Hello Mr. Lopp and welcome to the Crypto Insider interview.
I'm Vlad and today I will be asking you a few questions for about 30 minutes and I just
want you to know that I'm very happy to have you here and this is a true honor and privilege
for me.
My pleasure, fire away.
So you want me to start with the hard questions.
Go for it.
I have quite a few from people whom I've asked for questions in the last week and my boss
actually has a few for you like Bitcoin versus Bitcoin Cash.
How do you destroy the arguments of Roger Veer?
Do you think that there's anything good about Bitcoin Cash?
You know this is an incredibly complex topic that we could easily spend the entire time
discussing, but what it really comes down to is that there are no absolutes.
Everyone has their own perspective and their own version of the truth and their own things
that they're trying to optimize for.
So the best way I can break down the Bitcoin versus Bitcoin Cash thing is Bitcoin is trying
to optimize for a low cost of full validation of the entire history of the chain at the
possible expense of high cost of transacting, whereas Bitcoin Cash is doing the opposite
and trying to optimize for a very low cost of transacting at the potential high cost
of fully validating the chain.
And so I mean these are trade-offs and it ultimately comes down to philosophical differences
and then you can get into issues of governance and sovereignty and all of that.
And so I can't authoritatively state that Bitcoin Cash should not exist or that they
don't have the right to do whatever they want and pursue the path that they want to see
happen with what they believe the real vision of Satoshi and the future of Bitcoin is.
All I know is that I and a lot of people that I talk to are like-minded in that we prefer
to optimize for self sovereignty and enabling as many people as possible to operate in this
permissionless and trustless environment.
And that does mean that there are going to be pain points along the way at which people
are using the system in an inefficient manner and it causes problems for everyone else because
this is a scarce resource, it's a common resource, the actual block space.
And it's just something that we're going to have to deal with.
And I think that the ecosystem has dealt with it pretty well over the past year.
A lot of businesses have optimized how they're using the blockchain and now we have a number
of different efforts that are working on both making the protocol better and making businesses
better understand how to use Bitcoin in more efficient ways.
So it's an ongoing process and I think that some people are never going to stop debating
what the future should be, but I'm more interested in building my vision and trying to collaborate
with people who share that vision.
This just came to my mind while you're talking about whether or not you should be dismissing
or telling projects that they should not exist.
What do you think about the differences between Litecoin and Bitcoin Cash?
They are very similar in many ways.
They both have similar technologies.
They use different mining algorithms.
But at the end of the day, they have the same approach.
So which one of them do you think will live longer as a project or may have a greater
success?
It seems like the Litecoin developers are more closely aligned with the mindset of Bitcoin
developers and they're willing to adopt these more cutting edge, like layer two technologies.
So I would expect, at least from a scalability standpoint, that Litecoin is going to be able
to scale orders of magnitude greater than Bitcoin Cash without increasing the cost of
actually validating that change.
So it does get kind of weird when you start trying to compare all of these different things
and the fact that there is hundreds if not thousands of blockchain based networks out
there that you can transact cheaply on and the reason you can transact cheaply on them
is because not many people are using them and they're not being pushed to the limits
of what those networks support.
So it's going to be a never ending thing where there's just a lot of marketing and propaganda
going on until these networks actually reach their limits and we see, you know, this is
actually as far as you can go with the current protocol and that's actually why it's interesting
to see adoption happen to the point that it starts to hurt is because that's when the
engineers can then step in and say, okay, you know, these are the bottlenecks and these
are the things that need to change if we want to take it to the next level of adoption.
Okay, so I'll ask another question which I received from a guy named Laurentiu.
He's also Romanian and he follows me and he says, ask Jameson Lopp, please, how can we
make Bitcoin better and how would it look?
What would it look like in the space when all the Bitcoins are mined?
I think that's the more interesting question.
Yeah, well, how can we make Bitcoin better really comes down to the fact that, you know,
this is a distributed open system where if you want to collaborate, if you want to use
your skills and resources, it's kind of up to you.
You know, I can't, I'm not a project manager of Bitcoin, the project.
I can't sit here and tell you, you know, you need to do this and you need to do that.
Really it's more incumbent, like the freedom of the system means that it's also relying
upon you to decide, you know, what is your skill set?
How can you best apply your skills to the system?
That doesn't mean that you have to be a programmer and you have to write for the protocol implementations
or write for applications or whatever.
I mean, if you're, if you're a marketer or a writer or a technical writer or whatever,
you might write different blog posts or different things on social media to try to help educate
people.
Heck, if you're a good illustrator and you've got a sense of humor, you can make memes and
you know, memes are even a very interesting way of like spreading the viral effect and
getting people interested and keeping them engaged.
You know, kind of one of the things that people ask me very often is what is the, what is
Bitcoin's biggest weakness or what, what is the most likely thing to kill Bitcoin?
And my standard answer to that is apathy.
Like the Bitcoin project can only die if we all agree to give up on it and stop contributing
to it.
So, you know, keeping engagement and education and continuing to grow the ecosystem in every
possible way is, is how we, we continue building it and keeping it from dying, keeping people
from leaving and going and spending their time and energy doing anything else.
As for like the, the mining issue, you know, this is one of the reasons why a lot of us
believe that it is important to have the fee market pressure that, you know, does cause
a lot of conflict and anxiety and poor user experience as we're trying to figure out how
to navigate the fee market because as the block reward and the subsidy keeps going down,
if we, if we don't, if we don't compensate for the, the, the new bitcoins that are no
longer being created to pay for the miners with, you know, increased transaction fees,
then that just means that like the amount of value that is being paid to secure the
network in terms of the computational hash power is going to decrease.
So we, you could also argue that, you know, increasing the, the exchange rate as, as the
subsidy keeps going down would also offset that, but that's not really something we have
much control over.
I think it's, it's more feasible to, to try to help this fee market continue to develop.
And so while, you know, it'll be like a hundred years before the very last of the bitcoins
get mined, I think it's only in, you know, the next 10 or 20 years that the vast majority
of them will already have been mined.
And so that's why I think that over the next five, 10 years, we need to continue to develop
a fee market and be offsetting the subsidies because otherwise I think Bitcoin would continue
to exist.
It's just, there would be less hash power and less security.
Basically it would be cheaper for other people to start rewriting the blockchain and that
would be a very bad thing.
You know, we want Bitcoin to be so secure that even like first world countries do not
find it profitable to, you know, buy up or confiscate a bunch of mining equipment and
try to do a 51% attack on the whole network.
So, you know, if, if you, if you operate under the assumption that we're trying to go for
like a greater than nation state level of computational security, then we need to be
paying millions of dollars a day basically for the security.
I just had this thought because you mentioned your approach and your vision to Bitcoin cash
and Litecoin and I've read all these articles which claim that they are such a hazard for
the environment and we should stop mining as much.
And I was just thinking, do you think there is room for more than one proof of work coin
in the space?
Or maybe at some point, some coins like Litecoin, like Bitcoin cash, like Zcash or whatever,
the ones which require mining, they might switch to proof of stake just to power up
Bitcoin.
If we get to that point where we all acknowledge its power and its influence in the space and
its importance, you think that they will all just use the hash power to give it to Bitcoin
to secure it?
Well, I mean, my opinion is that if you want a high level of guaranteed security that there
can only be one, at least one proof of work per algorithm and thus per type of ASIC coin
that is going to dominate.
So that's simply because you can look at, for example, all of the SHA-256 hashing algorithm
coins out there, Bitcoin and the vast majority of the forks, where last I checked, I think
that Bitcoin cash had between five and eight percent of the hash power of Bitcoin, which
means that theoretically, almost any pool, any pool in Bitcoin, that pool operator could
on a whim decide to redirect that hash power and start 51% attacking Bitcoin cash.
Now, there's plenty of reasons why I think that hasn't happened.
It would cause a lot of disruption in the community in general and may not be long term
profitable due to the loss of confidence that would happen.
But if you want the ultimate even like theoretical security, then I think you have to be like
top dog of whatever your proof of work algorithm is.
So actually, if I recall correctly, Dogecoin was using the same script mining as Litecoin.
And then a few years ago, they actually came to an agreement to like merge mine Dogecoin
with Litecoin.
So that was another interesting development there, because I think Litecoin miners could
have easily 51% attack Dogecoin.
So you can also get into symbiotic relationships, but you can also argue about how theoretical
are these types of attacks since they don't seem to happen that often in the real world.
But if we are talking about like having the absolute best guarantee security, then I think
that there can only be one top contender for each of these algorithms.
Whether or not, you know, proof of stake becomes a thing, you know, that's a whole other tricky
issue because, you know, proof of stake has its own share of issues, especially concerning
like long term attacks, long term reorgs, this like nobility problem.
Then there's also the issue of, well, you're actually using resources inside of the system
to secure the system as opposed to using external resources, aka electricity and ASICs and whatnot.
And you know, that also can turn into kind of a philosophical argument.
But I think the most important thing is that right now there aren't any really great proof
of stake systems that have been deployed into production that, you know, don't have other
basically kludgy things bolted onto them like most of the proof of stake systems that I've
seen have ended up having like regular developer checkpoints or ended up being this like delegated
proof of stake, which is really more of a federation.
So you're basically creating completely different security models than what you get with proof
of work.
And of course, we could argue about the pros and cons of all of those for a long time as
well.
So I think, you know, there is a concerted effort, especially by the Ethereum folks,
to try to find a better form of proof of stake that is good enough.
I don't think any of these things will ever be perfect.
But if we can build one that at least is so expensive to attack that we effectively don't
see any attacks, then I think it will get plenty of adoption.
I'm not saying that I personally would adopt it.
We'll see.
Do you think that the Ethereum people will do a good job with their Casper implementation?
Because there seems to be a lot of rumors and a lot of talks about Vitalik's version
or Vlad Zompers version.
And they seem to have different philosophies.
They might have reached at this point when they saw all these Ethereum killers just take
away some of their market share, they might have reached some sort of consensus and maybe
they want to speed up the implementation because it has been almost two years or more.
I'm not sure.
Well, yeah.
I mean, they're on the bleeding edge of creating these new consensus protocols and it seems
like they're constantly rethinking the work that they've done.
And so it's hard to believe that they have stumbled upon the optimal version of whatever
this protocol should be because it's still changing.
I think just a few days ago, they basically had a consensus failure of their test net.
And that in and of itself doesn't mean that the whole thing is flawed.
It just means at the very least, there's still some bugs that need to be worked out.
And when it comes to building these type of networks, you can never be 100% sure that
it's bug free.
It more comes down to, well, the system has been running for this long and securing this
many million or billion dollars worth of assets and has not been successfully attacked.
So it's one of those, we have to wait and see type deals before we can evaluate it better.
So do you think that Ethereum will ultimately be its own killer in the sense that you have
EOS, you have Tezos, you have NEO, and I think I can name like five more, but I'm not going
to do it.
But do you think that Ethereum will overcome its issues and just get back its community
and it's part of the market?
I think that if and when they do deploy their proof of stake system, there are a lot of
people who are holding onto their Ether because they want to stake it and they want to, you
know, basically, you know, earn interest on those tokens that they've been holding onto
so that, you know, that will create like a renewed sense of enthusiasm and whatnot.
I think the bigger question for me is actually the scalability of like their sharding implementation
and you know, also how that changes the security model because from what I have read about
it, you know, it very drastically changes the security model of, you know, from what
a fully validating node on the network today, which I would argue there actually aren't
that many on Ethereum, will eventually, you know, become this sharded node that will only
see a very tiny aspect of what's going on on the network and, you know, how that ends
up like playing off of all the other shards and whether or not there are consensus failures
between the different shards and how that's all handled.
That's a big question, Mark, which is going to be very interesting to see how it plays
out.
But I think if they do succeed in the sharding plan, the last I saw is that I think they
were estimating, you know, maybe like 200x throughput, which is pretty significant.
But you still come across this fundamental issue of, you know, doing all of these computations
on the blockchain, even if it's a sharded blockchain, it's very difficult to foresee
how you end up having this single world computer that is actually, you know, used at a mainstream
level.
Personally, I believe that, like, Ethereum will become adopted more as a protocol and
as a virtual machine than necessarily the main Ethereum network, and we've already actually
seen this happen.
Like, there's a number of different, like, private and permissioned networks out there
that are based on the Ethereum virtual machine, and there's even RSK, which is the Bitcoin
side chain that supports the Ethereum virtual machine.
So I think Ethereum has shown there's very clear use case for having this type of more
generic developer-friendly smart contract language.
It's a bigger question in my mind as to how, like, what the final form of that actually
to being adopted and implemented is, and it may not be on the main Ethereum network.
Do you think that Ethereum Classic has it right in its approach?
Because they say they support immutability, they want to be what the original project
wanted to be, but at the same time, they don't show any signs of increasing scalability and
they haven't had any issues just because they weren't challenged up to this point.
So do you think that at some point in the future, they will fail or maybe succeed in
their attempt?
They want to focus on Internet of Things and maybe have smaller applications, not necessarily
something like CryptoKitties, which will freeze their blockchain.
But at the same time, they're also permissionless.
So anyone can deploy an application on their blockchain.
So if anyone is malevolent, is that how you pronounce it?
Malevolent.
If anyone is malevolent, then they can just freeze their blockchain.
I mean, I would say I probably align philosophically with the Classic developers more, but you
know, I think they're also at a huge disadvantage simply because it's such a smaller group.
They don't have the same manpower and skills basically dedicated to building out that network.
So from that standpoint, I think it's going to be more challenging for them to try to
be a serious contender in this space.
That's very diplomatic of you.
You didn't make any assumptions about the future of it, but you said it's going to be
challenging.
I can take that, because now let's get back to Bitcoin.
I've seen your involvement in the Bee Foundation, which wasn't supposed to be called a foundation.
It was supposed to be just the Bee.
But as I've learned from Giacomo, he told me that at first it was just the Bee, but
then he had to fill in some forms and he had to make it a foundation for legal reasons.
And that leaked and it didn't end so well just because people have such a bitter memory
of the Bitcoin foundation, which somehow still exists for reasons.
But what is your involvement more precisely?
Yeah, well, I mean, that's more of a branding versus a legal technical issue, I guess.
I'll probably generally be referring to it as the Bee, but for legal reasons, it has
to have foundation on the legal documents.
So really Giacomo is driving this effort because he was basically doing similar stuff with
his BHB network in Italy where he was funding various projects basically on his own.
And then Elena is the force behind the legal entity, but she is taking more of a hands
off approach and doing more of the advising, which is what the rest of us are doing, which
basically means that we're all in a chat room and email list and discussing various decisions
that will need to be made.
This is mostly going to be fairly inane stuff of saying, well, do we want to put this project
in our tree of donations that people can say that they want to allocate funds to?
And what are the major initiatives that we want to try to fund in this space?
I think inevitably there probably will be some more contention around outreach efforts.
Some people are going to get triggered and think that we're trying to represent the ecosystem
or various aspects of the ecosystem.
I was pretty clear upfront that I don't want to be involved in anything that is like trying
to lobby governments or trying to create propaganda or perspectives of what people believe Bitcoin
should be, rather I'm interested in trying to fund different projects that are trying
to build on top of Bitcoin and Lightning and what other side change, really any other technology
is they're building on top of Bitcoin just to try to continue to spur adoption and developer
interest in the system.
I was actually trying to do something like this on my own about a year ago.
I was talking to attorneys in the United States trying to figure out if I could form a charitable
organization and it turns out the IRS in the United States made it very difficult to do
that for open source software projects about 15 years ago.
So there's only like three or four out there like the Linux Foundation that are actually
charitable organizations that support free and open source software development.
And then when Elena came to me and was saying she was trying to do something similar but
she was doing it in Liechtenstein because the legal environment seems to be better there,
I said I'm all in and whatever I can do to contribute will be great and then it turns
out there's a lot of other people in the space who have been thinking the same thing and
just from conversations I've had over the years, I think that there is a fair amount
of demand and funding out there that would be interested in basically helping grow the
ecosystem by donating to different projects but there just hasn't been a good vehicle
for it.
And I think the Bitcoin Foundation had an opportunity to do that but they made a number
of mistakes, they stretched themselves too thin, they tried to be everything for Bitcoin
and I'm hoping that by keeping a much more narrow focus on more of the technical side
of things that we can succeed where they fail.
I think you are just too nice with the Bitcoin Foundation because it had financial interest
in the first place.
So it didn't begin as something which wanted to preserve or improve the protocol or maybe
help with scholarships for the next generation of developers to emerge.
It was just made out of Charlie Shrem and who also was on board.
Yeah, it was more of an industry association but then I think that they also compounded
their issues without talking about the specific personalities.
There were a number of people there who ended up having legal issues which didn't help but
they also made it, of course, this general membership organization and they created a
very rigid bureaucracy basically and I think the bureaucracy didn't help.
It probably slowed things down and also resulted in making it easy for misappropriation and
misallocation of resources because they ended up blowing through I don't even know how many
tens of millions of dollars where if they had taken a longer term approach and held
on to some of those funds then they would have been easily sustained for 10 years if
not longer.
And I think that the main reason that they still exist because I still read the meeting
notes from time to time, it seems like mainly from donations of the board members like I
know Brock Pierce has been donating a significant amount of ether to the Bitcoin Foundation
and of course that lost a lot of value over the past year so the Bitcoin Foundation lost
a lot of money but they can continue doing whatever they feel like doing.
It just seems like they're not doing much anymore.
I'm not entirely sure why they exist.
Francis Poulier who is helping with the B now, he was on the Bitcoin Foundation board
and he seemed to indicate that it was mostly just a phone call once a month or so and not
much else actually going on.
I think at the end of the day Bitcoin does need lobbying but it doesn't have to be centralized.
So you can just speak on your behalf as a person who is involved in Bitcoin but it doesn't
make much sense for a protocol which is distributed and at the same time it's open source.
You shouldn't be speaking on behalf of everybody because usually you find that there are so
many dissonances and differences of opinion.
Is that how you pronounce it?
Dissonances?
Yeah, dissonance.
No, the plural form.
Dissonance is the singular but the plural?
I think the plural is the same as the singular.
Really?
Okay, I'm going to look it up after.
But I'm about to ask you about the Liquid Network which Blockstream has launched a few
days ago.
You think ultimately that it's a good idea to centralize some transactions from the exchanges
and have a side chain just for them as a way of decongesting the main chain.
A lot of people seem to be skeptical and point out to Blockstream that they're actually turning
Bitcoin into something which they don't like but at the same time it's not mandatory to
use it.
If it fails, you still have Bitcoin the way we know it and we use it.
Yeah, so interestingly enough, I have a very privileged perspective of this and that is
because I spent three years working at BitGo and BitGo, of course, services a lot of the
large crypto exchanges out there.
So we actually had the ability to see what some of the fund flows look like between exchanges
and what we could tell very easily is that there is a lot of redundant fund flows between
exchanges.
The reason for this is that when you have 10,000 users on OKCoin and they also have
accounts on Bitstamp and they want to send money from OKCoin to Bitstamp, then each of
those users is going to request a withdrawal from OKCoin and put in their Bitstamp address
and click submit and do whatever other security things are required.
And then OKCoin is just going to see this list of addresses and they might be a little
bit efficient.
They might batch them up in a few transactions with a lot of outputs but still at the end
of the day, they're going to be creating a lot of transactions and a lot of UTXOs to
essentially move money from one entity to another.
So this is highly inefficient and the reason for this is mainly due to the pseudonymous
semi-private nature of the network.
It's because OKCoin doesn't know that all of these users are sending it to Bitstamp.
It's the same entity.
All they see are these random addresses and take that particular example and basically
multiply it by a factor of n factorial for however many different exchanges there are
and users on those exchanges and I think that as a result, there is a significant fraction
of block space that is being used up doing nothing more than sending money from one exchange
to another back and forth, back and forth as users are rebalancing their accounts and
just going about their normal activities.
So there's a couple of different ways of course that you can try to get around that and make
that more efficient.
One way would be to kill off the privacy and have people identify that they're sending
to a specific exchange and then the exchanges can form these private agreements and settle
up on a daily basis, not unlike banks.
Another way is that you can use a second layer network, so hopefully one day all of the exchanges
will also be integrated with one another on the Lightning Network and a lot of these cross-exchange
transactions can happen on the Lightning Network, but we're not there yet and it's unclear how
long it's going to take before we see major exchanges adopting Lightning Network for withdrawals
and deposits.
There's one or two small exchanges already have.
And then of course, another way is another, you could call it second layer solution, use
some sort of side chain, some other thing that is cryptographically tied to Bitcoin.
And so Liquid is one of those, it just happens to be more permissioned than Lightning is,
but I think it's going to be a faster way to get towards that.
They've been working on Liquid for years and now they're actually deploying it.
Hopefully this will give us a bit more congestion reduction in the near term and provide a stop
gap solution at least until Lightning becomes more of a thing.
And maybe it takes off and it also ends up doing a ton of transaction volume itself because
remember that it's also got additional privacy features that you don't get on Bitcoin, arguably
better privacy even than you would get on Lightning Network though it's kind of hard
to compare those two things.
But yeah, nobody is forced to use Liquid either.
So from a moral perspective, I have no problem with it.
From a technical perspective, if people look at the security model and the privacy model
that Liquid offers to them and they decide that Liquid is going to benefit their use
case then by all means I think they should use it.
I think the only part about the Liquid network which I do not understand very clearly is
how they want to be geographically diverse in the sense that they don't want to concentrate
too many exchanges from one continent or one country so that the political factor like
the government which imposes new policies shouldn't shift the governance of the side
chain as a whole.
But at the same time we can see that exchanges are very much concentrated in certain countries
somewhat offer maybe better financial policies, better tax situations.
So I find it hard to understand how they're going to make this work and how they're going
to maintain the balance.
Yeah, I mean that is the tricky thing when you have a federation though.
You could argue that they have a little more control over that balance than we have in
a more permissionless system like with miners.
Really nobody can control what the geographic distribution of miners is.
That's more of an issue of natural resources and a ton of other factors that are outside
of the control of pretty much any human.
So I mean but yeah, I mean it's a different security model and it may be difficult to
reason about especially if you're looking at the nation state attacker level.
I guess the ultimate end game scenario though is what is the worst thing that can possibly
happen if you're using liquid?
If say there was some sort of even multi-nation state level attack that manages to shut down
the whole liquid network, my understanding is that you should still be able to then basically
retrieve your coins back on the main Bitcoin chain.
So as long as it is protected against total loss of funds which seems to be the entire
point of a side chain is that you can screw around on there and even if the side chain
fails no one should actually lose money.
That seems like a win-win.
I was thinking about this model of governance that at some point we might see a Chinese
exchange which wants to get in but they will say no we'll just wait until another US exchange
gets in so that we have balance and another one from Korea and they want to have this
sort of harmony but maybe that it's a good idea and I also like the fact that they don't
care about the size or the volume of the exchange.
They don't care if it's Coinbase or Binance or OKCoin.
They just want to have one exchange one vote but then again that can also be exploited
in the sense that you can divide a big exchange into smaller divisions and have more voting
power.
Well yeah I mean you have to be wary of the type of issues that we've seen in like EOS
for example of like block producers voting for themselves and all of that.
Oh yeah that was nasty but at the same time it's expected.
Corruption is part of the human nature even though we don't define it as corruption.
It's just you know back in the ancient times it was all about how about the two of us get
together and beat that guy because we're stronger together.
It's about the incentive and maybe accomplishing something which otherwise you wouldn't be
able to do by yourself.
So yeah it's all about incentives have been expected on their behalf.
I remember Vitalik was bragging on Twitter and saying oh I knew it all along and I told
you so that this would happen but I have no idea how EOS is still functional in the sense
that people trust it and they deploy applications and maybe that it's just because they have
so much Ethereum to burn and they can maintain themselves at that high position and they
can pay for advertisement.
They can remain relevant just because they're wealthy.
Yeah I mean I think that a lot of regular users don't really worry about sort of edge
case scenarios and that as long as a system seems to work then they're not really concerned
with you know what might cause it to fail unless it actually fails then they don't generally
don't care.
Like you could be right on the brink of failure but if the users don't actually notice then
it's not a huge deal.
Plus I think if you have a dApp and you deploy it on the EOS I think if it fails you can
just move it somewhere else even though you're not going to have the data from the blockchain
maybe.
You will just take the same technology the same application and use it somewhere else.
But I've had this conversation with Jimmy Song on Friday and he wrote that controversial
tweet that you should be spending with your credit card because it makes so much more
sense from an economic point of view and when you use Bitcoin to purchase you're actually
selling it and that's not rational in any way because it costs you much more and he
explained it to me and then he wrote an article earlier today and are you adhering to this
type of economic talk or do you think that we should be using Bitcoin as much as we can
to increase the volume?
You know I've actually come across several checkout pages recently where I saw that Bitcoin
was an option and I ended up not choosing it and the reason was several fold.
One I think that my use of disposable debit cards is actually going to afford me more
privacy than Bitcoin right now.
Bitcoin is not very good on the privacy front.
You know if I was paying in Monero that would be a very different story.
Also there's the issue of speculation on what the value will be where right now I'm fairly
confident that we're at the bottom of a bear market and that anything that I spend or sell
effectively sell is going to be a lost opportunity cost where I will basically end up being better
off in the long run if I hold on to it and also kind of related to that is that every
time I spend slash sell I am actually making my life more complicated from a tax standpoint.
I have to go into my capital gain spreadsheet and once again figure out like what was the
cost basis of those bitcoins, what is the amount of tax that I need to pay as a result
and I can tell you my tax situation from last year was a huge nightmare and I'm trying to
avoid that as much as possible.
So you know in general I'm not spending because it would also just be it's going to complicate
my life.
If I do want to go with the like spend and replace strategy then it means that I'm going
and getting my hardware wallet, I'm actually creating the transaction to purchase the thing
and then I have to go to some other exchange or broker and do yet another transaction that
you know buys back those bitcoins that I just spent and then that again you know creates
new entries in my personal accounting ledger for okay now I have a new cost basis for these
bitcoins and I have to keep track of that and then eventually when I sell them.
So yeah it's it complicates my life and I try to avoid doing it and you know hopefully
you know those things will become less complicated over time like I would really like to see
some sort of law in the United States and preferably anywhere else that this affects
of you know getting rid of the need to pay for capital gains transactions for you know
anything under a certain amount.
I think there was like a bill in the United States to try to set that at like $500 or
something.
So if you're having to figure out capital gains for every cup of coffee or every like
$20 widget that you're buying on the internet that's a huge turn off and that's what results
in me generally only selling larger blocks of crypto because it's it's it complicates
my life less.
You know I never really thought about this because here in Romania we don't have any
piece of legislation which even remotely or vaguely mentions Bitcoin or cryptocurrencies.
So if you have Bitcoin and you purchase stuff with it it's like you're not even using a
form of money which they acknowledge.
So you can easily do tax evasion or launder money in this country and we even have like
Bitcoin ATMs but they have high fees so if you withdraw from those machines you actually
pay a lot of money like 7 to 10 percent but I assume that to somebody who bought early
on and maybe wants to take out some cash they can do it so easily.
But I'm happy you mentioned privacy earlier as I've seen that many of your posts and articles
are actually about privacy and how you're trying to rebuild your life like start a new
and have a new I'm not sure if identity but have a new life in which you're being more
cautious about your privacy in your day to day affairs and I even saw that I'm not sure
if it was funny or sad but you refuse to go on a ride in a roller coaster I think just
because you had a debit card which didn't have a name it's a disposable one.
Yeah well you know that created some additional complication.
The stupid thing I don't think I followed up on it but the reason that that was a stupid
event where they basically I purchased the ticket online and used throwaway emails and
debit cards and throwaway billing information and then I got to the actual park and tried
to claim my ticket and they basically started interrogating me and then we're asking you
know why why didn't you use your credit cards and other stuff that's you know tied to your
real name is basically they have some sort of data surveillance system where they try
to positively identify that you are the actual purchaser of the ticket.
The reason that was stupid that they rejected my ticket and refunded it was because when
I showed up at the park I gave them my passport and my fingerprint like they were you know
doing biometric identification for everyone who entered the gates so it was really stupid
that they they claimed that they couldn't identify me because I was giving them my passport
and I ended up buying a new ticket with cash right there on the spot so I don't know what
they thought that they were like protecting themselves or protecting other people from.
It was just one of those things where like they had you know bureaucracy in place and
their system said that they had to reject me using that specific payment method.
Oh man that's insane so you had to give them your fingerprint and your passport just because
you went to a park.
Yeah so you know I I don't think that I've gone to many amusement parks outside of America
maybe none but this is becoming a very common thing in America and I can only assume that
it's due to you know terrorism fears and whatnot is that they're afraid that someone's going
to come in and you know just you know shoot do a mass shooting or a bombing or something
like that and so pretty much all of these parks have very high security where you have
to go through metal detectors and pat downs and x-ray machines and all that stuff it's
basically like going into an airport.
If you ask me that's insane but here in Europe I guess we're much more free on the surface
so you don't get checked they don't care much about what you do you can just walk into a
fun park and go on roller coasters all day long and they will not ask for any ID but
at the same time we have much stricter and harsher secret services like the intelligence
they know all about the people who cross the border they can check on you and my my father
works for the Romanian equivalent of YIRS and he told me that he has to work at the
border from time to time because they cut their funding and they use the same employees
who work in the desks to go to the border and do checks like every for a week every
year or something like that and he told me that when somebody enters the border they
they just take their passports or IDs and they scan them and they can see on the screen
everything like where they traveled if they have any criminal records everything about
them they can just see it on the spot and I'm not sure if you have that in the United
States or I'm sure you have it in the airports but I'm not sure if everywhere
yeah well you know you we definitely have that on all of the borders in like the edge
of the country thankfully we don't have to go through that scrutiny when we cross the
borders of states inside of the country so you know you can go like near nearly four
thousand miles from coast to coast without having to go through a checkpoint like that
though there are a number of checkpoints because some legislation was passed that basically
gave our customs and border control agents the legal authority to operate anywhere within
100 miles of the border and if you actually draw along the coastline and the borders with
Canada and Mexico 100 miles inside of the border actually covers something like 80 percent
of the population of America pretty much everybody lives you know along the coastline on the
east or west coast so they do have jurisdiction over a lot of things and I have come across
a few random outposts in the middle of nowhere on like long motorcycle trips where there
will be nothing but a road and and trees and then all of a sudden there's a guard post
and there's like military people standing there that you know ask for your ID and it's
really weird because it's pretty rare but they do have the authority to do that what
is your explanation or argument when people say I have nothing to hide I'm such a good
citizen I obey the law there's nothing that I do wrong so I have nothing to hide why would
I care about my privacy how do you explain to these people that they should actually
care and KYC or controlling your passport or ID should not be the norm and you should
be a free person a free citizen of your own country yeah so it's it's it's more of a problem
of you don't know what data might be used against you in the future and this really
becomes more apparent when you start looking at like the way the legal system operates
where you know even if you are remotely suspected of some sort of crime law enforcement will
just start digging through your entire past and if they can find anything that is suspicious
or gives them some sort of probable cause to dig into you and try to start creating
problems for you then it's pretty easy to do so you know one one way that I phrased
this is that in the modern age at least in America and I'm assuming probably with most
countries that have reasonably large legal and judicial systems we very rarely delete
laws we just keep writing and creating more and more laws year after year decade after
decade to the point that there are so many laws on the books they like even lawyers don't
know all of the laws like lawyers have to specialize in one specific portion of the
law and so as a result of that we are all criminals it's basically impossible to be
alive and not commit a crime on a regular basis I think that there's a number of interesting
articles out there that are titled something like a crime a day or something or a felony
a day or something but basically like all of these inane laws many of which I would
argue should probably not exist or should have been you know struck from the record
as long ago that if government agents want to put you in jail it's highly likely that
they will be able to find a crime that you committed even if it's not you know an egregious
crime where you know there is a victim necessarily there's a ton of victimless crimes on the
books now as well so I would argue that the only way to protect yourself from that is
to keep as much of your activities private as possible so that it's harder for someone
to pin you with a crime that probably shouldn't even be a crime I actually watched magical
crypto friends and well Panda said that during I'm not sure which conference he attended
and he listened to you have a speech about privacy but he said that many of the measures
that you're taking and you mentioned in the speech are not applicable in Europe because
in here we have like a personal identification number and it's harder for you to just erase
your identity or run away plus I remember when I was in Paris and I've studied there
for a semester as an exchange I couldn't do anything without a bank account I couldn't
have a phone number I couldn't rent a place there was basically nothing that I could do
without getting a bank account and for that I actually needed so many documents that in
the end I ended up being illegally renting and illegally buying like a phone number
from somebody yeah just because the bureaucracy was ridiculous not because I had anything
to hide or because I was a criminal criminal yeah I mean a lot of the protections that
I put in place use various and this is actually one of the reasons why it's actually helpful
that America is so large and has so many different states and jurisdictions is that you can often
find jurisdictions that are more lenient and have more loopholes and so the stuff that
I've done takes advantage of some of those more lenient jurisdictions that have better
privacy so I you know create legal entities in those jurisdictions and then I use those
legal entities to perform various actions such as purchasing property or setting up
utilities and other types of accounts that are tied to my normal day-to-day life and
you know it's not clear to me whether or not you know a European could set up a legal entity
like that in America and then use it in Europe or you know what what what the options are
and the the downside to all of this kind of the conclusion that I came to is that you
know because of all of these regulations that governments have put in place they've basically
priced most people out of privacy the only way that you can have privacy is if you have
a huge amount of wealth like to the level that you can afford to pay for lawyers to
do the legal research to find the loopholes to figure out how to set up these complex
legal entities on your behalf and and that's really you know one of the reasons why I guess
wealthy people also tend to have more freedom is because you you use you basically create
a shield between yourself and the government with lawyers you know the lawyers are kind
of like the you know defensive football players or what have you that are you know protecting
you from being attacked by by by the government because they know how to use the government's
own laws against it you think that these immutable blockchains that we have now can actually
be a leverage for us to negotiate with the governments and tell them give us back our
autonomy and give us back some rights and you may have access or we may allow you to
use them or whatever like when you are in charge of your own money and you're trying
basically to take away the government's power to control you with their currency you think
that you're basically inviting the government to negotiate with you and say we want you
to use our currency and we want you to be a regular citizen but how how can we actually
enact some sort of policy in order to make this category of people be happy or stop this
from spreading to the extent that our currency becomes redundant yeah I mean that kind of
is the thesis of the sovereign individual that your technology will give more power
back to the individuals because we'll be able to replace more of the services that that
people are used to being provided by the government and replace those with basically new technological
means of coordinating on our own in a voluntary fashion so you know if we can then build more
privatized voluntary services that compete with governments and their public services
that will finally put nation states you know kind of back on their heels because they'll
finally have to compete in a free market rather than being able to just exercise a monopoly
over all of these different aspects of our lives but you know it's not going to be easy
either you know there's going to be a lot of people who fight back against that and
say no you know we we have to have the government coordinating everything otherwise it's just
going to be chaos and and so you know I think it's going to get more contentious before
it gets better I don't think it's going to be a very smooth transition by any means but
you think that there is going to be a transition by the way you formulated your sentence well
you know that's what I am focusing on and I think that's what a lot of us are trying
to do is we're trying to make that transition happen you know you can get get into a debate
as to whether or not it is inevitable but I think whether or not is it it is inevitable
it there have to be people behind the movement that actually build the technology and make
it possible to happen in the first place and and that you know a lot of those of us that
are on the forefront of that are also exposed and would very easily be you know the first
ones against the wall as it were if there was some sort of backlash against this movement
so I guess this is the last question but do you see bitcoin as a mean of resistance definitely
I mean it's it's a rejection of of you know monetary policy that is controlled by bankers
and nation states and and you know of course it goes far beyond bitcoin at this point and
and it's it's really just a rejection of the status quo saying you know we want to build
a completely new system that is more open and that we have more input into seeing how
it operates and and so that's why I got involved originally was because I felt like the concept
of money is just a concept that belongs to humanity in general you know it is a shared
agreement it is not something that is supposed to be dictated as to how it operates so you
know there should not be a small group of elite people that are controlling it it should
be something where anyone who is interested they should be able to contribute and have
input as to you know how money itself should operate and so that's why I started contributing
okay thank you very much this was very enlightening and inspiring on my behalf I hope that the
viewers will think the same and I hope that I'll talk to you some other time and maybe
talk about other topics like the lightning network and how distributed and spread it
has become because I know that you keep like tabs on how many lightning nodes have been
deployed so far and maybe by then we will talk about a quick and easy implementation
which anyone can use and maybe we'll have many more side chains to solve other problems
and we will see the end of all these shit coins and maybe we'll have we will have witnessed
the end of the bear market so thank you very much for this interview and have a nice rest
of your day my pleasure thanks