S03E03 Aaron van Wirdum – Bitcoin's Origin Story and the Unfinished Fight

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So with all of that, Aaron, is Bitcoin the inevitable outcome of that work or is it a lucky accident that could easily have never happened?
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I don't think it was inevitable. I also wouldn't describe it as a lucky accident somewhere in between, I guess.
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I do think, yeah, so the way I wrote the book and the way I think history actually unfolded is that Bitcoin is best understood as an evolutionary step in the thinking and working on digital cash projects.
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Bitcoin was indeed not the first one, but there is a lineage of digital cash projects and also ideas.
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Not every idea was turned into an actual working project.
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Some of them were just conceptual, but still these ideas contributed to the ultimate design
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of Bitcoin itself.
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No guilt, no gimmicks.
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Go to trustrevolution.co.
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That's trustrevolution.co.
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Okay, let's get into it.
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Aaron, how are you, sir?
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Welcome.
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I'm good.
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Thanks for having me.
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How are you?
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Very good.
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I am well.
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I appreciate it.
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I found myself about to attempt von Verden and wondering if I was going to do that properly.
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That's good enough.
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I copped out at the last minute.
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No, no. I mean, Americans and English-speaking people always ask me how to pronounce my name, but it's basically like written.
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Like, you always basically get it right.
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I mean, there's probably a slight nuanced touch if you really pronounce it in a Dutch way.
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If you have the time for it, yeah.
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Yeah, but it's close enough that it's basically fine.
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I love how Americans, we get a pass on most things when it comes to pronunciation.
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Well, thanks again, Aaron. I do appreciate it.
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And I want to start with a bit of a setup for those who may not know you, may not know the history that you have spent now many, many years covering.
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And so, you know, most people, I think it's fair to say, think of Bitcoin as either a speculative asset or a technical curiosity.
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You have spent 13 years covering it as something else entirely, which is the latest chapter in a decades-long war to build money that governments can't control.
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Or at least that's my perspective on it.
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You'll correct me.
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And so for further backdrop, before Bitcoin, there were at least a dozen serious attempts.
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They all failed.
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The people who built them, you know, are largely forgotten.
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And then suddenly Bitcoin succeeds and almost immediately powerful interests try to capture it.
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And so that fight is ongoing.
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And Aaron, you have documented all of it.
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And so let's start here.
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You said the cypherpunks who tried to build digital cash before Bitcoin might one day be remembered like America's founding fathers.
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That is a striking comparison.
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What did they sacrifice and what did they almost achieve?
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Well, yeah, so I made the comparison because I think they really recognized the Internet as a new frontier, essentially.
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right and even in their actual language that they would sometimes use uh tim may for example who's
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one of the founders of the cypherpunks he really describes the internet or the potential of the
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internet as uh i don't know if he literally said a new country but definitely like a new economy
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a new way for uh trade to happen a new way for business to happen and in such a way that it's
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separate distinct from the existing economies right so we really saw the internet as that's
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where we can start to build a new world with new institutions um what they recognized so they
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recognized the potential of the internet but they both saw that as a potential good as a potential
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bad right so what they were concerned about really was that the internet would develop
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without privacy, essentially,
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and turn into an enormous panopticon, right?
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Where everything anyone does is,
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or at least can be monitored, tracked,
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spied on, used against you, potentially.
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So what they set out...
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They foresaw volunteer.
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Yeah, well, that's the type of things
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that they foresaw and were worried about, exactly.
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So what they set out to do
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was they wanted to build tools to prevent that future,
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to prevent a dystopian Orwellian future society,
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and instead build something that would protect human rights,
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privacy in particular.
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So that includes regular or just communication technologies,
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PGP, for example, just ways for people to interact.
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But there were also more radical versions of that vision, a vision where legacy companies and maybe the governments couldn't even really function anymore and really instead build a new future.
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And the reason that they couldn't function anymore would, for example, be because they couldn't hold any secrets. So if a company can't hold any secrets or the government or an army can't hold any secrets, that it really undermines their operation.
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or if a government can't tax its population,
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can't tax economic activity,
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then it also becomes much harder
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for a government to even exist,
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to sustain itself.
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So they set out...
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And again, there's sort of different flavors
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of the cyberpunk.
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Some were more radical than others.
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Tim May was very radical.
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He really wants to bring down nation states
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and just instead build a completely new future
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on the internet.
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That was not necessarily true for all of them.
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But yeah, so they wanted to create...
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Digital cash was one of the things they wanted to create.
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That's something that would enable a new economy,
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a new way for people to conduct commerce online.
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But also things like smart contracts,
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that's something Nick Zabo came up with,
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like a way to conduct business online
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in a way that wouldn't require conventional contracts
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and governments to enforce these contracts.
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But really, if you provide a service,
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then automatically you get paid for providing that service.
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So all kinds of ideas to build a whole new parallel economy
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on the internet, essentially,
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with digital cash as a crucial component.
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Right.
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And I think, I mean, I don't know
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that everyone would agree on this, but I think in many ways they were describing what at least
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Biologist Svonivasan calls the network state. And I don't know that, you know, full credit to
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biology. Some people have their beef with him as to being a shit-coiner. But, you know, I think he
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has taken, in my view, a pragmatic, maybe some would say a compromised take on Tim May and others'
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vision of what that network state would look like. So with all of that, Aaron, is Bitcoin the
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inevitable outcome of that work, or is it a lucky accident that could easily have never happened?
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I don't think it was inevitable. I also wouldn't describe it as a lucky accident,
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somewhere in between, I guess. I do think, yeah, so the way I wrote the book and the way I think
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history actually unfolded is that Bitcoin is best understood as an evolutionary step in the thinking
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and working on digital cash projects, right? So Bitcoin was indeed not the first one, but there's
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a lineage of digital cash projects and also ideas. Not every idea was turned into an actual
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working projects projects some of them were were just conceptual but still these ideas
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contributed to the ultimate design of bitcoin itself but yeah i am quite convinced although
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i haven't spoken with him i can't know for sure but i'm quite convinced that satoshi was
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part of or at least aware of the cypherpunk community and was aware and and had you know
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studied these other digital cash projects because bitcoin just resembles some of these projects or
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at least in part it takes inspiration from them that seems pretty clear to me uh so yeah i mean
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And the obvious one is like proof of work, right?
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Introduced by Anand Back and Hashcash.
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There was also another proof of work system, by the way,
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which I describe in the book,
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but that works a little bit differently than Hashcash,
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which very directly sort of is implemented in Bitcoin,
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but also Bitgold and WhiteEyes, B-Money,
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and like all these projects inch closer towards something
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that can actually work as a digital cash system,
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But also all of them had some sort of limitation, which made that they either couldn't quite work or they could work, but the incentives weren't quite right to be adopted as digital cash.
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And Bitcoin brought together these different ideas, also ideas about money itself, also Austrian economics influences.
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And it was all brought together in a system that works.
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So I, you know, well, that's a big debate in history more generally.
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Certainly.
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Revolution, evolution, invention.
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And like do inventions, were they inevitable or did it really take unique individuals or particularly insightful individuals to sort of make that step?
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Like without Satoshi Nakamoto, whoever it was, would Bitcoin still have been invented?
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Well, probably not in the exact same way, but it's clear that there was a step-by-step evolution towards something like Bitcoin, at least.
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I don't know if this just crept into my mind and someone else deserves credit for it, but I tend to think of it as a chemistry experiment where stability was finally reached.
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You know, you see all the beakers exploding and the crazy lab meltdowns, and then suddenly someone got the formula right.
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Well, and you touched on this, Aaron. So let's do go back and go deeper. Before Satoshi, you know, brilliant individuals, some of whom you've already named, spent decades trying to solve this problem. Notably, David Schaum was a world-class, is a world-class, I'm suddenly realizing whether I don't recall if he's still with us, world-class cryptographer.
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Okay, good, good, good. Thank you for that. And he built a working digital cash in 1989. As I understand, banks were interested. He had venture funding and then it collapsed. And so walk us through DigiCash. What did Shom build? How close did he get to driving it as a standard and what ultimately killed it?
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Yeah, so digital cash actually existed, right?
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So that's one of the digital cash projects that was, in fact, implemented.
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And it's really, you know, David Chown really showed the way.
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He was way ahead of his time.
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He was basically the first person in the world to realize that money is going digital, right?
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With the emergence of the internet and computers, money will go digital.
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And then, as I alluded to before, but this is even before the cypherpunks, that's why I'm saying he was ahead of his time.
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Even before the cypherpunks were established, he recognized that that can lead to two different futures.
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A future where every payment that anyone ever makes is monitored or can be monitored, traced, this Orwellian future.
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or we create a digital form of cash.
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And what he really meant by that is a form of money for the internet
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that can be used privately, anonymously,
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so it can't be tracked in that way.
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He was really the first person to foresee that
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and indeed also the first person to, in fact, implement it.
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I think, well, you mentioned 89.
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I think that's when he first proposed the idea.
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It was implemented a bit later, sometime in the mid-90s.
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And what that was, so he was not trying to reinvent money itself.
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He was not, you know, like the Austrian economics folks that were also getting involved with digital cash.
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He was not one of those.
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Digital cash was really a layer, a tech layer for banks themselves.
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So banks could adopt it.
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That was the idea.
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And some banks did and could issue digital cash to their customers, essentially.
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So you would withdraw.
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It was basically just a number from a bank and you could send that number to someone else through whatever mode of transfer you wanted.
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It could just be via email or you could write it down on a piece of paper, I guess, if you really want to.
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It didn't matter.
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and then that person could withdraw the cash again
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to their own account essentially.
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So it would use euros or dollars or whatever the bank,
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whatever the fiat currency of the bank was,
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that's what you could use.
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The problem with DigiCash, as I mentioned, it was implemented.
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There's kind of different versions of the story of why it went wrong.
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There's, you know, not everyone agrees on that
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and especially the people that were involved with it
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pretty strongly agree on some of the points
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of why it didn't quite catch on on a big scale.
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One version of the story,
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and personally, I think both sides of the story
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are probably at least partly true.
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One side of the story is that
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there was just no real demand for it.
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So even though it worked,
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people could use DigiCache, eCache.
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They could use it,
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but there was just not a huge demand
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for privacy in that way, unfortunately.
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I think there's a lot of truth to that.
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We see that, you know, even today, a lot of people don't really care that much about their privacy.
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I think it's growing a bit.
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I would just say quickly, and thank you for the correction, Aaron, on 89 versus early 90s.
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I got those mixed up.
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But I think in 89, when he was conceptualizing, I would just note for the younger people in the audience, this was pre-web, early internet.
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Really, email was the only thing we had.
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And so to fast forward even into the early 90s, Webb was 93, 94, was radical.
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And so as you follow that up, Aaron, and again, sorry to interrupt you, I'd love to get your take on the presumption that this had to be done via banks, you know, versus we'll come to this Bitcoin and be your own bank.
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So, you know, is there in your research, in your work, have you found any insights into
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would there have been a conceptualization to move outside of banks or was it just, hey,
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this is the way you've got to do it?
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Well, he did have a test project as well.
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So Digicash the company that he had and this is a big part of the story in the Genesis book actually But he did have a test version of eCash as well that did operate outside of banks
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So what they did was they just promised, essentially, there was no way to guarantee this cryptographically or in any other way.
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But they did promise there will only ever be 100 million of these currency units.
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but in their view this was really a test project they did not foresee this having any real world
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value they did not see this as a real alternative that people would use it was just sort of to play
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around with and test the technology in his vision in his mind the ultimate you know user would indeed
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be banks offering it to their customers that that was really uh what what digicast itself was working
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towards but and other other cypherpunks did for example play with that test project and they did
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run with the idea basically that it could potentially also work outside of banks and
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indeed create a new form of currency and back in particular he saw that this digicash test project
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was gaining some real world adoption and that for him was a sign that wait a minute that means that
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we can also just do it without the banks.
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I think that was a huge inspiration or step in the thinking towards Bitcoin, that test
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project that did the cash out.
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Right.
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And then if I do get this date correct, Nick Szabo designed something, I think most would
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say almost identical to Bitcoin in 98.
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Why ultimately could he not make that work?
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And consequently, what was Satoshi's breakthrough?
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Yeah, I would not say it was almost identical, but it was definitely inching closer towards Bitcoin.
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It had the same proof-of-work mining, essentially.
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It even had something that you could, you know, if you squint your eyes, kind of see as a blockchain kind of thing.
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It was also very complex, however.
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Excuse me.
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It was a pretty complex design.
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And that has a lot to do with the way.
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So with these other digital cash projects,
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usually the proof of work that you created, the hashes,
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these were themselves the currency units.
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That's something Satoshi abandoned, right?
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He uses it as a consensus mechanism
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and also as a way to get coins into circulation.
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But the hashes themselves are not the currency units.
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And with these other projects, they often were.
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The hashes were the currency.
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That's what you would basically send and receive to someone else.
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So the problem with that, one, is that as computers become faster over time, it becomes easier to produce these.
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And so you have a sort of technological inflation that's then in the system.
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It just becomes easier and easier to create more money.
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So, you know, you don't have a limited supply of money in that way.
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so that's something satoshi solved with the difficulty algorithm adjustment uh difficulty
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adjustment algorithm right so um and and just by saying that the hashes are not the currency
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the hashes are a way of proving that you did the proof work and then you get rewarded
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currency units but that's a fixed amount every block and therefore every two weeks because of
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the difficult adjustment algorithm the other thing that satoshi didn't quite solve was the
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ownership registry so who owns what hashes there was a registry for that where you could look up
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which public keys own which hashes but someone had to maintain this registry and he had thought of a
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way that it it required like a special subset of users that would do that and then they would vote
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on if there's a double spend,
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if the same hash is sent to two public keys
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at the same time in different parts of the network,
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see different versions of the ledger
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because of it,
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splitting the network essentially.
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With Bitcoin, that's solved with Proof of Work, right?
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Longest chain ultimately gets,
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you know, everyone follows the longest chain.
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With Zabo's idea with Bitcoin,
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there was like a voting system
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and a subset of users,
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But it wasn't really watertight because, first of all, who gets to be one of the people that votes?
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And how do you stop civil attacks?
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How do you stop one person having 10,000 accounts and skewing the vote that way?
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So that was sort of an unsolved problem.
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And I think because of that, Bitgold was one of these projects that was a concept, but it was never actually implemented because it still had such a fundamental problem that just wasn't solved.
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And from there, I mean, if we look at those two instances and others, where they fell short, what does that tell us about what could still break Bitcoin today?
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What do we draw from the two that we've discussed and the many others that you have studied at length?
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Well, I don't know if this relates.
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Well, I mean, ultimately, the known weakness of Bitcoin is a 51% attack, right?
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that Satoshi knew it, it's in the white paper.
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That's a way where you can attack Bitcoin successfully,
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which requires having a majority of hash power.
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Or there's some mathematical models
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that you can do it with even a little less than a majority,
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but let's just say a majority of hash power.
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If you have that, then you can censor transactions,
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you can double spend,
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you can basically break the system in very bad ways.
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and I would say that is still the biggest problem ultimately like every other problem you can think
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of ultimately usually sort of gets down to well ultimately that's the real problem
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and you do see you know today in Bitcoin it's we're not in a great situation actually
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power is very concentrated a handful of mining pools that have the majority of
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hatch rates combined.
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There's huge data centers
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where a lot of the mining happens.
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There's only, you know,
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really only one or two chip manufacturers
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that can produce the machines
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that are required for mining.
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So that's kind of like
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a supply chain attack in a way.
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But these are not really solved problems.
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Right now, they're mostly being solved
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because the incentives still align.
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But that also breaks down
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if and when mining becomes more heavily regulated
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and governments start to get more involved.
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I'm not necessarily bearish on it.
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I do think there are ways forward with this.
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We have some advantages on our side,
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essentially, when it comes to energy production
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is sort of inherently decentralized,
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or at least in a way that
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So there's the advantage of scale, right?
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Like it benefits you if you concentrate certain industries,
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in this case, mining in one position.
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But there's also disadvantages of scale,
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and that has a lot to do with energy production.
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At some point, the energy that you're using for mining,
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you can put a miner
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next to
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let's say
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a hydro
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dam but at some point you've
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used all the energy on the hydro dam and then
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it becomes cheaper to use a different hydro
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dam or use solar energy
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somewhere so the energy part is
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sort of inherently decentralized and
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on the long term we can hope
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that because
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of that mining will also become
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more decentralized
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over time that's
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That's our best hope, I would say.
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Right.
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And then there's also some technological improvements when it comes to decentralizing mining itself.
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So there's, you know, there's reason.
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Definitely.
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And I want to get into that.
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To think it could improve.
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Yeah, go on.
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Yeah.
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And I think, so, you know, and I kind of bring us forward and bring us back.
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And so if we look then at Chalm in 89, some of his early research, we've got 20-ish years before Bitcoin, as we know, it actually worked.
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It grew.
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And then something happened that most people today have never heard of but might, you know, be the most important event in Bitcoin's history.
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Between 2015 and 17, there was an all-out war over what Bitcoin would become.
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And on the one side, the largest mining companies, exchanges, well-funded startups.
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To your point, they controlled most of the hash power and most of the economic activity.
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And then on the other side, this ragtag coalition of developers and users, many anonymous running nodes in their basements.
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And so the big money lost.
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Aaron, you covered this at length.
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And as it unfolded, most people today have no idea it happened.
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For someone who wasn't there, paint a picture for us.
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How close did Bitcoin come to being captured in 2017?
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Yeah, well, captured or just failed entirely. These were two very real risks, at least in my mind, in my experience at that time, because that's another risk that I would say that's the other big risk is Bitcoin could split and basically the community could destroy itself potentially, because ultimately everyone does have to agree.
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it's a very human very social sort of phenomenon where everyone does have to agree what bitcoin
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even is right and that came into question during the block size war where a segment of the bitcoin
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community users miners whatever uh they wanted bitcoin to have different protocol rules essentially
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And at that point, so they tried to, in a way, force that through.
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Had they been at least somewhat successful, then you could have gotten the split in the Bitcoin blockchain.
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And that can cause all kinds of confusion about, well, what is Bitcoin actually?
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It's a very sort of meta question about what is Bitcoin really?
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Which software is Bitcoin and which is not?
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And if there's no agreement on that, then it can get really messy with different exchanges listing different coins, essentially, as Bitcoin.
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Someone sending a Bitcoin transaction, someone else not receiving it because apparently they're not on the same network.
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I think especially in the early days of the block size war, that was in my mind a very real risk that something like this could happen.
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And in these, again, in these early days, I think that could have potentially destroyed Bitcoin like that, that complete chaos and confusion.
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I think that could have devastated the entire project.
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I think we came out of it stronger than we went in because in a very real way, that problem was resolved in the sense that the community did sort of formulate a, at least a rough definition of Bitcoin,
365
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which is a sort of conservative definition of Bitcoin.
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Bitcoin is, you know, the rules that we were already using.
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If you want to change the rules, then that's not Bitcoin.
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It was not obvious at the beginning,
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but that's sort of what everyone settled on,
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which I think was the right, you know,
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that's the right place to settle.
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That is how you can scale something like Bitcoin up
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and not introduce politics essentially,
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or at least not introduce a type of politics
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that could undermine the viability of Bitcoin.
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And then, yeah, to the question of, you know,
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could it have been captured?
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Also very possible.
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Like, it's also very possible
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if a big enough segment of users, miners, developers
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would have settled on a different, you know,
382
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definition of what is Bitcoin,
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then Bitcoin could have changed
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and arguably changed for the worse.
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In that specific case, it could have been changed
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to a form of Bitcoin that people can't actually run on their own computers.
387
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Therefore, they can't verify the Bitcoin supply, for example.
388
00:29:00,774 --> 00:29:04,734
Which for anyone who participates and owns, holds, uses Ethereum,
389
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that's where they have found themselves, right?
390
00:29:07,274 --> 00:29:08,554
So we could have become that.
391
00:29:09,134 --> 00:29:09,574
Right, yeah.
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I think it's of fundamental importance to Bitcoin,
393
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probably the single most important thing, that it is trustless,
394
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that you don't have to rely on some authority to tell you,
395
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how many bitcoins are in circulation, for example, that you don't have to rely on some authority to
396
00:29:26,814 --> 00:29:32,554
confirm for you that you received a transaction. But actually, it is all based on code, math,
397
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raw energy, and you can verify that for yourself. So again, I think that was being put to the test
398
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during the scaling wars. And I would say Bitcoin came out of it stronger than it went in,
399
00:29:46,894 --> 00:29:51,934
because the question was settled on these points.
400
00:29:53,274 --> 00:30:00,914
Well, and a follow-up to that, in order to once again set a backdrop that carries us forward into what we may be encountering,
401
00:30:00,914 --> 00:30:08,854
again, the New York agreement, 50 companies, I believe, 80% of economic activity, they agreed to change the rules.
402
00:30:09,234 --> 00:30:10,674
No developers were invited.
403
00:30:10,674 --> 00:30:16,874
that's in some ways could have been a slam dunk for the so-called participants of the New York
404
00:30:16,874 --> 00:30:22,794
agreement. What ultimately went wrong for them? And maybe that's a UASF discussion, but take it
405
00:30:22,794 --> 00:30:30,254
where you will. Well, I think a big part of it was, in fact, the market ultimately deciding
406
00:30:30,254 --> 00:30:38,694
otherwise. And by the markets, I mean users, individual users that value Bitcoin. That's where
407
00:30:38,694 --> 00:30:41,734
Bitcoin ultimately gets it valuable, right?
408
00:30:41,794 --> 00:30:45,814
People willing to accept it and hold it and value it as money.
409
00:30:46,874 --> 00:30:48,814
When someone asks what backs Bitcoin?
410
00:30:49,914 --> 00:30:52,214
It's the people, it's the users.
411
00:30:52,214 --> 00:30:53,354
Yeah, exactly.
412
00:30:54,474 --> 00:31:01,234
And during that time, we started to see fork futures.
413
00:31:02,754 --> 00:31:06,554
So people could basically buy.
414
00:31:06,554 --> 00:31:09,054
it's always a little bit hard to explain
415
00:31:09,054 --> 00:31:10,594
but people could
416
00:31:10,594 --> 00:31:12,794
on futures markets basically
417
00:31:12,794 --> 00:31:15,134
buy the different versions of Bitcoin
418
00:31:15,134 --> 00:31:16,914
that would exist after
419
00:31:16,914 --> 00:31:18,914
a split and on these
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00:31:18,914 --> 00:31:20,774
futures markets we
421
00:31:20,774 --> 00:31:22,694
clearly saw that
422
00:31:22,694 --> 00:31:24,354
the users, the markets
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valued the more
424
00:31:26,754 --> 00:31:28,494
conservative Bitcoin more
425
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than the Bitcoin that would change
426
00:31:30,874 --> 00:31:31,394
its rules
427
00:31:31,394 --> 00:31:34,874
controversially in that case. I think
428
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that's ultimately why
429
00:31:36,174 --> 00:31:39,234
the backers of the New York agreement gave up.
430
00:31:39,774 --> 00:31:41,614
I think that's why they ultimately said,
431
00:31:41,994 --> 00:31:44,754
okay, we don't want to destroy Bitcoin.
432
00:31:45,094 --> 00:31:46,934
I don't think they wanted to destroy Bitcoin.
433
00:31:47,194 --> 00:31:48,934
I think they, for the most part,
434
00:31:48,994 --> 00:31:50,434
just had a wrong idea about
435
00:31:50,434 --> 00:31:52,314
where Bitcoin gets its value from.
436
00:31:52,834 --> 00:31:54,494
And I think that really showed that to them.
437
00:31:54,914 --> 00:31:56,374
And the same is true for miners.
438
00:31:56,654 --> 00:31:58,434
Ultimately, miners want to make money.
439
00:31:58,934 --> 00:32:01,054
Ultimately, miners want to value
440
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or want to mine coins that are valuable.
441
00:32:04,954 --> 00:32:11,234
and these these fork futures really made it very clear that no the value is not where they thought
442
00:32:11,234 --> 00:32:15,634
it was it's actually in a more conservative version of bitcoin that doesn't change the rules
443
00:32:15,634 --> 00:32:32,268
when there is a dispute about that so all i mean that ultimately the market decides what is bitcoin that that ultimately what it comes down to And these fork futures really made that clear And even after the split happened it also been very clear right
444
00:32:32,768 --> 00:32:36,408
We did see a split with Bitcoin Cash, for example.
445
00:32:37,868 --> 00:32:42,488
The New York agreement technically still had a coin, I believe, but that was not even worth,
446
00:32:42,488 --> 00:32:44,928
I don't, we don't even have to consider.
447
00:32:44,928 --> 00:32:45,268
A footnote.
448
00:32:45,968 --> 00:32:46,528
Yeah, exactly.
449
00:32:46,528 --> 00:32:56,548
But Bitcoin Cash is a good example that it was at one point trading at, I think at its peak, even at 40% of Bitcoin's value.
450
00:32:56,708 --> 00:32:58,668
But over time, it just trended to zero.
451
00:32:59,708 --> 00:33:06,468
And today, it's basically irrelevant because ultimately the market decides what is Bitcoin and what is valuable.
452
00:33:07,288 --> 00:33:08,248
Right, right.
453
00:33:08,308 --> 00:33:10,408
And that is the conservative version of it.
454
00:33:10,408 --> 00:33:13,948
So the users won, Bitcoin's rules held.
455
00:33:14,528 --> 00:33:20,968
But I think I take, you know, from my own observation and from certainly your writing, that the fight didn't end.
456
00:33:21,008 --> 00:33:21,988
It has changed forms.
457
00:33:21,988 --> 00:33:23,628
And you've alluded to this.
458
00:33:23,628 --> 00:33:35,368
So right now, if I have this correct, 11 percent of Bitcoin's mining power is actively censoring transactions that by some interpretation, the U.S. government or others don't like.
459
00:33:35,368 --> 00:33:42,068
and meanwhile governments are buying bitcoin sort of the same governments bitcoin was designed to
460
00:33:42,068 --> 00:33:49,448
escape and so with that let's talk about f2 pool as an indication or a canary in the coal mine
461
00:33:49,448 --> 00:33:56,668
not necessarily you know in the in the weeds but they've been censoring ofac sanctioned transactions
462
00:33:56,668 --> 00:34:02,788
11 of hash power again if my if my research is correct how much censorship can bitcoin survive
463
00:34:02,788 --> 00:34:07,488
before we lose the censorship-resistant money moniker?
464
00:34:07,748 --> 00:34:08,488
Well, it depends.
465
00:34:09,008 --> 00:34:10,748
There's two forms of censorship.
466
00:34:11,068 --> 00:34:14,068
One, I would say, is the harmless form of censorship.
467
00:34:15,228 --> 00:34:18,948
That's all we've seen so far.
468
00:34:19,588 --> 00:34:22,028
And that is, if an individual miner
469
00:34:22,028 --> 00:34:25,428
doesn't include certain transactions in a block,
470
00:34:26,068 --> 00:34:28,228
then they don't mind these transactions,
471
00:34:28,228 --> 00:34:30,368
but other miners still can.
472
00:34:31,008 --> 00:34:33,568
So I don't think that's really a big problem.
473
00:34:34,068 --> 00:34:37,628
If anything, it's a problem for the miners because they're missing out on fee revenue.
474
00:34:38,948 --> 00:34:47,128
It's a very minor problem for those sending these transactions because sometimes they have to wait a little bit longer until it confirms.
475
00:34:47,388 --> 00:34:48,488
Not really a big deal.
476
00:34:50,108 --> 00:34:54,528
That wouldn't even be a big deal if it's over 50%.
477
00:34:54,528 --> 00:34:58,048
They have to wait longer for their transactions to confirm.
478
00:34:58,048 --> 00:35:01,608
even if it's 95%
479
00:35:01,608 --> 00:35:03,888
well now you have to wait a couple of hours
480
00:35:03,888 --> 00:35:05,268
which might be a pain in the ass
481
00:35:05,268 --> 00:35:06,988
but it's still
482
00:35:06,988 --> 00:35:10,248
it's not that big of a deal
483
00:35:10,248 --> 00:35:11,528
it's an annoyance at worst
484
00:35:11,528 --> 00:35:13,668
the real problem happens
485
00:35:13,668 --> 00:35:17,308
if miners not only refuse to mine transactions
486
00:35:17,308 --> 00:35:20,428
whether that's because the government doesn't want it
487
00:35:20,428 --> 00:35:21,708
or because they don't want it themselves
488
00:35:21,708 --> 00:35:23,468
or whatever the reason may be
489
00:35:23,468 --> 00:35:27,188
but if they also refuse to mine on top of blocks
490
00:35:27,188 --> 00:35:29,908
that include these transactions, right?
491
00:35:30,148 --> 00:35:33,548
So basically rework out any blocks
492
00:35:33,548 --> 00:35:34,948
that include transactions
493
00:35:34,948 --> 00:35:37,348
that they don't want to mine for some reason.
494
00:35:38,428 --> 00:35:40,588
And was that part of Mara's proposal, Aaron?
495
00:35:40,708 --> 00:35:40,968
Was that?
496
00:35:41,028 --> 00:35:41,208
No.
497
00:35:41,708 --> 00:35:42,588
No, okay.
498
00:35:43,008 --> 00:35:46,088
No, I don't think Mara is even censoring anything anymore
499
00:35:46,088 --> 00:35:47,668
as far as I'm aware.
500
00:35:47,668 --> 00:35:50,988
They had a brief stint where they announced
501
00:35:50,988 --> 00:35:53,108
that they were mining OFAC compliant blocks.
502
00:35:53,968 --> 00:35:55,828
There was a big backlash against it
503
00:35:55,828 --> 00:35:59,688
and I think they dropped that policy pretty quickly.
504
00:36:01,188 --> 00:36:07,888
To your point, I do believe F2Pool was excluding certain forms of transactions as well.
505
00:36:08,508 --> 00:36:14,928
And then you also have Ocean that's excluding different type of transactions for different reasons.
506
00:36:16,048 --> 00:36:18,388
But again, these are harmless.
507
00:36:18,548 --> 00:36:22,948
At this point, these are harmless because they're still mining on top of blocks that do include these transactions.
508
00:36:23,188 --> 00:36:24,828
So it's not really a big deal.
509
00:36:24,828 --> 00:36:30,728
it's only a big deal if more than 50% of miners not only censor transactions,
510
00:36:30,928 --> 00:36:32,888
but also reorg out.
511
00:36:33,128 --> 00:36:35,348
So refuse to build on blocks that do include this.
512
00:36:35,508 --> 00:36:38,948
Then you get true censorship essentially.
513
00:36:39,628 --> 00:36:40,068
And then,
514
00:36:40,388 --> 00:36:41,228
you know,
515
00:36:41,288 --> 00:36:41,468
then,
516
00:36:41,588 --> 00:36:42,288
then the question is,
517
00:36:42,348 --> 00:36:43,268
what do you do about that?
518
00:36:43,948 --> 00:36:46,148
Assuming that we want to do something about that,
519
00:36:46,228 --> 00:36:51,088
which I would say we do because I see censorship resistant as a fundamental
520
00:36:51,088 --> 00:36:52,448
value proposition of Bitcoin.
521
00:36:53,148 --> 00:36:56,348
So then what you do about that is you can,
522
00:36:56,788 --> 00:36:58,628
there's sort of two answers to that question.
523
00:36:59,008 --> 00:37:02,328
One answer is we don't do anything.
524
00:37:02,448 --> 00:37:04,728
It's just the people that want to make these transactions
525
00:37:04,728 --> 00:37:06,748
have to include higher fees.
526
00:37:07,368 --> 00:37:09,208
Then if the fees build up enough,
527
00:37:09,208 --> 00:37:12,708
then the incentives for miners should realign
528
00:37:12,708 --> 00:37:14,048
with including the transactions.
529
00:37:14,928 --> 00:37:15,788
So that's one answer.
530
00:37:16,168 --> 00:37:19,708
The other answer is then we actually do need to change the protocol,
531
00:37:19,708 --> 00:37:22,868
change the protocol in such a way
532
00:37:22,868 --> 00:37:26,128
that these transactions have to be included
533
00:37:26,128 --> 00:37:28,988
or you change the proof of work algorithm
534
00:37:28,988 --> 00:37:31,228
which essentially fires the miners
535
00:37:31,228 --> 00:37:33,828
and now you can get a whole new group of miners
536
00:37:33,828 --> 00:37:36,088
or home miners again or something like that
537
00:37:36,088 --> 00:37:39,128
that will start to include these transactions again.
538
00:37:40,068 --> 00:37:43,928
So there's different answers to that question.
539
00:37:44,568 --> 00:37:46,908
And I think if we get to that point,
540
00:37:46,908 --> 00:37:51,428
That will be a very big controversial debate on which way to go.
541
00:37:51,608 --> 00:37:52,788
Hopefully, we'll never get there.
542
00:37:53,988 --> 00:37:54,468
Right.
543
00:37:54,648 --> 00:37:55,228
And that's helpful.
544
00:37:55,448 --> 00:37:57,468
I mean, there's a disagreement on how to handle that.
545
00:37:57,888 --> 00:37:58,248
Right.
546
00:37:58,548 --> 00:38:03,828
And as you say, the act itself is one thing.
547
00:38:05,308 --> 00:38:09,568
Refusing to mine on top of blocks that don't meet those filter criteria is another.
548
00:38:09,828 --> 00:38:13,828
So from that, good to hear that you don't think that's existential, at least not at present.
549
00:38:14,328 --> 00:38:15,688
Let's turn to opera turn.
550
00:38:15,688 --> 00:38:19,908
And so I think you've said that that's the biggest divide since the block size wars.
551
00:38:20,428 --> 00:38:25,068
Could you give us a sense of at a high level, you know, what is Operaturn?
552
00:38:25,208 --> 00:38:26,108
Why does it matter?
553
00:38:26,648 --> 00:38:30,628
And is this the same fight in a different form or a different beast entirely?
554
00:38:32,488 --> 00:38:33,628
Is it the same fight?
555
00:38:33,728 --> 00:38:35,408
No, I'll just start with your first question.
556
00:38:35,408 --> 00:38:47,828
Yeah, so OpReturn is a, I would summarize it as it's a trick to embed data in Bitcoin transactions.
557
00:38:48,248 --> 00:38:56,708
So data that has nothing to do with sending money from A to B, but just different kind of data.
558
00:38:56,708 --> 00:39:06,868
It can be anything, can be an image or can be a text or whatever it is you want to, whatever it is someone would want to include in a Bitcoin transaction.
559
00:39:07,488 --> 00:39:14,028
The context is it was always possible to include data in Bitcoin transactions.
560
00:39:14,808 --> 00:39:18,828
That was also always something that people did.
561
00:39:19,108 --> 00:39:22,788
And it's probably not something that can be stopped either.
562
00:39:22,788 --> 00:39:24,708
and at some point
563
00:39:24,708 --> 00:39:26,648
Bitcoin developers decided
564
00:39:26,648 --> 00:39:28,828
that well if people are going
565
00:39:28,828 --> 00:39:30,728
to do this anyways then
566
00:39:30,728 --> 00:39:32,868
it's better if they use a
567
00:39:32,868 --> 00:39:34,868
method that's not as
568
00:39:34,868 --> 00:39:36,768
harmful because some of the other
569
00:39:36,768 --> 00:39:38,948
ways can be harmful for various
570
00:39:38,948 --> 00:39:39,428
reasons
571
00:39:39,428 --> 00:39:42,828
in particular make it harder to run a
572
00:39:42,828 --> 00:39:44,928
run a node more expensive to run
573
00:39:44,928 --> 00:39:45,308
a node
574
00:39:45,308 --> 00:39:48,728
so with up return you
575
00:39:48,728 --> 00:39:50,788
kind of limit the harm that it
576
00:39:50,788 --> 00:39:52,548
does and
577
00:39:52,548 --> 00:39:54,688
recently
578
00:39:54,688 --> 00:39:55,888
there was always
579
00:39:55,888 --> 00:39:58,488
there was never a limit on Opperturn
580
00:39:58,488 --> 00:40:00,368
on a consensus level. The protocol
581
00:40:00,368 --> 00:40:02,628
was always allowed, you can put whatever
582
00:40:02,628 --> 00:40:04,188
data, however much you want
583
00:40:04,188 --> 00:40:06,528
as long as it fits in a block, you can
584
00:40:06,528 --> 00:40:08,168
fit in an Opperturn and then
585
00:40:08,168 --> 00:40:09,828
it can
586
00:40:09,828 --> 00:40:11,348
end up in the blockchain.
587
00:40:13,708 --> 00:40:14,608
However, for
588
00:40:14,608 --> 00:40:16,628
a long time, there was a sort of
589
00:40:16,628 --> 00:40:18,728
soft limit in the sense that
590
00:40:18,728 --> 00:40:20,648
if it wasn't included
591
00:40:20,648 --> 00:40:22,108
in a block yet
592
00:40:22,108 --> 00:40:28,428
then a transaction with a big up return would not be transmitted over the network.
593
00:40:29,568 --> 00:40:32,848
Nodes would not help share it to other nodes.
594
00:40:33,348 --> 00:40:36,928
But if it was included in the block, if a miner received it directly
595
00:40:36,928 --> 00:40:40,328
or a miner put it in themselves or whatever the reason is,
596
00:40:40,368 --> 00:40:41,288
if it's in a block, it's fine.
597
00:40:41,588 --> 00:40:42,868
But it was always a soft limit.
598
00:40:43,988 --> 00:40:48,748
That soft limit in the view of Bitcoin developers, and I agree with them,
599
00:40:48,748 --> 00:40:52,288
has basically become useless in recent years
600
00:40:52,288 --> 00:40:55,608
because people had started to figure out other ways,
601
00:40:55,688 --> 00:40:58,408
again, to put data in transactions,
602
00:40:58,668 --> 00:41:00,988
including larger chunks of data.
603
00:41:01,348 --> 00:41:02,848
You saw that with inscriptions.
604
00:41:03,188 --> 00:41:08,728
It was a big rage with people putting all kinds of animated images
605
00:41:08,728 --> 00:41:12,188
and whatever it was in Bitcoin transactions.
606
00:41:12,448 --> 00:41:12,948
Monkey JPEGs.
607
00:41:13,568 --> 00:41:14,668
Yeah, whatever it was,
608
00:41:14,728 --> 00:41:16,388
they were putting that in Bitcoin transactions.
609
00:41:16,388 --> 00:41:20,848
and at that point
610
00:41:20,848 --> 00:41:22,028
Bitcoin developers figured
611
00:41:22,028 --> 00:41:23,908
okay well if people are doing that anyways
612
00:41:23,908 --> 00:41:26,448
then let's also get rid of that soft limit
613
00:41:26,448 --> 00:41:27,748
that's still on upper turn
614
00:41:27,748 --> 00:41:31,268
because upper turn is still a less harmful way of doing it
615
00:41:31,268 --> 00:41:33,508
it's still better if people use upper turn
616
00:41:33,508 --> 00:41:36,088
so let's get rid of the soft limit as well
617
00:41:36,088 --> 00:41:38,828
and then that's how people will hopefully do it
618
00:41:38,828 --> 00:41:40,628
there's a specific
619
00:41:40,628 --> 00:41:43,528
there was a specific trigger for this
620
00:41:43,528 --> 00:41:45,468
which was there was some meta protocol
621
00:41:45,468 --> 00:41:47,548
that wanted to use the Bitcoin blockchain
622
00:41:47,548 --> 00:41:52,468
to enable something that they were interested in enabling.
623
00:41:53,328 --> 00:41:56,548
And they were starting to use basically
624
00:41:56,548 --> 00:42:01,108
popkeys of fake popkeys.
625
00:42:01,488 --> 00:42:03,528
So fake addresses, essentially.
626
00:42:03,848 --> 00:42:06,088
Addresses that you could send money to,
627
00:42:06,188 --> 00:42:07,688
but no one owned a private key.
628
00:42:08,328 --> 00:42:10,128
And that's a very harmful way
629
00:42:10,128 --> 00:42:12,288
of embedding data in the blockchain.
630
00:42:12,708 --> 00:42:14,388
It bloats to UTXOSet.
631
00:42:14,388 --> 00:42:15,608
It's a bit of a technical term.
632
00:42:15,788 --> 00:42:18,068
I don't know how technical your listeners are overall,
633
00:42:18,208 --> 00:42:20,128
but it's bad.
634
00:42:20,268 --> 00:42:21,668
It's a bad way of doing it.
635
00:42:21,768 --> 00:42:22,868
So at that point, it develops,
636
00:42:23,008 --> 00:42:24,588
okay, let's get rid of the soft limit.
637
00:42:25,308 --> 00:42:27,168
And this caused a lot of controversy
638
00:42:27,168 --> 00:42:31,448
because a segment of the Bitcoin community,
639
00:42:31,448 --> 00:42:34,388
they saw that as a sort of surrender
640
00:42:34,388 --> 00:42:37,748
or endorsement even of, you know,
641
00:42:37,788 --> 00:42:40,548
using the Bitcoin blockchain for other forms of data.
642
00:42:41,148 --> 00:42:44,228
I don't think that's an accurate way of looking at it.
643
00:42:44,388 --> 00:42:48,388
You know, that's not, I don't think Bitcoin developers were seeing it that way.
644
00:42:48,468 --> 00:42:50,348
I also don't think it's technically true.
645
00:42:50,928 --> 00:42:53,808
I think it was a harm reduction mechanism.
646
00:42:55,508 --> 00:42:57,268
And that's how it was intended.
647
00:42:57,388 --> 00:43:00,188
And I think that was all things considered probably the way to go.
648
00:43:00,808 --> 00:43:05,568
But yeah, some segments of the community were very angry about it, are very angry about it.
649
00:43:05,568 --> 00:43:10,248
and in fact apparently want to do something about it
650
00:43:10,248 --> 00:43:14,648
by now changing the protocol to not only limit that,
651
00:43:14,748 --> 00:43:18,808
but also try to limit other forms of embedding data in the blockchain.
652
00:43:19,828 --> 00:43:21,868
I think it's a bad idea.
653
00:43:22,168 --> 00:43:24,208
I don't know how much in depth you want to go.
654
00:43:24,208 --> 00:43:27,848
I think it's disabling parts of Bitcoin.
655
00:43:28,228 --> 00:43:32,608
It doesn't solve the problem in a real way.
656
00:43:32,608 --> 00:43:35,508
in fact it's one of those things
657
00:43:35,508 --> 00:43:37,208
as mentioned
658
00:43:37,208 --> 00:43:39,168
operators essentially harm reduction
659
00:43:39,168 --> 00:43:41,348
it's one of those things if you try to fight it
660
00:43:41,348 --> 00:43:43,128
I think it gets worse
661
00:43:43,128 --> 00:43:45,388
because you try to fight it and now people
662
00:43:45,388 --> 00:43:47,428
are going to use other forms of
663
00:43:47,428 --> 00:43:49,328
including data on the blockchain again
664
00:43:49,328 --> 00:43:50,868
and the whole point was
665
00:43:50,868 --> 00:43:52,388
you know harm reduction
666
00:43:52,388 --> 00:43:55,208
so it's a bad idea
667
00:43:55,208 --> 00:43:57,068
it's a badly guided
668
00:43:57,068 --> 00:43:59,328
proposal in my view
669
00:43:59,328 --> 00:43:59,768
but
670
00:43:59,768 --> 00:44:05,948
Well, and I think, you know, so you've answered some of this, I believe, but let me cast it in a slightly different light.
671
00:44:06,028 --> 00:44:08,008
And this is very much going to be your opinion.
672
00:44:08,108 --> 00:44:09,988
I'm not asking you to speak on anybody's behalf.
673
00:44:10,188 --> 00:44:15,288
But what we've talked about, the cypherpunks certainly understood what they were building.
674
00:44:15,628 --> 00:44:19,248
The supporters of the user-activated soft fork UASF understood.
675
00:44:20,068 --> 00:44:26,088
Does the current collection, do the current collections of ETF buyers, so-called institutional allocators?
676
00:44:26,088 --> 00:44:26,948
That one always gets me.
677
00:44:26,948 --> 00:44:29,428
and maybe even some Bitcoin core developers,
678
00:44:29,828 --> 00:44:32,048
in your view, do they understand
679
00:44:32,048 --> 00:44:35,188
what we're meant to be protecting?
680
00:44:35,888 --> 00:44:38,508
Bitcoin core developers, I would say yes,
681
00:44:38,528 --> 00:44:41,468
as far as I know them and have spoken to them
682
00:44:41,468 --> 00:44:43,148
and have listened to what they have to say
683
00:44:43,148 --> 00:44:46,328
or read the mailing list, then I think yes.
684
00:44:46,388 --> 00:44:48,128
And I think it's important to point out
685
00:44:48,128 --> 00:44:50,008
also from my own perspective,
686
00:44:51,128 --> 00:44:53,608
I don't like all this data I'm betting either.
687
00:44:53,768 --> 00:44:56,388
I think that's not what Bitcoin is intended for.
688
00:44:56,948 --> 00:45:00,408
I wrote a whole book about what I think Bitcoin is intended for.
689
00:45:00,528 --> 00:45:05,868
I think it's intended to be a digital form of cash and a hard money and these things combined.
690
00:45:06,028 --> 00:45:09,688
I think that's what makes it interesting and valuable and important.
691
00:45:09,948 --> 00:45:14,788
And that's why I spent so much of my time writing about it and focusing on it.
692
00:45:15,508 --> 00:45:19,188
I think for the most part, the same is true for Bitcoin core developers.
693
00:45:19,448 --> 00:45:21,748
I think they generally share that perspective.
694
00:45:21,748 --> 00:45:30,988
At the same time, I mentioned earlier, I think censorship-resistant is a fundamental property of Bitcoin.
695
00:45:31,748 --> 00:45:35,808
And I do think that comes with, there are some downsides to that.
696
00:45:36,248 --> 00:45:42,448
Not just when it comes to people will make transactions that I actually personally don't like.
697
00:45:43,168 --> 00:45:47,208
But also, something like this, data embedding is very hard to stop.
698
00:45:47,208 --> 00:45:51,428
When you design something to be censorship-resistant, then it's very hard.
699
00:45:51,428 --> 00:45:53,488
and probably impossible to stop people
700
00:45:53,488 --> 00:45:56,348
from kind of abusing the system as well sometimes.
701
00:45:56,848 --> 00:45:59,308
Now, I think Bitcoin has an inbuilt solution
702
00:45:59,308 --> 00:46:00,068
to that problem.
703
00:46:00,888 --> 00:46:02,628
It's the block size limit
704
00:46:02,628 --> 00:46:04,608
and by extension transaction fees.
705
00:46:04,608 --> 00:46:09,448
I think over time, this will outprice any spam
706
00:46:09,448 --> 00:46:15,228
and any bad use or any low value use of Bitcoin
707
00:46:15,228 --> 00:46:17,608
like including images, which I think-
708
00:46:17,608 --> 00:46:18,268
Non-monetary.
709
00:46:18,268 --> 00:46:28,368
Yeah, I think there will be a lot of demand for censorship, resistant, hard money.
710
00:46:29,068 --> 00:46:34,948
Bitcoin is the best form of money ever invented if it all keeps working as intended.
711
00:46:35,728 --> 00:46:38,008
And I think there will be a lot of demand for that.
712
00:46:38,268 --> 00:46:46,108
And that demand will price out these more frivolous forms of using the Bitcoin blockchain.
713
00:46:46,428 --> 00:46:47,228
That's what I think.
714
00:46:47,928 --> 00:46:58,408
And by extension, I think that if you're going to try to stop that, you might actually harm these fundamental properties of Bitcoin of censorship resistance.
715
00:46:58,408 --> 00:47:01,208
That's what you might destroy in the process.
716
00:47:01,208 --> 00:47:08,828
Just because you want to stop some wizard JPEG, it might lead to much harmful places where you do actually undermine Bitcoin's value proposition.
717
00:47:09,248 --> 00:47:16,448
So we have talked about, give or take, three decades of this work, this fight to build electronic cash.
718
00:47:17,228 --> 00:47:26,428
Those who, you know, have attempted and fallen short, the Block Size War 2017, the threats by different definitions that we've talked about.
719
00:47:27,628 --> 00:47:31,248
To get a bit personal, you've been at this for 13 plus years, I think.
720
00:47:31,948 --> 00:47:43,328
And, you know, from your reading, I believe I understand you've, and most of us have, seen people sort of burn out, you know, cash out, go to prison, sadly, most recently.
721
00:47:44,008 --> 00:47:45,268
You're still in this.
722
00:47:45,268 --> 00:47:47,268
what keeps you in it?
723
00:47:47,468 --> 00:47:50,168
I think Bitcoin is the most important
724
00:47:50,168 --> 00:47:52,308
well I always said that
725
00:47:52,308 --> 00:47:53,548
there's recently
726
00:47:53,548 --> 00:47:57,128
well my answer was always
727
00:47:57,128 --> 00:47:59,008
I think Bitcoin is the most important
728
00:47:59,008 --> 00:48:00,668
technology in the world right now
729
00:48:00,668 --> 00:48:02,408
I think it has the most
730
00:48:02,408 --> 00:48:06,848
potential to change the world
731
00:48:06,848 --> 00:48:08,788
and change the world I think for the better
732
00:48:08,788 --> 00:48:10,648
and you know
733
00:48:10,648 --> 00:48:12,808
if I have to decide where I'm going to spend
734
00:48:12,808 --> 00:48:14,888
my time and energy on then I would like
735
00:48:14,888 --> 00:48:18,608
to spend my time and energy on what I think is the most important thing.
736
00:48:19,568 --> 00:48:22,488
I do think AI is starting to catch up.
737
00:48:22,488 --> 00:48:25,728
I'm starting to think AI is also up there as
738
00:48:26,408 --> 00:48:27,728
I would agree.
739
00:48:27,728 --> 00:48:30,568
Arguably the most important technology in the world.
740
00:48:31,028 --> 00:48:42,382
My attention is maybe starting to get a little bit divided With you For good or for ill right Depending Right It a very similar dilemma in that sense
741
00:48:42,382 --> 00:48:49,162
In the sense, like I said, with the cypherpunks who sort of foresaw the future of the internet
742
00:48:49,162 --> 00:48:58,722
and foresaw that it could either usher in dystopia or revolutionize how people live and
743
00:48:58,722 --> 00:49:00,561
work for the better.
744
00:49:00,561 --> 00:49:03,422
AI has a very similar component to that.
745
00:49:03,662 --> 00:49:06,362
It seems like it could still go both ways.
746
00:49:08,322 --> 00:49:10,222
Let's leave AI aside for now.
747
00:49:10,802 --> 00:49:11,362
We'll do that.
748
00:49:11,362 --> 00:49:12,081
We'll do a part two.
749
00:49:12,962 --> 00:49:14,922
You can show us your vibe coding.
750
00:49:16,322 --> 00:49:18,462
Well, so, you know, so kind of staying on.
751
00:49:19,382 --> 00:49:20,102
Real quick.
752
00:49:20,342 --> 00:49:24,422
Yeah, I mean, I think money is such,
753
00:49:25,041 --> 00:49:26,782
what is more important than money?
754
00:49:27,501 --> 00:49:29,362
There's very little that I can think of
755
00:49:29,362 --> 00:49:35,162
That's more important than money as far as human societies and humanity goes.
756
00:49:35,762 --> 00:49:37,702
Language is up there as well.
757
00:49:38,142 --> 00:49:41,021
But, you know, there's not that much you can do about language.
758
00:49:41,182 --> 00:49:42,822
It just sort of exists and evolves.
759
00:49:42,982 --> 00:49:45,242
And there's not too much to write about there, I think.
760
00:49:45,842 --> 00:49:48,501
Until we get the universal translator, not much is going to change there.
761
00:49:48,962 --> 00:49:49,561
Right. Yeah.
762
00:49:50,682 --> 00:49:55,001
Or get Esperanto to make a comeback or something like that.
763
00:49:55,001 --> 00:49:58,662
yeah but Bitcoin is still
764
00:49:58,662 --> 00:50:00,302
an evolving project
765
00:50:00,302 --> 00:50:02,622
and that also makes it interesting
766
00:50:02,622 --> 00:50:04,282
to focus on
767
00:50:04,282 --> 00:50:06,982
it is still growing we are still learning about it
768
00:50:06,982 --> 00:50:08,282
I mean we were just
769
00:50:08,282 --> 00:50:09,642
discussing
770
00:50:09,642 --> 00:50:12,302
this new idea about
771
00:50:12,302 --> 00:50:14,501
trying to stop spam or something
772
00:50:14,501 --> 00:50:16,902
as an example of I find myself
773
00:50:16,902 --> 00:50:18,462
on one side of the debate but
774
00:50:18,462 --> 00:50:20,442
you know it is an example of the
775
00:50:20,442 --> 00:50:23,041
conversation about Bitcoin is still evolving
776
00:50:23,041 --> 00:50:24,442
pretty much alive
777
00:50:24,442 --> 00:50:29,982
something yeah or you know it's been it's now been a while since we had a protocol upgrade but i think
778
00:50:29,982 --> 00:50:35,262
these are also you know these are very fundamental questions about bitcoin like what
779
00:50:35,262 --> 00:50:41,142
is bitcoin what do we want bitcoin to be uh what do we want bitcoin to be in 100 years from now
780
00:50:41,142 --> 00:50:47,061
right and and decisions we make now in that regard can really ripple out into the future and
781
00:50:47,061 --> 00:50:52,662
that makes it a particularly interesting project to focus my time and attention on i think
782
00:50:52,662 --> 00:51:04,822
Well, and that note maybe takes me to a question, which is, you know, you've interviewed cypherpunks, early developers, the people who working on this and built it before anybody cared.
783
00:51:05,642 --> 00:51:20,162
From an historical perspective and what we see in the future in this next hundred years, as you laid out, what are those early builders, philosophers, writers, what do they carry that the new wave doesn't?
784
00:51:20,162 --> 00:51:23,581
What do we lose as that generation fades?
785
00:51:24,182 --> 00:51:25,162
You mean the...
786
00:51:25,682 --> 00:51:28,162
Sorry, I referring to like the...
787
00:51:28,782 --> 00:51:29,081
Yeah.
788
00:51:29,342 --> 00:51:31,302
Well, I hope it doesn't fade.
789
00:51:32,041 --> 00:51:34,122
I hope this is the wave of the future.
790
00:51:34,521 --> 00:51:35,162
That's the...
791
00:51:35,822 --> 00:51:37,481
Sorry, by that, well, let me clarify.
792
00:51:37,682 --> 00:51:42,882
What I mean is ethos, spirit, commitment, work ethic, any of...
793
00:51:42,882 --> 00:51:46,282
I mean, maybe that just isn't something that concerns you, and that's good too.
794
00:51:46,282 --> 00:51:59,682
No, but I think it's a good question, but I want to make sure that I understand correctly. So is your question if the sort of first generation of Bitcoin developers kind of retires and then what happens next?
795
00:52:00,182 --> 00:52:15,802
Yeah, well, I mean, and Nick Szabo recently resurfaced on X, right? And that's fantastic. Adam Back is, you know, still quite active. I mean, as those guys, you know, do what they do, run off into the sunset, whatever.
796
00:52:16,282 --> 00:52:23,561
Do you think, is there something that we need to reinvigorate that they today are the torchbearers of?
797
00:52:23,561 --> 00:52:35,561
I mean, I hope that, you know, future Bitcoin generations will continue to find privacy important.
798
00:52:36,501 --> 00:52:45,302
Yeah, as I write in the Genesis book, I think Bitcoin really has two sort of origin stories and they merge into one.
799
00:52:45,382 --> 00:52:48,462
And that's also very much how I wrote the book.
800
00:52:49,322 --> 00:52:58,202
One of them is the hard money side, or I should really say the separating money and state side.
801
00:52:58,981 --> 00:53:01,662
There's a lot of emphasis on Hayek in that part of the book.
802
00:53:01,662 --> 00:53:09,021
And then the other is the privacy side, so the David Chown aspect of it.
803
00:53:09,021 --> 00:53:21,122
And I do think that, at least in the broader Bitcoin culture, one of them is emphasized much stronger than the other.
804
00:53:21,762 --> 00:53:32,501
In fact, the current Bitcoin narrative is evolving away from even really being considered as money, but more as like a financial asset or something like that.
805
00:53:32,501 --> 00:53:35,622
but I would say still the
806
00:53:35,622 --> 00:53:37,541
separating money estate and
807
00:53:37,541 --> 00:53:39,322
the hard money aspect
808
00:53:39,322 --> 00:53:41,602
that's still quite present as well
809
00:53:41,602 --> 00:53:43,021
it's the privacy
810
00:53:43,021 --> 00:53:45,442
aspect that's sort of
811
00:53:45,442 --> 00:53:47,521
you know that muscle isn't being
812
00:53:47,521 --> 00:53:49,742
trained as much and I do think
813
00:53:49,742 --> 00:53:51,001
that's important
814
00:53:51,001 --> 00:53:53,622
that is the future that I
815
00:53:53,622 --> 00:53:55,782
want to see where transactions are in fact
816
00:53:55,782 --> 00:53:57,622
private I don't want
817
00:53:57,622 --> 00:53:59,001
to live in that dystopian world
818
00:53:59,001 --> 00:54:01,362
Bitcoin itself could still
819
00:54:01,362 --> 00:54:06,622
So, you know, that door is not closed because Bitcoin doesn't have perfect privacy.
820
00:54:07,501 --> 00:54:07,902
Absolutely.
821
00:54:08,061 --> 00:54:12,902
The door to a dystopian world, even with Bitcoin, is still open in that sense, I would say.
822
00:54:12,902 --> 00:54:25,662
And I think that's still going to require a lot of work and also people caring about that to adopt these kinds of technologies, to adopt privacy-improving technologies.
823
00:54:25,662 --> 00:54:29,622
think of things like Fediment or privacy layers.
824
00:54:29,742 --> 00:54:32,501
Even the Lightning Network has privacy inbuilt.
825
00:54:33,001 --> 00:54:33,602
Yeah, exactly.
826
00:54:34,142 --> 00:54:35,942
I think it's very important to,
827
00:54:36,122 --> 00:54:37,561
and hopefully also on the base layer,
828
00:54:37,642 --> 00:54:38,581
we can see improvements.
829
00:54:39,742 --> 00:54:40,882
I think that's, yeah,
830
00:54:40,962 --> 00:54:45,602
if I'm worried about any torch sort of dimming,
831
00:54:45,702 --> 00:54:48,541
that would be the one.
832
00:54:48,622 --> 00:54:52,302
I do think that is still quite alive
833
00:54:52,302 --> 00:54:54,602
within the development community today, though.
834
00:54:54,602 --> 00:55:09,682
I think if you go to technical conferences and if you reach the mailing list, a place where developers are talking, then for them it is still definitely on their mind and at least one of the priorities that they do actually care about.
835
00:55:10,981 --> 00:55:18,822
But, yeah, I hope they stay that way, or at least in that domain.
836
00:55:18,822 --> 00:55:34,521
Well, and so that may be one in the same as what I'm about to ask, but you talked about, you know, continuing to sort of carry the torch in terms of valuing the aspect of the critical aspect of privacy.
837
00:55:34,521 --> 00:55:43,302
is there anything that you see Aaron as the most plausible failure mode so maybe it's not the 51%
838
00:55:43,302 --> 00:55:51,202
attack but what sort of creeps around in the back of your head as the thing that could could could be
839
00:55:51,202 --> 00:55:57,122
a failure mode for Bitcoin yeah I would say I'm most worried about sort of incremental regulation
840
00:55:57,122 --> 00:56:02,402
that just makes it harder and harder to use Bitcoin really as a digital cash.
841
00:56:03,481 --> 00:56:08,222
As unconcerned as I am about, you know, spam or something making that impossible,
842
00:56:08,442 --> 00:56:10,021
which is getting everyone riled up,
843
00:56:10,021 --> 00:56:14,322
I am actually concerned about legislation making that harder and harder.
844
00:56:14,322 --> 00:56:14,922
The slow death.
845
00:56:16,001 --> 00:56:16,541
Yeah, exactly.
846
00:56:16,902 --> 00:56:20,682
The embrace, what there's a saying, right, in English?
847
00:56:20,922 --> 00:56:22,021
Embrace and...
848
00:56:22,021 --> 00:56:23,622
Ah, you know what?
849
00:56:23,862 --> 00:56:24,602
Fun story.
850
00:56:24,602 --> 00:56:28,061
I was at Microsoft when the Embrace, Extend, Extinguish was invented.
851
00:56:29,122 --> 00:56:29,182
Yeah.
852
00:56:29,262 --> 00:56:29,842
Oh, you were.
853
00:56:30,041 --> 00:56:30,282
Right.
854
00:56:30,422 --> 00:56:30,581
Yeah.
855
00:56:30,622 --> 00:56:31,242
I wasn't that.
856
00:56:31,541 --> 00:56:31,742
Yeah.
857
00:56:32,322 --> 00:56:32,722
Yeah.
858
00:56:32,782 --> 00:56:37,581
So making self-custodial wallets or, I mean, even the fact that we're using that term now,
859
00:56:37,682 --> 00:56:40,481
self-custodial wallets, it's, you know, just using wallets.
860
00:56:40,481 --> 00:56:41,822
That was a linguistic hack.
861
00:56:41,962 --> 00:56:43,142
That was absolutely.
862
00:56:44,402 --> 00:56:49,882
I think it was, I think we, the Bitcoin community actually came up with that, unfortunately,
863
00:56:50,142 --> 00:56:50,922
or ironically.
864
00:56:50,922 --> 00:56:51,282
Okay.
865
00:56:51,282 --> 00:56:55,642
I thought that was foisted or shoved in by some clever legislator.
866
00:56:56,462 --> 00:57:04,662
I think the term was introduced to actually protect the rights of self-custodial wallets.
867
00:57:04,842 --> 00:57:06,382
To create a category that could be protected.
868
00:57:07,001 --> 00:57:07,662
Yeah, exactly.
869
00:57:07,822 --> 00:57:13,742
So it was sort of invented for a good reason, but it's still a term that I don't like because it should just be a wallet.
870
00:57:13,942 --> 00:57:19,981
That should just be the default way that people think about using Bitcoin is having your own private keys or your own wallet.
871
00:57:19,981 --> 00:57:22,642
But yeah, making that harder and harder.
872
00:57:23,662 --> 00:57:29,501
As I think you mentioned at the start of the show, we're already seeing privacy developers going to jail.
873
00:57:30,061 --> 00:57:32,222
Very bad development, obviously.
874
00:57:33,402 --> 00:57:43,021
Just the increase of KYC, AML type of regulation, which is getting really ridiculous in my own experience in some cases.
875
00:57:43,782 --> 00:57:44,202
Absolutely.
876
00:57:44,202 --> 00:58:04,001
Yeah, and then at the same time, in parallel, you do see the very regulated institutions adopting Bitcoin in a way, whether it's ETFs or treasury companies, but in a way that has nothing to do with actually using Bitcoin as a form of digital cash.
877
00:58:04,001 --> 00:58:10,162
So you see these two tracks sort of playing out at once where, no, they're not banning Bitcoin.
878
00:58:10,802 --> 00:58:14,762
They're also not attacking it on the protocol level yet, at least.
879
00:58:15,961 --> 00:58:22,642
Although, you know, even miners, I think, are increasingly, you know, dealing with various forms of regulation.
880
00:58:22,981 --> 00:58:26,122
So, you know, that can be ramped up over time.
881
00:58:26,122 --> 00:58:35,581
But yeah, I would say the incremental regulating more and more parts of Bitcoin, that's not even a future concern.
882
00:58:35,722 --> 00:58:36,842
It's just the present concern.
883
00:58:37,142 --> 00:58:37,382
Absolutely.
884
00:58:38,202 --> 00:58:40,922
That's happening day after day, essentially.
885
00:58:41,722 --> 00:58:41,981
Yes.
886
00:58:41,981 --> 00:59:00,902
And, you know, continues here in the U.S. for anyone who's, you know, dealt with banking and Bitcoin, you know, in my time at NYDIG and just seeing what choke point one, two, three, four, five and beyond the so-called operation choke point, what that has done to your point.
887
00:59:01,902 --> 00:59:06,461
And quite devilishly, you know, it doesn't need to be one fell swoop.
888
00:59:06,501 --> 00:59:07,902
It just needs to be suffocation.
889
00:59:07,902 --> 00:59:11,282
And so I think that is certainly the thing that I think most about.
890
00:59:12,222 --> 00:59:13,202
Let's wrap it up here, Aaron.
891
00:59:13,202 --> 00:59:16,961
The big concern is sort of the emailification of Bitcoin, right?
892
00:59:17,422 --> 00:59:17,782
Touche.
893
00:59:18,001 --> 00:59:21,142
And I think I know, I think I understand your subtweet.
894
00:59:21,382 --> 00:59:21,981
My subtweet?
895
00:59:22,902 --> 00:59:24,362
Yeah, maybe I'm being too aloof.
896
00:59:24,642 --> 00:59:36,342
But there are certain players that are looking to make it as simple as email, but with it as highly monitored and susceptible to manipulation, man-in-the-middle attacks and the like.
897
00:59:36,342 --> 00:59:36,762
Right.
898
00:59:36,762 --> 00:59:45,981
Well, yeah, I wasn't getting that specific necessarily, but yeah, the general idea that, you know, the SMTP protocol is still out there, but no one actually uses it directly.
899
00:59:46,322 --> 00:59:46,422
Runs there.
900
00:59:47,142 --> 00:59:48,162
Yeah, exactly.
901
00:59:48,481 --> 01:00:01,942
And, you know, that's sort of the bad scenario for Bitcoin is that the Bitcoin protocol is out there, but no one's actually interacting with it directly because everything is happening through custodial solutions and regulated entities.
902
01:00:02,142 --> 01:00:02,541
Absolutely.
903
01:00:02,541 --> 01:00:07,942
You really lose what makes Bitcoin important and arguably valuable in that way.
904
01:00:09,102 --> 01:00:11,682
Well, shout out to my node there in the corner of my office.
905
01:00:13,162 --> 01:00:26,061
So, Aaron, for someone who's listening who maybe recently realized that the money in their bank is not actually theirs, what should they do and what do they need to understand first?
906
01:00:26,402 --> 01:00:29,162
About Bitcoin or just in general?
907
01:00:29,862 --> 01:00:30,782
Unless you have other tips.
908
01:00:30,782 --> 01:00:40,802
I mean, I think the best tip is to just start with, just get yourself a little bit of Bitcoin, right?
909
01:00:41,182 --> 01:00:42,581
But get it on your own wallet.
910
01:00:43,162 --> 01:00:45,102
Get a wallet, get some Bitcoin on it.
911
01:00:45,282 --> 01:00:50,222
If you really haven't used Bitcoin yet, you know, just try it out with a small amount.
912
01:00:50,322 --> 01:00:58,802
And I think, you know, just touching it is the first entry point to getting more interested, hopefully.
913
01:00:58,802 --> 01:01:04,182
yeah I mean I would recommend
914
01:01:04,182 --> 01:01:07,862
maybe there's a good
915
01:01:07,862 --> 01:01:10,402
point to pitch my book here or
916
01:01:10,402 --> 01:01:14,242
please do absolutely I was trying to tee you up
917
01:01:14,242 --> 01:01:15,322
for that that was the tee up
918
01:01:15,322 --> 01:01:20,162
yeah well the Genesis book check it out
919
01:01:20,162 --> 01:01:24,142
it's the prehistory of Bitcoin the origin story of Bitcoin if you want to know
920
01:01:24,142 --> 01:01:27,662
where Bitcoin came from the Genesis book is the place to go
921
01:01:27,662 --> 01:01:41,422
So if you could sit down with a version of yourself who, as I understand it, first found Bitcoin in 2013 by way of Silk Road, what would you tell him about what this would entail?
922
01:01:41,541 --> 01:01:46,222
And would you still advise to go down this path?
923
01:01:47,162 --> 01:01:48,382
I would say nothing.
924
01:01:48,642 --> 01:01:49,442
No spoilers.
925
01:01:50,001 --> 01:01:50,942
No spoilers.
926
01:01:52,862 --> 01:01:54,302
That's more fun that way.
927
01:01:54,302 --> 01:01:57,501
I'm happy no one told me what to expect
928
01:01:57,501 --> 01:02:00,802
because Bitcoin has been a wild and interesting
929
01:02:00,802 --> 01:02:02,581
right
930
01:02:02,581 --> 01:02:04,622
never boring in Bitcoin land
931
01:02:04,622 --> 01:02:05,981
I'll tell you that
932
01:02:05,981 --> 01:02:08,862
well good I'm glad we're not in that alternate future
933
01:02:08,862 --> 01:02:10,642
I definitely don't regret it
934
01:02:10,642 --> 01:02:13,242
I definitely don't regret it
935
01:02:13,242 --> 01:02:13,682
obviously
936
01:02:13,682 --> 01:02:15,862
it's been a super interesting
937
01:02:15,862 --> 01:02:18,362
over decades by now
938
01:02:18,362 --> 01:02:20,702
it's been an interesting time
939
01:02:20,702 --> 01:02:22,162
maybe I would tell myself
940
01:02:22,162 --> 01:02:24,662
something about, you know,
941
01:02:24,742 --> 01:02:26,382
if you're going to write a book,
942
01:02:26,461 --> 01:02:28,001
don't expect to be done in a year.
943
01:02:29,262 --> 01:02:31,521
That was the biggest surprise for me.
944
01:02:32,981 --> 01:02:34,501
Writing a book is a lot of work,
945
01:02:34,622 --> 01:02:35,481
I will tell you.
946
01:02:35,842 --> 01:02:36,961
My other friends would agree.
947
01:02:37,682 --> 01:02:38,202
I was not,
948
01:02:39,162 --> 01:02:40,622
well, I mean, I finished it,
949
01:02:40,702 --> 01:02:41,882
but I was not prepared for that
950
01:02:41,882 --> 01:02:42,442
when I started.
951
01:02:42,782 --> 01:02:43,581
In my mind,
952
01:02:43,622 --> 01:02:45,122
I would write a book in like a year
953
01:02:45,122 --> 01:02:45,862
and then it's done,
954
01:02:46,001 --> 01:02:48,942
but that was something, you know.
955
01:02:49,702 --> 01:02:51,501
And what was the start to finish for you?
956
01:02:51,501 --> 01:02:55,061
How long did it take to go from I'm going to do this to it's available?
957
01:02:55,842 --> 01:02:59,442
Yeah, it was like five years, five, six years from X.
958
01:02:59,501 --> 01:03:01,362
But yeah, I really started from scratch, right?
959
01:03:01,402 --> 01:03:05,102
I didn't even know myself what book I was going to write.
960
01:03:05,182 --> 01:03:10,521
I knew that I wanted to write the origin story of Bitcoin, like the projects, like the people
961
01:03:10,521 --> 01:03:11,802
on projects that came before Bitcoin.
962
01:03:12,001 --> 01:03:12,762
I knew that.
963
01:03:12,862 --> 01:03:19,461
But other than that, I really went in as a sort of blank slate myself, other than, you
964
01:03:19,461 --> 01:03:23,541
know, the couple of pages that you read in another Bitcoin book about, you know, there
965
01:03:23,541 --> 01:03:30,202
were some things before Bitcoin, but I was not an expert in that domain before I started.
966
01:03:30,402 --> 01:03:36,122
So when I started writing the book, I did not know what book I was going to write, essentially.
967
01:03:36,501 --> 01:03:39,762
It was a big discovery journey for myself as well.
968
01:03:40,122 --> 01:03:40,162
Brilliant.
969
01:03:40,362 --> 01:03:41,282
Well, glad you did it.
970
01:03:41,422 --> 01:03:42,461
Appreciate all your work, Aaron.
971
01:03:42,461 --> 01:03:43,922
I know you're on Noster.
972
01:03:44,081 --> 01:03:47,102
I think you have turned away from the X, the Twitter.
973
01:03:47,102 --> 01:03:50,342
What's the best place to follow your writing and your work?
974
01:03:50,981 --> 01:03:53,862
Yeah, Noster is probably the best place to follow me right now.
975
01:03:55,081 --> 01:03:58,021
So it's just Aaron Van W on Primal.
976
01:03:58,422 --> 01:04:05,981
Or you can just go to my X and, you know, it's at Aaron Van W and you'll find my Noster publicly there as well.
977
01:04:06,242 --> 01:04:07,081
I'll still sometimes...
978
01:04:07,081 --> 01:04:08,122
Love that low-key advertisement.
979
01:04:09,501 --> 01:04:14,822
Yeah, I'll still sometimes tweet or retweet some self-promotional things on X,
980
01:04:14,822 --> 01:04:17,501
but that's really all I use it for anymore.
981
01:04:18,322 --> 01:04:19,262
Got to get that distribution.
982
01:04:19,602 --> 01:04:22,021
Not serious where I'll share more of my thoughts
983
01:04:22,021 --> 01:04:22,842
and these kind of things.
984
01:04:23,561 --> 01:04:24,382
I'm with you there.
985
01:04:24,862 --> 01:04:25,981
Well, Aaron, thanks again for the time.
986
01:04:26,081 --> 01:04:26,722
Appreciate it.
987
01:04:26,961 --> 01:04:28,481
And hopefully we can do this very soon.
988
01:04:29,242 --> 01:04:29,461
Yeah.
989
01:04:29,702 --> 01:04:30,521
Thank you for having me.
990
01:04:30,782 --> 01:04:31,382
All the best.
991
01:04:32,102 --> 01:04:32,422
See ya.
992
01:04:44,822 --> 01:04:49,662
Thank you.