The Tom Woods Show, episode one thousand sixty four.
Prepare to set fire to the index card of allowable opinion.
Your daily dose of liberty education starts here.
The Tom Woods Show.
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I've been a guest twice.
Check it out at Lions of Liberty dot com.
Hey, everybody, Tom Woods here.
All right. We've got today a kind of a not a debate about cryptocurrency,
but it's kind of a debate within Bitcoin that has been going on for a little while
and has generated quite a bit of heat and interest.
And I think it's safe to say that probably Bitcoin has never attracted more attention
and commentary than it is attracting right now.
So this seemed like an opportune moment to have this particular conversation.
And in particular, so in other words, if you're interested in what is Bitcoin
and how does it work and what's the infrastructure of it.
I have other episodes on that that will be linked on the show notes page for today,
which is Tom Woods dot com slash one thousand sixty four.
This gets a bit more into the weeds, but I have so many people demanding this
that I thought, you know, what am I here for if not to do the people's will?
So in particular, I have two people with us today who are going to talk about
Bitcoin Cash, abbreviated BCH and Bitcoin, abbreviated BTC,
and talk about the different visions of Bitcoin that both represent
and where both are going and the relative merits of each one.
So our two discussants today are Roger Veer, who is CEO of Bitcoin dot com
and Jameson Lopp, who is infrastructure team lead at BitGo.
So I'm going to let each of them.
I'm going to be a little less formal than we normally are in these debates.
We don't even have an official resolution.
We're just going to have a conversation.
But at the beginning of this conversation, I'm going to let each one of them speak
for five ish minutes about this issue.
And then I'm going to moderate a series of questions that they ask each other.
And we expect this to generate quite a bit of light.
So let's start with since he's never been on the show before, Jameson,
let's start with you. I'll give you the floor for about five minutes.
All right. Sure. Thanks, Tom.
So I think, you know, what we're really here to talk about is differing visions
for how to scale Bitcoin and how to get it to the level that the technology
is really capable of supporting mainstream adoption.
And for the past several years, that's really come down to what everyone has called
the block size debate, because it is one of the the main parameters
that affects like how many transactions can go into a block,
which is created approximately every 10 minutes.
And so what we've really seen happen over the past few years is this schism
between groups of people who want to increase the block size
in order to alleviate a lot of the the load and the stress on the network
right now, because the demand for block space is exceeding
what is available with one megabyte every 10 minutes.
On the other hand, we have people who want to take a more efficient
and yet more complex and and more effort required approach of scaling,
which is to create off chain scaling solutions.
Now, I'm in an interesting position here because I've been on both sides of the debate.
In fact, I was a big Bitcoin XT proponent several years ago.
And then I actually started working at BitGo full time and started
spending a lot of my time and resources managing nodes,
building infrastructure around nodes, and I began to realize
how incredibly inefficient these block chain databases are.
And so I'm looking at this from a very, very long term, like multi-generational
standpoint of how much data do we really want to put into these blockchains
if we're trying to create a system that will outlast us all and hopefully
eventually become mainstream global commerce system and store of value.
So I think that over the long term, Bitcoin will need larger blocks.
But those of us who are more conservative want to try as many other available options
to increase the capacity and use the block space that we have more efficiently
before we simply allow our nodes to accept a greater load with larger blocks.
The interesting thing about Bitcoin's transaction capacity is that at the moment,
it's only running at about half of its potential capacity.
If you look at the stats, only about 10% of transactions are currently spending
segregated witness outputs.
And if the rest of the ecosystem would catch up with BitGo and a few other providers
and adopt this new technology, then capacity would actually double and fees would drop,
at least for the short term, which would be some nice alleviation.
Now, that is not, you know, panacea.
Really, what that's doing is that's getting us to the next step to eventually be able
to support lightning network, second layer networks, which are going to afford us much
greater, more efficient scalability.
And this off-chain scaling plan is being pursued by a plethora of engineering teams
in this space.
In fact, it's a tried and true method for building efficient permissionless networks.
It is, in fact, analogous to how the Internet itself is designed, because you see, if you
look at the seven layers that compose the Internet itself, the lowest layer is called
Ethernet, which is this broadcast to all data transmission layer.
If that was the only layer that composed the Ethernet, then we wouldn't be able to do
what we're doing right now, which is streaming audio across the world.
Because if we only had Ethernet, every other participant on the Internet would have to
receive and relay all of the data from everybody else, which just doesn't scale at all.
The only reason why we can make use of these high bandwidth applications is due to
something called TCPIP, which are routing layers that allow you to send data through
the fewest intermediaries necessary in order to get it to the intended recipient on the
other side of the world.
Now, I know that Roger, a lot of Bitcoin cash supporters, are more focused on the economic
aspects of the network.
They're willing to make some tradeoffs of higher cost of full node operation in order
to achieve lower transaction fees, which is a big problem on the network right now.
And it's frustrating a lot of people.
On the other hand, many of us like myself are not willing to make this tradeoff for
Bitcoin because we believe that targeting low on-chain transaction fees can easily become
a slippery slope to centralization of full nodes and other aspects of the network.
And if a permissionless network of nodes gets to the point that only large enterprises can
afford to run them, then it's interesting because it essentially creates an opportunity
for those entities to govern the protocol.
And this means that such a network could eventually find itself in the position where there's
insufficient revenue from transaction fees to sustain the hash rate and the enterprises
that are governing the protocol may then decide that inflation of the monetary supply is
required in order to sustain the system.
And they could even do this without telling the users, because if the users can't afford
to validate the rules to which they agree, then they're blindly following what the nodes
on the network are telling them is correct.
And some of these rules, such as total supply, cannot be validated by lightweight clients
using SPV proofs.
So my main point is that the Bitcoin protocol is analogous to Ethernet.
It's this global broadcast system of data propagation.
And second layer networks such as Lightning are analogous to TCPIP, and they allow parties
to communicate much more efficiently by only routing the data through a few network participants
rather than everybody.
So Bitcoin cash proponents, in my opinion, are welcome to try to naively scale a floodfill
network, but my money is on a more efficient, albeit more complex, engineering solution.
And these second layer networks will be much faster than the on-chain networks and will
eventually end up actually having lower fees because they won't be in the situation of
having a high competition over scarce resources and scarce block space.
So I'm very interested to see what happens with the Bitcoin cash project.
I'm just not really willing to support that vision myself.
All right.
Well, thank you, Jameson.
Roger, the floor is yours.
Yeah, thank you, Jameson.
So I guess I took a couple of notes during your little talk there.
And one of the things that I heard you mention is that you want to take the conservative
approach, which is not scaling the Bitcoin blockchain.
And I'd like to point out that the approach that Bitcoin Core is taking is the most effective
and core is taking is the most reckless, dangerous approach you possibly could.
Bitcoin is the first and only cryptocurrency ever in the entire history of cryptocurrencies
to have full blocks and to have high fees.
So we're taking this Bitcoin experiment that's the number one cryptocurrency used by more
businesses and more people around the world than any other cryptocurrency.
And we're going to try something brand new with it.
And we have this empirical evidence of Bitcoin for the first seven or eight years of its
existence.
The blocks were never full.
The fees were low.
The transactions were always included in the very next block.
And that provided for a fantastic user experience that allowed Bitcoin to grow from being this
little tiny niche thing to this worldwide phenomenon that it is today.
So if we wanted to follow the conservative path, we would just allow Bitcoin to scale
in the exact same way it scaled from its beginning up until very recently.
Another thing I'd like to point out that you were basically advocating for central planning.
You're saying that a bunch of developers get to decide what the correct amount of block
space to be produced is.
At the end of the day, I don't think you or I or anybody else knows what the correct amount
of block space to produce is.
I think the amount of block space being produced should be decided by the people that produce
the block space, which are the miners, and the people that want to include their transactions
in the space, which are the Bitcoin users.
So if the Bitcoin users are willing to pay an amount of money that the miners are willing
to include that transaction in a block, that should be what determines the correct amount
of block space to be produced, not a bunch of central planning guys without any business
background or econ background at all, which is exactly what's going on.
And even if they had a bunch of business and econ background, they still wouldn't want
to be planning essentially planning the amount of block space to be produced.
In regards to layer two solutions, Bitcoin Cash will be able to support all of those
even more reliably and even better than Bitcoin Core will be able to, because when you have
full blocks, that makes the on-chain transactions that are required to settle up the layer two
stuff, it makes those transactions unreliable.
Those transactions unreliable and it makes it possible to have for all sorts of bad things
to happen.
So layer two is going to work even better on Bitcoin Cash than it will on Bitcoin Core.
The part that I think most people don't realize is or don't seem to care or pay enough attention
to is that Bitcoin's market share, it used to basically be 100%.
It used to have 99 point something percent of the crypto coin market share.
And it wasn't until the blocks became full and the fees became high and that caused the
transactions to be unreliable.
So then we have Bitcoin Core essentially becoming slow, expensive to use and unreliable
and a thousand and one other altcoins that are still fast, cheap and reliable.
Well, guess what?
When you have two options or in economics, it's called substitute goods theory.
When you have one good, it's fast, cheap and reliable.
And another one that's slow, expensive and unreliable, people are going to start using
the fast, cheap and reliable one.
And that's exactly what's been happening to Bitcoin Core.
And that's why you've seen its market share drop from basically 100% to less than 50% today.
And my prediction is that in the next year, in 2018, Bitcoin Core will no longer be the
top cryptocurrency in the world.
The average fee is more than $30 for a single transaction.
That means for Bitcoin Core to even be competitive with credit cards, it's only competitive for
transactions that are more than about $2,000 each.
So Bitcoin Core can't even compete with credit cards at this point.
Whereas Bitcoin Cash, the transactions are less than a penny.
They're always confirmed in the next block.
Bitcoin Cash very, very clearly is the original version of Bitcoin that was described in the
Bitcoin white paper and behaves the same way Bitcoin did until the Bitcoin Core team managed
to completely veer Bitcoin Core off of the original roadmap that was laid out by Bitcoin.org
and the original Bitcoin white paper written by Satoshi Nakamoto.
So I guess one last point I'll touch on is that you're worried about the centralization
of nodes if the blocks become too big and it requires a more expensive piece of hardware.
Well, it's not the full nodes that include your transactions in a block.
It's the miners.
Only the people who are doing Bitcoin mining actually include transactions in a block.
And these mining machines cost over $1,000 each.
And these miners are buying thousands or even tens of thousands of these machines at a time.
So they're spending millions or tens of millions of dollars at a time buying this mining equipment.
Even for the price of one of these mining machines, one S9 from Bitmain,
you can already buy a computer that can easily run and validate the 100 megabyte blocks right
now for the cost of just one of these mining machines that Bitmain is selling.
So I don't think it's a realistic worry.
So I guess to close up, I feel that the Bitcoin Core team are worried about all sorts of things
that might maybe possibly somehow some way maybe become a problem far into the future.
And they're optimizing against those things that might possibly become a problem way into the
future and in doing so, causing the current Bitcoin network to basically be unusable for
any business or individual who wants to use it in commerce.
And that's why we've seen all these businesses that used to be strictly Bitcoin only
in busy integrating all sorts of altcoins like Bitcoin Cash.
So we've seen that happen with Coinbase.
We've seen that happen with Bitpay.
We've seen that happen with blockchain.info.
And we've seen that happen with Bitcoin.com.
All of those businesses used to be strictly Bitcoin only until the Core team sufficiently
deviated Bitcoin Core from the original roadmap and basically turned it on its head.
They took a network that used to be fast, cheap, and reliable,
and have intentionally made it slow, expensive to use, and unreliable.
And you don't have to be a rocket scientist to figure out which version of those
those two versions of Bitcoin is going to be the more successful one in the world.
All right.
I think I'd like to give each of you an opportunity to take a couple of minutes
to respond to each other.
So James, if you want to respond to that, go right ahead.
I'll give Roger the same opportunity.
And then we want to jump into questions.
In fact, I actually did develop a question that I think I want to ask before you guys ask any.
But anyway, you have the floor, Jameson.
Yeah, no.
Roger brings up a lot of good points, especially regarding the frustration
and unreliability for commerce transactions, especially retail level stuff.
So from the standpoint, though, of who controls the block space or is there centralized planning
happening or is Bitcoin Core in control of the Bitcoin protocol?
I think that that's a result of a lot of frustration of people wanting to have somebody to blame.
But in fact, there are over a half a dozen different Bitcoin protocol implementations.
It just so happens that Bitcoin Core happens to be the one with the largest group of people
who are contributing to it.
And it's very interesting to see how angry people get about Bitcoin Core in specific,
because this is an open group collaboration project.
So anyone who has the expertise and wants to contribute their time is welcome to join Bitcoin
Core, start making reviews and pull requests and participating in the process.
And people who don't like Bitcoin Core and their process are free to create their own
software and put it out there on the market.
And there have been a number of different teams who have done that as well.
But at the question of who controls the protocol and the rules and the size of the blocks,
this is another one of the big disconnects between the different sides of the scalability
debate.
So you have one side who believes it's very important for full node operators to be able
to run a fully validating node at a low cost.
And then on the other side, you have people who believe it's very important that transaction
fees for on-chain transactions are very low cost in order to continue to drive adoption
for these retail level transactions.
And these are tradeoffs that can't really...
You have to choose one or the other, because low transaction fees are going to continue
driving more demand and raising the cost to actually run a full node.
So it's interesting to talk about the unreliability of the Bitcoin network at the moment.
It is in many senses unreliable because it is so successful.
It's almost an issue of we don't go there anymore.
It's too crowded type of situation.
But it is true that high fees are, I think, at all time high fees right now for transactions
on the Bitcoin network.
This is because there's a ton of demand and people are willing to pay a premium for it.
Some people aren't, but apparently a lot of people are because that's why they're so high.
And in fact, transaction fees are on track to make Bitcoin's computational security
actually sustainable.
Because Bitcoin is deflationary, the subsidy that is provided by each block to miners is
going to continue to dwindle until there's none left to pay them.
And at that point, miners will either have to work for free or there will need to be
sufficient transaction fees for them to collect.
So last I checked, Bitcoin is already about 40 to 50% of the way of being sustainable
in this regard.
And there are thousands of cryptocurrencies out there that have extremely low fees, not
just Bitcoin cash.
This is because almost nobody uses them and there's no demand for them.
And it's unclear at this moment if these cryptocurrencies will withstand the test of time.
I expect that many of them are actually going to fade into obscurity.
And it's worth noting that fees are related to a user's time preference.
So users with low priority transactions who are willing to wait for a period of low demand
are actually able to get by by paying lower fees.
And the estimates that we provide at BitGo will go all the way out to a one week confirmation
target.
So while some people say that Lightning Network may, quote unquote, steal fees from miners,
I actually expect that these second layer networks are going to enable new use cases
that add more utility and value to Bitcoin, which will result in even more demand for
block space because they need to open and close these payment channels.
And if you consider that a payment channel will enable a user to perform many transactions
off chain, those fee savings are going to be reflected by users that are willing to
pay even higher on chain fees because they're netting an overall fee savings.
So users who are opening payment channels, they're also going to have pretty low time
preference for their confirmation because they don't need to pay those high fees to
get very fast block confirmation.
So I know that Roger's been in Bitcoin for a very long time.
He often reminisces about what the good old days used to be like when fees were optional
and old UTXOs got prioritized by miners regardless of the fees they paid.
But the terrible truth from my perspective is that all blockchains are terrible at scaling.
They're highly inefficient databases.
And the only public permissionless networks you're going to see that have low fees are
going to have that because they have low usage, low security, and thus lower utility and value.
Almost nobody other than the miners themselves likes having high transaction fees.
But allowing a fee market to form when demand for block space surges incentivizes users
to be more efficient about their use of block space.
So as a result, the higher value use cases get prioritized.
And unfortunately, the low value use cases may suffer.
And this is what Roger and a lot of the Bitcoin cash supporters are upset about.
And I've been monitoring the Bitcoin transactions versus the Bitcoin cash transactions.
And over the past week, the average Bitcoin cash transaction has been over three kilobytes in size,
which is more than five times larger than the average Bitcoin transaction.
It's very interesting for me to observe.
I expect that this trend may continue if the adoption of Bitcoin cash continues to increase
because users are going to have very little incentive to be good stewards of the shared
resources.
And I fear that it may fall victim to a tragedy of the commons type situation.
But I'm incredibly fascinated to see how it all plays out.
All right, Roger, the floor is yours once again.
Yes, I guess one of the you know, again, I took a couple of notes there.
So one of the comments that Jameson made is that the Bitcoin core team is this open
community that anybody can participate in.
I'd like to point out, you know, what happened to Gavin?
What happened to Jeff Garzik there?
So Gavin Andreessen, for those that don't know, was the person that Satoshi Nakamoto,
the creator of Bitcoin, essentially turned over the reins of the project to Gavin was
gracious enough to share access to a number of repositories with other people.
And then when Gavin came out and said that he thought that Craig Wright was Satoshi,
people under the guise of claiming that they thought his account had been hacked, revoked
his access from these repositories, and then never gave it back to him when it turned out
that his account hadn't been hacked.
And then they also removed Jeff Garzik's access as well at the same time without giving any
excuse at all.
Whereas in reality, the reason that their access was revoked is because simply they
had different opinions from the current core development team.
So they literally had their access revoked.
That's certainly not a free and open thing for anybody to participate in.
And then we should also point out about the incredible amount of censorship that's been
going on on the main discussion platforms for Bitcoin.
So both on BitcoinTalk.org and rBitcoin.
rBitcoin is probably the number one discussion platform for Bitcoin worldwide up until maybe
a week ago when the mainstream media started going really crazy reporting on Bitcoin.
But at any one moment, you have more than 10,000 users reading about Bitcoin over there.
And you're literally not allowed to post anything that's in opposition to the Bitcoin core's
roadmap or your post will literally be deleted.
I implore anybody out there to go and Google Bitcoin censorship.
And there's a number of fantastic articles there by a guy going by the name of John Block
outlying or laying out the censorship that's been going on.
And it's just jaw dropping if you take the time to read it.
Not only are they deleting posts, but they're modifying posts and deleting things
selectively to make it look like people have the exact opposite opinion of what they actually
do have.
So that's not in line with a free and open community.
And I understand that not all Bitcoin core developers are engaged in that.
But for the most part, a lot of them have been openly supportive of it.
And the ones that have spoken out against it basically say something along the lines of,
yeah, I kind of wish they wouldn't do that.
And then lots of other ones claim that they don't see any evidence of this censorship
at all, which is just absolute madness.
And Jameson is right.
I do like to reminisce about the old days of Bitcoin when it worked really, really well.
Transactions oftentimes were free.
It worked incredibly well for commerce.
And you had this thing that was called zero confirmation transactions, where basically
most transactions, even before they've been included in a block, were good enough for
merchants to accept them without them having been included in a block yet.
I understand.
I think everybody understands that a transaction that's included in a block is more reliable than
one that hasn't.
But the current Bitcoin core development team, they've openly made zero confirmation
transactions less reliable and less useful to the point where people can't really use
them in commerce at this point anymore.
And it's a real, real big shame.
And for anybody that's actually trying to use Bitcoin in commerce, you realize that
the Bitcoin core dev team aren't interested.
They're openly hostile to people using Bitcoin in commerce.
And if you look at it, the entire reason Bitcoin is where it is today is because people started
to use it in commerce.
And it was only because people were using it in commerce that it even became usable
as this store value or so-called digital gold that lots of the people on the core team
think that it can be.
So I guess I'd like to point out that for anything to be usable as a store value, it
has to have some secondary use case.
So it either has to be usable in commerce or in the case of a house, you can live in
it, or in a case of gold, it has all sorts of industrial uses or digital uses or all
sorts of other things.
If Bitcoin is morphed into something that doesn't have any use case other than a store
value, it won't be usable as a store value.
And I think that's a real big disconnect on both sides of this debate.
And once again, the proof is in the pudding.
As soon as Bitcoin's blocks became full, and it started having a bad user experience,
its market share went from over nearly 100% to less than 50% today.
And maybe someday Lightning Network and Layer 2 stuff will solve all these problems.
But by that point, it's going to be way too late.
Imagine if a version of Facebook came out today that had way better features and
everything was fantastic, but everybody was still on Facebook, it would be almost impossible
to get people to switch.
And that's happening to Bitcoin right now.
We're watching people switching away from Bitcoin Core right now, and they're busy
switching to Ethereum and Bitcoin Cash and Ripple and Dash and all sorts of other things
out there because of the bad user experience that Bitcoin is providing for users.
If something's slow, expensive, and unreliable, and an alternative is offering them something
that's fast, cheap, and reliable, people are going to switch to that thing that offers a
better user experience.
And that's exactly what happens.
And as the very first person in the entire world to start investing in cryptocurrency
startups, I'm calling it like Bitcoin Core is not going to be the top cryptocurrency
in the world by the end of next year.
That's a plain and simple truth because of the bad user experience that not by accident,
but has intentionally been created by the Bitcoin Core development team.
They openly say they want Bitcoin to have full blocks, and by having full blocks, it
creates high fees and unreliable transactions.
When things are expensive to use, slow and unreliable, people are going to use something
else.
And that's why myself and my friends and all the businesses I do business with are busy
switching to Bitcoin Cash.
All right.
Let me ask Jameson a question, then I'm going to ask one to Roger, then I'll let you two
go at it.
Roger just repeated something I've heard him say before, which is that the Bitcoin Core
people in some cases have been implicitly or explicitly hostile to the idea of Bitcoin
becoming accepted as a widespread medium of exchange, but rather thinking of it more now
in terms of being a store of value.
Now, is that really true?
And is that your personal vision for Bitcoin?
Well, I mean, that's OK.
This is really difficult whenever you're saying like the Bitcoin Core people, because first
of all, Bitcoin Core is one of several implementations and even within Bitcoin Core, there are so
many different supporters who have so many different views.
It's very, very tricky to just categorize any large group of people as being one specific
thing or another.
OK, so all right, let me try and clarify then, because let's just say if I were to have read
an article about Bitcoin five years ago, I would have encountered a lot of young enthusiasts
whose view was this thing is going to take over the world, it's going to take on the
central banks, it's going to bring the state down.
And it's not going to do that by being a store of value.
It's going to do that by being a medium of exchange.
Is there a deliberate attempt to play down that aspect?
That's my question.
I mean, I think there definitely is with regard to doing on chain transactions for it.
But if you start digging into all of the technical progress that is happening, there are, last
I checked, like four or five different teams that are working on second layer technologies
that want to make Bitcoin as a medium of exchange be an even better experience than, say, your
Visa MasterCard type networks.
It's just they've been working on this for several years now.
And we're finally at the point where the technology is going to be ready sometime next year.
I mean, people are already doing transactions on the main network.
It's just in a beta phase at the moment.
Roger, let me ask you something.
I've heard I think I've heard you, but I've certainly heard some friends argue that as
time has gone on over the past seven or eight years, people have gotten into Bitcoin who
don't necessarily have libertarian ideology, you know, undergirding them that a lot of times
when you were learning about Bitcoin, the beginning, it was libertarians.
Everybody admits were early adopters.
They were early enthusiasts.
But that wasn't necessarily going to stay the case.
And I think there's been a kind of implication that as people have gotten into Bitcoin who
have not had a libertarian commitment, that this was bound to push Bitcoin into down
directions you haven't wanted to go.
But at the same time, Jameson here seems like as good a libertarian as anybody.
So can you sort out what the role of ideology in all this is?
Well, there's, I guess, lots of different types of libertarians.
So I came to be a libertarian from study economics, and I certainly was not born a libertarian.
My parents were not libertarians, but I was fortunate enough just by chance to come across
a Ludwig von Mises book when I was in junior high called Socialism.
And I thought it was a pro-socialism book when I picked it up.
But by the time I was done reading it, I realized that socialism not only does it not work in
practice, it's impossible for it to even work in theory as well.
So I became a libertarian from studying the economics, and I got interested in Bitcoin
because of the economic ramifications.
And I was that first person that started trying to spread Bitcoin to the world.
And I focused on libertarians, and I focused on libertarians that were part of the Free
State Project in particular.
So I reached out to everybody I could that was part of the Free State Project and tried
to give them all Bitcoins and tried to all get them involved.
And I don't know exactly what Jameson's libertarian leanings are or political leanings
are, but I kind of actually felt like he avoided the question in regards to the censorship
issue and people being complacent and whether or not Bitcoin should be a medium of exchange
or a store of value.
And maybe we could ask Jameson directly, like, what is his own opinion?
It's fine if he doesn't want to speak for others.
But I'd like to ask Jameson, do you think Bitcoin should be a store of value or a medium
of exchange?
And what do you think about all the censorship that's been going on in the Bitcoin ecosystem?
Sure. Sure. So I believe that we should prioritize the store of value at the moment due to the technological limitations.
But, you know, ultimately, I think that everybody on both sides of the scalability debate has
the same ultimate goal, which is get Bitcoin used by everybody across the world, make it
a mainstream technology that is easy and basically empowers people.
That is really like my fundamental goal is, you know, even higher level than Bitcoin is
to use my skills as a technologist to help empower individuals.
And like with regard to the censorship stuff, I think it's interesting, like these
moderation actions on various forums can be pretty annoying.
I've gotten hit by them myself over the years.
But and I wrote a long article about this, I think earlier in the year, I don't believe
that this is actual censorship that is stifling speech because there are plenty of alternative
forums that you can use for discussion.
In fact, I generally hate Reddit, whatever subreddit you're talking about.
I hate it.
I think it has a lot of issues.
And I myself am a big fan of Twitter because I get to choose what content I see and there
are rarely any interventions by Twitter administrators.
It's kind of odd to me that Roger keeps complaining about the censorship when he's competing on
the free market.
He's offering, you know, quote unquote uncensored forums.
He has a quarter million Twitter followers, one hundred and twenty thousand subscribers
on the BTC subreddit Bitcoin dot com is ranked something like number twenty two hundred in
the whole world in terms of transaction or traffic volume.
So he's out there and his views are getting heard.
Like I don't think that there are that many people in this space who don't know about
both sides of the debate because of censorship.
I mean, information wants to be free and pretty much everybody who spends time getting into
this level of the debate is well aware of like the points on both sides.
So basically a summary of your position is that the censorship that's going on or the
manipulation of the of the opinions of people being posted online, the manipulation and
censorship is OK because there's other places that people can go to discuss it.
In addition to the places where the censorship is happening, is that an accurate summary
of your your position?
Yeah.
So there are multiple different forums that have their own styles of moderation.
People get to choose which ones they interact on.
It's pretty obvious like what the different moderation styles of these different forums
are.
I believe this is free market in action.
And believe me, from like all of the vitriol and all of the shilling that happens on both
sides, like there are definitely people who are doing dirty stuff on both sides.
I don't condone any of that stuff.
I generally try to mute and block as much of it as possible.
But this is kind of the chaos that you get from a free market.
All right.
We've got a lively conversation going on here.
We're going to continue it after we thank our sponsor.
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All right.
I actually want to give Jameson an opportunity to ask Roger a question just because I have
to kind of be in charge here to make sure there's equal time.
So Jameson, ask Roger anything you like.
Sure.
So I mean, I think one of the main differences between our viewpoints on the scaling debate
is kind of like short term versus long term viewpoints.
So I'm just interested to know, you know, how many users do you really think that you
can get supporting, you know, on chain daily transactions?
Like is, is there a block size that you believe is too large or a cost of note operation that
is too high or, you know, how are you going to deal with the adversarial situations?
Um, I think this is one of, you know, when I say that like Bitcoin developers are conservative,
I'm really saying that, you know, they're extremely adversarial thinkers and they're
trying to be careful so that edge cases don't get into the system that can cause it to have
problems.
So like, how are you going to deal with being able to target extremely low on chain transaction
fees, but then not have some adversary come in and just fill up all of your block space
for basically free?
So again, it's the miners that should decide what size blocks they want to produce.
It's not for me to decide.
It's for the market to decide.
I don't think that that parameter should be centrally planned.
So the people that are paying for transactions in the block space can decide how much they
want to pay.
And the people producing the block space can decide how much they want to produce for the
amount of money that people are willing to pay.
So I don't know what the answer is there, and I don't think anybody knows what the answer
for that is.
Just as nobody knows what the correct price for a cup of coffee is.
It depends on the location.
It depends on all sorts of different things.
And there's a fantastic essay that I read when I was a young man called Eye Pencil,
I believe by Leonard Reed.
And he makes the claim that there's not a single person alive in the entire world that
knows how to make a pencil.
And when you first hear that claim, you think, what a bunch of nonsense, a pencil is so simple.
Of course, I know how to make it.
But then he goes into all the details of what's actually required to make a pencil and the
graphite that's mined out of the ground somewhere and trees that are cut down somewhere and
the machinery that's used to process the trees and then how you make the paint and the piece
of rubber on the end for an eraser.
And by the time you get done reading the essay, you realize he's right.
There's not a single human being alive on the planet that knows how to make a simple
pencil that you go and buy at the store.
So I think it's the same way with block space.
We don't know what the right amount of block space to produce.
We don't know what the right things that should be included in that block space is.
At the end of the day, it's the people producing the block space and the people paying to have
their stuff put into the block space that need to decide what the correct amount is
and what the correct price for that block space is.
So I don't know what it is.
But I can tell you, by the fact that we can see Bitcoin losing market share and losing
market share quickly, that the $30 per transaction that Bitcoin costs right now for 250 kilobytes,
I'm sorry, 250 bytes of data that's way, way, way too high, and that's why we're seeing
people go to other things.
Okay.
So I think that makes sense.
That's pretty much in line with a lot of the perspectives that I hear, which is that these
things should be decided by the miners because they're basically operating the market and
really in control of the supply of block space.
So I'm wondering, can you then abstract that a little bit more?
And would you say that at the end of the day, who really gets to define the rules of the
Bitcoin protocol?
Is that still the miners again versus the rest of the regular users?
So I guess there isn't a real clear answer to that question.
That's why this fight has been going on for a couple of years.
And that's one of Bitcoin's strengths.
And I guess one of its weaknesses is there isn't one final arbiter of what should be
decided and how things should be done.
It's not only the developers.
It's not only the miners.
It's not only the merchants.
It's all of these things and none of these things.
So I guess I don't have a clear answer for you other than we're seeing the ecosystem
migrating away from Bitcoin Core and migrating mainly to Bitcoin Cash and other altcoins
because up until very recently, the amount of block space produced was decided by the
market.
There was this one megabyte cap, but the amount of block space that people were willing to
pay for was much, much less than one megabyte.
The blocks were never, ever a full megabyte.
And during that time in which the market was deciding how much block space to be produced,
Bitcoin grew from nothing into the worldwide phenomenon that it is today.
And then once the amount of block space being produced was no longer being determined by
the market, we're seeing Bitcoin lose market share to all these other altcoins.
And all these other altcoins still have the amount of block space that they're producing
being determined by the market.
There's not another altcoin in the entire world that has full blocks.
It's only Bitcoin.
And that's an incredibly dangerous and reckless thing to do with Bitcoin.
And we're seeing the results of that by Bitcoin losing its first mover advantage and your
100% market share down to less than 50%.
So I guess congratulations to the small blockers and the Bitcoin core development team.
You guys have successfully destroyed Bitcoin's first mover advantage.
Let me ask you guys a question that would come from the average person reading the newspaper
and reading things online about Bitcoin and the news, because you get a lot of commentators
saying Bitcoin is in a bubble.
And one of the arguments they make, I find a lot of these people are not very informed
about Bitcoin.
But one of the arguments they make is that what's going to happen is people are going
to get buyer's remorse.
They're going to acquire some Bitcoin, they're going to realize it's not very usable precisely
because of some of the complaints that Roger has had.
It doesn't give a very good user experience that they're going to think, well, then what
the heck am I doing in this?
Just I'm buying it because I think it's just going to get, it's going to go up and up and
up.
Forget it.
And they're going to dump it for that reason.
What is your response, whether that's right or wrong, how do you respond to that kind
of argument?
And we'll start with Jameson.
Well, the usability argument.
So I mean, what's really changing as a result of the higher fees and greater demand on Bitcoin
is that the lower value use cases are getting priced out of it, and that's causing a lot
of friction and frustration.
So you know, if you have to pay 10 or $20 for a transaction, it no longer makes sense
to do these retail payments of 10, 20, even possibly $100.
So from what I'm observing right now is that the kind of the nature of the use cases of
Bitcoin are changing at the moment to being more of an institutional and high net worth
level of people that are getting into it because they're willing to pay those higher fees.
Now, one of the differences, I think, between my perspective and Bitcoin Cash kind of roadmap
is that I believe that the second layer technologies are going to alleviate a lot of that problem.
It's just going to be a patience game, whereas the folks who are in more of a rush to try
to fix this fee situation, they just want to raise the block size and get Bitcoin back
to operating the way that it was before.
So if I could reply to that, please do a little bit.
So I think Jameson actually kind of summarized the position pretty darn well.
And in regards to these layer two things, the Bitcoin core team, they're really confident
in these layer two technologies that they've claimed are going to be coming in about 18
months from now.
They've been claiming that for years.
And from my point of view, they've intentionally broken the version of Bitcoin that we know
and have years and years, almost a decade of empirical evidence showing that it worked
and worked incredibly well.
And they've intentionally broken and damaged that in the hopes of creating these layer
two technologies that don't exist yet, haven't been proven in commerce.
There's not a single place online where you can buy anything with a layer two technology
payment system built on top of Bitcoin or anything else for that matter, as far as I'm
aware.
So I think the conservative approach would be if you have something that's working and
working incredibly well, don't break it yet.
That's the exact approach that Core has taken.
They've broken something that was working incredibly well in the hopes of creating layer
two technologies that I hope work really well as well.
And I hope that flying cars come and replace my Tesla, but I'm not going to go and destroy
my Tesla today because I think that flying cars are going to come next year.
I'll wait till the flying cars are already here and working well and working safely before
I get rid of my Tesla.
And unfortunately, Bitcoin Core has taken the exact opposite approach.
They destroyed the thing that was working well because they hope that this other thing
is going to come in the future and replace it, and that just is incredibly frustrating
and reckless for me.
And I guess one other point, too, it's worth pointing out that not only transactions of
tens of dollars, also hundreds of dollars, and even thousands of dollar size transactions
have been priced out of the Bitcoin network.
Just the other week, I sent $20,000 worth of Bitcoin from my wallet to a Bitcoin exchange
to buy more Bitcoin cash.
So I sent Bitcoin Core to an exchange to buy Bitcoin cash.
To send the $20,000 worth of Bitcoin Core, it cost me $1,000 in fees.
It cost literally 5% of the transaction.
That's way more than credit cards.
That's way more than a bank.
Why the heck would I ever want to use that sort of thing?
And the $20,000 were all funds that I received for people to pay for advertising on Bitcoin.com.
Well, guess what?
Now we're only accepting Bitcoin cash for advertising payments.
And if I receive the same $20,000 from a bunch of different advertisers for advertising,
and if I want to move it to an exchange, to exchange for something else, it'll cost me
pennies rather than $1,000 to do so.
And so even big institutions are going to be switching to Bitcoin cash because it provides
a better experience for both small value payments and large value payments.
All right.
I'm going to give each of you an opportunity to ask each other one final question, and
then you can each sum up your position.
So Jamis, I'm going to turn to you to ask Roger a final question.
Sure.
So in terms of like, and this kind of goes back to one of the other questions, like with
regard to like, what is the definition of Bitcoin?
Are you in favor or against like the idea of people being able to run fully validating
nodes?
Because that does seem to be one of the main differences here in deciding like whether
or not these users need to have like the individual sovereignty and trustlessness, these security
aspects of Bitcoin, or whether or not it's good enough for them just to use the lightweight
verification and, you know, use SPV proofs to check that their transaction was included
in a block.
So are you less concerned with, I guess, the rest of the rules of the network and for the
average person to be able to participate in that, you're just more concerned and the average
person being able to move money around?
So my number one goal and interest in Bitcoin is to undermine the ability of every single
government on the planet to be able to control the money supply and control what people do
with their own money.
And so the way I see the best strategy to achieve that goal is to get as many people
around the world to use Bitcoin as quickly as we possibly can.
And if you look at the way that's happened, it's been through companies like Coinbase
and blockchain.info.
Those are probably the top two Bitcoin wallets in the entire world.
None of the users of blockchain.info or Coinbase are validating their own transactions.
They're all relying on Coinbase and blockchain.info to do that for them.
And I think that's just fine.
If you read the original post by Satoshi Nakamoto, the idea was that only full nodes, meaning
mining nodes, would be the ones that would be required to run all these transactions.
And if we get Bitcoin being used by people all over the world in commerce for everything
from shampoo to cat food to absolutely everything you can think of.
If politicians go to try and ban it, it'll be too late.
Everybody will say, no, wait a minute, Bitcoin, it's not bad.
I use it to buy my puppy food.
And how come the politicians want to make it harder for me to buy my puppy food?
So I think it's just fine if we rely on companies like Bitpay, for example, as well, and Coinbase
and blockchain and bitcoin.com to run full nodes.
I think as long as you have enough full nodes around the world, it's impossible for governments
to shut them down.
That's enough.
We don't have to have everybody running a full node.
And anybody that's interested enough for $2,000 today can buy what was definitely a supercomputer
just a few years ago.
So I don't think we're anywhere near being at the price point where people are going
to be priced out of being able to run a full node, where we're already at the point where
people are being priced out of even being able to transact in Bitcoin.
So if we're forced to choose between people being able to afford to run a full node and
people being able to afford to use Bitcoin, I would choose the path where people are still
able to afford to use Bitcoin and not be able to afford to run a full node rather than the
path where people can still afford to run a full node, but they can't afford to use
Bitcoin.
And that's the decision I hear you're presenting me with.
And I choose the one on which everybody can afford to use Bitcoin.
All right, Roger, your turn to ask a final question.
Okay.
Well, I guess first, actually, I want to thank Jameson.
Like I've met you in person.
You're definitely on the other side of this scaling debate from me, but you've always
been very civil and a gentleman and, you know, an all around civil guy.
And I think this debate needs more of that sort of thing and more people like you.
So thank you for being such a civil guy.
And I suppose my final question for you is the title of the Bitcoin white paper is, you
know, Bitcoin, a peer to peer electronic cash system.
At the moment, Bitcoin is no longer usable as cash.
How big of a problem do you see the fact that Bitcoin is no longer usable as cash in the
core team or, for the most part, openly hostile to even being able to use it as cash?
Yeah.
Well, it's my pleasure.
You know, there's so much vitriol in this space.
And you know, Roger is even a much bigger public figure than I am, but I've had to deal
with my fair share of vitriol and people just attacking me all the time.
So I definitely understand this can be a tough space to operate in as a public figure.
But yeah, in regards to Bitcoin as a cash system, there is no way that I can argue that
like there's no problems right now.
There's obviously a lot of problems, a lot of frustration.
We are not able to onboard users as quickly as we would like to.
If anything, I would say that Bitcoin has become popular and mainstream like faster
than the technology is really ready for it right now.
I actually would really like to see a kind of cooling off period so that the industry
in general can can regroup and continue innovating.
Because right now, a lot of us in the industry are just trying to keep the servers from catching
on fire every day.
But with regard to the earlier point of this trade off of being able to transact versus
being able to run a full node, I think I have an interesting perspective because I'm in
charge of running all the full nodes at BitGo and we had this issue this year with the New
York agreement and a lot of companies saying, you know what, the enterprises are deciding
to go in this one specific direction.
And I was actually pretty upset about that.
That is not the vision that I've been wanting to see.
And because I was on the inside of one of the prominent companies that was supporting
that, it created a lot of conflicts for me.
And it's the situation that I never expected to be in before.
But the whole ecosystem is so fascinating.
And while it can be very challenging to be an outspoken participant in it, I think that
these type of debates are very important just for us to allow the free market to work.
And so while there are a lot of times I'll come out and I'll say things that I think
are concerning to me about Bitcoin Cash or other scalability stuff, I am not predicting
that Bitcoin Cash is going to crash and burn.
I actually suspect that it will do all right, at least in the short term.
I just have a really, really long term view on the engineering of these networks.
And so at the moment, you know, there's obviously a lot of demand for lower value use cases
to get onto these networks.
Lightning Network is not production ready yet.
Thus, many users are going to choose a cheaper altcoin to transact on right now.
And they may choose Bitcoin Cash or Bitcoin Gold or Bitcoin Silver or Litecoin or maybe
not Ethereum anymore because it's having issues.
But there's a million options out there and the free market is working.
And there's always going to be a demand for users to externalize their cost of transacting
onto the other entities that are running the network infrastructure.
So there's a lot of different tradeoffs going on.
And it's going to be fascinating to see how much these folks are going to be willing to
pay to keep the Bitcoin Cash network nodes operating if it really gets to the level of
adoption that they're trying to hit.
So I'm very interested.
So can I clarify my question a tiny bit, Jameson?
Sure.
So I guess a more clear version of my question is, do you think that the version of Bitcoin
described in the Bitcoin white paper, is that Bitcoin Core or is that Bitcoin Cash?
Which one most closely resembles the Bitcoin described in the white paper?
So yeah, that's a tricky question because people are interpreting the Bitcoin white
paper in different ways.
And Bitcoin has been changing over the years.
I have this article I wrote about why nobody understands Bitcoin.
And I put a lot of examples in there of things that Satoshi actually realized he got wrong
and had to fix.
So is Bitcoin Cash like a better version of what is described in the Bitcoin white paper
from one perspective that is absolutely true.
It's just interesting for me to see a lot of people referring back to the white paper
as some sort of like founding document that we have to go by.
I'm taking this from a more engineering, you know, the system is going to change and going
to evolve type of view and saying, you know, we have to keep our minds open and be willing
to try things that weren't even mentioned in the white paper.
So your position is if you strictly go by what was mentioned in the white paper, Bitcoin
Cash more closely resembles what's in the white paper than Bitcoin Core today?
I can certainly see that from some interpretations.
Yes.
Okay.
Thanks, Jameson.
All right.
Now, I'm going to actually be democratic here and ask if the two of you feel maybe you feel
completely satisfied with everything.
But if you'd like to have each of you two minutes to sum up where you stand, you're
free to do that.
So Jameson, would you like to take a couple of minutes?
Yeah.
So, you know, I try not to get too dogmatic like a lot of people do in this debate and,
you know, get really upset about, you know, what is happening in the ecosystem.
I think that Bitcoin is undergoing natural growing pains and it is, you know, quote unquote
failing to scale.
But there is a great talk actually from Andreas Antonopoulos, where he shows that there's
a lot of parallels between what's happening in Bitcoin and what happened to the Internet
itself and that the Internet failed to scale for several decades and it kept running into
problems.
Engineers looked at those problems.
They came up with solutions and then the Internet became more scalable until it hit yet another
point at which it failed to scale.
And I see Bitcoin as a new type of Internet, you know, it's this new economic network for
people are instead of just transferring information, they're transferring monetary value or data
that represents monetary value.
So I'm sure that Bitcoin is going to continue to continue to surprise us and evolve in ways
that we haven't imagined yet.
We're continuing to really understand what it is this system is that is built.
I would argue that even the the smartest self professed Bitcoin experts cannot possibly
understand every aspect of the system and foresee every potential direction that it
may go in.
So regardless of what happens, I think that's going to continue to be an extremely exciting
space and I am very happy to continue spending my time and resources trying to make it better.
All right, Roger, you have the final word.
Great.
Thank you, Tom and Jameson both for participating in this.
And I feel it was a real productive discussion.
People got to hear both sides and both visions.
I want Bitcoin to be usable while every single person on the planet.
And I think that that's more important than every single person being able to afford to
run a full node.
There's no point in running a full node if you can't even afford to use Bitcoin.
So you can stop and think for yourself.
There's two versions of Bitcoin.
There's Bitcoin Core and Bitcoin Cash.
Bitcoin Cash is fast, cheap and reliable.
Bitcoin Core is slow, expensive and unreliable.
Maybe someday in the future, that'll change with Bitcoin Core thanks to the Lightning
Network.
The Lightning Network will work right on top of Bitcoin Cash as well.
And like any good investor, don't put all your eggs in one basket.
You don't have to be 100 percent committed to Bitcoin Cash and you don't have to be
100 percent committed to Bitcoin Core.
But I would invite anybody, you know, go and get the bitcoin.com wallet supports both versions
of Bitcoin.
Go and get some of each and then send it back and forth with, you know, your spouse or your
child or whoever and figure out for you which one is more useful in your life and use the
one that you find the most useful in your life.
That's the beauty of the free market is everybody gets to have the solution that they want and
there's not a one size fits all solution for everybody.
So try them all out, see which ones you like and use it and use it to make the world a
better place.
Thank you guys both.
All right.
Well, that is going to do it for today.
So what I look my thanks to Jameson and Roger.
As I said, I will have their information and links up at TomWoods.com slash 1064.
Also if there's anything you guys would like linked in terms of things you've written,
whatever you'd like up there will be up there for people to read and decide for themselves.
So TomWoods.com slash 1064 will be the smorgasbord of information on this subject.
And again, my thanks to you two folks because I think we did have a fruitful conversation
here and no names were called and we all walk away better for it.
So thanks so much again.
Thank you.
Thanks Tom.
Okay, everybody.
Thanks for listening.
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