We have to be wary of making changes to Bitcoin because there will always be unforeseen consequences.
The flip side of that, that few people talk about, is that not making changes to Bitcoin also has unforeseen consequences.
I know Bitcoin never sleeps, but hopefully you're able to relax a little bit on the Friday.
I know you're a busy guy, so I appreciate you taking the time to jump on another fucking Bitcoin podcast.
Yeah, so Saturdays are when I normally publish my blog posts, and I have one going out tomorrow.
So it's last hurrah trying to put some finishing touches on this one because it's not even related to Bitcoin.
Okay, well, I'm intrigued. I look forward to reading it. I was just going back through some of your older stuff today, actually.
I was looking through... the last one I was looking at was your one on just Bitcoin memetics, which was...
I'd looked at it before, but looked at it again, and I was like, man, this is such a great archive of every single prominent Bitcoin meme.
Like, it should be some sort of required reading. It's an interesting concept, too, just in general.
I don't know, but that was very helpful. I'm curious, which memes?
Like, so many of the Bitcoin memes have been around since long before I've been in Bitcoin,
which is only since, like, 2020, when I really went down the rabbit hole and started diving into all of this.
And so I think that's the case for a lot of people that were class of 2020 or 2021 or even 2022.
And it's nice to have a little bit more of the historical perspective on some of them.
Like, even, you know, the HODL meme is a great example of that, because a lot of people just think, oh, it's...
someone just decided to misspell hold, right? And it's like, no, no, no, there's an entire post about it.
He goes on this rant. The rant is amazing. You know, my girlfriend's out at a lesbian bar, like, whatever.
And it's always nice for people to have that context of what's the origin story behind these things that you say and say a lot.
Well, yeah, you know, stuff evolves, right?
So HODL turned into a backronym, right?
And that's because people didn't know the long, nuanced story.
And it's probably the case for several memes as they morph over time.
You know, much like, you know, I've written extensively about Bitcoin maximalism and the narratives around Bitcoin and how those evolve over time.
And you can you can kind of trace the inflection points and the pivots.
And, you know, I think this is just sort of like a natural sociological phenomenon. I mean, it's all memetics, memetics upon memetics.
Yeah, I actually I just started reading recently Rene Girard's "Things Hidden Since the Creation of the World" or "Things Hidden Since the Start of the World," forgetting the title exactly.
And I thought, well, that's a pretty decent way into it. And it's all about that, you know, acquisitive memetics and how that plays out in human history.
And he's basically saying that everything is a result, every interaction that we have and all these myths throughout history, too, are just tales of acquisitive memetics.
And that really started to blow my mind a little bit. I was like, wow, I mean, he makes very compelling arguments.
I'm sure one can make very good counter arguments to that as well.
Yeah, I think it's pretty interesting. I think it's a pretty fascinating approach to to look at the world, just, you know, copying and replication and ultimately the goal being to somehow acquire something through that.
I think it's pretty fascinating. But, Jameson, thank you for coming on today. This will be pretty open form. There are no rules for another fucking Bitcoin podcast.
I've got some topics I want to run through with you just because I really respect your opinion in the space.
You've been around a much longer time than I have and have a pretty interesting career before that as well that I think really feeds into what you're doing now and just has probably informed a lot of your viewpoints on that.
And I want to dive into that a little bit, too. But if you're good with it, we'll just kind of roll into this. I'll do my short little spiel of an intro and then we'll dive right in.
Go for it.
All right. Well, greetings and salutations, my fellow plebs. My name is Walker and this is the Bitcoin podcast.
Today it is Bitcoin talk and I am joined by somebody who talks about and writes about and works on Bitcoin quite a lot.
And that is Jameson Lopp. Jameson is the co-founder and CTO at Casa. He's also more generally a cypherpunk, a Bitcoin engineer and an educator.
He's got a ton of incredible resources on Lopp.net. I highly recommend you check that out and I'll link it in the show notes.
But Jameson, thank you for coming on to another fucking Bitcoin podcast. I know you have done quite a lot at this point, so it's good to have you on here.
Yeah, I think I've probably done several hundred podcast episodes over the past decade and I'm such a data archival nerd that I have all of them hosted on my own server and I've used AI to transcribe them all so I can juice that SEO as much as possible.
That's pretty incredible, actually.
Yeah, I mean, I like talking about Bitcoin or about privacy, self-sovereignty, libertarian ideas. It's all over the place.
As I think we were just mentioning, I've got yet another article coming out which has nothing to do with any of it. It's actually medical and health related stuff.
It's all related though in the sense that I follow the "don't trust, verify" philosophy.
I actually saw a tweet you put out and I think there may have been an associated article to it. I'm forgetting, but you were talking about your recent "let me try out this health journey and see how I can optimize this for my own personal health and ignore all the noise out there."
From what I saw in the results, it looks like it's been a pretty successful journey for you so far. That's fantastic because there's so much bad information out there.
Yeah, well, especially when you get into the health stuff. I mean, it's a lot like the crypto space in the sense that there's a lot of scams out there and in many cases it's hard to verify if you're not an expert.
Especially when you start going into the supplements or people who are selling you specific regimens because it'll do X, Y, or Z.
Even if I think in some cases they aren't total bullshit, it's problematic because we as humans are incredibly complex creatures and I think it's very difficult to distill down to just a couple of variables of like if you do X, Y, and Z you will get result A, B, C.
I think you probably saw my article about going keto and weight lifting and losing 40 pounds in four months.
That was kind of the beginning of my health journey and that was the like, "What is the most effect I can get with the least amount of effort? I want to be as lazy as possible and just stop being a big slob."
That was pretty successful but then I plateaued and so now for basically the past six months I've been like kicking it up a notch and I've been simultaneously doing a lot of stuff around epigenetics and longevity and trying to improve my body at a cellular level, which is pretty tricky because it's hard to even say like, "How do you properly test for all of these things?"
So I'm actually doing a ton of different tests through a ton of different companies just to try to see if they're in rough consensus with each other.
Then the article that I have coming out tomorrow is more mundane. It's cholesterol and it's because I went in for a routine annual physical and came out and the next day my doctor calls me and says, "We need to put you on statins immediately. Otherwise, you might have a heart attack soon."
So then I've spent the past month going through this whole journey of doing a lot more advanced testing and learning about cholesterol and realizing that the common trope of like good cholesterol and bad cholesterol that doctors will tell you is – I think a gracious way to say it is oversimplified.
But a more precise way of saying it is that it results in them leaping to the wrong conclusion a significant portion of the time and actually prescribing medication when it's not required.
The whole statins thing is kind of fascinating in a bit of a terrible way because I think there's been more and more research coming out that like there are a lot of unintended consequences of putting someone on statins and that's kind of been like the go-to for the medical establishment, right?
It's like, "Well, your bad cholesterol is high. I guess we better put you on statins because that's what we've always done."
Yeah, it's the easy thing for them to do instead of going in and doing the much more advanced tests that I ended up – I ended up paying out of pocket for all this stuff because it would have taken me months and months to like go through the proper channels to get all of these tests ordered.
Because they would view them as somehow not necessary for you to take and overkill for them to actually try and get answers to what may be happening.
Yeah, and I mean the short version is the medical industrial complex doesn't care about you.
Obviously, they have their own incentives and they prefer to push their solutions at you and make you go away and that's what was disconcerting about the experience that I had with my doctor was I felt like my doctor and their incentives were to do the least amount of effort possible to get the most likely overall average good result,
which means give me statins and if – and it's true that if I was in a position where I was having plaque build up in my arteries, the statins would help and they probably wouldn't hurt me too much if I wasn't in that position.
It's like I think 10% to 20% of people that are having side effects with statins, but yeah, it's complicated.
Trevor Burrus: It's like this classic game of okay, yeah, let's get you in and get you out the door and passed along to the pharmaceutical industrial complex that they can get their little piece of the pie and so as long as we've got you on some sort of medication, we did our job.
Pharma gets paid and you'll probably improve, we think, so well, I look forward to reading that because it's always nice to see Bitcoiners like yourself diving into these other topics with the same rigor that they dive into Bitcoin because if there's one thing I've learned about Bitcoiners, it's that really do the research and do the work to a level that might seem somewhat psychotic to others,
but it's like that's how you actually figure out what's going on and actually get answers.
You have to actually do the work and if you just accept what's out there, well, you end up with the same answers that everyone else has, so I'm looking forward to that.
I'd like to kind of start off this discussion a little bit.
I think that most pretty much everybody probably knows who you are.
You've had a huge impact in the space.
You've been around for a long time.
You've worked at BitGo previously.
You're a co-founder now at Casa and for those that don't know, Casa does multi-sig solutions.
Is that a fair classification, multi-sig solutions for Bitcoin?
Yeah, I mean the way that I pitch it for normies is that we help you be your own bank without even going into any of the technical details.
We help people put themselves in a self-custody architecture that eliminates single points of failure so you can be human and you can make mistakes and not suffer from catastrophic loss due to a single mistake for whatever reason.
And that is, I think, a very good thing and maybe the idea of multi-sig is still somewhat scary to some people who are like, "Man, I just figured out how to set up my one hardware wallet.
Now you're asking me to have multiple keys."
And I want to maybe get into that a little bit later, but can we just start with who is Jameson Lopp and how did you get here today?
And go back as far as you want here. I'll leave this open to you, but who the heck are you and how did you get here to be who you are now?
Yeah, I mean I am a longtime nerd, classic loner who got bullied a lot as a little kid, wasn't the best at socializing because I was reading way above my grade level and using vocabulary that my peer group didn't understand and thus thought was just fucking weird and thus ostracized me for being the weird nerd.
And as a result ended up, when I went to university, there was only one possible thing I could study and that was computer science.
I looked at everything they were offering and the only one that didn't look completely boring was computers.
So did very well on my computer classes in school, not so well on some of the other classes, but managed to get out with a degree.
And I actually hit the job market in 2007, so then the 2008 crisis hit and it actually ended up being good for me. I was lucky enough that I ended up at an email marketing company.
And the economic crisis was good for us because what happened was all of these other retailers and really any company that was doing advertising ended up getting their marketing budget slashed.
And so what they ended up doing was moving a lot of their budget from traditional things like print and billboard and television and radio and moving it to online because they realized that once they moved their advertising online they had metrics.
And they could actually figure out what the return on their investment and their various advertising promotions and channels and stuff were.
So that was good for us. We went over the next decade that I worked there from being 10 employees in a company that was sending maybe a few hundred thousand emails a day to being 300 employees and sending 100 million emails a day.
So major scaling operations, both the technical and the HR front.
Wow. And I think that one of the talks that I've heard you give that really stuck with me was one you gave at Lugano last year.
And that was you were declaring that it was basically an obituary for SMTP.
And you going through that and saying some of your experiences working on this and how you saw a little bit of how the sausage was made on the inside, how some of these decisions were being made.
But then the ultimate repercussions of that being email trending towards centralization.
I'd love if you could kind of explain that a little bit, why you declared SMTP dead and kind of how you went through that journey yourself and then also how it sort of impacted your views about Bitcoin and other protocol, let's say protocol ossification.
Yes, so SMTP as a protocol, it still exists and it's still used.
And in fact, it is probably one of the most widely adopted networking protocols in existence.
There's probably billions of people who are using it, though.
Using it should be in quotes, you know, almost no one who is actually sending or receiving email is running an email server or client that is directly using SMTP.
Rather, what they're doing is they're they're going through a trusted third party gateway that is doing all the SMTP stuff way under the hood behind the scenes.
And really, this was a multi-decade journey where I think email really started in the 70s.
And back then, if you wanted to use email, you would actually have to run email software and speak SMTP to the other people that were running email servers on the early Internet.
And that was all good and well. Email as a protocol was specifically designed for message reliability, a.k.a. if you sent an email, you were basically guaranteed that it would get to where it was going.
And that worked very well until the 90s, when millions of people started joining the Internet and some of them were not very nice and they were malicious and wanted to use email to basically sell stuff to people and send messages that were not desired.
The rise of spam and spam became really the greatest problem of email for the next several decades.
And you could probably argue it still is. We've mostly solved spam at this point, but not in a very good way.
There were many different solutions that were attempted to solve spam over the years, various filtering mechanisms, and none of them really worked well.
And they usually also had false positives, which wasn't great because that would harm the reliability of getting the emails that you did want.
And what ended up happening is that we, after trying many different automated systems to try to filter out email based on content, we changed to instead filter out email based upon this idea of reputation.
So we started creating identity and reputation around things like domain names and IP addresses and really all of these things that have their own forms of centralization.
Domain names are issued by an authority and they can revoke it and similar stuff with a lot of SSL certificates and IP addresses and stuff. There's usually someone further down the line that actually has control over those things and it's not you.
So what happened with these reputation systems is you can't have a million reputation systems. You can only really handle a handful of them.
And so we had the rise of what was really known as the spam blacklist services. They essentially became gods of the email ecosystem because if they put you, whether that was your name, your IP address, your domain, whatever, on the blacklist, then you would find that the vast majority of your emails stopped being delivered and then you had to go beg for forgiveness.
This is when I started realizing what was going on. This was probably around 2010 or so at my company. We started hiring people that their title was email deliverability specialists.
And I thought this is great because deliverability is a problem that we as a company were always grappling with because we would have all types of different clients.
We would have clients who were very good about their list hygiene and made sure that all the email addresses had opted in and wanted to receive emails. And then sometimes we'd have one come in who had just bought a bunch of random emails off of a shady website and of course the vast majority would bounce or get marked as spam or whatever.
And that would harm us as well because we were sending all of the emails through our IP addresses. So these email reputation and deliverability specialists, they actually were not working with me in the engineering department and I found that to be odd because this is a protocol.
And so if you send an email via SMTP, you get a response from the server and it should include a code and some sort of message that should either say "accepted" or some form of soft rejection or delay or throttle or a hard rejection of "we're never going to accept this" and then there should be a reason why.
But it turns out that wasn't good enough because in some cases we were getting on these spam blacklists and there was no automated way to appeal that.
Rather, what happened and what had to happen is you had to have a human who had preferably an ongoing relationship with the major blacklist providers who when we found ourselves on the blacklist, they would basically come to the engineers and we would figure out which of our clients did this and whether it was intentional or unintentional.
And if we were going to fire them as a client or what we were going to do to prevent that client from fucking up again.
And then the email deliverability specialist would get on the phone or send an email to their contact saying "OK, we see that you put us on the blacklist. This is what happened. This is how we're remediating it. We promise this won't happen again. Please take us off the blacklist."
Basically begging for forgiveness. So this goes to show you the power that the gatekeepers had in the system.
And this is ongoing to this day and it continues to consolidate and the problem is that as of right now, something like 90% of all email users are essentially captured by the top 5 or 10 email companies in the space.
And it's kind of absurd to think about just the fact that we all take email for granted, right?
I think most, not somebody like you perhaps, but the majority of us just think, "Oh, email." And most people when they think of email, they may even think of, they don't even go any layer below just, "Oh, that's just Google."
Or if you're still using Yahoo Mail or AOL perhaps, maybe you still have an AOL email address, but you don't go any deeper than that.
And you don't think about the fact that, "Oh, this wasn't always this way. This started out differently."
And choices were made that, not necessarily intentionally, maybe it wasn't a grand plan or some evil design to centralize email, but it's just what happened.
And it was the result of choices and it's-
Incentives.
Yeah, incentives.
Human nature to find the most convenient, simple solution to things.
Well, and I think that's such a good point. It's like there's always a trade-off, even if we think about just sovereignty, right?
I don't think that sovereignty in general is a, it's not a binary state, right? It's not zero or one. It's a spectrum, right?
And oftentimes where you are in that spectrum is determined by how much convenience you are willing to forego to do something that is necessarily harder, but allows you to move a little bit in the better direction on the sovereignty scale.
But it's a slippery slope too, right? Maybe the majority of people don't actually really give a shit about, "Are they sovereign?"
But it's also a thing where you're kind of like approaching a limit that you're never going to, it's like Bitcoin's never going to get fully to 21 million coins, right?
It'll be like just below that. You're just going to keep approaching it closer and closer, but maybe you can't ever be fully sovereign.
And I know that's something you've written about as well. I think you had a piece, Sovereignty versus Society, something to that effect.
And I thought that was a really interesting one, because you basically made the point that, look, in a society where there is division of labor, you can't necessarily be truly sovereign in every aspect.
You're always offloading some responsibility for something to someone else, and that's for convenience, for efficiency. But I'd love to know your thoughts on that and how do you grapple with that personally in the decisions you make?
How do you gauge, "Okay, this is actually something that I should care about in order to improve my sovereignty," or, "This is something that, you know what, I'm comfortable offloading this responsibility," because ultimately it's negligible compared to the other trade-offs?
Yeah, yeah, it's a matter of time and resources and risk management, I think, your threat modeling. If you want to be perfectly sovereign, it's funny because some of my favorite shows are the folks who live in Alaska or in the Arctic Circle, and it's very fascinating to me to see these people.
I'll say in most cases, even they are not 100% sovereign. In many cases, they are still getting shipments of some raw materials during the summer that give them the tooling that they need to be able to provide for themselves throughout the rest of the winter.
There are very few cases, at least in First World countries, where people are 100% sovereign and really the only way to be 100% sovereign is to essentially live a primitive lifestyle.
Another very interesting avenue that I've seen some people explore, I know there's at least one guy on YouTube who went through the whole evolution of man, of starting out at the Stone Age and trying to bootstrap his technology to see how far up he could get into the technological evolution to improve his ease of movement.
Ease of living and convenience and whatnot, but it's a long slog to do that where you still have to have access to a decent amount of raw materials and resources and knowledge and time.
And that's where, for most of us, it doesn't make sense to do that because we have skill sets that are the result of years, if not decades, of specialized experience that is very difficult for other people to reproduce.
And so our leverage of what we can accomplish in that specific area due to our own knowledge, it's better for us, it's more valuable for us and for the economy, for the world, for us to be doing that specific thing, this specialization of tasks.
This is how humanity has evolved and civilization has advanced.
And the weird trade-off to that is that it creates a more fragile society where we do have a lot more interconnected dependencies, and especially in the most recent modern day society, as we have continued to find more and more efficiency gains and do things like create just-in-time supply chains.
Those are great for efficiency and productivity, but once again, the brittleness of if a chink hits the system and the supply chains break, like the cascading effects, which I think we really saw during the pandemic, for example, can have massive repercussions.
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It is definitely the most, let's say, near and dear example that we have.
We've seen its globalization and just-in-time supply chains.
It's fantastic, right?
Things are getting cheaper and cheaper.
They're getting delivered to us at our front door.
You can order just about anything you want off of Amazon.
It's incredible.
It's kind of ridiculous, too, right? It's like I order a $5 or $10 little trinket that I could easily pop over to the local drugstore and get.
But what happens in my mind is, okay, it'll take me like 20 minutes round-trip to go get the thing.
And so what I'm really paying for is the convenience and the time-saving.
No, and it's such a good point.
There's a lot of things that I just got some new charging cables, and it's like I could have definitely gone to a local Best Buy or honestly like Walmart, Costco, anything and gotten them.
But I was like, I've got too much other things that I need to do.
And, wow, I'm just going to have this delivered right to my front doorstep, so I just have to reach my arm outside.
And it's a beautiful thing, convenience, right?
It's certainly not a very sovereign practice, but again, everything is a trade-off, right?
And so I think even where perhaps sovereignty gets even a little bit more interesting is in the digital realm.
It's really easy, I think, for people to start to conceptualize, okay, what would sovereignty mean for me if I'm homesteading and I'm trying to live off the land and just farm what I eat and have a very basic but sovereign subsistence?
Versus once you get into the digital realm and things get a little bit hairier, because I think it's a lot more difficult for anyone who is not trained and educated and has spent time working with these technologies to understand, first of all.
But even more so, there are more, I think, unknown unknowns for people where they just don't know what they don't know, and what they don't know they don't know can absolutely hurt them.
Maybe not now, but as we see ourselves getting towards a, let's say, CBDC future, where every piece of your online activity can conceivably be linked to all of your economic interactions, even in the physical world.
I don't think people entirely grasp the ramifications of that and how that is truly a totalitarian wet dream.
But for anybody who enjoys even a mild amount of freedom in their individual lives, I think that that should be something that's really terrifying.
So I guess, what do you think as far as what's your message to people who perhaps just don't get the dangers of that sort of a future?
As somebody who's also seen how technologies can quickly evolve from decentralized to very centralized, a CBDC is the ultimate centralization of money, right?
Maybe they can come up with something even more centralized.
But right now, besides one-world currency that is also issued by the Bank of International Settlements or something, individual nation-state CBDCs are fairly close to perfect centralization.
So, I don't know, what's your take on that?
I think you don't have to be too philosophical or kind of like even futuristic.
I mean, all you have to do is look at what China is doing.
That is what is going to happen everywhere else.
Like, China is the authoritarian or the techno-authoritarian testing playground for all of the dystopian things that technology could do.
Hal Finney had a great quote that technology can basically be a tool of liberation.
But it's like any tool, it's a double-edged sword and that we should assume that the powers that be will seek to leverage technology for their own purposes.
And this is actually my own mission statement.
When I left the email engineering world and went into Bitcoin, I decided that I wanted to have like an actual career mission.
And that mission was not Bitcoin.
The mission is to use my skills as a technologist to empower people and to make the empowering aspects of technology easier for normal people to actually grasp and leverage and make use of.
Bitcoin was the most obvious thing to go after because it has so much potential.
And yet, as you've said, there's a really high learning curve.
There's a lot of pitfalls.
There's a lot of ways that you can screw up.
And unfortunately, if people come in and they lose a lot of money because of some stupid mistake, that's going to be a major turnoff.
And we would, I think, prefer that not happen.
And it's such a great point that that first experience that people have with, you know, not just with Bitcoin, with anything, right?
We have that recency bias where it's like the last thing that happened to me with regard to this other thing.
If it was good or bad, that is going to impact how I think about that for a long time until I have another experience that is different.
And so I think, you know, people, there's been a lot of talk for a long time about the fact that, say, so-called normies or pre-coiners, I think, is a kinder term.
They'll come around eventually, but right now they're pre-coiners.
The majority of people just aren't going to do self-custody, right?
Even though there's this way that you can actually be your own bank, that you can be a little bit, move in a positive direction on that sovereignty scale, that most people just won't be either able to do that because they won't be able to understand it or they won't care enough to do that.
And you're actively, you know, you have built a company, co-founded a company that's trying to make that, I think, a little bit easier for folks.
And so, I mean, what are your thoughts on just, do you think that the, you know, are the majority of people in a, if we look 20, 30, 40 years down the road, are the majority of people who are using Bitcoin going to be self-custodying it?
Are they going to be using it in a, as close to sovereign as possible way?
Or is there going to be a trend towards just massive consolidation in custodians, and every major wallet's a custodial wallet, and very few people operate using Bitcoin in a sovereign way?
Well, there's a lot of variables there. One that I've brought up a number of times recently, kind of in the context of ossification, is that there's an open question around what do we as Bitcoiners prioritize when it comes to the ability and cost of self-custodying?
You know, in 2017, in the scaling wars, we were faced with a fundamental question, and the question was, what does the Bitcoin ecosystem value more?
Does it value more to target a low cost of transacting on the blockchain, or does it value more to target a low cost of validating the entire system?
And we settled on the latter, and of course we have solutions and a number of things people are working on to alleviate the former.
Though, you know, this is the creation of other protocols and adding more complexity and whatnot. But there are still plenty of unresolved questions, and I had another article I wrote a few years ago that was basically an attempt at listing a lot of the "inviolable" properties of Bitcoin.
And some of these properties are in conflict with each other. So, as you said, decades from now, will a significant portion of Bitcoiners be self-custodying?
Well, the problem with that is that the way the protocol is currently set up, that's simply not possible. Now, there are other projects that are going on that may result in sort of hybrid solutions or sort of localized or regional friends and family custody.
I do think that those are better than what would happen otherwise. It was even Hal Finney, I believe, who speculated in the first weeks and months of Bitcoin that eventually the system would essentially become owned by a bunch of custodial banks.
You know, kind of like gold in vaults, but it would be digital gold in third-party digital vaults, and that's how most people would be transacting. And I think that if we don't do anything, that is inevitably what happens, at least somewhat, because that's how most people get into the system, is they create an account at an exchange, they buy some Bitcoin IOUs, and then that's it.
I am also somewhat hopeful that if we can change things around and expand the Bitcoin economy to be more circular, that if we onboard more people by them earning Bitcoin, then it's more likely that they will be in a self-custody setup in that case, you know, to actually be receiving it directly themselves rather than in a digital form.
That's somewhat pie-in-the-sky optimism. It doesn't solve everything, but I think that's one of the major issues with where we are today.
I'm curious what your thoughts are on kind of—there's been a fair amount of lightning network FUD recently. Perhaps a lot of it is also valid. But just even if we look at custodial lighting services like Wallet of Satoshi that was just—is just moving out of the U.S. because they're going to get slapped with some money transmitter laws and AML/KYC crap and all that, and that's a whole different rabbit hole.
But I think one of the big critiques of lightning is that it works really well in a custodial sense. If you're using Wallet of Satoshi, you're using another custodial service.
But most people, again, are probably not going to use lightning in a non-custodial way because it's more difficult and it's more complex.
And I think that that's a fair critique in a number of ways. I also ask myself the question is, does the Layer 2 need to be fully non-custodial in terms of working and day-to-day operations, or is it okay for there to be a little bit of centralization on the Layer 2 as long as the Layer 1 remains pure, let's say?
And I'm curious of your thoughts of kind of lightning, and then we also have things like that are kind of built on top and around of that, like Fediment.
And then you've got things like Kaye is working on with Chami and eCash. And where you kind of see those fitting into the ecosystem, do you think that those types of other layer solutions are good ways for us to still have a degree of sovereignty, but solve some of the issues with the base layer?
And can you talk a little bit about that?
Well, they're good for dealing with smaller amounts of money. The problem is that it's – I don't know that I can prove it, but I would say it is impossible to create a second layer that has the exact same security model as the base layer.
Pretty much all of these – like even in the best case, like with lightning, which doesn't involve trusted third parties if you're doing it yourself, it's some pretty complicated game theory.
And so we're still finding edge cases and issues because it is a more complicated protocol, but it also seems to be improving.
I mean, from my own experience, I've been running my own lightning node for I guess four years now, and it has certainly gotten better in terms of reliability.
The tooling around managing liquidity also continues to get better, and I do believe that a lot of these liquidity issues will be solvable in an automated fashion.
I think some people are even applying AI to help solve liquidity stuff. I gave a talk in Berlin, I think in 2018 or 2019, where I said that one of the big looming issues with liquidity on lightning is that it's always going to be hobbled until we get all of the exchanges on the lightning network.
And that was both for economic reasons with how lightning works as this circular rebalancing mechanism and the ability for the exchanges themselves to be liquidity providers and for people to be able to automatically rebalance their liquidity by sending payments out of band to and from the exchanges.
Also from the fact that something like 50% of all Bitcoin transactions are just going from one exchange to another.
So it really, really makes sense for the exchanges to all be on lightning and just be sending these settlements off-chain because they're doing it on-chain right now, and I think in many cases they don't even know that they're doing it.
We were actually in a privileged position when I was at BitGo because we were powering a lot of the exchanges.
So I was able to run analytics on private information where I could see that just the exchanges were sending a lot of money back and forth to each other.
And from an efficiency standpoint, it was kind of gross to see, but there wasn't a good solution for it without destroying privacy, basically.
Just by having some big, beefy channels in between these exchanges where you're not having to actually make an on-chain transaction each time, you're just rebalancing that channel essentially, right?
Yep. There was also an interesting coincidence. When I first joined BitGo, the BitGo office was actually a rented unit inside of AOL's headquarters.
Well, that's kind of wild. Does AOL still have a headquarters somewhere?
As of a few years ago, they did in Palo Alto.
Wow, okay. That's good to know. I think it's a fair point about the exchanges, and we do have some evidence of the impact on liquidity that exchanges getting on board Lightning has.
I believe Bitfinex provides something like a third or more of the liquidity on all of Lightning. It's a big, big chunk of that.
I believe they were the first exchange, or at least very large exchange, to start doing that.
Obviously, that has a huge impact, and that's one exchange. You start getting that in bigger multiples, and it's like, okay, that liquidity just doubles and triples and keeps going up.
That's better for all the users of the network, and it's also beneficial for the exchanges.
I'm curious a little bit. I want to circle back a bit to ossification, because I think that that's, again, I'm still new around here, but from my readings of a lot of older Bitcoin articles and older Bitcoin talks, it seems like ossification is a pretty perennial discussion.
Perhaps this is the case with any network protocol, that it needs to be discussed, and that maybe there's always a trend towards ossification eventually, but it becomes a question of when is the right time to do that, if there is ever a right time.
Again, something that comes back to trade-offs, where it's what are the benefits of ossifying versus what are the dangers of doing that, and what are we potentially, what risks have we not thought about that we're closing ourselves off to by ossifying?
I think there's a lot of folks who come from the, let's say, more monetary side of Bitcoin, if I can call it that, that think that, okay, the reason to ossify is because, look, we have this perfect 21 million.
We have sound money. We have a base layer that works, so if it ain't broke, don't fix it. Let's not introduce potential chaos and unforeseen consequences by messing with something that is a once-in-humanity discovery.
On the other side of things, you have people who say, look, there are some things that need to be addressed, like UTXOs are going to – there's not going to be enough, essentially, for everyone on the planet.
And certainly, it's going to – Bitcoin base layer is going to price out most people from any sort of small transactions.
And so I'm curious where you fall on that, or perhaps a better way to address it is how do you approach ossification on Bitcoin?
How do you approach that discussion in terms of – you mentioned earlier some of the basically inviolable qualities of Bitcoin, some of which are in conflict.
But you do have some lines in the sand, I think, but I'm curious what is your take on that general discussion, and maybe what do you think are some blind spots that folks are missing when it comes to that conversation?
Well, first of all, I kind of reject the premise that a lot of people seem to act like ossification is a conscious decision. It's really not.
It is a phenomenon, and all networks experience it. It's almost a law of physics in the sense that a network grows to a size at which it's no longer feasible for the participants to coordinate upgrades, or at least to coordinate upgrades that are breaking changes, right?
Because there's no authority that can just make everybody update their protocol, it's basically like asking people to switch to a different language.
And if you're no longer speaking the same language, you've lost that network effect.
So Bitcoin has built up a pretty immense network effect at this point.
Obviously we don't want to break it, and we saw what happens when you do break it in 2017.
These other networks end up being a tiny fraction of a percent of the network effect and thus value.
But I think any serious engineer that you talk to is going to tell you that software is never finished, that there's no such thing as a perfect software, a perfect protocol.
SMTP isn't perfect, really. None of the networking protocols that we use don't have room for improvement.
It's just no longer feasible to improve them because there's billions of people and billions of devices that are running the software that can't all be coordinated to update in concert with each other.
So my sort of techno-accelerationist and optimist perspective is that we need to keep pushing forward and keep trying to improve Bitcoin as much as possible before it's too late.
Because it will become a point at which no one will be able to propose changes to Bitcoin that are able to get consensus.
And one of the other things, well, I don't really push for any specific protocol change.
I think that we should prioritize protocol changes that, A, improve the efficiency and scalability of Bitcoin, especially to act as a sort of cryptographic accumulator, like anything that will help people build other layers.
And also anything that will make permissionless innovation in the Bitcoin ecosystem easier.
And specifically around that, one thing that I keep mentioning is the trustless two-way peg is kind of the holy grail of sidechains that we were promised a decade ago that have never materialized.
There are a few people that are working on that type of thing. It's not clear which of them, if any, are going to end up being viable.
But the other thing is that while, as you mentioned, we have to be wary of making changes to Bitcoin because there will always be unforeseen consequences,
the flip side of that that few people talk about is that not making changes to Bitcoin also has unforeseen consequences.
And this kind of ties into the SMTP history is that the way that I kind of summarize all of this is that you can ossify a protocol, but you cannot ossify the rest of the world.
And so what happens, and the question you have to ask yourself is, if a protocol is ossified and something changes about the world and how people are using that protocol,
for example, with email, as it hit mass adoption and all of a sudden there were spammers that started using it, this was an unforeseen adversary that SMTP had not been designed to withstand.
If a new adversary or some new issue arises that degrades or breaks the usage of Bitcoin, what are we going to do?
Are we just going to throw up our hands and say, "OK, well, it's ossified, so we'll have to deal with it"?
You want to get really nerdy at some technical level, like there are some things that will have to be changed in the protocol, probably in a non-backwards compatible way.
These things are many decades away, but part of me, because I think about Bitcoin from a generational perspective, part of me wonders what happens if we stop making changes to Bitcoin at the protocol consensus layer,
and then we need to make a change, and literally no one who is a Bitcoin developer has been around to shepherd such a change through the system.
Is it possible that Bitcoin as an ecosystem could grind to a halt because it's not able to coordinate a change anymore?
That's one of the weird edge case long-term future things I worry about.
I think that it's a good thing to worry about the long-term, and it's also natural if you're operating from a place of a low time preference, thinking about generation to generation transfer.
That has to be part of our thinking, because everyone here is going to die eventually.
Humans have not figured out a way around that yet. With certainty, we will all die, and we have uncertainty about when that will happen.
But given that, and given the fact that Bitcoin is actually a viable tool for storing wealth and being able to pass that wealth along to other generations, I think that it's something that should be very much at the forefront of these discussions.
I'm curious, if you can go a little bit more into the specifics, because I think for some people they've heard it's often difficult to separate what is the FUD about Bitcoin from what are the actual things at a protocol level which are going to cause some problems down the road, especially for folks who aren't technical.
Can you give the overview of what are the main concerns at the protocol level that are those intergenerational concerns?
There's a few weird things like maximum integers that are used for things like timestamps and block heights that are probably 50 plus years away from overflowing and breaking the protocol if nothing has changed.
On the more immediate timescale, I think people will talk about quantum computing, possibly in the next decade or two. Does Bitcoin need to upgrade to quantum-resistant hashing to protect our addresses and funds and whatnot?
Kind of related to that, which I have a half-written blog post, is what do we do with Satoshi's stash?
If we assume that Satoshi is gone, possibly dead, and would not be able to move and update their funds to be quantum-resistant, do we just allow people, early quantum computer builders, to get those funds as a bounty?
Or do we burn them or what? There's some interesting philosophical questions there as well.
That is actually a really interesting question. That would be really the bounty of all bounties, wouldn't it?
That's quite an incentive, I guess, to try and build a successful quantum computer to be able to attack the network, I suppose.
You mentioned also when people say, "We implemented this change, and we didn't think that somebody would use this new enhancement to do X, Y, Z."
Do you put the ordinals and BRC-20s into that bucket? I know it's a very polarizing topic, depending on who you talk to and depending also where in the industry they fall.
Because, for instance, miners tend to really like that fees have been up, but we've also seen fees are likely going to continue rising regardless, and obviously going to continue rising in fiat terms because of the nature of Bitcoin.
I don't buy much of the "Bitcoin's security model is broken" thing if we talk about Bitcoin repricing the entire world.
But I'm curious where you fall on that, because obviously that is one of those cases where it was not anticipated that people would use upgrades in this way.
And it's made a lot of people angry. It's made a lot of people very happy, who think it's very fun. What's your take on that whole ecosystem?
Using Bitcoin as a database, as data storage, that's not new.
The only thing that was really new about inscriptions was that they were able to, I think, take advantage of Taproot to put data into transactions more cheaply than was possible before.
It was always possible before. We've had people inscribe the white paper into the blockchain like 10 years ago.
There's actually a really cool command you can run on the command line to extract and reconstitute the PDF of the Bitcoin white paper if you have a full node.
But just using Bitcoin as data storage, I don't think that's a problem.
I think that the economics work themselves out there, where if you're going to be using Bitcoin as data storage, that data better be pretty damn valuable.
And you're going to need to be able to compete in the market against people who are doing other valuable things.
So, you know, I wasn't surprised by people taking the sort of NFT hype and transferring it over to Bitcoin.
But I also don't think that it's as sustainable as, say, NFTs on Solana, just due to how much more expensive it is.
I suspect that if Bitcoin is able to maintain some semblance of an NFT ecosystem, it's going to be relegated to, you know, $100,000 type really niche artwork.
Sort of like bored ape, crypto punk level stuff. And it's not going to be for the layman, you know, creating $5, $10 things.
Because in most of those other ecosystems, you know, they're not actually storing the entire file in the blockchain or the data layer or whatever.
They're just putting pointers in there. So it's a lot cheaper. And it's cheaper for other reasons, too.
I appreciate the explanation there, because I tend to agree that a lot of the "problems" that people see with something like inscriptions and then ordinals on top of that, or, you know, any of these things, a lot of them work themselves out because the economics need to work.
And if they don't, like, you know, unless you want to really try and control that, and I suppose if you do really want to try and control that and have that not be possible anymore, that means maybe you don't have a ton of faith in just the operation of the free market to try and seek, you know, effective ways to deploy capital.
Because at a certain point, it's like, okay, if you want to, you know, spend transaction fees on this, then okay, great. Eventually, that will price out the majority of the market who may want to use that.
And I think it's also something that's missed, which you pointed out, which is that inscriptions have been done for a long time.
Ordinals is something a little bit different, I suppose, the actual creating a number system, assigning a little bit more of, you know, value to certain numbers or like the rare sats idea.
But ordinals is just a meta protocol, right? And so you can kind of think of it as a second layer that's much more amorphous in nature than the other layers in the sense that it's not even really creating any other data outside of the blockchain.
All that it's doing is looking at data in the blockchain and then ascribing other value to it.
And I think people are free to, you know, hallucinate and create their own meta protocols that don't change Bitcoin in any way.
They're just creating completely other software that interprets the blockchain data in a different way.
But I bet that what almost nobody realizes, unless you've been around for a decade, is that there was an intense debate in probably 2013 or 2014, maybe even earlier, about the OpReturn size.
And back in the early days, I think when OpReturn was first introduced, it allowed 40 bytes of data to be stored in the OpReturn output.
And there was this massive debate between the protocol developers about whether this should be good or bad or whatever, and from one perspective it was considered good because I think the OpReturn UTXOs themselves are prunable, so the nodes can throw them away because they're unspendable.
But then I think there were some, I forget if it was what eventually became the Omni protocol, I think it was MasterCoin back then, but there were some developers who said, well, 40 bytes isn't enough, can we get 80 bytes?
And so there's massive debate for, I think, several months, if not longer.
And eventually the OpReturn data size did get bumped up to 80 bytes.
But this just kind of goes to show you that storing arbitrary data in the Bitcoin blockchain is not new by any means.
History is just repeating itself in a slightly different way.
It's always good to be a student of history in that regard then, so you can have a little bit more perspective on what's actually happening there.
I'd like to switch gears a little bit but stay on the topic of protocols and talk a bit about Noster because I think that it's something that's, I mean, we're coming up on about a year.
It was kind of early December when I joined Noster last year. That's when things started really, you know, Jack posted about it on Twitter, maybe third week of December, something like that, and it just blew up.
Actually, just the other day I was talking with Will Kasserin and we were kind of just recounting the absurd progression and pace of development on Noster this year and also the many attempts at censoring from Elon calling it out when everyone was like, "What is this Noster? He's listing by Mastodon and these other things."
And then to the Chinese App Store pulling it down, to Zapps getting pulled off of iOS clients, and in the meantime, all these developers building just at a rapid-fire pace and building all sorts of things.
But, you know, you've been pretty active on Noster since very early on, and I'd love your thoughts on kind of where you see it evolving to next as someone who is an engineer and a technologist.
Obviously, it's being used as a social media protocol right now, but it's notes and other stuff transmitted by relays, and it's ultimately just a censorship-resistant messaging protocol, right?
So the possibilities for how it can be used are pretty endless, and I'm curious where you see that ecosystem moving and developing or maybe some applications of it that you are really excited about.
Yeah, so I think about a month ago, I published my own exploration into sovereignty on Noster and finally getting around to running my own relay and migrating all of my tweets over to it and copying all of my past year of notes from other relays over to mine.
Just so that I could have better data integrity guarantees that I wasn't going to get rug pulled.
I would say it still has a lot of problems.
I still have open questions around the long-term economic incentives.
One of my favorite things about it is just the Lightning integration.
I've been using Lightning daily as a result of this, where I was before, I was barely ever using Lightning.
I barely had the opportunity to make Lightning payments, but Zaps have really changed the game there.
I think that if we improve the onboarding experience and make discoverability more Twitter-like, then that could get more people to come over, but right now it's still too high a bar.
I hear a lot of people say they poke around and they install an app and don't necessarily know what to do next, and that's a result of the decentralization.
We're not putting all of the data in one big honeypot and running analytics over it and machine learning, all this other stuff, though.
I think some of the services, like Primal and stuff, are starting to do that.
From bigger than just social media, I think the best way that I've heard it described, and this will probably go over a lot of people's heads, but it's a decentralized message bus.
This is getting really low-level, talking about almost like motherboard hardware level of what is this new network.
It's a new communications network, but it's one where you put data out onto a server, and then anyone who wants to can connect to the server and read that data.
That's a very simple, primitive way of describing it, but if you think of it, it means it's just a new way of sharing data.
It just happens to be that the data itself has some integrity guarantees due to cryptography and the signing of these notes.
What does that mean? It means that now we have a communications platform with authentication built in at the message level.
What do I mean by that? Well, if you go to Facebook or TikTok or Twitter or whatever, you see a feed and you see posts from other people, but you don't actually know that those people made that post.
You're trusting the third-party server that they got that post and they authenticated that person's account, and that person hasn't been taken over.
Of course, anyone who's been on Bitcoin Twitter knows that one of the biggest scams out there is to sim-swap someone, hack their Twitter account, and put out some sort of phishing scam or giveaway or airdrop or whatever that then drains people's crypto or preys upon their greed to get them to send you money.
That's not feasible on this new network because they have to actually get your private key. They can't just fool a third-party authentication service and claim to be you and bypass it and then start posting as you.
So that means we can do this now. We can use this as a mechanism for other forms of interaction.
It's almost mind-boggling to try to say what does that mean, but you can look at some of the examples. One of the first non-social media examples that I recall being built a year ago was a chess game.
So now we have the ability, without a trusted third-party, to play a game of chess with someone else over the internet.
And we know that each move that you make is posting a note, and you can then update your own local database of where all the chess pieces are, and you know that when you get a move that you're reading from a relay, you know that that's your actual opponent because cryptographically signed message is authenticated at the protocol level.
Now that doesn't sound very interesting unless you're really into chess, but now take that assurance and use it for something that's more valuable, that's more sensitive.
So in the context of Bitcoin, there are other things that you may want to be able to coordinate between multiple parties.
So tooting CASA's horn, earlier this year we had a team win a hackathon where they created a project called Munster, and basically it was a way of setting up a multi-person, multi-sig wallet where you're using Noster to coordinate.
So you're using it to coordinate the initialization of the wallet and the exchanging of the public keys and derivation paths and wallet descriptors, and then when you want to actually go spend the funds from the wallet, you're using it to coordinate the partially signed Bitcoin transactions.
You could do the same thing, I think there's some projects right now that are doing that for CoinJoin. Once again, any sort of multi-party usage of Bitcoin would be directly applicable, and really the possibilities beyond that are pretty enormous.
I think that that's such an important thing that maybe a lot of people are missing right now is just the importance of being able to economically coordinate.
Because if you are trusting, okay, we have Bitcoin, which is no trusted third party, right, if we're using it in a sovereign way, we're holding our own keys and maybe we have a multi-sig setup.
But if we don't have a way to coordinate the exchange of that value, so I want to send Bitcoin to somebody on the other side of the world, and I'm trusting WhatsApp or Telegram or some other form of messenger to relay the communication of, okay, they're going to send me their address, I'm going to copy and paste that and send the Bitcoin over to them.
But I'm then not having trust, I have no trusted third party in Bitcoin, but I've just introduced a trusted third party into the economic coordination at the messaging layer.
And so having a way to have a censorship resistant and cryptographically signed economic coordination mechanism, which is what Noster already is and can be in, as you just described, multiple other ways, is an incredibly valuable thing.
Aside from the obvious benefits of having a social media protocol for free speech, having a way to freely coordinate is a really, really powerful thing.
And I'm excited to see the other intersections that are created between Bitcoin and Noster.
I love zaps. Zaps are a brilliant thing, using value to actually provide the ultimate social signal, which is a value based signal, not just a meaningless like, which can be spammed by a million bots.
Providing something that actually has monetary value attached to it, that is also incredibly powerful, just from the social protocol perspective.
But I'm really excited to see what else is built.
Will's prediction in this next year is that it'll be the year of the algorithm for Noster, but the opt in algorithm.
So I'm excited to see what that means, because I think it's going to help with discoverability.
It's going to help with onboarding because it's more familiar to be able to say, OK, you know, even something as rudimentary, but brilliant as Twitter's old in case you missed it algorithm that, you know, OK, you've been off for a day.
Here's, you know, in case you missed it, here's what you probably would like to see.
Those things are really beneficial and help to just keep people coming back as well.
So one random idea that I pitched a few months ago was only zaps like there's no reason why we couldn't recreate only fans on Noster and have the content creators hosting their content on their own paid relays.
And you have to zap them and then they get the money directly and there's no third party taking a huge cut.
And the reason that I say this is because I think there's a well-known trope that, you know, any sufficiently new and disruptive technology needs to be adopted by the porn industry, the sex industry.
It's a trope for a reason, though, right? But it's an interesting thing to not just for adult entertainers, let's say, but for anyone, the idea of content specific paid relays.
So having that because we talked about just the economics incentives of relays, for example, obviously, there is a cost associated with running those people are doing a lot of subscriptions or that sort of thing right now, paying to access the relay.
But I think another model we'll see emerge is content specific where, you know, or creator specific, whatever that might be, but you're paying to access that relay because that's the only place that this whatever type of content it is that you want to see.
It's the only place that it's available or it's curating an incredibly high signal collection of those bits of data that fit that particular criteria.
And I'm interested to see kind of how that develops as we see more and more relays pop up.
But it's exciting to see this, see it really take off.
And I mean, it's it still hasn't been very long. We're still early to, you know, use a covenant meme.
But so, Jameson, I do want to be I want to be conscious of your very scarce time here.
I know you have a newsletter to finish up, but I would like to just end with a completely non related Bitcoin question, which is, are you reading anything right now?
Even if it is Bitcoin related, that's OK. But are you reading anything right now that you'd recommend that's really got you excited or that you found particularly interesting?
Oh, well, right now I'm in the middle of reading Outlive by Dr. Peter Attia.
OK, I may be mispronouncing his name, but he's basically a longevity doctor.
And that actually ties into the article I'm writing right now about my recent cholesterol saga with my doctors.
OK, well, I'm excited to check that out.
I'm always curious what what Bitcoiners are reading, because especially for someone like you, you've probably read the vast majority of the Bitcoin books that are out there.
So at least you've got that backlog taken care of.
And then I'm going to link to obviously to your Nostr, to your Twitter and to your website, because I think it's one of the best resources around for new and experienced Bitcoiners alike.
Is there anywhere else that I should send people?
Bitcoin.page and Casa.io are all you need.
All right. All right. Well, I'll include those as well.
But Jameson, thank you so much. I know Bitcoin is scarce, but Bitcoin podcasts are abundant.
So thank you for spending your scarce time to come on to another fucking Bitcoin podcast.
Really enjoyed this. Learned some new things as well and can't thank you enough.
You bet. Thanks for having me.
And that's a wrap on this Bitcoin talk episode of the Bitcoin podcast.