody who just dismisses it with the same old tired arguments, they're almost getting laughed out the building.

It was quite interesting seeing Ray Dalio switch this week.  We had Dan, you, having that chat with that Mexican billionaire who's got 10% liquid assets; we've had what Michael Saylor's done, what Square's done.  It's a very serious piece of business now.  How do you feel about it now?

Dan Held: I've been in this space where I first bought my coins in 2012 and built my first product in 2013.  I've waited eight years to see this moment.  My original investment thesis was that, "Bitcoin is Gold 2.0", and it has largely fulfilled that expectation.  Now, that is the most resounding, loudest narrative in this space and on this bull run, we not only have great structural integrity of a trading infrastructure, in terms of different financial instruments and liquidity; you also have the validation and buy-in and reduction of career risk by legends like Paul Tudor Jones and then companies as well, from Michael Saylor and MicroStrategy and Square with Jack Dorsey.  This has de-risked the space hugely.

In addition, you've got one of the biggest macro events in 100 years, I would say like world wars and pandemics are on the scale of very, very, you know, these are sort of once-in-a-hundred-years sort of events.  Bitcoin is built for this moment, so the store of value narrative, combined with that narrative being propagated by businesses and institutional traders, and Bitcoin largely executing upon that path, I couldn't imagine it being this good of a setup.

Back when, in 2012 and 2013, my first wallet was Bitcoin-QT, it was the full node, it was the Bitcoin Core software essentially and you had to run a full node; so I was like, why does this have to sink every time I open it up, because I didn't understand how it all worked just yet.  And, to see that come from there all the way through here, where you can buy it with PayPal, Robinhood, Square is incredible.

Erik Voorhees: Yeah, the PayPal achievement is really awesome.  Their horrible descriptions of the four coins aside, them putting it, not just as something supported in that platform, but pretty front and centre when you log in to PayPal now, it's magical and awesome.  We like to use this phrase of, "First they ignore you, then they laugh at you, then they fight you and then you win".  I think many people think that the fighting was years ago, that we already passed that part, and I don't think we arrived at that part yet.  I think we're done with the laughing at part, and that's why you're seeing all these very reputable, credible people feeling comfortable stepping into it, because it's respectable if still kind of niche.

But, the real challenge comes when fiat currencies start suffering in the context of Bitcoin's strength; that's when the fighting actually happens, and we haven't got to that point yet, so we need to stay humble there.

Peter McCormack: That's a really interesting point, because this came up in my conversation with Brandon as well, but also with Nik Bhatia yesterday; we had a long conversation.  I said, one of the interesting things is going to be that this move to CBDCs is kind of interesting for a number of reasons, but CBDCs are going to condition a number of people into using a digital currency in a wallet in a similar way to that you would use Bitcoin.

But ultimately, what they're going to see is that every currency will then be priced against Bitcoin and you will very, very quickly see which are being debased.  So, it kind of forces a monetary responsibility from central banks; else people will just exit into Bitcoin and that's when the real fight can start?

Dan Held: There are a couple of things to unpack here.  One is that I agree, central bank digital currencies normalise the idea of digital currencies in people's minds.  Now, central bank digital currencies, to be clear, are an abomination of freedom.  It is total, complete control of the central bank over the economy, business and personal transactions, which is horrible.  This is not an innovation; this is 1984 actually happening.

However, that plus when Libra came out, I was optimistic because I felt that Libra, Facebook's Libra coin, could essentially normalise, or with the name of Facebook behind it, normalise the idea of money that's not from your government, or that money has transformed to this digital version, which then makes the leap to Bitcoin, I think, easier; because, as they see their purchasing power decrease by holding on to that fiat, then they look at Bitcoin and they see the increase in purchasing power as irresistible.

I've had an analogy I've used before with Brandon Quittem around Bitcoin in the final fight.  So, to Erik's point, I don't think that main battle has occurred yet.  Bitcoin has fought several small skirmishes, including a civil war between the Bitcoin Cash community and the Bitcoin community, and so the biggest fight was against state.  And, there's a terminology in science fiction called "The Great Filter Event". 

So, when we look across our solar system and we look out to the galaxy and to the universe, it's very quiet.  We don't hear any radio signals, we don't see Star Wars-esque level civilisations moving energy around and so, it's very quiet out there.  According to the Drake equation, which is an equation where you plug in a bunch of different variables to calculate how many intelligent species there should be, we should see much more activity going on.  So, the hypothesis is that there's a Great Filter event in which every civilisation doesn't get past.  It could be nuclear weapons, it could be antimatter; those are their eventual demise.

For Bitcoin, a Great Filter event, and with every other cryptocurrency, is the fight against states.  Only the ones that are truly decentralised and state censorship resistance will supply that Great Filter event.  So, that's where I totally agree with Erik; the biggest battle's to come.  And I think Bitcoin and very few others might survive that last final battle.

Peter McCormack: Go on, Erik, I'm sure you'll want to jump in there?

Erik Voorhees: No.  I think the reason it's important is because people need to prepare their lives for when that's happening, and that comes down to everything from one's own estate planning and making sure what coins you lose on your yacht are the ones you want to be losing on your yacht; and, it comes down to people mentally preparing for a time when their passion, what they care about and what they fought for for years, becomes vilified in the public to a very intense degree.

This is why a lot of bitcoiners remain anonymous, and thankfully so.  There's a certain degree of protection to that that is very important, and that anonymity will be one of the major weapons we have when this starts happening.

Peter McCormack: Well, listen, this is going to lead us on to where we may spend a lot of time discussing; I'm sure we've got a lot to get through here.  But, you two have had some disagreements in the past.  Also, you and I, Erik, have discussed this; the world of Bitcoin only, or a world of multiple coins; but, it's certainly something between us we've discussed and discussed separately.

Now, I don't normally allow the coverage of altcoins or tokens on the show, because I just want it to be a Bitcoin show.  But at the same time, if we have a bull run coming there are going to be listening to the show who may be, as much as I'm a bitcoiner, may be considering altcoins and tokens as investments.  So, I don't mind discussing it in relevance of two people making their side of the argument; yourself, Erik, who I know is pro-alternative coins; and Dan, I know you're against it.  So, I'm always happy to do that because I think it's useful for people to be able to listen.

One thing I would ask as a starting point though, Erik, because if we're asking people to consider where to put their investments, how does an altcoin differ?  Let's talk about a monetary altcoin, rather than tokens, like utility tokens; let's talk about a monetary altcoin.  How do they really differ from other kind of currencies when you have to consider your investment, do I hold in pounds; do I hold in Bitcoin; do I hold in Litecoin; do I hold in …? 

How do you see that; do you see that as different at all, because I see that as kind of the same risk in that, as Dan mentioned firstly, if they're not fully decentralised, they're available to attack?  But also, if they aren't able to really pick up any liquidity, a lot of them, if you look at a lot of these coins, their Bitcoin chart's usually pretty poor over a long period of time; do you see tokens and monetary coins as different, or do you always just see it as one set of potential investment?

Erik Voorhees: Yeah.  Probably, if there's one thing to take away from all my thoughts on other coins, it's that these things have different attributes.  Each one is different, they have lots of different attributes and on each attribute, you can discuss whether it's better or worse than some other coin on that attribute. 

I think one of the problems that we often get into is to treat things too simply, or to homogenise them into one category and then to dismiss the category.  If you homogenise altcoins into one category, it is very easy to dismiss them, because the majority, and probably the vast majority of them, are total garbage and I'll be the first one to tell you that.  When the majority of something is garbage, I think there is a tendency or mental bias to dismiss the whole lot, but I don't take that position.

Now, if you're asking whether someone who is interested in the monetary argument that Bitcoin is a better money and thus is a great investment, especially relative to fiat, there is no coin that I'm going to hold up and say it is better than Bitcoin for that purpose.  I think hands down, the best form of money in the world today is Bitcoin, period, no exceptions, and I'm happy to defend that point. 

So, if someone is purely interested for that reason, and indeed that's why many of us got involved in this from that monetary angle, and you just want to care about Bitcoin and only hold Bitcoin for that reason, I think there's nothing wrong with that and it's perfectly fine.At the same time, there are some other coins that for various other reasons are really interesting and really profoundly influential.

Peter McCormack: Okay, all right.  As a starting point then, in response to that, Dan, do you want to put forward your case for why -- because I'm going to speak for you, but tell me if I'm wrong; you have a broad assertion that everything that isn't Bitcoin within the space is just set for failure, poor investments, poor use of the technology.  You see where I'm going, but I'll let you put forward your case.

Dan Held: Yeah.  We'll be digging a little bit.  So, I'm a product guy and, by the way, Erik's built some great products in this space.  I've always respected Erik's ability to find and be innovative and craft products.  So, as a fellow product person, this is maybe my appeal to Erik.

When we build products, we solve a problem for our customers and so, when Satoshi went out to build Bitcoin, he built blockchain technology to build Bitcoin, and he set out to solve the problem of storing value.  Essentially, Satoshi, and we could enthuse a long discussion over intent and everything else, but for simplicity's sake, he's there to solve the problem of trust; we must trust our central banks; we must trust our banks; and, Bitcoin removes that measure of trust through its immutable monetary policy and the immutability of transactions.

The way that Satoshi architected the blockchain architecture was to enable those two value props.  Blockchains are very, very bulky and very poor at doing almost everything.  With any sort of specialised equipment, whether it be a shovel or tank, or other piece or tool that you use, it's been built to serve a function.  When people go, "Well, how about distributed databases or whatnot?"; distributed databases have been around for a long time.  Satoshi took existing ideas and put them all together to create Bitcoin and the innovation behind that, I think, is primarily around being a sound money.

Now, other folks said, "Hey, we've got this cool technology that's distributed, really hard to destroy; what if we could use it for other things?"  I've been around for eight years and I've seen 10,000 cryptocurrencies come and go, and I just haven't seen a lot of that materialise.  So, part of this is my product sense of going, "Hey, this is specialised technology built to solve one problem, and then we found empirically that it's very bad at solving these other problems", so it makes me very sceptical when I hear people talk about how this technology might solve a problem that isn't money.

Then, furthermore, when we look at the security model of these chains, what happens is there is a block reward produced.  A block reward is produced to reward the miners for organising transactions properly.  It pays them or incentivises them to behave.  When we look at these chains, most issuant schedules require transaction fees to replace the block subsidy, which is the newly minted coins, over time.  As Bitcoin's issuance schedule levels out at 21 million, after all the Bitcoins have been mined, Bitcoin will only be protected by the transaction fees paid by transactors.

When we look at on-chain data for almost every coin other than Bitcoin and Ethereum, we have nearly no transactional fee volume, which means that their long-term security is objectively poor.  So, in the short term, they might be fine; but, in the long term, they all have structural problems that are very apparent. 

So, those are the two reasons why I'm not very bullish on a coin outside Bitcoin, is the specialisation of blockchain tech and the long-term security implications that we can see today.  Anyone can go look at these metrics of, for example, Coin Metrics; look at total fees generated or total transaction fees generated.  So, those would be my two pushbacks on that narrative.

Peter McCormack: All right.  What do you think of that, Erik?

Erik Voorhees: Okay, so let's talk about one use case, because what astounds me about the maximalist position is that it essentially tries to make a point that is impossible to defend, which is that zero other value exists outside Bitcoin.  So, I feel like to tackle that, one simply needs to demonstrate any value that is outside Bitcoin for the maximalist position to be defeated, and so I want to talk about one use case that all of you guys are familiar with and most people that are listening to this will be familiar with.

Peter McCormack: Is it Dentacoin?

Erik Voorhees: It is not Dentacoin, and we can talk about Dentacoin if you want.

Peter McCormack: I'm just fucking with you!

Erik Voorhees: But, we all know about BlockFi, right?  BlockFi, excellent company, I'm a customer, I use them, great service; I have nothing bad to say about BlockFi.  However, what they're offering is an ability primarily to get a loan of one asset based on crypto collateral, right; primarily Bitcoin collateral, but they support several other assets.  So, you can put up your crypto collateral and you can get fiat, or you can get other coins from them.  It's a great service; everyone should try it out if they haven't.

It is centralised, so you're going through all of the KYC and compliance issues, all of that surveillance that all of us despise; all of the risks of a central entity holding those funds are there, and we all know the reasons why that's a problem; and yet, there's also this whole thing called Ethereum and people building these smart contracts on Ethereum.  In that world, you can do a very similar thing of getting crypto-backed loans, putting in one asset and getting out another, but without any central party being involved; no KYC; no atrocious surveillance done on that; no borders; no territory restrictions; no censorship; no need to worry that when you try to withdraw, it will be blocked for some compliance reason. 

That's built on Ethereum because of the smart contract capabilities of that chain.  And, you don't have to say that that is a better product than BlockFi or not, but to say that there is zero value in the ability of people to access that service without compliance and without restriction and without censorship, I think is an unjustifiable position.

Peter McCormack: Okay.  It's an interesting point.  It's something I've thought about myself and I don't hate Ethereum like I dislike other stupid projects.  Like, I think Filecoin is stupid and I think it's already collapsing under the weight of its stupidity.  Now, I think there are a lot of other stupid projects.

I think of Ethereum differently.  There are clearly a lot of people who like it, who are using it, and getting value from it in their own way.  I don't and I choose not to, but I consider Ethereum as a game and the objective in the game is to leave with as much money as you possibly can before it collapses.  That's my view on it, but I don't get in the whole fight of it's a scam, or whatever; I've got a slightly different view.  What do you think about that, Dan; what do you think about what Erik said there?

Dan Held: Yeah, so as a product person, I look at the product I'm developing, whether that would be a centralised product or a decentralised one, and I look at what problem is it solving.  Most people don't need over-collateralised loans; they typically need loans because they don't have the money.  So, this solves a very niche problem, which is around getting leverage.  A predominant use case of borrowing from BlockFi, using your Bitcoin, or through investing collateral, and the same on these DeFi protocols, was to get leverage.  Or, you could take that money and go do something else with it.

Now, there are a couple of issues with this longer term.  One is a more niche use case which is, yes, you are non-KYC AMLd, but you are also doing this on a transparent ledger that everyone in the whole world can see.  It's not exactly better for privacy; it's actually worse for that.  It is permissionless, agreed, that's very interesting.  However, there are large structural problems with how this works in practice; 12 March was a great example where MakerDAO actually fundamentally broke at a game theoretic level.  I forget exactly how it happened, but the auction essentially auctioned off at a zero-dollar value.

The Ethereum blockchain and every other blockchain has a finite amount of block space, which means transactors, to get in that block, need to bid to get a spot in their block, to be timestamped and then kept in the permanent record.  When 12 March happened, there was a lot of movement with these products, these DeFi products, and they all crowded to get on chain at the same time, which led to some game theoretic fundamental things that fell apart.

So, that's where I think these are fun in practice, where you can do this at a very small scale; but, as soon as it hits any very, very minor scaling, there are all sorts of game theory issues that occur, where front-running concerns can exist; if you need to close or issue your version of a smart contract in order for the game theory to hold up and you can't get into the block because now you have to bid $300 to get into the block; things get really complicated and things fall apart.  So, it works on a hobbyist level, but when you take it and extrapolate it to anything meaningful, it starts to really have some fundamental issues.

Erik Voorhees: Okay, how's this for meaningful?  Uniswap is currently doing more trading volume than Coinbase; a two-year old startup that raised $10 million in a decentralised permissionless way is doing more trading volume than an eight-year old company that's raised $0.5 billion.  You're telling me that that's not meaningful?

Peter McCormack: Well, I would just interject there and say it's impressive; I think the numbers are impressive.  I don't think that actually answers the main point Dan was making, which was with regards to structural issues?

Erik Voorhees: Yeah, so if the argument is there are structural issues, of course; every blockchain has structural issues.  If the argument is those issues are unsolvable and thus the whole thing is going to fall apart, I think empirically so far it has not, and so you need to be a little humble in that position until it does.

Dan Held: But, what happened on 12 March?

Erik Voorhees: I mean, what's the Maker price right now; higher than then?  Dan, what you're taking is a one-day event that was ex-sigma, out of the norm where problems happened.  How many of those have happened in Bitcoin; how many times in Bitcoin's, especially early history were there pretty severe problems that got fixed?  Like, I don't know, creating all the money in the world on the Bitcoin blockchain? 

Bugs are allowed to occur in open-source software and it doesn't mean that the entire project should be thrown out because problems happen.  That's part of the iteration.

Dan Held: There are a couple.  It wasn't a bug; it was a game theoretic problem, which means that they hadn't figured out their game theory properly.  That's actually worse than a bug, because a bug could be fixed with code.  In addition, we're introducing a larger surface area for the argument when we want to get into other parts of this.  There were a couple of different points you had there, so we can dive into each one, or we could choose to -- which part do you want to stick on?

Erik Voorhees: Let's stick back to this BlockFi versus Maker discussion, because I don't dispute that Bitcoin, in a centralised service earning interest in that way, has value and is useful and I'm glad that that exists.  But, I think you do dispute that Ethereum running these smart contracts in a permissionless way, I think you believe there is something fundamentally wrong with that, or even that there's no value to it at all and that just seems so strange to think.

Dan Held: I didn't say that.  What I said is I think that, one, we've seen a break, which all bitcoiners have, essentially, it's the same argument over and over which is that, these things can work for a short period of time in a very small scale; but, as soon as anything starts to occur on them, things start to break and it all fundamentally falls apart, which it did on that date.  That's the whole point; this is supposed to be the world's financial system; it has to operate.

Erik Voorhees: Let's talk about that point.  You're implying that it broke in March and that it remained broken when, what actually happened is crash in price; rebound to normal price; and a price today that's far higher than it was back then; and, billions of dollars of this stuff circulating still.  So, it's not like it fell apart and went away; it demonstrated anti-fragility in that moment.

Dan Held: Kind of, or it represented speculative trading.  As you've seen in crypto, many assets have existed far longer than we thought they might, not based on the raw utility, but based on speculation.

Erik Voorhees: Okay, but the whole point of Maker and Dai is the value of the Dai remains at or just at $1.  Is it true or is it false that Dai today is at or just at $1?

Dan Held: Today it is, but it may not be tomorrow and it wasn't at certain points.

Erik Voorhees: Okay, well for 99.9% of MakerDAO's history, it has remained at that price and you take one day during a crazy market event, where the peg broke for a bit, and you're suggesting that that is proof that the system is unsalvageable?

Peter McCormack: Dan, have we not had the same with Tether; have we not had times where Tether's lost its peg?

Dan Held: Centralised stablecoins are far different than decentralised ones, because centralised ones are based on pure faith versus code and/or game theory.

Peter McCormack: Right, okay, so I'm trying to see where we can steer this.  Okay, so there's potentially a game theoretical issue that would concern you long term, Dan, in that at some point, this could break down catastrophically and a lot of people could lose money.  One of the things that scares me off the DeFi thing I've never really bought into is that, because I've never really dived into it, Erik, but all I've seen is people saying, "I'm yield mining tacos [or] I'm yield mining potatoes" and then --

Dan Held: Yams!

Peter McCormack: Yeah, yams!  And then, a bunch of people show this market is going crazy and then just suddenly slams down, a bunch of people get rekked and then I've seen stories of people -- it feels really amateur compared to Bitcoin.  So, my experience with Bitcoin, when I talk to developers, or someone like Dan, everything's conservative, slow.  I did a long interview recently with John Newbery when he was talking to me about the importance of onboarding the right developers, the review process; it's like, we can't screw this up.

It feels to me a bit like, when I look at the world of DeFi and Ethereum, it's just this crazy, casino-like place, where people can just get rekked.  So, I don't care, and excuse me for this, Dan; I don't care if people want to use Ethereum and actually, if it breaks in the long term, I'm less bothered about that, because not every technology lasts forever.  I have a mobile phone, I don't have a house phone; that kind of thing.

But, what I would want to get people to avoid it for is just it seems that there are so many exit scams or so many ways you can lose your money in really crazy ways, and I don't like that; but, I guess you don't care?!

Erik Voorhees: Do you know what it's very similar to?  It's very similar to the early days of Bitcoin.

Peter McCormack: I knew you were going to say that!

Erik Voorhees: Exactly.  It is amateur, experimental, highly risky, scams everywhere, extremely volatile, tons of people losing tons of money.  It is the same phenomenon.  It is people iterating and inventing new ways of using value on these distributed systems.  Most of them will fail; a lot of them will be scams; a lot of people will get rekked; and, there are risks everywhere, 100%.  But, thank God that this experimentation is happening, because this is how you build a new financial system, instead of just having the banks. 

Bitcoin is the best form of money we've ever created as a species, absolutely; but, a financial system is not just money.  That is the start.  You use that to start building other parts of it, and you do not replace the entire global financial system with something built on free markets and open systems if all you build is money and nothing that uses that money for any other purpose.

Peter McCormack: Hmm.  Dan?

Dan Held: Yeah, so for me, let's look at the tech stack of Ethereum smart contract, who essentially have the trust of how code is running on the Ethereum layer, and there are different scaling solutions on top of that, all sorts of different ways that we can compress economic activity down to a single transaction on layer 1.

Ethereum itself is undergoing a massive, massive change, transition from proof of work to proof of stake.  Also, there is a lot of monetary experimentation going on, which is largely done by developers in a closed room, with maybe a post announcement of what has been decided.  But, we've replaced suits with devs and they're undergoing huge structural changes, and also moving on from, I think it's Eth to Zero; I forget what the terminology is for the most recent.

Erik Voorhees: Phase Zero, ETH2; easy to confuse!

Dan Held: Phase Zero.  That is a really awkward change as well.  So you've got, at the base level, Ethereum is undergoing massive change.  And then, you have these smart contracts that almost nearly every day now, we're seeing one have a flaw that's been exploited.  So, it's skyscrapers on skyscrapers on quicksand.

So, that's where I am equally optimistic as Erik as, I'd like to see new things built; I'm not just a maximalist to be a maximalist.  I mined Primecoin; I bought Litecoin; I didn't start this journey by only using Bitcoin --

Peter McCormack: You shitcoiner!

Dan Held: Yeah, but Primecoin, it went down the journey of wondering, "What if there's something more useful to do with the proof of work?  It can fight prime numbers too".  So, I've gone down these rabbit holes and with Ethereum, I don't see how you can look at that as a company founder and believe that you could actually build a company, or build processes, on top of such an experimental foundation.

I agree the experimentation is cool.  I want these things to occur and to happen.  Can you do it structurally?  I mean, when people look at this transition, a lot of people are very uncertain about how this is going to work with Ethereum; even the Ethereum core developers themselves.  So, I don't see how we can look at that and look at that as a solution for a financial system.  Maybe if everything goes well, I could see that conversation becoming more and more relevant, but it's hard to look at it now and see that.

Erik Voorhees: That's all fair and I disagree with none of that.  Yeah, Ethereum is going through a ridiculous change and it could completely fail.  I mean, to go from a proof-of-work system to a proof-of stake while it's worth tens of billions of dollars and you have all this economic activity happening on it is the height of riskiness and recklessness.  That's all fair.  If someone wants to avoid those systems because the risks are too high in their current state, I think that's a completely fair and reasonable perspective.

Peter McCormack: But then, what happens if it completely collapses under the weight of this; billions is going to be lost?

Dan Held: Yeah, well what happened when Mt. Gox went down, and how many people wrote the obituary of Bitcoin because Mt. Gox went down $400 million dollars?

Peter McCormack: Well, that's slightly different.

Dan Held: Is it?

Peter McCormack: Well, Mt. Gox is an exchange; we're talking about the actual protocol itself.

Dan Held: Well, ones a protocol and one's not a protocol.  One's a company that was misconstrued by the press as a protocol, but that doesn't mean that there's an actual issue on the protocol.  And, if you're referencing the couple of different issues that occurred on the Bitcoin protocol, like the 2010 inflation bug, Bitcoin had no value and you're right, it was experimental; but, that was ten years ago. 

We're much more mature, we have many more eyeballs on the code; this should not be happening this far in the future with this much money and these many eyeballs looking at it.  It's a different era.  It was before Bitcoin was even worth a penny.  So, using that as an example, or using Mt. Gox, I feel, is an intentional false equivalency to make these events seem equivalent, but they're not at all.

Erik Voorhees: So, you're correct the Gox is a centralised company and what we're talking about here is the protocol of Ethereum failing and what would happen; yeah, that is different.  What's not different is that just as when Mt. Gox went down and everyone thought that that was the end of the world, and Bitcoin and the industry itself rebuilt in other ways around it and got better and was expressed anti-fragility, so too does the crypto industry if Ethereum fails.

Do either of you believe for a minute that if Ethereum tomorrow had some zero-day bug that wiped out the entire system that suddenly everyone would just go to Bitcoin and there would be no other experimentation on other chains and other coins?

Peter McCormack: Of course not.

Erik Voorhees: No.  People will try to figure out what happened, they'll innovate, they'll change things, they'll build others.  That is the rapid innovation of change that we should be celebrating, not scared of, and I do find it a little interesting to hear this tone of, "Well, back when we, as the bitcoiners, were experimenting, it was okay how we did it; but, this recent innovation, that's too reckless".  It's very paternalistic and really, I think, against the ethos of decentralisation itself.

Dan Held: I would say it's more representative of the maturity of the industry.  The fact that we would want to look past and look back on our young self and be like, "I should behave like I did when I was 12", doesn't make much sense.  We're all much older or much more mature.  Even Ethereum was developed later, but it developed later on the back of Bitcoin's development, for example, like exchanges that were built and code infrastructure and developer interest, etc.  Bitcoin started from zero to one and Ethereum came from one to two. 

So, I think it's fully within our right to start to question the current state of things, because this is the mature state of the industry.  We have thousands of developers looking at this code compared to back in 2010 when very, very few were; so, I think it's a different era and deserves a different level of scrutiny.

Erik Voorhees: Can you appreciate it under the context of Bitcoin being the first and most conservative of these projects and, yes indeed, being more mature and thus needing to move much more carefully and being more responsive; and also, celebrating that all these other peripheral projects are doing the experimentation?  I mean, isn't that good?

Dan Held: Absolutely, and I'm a free market guy where I believe anyone should do whatever they'd like.  It doesn't necessarily mean I'm going to go store my wealth in it, or going to go use it.  I don't know of a protocol right now that really solves a problem for any of my pain points.

In the product world, whenever we see something trending and we see folks using it, we hear about it, we see the metrics start to move up.  And, when you look at most of these DeFi projects, the metrics are equivalent to a very small app, any app you want to choose.  It could be a weather app or any app out there in the world.

I mean, I created an app for drone pilots called "Hover" for fun.  That has more daily active users than most of these DeFi projects.  And, if you look at the daily active user numbers, or you look at the monthly active user numbers, they're not exactly going perfectly up into the right; they're more surge of interest alongside some of the high yields that they receive, and then you see the decline. 

You and I have been around a long time, we see these flash-in-the-pan narratives.  What indicates to you that these are going to stick around a little bit longer?

Erik Voorhees: This is something that we can empirically look at.  Let's talk about Uniswap.  Uniswap is doing more volume than Coinbase.  Do you have any conception of how profound that is; that a decentralised, open, borderless protocol is trading without permission more digital assets and value every day than Coinbase, which has been around for eight years and raised $500 million. 

You're conveying it as if you have all these little projects and none of them are seeing success.  The majority of them don't, but that's true of all startup situations.  So, let's talk Uniswap.  That has demonstrated not just product market fit, but is now dominating against Coinbase.

Dan Held: No, product market fit is defined by retention.  We need to see if this volume is sustained over time, or if they've just incentivised short-term gaming.

Erik Voorhees: Sure, that's fair.

Dan Held: And so that's where I think tbd.

Erik Voorhees: Yeah, that's fair but empirically, you have to acknowledge that the rise of Uniswap itself this year is demonstrating something that until that empirically changes, needs to be considered.

Peter McCormack: Could you really say though in 2017, we had that kind of crazy time where people were investing in ICOs and tokens and almost everything has died or is dying from that period; could we not just argue that this is the same, that there isn't really any value being created and what's being created is an opportunity for people to make money, and that's all it is?  It is just a casino and that's what really people are getting involved in, rather than true value.

I've not seen or heard of anything being created where I think, "That's really useful.  I could imagine I'd want to use that or my friends would want to use that".  I can give lots of really solid arguments for why my friends should be investing and putting their money in Bitcoin now.  There's nothing I've seen in DeFi that has.  Am I missing something there, Erik?

Erik Voorhees: I mean again, just as in the ICO days, most of everything was garbage.  But, you know what came out of the ICO days; Ethereum itself.  Ethereum was an ICO project and it is not the only coin, or new blockchain, that launched back then that has material growth and material usage and material success today.  So, you only need to find a few of the diamonds in the field of garbage for the whole process to be valid.

Similarly, in this DeFi stuff; yeah, most of it is total garbage and a lot of it is pyramid scam, like just casino nonsense; that's absolutely true.  But then, there's Uniswap; then there's a way to move one asset into another with no permission from anywhere in the world and no one can stop that.  I mean, how can any bitcoiners see what Uniswap has done and not applaud that?

The reason is, it's built on Ethereum instead of Bitcoin.  That's why they're not applauding it.  But, it is taking the essence of decentralisation and censorship resistance and bringing it into new areas of financial transactions and I think it's a beautiful thing.

Peter McCormack: I'm not sure that's entirely true, Erik, because when the INX project came out, I think there a lot of bitcoiners who were, "Oh, you don't even like the idea of that coming onto Liquid?", not even excited about that.  So, I'm not sure that's entirely true.  I'm not sure it's just because it's on Ethereum.

Also, I wouldn't say that they wouldn't say it's not impressive.  I think the numbers they've done is impressive.  You can't help but look at that and say those numbers are impressive, but how meaningful are they; what do those numbers actually mean?  Where will that value exist in two or three years?  I know Bitcoin's going to be around in ten years and the value they've put in there, I'm pretty confident, I've got a lot of conviction that that would be a safe place to put your money.  I don't have that conviction behind DeFi projects.

Erik Voorhees: That's fine.  I mean, no one should have conviction that they could leave a lot of money in DeFi projects for an extended period of time; it has not earned that yet.

Peter McCormack: Dan, I've been tweeting just for a laugh and making some jokes about this conversation, but Mr HODL said, "Can Dan understand and explain whether these things are scams?" and I think a more important question is, do you think we're talking about things that are scams, or are you talking about things that are just poorly thought through, because it's kind of a different thing.  Some people call everything a scam, and I don't always agree with that statement myself?

Dan Held: I mean, it's a little bit of a bait question, but …

Peter McCormack: I know, I know.

Dan Held: Look, I think my general line is, I've been around for eight years and I've seen 10,000 cryptocurrencies come and go and I'm not exactly thrilled by what I've seen.  I don't see many things that are compelling to me on a personal level.  Again, all of these are more personal opinions.

In terms of scamming us or not, it's really hard to define in the crypto space and I've spent a lot of time thinking about how to quantify it in the most succinct way possible.  The way that I would define a scam is the delta between expectations and what you deliver.  Now, to what degree of that delta is a scam or not; that's a little subjective.

So, if I sold you a room in my Moon hotel that I had not built yet, according to crypto, that's not a scam because it's possible, it's technically possible within the realm of physics.  My ability to go and deliver on that, as we all know, is very unlikely given that I have no background in building rockets or spaceships or anything else.  So for me, I would define that as a scam.  If I were to sell you a room in my Moon hotel, the delta between my ability to execute on that and the expectations I've set are so enormous that I find it very unlikely.  That's my definition of scam.

The problem is there's not a concrete one, and this is where there are a lot of folks in the altcoin space that use this as a false equivalency where they say, "Oh, we're just like startups".  Sure, but startups in Silicon Valley typically go through quite a bit of vetting.  Of course, you still have the Theranoses and whatnot but in Silicon Valley, you typically have to put -- there's a lot more research done; there's a lot more traction that needs to be shown versus in crypto, where you open up investing to everyone.  Anyone can go buy your token and you don't necessarily have to deliver on that value in order for value to accrue to the token.

So, I would say my most succinct way to define a scam is the delta between expectations and what was delivered.

Erik Voorhees: Do you think Zcash is a scam?

Dan Held: I think they've delivered largely on what they promised.

Peter McCormack: I think Zcash is a company.

Erik Voorhees: Well, there is an organisation and there is a blockchain and a cryptocurrency.  So, do you think it's a scam?

Peter McCormack: I don't.  I don't think everything's a scam.

Dan Held: You're talking about the coin itself?

Erik Voorhees: Yeah, the blockchain and cryptocurrency known as Zcash and the operation of the company that made that happen.  Was that operation, either when it started or today, a scam?

Dan Held: I would say that they have largely delivered upon what they promised the people who purchased Zcash.

Erik Voorhees: So, can you make a step further and just admit that it isn't a scam.

Dan Held: I don't think it's a scam.

Erik Voorhees: Okay.

Dan Held: It doesn't mean that I find it interesting, nor do I think it will survive or exist or thrive, but I don't consider it to be a scam.

Erik Voorhees: Okay.  So you're willing to state that there are crypto projects that are not scams, even if you don't personally like them?

Dan Held: What I'm saying is that to each person, there is their own subjective sort of classification of that.  So, that's where you see some bitcoiners, like Mr HODL, who may very well be right in terms of his perceived delivery versus what you promised.  I haven't dug in on the Zcash project, I'm not following it on a day-to-day basis but, to the best of my understanding, they've delivered most of what they promised to the users.

I think there are some unsavoury things like, for example, the amount that they carve out of the block reward for the initial team and stuff.  I don't necessarily agree with that.  I think some of that stuff is like, I don't know if that's a scam or not, but I would say that's just not perceived very well by the community.

Erik Voorhees: Yeah, but they were transparent about that.

Peter McCormack: Yeah.  Bitcoin is used as the basis for everything and nobody can live up to what Bitcoin's done, yeah.  I think there are better examples.  I think there's more reason to call something like Ethereum a scam.  Ethereum, at times, has been very misleading about what it's trying to be, or ultimately delivers, and it's moved the goalposts quite a bit on that.  I think you're right that Zcash has tried to fundamentally deliver what it set out to do.

Erik Voorhees: All right.  So, I think largely, what is disappointing to me is that many of the principles that make Bitcoin important: decentralisation, inability to be censored, the openness that anyone can access and use; those principles are being taken and expressed in other ways and other areas and I think that is one of Bitcoin's best gifts to humanity.  Not only is it, as a project, incredibly successful and it will, on its own, change the world, but has also inspired all sorts of other experimentation and projects that are also changing the world.

Instead of seeing that as a collaborative, mutually beneficial phenomenon, I'm dismayed that so many bitcoiners see these things as threats, as scams, as something to spend much of their time dismissing and deriding and it's just kind of depressing, because so much positive value and energy is getting put into this experimentation and it's inspiring to me every day.  I wish that other bitcoiners would see that essence being expressed in those other projects.

Dan Held: I think the only reason why Bitcoin is around today is due to bitcoiners' resiliency against competing narratives.  The Bcash community largely tried to destroy Bitcoin and bitcoiners rejected that with intensity, as they should have, and they won.  Also, you have the Ethereum community led by Vitalik, largely led by Vitalik, who has consistently tried to use, "Proof of work is wasteful or an environmental disaster" as a way to undermine Bitcoin.  He has also attacked bitcoiners themselves by calling them "maximalists" and saying that they are "conservative luddites" essentially.  I am paraphrasing; he didn't actually say those words.

I don't know why it's wrong for bitcoiners to defend themselves.  What they believe in is justified.  They have people constantly attacking them.  Other coins constantly attack Bitcoin's speed, proof of work, the community, the monetary policy, incessantly.  Bitcoiners have defended themselves, justifiably so, against these attacks and so, I find it surprising when these altcoins attack bitcoiners, or position their coin as advantageous towards Bitcoin, and then are offended when bitcoiners give a good rebuttal and then also go after them.

I think it's the Bitcoin, as we call, the "cyber hornets" defending what is rightfully theirs and are justifiable in their defence of it.

Erik Voorhees: So, there's definitely truth in what you're saying and Bitcoin has been forged in an environment of hostility from the very beginning.  It is an explicitly counter-cultural transformative technology which, if successful, will change much of how the earth works and is going to have a gazillion enemies; 100%.

Zcash and Ethereum are not enemies of Bitcoin and the fact that some people in those communities will point out attributes of Bitcoin that they think they can do better or differently for whatever purpose is not an attack on Bitcoin; it is a modification to build another part of what is a decentralised phenomenon.  That is part of the decentralisation.  If we only had one chain and one coin, we would be in a less decentralised, less diverse ecosystem of this technology.

Dan Held: So, there are two points here.  One is actually per how the block reward works.  Less chains is better because it means that each chain has more security.  The more chains you have, actually the less security you have with these chains long term.  So, it's actually counterintuitive, but it's better for decentralisation if there are very few chains than many chains.  That block reward is what is then given to the miners to behave properly in organised transactions, which ensures all the decentralisation works as it should.

Erik Voorhees: That's fair, but you said "few chains", not "one chain".  Do you actually think that decentralisation is best served if there is only one blockchain?

Dan Held: Per the basic fundamental part of how blockchains work, the answer's yes.  The security budget of a singular blockchain having all the activity on it would be far greater.  So, for example, let's say we have $100 billion of security spend a year in block reward.  If we divide that up between 100 chains, those chains are fundamentally weaker and can be more easily attacked; so the fewer chains, the better for a particular blockchain's security.

Erik Voorhees: Yes, unless you're already well beyond the amount of resources that need to be spent on security.  So, it's not always true that, for economic efficiency, a certain chain should have double the mining power behind it.  There is a point of diminishing return and if you channel all economic energy into security at all costs, you actually end up with an inferior product and something that is less innovative and useful.

Dan Held: I also have some great points on this, and same with Nic Carter.  There's either the stock flow or threshold model of security spend; what is an appropriate level to be able to survive a state level attack; you're right, we don't know.  What we do know is that in the low billions is probably too little.  The US defence budget is $0.5 trillion a year, so I think we can concretely see that we do not have enough security spend right now to survive a state level attack.  Having it split up between multiple chains, I'm not sure if that would help.

Also, this isn't just code; this is a Schelling point of people's belief in it.  It's the Lindy effect of people continuing to believe in it and store value in it.  We can't just have one chain disappear and another one pop up; it doesn't work that way.  You can't rebuild trust; you can't rebuild faith.  So, the beauty in the innovation isn't just this code; the code is actually a small part of that.  It's the social network around it; it's the belief in storing value in it and the continuity of that protocol through time.

So, I would say the innovation here isn't necessarily code; it's more that continuity and the fact that Bitcoin's survived this long is incredible.

Erik Voorhees: I think that last point is completely valid in a world where all the blockchains and all the coins were only trying to do one thing, which is to be a monetary standard.  If it was Bitcoin and Bcash and Litecoin and the very similar coins were all basically trying to do that one thing, I would buy that argument; I think that would be true.  But, many of these coins are not trying to compete on that; they're doing something else.

Dan Held: Well there are a couple of things we can use to look at, what are appropriate use cases for a blockchain?  Now, we know that block space is finite, so to get a transaction in, whether you're doing a smart contract or a Bitcoin transaction or a coffee transaction using Litecoin, or whatever you want, those have to bid for their block space and transaction fees are your bid to get into that scarce amount of block space.

If any of these chains have any sort of volume, those fees become enormous and crowd out any other use cases other than ones that have high economic density, which means that the transaction itself or the smart contract has a lot of value in it.  Those will be the only ones who can afford to bid to get into the block space.  So with that, we can already pretty much take out many of these layer 1 chains that are useful for payments or some other function that doesn't accrue demand from these high-value transactions. 

So, we can see things like that sort of indicate -- for example, Bitcoin on layer 1 will not be used for coffee; and we know that for sure because transaction fees will be over, and right now I think they're at like $5.  Those will only continue to climb as demand increases for that block space.  So with that, we can easily eliminate some ideas that this blockchain technology might be useful for some of these other use cases as we see some of the fundamental components of how the block space market works.

Erik Voorhees: So, counterpoint: you have some purpose-built blockchains which make certain design decisions, some of which are trying to explicitly optimise less for security and more for speed, right?  I don't think there's anything in particular wrong with that.  It would not be the model to go with for your money standard.

But take the Solana blockchain, which has this decentralised exchange built on it.  It runs on 20 or 30 nodes, not nearly decentralised enough to run a global monetary system, but it is a decentralised exchange that basically anyone in the world can access and has extremely high transactional throughput; and, it's designed for that purpose.  What's wrong with that?

Dan Held: There's nothing wrong or right about that.  It's just that, for example, why don't we just have 30 distributed databases; why does it have to be on a blockchain; and, why do we need the Solana token for that?  I don't want to get into Solana specifically, I don't want to pick on them, but I just don't really -- you know, when you look at scalability with blockchains, it's essentially the nature of throughput, it's a function of how many copies of the ledger do we need to have; how robust is it against scalable attacks?

There was this older argument.  This argument was more popular in 2017, that blockchain is a sliding scale.  You don't need state-level censorship resistance; you can have this -- it's more of a Grayscale of, there's Bitcoin and then there's other variants.  But, if these protocols are solving a problem like a blockchain should, which is around providing people access to financial ability to store value or, as you're saying, there are other use cases as well, inherently states will become offended by that and/or become hostile towards it. 

So, they all actually need to have state-level censorship resistance; it's not just Bitcoin.  Any other financial use case that undermines regulatory frameworks or undermines the authority of the state will be challenged.

Erik Voorhees: There is truth to that, but when you combine it with the fact that these things are open source and can be duplicated, you get a system where the vectors of attack that work on Bitcoin might not work on them, or vice versa, and that is part of the decentralisation.  If there's only one blockchain, a state actor can focus on the design parameters of that, knowing that there are no alternatives if they figure it out.

How is that superior to a world with a very messy and diverse set of blockchains, all of which have different attributes and are constantly changing?

Dan Held: At first glance, diversity is typically around placing multiple bets.  But, when we look at how blockchains are constructed, as we've seen with the block reward; that is required to be high in order to make sure that decentralisation is preserved.  So, multiple chains existing does not increase decentralisation and also, you have less eyeballs looking at the code, because there are more layer 1 chains to look at. 

And, there is a Schelling point around storing value or participating in a certain coin.  You can't replicate that; that is not copy-pasteable with code.  You can't copy-paste it and fix the flaw.  You have aggregate trust and belief in it by humans who are not code; we're simply interactors with the code, and that's a non-replicable function.

Erik Voorhees: You assume that, like a lot of fixed pie fallacies here, Ethereum's existence has bought in so many developers into this technology.  They're not just taking a fraction of Bitcoin's eyes off that code, they've inspired a whole different generation of people, many of which totally have different feelings on a lot of this stuff than you or I do; that's part of the decentralisation.

Peter McCormack: Dan, let me ask you something.  Dan, why does this all matter to you; what's the kind of important point here?  Is it that you think a lot of noise needs to be made to make people aware of the risk of investing money in this, or some more responsibility needs to be put on developers; what's the important outcome that you would be looking for, based on what you believe?

Dan Held: When I was younger, I was hoping for more responsibility but through time, I've sort of given up on that.  Things are going to happen and you just have to be okay with it and experiments and wild ideas that should have never been started are going to happen, whether I like it or not.  I'm also a free markets guy, so people are free to do what they like, even if I really don't like it.

For me, I was in crypto from 2013 through 2016 and then, 2016 I went to work at Uber.  At Uber, I mentally checked out a little bit and while I still hodled, I was paying attention just unexecuted in my role.  During the fork wars, when I came back in late 2017, I felt like I had let Bitcoin down.  I had seen people who didn't understand what Bitcoin's value prop was, almost destroy it, which to me was horrible to see.  I felt that I'd betrayed the coin by not being there.  So, when I came back, I felt like I had things to say around why Bitcoin matters, what it's solving for this world, and that's where most of you all probably heard my name for the last two years, rather than a long, long time ago when I used to work in this space.

So for me, why I care about this is that I've seen constant narrative attacks on Bitcoin, and that's why I wrote the series of my articles, starting with "Hodlers are Revolutionaries".  Naval Ravikant said that hodlers were free riders, and I felt that so misunderstood what Bitcoin was and how it worked with the believers in it, the people who purchased it and stored value in it, which makes the whole thing work, that I felt compelled to start writing. 

The same with "Proof of Work is Efficient", the second article I wrote, and "Bitcoin's Distribution was Fair".  Some people used to claim that Bitcoin's launch was equivalent to a stealth premine, which it is not at all.  So, these different narratives I saw were attacks on Bitcoin constantly.  And so, we see these attacks on Bitcoin and I felt I needed to defend it.

And so with these coins, they're free to go do what they like, but often they will go after Bitcoin and I feel the need to defend it from a narrative level of going, "Well, that's factually incorrect", or this or that, because some coins will use words, "We are more fair than Bitcoin.  We use less energy than Bitcoin and that's more environmentally friendly.  We're faster", we're this or that, but they typically don't talk about the trade-offs.  So, on a personal level, I felt compelled to write to clarify those things.

Then, to wrap this all up, on the Ethereum side, they claimed they were not competitive with Bitcoin for a long time, until a year or two ago.  Now, they're trying to take the title of "sound money", and Erik, I'd be interested to hear your thoughts here.  So on the sound money side, they very much pivoted their narrative to, "Eth is money; Eth is sound money", and now they're talking about monetary policy, and I don't remember them talking about that in 2015 and 2016.

So, you say that they don't compete?  They're basically pointing their road map and their ship and their community's energy right at Bitcoin.

Erik Voorhees: Who's "they"?

Dan Held: I would say, yeah, it's a great question, because there are a lot of folk in the Ethereum community who will build on top of Ethereum for different reasons; but, it does see that in the crypto Twitter-sphere, there is a general "Eth is money" narrative that has become more popular in the last two years, and that they make it and they compare it against Bitcoin.

Erik Voorhees: Some people do.

Peter McCormack: Yeah, I think there's a conflict in the Ethereum community, because I've seen other people actually argue back against that, "Don't say that".  Who was it I saw recently said, "That's a dumb idea; stop saying that", someone specifically said.  I know what you mean though, Dan, but I have also seen people also challenge that as well.

Erik Voorhees: Well, Dan, those articles that you cite are fantastic and you've done a huge service to Bitcoin by explaining those things clearly and helpfully, so I am personally grateful to you for doing those things.

I guess my confidence in Bitcoin and its position and its design parameters and its trajectory, I feel non-threatened by any of these other coins, even if some of the people in those coins try to challenge parts of Bitcoin; it doesn't feel threatening to me.  What is threatening to me is that the real obstacle is one where humans change from fiat and banks and governments controlling value to one in which money systems are open and free market and anyone can interact with them.  That is a fundamental philosophical struggle that this whole industry is going to need to convince the world of. 

And, the more it disputes these little differences between these chains and tries to make enemies of the people who actually believe 99% of the same things, I feel like it's energy spent in the wrong direction.  At the same time, a lot of it is garbage, and so I will not tell people to go invest in all these different coins.  If you can only invest in one coin, it should absolutely be Bitcoin and you should be extremely careful with anything else, 100%.

Peter McCormack: Erik, is there any garbage on ShapeShift?!

Erik Voorhees: Yeah, there is, yeah.  There have been two coins that we ever delisted because we felt that they were clearly just so scammy and bad that we removed them.  One was PayCoin, about a month after we added it and when we started realising the promises they were making were just total fraud, we delisted that.  The other was BSV, because fucking Craig Wright and Calvin are such douchebags. 

But, yeah, there are a lot of coins that are on ShapeShift that I would never own.  They're not necessarily scams and some of them have a lot of value, like Ethereum, and some of them don't, but that's for people to play around with and do what they will.  But, I would never tell people that all these different coins are valuable; the vast majority of them are garbage, and that's fine.  Be careful.

Peter McCormack: All right, well, I'm conscious of closing out on time, so I think you've both made some very solid arguments.  You know my position.  I definitely veer more towards Dan, but I'm not as aligned with Dan; I'm less bothered by some things.  But, Dan, you've made a couple of arguments this evening which hadn't crossed my mind.

The very long-term security budget is an important issue that I think some other projects haven't realised, and I do think there's some bullshit out there.  I do think something like Filecoin is absolute nonsense, and I think we're seeing that unravel in front of our eyes already.  But at the same time, I find your argument about experimentation, sometimes it's hard to argue against experimentation, Erik; but also, at the same time, perhaps these things should be experimented on in their own time, rather than with other people's money under false claims of things they can do.  I think it's a complex area.

My show's going to stay What Bitcoin Did, and it's Bitcoin only.  Dan, do you want any closing words?

Dan Held: I really appreciate the opportunity to come on and jam.  Erik and I have known each other for a long time and while we disagree, we still, I think, have a healthy respect for each other in terms of debating.  I'm not sure if we're ever going to see eye to eye, but I certainly respect some of the arguments that he made.  Also, look, I live in Silicon Valley; I've been out here for seven years.  The experimentation culture is huge here, so I definitely like experimentation too; I'm just more of a cautiously optimistic type.

Peter McCormack: Right, Erik, what about yourself; closing words?

Erik Voorhees: Closing words?  I'm just so fucking excited for this whole phenomenon and it's very easy to get bogged down in a million problems.  But, seeing what has happened to Bitcoin from 2011 to now, the dreams that we had of what this could be are not just hinted at still, but they are actually happening, and it's been less than a decade. 

I hope that the people appreciate living in that time and being part of that phenomenon and I hope that people realise that the game is just getting started and the real struggle is going to happen as this form of money sucks up the value of the earth into this new infrastructure.  All of us have a part to play in making that as smooth and ethical as possible and so, for all you listeners, thank you for supporting the growth of this and stay educated, stay sceptical and stay safe.

Peter McCormack: Amazing.  Well, listen, I love both of you, I miss you both.  Hopefully, I don't know if you're going to take a vaccine, Erik, I can't imagine you will; but, I will, I want to travel, I want to get back to the States.  If I have to flash my health passport, I will.  But, hopefully at some point in the next six months, this will all get back to normal and I can see you both in person.  But, it's great to see you, miss you both and take care.

Erik Voorhees: Cheers, see you, guys.

Dan Held: Cheers, Peter.