Shai’s Bitcoin story begins around 2011, and yes, he did have around 1,000 BTC at some point. He spent them, because back then people still talked about Bitcoin as a medium of exchange. What did he buy? “Stuff that’s good for creativity.” He is not at liberty to discuss it further.

His disenchantment came in two blows: first when Steam started accepting Bitcoin and then dropped it months later because congestion made payments unreliable, and then the SegWit saga, which to him felt like tyranny from Bitcoin Core. He is quick to admit this view was naive, and that being closer to protocol development has made him understand the Core side much better. But at the time, it pushed him away.

What brought him back was Daglabs, Yonatan Sompolinsky’s company, which eventually settled on implementing GHOSTDAG and launched Kaspa in November 2021. And this is where the conversation gets interesting, because Shai no longer believes Kaspa makes Bitcoin obsolete, nor does he like the store of value narrative. Instead, he offers a third thesis: Bitcoin as the ultimate decentralized vault, the Fort Knox of data and proof of publishing.

If you want to make a commitment to data that people will still trust in 200 years, you use the most secure chain in the world, and posting data there should be expensive, because high fees are exactly what keeps the vault secure. Meanwhile, fast chains like Kaspa could anchor their state commitments into Bitcoin, letting anyone verify decades of history against the immutable ledger. He calls it maybe the most beautiful application of Bitcoin he can think of: humanity documenting itself in a way that is not censorable or retroactively coercible.

But the meat of the episode is Shai’s criticism of Kaspa itself, and this is what makes him such a rare guest: a co-author of the protocol who is willing to say, on record, that the fair launch model is failing. His argument is subtle. A fair launch and a community project are not the same thing.

A fair launch without a social contract between developers and wealthy community members leaves the project vulnerable to capture: someone with enough money (say, an ASIC manufacturer who mined 80% of the supply for three months before announcing their machines) can simply start footing all the bills, gain an exclusive channel to the developers, and exert disproportionate influence. Shai reveals that three individuals collectively hold around 1.5 billion KAS, roughly 6% of the supply, and that the centralization of community funds has made the ecosystem hostile to outside builders. He knows of developers who tried to build on Kaspa and gave up because documentation was scarce and the devs were too busy to answer questions.

Then there is the governance drama. A few months before our recording, a conflict erupted between Yonatan Sompolinsky and parts of the community over how Kaspa communicates publicly. The result, three months later, is a total blackout: no vision, no plan, no representation. Shai’s verdict is blunt: being a great technology visionary does not make you a great leader, and the reclusiveness of the core team, combined with their dismissal of outside research (including a detailed fee market analysis by a PhD in financial mathematics that core never acknowledged), is centralizing development through social separation.

Shai himself was cut off mid-project from funding for his Kaspa book, which he calls the biggest mistake of his career. The good news: the book lives on as a general proof of work textbook, now funded by an education grant from Quai Network, and you can already read large parts of it online.

On the technical side, this episode is a masterclass. Shai explains what selfish mining actually is (withholding blocks to knock honest blocks off the chain, not mining empty blocks, a mistake I made and was happy to be corrected on), and how Qubic’s attack on Monero changed his mind about its urgency. He estimated Qubic controlled only around 28% of Monero’s hashrate, yet still managed to severely disrupt liveness, precisely because RandomX relies on commodity CPUs, the most abundant and easily rallied hardware in the world.

His advice to Monero is simple: drop RandomX, because the CPU mining experiment has failed the test of reality. His broader claim is one he is willing to die on: the only way to sustain decentralization in proof of work is an ultra ASIC-friendly algorithm, forcing mercenary miners to buy hardware that can do nothing else.

His case for proof of work over proof of stake is equally sharp. Any system where influence is derived from an intrinsic resource (coin holdings, reputation, delegation) codifies rich-get-richer dynamics directly into the protocol. Proof of work tethers influence to external markets, energy and hardware, which are chaotic, competitive, and constantly shifting, and that instability is a feature. His one rule for hybrids: proof of stake can govern anything except transaction inclusion and ordering. The moment PoS touches sequencing, you have a PoS chain with extra steps.

You will also learn why GHOSTDAG is “literally the worst name in crypto” (it generalizes Nakamoto consensus, not GHOST, and Kaspa is simply Aramaic for silver), why DAGKnight might be the perfect proof of work protocol (scalable, strong liveness, and self-scaling, adapting to real network conditions instead of hardcoded assumptions), and my favorite Easter egg ever embedded in a monetary policy: Kaspa’s monthly emission reductions follow the frequencies of the chromatic musical scale, starting at 440 KAS per block, like the middle A of a piano. Kaspa is the only proof of work you can use to tune a piano.

Shai also reveals he mined 5 million KAS in the first days and gave all of it away in paper wallets: to his grocer, his psychologist, his family. At the top, that was a million dollars. He does not regret it.

The quantum computing segment alone is worth the price of admission. Breaking Bitcoin’s ECDSA requires around 2,300 logical qubits; the best machines today have two or three. A survey of leading experts found that more than half believe there is a greater than 50% chance of cryptographically relevant quantum computers by 2035, which for Shai is enough to start preparing now. He dismantles the Y2K comparison made by skeptics (Y2K was a non-event because thousands of engineers worked for years to fix it, just like the ozone layer), explains why post-quantum signatures are 15 to 20 times larger and thousands of times heavier to compute on hardware wallets, and presents his own research on quantum canaries: deliberately weakened UTXOs acting as on-chain tripwires that give the network a measurable, game-theoretically sound signal of when quantum hardware crosses dangerous thresholds.

He also covers quantum mining, which is wildly counterintuitive: rational quantum miners increase orphan rates just by existing, and Grover’s square-root scaling means a miner manipulating difficulty upward on a fast-adjusting chain like Kaspa could theoretically rewrite history with a fraction of the hashrate. The machines required are so absurdly powerful that this remains a curiosity rather than a threat, but it is a fascinating lesson in how many of our security assumptions are artifacts of classical computation.

We also get into why Kaspa’s fee market can activate without congestion (parallel blocks force miners to randomize transaction selection, so paying more always buys you better inclusion odds), why Lightning centralizes into supernodes, why privacy coins face an unwinnable fight against TradFi compliance, why the crypto industry is “selling fundamental science directly to retail” (his analogy: a chemist inventing a new car material and pitching it on the street instead of to manufacturers), and why FUD is the single best educational opportunity a researcher can get.

And because this is the Bitcoin Takeover podcast, we also spent an hour on philosophy (absurdism, utilitarianism, and the categorical imperative are the three legs of his worldview; Ayn Rand “solved” the metaphysical gap by declaring “existence exists”), an hour on music (Sgt. Pepper invented the studio album; Pet Sounds made Paul McCartney jealous; he prefers In Utero to Nevermind), and a memorable stretch on what it means to be Israeli in crypto when strangers demand you answer for geopolitics before they discuss your math.

Shai beat Yonatan’s record by over an hour. If anyone ever breaks his, he promised to come back.

This episode is sponsored by Sideshift.ai, NoOnes.com, Bitcoin.com News, LayerTwo Labs, and Citrea! Special thanks for making this 8.5-hour marathon freely available to everyone!

Listen to Shai Wyborski on YouTube, Spotify, Apple Podcasts & more!

▶ Play video Watch on YouTube

Time stamps:

00:01:09 – Intro: Shai Wyborski, GHOSTDAG & the 8-hour record
00:03:41 – Dropping out of high school at 14
00:04:44 – Shai’s evolving opinions on Bitcoin
00:05:21 – Spending 1,000 BTC on “creativity fuel”
00:06:31 – Steam drops Bitcoin & the SegWit “tyranny”
00:10:47 – Bitcoin as the decentralized Fort Knox of data
00:15:44 – Bitcoin’s problems: throughput & Lightning’s limits
00:16:31 – Kaspa’s multi-leader consensus explained
00:23:24 – The failure of the fair launch model
00:37:42 – Three individuals hold ~6% of KAS supply
00:41:44 – Sponsor reads with live guitar jam
00:52:03 – Working with Quai Network (disclosure)
00:53:06 – Qubic’s attack on Monero with ~28% hashrate
01:08:27 – What selfish mining actually is
01:12:17 – Why proof of work beats proof of stake
01:21:24 – Advice for Monero: abandon RandomX
01:24:47 – PoW/PoS hybrids & Zano
01:36:46 – GHOSTDAG: “the worst name in crypto”
01:49:08 – DAGKnight: the perfect proof of work protocol?
01:59:22 – What Shai would change about Kaspa’s launch
02:07:08 – Mining 5M KAS & giving it all away
02:12:01 – Should the GHOSTDAG authors step back?
02:15:05 – The Kaspa governance drama & core blackout
02:28:40 – The proof of work book & the Quai grant
02:45:11 – Why FUD is the best educational opportunity
02:54:33 – Kaspa storage requirements at Visa scale
03:00:55 – Lightning Network critique: supernodes & trust
03:08:33 – Israel, politics & crypto tribalism
03:23:18 – Privacy, miner censorship & compliance
03:35:09 – How Kaspa splits fees between parallel blocks
03:39:53 – Guitar jam session
03:43:21 – Does Shai believe in God?
03:47:26 – Absurdism, utilitarianism & categorical imperative
04:02:32 – Ayn Rand, objectivism & “existence exists”
04:12:15 – Jordan Peterson & decentralized cults
04:25:29 – Does Shai actually use Kaspa?
04:45:20 – Tokens, vProgs & smart contracts on Kaspa
04:55:11 – Stablecoins are just tokens
05:20:03 – Do two pools control 51% of Kaspa’s hashrate?
05:25:49 – Decentralized oracles vs Chainlink
05:48:45 – Quantum computing explained: logical qubits
06:03:47 – 2,300 logical qubits to break Bitcoin’s ECDSA
06:05:37 – Expert survey: quantum attacks by 2035?
06:08:01 – Post-quantum signatures: size & hardware problems
06:14:12 – Quantum loot: Satoshi’s coins & P2PK
06:29:53 – Quantum canaries: Shai’s on-chain tripwire
06:45:25 – Quantum mining attacks & Grover’s algorithm
07:02:29 – Unclonable cryptography & quantum money
07:10:21 – Kaspa’s security budget: fees without congestion
07:18:24 – The chromatic emission: tuning a piano with Kaspa
07:32:48 – The hardest part of earning a PhD
07:44:04 – Beatles, Sgt. Pepper & the studio album
08:21:14 – Breaking the 8-hour record
08:26:33 – What Shai is working on now
08:34:21 – Outro jam & final thoughts

Fast forward 15 years, and Zcash (a Bitcoin fork which adds ZK SNARKs for state of the art transaction privacy) has figured out how to apply zero knowledge proofs to the Bitcoin protocol in an efficient and elegant way. Zooko, one of the project’s co-founders, calls this a solution to Satoshi Nakamoto’s last wish. Pushing the research and development of ZK proofs has proved to be a productive endeavour: an entire industry makes use of the Zcash technology nowadays, from Railgun and Tornado Cash on Ethereum, and all the way to the Zside Drivechain and the Citrea ZK rollup that’s coming to Bitcoin.

But Zooko is no stranger to cypherpunk projects, electronic money, or challenges that seem impossible to accomplish. At the age of 21, he joined Digicash: the first start-up which attempted to build internet money, for the purpose of making e-commerce private and safe for credit card owners. Ecash, David Chaum’s vision for a more market-driven internet, was maximally private but absolutely centralized.

Admittedly, Zooko has been thinking about ways to decentralize ecash since he first arrived in Amsterdam to work at DigiCash. His colleagues at the office, esteemed cypherpunks Nick Szabo and Wei Dai, were also trying to figure out ways to remove centralization in ecash (which is why Wei Dai wrote the b-money paper, while Szabo published papers on Bitgold and God Protocols).

On November 7th 2008, just two hours before Hal Finney famously replied to Satoshi Nakamoto for the first time, Zooko was posting on the same cryptography mailing list about potentially joining a third attempt to create decentralized Chaumian ecash. It’s definitely interesting that Zooko was on Perry E. Metzger’s cryptography mailing list at the same time as James A. Donald, Ray Dillinger, Hal Finney, and all the other cypherpunks who commented on Satoshi’s Bitcoin before launch. It’s also suspicious that someone who openly expressed his interest in creating decentralized Chaumian ecash and was posting on parallel threads did not also comment on the Bitcoin announcement.

On the other hand, Zooko did publish the first blog post about Bitcoin in January 2009 – which Satoshi Nakamoto also linked on the bitcoin.org page. So I’ve asked Zooko is he is the creator of Bitcoin and he denied it, saying he was working on Mojo Nation. If we follow the theory that Satoshi Nakamoto was a bad coder (the broken game of poker and P2P marketplace in version 0.1 of the code, as well as the feedback from Hal Finney and Ray Dillinger suggests he was inexperienced), it becomes less likely that Zooko would have coded it.

After all, the Zcash advocate did port PGP to HP-UX, and worked for cypherunk legend Eric Hughes alongside Bram Cohen to build Mojo Nation. Other contributions of his include creating ZRTP alongside Phil Zimmermann, co-inventing Tahoe-LAFS alongside Brian Warner, co-authoring BLAKE2, and also collaborating with Aaron Schartz and Mark S. Miller (who is responsible for naming the decentralization-security-user meaningfulness trilemma as “Zooko’s Triangle“).

Between 2009 and 2016, Zooko was one of the biggest Bitcoin bulls and advocates. He defended the network every time it was necessary, onboarded many of his friends and co-workers (Slush, founder of Slush Pool and former CEO of Trezor discovered Bitcoin through Zooko), and even made a small early contribution to Bitcoin Core by fixing a bug (Satoshi was very grateful and acknowledged this effort).

But the year 2013 turned out to be both productive and exciting for Bitcoin: two papers, Zerocoin and Zerocash, were published in order to fix Bitcoin’s privacy problem with Zero Knowledge Proofs. Adding ZK SNARKs to Bitcoin only required a soft fork… but it was difficult to reach consensus due to the experimental nature of the proposal.

On the plus side, Gregory Maxwell came up with the CoinJoin wallet bounty as a way to temporarily improve Bitcoin’s privacy until Zerocash becomes a much more mature proposal. DarkWallet, built by Amir Taaki’s team, was the first such wallet to emerge. In the following years, bitcoiners also witnessed the releases of Samourai Wallet and Wasabi Wallet… but they can’t possibly provide the same degree of privacy as ZK SNARKs. They merely provide temporary deniability.

The fact that Bitcoin Core developers were not in favor of the ZK proof upgrade did not deter the research and development of Zerocoin and Zerocash. In 2016, Zcoin and Zcash were launched as stand-alone blockchains. Both of them borrowed Bitcoin’s open ledger design and monetary policy, but added a privacy pool that uses Zero Knowledge Proofs to hide the transaction sender and conceal the amounts being transferred. Zooko, upon spending months trying to raise funds alongside Zerocoin and Zerocash paper author Matthew D. Green, became the co-founder and first CEO of Zcash (later renamed into the Electric Coin Company,a development team for the project).

But in order to see the light of day, Zcash needed more than funding. To fulfil the cryptographic requirements to launch the network, a creation ceremony was required: 6 different security experts from all around the world followed the same procedure on the same day, then burned the laptops that they used for generating the secret keys (aka “cryptographic toxic waste”). While this trusted setup was never the ideal model and was completely removed in a more refined iteration from 2022 that came up with the Halo2 proving system, it was the necessary first step. The 6 Zcash ceremony participants are Zooko, Edward Snowden, Peter Van Valkenburgh, Derek Hinch, Za Wilcox (Zooko’s brother) and Peter Todd (whose destroyed laptop I bought in 2021 and is a significant talking point in this podcast episode).

Over the last 9 years, Zcash has grown and improved exponentially. Today, it’s the most influential project in the entire crypto space: privacy protocols Tornado Cash and Railgun are built using the zero knowledge technology that Zcash researched, while ZK rollups on Bitcoin (sovereign or optimistically verified) couldn’t exist without the work that Zcash did to achieve greater data compression. Furthermore, an upcoming project upgrade named Tachyon (proposed by cryptographer Sean Bowe) fixes the biggest criticism that privacy protocols have received for the past 15 years: scalability.

Generally, transactions that include obfuscation are either larger in size, or else more computationally intensive (at least compared to a simple 1 input, 2 outputs transaction in Bitcoin). But Tachyon promises to bring scalability to billions of users without any privacy tradeoffs – which is the holy grail for solving the trilemma. It’s definitely going to be interesting to observe the improvement and refinement of the Zcash project over the next few years – as everything that’s being built is 100% compatible with the Bitcoin network and can get added as a future upgrade.

Listen to Zooko talk about Ecash, Bitcoin and Zcash on YouTube, Spotify, Apple Podcasts, Twitter/X, and more!

▶ Play video Watch on YouTube

Time stamps of my interview with Zooko:

Introducing Zooko (00:00:55)

Early Cypherpunk and Digital Cash Days (00:03:18)

Cypherpunk vs. Cryptography Mailing List (00:03:52)

Discovering Digital Cash and Chaum’s Blind Signing (00:04:44)

The Internet, BBS, and the Fall of the Berlin Wall (00:09:10)

Growing Up with Technology in Eastern Europe (00:12:04)

First Computers and Early Programming (00:13:02)

Loading Games and Computer Limitations (00:14:05)

Impact of Tariffs and Internet Access (00:16:47)

Economies of Scale and Computer Conferences (00:18:28)

Social Media, Privacy, and Information Overload (00:19:33)

Twitter Blocking & Echo Chambers (00:21:06)

Personal AI and Information Control (00:24:08)

First Computer Memories and Speech Synthesis (00:28:55)

Programming Languages: BASIC, Pascal, and C++ (00:31:15)

Vocoder Technology and Privacy (00:32:27)

Video Games and University Life (00:34:28)

Science Fiction and Cypherpunk Literature (00:36:10)

Working at DigiCash and Early Digital Currency (00:39:04)

Nick Szabo, Social Scalability, and Economic Thought (00:46:27)

AI-Generated Personas and Real-Life Community (00:52:42)

Global Talent, Work Ethic, and Financial Management (00:55:51)

David Chaum as a Boss and DigiCash’s Downfall (01:00:06)

Decentralizing Ecash and Early Bitcoin Attempts (01:04:50)

Wei Dai, Crypto++ and Peer-to-Peer Innovation (01:06:19)

Open Source Maintenance and Funding Challenges (01:10:00)

Why Digital Cash Mattered in the 1990s (01:12:30)

Cypherpunks, Remailers, and Privacy Motivation (01:13:46)

Bitcoin’s Early Days and Zooko’s Initial Skepticism (01:19:55)

Bitcoin Advocacy and Security Flaws (01:39:07)

Zooko’s Triangle and Naming Systems (01:43:31)

Altcoins, Experimentation, and Maximalism (01:51:09)

Bitcoin’s 2013 Privacy Papers: ZeroCoin & ZeroCash (01:55:12)

Funding Innovation and Open Source Economics (02:00:27)

Zcash Launch, Sidechains, and Market Dynamics (02:03:40)

Sponsors and Bitcoin Innovation Renaissance (02:09:01)

Proof of Stake, Hybrid Models, and Cross Link (02:26:14)

Network Sustainability and Burn Mechanisms (02:33:37)

Quantum Resistance and Lost Coins (02:37:26)

Peter Todd’s Compute Node, Zcash Ceremony and Trusted Setup (02:42:19)

Zero Knowledge Proofs and Counterfeiting Bug (03:05:35)

Zcash Design Choices and Block Size (03:43:04)

Bitcoin Blocksize War and Evolution (03:49:09)

Zcash vs. Monero and Privacy Models (04:27:33)

Tachyon: Sean Bowe’s Scalable Privacy Breakthrough (04:08:22)

Live Zcash Demo and Address Privacy (05:27:00)

Zcash Mining, Liquidity, and DEX Integration (05:49:57)

Decentralization, Transparency, and the Future (06:02:22)

Closing Remarks and Podcast Wrap-Up (06:05:15)

Full Transcript of my interview with Zooko, in which he talks about Ecash, Bitcoin & Zcash:

Automatically Transcribed With Podsqueeze

Vlad Costea 00:00:55 Hello and welcome to the Bitcoin Takeover podcast. This is season 16, episode 29. This episode is sponsored by Edge Wallet, which is a new entrant to the roster of sponsors. Layer Two Labs. NoOnes, Sideshift, Hodling.ch, Citrea.xyz, and Bitcoin.com News, which is now orange. Our guest today, or my guest today because I’m the only one interviewing is Zooko: cypherpunk, a guy who has been working on creating Champion Zcash and has been envisioning Bitcoin before it even existed.

He was on the Cypherpunk mailing list, which is not actually cypherpunk it’s cryptography mailing list. In 2008, when Bitcoin was announced the first time, which led to a lot of people thinking he might be Satoshi, and he was working on something called Mojo Nation at the time.

But still, it’s an interesting suspicion to be had. And then he took on Satoshi’s last wish before departing, which was to research zero knowledge proofs to find a better way to design the Bitcoin protocol. He started Zcash, which is actually you’re not the only person who started Zcash, but you were involved with Matthew Green.

Vlad Costea 00:02:10 And I think a lot of other people who contributed to the zero Cash paper were involved in that. And a surprise for this episode. And I talked too much, I know, but I’m super excited. I have this compute node from the first Zcash ceremony, which I bought from Peter Todd for a thousand bucks. I’m gonna unbox this for the first time ever.

Zooko 00:02:30 How did you pay for it though. Bitcoin? In Bitcoin. Okay.

Vlad Costea 00:02:36 Yeah he wanted bitcoin. And what else did I want to mention. You’re the head of product at Shielded Labs nowadays. So you’re not with the electric coin company anymore. And you call yourself the biggest cheerleader of Zcash.

Zooko 00:02:52 Yeah.

Vlad Costea 00:02:54 Is there anything that I missed here?

Zooko 00:02:58 no, that’s that’s me. And I’m old. I was born in 1974.

Vlad Costea 00:03:06 It’s not that old. I’m still planning to get David Chaum on the show, while his memories are still in good condition. And he’s able to tell stories from the old days. And I think that this is a good place to start.

Vlad Costea 00:03:18 Right. Because you’re about you’re a teenager and somehow you got a job at Digicash working on making Digicash a thing in the 1990s.

Zooko 00:03:29 Yeah, I was 20, 20 or 21.

Vlad Costea 00:03:33 Okay, so not a teenager.

Zooko 00:03:35 Yeah. Unless 20 year olds count as teenagers, which it kind of seems more and more like to me nowadays.

Vlad Costea 00:03:44 Anyway, you basically flew to Amsterdam. Yeah. And you started working on that?

Zooko 00:03:52 Yeah, I was obsessed by it. I had learned about it. Probably from the Cypherpunks mailing list. You said something about the Cypherpunks mailing list versus the cryptography mailing list. There were two different mailing lists. The Cypherpunks mailing list was the original one that was created by, John Gilmore, Eric Hughes, and Tim May. And then at some point. There was too much politics for some people’s taste, which is probably a familiar pattern. And so some people wanted to just talk about cryptography without as much politics. And so Perry Metzger created the cryptography mailing list for that purpose, and it was the cryptography mailing list that Satoshi posted, Bitcoin to.

Zooko 00:04:44 Wait, what were you asking about? Oh. Did you. Digicash? E cash? So I, It was an undergrad computer science major at the University of Colorado at Boulder, and I was too disorganized to benefit very much from university.

I didn’t do my homework and didn’t go to class and stayed up too late playing video games every night. But I discovered that I was reading the Cypherpunks mailing list every day, and they described this idea from David Chaum of Privacy Preserving Digital Cash.

So I downloaded the paper that Chaum had written, and, So I’ve read a lot of science papers now, and in retrospect, I’m really lucky that I hit upon a Chaum paper first, because he’s one of those cryptographers who both advances the state of the art like, comes up with novel and important new scientific concepts, and also writes in like, an easy way. Like the papers don’t have, like, unnecessary Greek letters in them. Anyway, so I read this science paper by Chaum about digital cash.

Zooko 00:05:59 I don’t know if you know, but he invented, like three. Like, there’s 3 or 4 ways to have privacy in a computer system. And Chaum invented either all of them or all but one of them in the 1980s. Anyway, this was one of them was called Blind Signing, with which you proposed to make cash for the internet. And this was in 1994, maybe that I read it.

He published it earlier, but like the internet was pretty new. There weren’t a lot of people on the internet. what’s his name? That economist was probably saying the internet was is useless as a fax machine. the World Wide Web hadn’t been invented yet, but Chaum correctly. And the cypherpunks, the whole group of us on the mailing list Correctly perceived that the internet was going to be huge.

And so Chaum invented a way to do money on the internet. And his conception of privacy was different than mine then and now. He thought it would be better for society if the consumer who paid for a thing, who sent money, had privacy, but the vendor didn’t, because vendors are more likely to be bad guys, and consumers are more likely to be like innocent mass of people.

Zooko 00:07:25 So in the original digital cash cash paper, only the vendor got privacy, but the recipient didn’t anyway. So I got totally obsessed today. Oh yeah.

Vlad Costea 00:07:41 Yeah, there’s only sender privacy.

Zooko 00:07:44 Right. Interesting. Okay, well, maybe Chaum will like the Lightning Network then. And also another part of this story is this book called Applied Cryptography by Bruce Schneier. It came out in the 90s, early 90s. And, it was just a compendium, a big, thick book of all these cool cryptographic techniques that Bruce Schneier had learned and written down. but yeah, me and everybody I know read the whole book, Applied Cryptography or. No, it wasn’t. I forget the name of that book. It was the red one. It was by Bruce Schneier. Schneier book.

Vlad Costea 00:08:22 Yeah, it’s applied to cryptography. I know that he still sells them like signed on his website. You can actually get an autographed one.

Zooko 00:08:30 Yeah. It’s a it’s a classic. It’s it’s on my bookshelf in the other room.

Zooko 00:08:36 so anyway, I was totally obsessed with this notion of anonymous digital cash because at that point I was like 19 years old, probably, or 20 years old. When I discovered this, I’d already discovered the Cypherpunks mailing list. And before that I discovered the internet. And like computer networks. Like before the internet, we had BBS, which was a decentralized computer network that you could connect to over your modem. And before that.

Vlad Costea 00:09:07 I had the early day forums. Right.

Zooko 00:09:10 Yeah. And you could play online games. and an email like thing. Yeah. BBS is where we’re awesome. I’m still waiting for like BBS is to come back in the internet age, like maybe, modern groups like Discord and Telegram or something, or more like that. Socially, I don’t know. but before the internet blew my mind, the previous thing that blew my mind was the fall of the Berlin Wall. Whatever year that was 1988 or 89. I had grown up in a. A semi cult like Christian church.

Zooko 00:09:57 And we believe that like the Soviet Union was the evil empire of Satan, and there was going to be a nuclear war, which was Armageddon and the return of Jesus and stuff like that. So it really blew my mind when I was like 16, when instead of nuclear war, the Soviet Union just like dissolved and, people were allowed to leave East Berlin. That was amazing and very sort of like, inspiring.

And so then when I discovered the internet, it had it sort of resonated with the fall of the Berlin Wall. And then when I discovered David Chaum’s Ecash, that was like the third resonance. I was like, we have, you know, political freedom and human flourishing is allowed again. And we have the internet, which allows you to communicate with everyone. Because before that, like you had to pay permanent charges to call to another state or whatever called long distance.

Vlad Costea 00:11:05 Yeah. I mean, there was so much that happened, and I think the early 90s seemed exciting. There’s a book that I studied in university, which is called The End of History by Francis Fukuyama.

Vlad Costea 00:11:17 And this guy was very good at making wrong predictions, and it sort of showed to me that in academia, if you want to be relevant and you want everyone to reference your work, you have to be super wrong so that people make fun of you and their papers. And that’s how you get invited to conferences. It’s like this hack.

Zooko 00:11:35 Totally worked for him.

Vlad Costea 00:11:36 It was such a such an exciting time for the West and the East. It was still very gray and depressing in some ways. I grew up in the 1990s in Romania. I was not aware of the internet until maybe 2000 or something, but it was still very exciting to discover all of the stuff that you’re talking about to.

Zooko 00:12:00 So you kind of had the same experience for ten years.

Vlad Costea 00:12:04 Yeah. So later than I did makes a lot of sense because I had an NES in 1996 or something. I was about 4 or 5 years old, and that was not even an NES. It was like a clone of it. So it makes sense.

Vlad Costea 00:12:21 Then I had my first computer in 2000, and I got my first new generation computer in 2004. Before that, it was just used. I’m not going to call it pieces of junk, but to have a Pentium one with 66MHz in the year 2000, and to watch these video game magazines and be like, I can’t play anything on my machine. It it sort of hurts. And I know that your generation had the Apple II and the Commodore 64, and those were a lot more. How should I put it relevant for a decade or so? Like you could play games on them and you could program them. It’s pretty cool.

Zooko 00:13:02 It’s super empowering. Mike. My dad worked at Texas Instruments, and he helped make the competitor to the Commodore 64 on the Apple two. It was called the TI 99 five, so maybe they weren’t that great at 99 for a actually. So maybe they weren’t that great at branding. But when I was a little kid, he started bringing home prototypes that he was building at the factory or office or whatever, to like, beta test them on me.

Zooko 00:13:31 I was like five, six years old and he would watch to see what I would do if he set this personal computer in front of me. So that was like the first time my mind was blown. That was really what set me on my course, was that those things were magic. And like you say, they came with a computer programming language. Like, in fact, the only thing you could do at first was type in a program and run it. you’d have to separate things if you wanted to play a game or do anything else.

Vlad Costea 00:14:05 And I guess you had to write your own. Drivers sometimes go to assembly language and type some of that code. I had a cousin who had a Commodore 64 clone, and to me it was amazing, but at the same time boring that he had to wait. He had the cassette module and he had to wait for the audio cassette to rewind. Until then, I was not even aware that you can have video games or data on an audio cassette.

Vlad Costea 00:14:33 And then sometimes you’d get a reading error. So you had to rewind again, maybe try to do something to it, like blow into it or whatever.

Zooko 00:14:40 You blow on.

Vlad Costea 00:14:41 It. Yeah. Just to make sure that it’s gonna work the second time around. And basically what was happening in the process was that the information on the cassette was being loaded on the Ram of the device. Yeah. Well.

Zooko 00:14:57 You and I had some similar experiences, but like 10 or 20 years apart because of geography and politics.

Vlad Costea 00:15:04 Yeah, but don’t get me wrong, I never did stuff as interesting as you did. I had a pretty normal life or an Eastern European up until 20 or something.

Zooko 00:15:12 I don’t really know what that is. What’s a normal life for an Eastern European?

Vlad Costea 00:15:17 Play outside with your friends. Go to school. I mean, of course, I had very demanding parents who really pushed me to my limits and wanted me to be in the best class and, you know, be among the gifted students, even if I don’t think I was like top of my class past the fifth grade.

Vlad Costea 00:15:38 But it really pushed my limits. And yeah, I was always curious about new stuff that’s happening. I was reading computer magazines. I was imagining this world outside of my gray reality where stuff is exciting. Like I was watching these advertisements in magazines, for video cards, for main boards and stuff like this, and I was like, whoa, it must be so cool to have this. Of course it’s not. Of course I was not aware. It’s just advertisement. Just like you see happy people drinking Coca Cola and you think it’s fun? Yeah, it’s not like that. But yeah, I was very interested in this stuff.

Zooko 00:16:15 And I used to dream about having 256 colors instead of 16 colors. Wow.

Vlad Costea 00:16:21 Oh yeah. My first monitor had 16 colors.

Zooko 00:16:24 Yeah.

Vlad Costea 00:16:25 And I couldn’t run a lot of games because of that. And then I had a very major leap. I think it was because of border taxes or import taxes in my country. It was super expensive to bring anything electronic into the country up until 2004 or something.

Vlad Costea 00:16:47 Wow. And that’s also when my parents bought me a new generation computer in 2004, and I felt like, oh my God, I can do anything I can ever imagine on this one.

Zooko 00:16:57 So the reduction in tariffs had a huge impact on your life.

Vlad Costea 00:17:03 It did. Yeah. It was very important.

Zooko 00:17:06 Also the human impact.

Vlad Costea 00:17:08 The internet like I remember the first dial up connection. And we used to use these phone cards that basically they were like gift cards. They had a code and you had to type that in. And you unlocked some time that you could use the internet.

Speaker 3 00:17:23 Oh, wow.

Vlad Costea 00:17:25 It was like calls in many ways.

Zooko 00:17:28 Like what?

Vlad Costea 00:17:29 Like calls on your phone. Like you didn’t have unlimited. You could have unlimited. I think they had this special offer. You could have very cheap internet, like $0.01 per minute after midnight.

Speaker 3 00:17:43 Oh.

Zooko 00:17:44 Yeah. Well, before the internet. That’s part of why BBS has flourished, is that local calls were free and unlimited in the United States, not long distance calls.

Zooko 00:17:57 But you could call, you know, your area. I don’t know exactly how big an area was, but there were some places you could call maybe your area code, for free and unlimited. And so I would do that all day long. Every day I would call all the BBS and then hang up on that one call the next day. Yes. But, it was all free. So, Yeah. Reduction in tariffs and reduction in fees for communication. Indication these have important downstream impacts on human lives.

Vlad Costea 00:18:28 Also economies of scale and the huge development of microchips. Like I remember the early 2000, it was the most exciting time of my life. My dad was taking me to these computer conferences, and sometimes I compare that to the Bitcoin conferences, to which I go, and I understand whether or not we are there in terms of enthusiasm or participation. But these computer conferences were amazing. They were showing you concepts like, this is what the living room of the future is going to look like. This is.

Vlad Costea 00:19:01 Yeah, it felt a lot more positive than it is today, I think mainly due to privacy issues and a lot of these, I guess, hacks that have been happening over the years, people have become more wary of technology, and nowadays that it’s been commodified to the point that you can have everything in your pocket and you can get any piece of information in the world. Basically, in a few seconds, people feel depressed rather than excited.

Zooko 00:19:33 I know it’s really weird to me because I was like, looking forward to it my whole life. And then it actually happened and I was like, wow, I’m living in the science fiction books that I used to read as a kid. And then people were all sour about it. And, In addition to what you call the privacy issues, like the sense of being surveilled and controlled by Facebook or whoever and the hacks, which is a total, really big deterrent and downer for a lot of people I know. Then also there’s the the social media effect.

Zooko 00:20:05 I don’t know the word for it, but people find social media to be like depressing and angering and whatever.

Vlad Costea 00:20:14 In my experience. So the reason why I don’t use much, I mean, I, I spend a lot of time on Twitter, but I don’t spend time on Instagram or whatever because it’s like a competition of highlights. And people say, well, I just went on vacation and this I just graduated from this university.

I just got this letter of acceptance in this university. And it feels like, at least to me, it feels like I’m subconsciously trying to compete with these people to one up them and be like, oh, this person can do this.

He was an idiot in school. I can do better. And I had to escape that mindset where I have to constantly compete on metrics that don’t even make me happy. It’s pointless. It’s just trying to impress people who don’t even care and wasting time.

Zooko 00:21:06 And for me to control that kind of thing, you have to control your information inputs.

Vlad Costea 00:21:13 Well, it doesn’t work that way. You block a lot of people on Twitter because I do have requests from people who want to be unblocked.

Speaker 3 00:21:19 Yeah.

Zooko 00:21:20 I’m not surprised because you’re, like, the only person who’s ever successfully gotten me to unblock them. But you are not your Twitter account. Important note you are not your Twitter account.

Vlad Costea 00:21:32 You mean me specifically or anyone?

Zooko 00:21:35 Everyone. Everyone listening. You are not your Twitter account.

Vlad Costea 00:21:39 No we’re not. Unfortunately, when you’re constrained to like, 280 characters and you know you’re competing with an algorithm, your incentive is to post a certain type of message. And it’s not always healthy. It can get misinterpreted very easily. There’s not room for nuance. Yeah I sort of get Greg Maxwell for not wanting to spend time on Twitter. Yeah, but that’s where the information is. Like I, I find it boring to watch the news today. I’m like, okay, just give me what I’m searching for.

Zooko 00:22:12 Yeah. Me too. Yeah. I just figure if it was important enough, Of somebody that I follow somebody account that I follow on Twitter, they would mention it.

Zooko 00:22:23 So all the other stuff that I’m missing by not watching the news must not have been that important. That’s my current theory. but you mentioned the algorithm. The. The problem isn’t that it’s an algorithm or an AI or whatever it is. Now, the problem is that it works for Xcom and it doesn’t work for you. And what benefits? Xcom is distracting and inflaming you.

Vlad Costea 00:22:53 I also had this conversation recently with someone else, and he called me one of the most reasonable voices on Twitter, and I’m like, yeah, but it comes with a cost, because when you’re very polarizing and you’re taking sides in one of the extremes, you’re cutting through the noise and you’re you’re getting through and your message is read by more people, and it’s easier to get more followers to engage with people. It’s also horrible because you subject yourself to unreasonable standards, and sooner or later they’re gonna slay you, they’re gonna cancel you, they’re gonna say, oh, you’re you’re not what we thought you were.

Zooko 00:23:31 That already happened to you.

Zooko 00:23:33 It did. You’ve already been through that and survived last year.

Vlad Costea 00:23:35 Yeah.

Speaker 3 00:23:37 Yeah.

Vlad Costea 00:23:39 But I’m still not welcome in some places, which is a bit disappointing. I wish I could debate these people. It’s just that they create their own safe spaces and that’s it. And I was so blind to this, you know, I was thinking, well, maybe that they’re smart and they know what they’re doing. They are smart, but not in the way that I thought. Yeah, they’re smart in terms of personal branding and stuff. Just milking their audience.

Zooko 00:24:08 Yeah. Well, there’s an experiment that I want to see done, which is whether that effect that you just accurately described about polarization and simplicity and whatever, working to gain attention. Does that still happen in a world where everyone has their own AI that works for them, instead of everyone relying on Xcom? I know that works for Xcom. Okay, it could turn out the same like people. Each person’s personally learns that what their human wants to see is really upsetting political polarization.

Zooko 00:24:53 Or it could be totally different, like the person in their eye could collectively decide, you know, I don’t want to see as much upsetting political polarization. How about I see something beautiful or educational or something else? I guess it’d be both. Like some people will do one or some people do the other. And then if you’re more reasonable and nuanced and whatever, then you’ll just, not be popular in one of those two groups.

Vlad Costea 00:25:23 I don’t know how this is gonna work out. The idea of having a personal AI sort of scares me. Yeah, because it dehumanizes you. You’re gonna have a machine that understands your patterns. And my concern is that I’m gonna turn into these patterns for reasons which concern efficiency or something. So I’m going to be less human. I’m gonna enjoy less of the stuff that I do enjoy as a human. Just because this personal AI is telling me what I’m really good at and what I should be doing with my time instead.

Zooko 00:26:00 And that that 100% I would agree with if someone else is like paying for the eye and controlling it.

Zooko 00:26:11 Like with the Twitter algorithm. That’s exactly what’s happening, right? The the the people who allow the Twitter algorithm to control their information inputs are being trained by that algorithm and changing the way they see themselves and the way they see the world and the way they think and the way they feel. That’s absolutely happening. You you feel the same concern if this hypothetical world where you had an AI that was only loyal to you.

Vlad Costea 00:26:45 Well, it would have to be open source in the first place. Like, how do I even know that it’s loyal to me? And yeah, it’s not trying to pretend that it’s loyal to me while actually using my data or manipulating me into doing something.

Zooko 00:27:00 Absolutely. Here’s a good example. Or like comparable thing you’re concerned that you just described about what did you say changing yourself because it’s more efficient becoming the patterns. It was really interesting way to put it. would you say a similar thing happens with a friend who you confide in, or a lover or a. Some kind of professional associate, like your doctor or your lawyer or someone that you’re a coworker that you cooperate with closely all day long.

Zooko 00:27:40 Those people also change you, and you tend to become the patterns that those people see.

Vlad Costea 00:27:47 Yeah, but that’s different. It’s social adaptation. You’re trying to speak the same language with someone else and get along. Yeah, it’s not change. It’s not really changing yourself. You’re playing a role. I think if I this personal being which is there with you and guides you and tells you what you should be doing all day is in charge. You’re less of yourself like the I will not leave you alone when you go to the bathroom, or you take a shower or something. It can even control what you’re doing in the shower.

Zooko 00:28:26 So you feel like it would have more power over you than like your. Spouse would have.

Vlad Costea 00:28:36 Of course. Yeah. I mean, of course it’s up to you, but how many people actually take their phones to the bathroom? A lot of them, even.

Zooko 00:28:43 I totally would take my phone into the shower if it would work in there.

Vlad Costea 00:28:50 Yeah, but coming back on topic, I want to ask you first, what was your first computer.

Zooko 00:28:55 Because that 9499 for it was one of the first 16 bit processors ever, because Texas Instruments was really good at this sophisticated microchip stuff, and it came with basic. So you could type in programs like line number space instruction. So mostly I just typed in programs, and then we got this magazine and they would have printouts in the back.

And you could type in the whole printout and run that program. That was pretty awesome. And my dad worked there. And so whenever they made a new, peripheral to add on to it, he would bring one home to test on me. One of the best ones was the speech synthesizer. Texas Instruments also was the first company. Do you remember the speaking spell that was before your time?

That was the 1980s. But they made electronics that could make the human sounding voice, and they had this little educational plastic toy you could buy called the Speaking Spell to teach kids how to read. and then they made a plug in module that you stick into your T home computer, and then it would produce speech of whatever you know, you typed in.

Zooko 00:30:09 That was awesome.

Vlad Costea 00:30:11 Wasn’t that sort of a vocoder which sounded like a robot? Like a transformer?

Zooko 00:30:17 It definitely sounded like a robot. Yeah, but it was just exciting that you could understand it at all. And I just had endless amounts of fun making it say random strings of letters and see what it came out sounding like. Yeah. And then, like.

Vlad Costea 00:30:32 You.

Zooko 00:30:32 Would write a program to make the screen turn different colors for 16 colors. I tried all of them in different sequences. It was pretty great. Oh, and the T came with really good music like sound. I think it had multiple voices, like two or so different tones. It could play at once, maybe 3 or 4. That was great.

Vlad Costea 00:30:54 Now these limitations actually make you creative.

Zooko 00:30:57 Yeah.

Vlad Costea 00:30:58 Definitely. What I like about the basic programming language is that it’s like natural language. It’s not the most efficient one, but you tell it in a sequence of commands, what you expect it to do for, as opposed to C-plus plus, which I studied in high school, which seemed very counterintuitive to me.

Vlad Costea 00:31:15 It was like, okay, C and C out, and then you don’t use parentheses. You use what you call this.

Zooko 00:31:25 I call them angle brackets.

Vlad Costea 00:31:27 Yeah. That was I learned Borland Pascal. That was my first programming language. And it was very logical.

Zooko 00:31:36 Yeah. Pascal. So basic was totally about, programming for everybody. Like, the idea was you buy this home computer, you take it home and plug it into your TV in your living room. Now what? Well, now you’re going to type in programs.

So the whole idea of Basic was, like programming is the user interface between these random people who want to, like, teach their kids to read or whatever in their computer and then, like you say, after C, C plus plus like C, C, C plus, plus and everything since has been a programming language for professionals, right? Like the only people who should learn that or someone whose job is going to be to write computer programs, they’re going to be a total expert.

Zooko 00:32:20 But I’ll bet the former is about to come back, do the AI again.

Vlad Costea 00:32:27 Yeah. And something else I wanted to mention is that this technology, the vocoder, is something from World War Two that the allies were using for compressing the data of voice communications, but also making everyone sound like everyone else. It was also a privacy tool because you couldn’t tell unless they had a very special kind of pronunciation or accent that it’s one person talking over the other one. Interesting. It became popular in 1970s music. Oh, yeah. If you think about Stevie Wonder or Earth, Wind and Fire, they were using this effect a lot.

Zooko 00:33:08 Wow.

Vlad Costea 00:33:09 And then it came to computers too. Also Daft Punk. I think there were some of the last musicians who made it big using this effect.

Zooko 00:33:20 Yeah. Thanks for teaching me that.

Vlad Costea 00:33:25 Yeah, I’m a nerd. I research the stuff that I use and also bought myself one of these analog processors for vocoder, and I was thinking, I’m going to use that for some interviews if the guest does not want to, I don’t know, reveal themselves or something.

Vlad Costea 00:33:44 I can use that in real time, basically put an output from my soundcard into that and then back into the input of my sound card.

Zooko 00:33:52 That’s cool.

Vlad Costea 00:33:53 I never used it for that, but I spent like 200 bucks on it.

Zooko 00:33:58 You can do that thing much more conveniently nowadays. Like I played video games and people on the discord sometimes have some kind of voice changing for unknown to me reasons. It’s like it’s a feature of discord or something, I don’t know, or an add on that they installed, but it’s really cool that you have an analog one, because that’s cool. It’s old and historic, and it’s also a lot less likely to have a backdoor on it.

Vlad Costea 00:34:28 You mentioned that you are playing video games all night in university. Like, what were you into at the time and what do you play nowadays?

Zooko 00:34:37 I don’t even remember what I was doing in university. Might have been heroes of nighttime magic. Maybe a civilization. One of those things that you can play endlessly all night until like the sun comes up and then you collapse, depressed and exhausted.

Zooko 00:34:57 nowadays I mostly play player unknowns battlegrounds. It’s the first person shooter that you do in a team.

Vlad Costea 00:35:08 Yeah. Sorry. My backlight died and I was trying to fix it.

Zooko 00:35:11 Oh, yeah. I noticed the light change. It looks good.

Vlad Costea 00:35:14 I was thinking that Heroes of Might and Magic. I was not even aware it was popular in the US. Because in Eastern Europe, it’s like God tier kind of game. It was running on any machine. And you get a bunch of Russians, Ukrainians, Romanian, Serbians playing this online even today. But the third one, for some reason, the third one is still very popular.

Zooko 00:35:39 It was my magic three. Yeah, I think that might have been what I was playing back then.

Vlad Costea 00:35:44 But it it couldn’t be unless I think it came out in 97 or 98. So maybe you were are playing the first or the second.

Zooko 00:35:52 I don’t know. The only memory I have clearly, is when a new science fiction book by Vernor Vinge came out, and I stayed up literally all night reading that in one sitting.

Zooko 00:36:06 It wasn’t a video game. It was a book.

Vlad Costea 00:36:10 Are you a fan of this cypherpunk or even cyberpunk literature? Is there anything that you think is useful to read to better understand what’s happening today?

Zooko 00:36:20 Oh yeah, I was a huge fan from like childhood. I was a science fiction fan. As a child and then, teenager. I would say my number one recommendation is that author I just mentioned, Vernor Vinge, who, alas, has recently died. He worked for many years and made only a few books, but most or all of them are pretty important and meaningful. and pretty good, pretty good reads.

Vlad Costea 00:37:07 I know that a lot of people recommend Snow Crash and the crypto icon, not the cipher gnome icon.

Zooko 00:37:17 Right? yeah, I read those. Neil Stevenson, the author, actually posted to the Cypherpunks mailing list before Crypto Omicron came out, and he said something like, I don’t want you guys to feel like I’m, what’s the word like appropriating your culture or representing you or whatever.

Zooko 00:37:38 But there’s a group in my new book which is inspired by you guys called The Secret Admirers, And the title of my new book is Crypto Comic Con, which is not the same as Tim May’s Cipher.

Vlad Costea 00:37:54 That’s actually how I got David Tom to do an interview with me seven years ago. Yeah, I told him, oh, I read the Cypher Comic-Con and I’m such a big fan. And he was hooked. He was like, yeah, okay, I give you 30 minutes. And then I felt like an idiot for 30 minutes because I knew I wanted to interview him. I just didn’t know what I wanted to ask him. And I felt like I wasted his time.

Zooko 00:38:18 Yeah, I had that experience a lot with David Charm. I can remember that part you asked about about me going to work for him.

Vlad Costea 00:38:28 And yeah, that’s sort of the main topic. We branched out a few times.

Zooko 00:38:33 Yeah, well, I hope I hope you don’t mind.

Vlad Costea 00:38:37 No.

Zooko 00:38:37 It’s meandering.

Vlad Costea 00:38:39 It’s a lot of fun.

Vlad Costea 00:38:40 And we’re just getting warmed up for the juicy stuff.

Zooko 00:38:47 By the way, I totally never agreed to do this for 8.5 hours. That was a joke, but I’ll try. Whatever.

Vlad Costea 00:38:57 I’m always up for a challenge.

Zooko 00:38:59 Yeah. Yeah. I often say why? So, Let’s see. I wanna hear the story.

Vlad Costea 00:39:04 Sure.

Zooko 00:39:05 Okay. Totally obsessed with this new idea. Which to me was like the natural successor to the end of communism and the birth of the internet. And the next thing was going to be digital cash. And so I just, like, talked about it all day long and all my friends and read everything I could read.

And then David Johnson founded this company named Big Cash in Amsterdam, Holland. And he recruited all, like the smartest young computer scientists of the Netherlands to drop out of college and join him in his startup. It was just I don’t know when they founded it. early 90s, I guess it was kind of like the first startup before the boom of internet startups that came out in the late 90s.

Zooko 00:39:53 and then they implemented this blinded digital cash theme. It had a centralized server whose job it is to check for double spins. Right. So central server is just there to make sure you don’t double spin it. And the blinding was Trump’s invention to prevent the central server from being able to identify the sender of the transaction.

But it was able, with that protocol to identify the recipient of the transaction. And their idea was they didn’t really conceive of like a new currency. Their idea was, there’s this new internet thing. It’s taking off like the World Wide Web is getting invented.

People are going to start wanting to buy things over the internet, and they can’t use credit cards to buy things over the internet because it wouldn’t be safe when people would steal their credit card numbers, steal their money. So there’s going to be a need for a new payment mechanism, but they naturally assumed it would still involve like nation state currencies. So they tried to partner with banks to issue like US dollars through their digital scheme.

Zooko 00:41:02 But anyway, they did make their own currency. But it was just like play money. It was called Cyber Bucks and they announced they would never mint more than 1 million or 10 million or whatever cyber bugs.

So there was supposedly some like play money scarcity. and then they and they just gave it out like a faucet, like anybody could have as many cyber bugs as they have or whatever. And then they announced there was going to be a competition. whoever had a web store that, was the most best, most successful web store that accepted cyberpunk bucks for payment would win a prize. So I’m so excited.

I had just learned how to make like web pages with World Wide Web was probably in 1995 or so when this happened. and I had written a encryption program. well, I guess I skipped over the part where Phil Zimmerman invented PGP, and I discovered that, that was also inspiring and motivating. So I had written an encryption program to integrate PGP into your email for you. So whenever you sent an email, it would automatically get encrypted.

Zooko 00:42:13 So I made a web store with silly little images and it said, pay $0.50 worth of cyber bucks or half a cyber buck. And I’ll download you a copy of my encryption program. And then a while later, I got a phone call from cash. I was so excited. This was like. I just idolize these people.

And they said, you have the most successful cyber book store on the whole internet. But we did exclude all the porn and gambling. I never know. I don’t know if there were any competitors in the non porn non gambling class besides my store, but but I was the winner of the cyber contest and I said, and the prize is you’re allowed to try out to be the junior coder at our company.

And this was just like amazing. It’s like like literally my dream had just come true instantly. Right? But I hadn’t finished my undergrad degree in computer science. Right. And I felt like this was a social or moral obligation, like you have to finish your undergrad degree.

Zooko 00:43:24 I don’t know, maybe this is a generational thing. but I said, oh, I have to finish my undergrad degree first. And they said, oh, well, okay. Too bad. Bye. We hung up and I immediately picked up the phone again. It was before cell phones. It was a one of these, and I dialed my best friend who knew that I did nothing but talk about did you catch all day long? I said, you’ll never guess what happened. And he said, what happened? And I.

Speaker 4 00:43:50 Said, did you just called me and offered me a job? He said, what did you tell them?

Zooko 00:43:57 And I said, oh, I told them I had to finish my undergrad degree. And he said, I just have one question for you. Is this exactly the kind of opportunity you’ve been waiting for?

Speaker 4 00:44:13 I said, you’re right. I’ll call you back.

Zooko 00:44:17 So I hung up on my friend and I called. Did you cash back?

Speaker 4 00:44:22 And I said, well, I.

Zooko 00:44:22 Don’t really need to finish my undergrad degree right now. I’d like to try out for Junior coder. so that was one of the best decisions of my life, because I wasn’t really learning very much in college due to my like, ADHD or whatever. and I flew to Amsterdam, got the job as junior coder, and then I started really, really learning because, as it turns out, I learned an unproductive when I’m paired up or in a small group with other people. and all the other people there were super brilliant, like cryptographers.

I learned so much cryptography. I was only there for two years before they were like, going out of business because they couldn’t get banks, or they couldn’t sign a deal with Microsoft to integrate digital cash into all the World Wide Web or whatever. It was definitely a major positive turning point in my life when I dropped out of undergrad.

Vlad Costea 00:45:19 So.

Zooko 00:45:20 So thanks to my friend for saying that to me. He changed my life with one sense.

Vlad Costea 00:45:25 You mentioned that they made 10 million of this game.

Vlad Costea 00:45:31 currency or something like toy money. And I was curious, who is they? And when you got to DG cash, who was working there that we might know about today.

Zooko 00:45:41 That we might know about today? Well, David was the CEO and founder. and I often had that experience like you apparently had, where I want to talk to David and tell him something, but he’s so brilliant that he only gives me, like, 15 seconds before he knows where I’m going. And he’s like, no, that’s not going to work for the following reason.

Then he walks away because I was like 21 years old, I think when I landed there, and a lot of my ideas were, I’d stopped him in the hall. David, David, I’ve got another way to make it decentralized. My whole my whole wish was to figure out how to make it decentralized. So then it could be like what Bitcoin later became. So I was trying to invent Bitcoin for like 15 years, unsuccessfully, before Satoshi invented bitcoin.

Zooko 00:46:27 another employee there was Nick Jarboe, Shabo, but he had left shortly before I arrived there, but I was reading his blog post like the God Protocol. This is mind blowing blog post that, presaged Ethereum. You know what Nick’s doing now? I probably blocked his Twitter account, but I love. Hey, Nick, if you’re listening to this, let’s get let’s get in touch. Let’s have coffee. You’re my Twitter account.

Vlad Costea 00:46:56 Yeah. Next. I was so great. Like, if you go to his blog, which is called Unenumerated blogspot.com, if I’m not mistaken. Yeah. You’re gonna find so many articles about all sorts of topics, like the history of lactose tolerance or what else he calls it persistence, not tolerance. He calls, I think, what’s it called, the Apollo 12 or 11. Which one is the moon landing?

Zooko 00:47:26 I don’t know.

Vlad Costea 00:47:28 Either of these. Whichever is the moon landing. He has an article about it and explains why it might have been the most wasteful allocation of resources ever.

Zooko 00:47:39 Oh, wow.

Vlad Costea 00:47:40 And he makes an argument for it. Even though I heard Tyler Spalding the first time I met him, he spent like 30 minutes explaining to me why it was the biggest and most important investment that the US government has ever made, because that’s how you got IBM, that’s how you got Sun Microsystems. And a lot of these companies that build microprocessors. And yeah, I think that’s consumer level stuff. We needed to have them for the space missions.

Zooko 00:48:10 Well, it turns out that, Nick Jimbo’s blog is getting soft filtered out of the, search engine results. So I’m just going to go to unenumerated.blogspot.com to find that.

Vlad Costea 00:48:22 He also has articles about blockchains and social scale.

Zooko 00:48:26 Yeah. I mean.

Vlad Costea 00:48:27 I think that’s the term that he coined after some smart contracts that is very relevant. It’s social scalability.

Zooko 00:48:36 Oh yeah, I love that. Yeah. It’s relevant to my work with Zcash.

Vlad Costea 00:48:43 Yeah. Basically social scalability is about how you can use the tools which are neutral and automated to bring trust and collaboration between people who otherwise would not trust each other.

Vlad Costea 00:48:57 Just like you had with the discovery of the bimodal standard for money. Something like this, because you knew that these were pure metals and you would look at them, you could weight them and then say, well, I don’t have to trust you personally. I don’t have to like you, but we can engage in trade.

Zooko 00:49:17 Yeah, yeah, I love that idea. Many, many of Nick’s ideas very inspirational and I think pretty deep and important. And social skill ability is definitely one of them.

And another part of it, from my perspective, I haven’t I don’t know when when I read his actual blog post on it or tweets or whatever, but I thought what he a part of what he said about social scalability is that one of the major limiting factors is how many people have even heard of it. You know, if there’s two people who might be able to cooperate and they haven’t both heard of Bitcoin or Zcash already, they probably have to have heard of it years earlier so that they had time for it to sink in.

Zooko 00:50:06 So anyway, that’s one of the things I think about a lot of social scalability is just, the longer Zcash survives and like functions, the more people will have heard of it. And like you mentioned about earlier, about, I was poking at tariffs and you said something about, I think, economies of scale. Right? Yeah. Economies of scale. I’ve been listening a lot to Russ Roberts, the economist, now philosopher.

He graduated from economics to philosophy. But, he’s my favorite, Philosophy podcaster. And, Listening to that has taught me recently how. Is it really connected to social scalability? Actually, Russ Roberts conception, which he gets from Adam Smith, actually, is that it’s really specialization that is the source of improvement in the human condition and that specialization is really dependent on, the scale of how many people you can cooperate with.

And as I assume, I don’t have any formal reason to think this, but I assume it’s one of those, like, super linear processes. Like if you have 1000 people you can cooperate with, that’s way better than ten times better than if you have 100 people you can cooperate with.

Zooko 00:51:45 Right?

Vlad Costea 00:51:48 Well, but there’s also the argument on what type of cooperation you have, because you can have something very minimalistic in terms of interaction or trade with a thousand people. And then you can have something substantial with 2 or 3 people. Like it’s not about the number of people. It’s it’s also about the volume of trade or the quality of the economic activity.

Zooko 00:52:18 Okay.

Vlad Costea 00:52:20 I have this argument about my podcast all the time. When people see, usually they point out, well, you only have like 500 views on YouTube or something. And I’m like, it’s not about how many, it’s about who’s listening. Like, you would actually be surprised to see what kind of people are tuning into this.

Zooko 00:52:42 Yeah. I think that, AI generated personas are about to flood the internet. I think 12 months from now, there’s going to be 1 trillion or 100 trillion identities that are indistinguishable in all practical ways from humans. And hopefully that will teach people to stop watching follower accounts and view counts as being an important metric.

Zooko 00:53:18 We’ll see.

Vlad Costea 00:53:21 I don’t care too much about that, but I do think that all of these events in real life, like conferences or hackathons, meetups, that’s the real way to, on one hand, measure your worth. If you’re working within that community and you get some real life feedback. And it’s also the way to make sure that these people are for real.

I’m pretty sure that a lot of my followers are either dead accounts like they have been dumped by the people using them, or they’re bots. There is no way for me to control this. I don’t even know who they are. Sometimes I scroll through the list and I’m like, this is disappointing because it looks nice on one hand to say, oh, I have like 17,000, but then who are these?

17,000? And it looks bad. Like, I know there are some people who buy followers and they care about this metric and they’re like, yeah, I want to have 100,000 because it looks imposing. But when you post something and you get ten likes and you have 100,000 followers, it looks bad.

Zooko 00:54:27 Yeah, well, I already don’t pay attention to those kinds of numbers. I’m hoping that the 100 million bots will force everyone else in the world to stop paying attention to those numbers, but I already don’t pay attention to them. But I paid attention to your, posts and podcasts because people that I pay attention to recommended it.

Vlad Costea 00:54:51 Well, I appreciate that. It means a lot. I remember the first time when we actually had a call about a year ago. We were both somewhat skeptical. I was excited because I was like, oh, this guy, I know so much about his work and he wants to talk to me.

It means something. I’m just this guy from Romania and I don’t forget this. You know, when I have these interactions, I, I, I really don’t forget this and I’m grateful that the internet exists.

And I tell this to my parents all the time. I’m like, can you imagine a world where I would not have internet and a computer, and I was just stuck within the local job market?

Zooko 00:55:27 Yeah, yeah.

Vlad Costea 00:55:32 Okay. It worked out pretty well for myself.

Zooko 00:55:35 Yeah. And I think that’s because of the economy of scale. It enables you to interact with tens of thousands of people. And that’s way, way, way better than the number of people you would have interacted with in an alternate universe.

Vlad Costea 00:55:51 Yeah. And I think the future belongs to kids who grew up in these poor countries. And they got access to computers, and they became very hard working. I guess that’s why a lot of these employees and large corporations in the US like Amazon, Google, Apple, they’re from India or Pakistan, Eastern Europe.

Zooko 00:56:20 So they don’t take it for granted.

Vlad Costea 00:56:22 We don’t take it for granted. We have low expectations. And also we’re pretty hard working. And we we see this in everyday life that it’s pretty tough.

So when you get to do something a bit better than the average person, you appreciate it more. But on the other hand, there’s also the extreme of that hustler story, I guess, with people who suddenly discover that they have a lot more money than their parents, and they live a lifestyle that’s not sustainable because nobody taught them actually how to value work and how to manage their finances, and they end up buying fancy cars, stuff that they don’t actually need and they can’t actually sustain the lifestyle.

Vlad Costea 00:57:09 I know a lot of people who work in computers. We call it it like this umbrella term. In my country they make like €10,000 per month, which is pretty good in my country. But that’s exactly what they spend. And they complain that it’s not enough money for them because they set themselves to a standard that that is not sustainable for them.

Zooko 00:57:32 Yeah. Yeah, I think that’s pretty typical everywhere probably.

Vlad Costea 00:57:38 I guess you see it in the US with basketball players or something.

Zooko 00:57:43 I don’t know. I don’t pay attention to basketball, but probably I think everyone pretty much everyone’s like that. It’s kind of a learned skill to spend less than you earn. Yeah. Not not natural.

Vlad Costea 00:57:58 I was gonna ask you. You mentioned that Nick Szabo was there for a few months. Not such a long time after you got to DG cash. Was there anyone else interesting that was working there who maybe got a significant role in Bitcoin later?

Zooko 00:58:19 There were a lot of people that were important to me, but I don’t think you would have heard of them or.

Zooko 00:58:28 I don’t think they were important to Bitcoin. there were a bunch of cryptographers who taught me Neil Ferguson, Barry Schumacher’s, Stefan Braun’s, Uncle Lancaster, this is like the. I don’t know how to describe it. I was 21 years old. This was, like, life changing experience for me, right? Like, something.

Something where you totally change your world and your social scene and everything. When you’re 21. Like I never left the country. No, I had left the country before, but I never lived anywhere outside USA. Before that, I just moved to Amsterdam, Holland, which in the 1990s was like the party capital of Europe.

It’s the only place where marijuana was legal. and and those, those folks that worked at that company were very patient with me. I think I was. I don’t know, I think they were very they were very they’re very nice to me who took me under their wing and taught me a lot, which I’ve always benefited from for the rest of my life.

Zooko 00:59:43 About, like, cryptography. And I had a whole lot of other experiences that I guess I won’t go into, but it was a very mind opening time of my life.

Vlad Costea 00:59:58 So how was David calm as a boss? How would you describe him? Was he tough? Was he easy to talk to?

Zooko 01:00:06 He wasn’t my direct boss. I described talking to him. it was not easy because he was too smart and busy and impatient. It was kind of fun because it was a good challenge. Like, can I come up with a way to make Deji decentralized, which can keep David’s attention for longer than 15 seconds? I never managed to teach him anything about cryptography until, long after I had left the education. he was. He has a reputation for being, like, ineffective. At company leadership, there was a few, exposés or, postmortems about after it crashed that placed all the blame on David for mismanaging it.

Vlad Costea 01:01:04 I think he was supposed to make a deal with Deutsche Bank or something, and he got a pretty good offer, and he declined it, expecting to get a better one.

Vlad Costea 01:01:13 I think that’s the story.

Zooko 01:01:15 That story was told in some, I don’t know, blog post or magazine or something. But it wasn’t Deutsche Bank. They actually did have a deal with Deutsche Bank and I worked on the engineering for that project is one of my most uncomfortable, miserable memories where I learned a hard lesson about software engineering when I fucked something up.

And, and when your bank was demoing it on stage live in front of, I don’t know who was out in the audience, presumably important people, because it was a bank. And, they were demonstrating like, now we can send Deutschmarks over the internet using this technology and they, like, click the button.

And it gave an error message because something I had done and they had insisted that I come like, sit there. I was like 22 maybe that at that time. And the the stiff, stern German guy who whose like career was on the line walked over to where I sat next to the stage or whatever. And he. Yeah, I’m just fingering me.

Zooko 01:02:17 He said.

Speaker 5 01:02:18 This is your fault.

Zooko 01:02:21 And I learned something about timeouts in computer programs that day. He was basically right. It was basically my fault. But anyway, so it wasn’t Deutsche Bank. I think the story was about Microsoft, or maybe so, but I think his story was about Microsoft that allegedly, according to I didn’t have any insight information from my time there, but I read the article later, after I had left and after the company had folded, that, Microsoft made some kind of offer to use digital cash or partner buy or something, and that David had rejected it, or he’d kept sending back refinements until the other side got tired of the iteration and gave up.

Sounds plausible. I think there’s a. Occupational hazard of cryptographers. I’ve worked with many, many geniuses in my life, some of whom were cryptographers, geniuses, and other kinds of geniuses. and an occupational hazard of cryptography geniuses is that in cryptography, you’ve got to apply like, a paranoid mindset in order to succeed.

Zooko 01:03:36 Cryptography. You got to think like how? You know what? If two things went wrong at once? What if the enemy had infiltrated you from two directions at once? You know what it’s like. You’ve got to really go all the way. And then, by the way, you got to turn it around and stop.

Stop trying to think of what could go wrong, and instead come up with a proof that what you have is right. It’s a really interesting interplay. But anyway, a lot of the genius cryptographers I’ve worked with have had a problem with, that that technique doesn’t work very well for human relationships. Like, you can’t overdo skepticism and suspicion.

And I see this a lot in the crypto currency world, especially in old style Bitcoin. I don’t paint that much attention to Bitcoin anymore. I know you do, but I saw a lot of that sort of, flaw of thinking that your social system should be as sort of, like, trustless as your computer protocol. but that doesn’t work for social systems.

Zooko 01:04:46 It’s a recipe for disaster.

Vlad Costea 01:04:50 Yeah. I was gonna ask you if. There was anyone around the office that DG was also obsessed with making this decentralised, or it was just a bad business idea because this whole system was supposed to make money and once you make it decentralized, there is no more business model behind it.

Zooko 01:05:14 yeah, I don’t remember. I mean, that was just like my hobby. It was just my side quest while I was there. And for 12 years after I left there, I don’t remember anyone else being very excited about it.

Off the top of my head. yeah. Our day to day was to try to make a thing that customers could use to buy products over the internet with Deutschmarks while preserving their privacy.

So yeah, until, I mean, there were people out there, but not, I don’t think, at cash Who love this idea like we die. Marcus Miller. But until Satoshi came up with Bitcoin, it wasn’t proven to be possible. And so it was just like an endless sidequest for some of us.

Zooko 01:06:15 Satoshi changed all that.

Vlad Costea 01:06:19 So there’s not much information out there about Wadeye. I think he’s the most silent of all. Cypherpunks. Did you work with him? What was it like? I did read his bimonthly white paper, and I think what it describes, AI is closer to Ethereum than Bitcoin.

Zooko 01:06:40 Oh, really? Why? I don’t remember, I read it at the time and also reread it a couple times later, but it didn’t have any programmability built into it.

Speaker 5 01:06:49 Did it?

Vlad Costea 01:06:52 I gotta read it again. But when I read it, I remembered that the impression that I got is that it describes something like Ethereum much closer than Bitcoin. Nick Szabo with big gold. I think he was like 90% there were bitcoin.

Zooko 01:07:08 Yeah I mean yeah. we die. Yeah. He was never very prolific in like public posts. He wrote the first, open source cryptography library in C plus plus which was called Crypto Plus plus. that was really important as an enabling tool, for the cypherpunks and for me personally.

Zooko 01:07:34 So I interacted with him a little bit in, like a software engineering way. Like I would report bugs in crypto plus plus or whatever because I use people a lot. At one point I actually became a maintainer of Crypto plus. Plus I think, after we had, stepped away. I remember he told me privately when he stepped away from crypto plus+ that.

He was pivoting into. I hope he doesn’t mind. I’m pretty sure he wouldn’t mind me disclosing this. He said he was, getting into, like, decision support automation, which at the time, I was like, whoa, that’s pretty weird. I don’t know what you’re talking about, but nowadays I think, oh, that’s probably like AI plus human put together is probably better than AI by itself.

So maybe that’s what we had been doing for the last ten years. I don’t know which is an idea I got from Vernor, the science fiction writer in his he re reviewed. He’s like the first author to post about the concept of cyberspace and virtual reality and pseudonym and AI slash human augmentation augmented intelligence as opposed to artificial intelligence.

Zooko 01:08:58 More or less the first and the internet pretty much, except for John Brunner. I think Vernor is probably the second science fiction author to really give a a good preview of the internet. But anyway, so I remember I appreciate the fact that when we left, he sent me a personal note that said, he’s stepping away. But if I need anything with regard to crypto plus plus, he would be willing to jump back in and help. I thought that was very nice of him, but we never did need anything. Crypto was good enough, so I haven’t talked to him in forever.

Vlad Costea 01:09:33 I think that’s.

Zooko 01:09:34 When he actually.

Vlad Costea 01:09:34 Joined.

Zooko 01:09:35 Microsoft. I think before this whole step away, he joined Microsoft to work. There was this era of software and social Innovation called peer to peer. Like Napster. Remember Napster and Kazaa and whatever? Well, during that era, I think we joined Microsoft to work on a peer to peer. Like semi decentralized, something or other? I think.

Vlad Costea 01:10:00 there is this joke in open source software that if you contribute to an open source repository for long enough, you’re gonna wake up one morning realizing you’re the maintainer.

Zooko 01:10:10 Oh, yeah. I’ve been thinking about that because I’m writing an open source project for fun in my spare time, because I wanted to learn rust, and I just got obsessed.

I just, for whatever reason, I couldn’t. I every night when I went to sleep and every like afternoon, if I went to have a nap for like a year straight, I could only think about how awesome it would be if we if I could write a new memory allocator in rust using these new ideas I have for how memory allocation could work. So I just said, okay, well, I might as well teach myself.

I’ve been meaning to learn forever. And, Oh, right. So now I’ve written it. But I don’t want to become an open source maintainer again. I’ve done that. I’ve been a maintainer of open source projects. and. Yeah, I’ve. I’m too busy with cash to take that job, so I’m trying to figure out. First of all, I was thinking, well, maybe somebody else out there would love my invention enough that they would become the open source maintainer.

Zooko 01:11:07 That’d be cool. Then I was like, maybe I can just get an AI to be the open source maintainer. Like, dear AI, please review all the patches for backdoors and, you know, unit tests and whatever. I don’t know, maybe that’ll happen in a year or two. Open source maintainer. an unfunded basically.

I guess there’s some non-profit funding for like the most biggest ones, but it’s like a underexplored area of human. Productivity is that we have never yet found something. That’s both a positive feedback loop of economic incentive and open source at the same time. and that’s like both of those are really important ways that human mind learns and flourishes.

But right now, they’re not compatible. I’ve had a go at that trying to improve that with the bootstrap open source license, which is, had a moderate amount of success. But mostly what I learned was that nobody else, very few other people are interested in solving this problem right now, or they hadn’t heard of it or whatever. So that’s another one of my side quests.

Vlad Costea 01:12:30 So for the sake of the new generation who might be listening to this, why was it such a big deal in the 90s to create a way to send money over the internet. Why couldn’t you just put your credit card information, or have some sort of encryption for your credit card to put that in your browser or something, and remember the option for payments or whatever? And also, why were the Cypherpunks so obsessed with creating their own money?

Zooko 01:12:59 I mean, this is sort of reflected in the modern cryptocurrency movement, between the people who want like improved payment rails or improved financial infrastructure versus the people who want an improved currency. And I’m in the latter camp. I’m, I’m I’ll take improved financial infrastructure if it helps me achieve improved currency. But really to me, like fiat currency, like nation state control of the money supply and the everything about the currency, That’s like the final boss, and it always has been, ever since before Bitcoin. I’m still. What was your question?

Vlad Costea 01:13:46 It was about cypherpunks because I’ve read in literature that this was actually about retailers, because these guys wanted to have privacy on the internet.

Vlad Costea 01:13:55 They were using retailers to mix.

Zooko 01:13:58 They’re also invented by David Chong, by the way. But go on.

Vlad Costea 01:14:01 Yeah, everything mixing, I guess, is owed to David Cham. Right. And they wanted to pay each other right, because someone was paying for electricity and was buying the hardware and was operating this 24 over seven or something, and they really wanted to give money to this person, but they had no idea how. Because the only way they could give money was for this person to reveal who they are, which sort of screwed up the anonymity of the system.

Zooko 01:14:29 I don’t know that I don’t recognize that story, but Paul, you’ve read I believe you. That you’ve read that history. And it sounds plausible to me. Eric Hughes was one of the founders of the Cypherpunks and a very influential person in my own life. I also worked for accused, And he made a presentation at Blackhat, the hacker conference. I think it was, which is lost to the internet. I’ve never been able to find a transcript or a recording of his presentation, and it was about darknet markets.

Zooko 01:15:12 So that was, an aspect of the Cypherpunks. Tim may especially were. Hardcore. Like anti-state libertarians. Which they have a lot in common with some Sectors of modern Bitcoin. to me, speaking for myself, it just always seemed obvious. And I’m basically a. I’m some kind of libertarian. I’m a progressive conservative libertarian. But, anyway, it just always seemed obvious to me from, from the get go that.

Humans require, binding contracts and money in order to cooperate at scale. Like the amount of cooperation you can achieve without that is limited to, like, a large family or a small village or whatever. in addition to requiring free communication. So it just was always obvious to me from the By the time I discovered the internet, when I was like 18 or whatever, that we would need, uncensored cable.

Binding contracts and financial infrastructure in order to sort of unlock the, the the ability of humans to help one another out at scale. And remember, it’s super linear, right? Especially due to 30 years later or however long it’s been when I’m listening to this podcast, he says that it’s the the tail of the people you can specialize in exchange with, which is related to the job of social scalability.

Zooko 01:17:20 It’s the scale is really the source of innovation. I think that’s really interesting. Like his claim is that Russ Roberts Roberts’s perspective seems to be that, like technology and science, they’re actually a second order effect, or the outcome of the innovation and the flourishing and the sort of infinite creation that David Deutsch apparently has been talking about. and the input or the basis or the most important factor is social scalability anyway.

So my point, all I’m saying is, for me, I don’t think my overarching perspective on this has changed much since I was 18 or 19 is that, we need like humans have. This vast, sort of mind boggling capacity to create, prove each other, lift each other up, discover discoveries and beautiful things and all that.

And it’s it’s mind boggling because it’s super linear in my view. Like the there’s the number of humans who are cooperating increases by a factor of ten. The amount of reduction and uplifting is going to increase by more than ten. What I mean super linear. So I get on my whiteboard and draw your graph.

Zooko 01:18:44 Anyway, my point is, I think the major bottleneck or limit on this exponential creation of the future together is nation state control of economic cooperation tool. So stablecoins are not very interesting to me. I mean, yes, they’re interesting I guess.

Or they would be if they had privacy and censorship resistance. But then the nation state could still destroy the whole economy. And like nation states have always destroyed the whole economy. Sooner or later. So far, we’ve seen like a thousand maybe data points.

And like the first 900 of them all destroyed their economy. Now we got 100 current experiments running. But anyway, what’s my point? Oh, and I wrote this in the first blog post about Bitcoin on my blog in January 2019. I basically was saying the same thing then.

Vlad Costea 01:19:55 I think I was gonna get to that because we’re transitioning into your Bitcoin era. You’re one of the first people to discover it. You are the first person to write a blog post about it. Not the first person to tweet about it, but basically you described it as charming.

Vlad Costea 01:20:15 And Zcash, that’s actually decentralized. Of course, the difference is that Bitcoin doesn’t have the privacy of communication, which is very private but centralized. And it’s really fascinating really because you, you discovered this. You’re also on the cryptography mailing list. The Mets doubt one. Yeah that’s.

Zooko 01:20:37 Great.

Vlad Costea 01:20:38 At the same time when Satoshi was posting about bitcoin and Delphine was posting the same reply, you’re under another thread commenting that political stuff belongs to another thread or something. And you said, well, let’s keep it about cryptography here. But also I got to tell you that I’ve been working on two different attempts to create decentralized communication, and that’s why a lot of people read that. They’re like, oh, this guy must be Satoshi. This must be his slip from 2008.

Zooko 01:21:11 Yeah. Not I’m not Satoshi. I wish, like I said, I tried to be Satoshi for two years at Digitas, trying to figure out how to make dummy and in digital cash, decentralized. And then the next 12 years, those were the the dry years, like the internet bust happened right around 2000, 2001 or so.

Zooko 01:21:32 And like everyone was out of work, all the companies went out of business. All the people who were bullish on the internet changed their minds and decided the internet was stupid. And, and I was out of work. But I kept trying in my spare time for the next 12 or whatever years to figure out how to make decentralized money for exactly this reason.

Like I said in that blog post and like I described earlier, like, I think it’s basically necessary for people to be able to cooperate in a way that cannot be, controlled, censored or sort of like manipulated and blown up by nation states or other any other big, powerful organization. Let’s just happen to be the big and powerful ones at this time.

Anyway, my point is, I’m not Satoshi. I wish. Yeah. So she’s my hero. you or someone recently pointed out to me this post I’d written to the Perry Perry’s crypto list that’s down saying I’m currently working on two. I don’t remember what I said, and I don’t remember what I was talking about, but let me think back.

Zooko 01:22:45 What year was this?

Vlad Costea 01:22:47 This was in the summer of 2008.

Zooko 01:22:51 The summer of 2008. I don’t even remember.

Vlad Costea 01:22:55 No, I think it was for your 4th of November, if I’m not mistaken, because he published the white paper on the 31st of October. And having responded like 4 or 5 days later, and it was on the same day that Halloween, you responded that you posted this, and I’m gonna look it up for I.

Zooko 01:23:15 Wasn’t working on Bitcoin. I didn’t think Bitcoin would work, by the way. At the time, I wrote it off like a lot of people who knew too much. When you know too much, you’re tempted to be overconfident. I looked at the Bitcoin whitepaper and I was like, oh yeah, another nice try. Like all these other failed attempts we’ve seen like e-money and gold and reusable proofs working whatever. So what I was talking about at that time was Charmian Zcash, not Bitcoin. I may have been still working on the internet project, which grew out of Mojo Nation.

Zooko 01:23:57 I don’t remember what year that was. Mojo nation was a really cool, complicated thing where I was just a coder there, not like a inventor of it. they hired me to be a coder because of my experience at DG cash, and they wanted integrated. It blinded digital cash in that because again, this was before Bitcoin that no one knew they were cypherpunks the creators of it, Doug Burns and Jim McCoy. yeah. So before Bitcoin, no one knew how to actually make real practical decentralized money.

But anyway, so when I said in that mailing list post, I’m working on something that might result in some kind of digital cash, I doubtless meant one of those semi centralized things. I did have an idea at that time, which might be relevant, might come back now. in the modern era of, okay, we have these centralized services where you can there’s a centralized service whose job is to prevent double spins. Right. It’s like what we call the bank or the mint in the digital cash cash era.

Zooko 01:25:16 Can you hear me?

Vlad Costea 01:25:17 Yeah, it was called the mint, if I’m not mistaken. And I only know this because there’s a guy who tried to bring back to me, and he cash on top of custodial lightning.

Zooko 01:25:28 Yeah, yeah, I’ve heard something about that.

Vlad Costea 01:25:29 Moderately successful with it. Even though it feels so backwards. Like Bitcoin was created because it was trying to make cash obsolete. And then you bring in cash as a way to just bring some privacy to something which is centralized and bound to get robbed by the mint.

Zooko 01:25:54 Right. Yeah. Yeah. Well, Bitcoin has a privacy problem and lightning doesn’t fix it. So I guess that’s the impetus for him to try to use champion blinded signatures.

Vlad Costea 01:26:08 Oh, there’s this guy. Crew, crew? He said you blocked him or something, and he’s. He’s been trolling under my post on Twitter, and he claims that he is able to make very private Bitcoin transactions from Coinjoin, and he’s gonna have these large inputs with maybe 250 participants, and he’s gonna make a payment out of that one.

Vlad Costea 01:26:37 And it just looks like it could be anyone. And he’s like, yeah, I’ve solved all of Bitcoin’s privacy issues, but still he cannot hide amounts. It’s just that he’s getting better sender deniability. And it’s only a matter of time until the other participants from that pool dox themselves by mistake or something. And the anonymity said that he has diminishes until it’s just deduction by exclusion.

Zooko 01:27:07 That’s all true. And there’s also the problem that, You can’t add money or you can’t have privacy to money in flight because, the throwing the money and the catching the money themselves leak information. So, a really good way to think about this is to temporarily erase from your mind the word privacy. Probably not a real thing. It’s just like a negative. It’s the opposite. Or the absence of something, and you’re just going to confuse yourself if you try to see how much of the absence of something do I have? instead, you start thinking about information leakage. leakage means unintentional or, unavoidable, right? Like, information disclosure is when you intentionally do things like.

Zooko 01:28:01 You and I are currently live testing on the internet because we choose to. And we’re giving out a whole bunch of information about ourselves to a whole bunch of recipients. And that’s not leakage. That’s like consent and choice and just controlling ourselves. Leakage is where you either don’t know or can’t stop disclosing information about yourself, even though you’d prefer not to.

Right. So that’s the fundamental thing to think about is information leakage. And that immediately helps you think more precisely about, hey, to whom am I leaking this information? Or who’s getting this information? And B, what exact information are they getting right? Information is not all the same as each other.

So when you think about it in those terms, there’s a pretty compelling way to realize that any attempt to. Add privacy the bad term that we’re trying to avoid to money in flight is probably going to fit. Way to think about it is there’s three steps. The first step, when you start it with the money and you decide you want to send it privately.

Zooko 01:29:18 Air quotes. Then there’s the middle step. We’ll get back to that. And then there’s the final step where you finished sending the money air quotes privately. Well, almost all the time or all the time. Step one and step three leak so much information about you on, unwillingly or on or unwittingly that your adversary wins. And the point is, it doesn’t matter what happens in step two.

Like, even if step two does the best possible job, that would mean zero additional information is leaked to anyone. That’s the best thing. Step two could do even if step two does that, you probably still lose the after story, still knows what you did. And so this guy you described, he has a coinjoin has got 250 people. I’m just not interested.

Like good luck. try hard to sort of, like, prove yourself wrong. I like that science is when you try to prove yourself wrong. It’s not science. You try to prove yourself right. But basically, my assumption is people who use that system would accidentally or inevitably leak so much information about themselves at the beginning and the end that it wouldn’t matter that there were 250 people in the middle.

Zooko 01:30:40 And that applies to everything. It applies to people swapping in and out of Monero or Zcash. Monero does a bad job in step two because it leaks more information about you unwillingly or unwittingly. Zcash.

If you use a shielded pool in the middle, it does basically the best possible job at the blockchain level, although it doesn’t do the best possible job at the network level like TCP IP connections. but even if it did do the job at all the levels, it would still fail if your idea was and this is people’s idea, I see this like this is new. Sorry, I’m interrupting myself.

Let me finish the first sentence. It would still fail even if it was the best possible job, which it basically does at one layer. And hopefully in the future we’ll also do it. The network layer. that’s still not going to enable you to send money privately, because sending money privately is not a thing. The only way you can get privacy is by holding your money at rest and the shielded pool.

Zooko 01:31:41 oh, and I was going to say this is still what people think. There’s this social scalability problem that only a small pool of people have yet realized that you cannot add privacy to money in flight. You can only add privacy money at rest. everyone outside that small circle still assumes that the one and only natural thing is to add some privacy to your money while it’s in play.

And so I see this because, this, these two new Dexs have added Zcash support, which I’m really excited about. One is Maya. Maya and the other is near. But near is a whole blockchain. It’s got all these different kinds of technology. The founder of Nir, Ilya, keeps talking about AI all the time.

I don’t know what he’s all about. He seems really smart. So there’s all kinds of stuff. But one of the things that is near is the depths, as far as I understand. And I’ve used it and, read a little bit about it and talk to Elliott about it. So I think it’s a real thing.

Zooko 01:32:35 Anyway, so these these two Dex’s, Dex’s are super important, right? Because they’re like, you don’t have to KYC. Your KYC information is not going to get stolen by kidnappers. you can’t get banned. And also, really importantly, it’s way easier. Like just you just click instead of filling out a form or whatever.

So I’m really excited about Texas finally, after however many years integrating Zcash support. But I see people talking about it and they say to each other, oh, this is great. Now my Dex has Zcash. Now I’m going to take my bitcoins I’m going to swap them for Zcash.

Then I’m gonna swap them back to bitcoins. And then I will have privacy. And I think to myself well we’ve got a long way to go. You know like how many years or decades is it going to take for people to learn. You’ve got to actually hold the Zcash permanently basically if you want privacy.

Vlad Costea 01:33:32 Yeah, that that’s not a problem that you hear a lot of conversations about.

Vlad Costea 01:33:38 Usually people approach privacy from this mindset of hiding in a large crowd, but they don’t think where you come from when you get into that crowd, and they don’t think that once you leave that crowd, you’re just as traceable as you were before.

Zooko 01:33:53 Yeah. And that’s one of those, like, funds about Zcash that has been really, surprisingly persistent. Like, I’m a geeky computer scientist. Accuracy maximalist. So many, many years ago, someone said this kind of like privacy is about hiding in a crowd and nobody uses Zcash.

Therefore, Zcash users don’t get privacy. And I like did my computer science thing and I was like no that’s actually false. Well a bunch of people use Zcash and B privacy is not about hiding in a crowd. Privacy is about not leaking information about yourself.

Right? Like the hiding in a crowd, perspective is like, okay, you’re going to leak a bunch of information about yourself. And now also a bunch of other people are also leaking information about themselves. And maybe we’ll throw in some, like, false trails on top of it.

Zooko 01:34:43 Like we’ve got a whole bunch of information like to, to baffle the enemy with. Well, that’s just not ever going to work. And, the Cypherpunks and the cryptographers figured this out like, 40 years ago. Well, cryptographers, open source cryptographers figured it out. Like the 70s and 80s. Probably Cypherpunks carried that forward into practicum or whatever in the 90s. And so that’s just like. It’s always been surprising to me that, like the rest of the world, is not geeky, accuracy, maximalist. And they don’t, like, compute a little, just proof. And they’re like, oh, okay, I guess we’ll stop saying that about Zcash. Now this is actually false. But no, they keep saying it.

Vlad Costea 01:35:28 I used to believe that too, actually. Was that I used to believe that too, that just because it has users than Monero then it’s less private.

Zooko 01:35:37 It totally makes sense. Like it’s very plausible. I mean, to be fair, the the cryptographers had to learn it too, in their way over the decades.

Zooko 01:35:49 Yeah. I mean, the open we’re we’re all learning. I think people will understand it a lot better ten years from now than they did ten years ago.

Vlad Costea 01:35:57 Okay, so you said that when you found Bitcoin in January of 2009, you dismissed it and.

Zooko 01:36:03 Oh.

Vlad Costea 01:36:04 Yeah, when did you actually take it seriously? Because there is this guy from Czech Republic. Slush. Yeah. And he created the first bitcoin mining pool. And I listened to an interview with him where I think it was mad bitcoins Thomas Hunt, he asked him, so how did you discover Bitcoin? And he said, oh, it was Zucco who told me about it.

Zooko 01:36:24 Yeah. Slush and I worked together on an open source project. Remember I said I was an open source maintainer? Slash was one of the contributors to the Tahoe Olaf project, decentralized into encrypted storage for data, which is still alive and still has a whole bunch of really good cryptographic ideas in it that all of the modern, like decentralized storage protocols have not yet learned from and copied.

Zooko 01:36:51 So if you’re out there building a decentralized storage protocol, will you please go read the Tahoe Cryptographic Access Control Protocol and add it? But anyway, yeah, so Celeste and I were colleagues on an open source project. When did I get interested in Bitcoin? Well, I’ll tell you, I, like I posted on that blog post, I thought it was like a good experiment.

I was like, here’s, here’s an attempt to actually implement this thing by this guy named Satoshi Nakamoto. That was what I posted on my blog. So I was really glad that he was actually giving it a go, but I thought it wouldn’t work, for mistaken technical reasons.

And I’m kind of embarrassed to really now and then a while later, like maybe a year or two later, I happened upon somehow heard about a website in a movement called algorithm. I think they had a website named algorithm or something like that. And they were, capitalist anarchists, right? Who are living they’re living their ideals. So leftist anarchists, their way of living their ideals is like bombing banks or whatever.

Zooko 01:38:07 The capitalist anarchist, their way of living their ideals was selling unregulated milk, like selling milk without a license. So they had this whole website called The Origin Story, which I much, much more approve of selling one without a license than you have bombing things. So anyway, they were yeah, this whole website where it’s like a forum, right, where you can meet other people who will trade with you without the permission of the state.

And it was called algorithm. And I was looking at this bulletin board and they were saying, I’ll, you know, sell you my milk for Z for Bitcoin. So that was when I started paying attention. I was like, wow, that thing, that experiment is actually Working. I don’t know whether that was.

Vlad Costea 01:38:50 I’m not even sure. But if you said it took you a couple of years, then maybe you got involved in 2011 more seriously and beyond Zcash, which happened in 2015, 2016, you had like four years of being one of the most vocal supporters of Bitcoin.

Vlad Costea 01:39:07 I remember there was I don’t remember I was not around at the time, but I’m a nerd. I dig a lot and I find stuff. There was that famous tweet by Amin Guillen who said, this is a good time to sell your bitcoin or something like that in 2014. I think it starts with this phrase that says, you heard it here first. Oh, this is a good time to sell.

Zooko 01:39:32 He and his grad students were writing about selfish mining. Yeah, I think actually.

Vlad Costea 01:39:39 Yeah.

Zooko 01:39:39 Yeah. Okay.

Vlad Costea 01:39:40 I remember, and you are the first person to reply to that. And you said, why is that? And he replied to you and said, it’s not incentive compatible or something like this. So you’re basically one of the biggest defenders of Bitcoin for a while.

Zooko 01:39:58 Yeah. And a lot of that’s gone because I posted it on social network called Google Google+. So during those years I posted a lot, including a ton about Bitcoin and many other topics. And the way I posted it was I typed it into the interactive Web2 interface of Google+ and posted it to my Google+ account, and then I’ll post the link to my.

Vlad Costea 01:40:21 Yeah, that’s what Google had. Yeah. Circles.

Zooko 01:40:24 But I was using it as like a like a blog. Like a way to post things publicly. So then I could use my megaphone. Right. And then I would send people links to post on Twitter or whatever, say look at what I wrote about Bitcoin or whatever.

And now that’s all gone. And I downloaded a copy of my post at some point, but I probably lost my copy of my copy. So basically it’s all gone and it hurts.

But anyway, I did advocate for Bitcoin in various contexts during those years, much of which has accidentally gotten deleted off the internet. I’m pretty proud that I found a security flaw in Bitcoin early on and reported it privately to Gavin Andresen.

Vlad Costea 01:41:11 Do you remember what this was about?

Zooko 01:41:14 Yeah, I was one of Satoshi’s, noob mistakes. Satoshi did a bunch of things which I experienced cryptographer would not have done, and one of them was to find a merkle tree with ambiguity about whether a given string is a leaf or an inner node of the Merkle tree, which then an attacker would be able to exploit that ambiguity by posting two different things hash to the same value in the Merkle tree.

Vlad Costea 01:41:51 Yeah, I hear that a lot. When professional coders or cryptographers speak about Bitcoin, they sort of dismiss it because of Satoshi’s newbie mistakes. They say he made some premature optimizations. They say he was not a professional coder by the looks of it. And they also dismissed that part where I think in version 0.1 of the client, he had a broken game of poker and also an unfinished peer to peer marketplace.

Zooko 01:42:24 Yeah. My favorite pet theory is that he abandoned that because he ran aground of Zuko’s triangle.

Vlad Costea 01:42:35 Oh, that’s another one.

Zooko 01:42:37 Peer marketplace. And my pet theory is that one of Bitcoin’s great, great contributions to like the state of human science was that you could actually have a widely used, usable system with no names in it. Like, you just can cut and paste your Bitcoin address that works. so many other attempts at freedom empowering, human, empowering, decentralized systems sort of got stuck because they tried to figure out, okay, now how do we provide the human meaningful names in here? Anyway, my theory is that’s why he abandoned the peer to peer marketplace, because like the last thing, the last patch is like, okay, now here’s where we’re going to put the names.

Zooko 01:43:27 And then then instead he deletes it.

Vlad Costea 01:43:31 Yeah. So you mentioned Zuko’s triangle. Nowadays we talk about the trilemma, which is like a derivation of Zuko’s triangle. The trilemma is about decentralization, security and scalability, and Zuko’s triangle is also about security. Also about decentralization and usefulness instead of scalability like human. How did you call it human usefulness or something? There’s a Wikipedia page about it.

Zooko 01:44:01 Yeah, yeah, but I think it’d be really good if someone would update Zuko’s triangle and make it have better points for three points. Three vertices?

Vlad Costea 01:44:16 Yeah. So you call it human meaningful.

Zooko 01:44:20 Yeah, yeah, that’s what I called it. You know, thinking about like a naming system, like, you know, how you indicate which recipient you want to send money to or contact. You type in their name or you select their name from a dropdown list. You scan a QR code.

Vlad Costea 01:44:47 Yeah. And in recent conversations it’s been replaced by scalability.

Zooko 01:44:55 Interesting. It was actually Marcus Miller who, turned it into a triangle, and he’s the one who named it Zuko’s triangle.

Zooko 01:45:06 So I think it should be called the Marcus Miller triangle. Aaron Swartz was involved, too. Aaron Schwartz and Marcus Miller and I worked on that.

Vlad Costea 01:45:15 I was gonna mention that because it’s mentioned on the Wikipedia page that Nick Szabo wrote a paper called Secure Property Titles with Honor Authority. And also Aaron Swartz described the naming system based on Bitcoin, employing Bitcoin’s distributed blockchain as a proof of work to establish consensus Instances of domain name name ownership. And there’s also Curtis. Ervin who says he provided some sort of solution.

Zooko 01:45:48 Yeah. So my personal thoughts about that have changed because the Ethereum folks successfully deployed E and S would seem to get a little more usage. Like I see people’s Twitter handles say something something DNS sometimes or ETH or something. and once they did that then I realized I don’t like that either. It’s not good enough. they solved the problem of domain name seizure, which was a real active problem in the, like the DNS.

Vlad Costea 01:46:31 But I was never.

Zooko 01:46:32 A bit more hardcore.

Vlad Costea 01:46:33 About it. Sort of defeats the purpose.

Vlad Costea 01:46:36 If you’re going to associate all transactions with your name, and then it’s also this account based system, I just don’t like it. I understand why, especially with privacy.

Zooko 01:46:49 Because Ethereum is such a privacy problem. This exacerbates it.

Yeah for sure. But I have I’ve gotten really extreme about this in a way like more extreme than when I helped Marcus Miller and Aaron Schwartz come up with this triangle, which is I’ve decided that, I want a world where you can believe that Bob NS is your friend, that, you know, you want to refer to him as that, and you want to cooperate and communicate with other people that refer to him as Bob barbarians.

And I can believe that barbarians to someone else that I know. And me and my friends communicate with. And you and I can interoperate and communicate unambiguously and effectively with each other. But. And I think that’s possible using Marcus Miller’s pet names theory. But I don’t want a world. It really bugs me. Something. Something about it.

Zooko 01:47:53 I could be wrong. This could be like a bad vibes misfire. like a false alarm or whatever. But the notion of global agreement that, like Coke should point to this public key, which we all agree should be controlled by the Coca-Cola Corporation. I just think there’s, again, maybe this isn’t actually going to matter, but I think it’s like that’s used for Epistemic hegemony for like controlling what people can think.

Like names turn into words. Words. It turns out, thanks to the Lam research, we figured out that words are worth thinking comes from. And I just don’t want there to be a global name that everyone in the world agrees that tokens, or any stream maps to one particular thing. I want everyone to have differing opinions about those things.

And that’s where I part ways, like more or less all of the really cool, modern, decentralized things which I otherwise think are really cool. I’m glad they’re happening and I look forward to the results. Like blue Sky, which I actually use in addition to thinking is really cool, which was founded by a crazy electric coin company cashier.

Zooko 01:49:16 faster. Probably a bunch more things. They’re all cool and they all start with. And there was a thing called, what was that thing called? Oh, dang. Is that really cool decentralized communication tool with the key management. Oh, I don’t remember. I’ll tell you later.

Anyway, those guys all start with saying, okay, well, the first thing we got to do is figure out how to have a universally agreed mapping from a string to a cryptographic value. And that’s immediately. So immediately where I lose interest, like if you have a universally agreed mapping from strange to a cryptographic value, then I want to keep looking for the next product instead.

But oh well, you know blue skies cool forecast is probably cool. I haven’t tried it yet, but they’re using some of the same technology that we’re using at Shielded Labs to add proof of stake to Zcash. The faster people are using the same rust code. So I was reviewing their rust code a few days ago, but I haven’t tried their product yet.

Vlad Costea 01:50:23 Right. So coming back to the main topic, which is your time in Bitcoin. I was gonna ask you because in between 2011 and 2016, you’ve seen a lot of these altcoins getting launched. And I know that you did pretty much everything almost a decade before everyone else.

And what was your reaction to something like Prime Coin or Litecoin or Pure Coin, or all of these small experiments that were not very different from Bitcoin? Did you dismiss them as not good enough or unoriginal, or did you think that it’s in the nature of open source to try to fork it, to play with it, to see what the market thinks about it? Like, were you a toxic maximalist ever?

Zooko 01:51:09 That’s no never. My my initial instinct from the very moment. and also Satoshi’s, by the way, like, Satoshi was in favor of Nim coin, right? He was like, yeah, we should try this experiment and it should not be on the Bitcoin blockchain. It should be a separate blockchain. but as soon as I saw anything, my initial instinct is that.

Zooko 01:51:35 Yeah, experimentation and diversity and competition are like the basis of progress. Like, that’s that’s where evolution comes from is diversity and competition and iteration. and the very first time I heard any, like, immune reaction from some of one of my, one of my former Bitcoin buddies, immediately like red flagged that in my mind, like, oh shit, that that person’s having like a, a tribal immune reaction, that’s not going to go well.

Vlad Costea 01:52:11 Oh, but there is tribalism nowadays. And if you tweet something about Monero or Zcash or you mentioned the two of them and you say, you know, they’re pretty good tools. You’re gonna trigger a lot of reactions, and people will get angry for one reason or the other.

Zooko 01:52:28 Yeah, but I remember I mostly block those things, right? Like. I mostly I advise you to block a lot of, a lot of people’s Twitter accounts because not the people, just their accounts, but just block everything that I. It’s kind of like picking up trash in the neighborhood park, blocking accounts that are sort of dragging people down or distracting them, or worsening the conversation.

Zooko 01:53:03 It’s your duty as a good citizen to block them, to protect your followers from having their information polluted with trash.

Vlad Costea 01:53:14 At the same time, I’m also concerned with echo chambers and the fact that if you block too many people, you’re going to find that everyone around you agrees with you, and you don’t find any opposing views that might actually save you from making mistakes. Like, I always assume that I might be wrong.

Zooko 01:53:32 Yeah. Yeah. Me too. I think you can tell the difference between trash and good quality stuff that you disagree with, right? Like good arguments or perspectives that you. Argue for an opposite conclusion of yours or a different, I don’t know, lifestyle or country or political party or something. Can’t you just tell the difference between, like, low quality stuff that’s just dragging you and everyone else down versus quality stuff that you disagree with?

Vlad Costea 01:54:15 Oh yeah. But at the same time, disagreeing is fine. And sometimes I’m open to people who think differently.

Zooko 01:54:22 Yeah. Yeah, well I don’t I don’t think you should block high quality stuff.

Zooko 01:54:26 I think you should block stuff that like, just sort of try to objectively say like. Am I a better or worse thinker? Remember at the beginning of this conversation, like, does your spouse or your personal AI assistant change you? Well, were you follow on Twitter also changes you. So take a moment to reflect. Like who did I read today and what effect did that have on my thoughts and emotions? And do I want more or less of that in my life? And if it’s less than, block them?

Vlad Costea 01:55:01 Yeah, that’s that’s a good point. I might look into it anyway. 2013 was a big year for Bitcoin. And now I’m getting back on track now.

Zooko 01:55:12 Okay back.

Vlad Costea 01:55:12 On track. We had two very significant papers that got published that year. There was zero coin and zero cash. The two of them were trying to bring zero knowledge proofs to Bitcoin, trying to solve this issue with monetary fungibility. And there are proposed as soft forks for Bitcoin.

Zooko 01:55:31 So oh yeah.

Vlad Costea 01:55:34 In a parallel universe probably we have a situation where Bitcoin has Ethereum and Zcash as part of the network.

Vlad Costea 01:55:43 And we never had the altcoins.

Zooko 01:55:49 Excuse me a second.

Vlad Costea 01:55:53 No it’s all good.

Zooko 01:55:55 I’m.

Vlad Costea 01:55:55 Back. So what did you think about these papers when they came out? I’m not sure.

Zooko 01:56:05 You’re kidding.

Vlad Costea 01:56:05 Zero cash. Yeah.

Zooko 01:56:07 And what happened with the altcoins?

Vlad Costea 01:56:09 I said that there might be a parallel universe where we never got got the altcoins because we had. Ethereum getting built on Bitcoin and we had Zcash getting built on Bitcoin and maybe. We had millions of users just using bitcoin as opposed to all of these other networks.

Zooko 01:56:30 Well, in that universe, how would further improvements be funded? Well, that’s the universe we’re in now. Like, there’s a really good, like a technically good competitor to Zcash today, which is, the drive chain. What’s that guys? I don’t know how to pronounce stork.

Vlad Costea 01:56:57 Oh, no. Storks. If you’re correct from a Polish point of view.

Zooko 01:57:02 So he has he has this technical idea about drive chains, which I tried to contribute a little bit too.

Zooko 01:57:09 Like eight years ago now or five years ago, I went to a meeting with him and Adam back and some other people. And the question the topic was then we convinced the minors to adopt some behavior that would facilitate these kind of, like, sidechain things. I guess I wasn’t that much help.

And also, it’s eight years or ten years later and we’re no closer to anyone actually using it. But anyway, my point is suppose. Let me put it like this. Let’s not call out false stories and drive chain. Let’s just be hypothetical. Suppose you could wave a magic wand.

And you could transform all the Bitcoin full nodes and miners and wallets of the world. Zcash software Zcash protocol. But it’s also just old bitcoins right. So it’s still just like the exact same holders have the exact same amount of Bitcoin. The issuance curve is the same. Everything’s just just bitcoin. Except now it has all of Zcash extra properties. Would you.

Vlad Costea 01:58:24 Yeah I mean it sounds very good so far. Yeah I’m pretty sure there’s a catch.

Zooko 01:58:29 But well I mean no that is pretty good. And and to some degree we in Zcash have done that to some degree. Like you know, we’ve open source, like I said, I tried to help a little bit. It wasn’t much help. But anyway, like we try to contribute back or make make it easy for other people to copy our stuff.

And there’s this whole new thing coming in Zcash, which I’m not really personally much involved with, but it’s called Zcash shielded assets. And to some degree you could say it’s basically that magic wand. What? Like if those people who are working on that succeed, which is very hard. There’s a lot of work.

But if they accomplish all this work, they may in a few years, make it possible for a big coiner who, like, owns nothing but bitcoin, right? They have nothing but the ten bitcoin in their self-custody wallet or whatever. And maybe someday someone will say, oh look, there’s a new feature. You can push the button and your Bitcoin will gain Zcash level privacy thanks to the Zcash network.

Zooko 01:59:45 Having done like all these years of work and develop these things and deploy them. And now we’ve added a feature to your wallet and it’s interoperable with the other Bitcoin things and so forth. Well my question about that is who like that that all of that got funded by the catcher’s, like all the creation of all this technology and product and wallets and everything. So if Bitcoiners gain it all for free at some point, who then will fund the next generation of technology after that?

Vlad Costea 02:00:27 Well, that’s a good question.

Zooko 02:00:30 I’m not saying it’s like the killer argument, like maybe it’s okay. Maybe like donations or the next generation of technology will be a completely different thing invented by someone else. I don’t know, but it kind of relates to what we said earlier about open source and sort of free market economics are two of the best inventions of humanity, but they don’t go together like they’re like oil and water. Like Zcash, like the altcoins or the explosion of different projects, each with their own token. And like the Ethereum world and the salon world.

Zooko 02:01:09 That’s that has a lot of drawbacks. So socially especially. But it means that you can try and experiment because you can get funded to try and experiment. It seems to me to a large extent over in the Bitcoin world. They’re currently more in the like, the funding system like we had in open source and still have an open source, which is where it’s either volunteers or it’s sort of a side effect of a of a company, which I also did.

I ran a company that contributed to a bunch of open source as like a civic duty, like to produce public goods. But in my opinion, that produces a lot less innovation, a lot more slowly than the explosion of. Capitalistic experimentation and competition.

Vlad Costea 02:02:11 Yeah. You have a good point about funding, research and development. My favorite people, the ones that make me laugh the most, are the ones that say, why do you need an altcoin when you have test nets?

Zooko 02:02:23 Right. I mean.

Vlad Costea 02:02:26 You’re like, okay, we have a testnet, but how does this testnet operate? Well, it’s a fork of bitcoin and you put stuff on it okay.

Vlad Costea 02:02:33 Well but how what’s the incentive for anyone to break that. There is no incentive. How will normie users try that? There is no way to get normie users to incentivize them to try something. And then how can you assess whether or not the market likes it? Because that’s the biggest issue.

Zooko 02:02:52 Yeah.

Vlad Costea 02:02:55 You might have a genius idea, but the market is not going to want it now. Maybe it’s going to be popular in a few years, like it was the case for prediction markets, right? Paul Staats is also the guy who was trying to build a prediction market on Bitcoin, and it was very ahead of his time. And now we have early market. We sort of took his idea and made it popular on Ethereum.

Zooko 02:03:16 Yeah because of the economic incentives. Yeah. yeah. Spend spend more time. Try try to try to connect with more, like builders, like entrepreneurs. They have a lot of interesting perspectives on this stuff. Maybe also investors like VCs and crypto Twitter. They might have a lot of interesting perspectives on this stuff.

Zooko 02:03:40 So, actually related to this topic, when launching Zcash, I went pretty deep into making it a kind of Bitcoin sidechain. At that time, the concept of sidechains has just been coined. My fellow co-founder of Zcash. Andrew Miller was one of the co-authors, along with Craig Maxwell, I think, and a bunch of other people.

Maybe Paul Straus was on that paper side. Chance. It was a big deal that year, like 2015 or 2016. And I thought, okay, we’re going to we’re going to implement the zero cash paper. I think Zcash maybe or maybe not. We should also make it a sidechain of Bitcoin. And I worked out this. Intimidatingly complicated scheme whereby.

I don’t remember how it worked, but some intimidatingly complicated scheme in which Bitcoin and Zcash could be linked together. But we could still somehow issue more Zcash or issue more Bitcoin like take a cut out of the miners or something. I forget how it worked. And I think Andrew Miller helped me invent it. Ask him.

Zooko 02:04:52 He’s a great guy to talk to you. And then I pitched it to an investor, a potential investor who was considering funding the creation of Zcash. His name was Roger ver. I said, I’ve got this whole idea. We’ve got this zero cache protocol on all this privacy.

And I’m thinking of also adding this Bitcoin sidechain. I said my main hesitation is that that could have like two years of development effort to implement that thing. That’s really complicated and sketchy and unknown. I’m really hesitant to bite off more than I could chew with that one.

And the result was there be a fixed exchange rate, right? There would be. Or maybe there would be a floating exchange rate within a ceiling and a floor or something between the new coin and Bitcoin. Are you with me? Are you reading Twitter?

Vlad Costea 02:05:41 Yeah. Sorry, I was just retweeting this because I feel like it did not get enough attention. Just go on, ignore my habits.

Zooko 02:05:49 Should I retweet it to you? Now I’m looking at Twitter.

Zooko 02:05:51 Sir.

Vlad Costea 02:05:54 I’m really sorry I interrupted you.

Zooko 02:05:56 No. That’s fine. I just noticed this is the great thing about video conferencing is you can tell when someone stops paying attention because, like, their face stops twitching in response to your words, and then, you know, they’ve been reading something. Okay, so, look, I had this whole complicated scheme, which I don’t even remember how it worked. It was to make Zcash be a sidechain of Bitcoin from the from the original launch.

My main reason not to do it was engineering risk, and belay thought we might be biting off more than we chew. In retrospect, that was 100% right because we barely able to launch Zcash as it was without this giant additional complicated feature. But that’s not why I decided not to do it in this scheme, which Andrew Miller might have helped me invent, I think. Yeah, I remember he gave me a key insight about how Sidechains did not, necessitate a 1 to 1 exchange rate between the original chain asset and the side chain asset.

Zooko 02:06:55 That could be a fluctuating or different exchange rate between the two. And that led me to think, oh, then we can have 1.1 Zcash per Bitcoin instead of 1.0 per bitcoin or something. But regardless, the point of the story is more important than technology and engineering risk. It’s that I told Roger about this project because I was asking him to invest in funding us to invest to create Zcash.

And I said, and then we could have this Bitcoin sidechain option in our launch in which there’d be this fixed or semi fixed exchange rate between Zcash and bitcoins. This is one of those cases in my life where someone like changed everything for me with a very simple sentence, right. Roger said something like.

That would prevent the market from. Conveying information about the two. Well and I was like oh you’re right. Market’s conveying information about different things is super valuable. We don’t we don’t want to fix or a connection of that kind and forget it. So that was the end of the alternate universe where Zcash launched as a Bitcoin sidechain.

Vlad Costea 02:08:21 But I guess it was also, as you mentioned, technically difficult to do a proper sidechain. I think it’s sort of funny in Bitcoin Sidechains are like communism. They were not the true form of it was never tried. We never really had true sidechains. We just had federations and other types of multisig that say, well, I’m a sidechain, but at the same time they’re really not.

Zooko 02:08:47 Yeah. I don’t know. I don’t pay that much attention to the Bitcoin technology. Sorry.

Vlad Costea 02:08:55 Oh, it’s been two hours and I forgot that I have sponsors. So do you mind if I plug a few of them?

Zooko 02:09:01 Do you mind if I make myself coffee and vape nicotine with my girlfriend while you plug them? But I want to hear what you say about your sponsors. I’m interested in your sponsors.

Vlad Costea 02:09:08 Okay. The first one is that I want to mention because it’s very contextual right now. It’s relevant to our conversation. Layer two labs. They are the ones building the drive chain on Bitcoin. And Paul starts actually says he figured out a way to do what he calls the core untouched soft fork, which means he’s going to negotiate with the miners the activation system, and he’s going to bypass Bitcoin Core in the process.

Vlad Costea 02:09:35 And it’s a very bold approach to activating the soft work on Bitcoin. He wants to go through all the way he’s been able to secure the funding for it. He has deactivation software. He has the sidechain software working. You can actually go to layer two labs download, and that’s where you can find clients for the Z site sidechain for the Ethereum sidechain for the name coin, one for the prediction market one.

And I think there’s one more that I forgot about. Oh yeah, there’s one that’s called Thunder. And it’s a big block sidechain where you can do a lot of this stuff. That is only possible today on BSD, and it’s on a side chain. And you can test that.

I think right now it’s on the Bitcoin Signet because unfortunately it’s not on a live network yet. And there is a telegram channel that’s called drive Chain Talk. You go there and you’re going to find people who can send you free coins so that you can experiment, you can engage in transactions with others. And to be honest, it’s a really fun experiment.

Vlad Costea 02:10:45 So check it out. It works on all operating systems, and I think it’s at a very advanced point where it’s only awaiting activation if negotiations with miners go through, because I think it ties in with two of Bitcoin’s issues. One of them is competition, and the other one is the lack of fees for miners, especially in this environment where the block rewards are getting diminished.

And Satoshi’s biggest bet was that there’s going to be enough unchained activity to compensate for the diminishing mining rewards. Anyway. Check out layer two labs.com. I think they do a very scientific work, which I respect. There’s also CTA, which is taking advantage of something that’s called ZK rollups on Bitcoin, and the crops are on Bitcoin are slightly different from the ones on Ethereum.

They have different security assumptions, and they could definitely be better if we had some sort of covenant soft work. But at the same time, they’re still possible today and they’re going to launch, I think, by the end of the year. The purpose of Citra is to enable financial applications on Bitcoin that are only possible today on Ethereum.

Vlad Costea 02:12:02 So smart contracts with borrowing and lending and all of these functions as protocols, as opposed to companies where you can see the open source software, you get to control the parameters and you play according to your own rules. There is not much room for negotiation there. It’s exactly what you sign up for, and that’s what you’re gonna get.

And you can already test some serious functions on the Bitcoin testnet. I think it’s testnet 3 or 4. You go to Citra, which is It’s x, y, z and you can download the wallet and you can try this on the testnet. I think it’s going to be out by October or something according to the latest estimations.

And I also have so in both cases I have interviews with Paul Staats as well as Orkun Kilic, who is who are the two CEOs of the projects. So check them out. And since Zuko seems to still be making coffee, I’m gonna also plug Edge Wallet, which is the latest sponsor to join this roster of supporters of my show.

Vlad Costea 02:13:16 Edge wallet is very useful in practical situations where someone wants to send you a coin for which you don’t have a wallet. And of course, Edge Wallet supports Zcash, and you can use it for these privacy use cases. And you can do swaps in a very simple interface.

But my point is that I was at a conference last week in Prague, and someone I was trying to get a t shirt from someone at a booth, and that t shirt was conditioned by the action of claiming some NFT on Polkadot. And I’ve never used Polkadot, and it’s so intimidating, the thought that, okay, to get this piece of merchandise, you have to basically download the wallet, write down 24 words, and then make sure you secure that.

And then maybe you also need some some of that currency to pay the transaction fee. It’s sort of a nightmare, but an edge wallet. I just searched for Polkadot in the search box. I realized that it’s there. It was added to my wallet within seconds, and I was able to get that transaction to make it happen very fast.

Vlad Costea 02:14:28 And it’s sort of the use case for which I recommend Edge Wallet. It’s the one that supports almost everything. And it also has a very cool dress code, which they added recently, which means that you have an alternative pin that you type when you open the wallet, and that one is gonna show that your wallet is empty for moments when maybe someone kidnaps you or something.

I, I did see that’s unfortunately happening in Europe. And if someone asks you, okay, open your wallet and show me what you have inside, you can actually type that fake pin. And they’re not going to see any coins in your wallet, which I think is useful. You can download that from edge Dot app.

I think that’s the URL, and I think I also have like a special vanity URL which is BTC cover. I’m not sure if that helps in any way, but it’s easier to just search for Edge Wallet in the app store. Were you able to hear any of this?

Zooko 02:15:26 Zucco oh yeah, I listen to all of it while making coffee.

Zooko 02:15:30 and Edge wallet includes Shield and Shielded Zcash in its set of supported things.

Vlad Costea 02:15:36 Which used to be considered impossible only like 4 or 5 years ago.

Zooko 02:15:42 Yeah. Yeah. So I really like them for, Yeah, they, they do a lot of, like, people don’t realize how much work it is to make the user experience usable while supporting all those different things. Really good as well. It’s awesome. And I was really interested in L2 labs in Syria as well. They’re both examples of the recent sort of renaissance of Bitcoin innovation after a sort of dry period of low innovation.

Vlad Costea 02:16:13 And the irony of this is that the culture has devolved. Is that a verb devolution regressed, I’ll just say regressed to the point where innovation is frowned upon. And they’re like, well, if you’re trying to change anything in Bitcoin, like it’s already perfect, right? And I think it’s because the narrative has been hijacked by these Austrian economists or Austrian econ wannabes. Because if you get them to debate with an actual Austrian economist, you’re gonna realize that they’re not really that well-versed in the theory of it, but they think that.

Zooko 02:16:53 The Austrian economists really like diversity and competition.

Vlad Costea 02:16:57 Well, that’s the high school of thought. But then you also have, I guess, the very hard core gold bugs in Austrian economy who say, well, gold is the only honest currency and it’s the only one that we should be using. And they sort of replaced gold with bitcoin in these sentences. Yeah. And for them now it makes a lot of sense. And they say yeah it’s the perfect money.

Real money did not exist before Bitcoin. And any attempt to change Bitcoin is a scam and some sort of nation state attack, where they find ways to make these conspiracy theories and spread them. And it’s very counterproductive because if you read the Bitcoin white paper, which a lot of people do and don’t understand anything, but if you just look at the abstract, I think that’s like the aspiration of the project.

Of course, this was the first response that Satoshi got on the cryptography mailing list that this will not scale. This will not scale. It’s a very good observation and a fair criticism, but it doesn’t mean that it shouldn’t scale, or it doesn’t mean that it should not take advantage of innovations happening both in software and hardware.

Zooko 02:18:18 Yeah. My question is, how are L2 labs in Syria funded or how do they intend to be economically sustainable long term. Assuming they do.

Vlad Costea 02:18:32 Well. Layer two labs is mostly funded by site shift, which, by the way, is another sponsor of the show. It’s this exchange where you do swaps without actually needing to set up an account if you don’t want. And let’s say that someone wants to send you stablecoins or whatever and you want to receive bitcoin. I don’t think they support Zcash anymore, which is really a shame.

Zooko 02:18:58 Yeah, they used to.

Vlad Costea 02:19:01 I remember that they used to support Zcash. I think it’s because of legal compliance whatever the interesting. They don’t want to deal with lawyers being angry. But my point is that you basically type your Bitcoin address and the person sends stablecoins to the address that you’re sending to them. And what you’re going to get by site shift is just Bitcoin to your wallet. It’s a good way to make you not deal with that headache anymore. Not think about gas fees or whatever nonsense is involved in these transactions.

Vlad Costea 02:19:37 And also, you should not be holding on to stablecoins. This is actual financial advice like the.

Zooko 02:19:44 You shouldn’t call them stablecoins. This is terminological advice. We’re not deserving of that adjective stable. Are there fiat currencies. Right. Like those are some of the least stable things. They’re stable until they’re not.

Vlad Costea 02:19:59 Actually think about this a lot. Like if you have inflation in the US dollar, are you also gonna get inflation in these stablecoins to devalue them? Or are you gonna get a situation where these stablecoins are more scarce and therefore somehow they over peg? If that’s even a term, it’s just social consensus. They say, well, this token is always 1 USD and it gets traded as such.

Zooko 02:20:27 Yeah, the basic one has them pegged to the dollar or whatever fiat currency.

Vlad Costea 02:20:37 Yeah.

Zooko 02:20:37 This new idea about stablecoins that pay interest to the holder. I don’t know. I don’t understand how that interacts.

Vlad Costea 02:20:49 I did hear about that. They call it Hield. And they have these protocols that they set up for it.

Vlad Costea 02:20:55 It just sort of defeats the purpose. That’s not why I’m here. If I wanted US dollars I would just get US dollar.

Zooko 02:21:02 Real.

Vlad Costea 02:21:03 Job and the real job. What do you mean a real job?

Zooko 02:21:08 Well I meant that as a dig at both of us. Like we’re living our dreams and doing what we really care about instead of. Going and working for some company. Doing something we don’t care about to earn fiat currency.

Vlad Costea 02:21:23 I would get a normal office job from 9 to 5. Probably get better than I do here and have less of a headache. But I do enjoy this, by the way. Mom, if you’re listening.

Zooko 02:21:36 Yeah, mom.

Vlad Costea 02:21:39 This is fun. Anyway, I was talking about site shift. They are the ones who are sponsoring layer two labs. Okay.

Zooko 02:21:46 Is that Paul Straus? Is he the founder of layer two labs?

Vlad Costea 02:21:49 He is? Yes. And he’s using this to pay developers to bring his idea into fruition. And I think it’s like 90% coded at this point.

Vlad Costea 02:21:59 He’s ready for deployment. The biggest challenge is just getting a majority of miners to activate this and bypass Bitcoin Core, and also deal with the backlash of that, because it’s sort of unprecedented for someone to do this.

Zooko 02:22:17 That’d be interesting.

Vlad Costea 02:22:19 It’s a nice side quest. The way that you would call it. Like, just try to get consensus among miners and see what what happens afterwards.

Zooko 02:22:32 Isn’t that kind of what they tried during the Blocksize War? No, I didn’t really understand how that played out, honestly. I guess I kind of lost interest by the end of the war.

Vlad Costea 02:22:44 I should ask you about that. By the.

Zooko 02:22:46 Way.

Vlad Costea 02:22:47 What kind of opinions you had at the time. But now what was different with the whole SegWit situation is that you had core developers writing this and building this and supporting this, and Paul is doing this without the core developers, which are mostly neutral or friendly to the idea of drivetrains. I think the only one who is very vocally against it is Peter Todd, and I’m not sure about Greg Maxwell.

Vlad Costea 02:23:16 He’s also, I think a critic of it, because he thinks it’s gonna mess up the incentive system. If the miners can also steal from style chains and stuff like this. But then again, the miners are some of the most honest actors in the space, and they have incentives to stay honest. The metaphor that I like to present is like a farmer burning crops to get insurance money. I mean, they can do that, of course, but nobody will work with them anymore. It’s sort of the end of their career.

Zooko 02:23:53 Yeah. But that could happen. I mean I don’t know about Bitcoin specifically. Like I said I’m not paying very close attention. but in principle like exit scams are a thing.

Vlad Costea 02:24:08 Yeah. But to pull off this kind of exit scam, you have to invest a lot of ASIC miners and have the proper infrastructure for electricity. And once you get to that point, maybe you’re gonna discover that it’s pretty profitable and you’re gonna be like, yeah, maybe I can exit scam.

Vlad Costea 02:24:27 But if I keep this going, it’s it’s pretty good.

Zooko 02:24:31 Yeah, yeah. The, you know, the capital expense is kind of a way to. Tend to make players longer term because they need time to recoup their capital expenses.

Vlad Costea 02:24:50 But to get back to your question about who funds this kind of stuff for, etc., it’s a bunch of VC firms and some of them are also involved in Ethereum, and they’re interested in bringing Ethereum applications to Bitcoin. And this is also part of the reason why some bitcoiners see something perverse in this, because they’re like, how dare you bring some of that Ethereum smart contracts, EVM. Blah blah blah to my holy time chain. And they call it time chain, by the way, because it seems like there was this early tech demo that Satoshi was circulating to Ray Dillinger, and a couple of other people were doing reviews for it, and in that version was referring to the blockchain as a time chain.

Speaker 6 02:25:36 I didn’t know that.

Zooko 02:25:37 That’s interesting.

Vlad Costea 02:25:38 Yeah, someone dug that up, and for some reason it was picked up by the cults and they said, well, we should differentiate ourselves from the blockchain industry by saying that Bitcoin doesn’t have a blockchain.

Vlad Costea 02:25:49 It has a time chain.

Zooko 02:25:51 Okay. Thanks for. I’ve seen that word a couple times on Twitter, so thanks for explaining it to me.

Vlad Costea 02:25:56 But it’s funny because you’re not putting together timestamps or something. You’re putting together blocks of transactions. I mean, of course you do have timestamps, but that’s not the purpose of it.

Zooko 02:26:14 Yeah, I like the idea of, Well, in the context of Zcash, what I’m doing at Shielded Labs is making a new proof of stake blockchain, which then Inter links back and forth with the Zcash proof of work blockchain called Cross Link Protocol. and the intention is to have the economic benefits of proof of stake and the finality benefits of proof of stake. And I think better security because you basically have to break both proof of work and proof of stake before you can defraud Zcash users.

But the in the current first prototype that we’re working on, the proof of stake blockchain doesn’t do anything. It doesn’t include any transactions. It’s just basically stamping a given proof of work block as being final and non non rollback capable.

Zooko 02:27:15 If that’s a word final, final is the word. Anyway I just I think that’s it’s neat to sort of think about what’s the minimum sort of functionality you need from a given technical component. And finality is a huge one. Like if it if it weren’t for double spend attacks, we would never have had this problem in the first place. Like double spend attacks are the hard part. And what you need for that is just finality, which is almost just the same thing as time stamping. Everything else you can solve with cryptography, with encryption and zero knowledge proofs and stuff.

Vlad Costea 02:27:56 Now, I’m not very sold on proof of stake. I do understand what it’s for, but I think a hybrid between proof of work and proof of stake can actually work pretty good if it’s simple or elegant enough to not lead to a lot of complexity.

Zooko 02:28:16 Yeah, that’s our hope. Yeah.

Vlad Costea 02:28:20 I did see some of these designs that are hybrid. I think they’re overly complicated.

Zooko 02:28:28 I think the cross link is beautiful. What’s that?

Vlad Costea 02:28:33 Cross link.

Vlad Costea 02:28:34 Is that what you call it?

Zooko 02:28:36 Yeah, it was invented by, my brother Nate Wilcox and my business partner at Shildon Labs, Ni Wilcox and Emma Hopwood from Electric Coin Company, who’s a genius. And Cross Link is beautifully simple. Like, there’s a proof of work blockchain over here. It’s a proof of stake blockchain over here. Each one has hashes of blocks from the other one. And now you put some simple security constraints on which blocks are allowed to be finalized. And you’re done. It’s delightfully simple.

Vlad Costea 02:29:18 Sounds nice. So why don’t you use that one instead of switching to proof of stake as seems to be the plan?

Zooko 02:29:26 No, that’s what we’re doing. It showed the labs are deploying cross link, which results in a hybrid proof of work slash proof of stake blockchain. And the Zcash community seems totally on board. Like there was some consternation and questions about proof of stake when I first started advocating for proof of stake years ago. Back then, I was basically just advocating let’s just switch to proof of stake like Ethereum has is doing.

Zooko 02:29:53 And a lot of people had questions which I thought were mostly confused or wrongheaded. Questions like, would this result in increasing the 21 million coin cap, which I thought, no, why would it? And would this result in like big holders of the coin gaining like control over the protocol? And I thought, no, that just seems confused.

Like that doesn’t give you control over the protocol. I figured those people were just like analogize to Ethereum or to some smart contract running on Ethereum or something, I don’t know. But what was my point? my point is, we then changed our minds to go for this hybrid proof of work. Proof of stake. in part because I think it’s safer.

I’m a kind of a security maximalist. Like, I don’t think proof of work is secure. And I don’t think proof of stake is secure. There’s no proof that they’re secure. it might not be. It’s not good enough. And I think that the cross link is more secure than either proof of stake alone or proof of work alone.

Zooko 02:31:01 another reason why we are going with this hybrid mode is to try to draw in people. Like apparently you and apparently all these hackers or sort of leery or have concerns, like maybe some of them or a lot of them will be okay with hybrid mode, even though they wouldn’t be okay with leaping all the way to proof of stake like Ethereum did.

Vlad Costea 02:31:28 So is this available anywhere to maybe try or read the code or something?

Zooko 02:31:35 Oh, yeah. We’ve, Like, it’s a it’s a it’s an early prototype. Our strategy is to deploy a hybrid pitchfork proof of stake in a way that’s secure and safe for users as fast as possible. so we’ve implemented these prototypes every. We’ve got a roadmap you could look up on, shielded labs, That shows you our progress. every time we release another update, like a milestone for our goals, for our roadmap, we have a community call slash party for people to try it out. so you missed the last one. Sorry. I don’t know, maybe follow Shoulder Labs on Twitter or something so you don’t miss the next one.

Zooko 02:32:24 The next one should be in. I think about a month and a half, maybe two months from now. I’m really excited that our team at Shoulder Labs has, finished ahead of schedule every milestone so far. Two out of two. But that’s good. Software engineering is hard, man. anyway, so, yeah, it’s all open source.

It’s got documentation, you know, kind of prototype documentation. you can run a testnet. it comes with a Interactive guy. So you want to see, like, the little blocks. and my suggestion as head of product was why don’t we add cool gaming beeps and boops to that guy? And we did.

So now, you might have to pass like the dash dash sound flag when you build it, but you can have cool beeps and boops when you’re interacting with the blockchain. I forgot how I got onto this subject. You were talking about proof of stake? No, we were talking about proof of stake. We’re talking about security. I don’t know.

Zooko 02:33:37 I remember you mentioned the, problem with Bitcoin’s security clock ticking down towards zero, like the security budget ticking down.

Vlad Costea 02:33:49 Yeah, it’s part of the inflation program, I guess.

Zooko 02:33:55 We that’s the other thing we’ve done at Shoulder Labs. We’ve done two things so far on this prototype of Cross Link, which is going well and fast, and you should totally join totally like during the next demo party. The other thing we’ve done is called the Network Sustainability Mechanism.

And you’re interested in Bitcoin. So maybe you can go tell the Bitcoiners if any of them are still listening to you, that they should consider something like this for themselves. The Network Sustainability Mechanism, which was also invented by Nate Wilcox, is a simple hack to the Zcash economics.

So Zcash economics starts with a clone of Bitcoin because we started like get cloning the code base and the economics and everything in like 2015 or whatever. So it’s got halvings every four years and all that it’s been through I guess. Two Halvings Zcash has But Nate. Pointed out that.

Zooko 02:35:03 You can have something that is almost the same as a hat. So halvings are a set of straight lines, right? That are four years long each, and the slope of each line is half as much as the slope of the previous line. You can do the same thing with, a simple equation, which is that at each block you issue a fixed fraction of the currently unissued points reservoir that results in the same shape, except it’s a curve instead of a sequence of straight lines.

Vlad Costea 02:35:39 But gradual deflation, as opposed to this sudden spike that happens every 210,000 blocks.

Zooko 02:35:47 Yeah. It’s smooth. Instead of having the little juncture sure where the two lines meet. It curves right through there while tracking the same overall curve. If that makes sense. but that’s not the main point of it. So it is smoother, which some people prefer having. Which is fine too, as far as I’m concerned. But anyway, the point of it is, if you’ve done that now, what if someone burns some Zcash in a way that the all the Zcash miners can verify this? Zcash is gone for good.

Zooko 02:36:25 And that’s the other part of the network sustainability mechanism is okay Zcash counts as unissued Zcash. So now the long term curve of Zcash issuance still approaches 21 million asymptotically in the exact same way that original Zcash did and in the same way that Bitcoin did. But if anyone burns Zcash then And that additional Zcash also gets issued in this asymptotic curve over all the future history. Does that make sense.

Vlad Costea 02:36:58 Yeah. Because basically it’s a transfer of these coins to a new owner so that they don’t get lost or something.

Zooko 02:37:06 Yeah. But the new owner is half of the coins go to the miners for the next four years. And then a quarter of the coins that were burned go to the next four years worth of miners and then so on. Right. So it’s like the same issuance schedule but smoothed. But that’s where your coins go if you burn them.

Vlad Costea 02:37:26 All right. I spent a lot of time thinking about this. But in the context of quantum resistance in Bitcoin, because if you’re going to get basically Google or MIT or whatever, building the first quantum computer that’s capable of stealing the coins that Satoshi left.

Vlad Costea 02:37:47 It would make sense to hard fork at that point. But what’s going to happen to the coins? Because you know very clearly that Satoshi was not interested in claiming them. So for the sustainability of the network, I was thinking it makes much more sense to actually redistribute them to get mined again.

Zooko 02:38:08 Yeah, that would help with sustainability for sure.

Vlad Costea 02:38:12 I guess you’ve had this idea like a decade before I have.

Zooko 02:38:17 Yeah. I advocated for it way back when, probably on my Google+ account. I don’t know, there was a science paper written about it. I forget the author’s name was presented at one of the Bitcoin conferences. but now I’m thinking about. So now we’ve implemented this for Zcash, but it’s not yet in a Zcash network upgrade. Zcash network upgrades are hard forking upgrades like Ethereum network upgrades are. but it will probably, judging from my read of the Zcash communities and miners and everyone’s sentiment, I don’t think anyone is opposed to it really. It got a lot of sort of critique and scrutiny, which is good.

Zooko 02:39:03 people sort of proposed alternative alternatives, but none of them seemed much better anyway. So I think it’s going to go into a future Zcash network upgrade hopefully soon. Like the sooner the better. In my view, it also comes with the third component that I didn’t describe, which is copied from Ethereum’s EIP 1559, which is that when you pay transaction fees, some of the fee gets burned, but not all of it.

Vlad Costea 02:39:34 Can you say that again?

Zooko 02:39:37 Were you reading Twitter again?

Vlad Costea 02:39:40 Guilty. And I feel like I missed something very important.

Zooko 02:39:45 Wayne Vaughn said. Whoa! Zuko has gone full Gandalf.

Vlad Costea 02:39:51 I did see that, like two hours ago that you posted it. You would. But I don’t think you look like Gandalf. It’s just that you. Maybe he means that you grate a bit.

Zooko 02:40:03 How about now?

Vlad Costea 02:40:04 Oh, yeah.

Zooko 02:40:05 Better. I hope Wayne is still watching.

Vlad Costea 02:40:12 He was not interested in joining the podcast, which is weird.

Zooko 02:40:18 Okay, so the thing that I said that I think is important and cool while you were looking at Twitter is there’s a third aspect of the network sustainability mechanism that we’ve implemented at Shielded Labs, which I think the Z catchers are going to activate on the main net whenever they get around to their next network upgrade.

Zooko 02:40:42 The third aspect is it’s copied from Ethereum’s EIP 1559. Historical side note EP 1559 began as a copy of a proposal that Vitalik made for an upgrade to Zcash, a zcash zip. But anyway, now they’ve deployed EIP 159 on Ethereum. It’s been tested out, scrutinized by game theorists and whatever, and live fire drills in the wild. So now Zcash network sustainability mechanism includes something inspired by EIP 1559, which is that when the user pays a transaction fee part, but not all of the transaction fee gets burned.

Vlad Costea 02:41:26 I mean, for our privacy network, it makes a lot of sense because in some ways the change can reveal a lot of information.

Zooko 02:41:34 Well, the fee for privacy, the fee ought to be standardized. Yes. in practice, the Zcash network allows non-standard fees, which, if I had my druthers, as we say, I would support a hard fork to disallow non-standard fees. But, in practice, all the shielded wallets pay the standard fee so they get privacy from each other. but the network sustainability mechanism that’s coming adds a new aspect, which is the part of the fee gets burned, which then means it’s contributing to long term sustainability of Zcash.

Vlad Costea 02:42:19 Yeah. We started talking about Zcash a bit sooner than I expected, because I wanted to have a conversation about how you how it happened. You know, talk about the ceremony, talk about how you basically removed the need for a trusted setup, which I think was the argument against activating zero cash on Bitcoin.

Zooko 02:42:41 I just. Knocked on my phone and spilled my coffee into my lap.

Vlad Costea 02:42:51 I hope you did not hurt yourself.

Zooko 02:42:54 No, it wasn’t that hot. Fortunately, my coffee mug is intact.

Speaker 6 02:43:04 Sorry to.

Zooko 02:43:06 Interrupt.

Vlad Costea 02:43:07 This is what happens in live settings, so don’t worry. Sometimes I knock over some stuff on my desk during interviews.

Zooko 02:43:19 So you were saying?

Vlad Costea 02:43:22 Yes. I think it would be very productive.

Zooko 02:43:25 I was made to trust the original ceremony. How we eliminated trust to set up. And then you were saying trust the setup was like an important criticism.

Vlad Costea 02:43:35 At least that’s what I remember reading on Bitcointalk from 2013 that people were discussing activating zero cash as a soft fork on Bitcoin, and they said, well, it does require this trusted setup, so it’s better to to wait until maybe they figure out a better way of doing it, which you did, by the way.

Zooko 02:43:56 Yeah. Well, not me personally, but yeah, we did. That was solved by Sean Bowe, the great cryptographer who has been working on Zcash all along. When he came up with the zero knowledge proof system called Halo.

Vlad Costea 02:44:12 So there is this beautiful story from 2016 when a bunch of cryptographers around the world, they went on to use their compute nodes to generate some private keys and then destroy their laptops or whatever it is that they used. There is a very cool wired article that was written about this, and you can find it online. and I was fortunate enough to be on the internet when Peter Todd decided to clean up his wardrobe, and I got this from him.

He calls it a compute node. It’s an MSI laptop, which is not 100% destroyed. He did destroy the processing unit so it doesn’t have the CPU anymore. I think that was the essential part.

I need something to cut this. Can I use the pen? I’m very unprofessional right now. Okay, so for the first time in like, a decade, I’m opening this up.

Vlad Costea 02:45:14 It’s like a time capsule. And what we have here is just parts of the laptop. Like, I don’t even know what this is. It looks like a rat eater. A cooler.

Zooko 02:45:27 Fan? Yeah.

Vlad Costea 02:45:31 Let me put this away so I can maybe find something more interesting. We have all of these envelopes. It says burnt compute node remains. And it’s also sealed on 2016, October 26th by Peter Todd. It says right here.

Zooko 02:45:53 Yeah.

Vlad Costea 02:45:58 So let’s see what’s inside. It’s just a laptop, the parts from a laptop. But it feels so magical to know that this was used for the creation of Zcash. Once again, it’s sealed with this duct tape. I feel like one of these YouTubers who unbox stuff.

Zooko 02:46:20 Yeah. Unboxing an old laptop.

Vlad Costea 02:46:26 It also smells like it was burnt. And I can’t open this. I’m gonna have to ask my girlfriend to bring Scissors or something. I hope I don’t get some disease, by the way. Some virus that might.

Speaker 7 02:46:36 Be.

Vlad Costea 02:46:36 Stored inside.

Vlad Costea 02:46:37 After all these years.

Zooko 02:46:39 Andrew Miller used to post YouTube videos of unboxing things he’d bought with Bitcoin.

Vlad Costea 02:46:44 I think this is where the processor was. You can see the thermal paste here.

Zooko 02:46:50 yeah.

Vlad Costea 02:46:51 And this is also the cooling system beneath the processor.

Speaker 7 02:46:55 Oh yeah. Yeah.

Vlad Costea 02:46:58 And there’s another cooler that has a cooling system.

Zooko 02:47:02 Looks like the one that would go on top of the processor.

Vlad Costea 02:47:05 Most likely. Yeah. This is really cool. By the way, I feel honored to have this. It says final MPC to compute network test burn number one. Number two. Tails 386 2.6. Sealed at midnight on Monday, October 24th, 2016 by Peter Todd. I don’t know what this is supposed to be.

Zooko 02:47:31 Oh, I think that would probably be a DVD with the software that was run on that compute node.

Vlad Costea 02:47:42 Oh. So cool. Should I open it or do I devalue it? If I open it that.

Zooko 02:47:47 I don’t know what the market is for these things.

Vlad Costea 02:47:50 I’m not even sure if I want to sell this, but it feels like it loses it.

Vlad Costea 02:47:54 NFT it it loses some. How? How does that help?

Zooko 02:47:58 If you if you open it, it probably just looks like a DVD.

Vlad Costea 02:48:02 It’s physically compromised anyway. I’m just gonna open it. Who cares? I paid a thousand bucks for this.

Zooko 02:48:11 Yeah, you can do what you want.

Vlad Costea 02:48:12 Yeah. I mean, for me, it was a lot of money, but I felt like, oh, it’s such. It was in 2021, I think that I bought this. It was at the peak of the NFT mania, and I felt like, oh, it’s such a cool cypherpunk artifact.

Zooko 02:48:27 Yeah.

Vlad Costea 02:48:31 If there’s anything that wants to buy this off of me, maybe I’ll let it go for, like, a thousand Zcash or something.

Zooko 02:48:40 a really good story about that is called The Ceremony by Radiolab on NPR. Look up the episode of Radiolab called The Ceremony and you hear the story of this ceremony.

Vlad Costea 02:49:03 So these are DVDs of seven, 4.7GB. It says test burn. Final MPC compute. Primary and test burn.

Vlad Costea 02:49:17 DVDs. So after I’m done with this, I’m going to ask you why all of this was necessary. Or you can tell the story while I open this because I feel clumsy.

Zooko 02:49:30 I have to tell the story.

Vlad Costea 02:49:31 Why was this necessary? And I think Edward Snowden was also part of it.

Zooko 02:49:36 Yeah, there’s a great video by Zcash Media where they interviewed Ed Snowden about why he did that. The story is. After failing to invent bitcoin at digital cash for two years and then failing to invent bitcoin for the next 12 or whatever years. And so she invented bitcoin. but I did know right away, based on my background in privacy and security, that Bitcoin would not be private.

Vlad Costea 02:50:20 This used to be the hard drive. I think he destroyed this to. Okay. So why was this ceremony necessary?

Zooko 02:50:33 Well. First, let me tell you that I then discovered a science paper named Zero Coin by Ian Myers, Matt Greene, Kristina Garman, and Avi Rubin, I think. anyway, there’s this really great science paper they proposed to extend.

Zooko 02:50:55 Oh, okay. Yeah. That’s the. Okay, so the first ones would be the software that he booted on that machine. Run the protocol, and these ones would be the, copies of the messages that were exchanged between compute nodes throughout the course of the ceremony. There were six, I think, six steps.

Speaker 6 02:51:22 Six phases.

Vlad Costea 02:51:24 Just look at how, on one hand, amateurish but rigorous he was. He used the pen across this seal to basically show that if someone ever opens this, this line between the two edges is going to be discontinued.

Zooko 02:51:39 Maybe you shouldn’t open it and reduce it to that resale value.

Vlad Costea 02:51:44 I’m way past that point.

Zooko 02:51:45 It’s up to you. Okay.

Vlad Costea 02:51:48 I’ve already opened the first one, and I don’t think anyone would ever want to buy this from me. I don’t know, let me know in the chat. Maybe I’ll let it go for, like, a large amounts of money so I can retire from podcasting. I’m joking, I enjoy this.

Zooko 02:52:05 But yeah.

Vlad Costea 02:52:06 Good.

Vlad Costea 02:52:06 I do think it’s useful to show this historic artifact in the right context, because I was thinking maybe I could do a YouTube video, but without, you know, the proper commentary to accompany this moment. It seems so void of contact.

Zooko 02:52:21 Nobody would understand what it was.

Vlad Costea 02:52:23 Yeah, and I wouldn’t know either. Like, I look at this and like this stuff. What’s this supposed to be? Anyway? Well, how come you invited Peter Todd? Also, of all people?

Zooko 02:52:43 Well, let me give a bunch of background first. About, like, why it was necessary and stuff. To answer that question.

Vlad Costea 02:52:55 Okay, so it’s just verbatim discs. It says exactly what it was on the label from A to F. Which OS do I need to run these.

Zooko 02:53:12 It’s not executable software in there. It’s copies of messages. what you could do with that is. Test whether those six messages match the public parameters that were generated for Zcash, version one for its launch.

Vlad Costea 02:53:39 Okay.

Zooko 02:53:41 How would you do that at the time? We had a whole website.

Zooko 02:53:47 describing the ceremony and the cryptographic contents of it. But I’m not sure exactly what you do to test that.

Vlad Costea 02:54:02 I think this is just the part of the case. I don’t think there’s anything more to it. This is heavier. Maybe I should open it up. I’m curious because in the blog post by Peter Todd, you mentioned that he had a bunch of SD cards with which he was recording video footage of everywhere he was going, and he had this ethical debate over whether or not he should store them or throw them away, because there was some valuable OpSec information in there.

Zooko 02:54:39 Yeah. That’s that was an interesting trade off in the whole design of the ceremony was between, withholding information in order to prevent any possible attackers from being able to use it versus publishing information in order to enable more people to verify more things.

Vlad Costea 02:55:01 So how did how was this handled in the end? I know that it’s not even known who all the participants were. There were like six of them.

Zooko 02:55:13 there were six of them.

Zooko 02:55:16 I recruited them all. I was one of them. And then I recruited five others. And I assigned, Pseudonyms for three of them. To prevent attackers or each other from realizing who each other were because, okay, so we still haven’t explained to the viewers what this even is, right? Maybe they already know.

Vlad Costea 02:55:51 Go ahead. I think I’m done with unboxing.

Zooko 02:55:55 Okay.

Vlad Costea 02:55:57 I should wash my hands.

Zooko 02:56:00 So. So Bitcoin has, a very deep privacy problem and, like we talked about earlier on in this conversation, there are some people who try to help with it, like reduce or ameliorate Bitcoin’s privacy problem, but they mostly have, well, a flawed view of how privacy can work in principle. Plus, they have all these constraints, right? Like if you interoperate with existing Bitcoin or to upgrade. God forbid. Bitcoin is a pretty big lift as we know. So these attempts to add privacy to Bitcoin are, in my view, just all DOA. I’m not not even interested in learning about them, like Lightning Network for example.

Zooko 02:56:53 is just architecturally incapable of properly fixing the privacy problem in my view. And this is also what my view was at the time. So When I discovered this science paper called Zero Coin, my eyes lit up. At that time, I wasn’t working like this was before.

Zcash, right? This is the origin of Zcash. I was working on Tahoe, the encrypted, decentralized and encrypted file system at a startup company that was working on parallel layoffs. I was sort of contributing to and advocating for Bitcoin in my spare time for fun.

And I read the science paper called Zero Coin and my eyes lit up and I said to myself, this is the first thing that could actually work. because you remember, I tried forever to get to invent, to figure out how humans could have decentralized money, and I couldn’t figure it out until Bitcoin, which I didn’t even believe would work until a couple of years later when I saw people using it, or a year later or whatever. But I knew Bitcoin had a Pretty deep kind of architectural flaw of disclosing information.

Zooko 02:58:13 So a lot of people don’t even know this today, actually. I think a lot of people think Bitcoin is private. but it’s like the opposite of private. Like you can’t use Bitcoin for anything without unwillingly disclosing your current assets and all of your past transactions and all of your future transactions to kidnappers and the IRS and the government of North Korea and the government of Russia and everyone else. So anyway, so I knew that was like a really deep limitation and problem in Bitcoin all along. So when I saw the science paper, I was really excited.

It was the first thing that actually provided like cryptographically strong privacy, the kind, not the kind like we talked about where you’re leaking information, but you’re trying to cover it up by other people leaking their information or inventing fake information or whatever, like that whole thing is, not it? Instead, your point was, the first thing we have the other kind of privacy, where we use encryption to make it so that your information about you is leaked. Hence the word zero in the name, which is named after zero knowledge proofs, which are named after leaking no information about you.

Zooko 02:59:35 It was a proposal. It was. It was couched in terms of a possible hard forking upgrade to Bitcoin in the paper. And it had some practical problems, like transactions would be like ten kilobytes each and stuff had some limitations. But I was pretty excited about this, like breakthrough in human science.

And then about a year later, the same authors joined Join forces with some more authors who had pushed forward the science of zero knowledge proofs that made zero knowledge proofs efficient enough to be practical. And this was. There’s this great post by Satoshi to the Bitcointalk forum, where somebody had been suggesting that this new fangled zero knowledge proof thing could help with Bitcoin.

And so he looked at it and said, like, it’s hard to see how exactly it would work. He said if a solution could be found, a much more usable version of Bitcoin could be built. And then four months after he posted that he disappeared from the internet forever, and then three years after that, the scientists who didn’t didn’t include me Found a solution and the solution was new fangled and more efficient.

Zooko 03:01:12 Zero knowledge proofs, combined with the zero coin architecture of into encrypting your UT expose in the blockchain and including a zero knowledge proof that the encrypted, transaction. I shouldn’t say encrypting your UT, I guess encrypting your transactions and including a zero knowledge proof that the encrypted transaction is valid. Oh, well, I’m so excited about this one, because the zero that was called zero cash was the second paper, and that one was seemed like more practical. But the new improved, efficient zero knowledge proofs required this trusted setup concept, Which was. Are you looking at Twitter? Are you trying to get more people to tune in?

Vlad Costea 03:02:09 Yeah. There are some people in the drive chain chat, and I told them, you know, Zuko likes drive change, and they’re like, oh, where I. I sent them the link. Sorry. Zero coin and zero cash. I’m listening.

Zooko 03:02:23 Okay, so that generation of zero knowledge proofs, elements of song logic, Alessandro Mederos and Aaron Cromer were former scientists who joined forces with Matt Green, Christina Garman and Ian Myers forming the Seven Scientists.

Zooko 03:02:45 It’s like a cowboy gang or something, but, I think they met at the Bitcoin 2013 San Jose conference. I went to that. That was amazing because, Tyler and Cameron Winklevoss were there, and, there was this little, like, folding table with these two folding chairs that had Brian Armstrong and Fred or something behind them, and they offered to hire me to be like the chief security officer or something for the new four person startup. And I was like, sorry, I’m really busy. and there was that musician. What was his name? Zhou tong Zao Tong.

Vlad Costea 03:03:28 Yeah.

Zooko 03:03:29 So Tong. Yeah, he performed live in a black hoodie so nobody could see his face. It was awesome. Oh, and I met Vitalik Buterin for the first time. I met Luke Asher. I met Roger ver. So again. Andresen. I don’t know if that was the first time. Anyway, at that conference, I wasn’t present for this part. But the four scientists met the three scientists and joined forces and became the seventh scientist.

Zooko 03:03:53 And then they were at the zero cache paper. Oh, and also with that conference, Ian Myers, I believe it was, gave a presentation on zero coin couch as a possible hard fork upgrade for Bitcoin. And Peter Todd, I recently rewatched the video of this Peter Todd, like, stood up to ask a question, but it was more of a statement at the end.

And the statement was The Bitcoin Core developers are not going to. Integrate a hard forking, experimental, inefficient protocol upgrade into Bitcoin right now. but anyway, then those seven scientists met each other. I think at that conference a few months later, they came out with the second paper called Zero Cash.

And that was that really got me excited. That seemed like just about the best architecture. and Matt Green went to real world crypto that year, whatever year it was, maybe it was 2014, January or something. February. And he gave a present, a presentation about his paper now. Matt was a, an academic.

Zooko 03:05:10 Right? He’s a professor. And the more papers he gets accepted into big conferences, like, the better his academic career is or whatever. But I was so excited that I was, like, champing at the bit to be the first in line to ask a question at the microphone after. So he finished his presentation and he says, you have any questions? I’m like, ooh, me? I was like, this is great. This was the best thing ever. But what.

Speaker 8 03:05:33 About that trusted set up thing.

Zooko 03:05:35 Where okay, let me stop and explain the trust. Is that something everyone can can verify? So you get you get a block of transactions, but they’re all encrypted. Only the ones that are transactions to you. You can decrypt. All the other ones are ciphertext, which leak no information to you about these other people’s business. But how do you know that the transactions inside the encryption are valid? Well, there’s a zero knowledge proof included that proves that the ciphertext inside this impenetrable encryption is only a valid transaction.

Zooko 03:06:09 It doesn’t counterfeit new money. It doesn’t double spend. It’s correctly signed by the signing key. The spending key of the spender. It follows all the, like, transaction rules. Okay. There’s this concept of trusted setup, which is. Somebody who is setting the system up in the first place.

They generated a secret, and then they generated a public parameter or public key or something like generated from the secret. Then they deleted the secret, and then they circulated the public thing for everyone to have a copy of. Then when you get this block with all these encrypted transactions. You use the public parameter as part of your verification of the zero knowledge group.

To be sure, all of these encrypted transactions are valid. The problem with this is what if they didn’t delete it? The secret originally. Well then whoever it was that got that kept a copy of that secret. They can generate invalid transactions which your verifier will perceive as valid transactions, which means they can now double spend infinitely. They can counterfeit infinite bitcoin.

Zooko 03:07:27 So, Madam President, this paper, it had this property because at that time there was no way to do zero knowledge proofs without this trusted setup issue. I was the first in line of the mic. I was like, okay, what about the trust? Is that about you though? How are you going to solve that?

Hey, man says like, oh, well, you know, we’ll just have a video camera running. We’ll generate the secret on a computer. Print out the public version, and then we’ll, like, drop the computer into a volcano or something. And I didn’t release the microphone. I was like, no, that’s not good enough.

And I think he was kind of annoyed because I’m hogging the mic and like, interfering with his presentation of his big success paper. Right. He was like, well, fine, then you solve it. Well, a few weeks later, he called me. He was like, no, actually, seriously, we want, this zero cache thing to become a real live thing like Bitcoin.

Zooko 03:08:23 and we’re starting to realize this is not going to come about as a side effect of our PhD thesis. So would you be interested in helping with that? And that was a really exciting moment in my life. But I actually told him no. I was like, well, I’m busy working on this Tahoe and encrypted software storage software.

And I figured Bitcoin already has a head start, right. And so Bitcoin would be the mainstream thing. And then the zero cash thing would only be used by people who had some special need for privacy, like their spies or criminals or their paranoid or their like extremist libertarians or whatever.

And if it’s only used by a niche, then it’s not important enough. It’s not. It’s not going to solve that problem that I was talking about, about the whole world being held back from infinite creativity and growth, if only a few people use it. But I said, no, I guess it’s not necessary. He was like, oh, too bad. Okay, fine.

Zooko 03:09:26 But then I slept on it and the next day I was thinking, oh wait, I’m wrong.

Vlad Costea 03:09:36 Were you wrong?

Zooko 03:09:38 I was just waiting to see how long it would take you to finish typing something and notice that I stopped. I wasn’t typing, Oh. You weren’t? No. You’re just waiting. so the next day I thought, oh, no, actually, privacy is not a niche thing.

Every business that transacts needs privacy for competitive reasons and various other reasons. Like every consumer expects privacy and all their normal life. governments need privacy. So actually, the Zcash could be the mainstream thing everyone could use that could help unlock exponential, infinite creativity among humans cooperating with each other.

So I called my coming back. I said yes, I will drop my previous project and devote the foreseeable future of my life to this project. Okay, so. But now, now it is my job to solve the trust problem, right? Like he retorted when he gave that presentation at the Real World Crypto Conference.

Zooko 03:10:38 So, me and Sean, Bo, Nate Wilcox. Emma Hopwood and several of the seven scientists who had originally written Zero Chemistry. Maybe some other people. Brian Warner helped with this, actually. Julian Assange actually helped with this. I went and visited Julian Assange in the Ecuadorian embassy during this time period and asked for his advice, and we said, okay, the this trusted setup problem is a pretty big problem. How do we a prevent any attacker from keeping a copy or acquiring a copy of the secret and be convince everyone else that we actually have done so? Pretty deep problem.

Vlad Costea 03:11:28 I mean, don’t expect me to give you any productive answer to this. It’s way above my pay grade. Or how should I put it?

Zooko 03:11:39 It’s not. It’s out of your.

Vlad Costea 03:11:41 Out of my depth.

Zooko 03:11:42 Out of your wheelhouse.

Vlad Costea 03:11:44 Woodhouse.

Zooko 03:11:44 Well, we came up with a, an idea which was to do a multi-party protocol with many different participants. And each one, each individual participant will not get access to the secret.

Zooko 03:12:07 I decided to call the secret the toxic waste. The toxic waste is the thing which, if anybody had it, they would be able to forge the cash. Counterfeit cash. And we came up with a protocol in which each of the individual participants do never see the toxic waste. It’s never present in their computer.

There’s no ability for them to acquire a copy of the toxic waste, even if they tried. But they each come up with a toxic waste precursor. The metaphor was like, there’s these six different chemicals, and if you mix all of them together in the same room, they turn into this horrible toxic waste that we don’t know how to deal with. How are we going to dispose of it safely?

So what we’re going to do is we’re going to keep the six precursors separate from each other and not allow them to mix. So this was the invention of the ceremony and we went all out. I’m very proud of it. It was really fun, really interesting, quite a challenge. And I kind of think it was one of the most secure cryptographic ceremonies ever performed because we had this multi-party protocol with six participants.

Zooko 03:13:17 The reason we had six and not more is the protocol took hours. And this if we had more people, it would take more hours and we couldn’t fit it into one weekend. And I figured people would start like dropping out, not finishing if it took too long and that would break it, then we’d have to start over.

So I really wanted to make sure we succeeded, So we ended up with six participants. Each one we sent them, we like recruited them. And this is where you ask, why did I recruit Peter Todd? I wanted someone who’s independent, but all six of the people, we had a goal that they were a like computer security competent.

So there was a low chance that they had been like there was a enemy actor, like the government of North Korea or Russia or CIA or whatever was like currently running a rootkit on their computer, like spying on them. We wanted like security, computer security, competence. So one of the goals but be we wanted them not to know each other or be all part of the same club or organization or anything and see, I wanted them to be trustworthy, like.

Zooko 03:14:37 to be sure they wouldn’t try to steal the other five players. Toxic waste precursor. Right? recruited 8 or 9 people, actually. And then at the very last moment, I notified all but the six that in fact, we couldn’t, we couldn’t fit 8 or 9 and that they were, in fact, decoys.

There were hackers out there trying to preemptively hack in to all of our players. Those 2 or 3 guys were there to throw the hackers off, because they would be busy trying to hack into them, because I, I was telling everyone that they were going to be a participant, but we couldn’t afford we couldn’t include them.

I felt bad for those guys. They were like disappointed. They were like, oh, I’m just a decoy. anyway, So then we had gone through a run through of this process to, like, you know, see how it would work. like two weeks earlier, we, give everyone instructions, and I got. Oh, and during the same period of, like, recruitment, I also recruited at Snowden.

Zooko 03:15:51 I assigned fake pseudonyms to Ed Snowden, Peter Todd, and, the NCC Group. NCC Group is a information security consultancy. Like a computer security company who you hire to, I don’t know, do all the computer security stuff, like figure out who hacked you and whatever. and I didn’t want anyone to know who these people were, especially attackers. Right? I didn’t want the attackers to know who to hack preemptively. So they just use code names for all those guys or pseudonyms. And, we get we gave them instructions. Instructions were step.

Speaker 6 03:16:32 One.

Zooko 03:16:34 You get, you go to the computer store and you acquire a computer which is capable of running the necessary software fast enough, which actually was a pretty high end computer at that time. And we’re going to reimburse you for the cost of this. And then it’s important that you, like, physically walk into the store and pick out a computer yourself and like, leave with it. don’t like let it out of your sight from this moment forward until the ceremony is over.

Zooko 03:17:07 This is something I learned from Ed Snowden, which he had learned from, like the CIA or whomever he worked for in Hawaii. They called it random purchase. If you’re a CIA employee and you want to make sure that your enemies haven’t inserted a backdoor into some device of yours, you can’t order the device from Amazon, right?

Or the enemies might insert a backdoor at the factory or in the truck or whatever. So instead you do random purchase where you walk into a computer store and pick one up physically and leave with it. The next thing you do is you go to your like secure location where you have working internet, which is not your home, or a place that where the attackers might know where to look for you.

The next thing you do is open up your new computer and rip all the radios out like the Wi-Fi chip, Bluetooth, so that it cannot communicate other than through Ethernet when it’s when an Ethernet cable is plugged in. This is air gapping. And this was Julian Assange’s contribution.

Zooko 03:18:08 When I asked him for advice, he said a double down on the air gapping part. now the next thing you do is you’ve got two different computers. Oh, and when you buy this computer in step one, you have to get a DVD writer with it. Which at the time you could do you could buy DVD writers and stores. Probably not anymore. And you have to bring a bunch of writeable DVDs, like blank DVDs that you can write to.

I’m really proud of this part. This is one of my contributions was because and this is how it feeds into your, collectible acquisition. They’re glad because I wanted. So there’s the two things we’re balancing. One is like withholding information and decoy information and all kinds of stuff to try to throw off any attackers who might have heard about Zcash and might be trying to hack us in advance.

The other thing is equally important or very similarly important, which is how do we convince people that this even happened? Like, like we’ve often been accused ever since of having like, sort of like staged all of this, right? so that’s why we recruited Independent, outspoken people who have their own like social network in their own reputation, who could attest to what they did and heard.

Zooko 03:19:37 We also, made video of the whole process at each of the six different or various kinds of evidence. Some people made video Ed was top secret Ed Snowden. I didn’t reveal his identity even after the ceremony when I revealed Peter Todd’s and NCC group’s identities until many years later, after the trust was set up, had been superseded and become merely like, historical. so Ed didn’t provide video or audio, he just provided like a PGP signed note.

That said, I did this process, and here’s what I observed. I didn’t see anybody like attacking my network or anything. but I also. So it’s really weird. Interesting thing about what what how much can you independently verify from a thing like this after the fact? And in particular, what if there is a hacker somehow involved? What if. What if the software on that DVD that you have there?

Vlad. That’s called the compute node operating system, tails or whatever. What if there was a backdoor built into that software when it when that DVD was burned? Because either like me or the one of the other members of the Electric Coin Company planned in advance and somehow tricked all the six, the other five players to install Backdoored software, for example.

Zooko 03:21:09 Right. And a lot of like we really went all out on the paranoia. Well, I thought, there is one thing you can do is you can retain a copy of all the communication, all the bits that were transmitted from one compute node to the next. And how do you do that? Well, there’s only one way to transmit these many bits in a way that is like persistent.

And future generations can look at and hard to like overwrite or fake. And that’s a burnable DVD. So that’s why you have six burnable DVDs there. Those are the there were six rounds in which each of the players sent a message to the next player. And the only way to send a message because remember, the computers have no the compute nodes have no. Yeah.

The compute nodes have no, radio antenna or chip left inside. If the player did what they were instructed. Right. The human operators did. They ripped out the radios. They were instructed not to plug an Ethernet cable into it. The only way the compute node could send or receive information is through the DVD writer slash reader device.

Zooko 03:22:31 So the so according to this protocol, which as far as any evidence has ever shown, worked perfectly and was not attacked. To my knowledge, the six disks you have there are the only six messages that emitted from that compute node whose remains you have there between the time it was random purchased at a store and the time it was destroyed. Cool,

Vlad Costea 03:23:00 Yeah. So I was gonna ask you, is this preserved anywhere, or do I own something which might be one of a kind?

Zooko 03:23:07 We tried to preserve it. let me think. The amount of information on the DVD was kind of a lot. At least my DVDs I uploaded to the Internet Archive. Although I’m not sure how to find it, I think you can search the Internet Archive for like the Zcash ceremony, and maybe you can find my DVDs. I don’t know if Peter Todd uploaded the copy as off of there. I don’t know, I don’t remember. You might own something unique there.

Vlad Costea 03:23:41 Yeah.

Zooko 03:23:43 And there’s a horrible plot twist.

Vlad Costea 03:23:45 Okay.

Zooko 03:23:47 Okay, so we did what in my personal, biased, humble opinion, is maybe the best, most secure, most awesome cryptographic ceremony ever performed. Including it successfully generated the public key that then anyone can use to verify the encrypted transactions. There’s no evidence that anyone gained copies of even one of the six toxic waste precursors, much less gained all six of them.

Mix them together. we generated a ton of sort of independent testimony. Like Peter Todd wrote a blog post and soon wrote a side note. Over at my station, we wanted to get cameras and make 24 over seven unbroken recordings of the whole, like 48 hour rigmarole so that you could tell like there was no cut.

So there’s no way that somebody, like, went and messed with the machine in between steps or whatever. And I wanted to have a camera that didn’t have Wi-Fi. Okay. This was 2016. You couldn’t buy a camera that didn’t have Wi-Fi in 2016. So I sent a lieutenant to the used, like, security, like, how do you put this, like audio, video, home security, business security store in Denver, Colorado.

Zooko 03:25:06 Okay. You went to the security store. He found a camera which was made before the Wi-Fi era on the shelf and bought it. Used for a lot of money, and we set that up. We had to have multiple cameras pointing at each other.

So like if somebody wanted to like, fake the video footage, there would be evidence of them, tampering with one camera on the other camera before they would be able to go camera on the other camera or whatever. Anyway, we did all that. Oh, and we invited an independent journalist, this woman named Morgan Peck, who in 2016 was the author of one of the only good articles ever written about Bitcoin in mainstream media.

Because, you know, mainstream media kind of sucks, right? But Morgan Peck had written a good article, I think it was in an MIT Technology review or some magazine that Bitcoin like how Bitcoin actually works. so I thought, oh, well, she’s a reliable journalist. So we invited called her and said, do you want to be like the on site 24 seven independent witness, like you’re a journalist, you can testify to what you saw.

Zooko 03:26:14 Anyway, so she did that. Okay. The horrible plot twist. Oh, and if you want another version of the story, listen to the ceremony on NPR, on Radiolab by NPR. It’s a good story. But then after the ceremony. Podcast ends after the end of the story. Years later, two years later.

We find out that the original zero knowledge proof science papers that we had based this on had a mathematical flaw in them. It’s like worst case scenario is exactly what the Bitcoiners that you mentioned saying, oh, this is too sketchy. Well, it’s not exactly what they were concerned about was the trusted set up. And it wasn’t that the trusted setup was compromised, but it was that kind of complicated.

So there’s a trade off between disclosure in order to increase like confidence and increase people’s ability to independently verify stuff versus non-disclosure. In order to prevent attackers from learning information they could abuse. Right. Well, one of the scientists, I presume he doesn’t mind. I’m going to name him, especially since he turns out to be right.

Zooko 03:27:32 His name was Ron Romer. He’s this mad genius of a scientist, one of the seven who invented zero cash and as much as their knowledge proof stuff, and helped with Zcash for many years. So at this point in 2016, he says, I don’t think you should post the contents of those DVDs. That’s called the transcript.

It’s. Intermediate numbers that were generated by the six nodes on their way to converting their individual toxic waste precursor into the be shared public parameters. Okay. And they generated all this information. And I wanted all that information, the transcript to be independently verifiable by a third party to show that the parameters that Zcash nodes are using to verify the zero knowledge proofs of the encrypted transactions, those are the same parameters that each of these six people saw at the time.

Okay. So there’s a particular attack that I want to make it harder, which is to swap in different parameters because you just ran the whole like you’re an attacker, you just run the whole same computation yourself. You keep all six of the toxic waste precursors, make the toxic waste.

Zooko 03:28:57 Now you can use it to forge Zcash. If only people will use your public parameters to verify the Zcash transactions. So now you get your public parameters instead of the ones that Peter Van Valkenburg and Andrew Miller and Zucco and Ed Snowden and Peter Todd generated in their Zcash node.

So it was really important to me that people could independently verify that their Zcash node was using the parameters that all six of those players had independently attested to. Okay, with me so far. Well, Ron Shermer said, well, that’s dangerous. There’s a lot of unknown cryptography here. This is a new newfangled cryptography, and that those transcripts contain a lot of bits and numbers that could potentially compromise.

Soundness of proof. And I was like, Ron, you worry too much. I hope he doesn’t mind my saying that, but I figured incorrectly that I was totally wrong and Ron was totally right. I figured that those parameters had been like run through a one way secure hash function, basically, and no attacker would be able to extract any useful cryptographic information out of that.

Zooko 03:30:17 And I was wrong. So two years later, different cryptographers, namely Mario Cabazon, who went on to invent plonk, I believe, and a lot of important contributions in cryptography within the Ethereum world. And Sean Bell, again, they noticed that there was a mistake in the original science paper which we were using to implement our system.

Somebody else also implemented a similar system based on the same science, and they had the same bug in their code because of this mistake and the mistake project. no it wasn’t. Ze coin later copied some other stuff from us, but, I forget the name of it. It’s like a JavaScript. I don’t think it was really used.

It was like a JavaScript experiment that implemented the same generalized proof system and was vulnerable to the same bug. I’m basically just trying to prove that it wasn’t my team’s fault. We did not make the mistake in our implementation. The mistake was in the original science paper. but we discovered Sean, Sean Bow, and Erlich Iverson discovered the mistake.

Zooko 03:31:30 So that began the second, the next exciting cloak and dagger period of my life. After that one, I’m done with cloak and dagger. So the first was the first ceremony where I did all this cloak and dagger like secretly texting international fugitive or international fugitives.

And then two years later, we found out that there was a flaw in the science paper, that if someone had a copy of the transcript and they knew about the flaw. They could counterfeit. Zcash. Undetectable. Worst case scenario. And, So for 11 months. 11 months. Me, Arielle, Sean and Nate Wilcox lived this double agent spy life. Because we decided the four of us decided.

Well, I decided I was the boss of the company, that. Hey, this is, like, terrible, right? This could ruin everyone’s investment in Zcash and also like triple or in Zcash project, and also set back the entire science of zero knowledge proofs by years or decades. If this got exploited by some like attacker, some hacker and I thought it quite likely at that time already.

Zooko 03:33:01 This was many years ago, but the government of North Korea was already actively doing this kind of thing. I thought, it’s not inconceivable that there are attackers who have compromised some of our accounts or some of our devices in this company. So we’re going to treat this with like maximum OpSec.

So the four of us inside the company lied to everyone else in the company for 11 months and never discussed this except through limited secure channels and arranged to stealth upgrade the bug out so that after everyone had upgraded with a fixed version, then we revealed everything. And again, this interesting trade off between secrecy and transparency. We’ve always out aired really hard on the side of transparency. So we posted like everything there was to know about this bug after it was no longer exploitable.

Oh, and we also helped a bunch of other projects that had cloned our source code without understanding what they were doing, and we saw that they were using the vulnerable version of it. And so we privately contacted them. And this was really tricky because we weren’t sure if we explained too much with some of them actually try to counterfeit Zcash instead of trying to protect their own users like that.

Zooko 03:34:31 Anyway, I went the whole nine yards trying to be like transparent and protect not only all the Zcash users, but as many users as we could. And One weird outcome of that, in my view, is that a lot of people heard about it and still to this day retain, a kind of vague idea that Zcash is either was counterfeited or is especially vulnerable to being counterfeited, which really bugs me as an obsessive accuracy maximalist because Zcash has never been counterfeited.

Like like Bitcoin, Bitcoin has been counterfeited successfully, well, temporarily successfully, until they rolled back the blockchain and undid the counterfeit, the coin was counterfeited and the attackers got away with a whole bunch of counterfeit money. Stellar was counterfeited, and the attackers got away with a whole bunch of counterfeit money. Monero was vulnerable to counterfeiting. The Bitcoin variant of it was successfully exploited. The Monero fork of it was not, as far as I understand, but I’m accused about that. Anyway, my point is, it really bugs me as an obsessive accuracy maximalist when people have widespread beliefs contrary to reality.

Zooko 03:35:49 Zcash is actually both has the best track record of not getting counterfeited like Perfect. AII the best, or at least hide for the best with some of the other good ones. But it also has many of the best defenses against counterfeiting. Including, as it’s known, said at the time, the fact that Zcash funds this full time team of experts, which eight years later, or however many years later, has now split into many full time teams of experts. Where was I? Aside from being annoyed at people for thinking Zcash is counterfeiting, which is kind of the opposite.

Vlad Costea 03:36:26 I think still nowadays, if you look at Twitter, you’re gonna find Peter Todd saying that Zcash had an inflation bug or something.

Zooko 03:36:34 Right? And that’s true. but we know that it wasn’t exploited, which people don’t understand. and the reason we know that is because.

Vlad Costea 03:36:44 There was this 2018, 2019.

Zooko 03:36:48 I think we fixed it in November 2018 or so, I forget. Yeah.

Vlad Costea 03:36:52 There was something about year 2018 because around the same time there was a Bitcoin Cash developer who basically disclosed an inflation bug in Bitcoin that was very serious.

Vlad Costea 03:37:05 And they also had to lie about it in the sense that what they said to the miners was that you just need to update this without explaining very well what’s happening.

Zooko 03:37:15 Yep. Same thing we did. Stealth stealth patch. Yeah. but we have we’ve always been like I say, like at least me and probably almost everyone involved in Zcash has always been kind of security and privacy and safety maximalists. and so we had actually designed and implemented like an extra layer of defense in advance in case the zero knowledge proofs failed.

And it worked and it protected all the users. so the zero knowledge proofs are sort of the primary line of defense. Like the idea is, before any transaction can become part of a final block, it has to pass all the validity checks. The validity check includes a zero knowledge proof. The zero knowledge proof proves that this transaction doesn’t violate any of the rules.

That includes the fact that the transaction doesn’t counterfeit money, right? It also proves that you own the private key that you had that much money before you send it to someone else, that you didn’t double spend this money to one person, also to another person, etc. all the rules are proven by the zero knowledge proof.

Zooko 03:38:26 Now, in my view, that’s sort of like the best. That’s the sort of like the future, like, maybe 5 or 10 years. I think people, especially because of all the rapid deployment and adoption of zero knowledge proofs in the Ethereum world, also Star Square And other things in the Bitcoin world.

I think in five, 5 or 10 years people will consider a solid zero knowledge proof of correctness to be like the gold standard and consensus rules that any miner could join, and all the miners cross-checked each other and blah blah blah blah blah. That’s not as safe as a knowledge proof of correctness. I think 5 or 10 years from now.

But despite that, zero knowledge proofs were new and unproven when we started. And so we also implemented an additional layer of defense called turnstiles that Matt Green and I came up with before we launched Zcash. And that is there’s different pools, which are a shielded pool. All of the coins inside that shielded pool are indistinguishable from each other. And when people transact there’s no information emitted.

Zooko 03:39:42 Okay. But then there’s a separate shielded pool. And in order to move your coins from one to the other one, you have to publicly reveal the amount of the coins they’re moving. Well, now there’s a public real time audit of how many coins entered and how many coins left from this pool. If there was counterfeiting in that pool, everyone in the world would know instantly because more coins would leave the pool than had ever entered it.

That’s that’s counterfeiting. Like, if you if you can’t fit money and you don’t spend it, maybe you haven’t really counted. But if you counterfeit money and you spend it, then this is going to reveal that fact pretty soon to everyone. in addition to that, it’s also a what I call a blaster, damage containment device, which is.

Coins are not valid coins. Altcoins if. All of the coins have already let. All of the valid coins have already left this pool, right? Like if if you put 1000 coins in, somebody sends a thousand coins out and then somebody sends one more point out that was not valid, right? Like the last one out, doesn’t count because that’s obviously counterfeited.

Zooko 03:41:05 That proved that there was counterfeiting in that pool.

Vlad Costea 03:41:10 Yeah, it makes a lot of sense. You you want to check the supply at every step.

Zooko 03:41:16 Right. And that means that the overall 21 million cap is preserved, even if there was counterfeiting in the first pool. So today we know eight years later or whatever, six years later or whatever. Hey, we know there wasn’t counterfeiting. Like, apparently no one discovered this bug before we did.

No one exploited it before we patched it, because if they had, somebody would have moved more money out of that pool than has ever existed and has never happened. Because at that point it would be a race. There’s a game theory reason, like you’re the attacker. You’ve successfully counterfeited some Zcash.

If you spend it. Then now there’s the race between you and the person you spent it to. Whoever exports your money from the pool first keeps your money. Whoever exploits your money from the pool last loses your money. So there’s there’s race, and no one has ever.

Zooko 03:42:14 That’s never happened anyway. So we have really solid, strong on chain proof that’s publicly verifiable, that the counterfeiting never happened in that pool. In addition to which, even if it did happen, the 21 million Zcash limit would still be intact.

Vlad Costea 03:42:32 Okay. I do have some curiosities about the design of Zcash because from the get go you had a block reward of 12.5. Zeke. And it seemed to follow very closely the monetary schedule of Bitcoin. It’s almost like it was designed to mirror Bitcoin but have the zero knowledge proof privacy added on top. Yeah.

Zooko 03:42:57 Absolutely.

Vlad Costea 03:42:58 But you also have faster block times like one minute if I’m not mistaken.

Zooko 03:43:04 Yeah. It was during the big block the block size worse. And I decided it wouldn’t be good for Zcash to like take a side or get involved.

Vlad Costea 03:43:13 But so when was this 2017 or something?

Zooko 03:43:16 It launched in October 28th, 2016.

Vlad Costea 03:43:22 Right. So from the beginning it had these design choices that there’s going to be 21 million. Zcash. You’re going to have a new block every one minute.

Vlad Costea 03:43:31 You’re going to have halving cycles, which.

Zooko 03:43:34 I think it was. 300 seconds. I think we doubled. There was this debate at the time within Bitcoin, the block size works with shall we double the size of Bitcoin blocks. And what we decided to do over in Zcash that we were launching at the time was don’t know. We did both. We both doubled the size of Zcash blocks compared to the Bitcoin code we copied from Satoshi. And we have the block time. So we would have forex the capacity at launch.

Vlad Costea 03:44:13 And also you have the same schedule for reducing the inflation. Yeah. With having cycles. And what else is similar.

Zooko 03:44:27 we have the transparent addresses which are the same as Bitcoin addresses and have the same transparency features.

Vlad Costea 03:44:35 You have SegWit or taproot or something like that.

Zooko 03:44:38 No, no, we cloned it before SegWit was integrated and we never got around to adding SegWit.

Vlad Costea 03:44:45 Does it make any sense to add SegWit? I remember. Was it Daniel Kravis? He joined my show and he argued that SegWit.

Vlad Costea 03:44:55 I mean, he’s a BSD nut nowadays, but he was arguing that SegWit was added to BTC for the purpose of disconnecting the signature from the transaction so that you have more deniability. And he was arguing that the core developers were trying to help Ross Ulbricht get away. It’s sort of silly. Yeah, I know.

Zooko 03:45:24 Well, do you know anything about Sean Bowes tachyon discovery?

Vlad Costea 03:45:29 Yeah, I was gonna mention that, but we’re still, I guess, in 2017 ish.

Speaker 6 03:45:34 Yeah.

Zooko 03:45:36 So I don’t know if it. In 2017 ish, I opened a GitHub ticket saying maybe we should add SegWit in order to increase like efficiency. but now I think it’s all obsolete. Like, Sean is going to invent something that’s way, way better than anything ever existed before. So forget about SegWit. That’s so old school.

Vlad Costea 03:46:01 Okay, so I remember there was a point in 2019 or something when there was this spam attack on Zcash because block space was cheap and someone was able to basically bloat the blocks to the point where it became more difficult to run a full node.

Vlad Costea 03:46:21 Was it because you decided to increase the block size to a point that I guess did not meet the actual demand from users?

Speaker 6 03:46:34 no.

Zooko 03:46:36 The the full nodes could handle the size, of the blocks after a small efficiency fixed. The problem was the wallets, the end user wallets that want to scan transactions looking for incoming payments to their user. So for privacy reasons, your wallet doesn’t want to reveal to any third party anything about you.

So the most private way to implement that is a big efficiency trade off cost, which is you have to download some header information from every encrypted transaction that anyone makes. So that was what the. The spam was all encrypted shielded transactions.

And therefore any wallet that wanted to update how many coins its user had had to download all of them in order to test each one locally, so it could figure out which ones were for each user without revealing to anyone else which ones were for each user. So that was the problem with wallets all broke. Zcash wallets, all that spam was in effect, but the block size.

Zooko 03:47:54 Some people were concerned about the block size. I remember Jameson Lopp like commented and kind of like a snarky way or something on Twitter. I was really annoyed at him because I think he’s a good guy and was anointed him for being like glib and wrong.

But anyway. But yeah, I don’t think Blocksize is really important to this story very much. There was one way that it was important, which was some Bitcoin slash Zcash ATMs have little bitty hard drives and little bitty CPUs in them.

And one of them had had to like stop supporting Zcash because they couldn’t handle that that much data going into their little bit hard drive. So that’s a that’s a serious drawback. Some people have complained to me that it’s harder to install a full node and sync it on your laptop, but I think they’re just being whiners.

Vlad Costea 03:48:51 Was it lamassu, the ATMs? I think they’re the ones that supported Bitcoin and Zcash.

Zooko 03:48:59 They did. I don’t know if they were the ones that stopped supporting Zcash during this period. I don’t remember.

Vlad Costea 03:49:09 Anyway, on the topic of the Blocksize war in Bitcoin, you said that was around the time you stopped paying attention to what’s happening, but did you have any side that you preferred?

Zooko 03:49:21 yeah, I. I definitely thought. That evolution is important. Like improvement is important. So it seemed to me that Bitcoin was also flying too early and too hard. I very strongly have the perspective. Well, I really I really hate censorship.

It really bothered me that, some people were trying to prevent other people from hearing the other side. And some of the personalities on the small block side were like these toxic people that don’t want to have anything to do with.

But again, I figured at this point it’s my job to stay out of it because I now have this new role is leading Zcash, and I’m not really going to help much by. Weighing in on that stuff. I really enjoyed reading Vitalik Buterin book review of the two Blocksize war books, the two, the two histories of the Blocksize War.

Zooko 03:50:48 Did you read his book review? Check it out. I’ll send you a link. Vitalik read these two books, one each telling the history of the Blocksize War from their perspective of their side. And he also tied in his own memories of it for having been there.

And, he said, I might be paraphrasing. This might be unfair to Vitalik or to someone, but he said, basically the, the small blockers were evil, like censoring character assassination. Cyberattacks, illegitimate seizure of power. But the big bloggers were incompetent.

Like they couldn’t build and, create a blockchain work, something like that. apologies to all the small blockers, big blockers, and Vitalik for slandering you all at once. I mean, it’s water under the bridge. Like I don’t care anymore. I don’t.

Speaker 6 03:51:54 I don’t I’m not.

Zooko 03:51:54 That into bitcoin, man. I’m sorry. Like, it’s just not that interesting. Like, I’m excited that L2 labs in Syria and, you know, I ran into Some old bitcoin OG friends who are trying to make innovations on top of bitcoin.

Zooko 03:52:11 That’s cool. Star square la saison. He’s one of the founding, scientists in Zcash. And they went on to star where he’s trying to do stuff on Bitcoin. That’s cool. But why? Because it’s got a whole bunch of money in it. Money can. Money can move. It’s only got $2 trillion in it. Big deal.

Because there’s all these people who love it. People can learn to love different things. What’s the big deal? Anyway, so Ellie was complaining on Twitter yesterday. Listen to my banger, Ellie. Ellie was saying we haven’t had an upgrade in Bitcoin in like four years. It was one simple eight line thing that we need to change to add up cats.

And then we can have these really scalable start proofs on bitcoin or whatever. It’s like you said, it’s really like surprising or embarrassing or something. You know he was obviously tweeting Matt, you know, so I just replied with the James Franco getting hung meme that says first time. Yeah. Anyway, So yeah, you bitcoiners have fun with that.

Vlad Costea 03:53:24 Someone in the chat is asking if you’re 100% into Zcash or you still hold Bitcoin.

Zooko 03:53:30 Yeah, I sold out of Bitcoin a zillion years ago. I was forced to sell a lot of my bitcoin to fund my startup lease authority in like the early 20 tens. So always, you know, I learned the lesson about that. Like if you want to invest in something that’s highly variable and you’re right about the long term trajectory, which I was like, there’s a tweet of mine that says something like, I have a buy order in for more Bitcoin at $2 a coin, something like that.

But if it’s variable and if you’re not rich and you have expenses along the way, then there’s this thing which is called gambler’s ruin, which means you can be right and broke. Anyway, so my advice to anyone who wants to invest in highly variable things like cryptocurrencies is focus on earning more than you spend it. Then you can invest out of your positive cash flow out of money that you might need. Because if you need it and you’re forced to sell at a loss, then you’re broke.

Zooko 03:54:39 Even if you were right.

Vlad Costea 03:54:41 No, but we live in the era where people go into debt. They go to the bank, they get this $50,000 loan and they put it all into Bitcoin. They’re like, yeah, I’m just gonna sit on this. Even if they have to pay monthly payments back to the bank with interest, and the number doesn’t necessarily go up in that time frame. So they can actually get rekt.

Zooko 03:55:11 Yeah. It’s the time frame issue and especially something that really bothers me about the discourse around trading and investing in Bitcoin specifically, but also in crypto, Twitter in general. Ethereum and all that stuff is the people glossing over the difference between rich people and poor people, right? Like, a rich person can take a certain strategy and get even richer. The poor person can copy the exact same strategy and do the exact same thing for the same reasons and go broke. Because the poor person can’t afford the time and the costs in the meantime. You know what I’m saying? This is so obvious to me.

Zooko 03:55:57 Like this. I think it might be called gambler’s ruin among like economists, whoever studies this shit, but it really bothers me to see. People glibly giving advice on Twitter about how to invest or whatever. I think a lot of people have been very hurt by that, but only poor people, right? Like, rich people are more sophisticated and they have that cushion. They can they can lose and try again where people can’t lose and try again. So for normal people who are not rich, do not listen to anything anyone tells you about crypto, Twitter or Bitcoin or anything. Learn dollar cost. Dollar cost averaging. And focus on earning more than you spend.

Vlad Costea 03:56:46 Well this used to be common sense, right? Saying well don’t invest more than you can afford to lose.

Zooko 03:56:51 Exactly.

Vlad Costea 03:56:53 But it seems like you have all of these degenerate gamblers going 100 x or or else just borrowing money that they cannot really pay back. Yeah.

Zooko 03:57:04 And but that’s what you see. What you don’t see is all the people who are wiped out and it destroys their lives.

Zooko 03:57:10 It destroys their families. They kill themselves. They’re wrecked. Like, wrecked is funny when you’re talking about some degenerate who’s, like, playing with house money and he gets his comeuppance. Haha. Him it’s not funny, the effect it actually has on people, but you don’t see that it doesn’t show up on crypto Twitter. Anyway, that happened to me. Except I wasn’t entirely wrecked.

I was nearly wrecked. I slept in my car the summer before we founded Zcash because I couldn’t afford rent. But but anyway, I bought a bunch of bitcoin at like $3 and $4 and $2 and whatever. because I was one of the earliest Bitcoiners. But then I had expenses because I had employees and I was trying to make this product.

It was an encrypted storage system. And the time came that I could either sell my Bitcoin for like $15 a Bitcoin or, close down my business. So I chose my business. I don’t regret it because that eventually led to Zcash indirectly. How do we get onto that topic? Oh, somebody asked do I own Bitcoin? No, I’m really all in on that.

Zooko 03:58:16 I have a couple. Like how much do I want to disclose about my finances. So you guys went up really high in 2018. So I was momentarily rich. And I donated most of my money to non-profits that accepted Zcash. And then Zcash went back down again.

So now I’m not rich. but I am I’m really all in on Zcash, in part because I think it’s the most promising and in part because being a zcash holder is how you’re contributing to the future. It’s that question I was asking you earlier. Like, if you could wave your magic wand and give Bitcoin all the properties of Zcash, would you do it?

If you ask me what I do and I’m like, I don’t know. Well me. Interesting question. but if you hold bitcoin you’re not contributing to the future of humanity very much. Maybe. I mean, I don’t know. Maybe a little by helping the price of bitcoin stay up. But I don’t think that’s a big help. If you hold Zcash you’re helping the price of Zcash stay up.

Zooko 03:59:18 And you’re also contributing to the Zcash network and Zcash developers which don’t include me. By the way my company Shielded Labs is not funded from the Zcash Development Fund. But a bunch of the other ones are. So anyway, Zcash went through.

Vlad Costea 03:59:38 Yeah, I guess you just pointed out the most classic criticism that Zcash gets. I remember last year I was at a conference in Mexico, and there was this guy who basically created a fork of Monero that’s called Wow neuro. And he’s this academic from the field of physics, if I’m not mistaken. He was saying, how can you honestly believe that Zcash is good?

And how can Zcash be the future of money if there is such a huge mine. And there’s this developer allocation and you expect this to go on and it’s not fair. He was always complaining about this, but he also doesn’t have an answer to the question, how do you actually keep the research going and build this and have this available as a open source software that it seems like Ethereum has used much more than Bitcoin.

Vlad Costea 04:00:30 The way that I see Zcash basically is like a Noah’s Ark for Bitcoin if shit hits the fan. And the core approach to development is not good. You can just move the utxo set to a fork of Zcash. Maybe you’re gonna say people.

Zooko 04:00:47 Are trying to enable that. I have mixed feelings about it. Like I’d rather people sell their bitcoin and buy Isaac. Sure, get on Noah’s ark.

Vlad Costea 04:00:56 Seems unlikely. They have this mindset and they say, well, we’re first class citizens, whatever. We’re bitcoiners. Everyone else is just working for us, building stuff.

Zooko 04:01:07 Well, in my opinion, the the people who. I think it’s important for society that people who take risks, pay costs and are more right, get more rewarded. So I think it’s important for society long term. The people who hold sick benefit more than people who hold Bitcoin. And I wish bitcoiners ill. I hope they benefit too. But if they benefit just as much as people who hold benefit, then I think that, take some of the energy out of the positive feedback loop of improving society long term.

Vlad Costea 04:01:49 Well, and then there’s the question, what is Zcash actually improving? You’re fixing the fungibility of the Bitcoin design, which is possibly the biggest problem to solve. And for the longest time, and maybe that this is a good way to transition into tachyon or tachyon. I’m not sure how you pronounce that. For the longest time, the criticism against privacy has been that it doesn’t scale. Usually transactions that do include any type of obfuscation, or else smart cryptography are much larger than the ones that don’t include that. And that’s, I guess, what Zcash is trying to solve.

Zooko 04:02:33 Yeah. Tachyon is this new discovery by Sean Bowe, who’s already appeared several times in this story, but he’s currently an independent researcher. I hired him. He never went to college. I think he might have dropped out of high school, but I was I think I’m basically his first employer ever hired him to work on Zcash at the beginning, like 2016 or so. And, now he’s an independent Zcash hack. Oh, thank you so much.

Zooko 04:03:02 You have some.

Speaker 9 04:03:02 Water?

Zooko 04:03:04 That’s all right. food. All right.

Vlad Costea 04:03:11 If you want.

Zooko 04:03:12 A breakthrough.

Vlad Costea 04:03:13 Show some sponsors and then talk about tachyon.

Zooko 04:03:17 Sponsors. Okay. Come back right after the break to hear about tachyon while I eat these, boiled eggs. And I listen to Vlad’s pitch. I’m going to listen carefully. Go for it.

Vlad Costea 04:03:28 Okay, so Bitcoin.com news, they have recently underwent this rebranding where you’re gonna see that they changed their color from green to orange. And this is not just a chromatic change. It’s also a change in their editorial philosophy and their approach to reporting news.

I guess since 2017, or to be more precise, from 2017 until earlier this year, Bitcoin.com has been this hub that promoted Bitcoin Cash, the BK fork of Bitcoin, and they used to say that it’s the real Bitcoin. They for a while they were saying that BTC is too slow and has unreliable fees and therefore you should only buy BC now they changed all that. They understand the difference between BTC and BCH and they mostly report about BTC.

Vlad Costea 04:04:17 It’s I guess it’s the market speaking and this website adapting, but also they have pretty good journalism and I’m the one who actually reached out to them and said, well, maybe you guys need some advertisement because it’s a monumental change. If you ask me.

It’s proof that the block size words have come to an end, and we have settled the camps and we have identified which version of Bitcoin has more market demand, even though I think Bitcoin still needs to scale better. But that’s another discussion for another day. And you go to news Bitcoin.com and you’re gonna find some of the best coverage in all of the space.

Like, seriously, I do believe that they’re less biased than Bitcoin magazine right now. They’re less politically motivated, to put it lightly, because I think Bitcoin magazine is to Trump friendly and Bitcoin.com news is more balanced. They have also political news from other countries. They report what’s happening in India and Russia and Iran and these countries about which you don’t necessarily hear in the Bitcoin context. And I think it’s useful that the news is not USA centric.

Vlad Costea 04:05:33 So seriously, do yourself a favor, check out news Bitcoin.com and I hope they cover Zcash too. I’m not sure about that. I don’t control their editorial policy, but they’re pretty good. There’s also News.com, which is a peer to peer marketplace which focuses on empowering the global self.

The CEO of it, Rei Yousef, used to be known for Paxful, which is a business that he decided to not support anymore, and he started another peer to peer marketplace, which seems to be getting a lot of traction in the Middle East, and I guess also Africa. That’s the main focus. But you can also participate to this economy by providing some liquidity. And they have this peer to peer marketplace.

They also have a spot exchange where you can buy and sell, and also you can sell gift cards or try to sign up for their debit card for spending your coins. Even though I’m not a big fan of that udu, I’m not going to judge if you think that the sole purpose of this monetary revolution is to just use visa to spend your coins, that’s sort of defeating anyway, no one’s com, it’s pretty cool.

Vlad Costea 04:06:48 Check it out. And last but not least, we have HODLing, Modeling that which is a business from Switzerland, and they specialize in self-custody. So if you hold a lot of coins or else you’re part of a company that’s planning to acquire something to their reserves, then you should probably think about problems such as how do you make sure that the security person in the company has access to all the coins and is able to spend them?

It’s not a good scenario. You should think about whether or not you need a multi-sig. You should think about maybe using hardware wallets as devices that sign transactions, maybe using a Shamir secret sharing type of setup. And it’s pretty complicated. Like how do you manage them?

And these guys can offer you the consultancy to make it happen so that you eliminate single points of failure and also have the kind of setup which is tailored to your business or to your threat model. So check out HODLing. They’re pretty cool and they’re friends of the show. And once again, thanks to all the sponsors for making this possible.

Vlad Costea 04:07:56 We have been going on for four hours, eight minutes now, and we’re only halfway there if we want to break the eight hour record. Are we still up to that?

Zooko 04:08:08 I doubt it.

Vlad Costea 04:08:13 Anyway, I hope you enjoyed your eggs. This was the commercial break, and now we can talk about tachyon.

Zooko 04:08:22 Okay. So rainbow is a genius. And in the creation of Zcash 1.0 and Zcash 2.0 and solving, helping discover and then helping solve that counterfeiting bug. Sean and the other members of the Electric Coin Company made. quite a few cryptographic contributions in both the science and the software engineering, which everyone else in the modern knowledge industry is currently using.

And then. He told me I was the CEO back then. He was my employee and he told me, oh, I keep trying to think of how to invent a zero knowledge proof system which doesn’t have any trusted setup and can also be recursive, which is a kind of scalability, so that you can use it for like any, any task.

Zooko 04:09:33 and quite a few months later, maybe 6 or 7 months later, he hit me with this light in his eyes, and he was like, I’ve. I figured it out. He had discovered what became known as Halo, which is the first knowledge proof that was both recursive, capable of recursion and didn’t involve any trust, etc. and I thought that was really important that like the like the eliminating setup part. That’s really important to me, maybe because of my own personal battle scars, but I really think a thing cannot be scalable, socially scalable in those terms, and safe enough with this whole trusted setup stuff.

So I’m eagerly awaiting the rest of the zero knowledge industry to upgrade past trust and setup. But, Anyway, so Sean discovered the first one of that class, along with a fundamental cryptographic technique which gave rise to what’s now known inside cryptography is folding or accumulation, which is really important technique for almost all of the modern generation of zero knowledge groups. Well, then, A few months ago, he left the Electric Coin Company, and then at some point, he came to several of us with this light in his eyes, and he said, I think I figured out how to have scalable privacy.

Zooko 04:10:59 And that is now codenamed tachyon. And he has a blog where he’s written like two blog posts so far. If you’re really into cryptography and consensus protocol design, you should definitely read these blog posts. They’re very dense and thick, and I’ve reread them and restarted it like ten times in a row now, and I retain a little bit more of it each time. But there could be errors in my, explanation of what tachyon is, but it’s basically.

Speaker 9 04:11:35 Okay.

Zooko 04:11:37 There are various scalability bottlenecks. You mentioned one, which is the size of transactions. Well, that one’s solvable.. In various.

Speaker 9 04:11:45 Ways.

Zooko 04:11:47 There’s another scalability bottleneck, which is. The global set of all valid coins that have ever been minted, validly minted. In cryptography, you call a set an accumulator, or I mean, it’s like an accumulation of all the coins ever. Well, that one’s solvable too. Like we all know how to solve. All those cryptographers know how to solve some of these. The third one is that in a fully privacy protecting cryptocurrency like Zcash, you have to have a collection of all of the coins that have ever been spent in order to prevent double spending.

Zooko 04:12:36 Here’s that old double spending problem coming back again. That one. There’s not a very good solution to there’s. There’s no solution that’s been deployed yet, to my knowledge. The best solution we have been able to come up with is a kind of sharding. And the closer we looked at it, the more complicated it became. So we backed off.

Well, what Sean has come up with with tachyon is a novel solution to the problem of maintaining a global shared database, of which coins have already been spent so they can’t be double spent. And the way it works is replace this global shared database with. Each user has a recursive, trustless, zero knowledge. Proof that their coin isn’t in has never been spent.

Okay, so you’ve got coins in your wallet. You have a zero knowledge proof that your wallet can generate to prove that your coins have never been spent. Now, Whenever anyone spends their coins, the consensus nodes need to update that cryptographic construct an accumulator. To mark those coins as spent so that they can never be spent.

Zooko 04:14:10 Double spend. Right. But instead of collecting all of them through history, what these consensus nodes are going to do is make a recursive zero knowledge proof. So it’s a proof that. I might be explaining this wrong or misunderstanding it. The what I do know is that.

The scalability bottleneck that is eliminated by the tachyon idea. Is the requirement to have a record of all the coins that have been spent, which is called nullifies? each coin has a nullifies, and the nullifies is the way you identify whether it’s in its maintenance or nullifying its ability, I guess. until now, someone would have to have a record of all of the nullifies ever used if they were to be sure that, newly spent coin hadn’t previously been spent with tachyon.

Instead, they have not a record of all of history. They have this fixed length cryptographic object, and the spender provides as a recursive zero knowledge proof that their nullify is not in the previous. State. Okay, let me back up and try one more time.

Zooko 04:16:01 You understand the concept of blocks, right? I have a block and it has a reference or it’s derived from a previous block. Okay. So you know, sort of transitively reason about. Okay.

Vlad Costea 04:16:24 You know, I actually like this when you don’t have it figured out how to explain it in plain language. It means it’s pretty novel and you’re not much of a salesman, which I like.

Zooko 04:16:38 yeah. And also, this is not my invention. This is Sean’s invention. And he and other people understand it better than I do at this point.

But I’m pretty sure I understand it and how it solves this fundamental scalability bottleneck for the first time. and it has to do with this. Imagine you have so the current way, any kind of works and any other system.

Tornado cash, all the privacy projects that copied Zcash, etc., is that. You get a new batch of null fires. And you say, for each one of these, if it has never been used before, then I’m going to add it into the set of all null fires that have ever been used.

Zooko 04:17:27 Okay. With tachyon Given because we now have recursive, trustless, zero knowledge proofs. Thanks, Walmart. Small part two. Sean Bell himself several years ago. You can now prove that my nullify.

Didn’t get used in the previous sort of block or the previous state of the system, nor is it used in the current batch. And the key part that makes this scalable, it’s really mind blowing, is that nobody has a copy of the previous block.

I can give you a proof that my nullify wasn’t in that block or that set of null fires. You can verify the proof based on the current accumulator, and neither you nor anyone else has a copy of the old set that my proof proves my notifier was not in. Yeah.

Vlad Costea 04:18:32 That’s pretty complicated.

Speaker 10 04:18:35 Yeah, and it might be wrong.

Zooko 04:18:36 Too, but, yeah, it’s pretty.

Speaker 10 04:18:38 Complicated.

Zooko 04:18:39 Okay. Bottom line is it should be, as far as I can understand. It should enable the number of Zcash transactions simultaneously to be limited. Not by anything to do with history or state or disk or disk accesses or communication between nodes, but only by the bandwidth of a single node.

Zooko 04:19:08 Does that make sense? Like what? One node can verify these zero knowledge proofs and update the accumulator basically as fast as it can receive, like 64 byte or 128 byte messages from wallets. So basically, I think and you know, a big part of this is just I trust Sean Bowes both like creative genius for having come up with something that no one else had thought of.

Also, it’s like engineering skill at having evaluated actually like a bunch of trade offs and a path to implement it and deploy it. And also his taste like some engineers are good at solving problems. But in my my taste as an engineer differs from theirs. And I think their their solutions are going to cause more problems.

But Sean is not like that. I think his engineering taste is pretty good. So I’m extremely, excited about the likelihood that this project of his is going to get deployed to mainstream Zcash and make it so that you can have basically, like, I don’t know, like basically any number like as many transactions as you know.

Zooko 04:20:29 One big computer with good internet can process per second, which is a lot. Without compromising privacy. Yeah, I’m not much of a salesman. You should get the, the tachyon salesman onto your podcast next. I don’t know who that is.

Vlad Costea 04:20:48 Yeah, I don’t know either.

Zooko 04:20:50 I think we have a tachyon salesman yet.

Vlad Costea 04:20:53 This might just be the most advanced thing we have today in cryptocurrencies. Taking on state of the art stuff.

Zooko 04:21:02 Yeah.

Vlad Costea 04:21:03 Like, I’m pretty sure that Solana scaling is sexy nowadays. And the Ethereum scaling is also interesting to a lot of researchers. But this is next level.

Zooko 04:21:14 Yeah, it really is because it’s. I. It’s like it it’s like eliminating information. Something about information theory. Here, like a lot of the scaling, is about spreading the information into different locations, which can help in different ways. There’s compressing or limiting information that can help your knowledge proofs or sometimes seen as a form of compression. But tachyon still blowing my mind. As you can tell, I still only 90% understand it or so, because it seems like it’s about like bleeding information while retaining all of the properties from that information.

Zooko 04:21:57 That’s pretty weird.

Vlad Costea 04:22:01 Yeah. So of course, the question is, how long do you think it will take for this to actually become production code and get merged into Zcash?

Zooko 04:22:10 Great question. Everything always takes a zillion times longer than you want, than I want. So based on that it’s going to take years. the positive thing is John is super. In addition to his other virtues. he’s a super productive coder. he’s really, well trusted and well respected by the other developers throughout the Zcash ecosystem. so that helps. Like, more people would be willing to, like, pitch in or stay out of the way or whatever is needed to help accelerate it. I don’t know. It’s a good question. Things are it’s hard to predict how things like that because Zcash is such a vast, complicated thing. Excuse me one second. Muting my mic.

Vlad Costea 04:23:04 It’s all good. I’m not sure if you can hear me. I know you’re doing something else. You can nod if you can still hear me.

Vlad Costea 04:23:18 Okay. He’s having a Conversation. And it’s only normal after like four hours and a half to to get people around the house to ask questions like, how long is this taking? Who is this weird guy with the curly hair who’s talking to himself right now? I’m also gonna pick up some questions from the chat, just so you know. But later we had, like, this chronological structure to the interview. The point was to go through Zcash and also go through Bitcoin and then Zcash and talk about the future of Zcash.

Zooko 04:23:56 Have we gotten there. We’re at the future. We’re just taking on yeah.

Vlad Costea 04:24:00 Like once again it can take a long time until we get that. And something that I see nowadays on Twitter. And I was gonna get to this. Basically the Monero people are talking about full chain membership proofs like they’re already there and they’re like, yeah, of course we figured out the limitations of ring signatures. We have full chain membership proofs. Now, I think I saw today a piece of news that said that the implementation got delayed because they were not able to figure out some stuff.

Vlad Costea 04:24:33 And it seemed very simple in practice. Like you had this genius kid, Luke Parker, who came along and said, wait, we can do this, and we’re gonna have a much better sender privacy because we eliminate ring signatures, and we make it so that any node of the network could have sent that. We increase the anonymity pool. And then he sort of quit. And I was there when he became, I guess he had his existential crisis in the middle of the event, realizing that there are there are a bunch of anti-Semites talking on the stage and scammers around. He probably thought to himself, who am I building this for? Four.

Zooko 04:25:16 Was that it? A10 conference?

Vlad Costea 04:25:18 Yeah, it was in Mexico last year. Okay. And there was this guy, Jeff Berwick or something, and he went on stage and he started blaming everything on the Jews. And I think that was Luke Parker’s moment of clarity. And he was like, who am I working for, really? Like, am I gonna make this guy rich or something?

Zooko 04:25:43 Good on Luke.

Vlad Costea 04:25:45 He sort of quit, but he said he’s still got to maintain some parts of the project that he was working on. And then he passed on the task to someone named Justin Silverman, if I’m not mistaken. Is it just.

Zooko 04:25:59 The man, I think?

Vlad Costea 04:26:01 Yeah, yeah. Berman. Yeah. Silverman.

Zooko 04:26:05 Justin Berman was working on SCMP.

Vlad Costea 04:26:08 Yeah. And it’s it’s a single point of failure, just like it can be with Zcash and tachyon. But it’s good that these guys posted their ideas and they got others thinking about it, because if there is a malicious nation state actor involved, they can just take out the person and delay the implementation by multiple years.

Anyway, my point is that what’s my point? But by the time Monero will have acquired increased sender privacy, Zcash will have figured out how to make privacy more scalable. So it’s a very for myself as a Bitcoin.

It’s a very fun race to observe that you’re trying to one up each other. I understand you don’t like Monero. I can ask you why you don’t like Monero so you can go into detail.

Vlad Costea 04:27:00 But I’m happy that there’s this rivalry which is leading to more innovation.

Zooko 04:27:05 Yeah, competition is one of the best things in the universe for producing value and learning.

Vlad Costea 04:27:15 So what do you think about Monero? I do recall David Charm at one point in 2018 singing something along the lines of it’s amateurish. And then he sort of apologized for it and took that back.

Zooko 04:27:33 what I think the main thing I think is that it’s not safe for people to rely on Monero today for their safety. And. It should be obvious if you look at the available evidence, I think the Monero devs agree with the fact, although they don’t say it in these terms. But if the current ring signature system, is leaking information about you. That information could still be used against you next year. And things like this have happened many times. So.

Vlad Costea 04:28:30 I also think about this post-quantum world, right where you’re gonna get these quantum computers, breaking the privacy protocols and being able to anonymize everything that’s been up for skated. I think Monero is more vulnerable than Zcash to this sort of attack, being able to break the cryptography.

Zooko 04:28:56 I don’t know. I know a bit about Zcash quantum cryptanalysis properties, but I don’t know about Munro’s properties. in the face of quantum computers. but I think that’s a hypothetical or far future concern. Like, it might not happen at all, or it might take a long time, or we might be surprised about something about the cryptography, whereas.

The current fact is that you can’t use Monroe safely to protect your privacy unless you learn and practice some pretty complex extra procedures, which I’m not even sure exactly how it would work or if anyone does it in practice. But, yeah, basically, like I think people should know what their risks are. So they can they can be intentional about what risks they want to take for themselves.

Vlad Costea 04:30:02 That’s interesting because the last time I had a chat with, I’m not sure if it was grok or ChatGPT about it and ask them. Let’s say that you want to send a private transaction and you get to choose between shielded Zcash and Monero. What it basically said is that shielded Zcash has many extra steps, which are sort of a hurdle on the way of user experience, and that they would choose Monero because there is no way for anything to go wrong.

Vlad Costea 04:30:33 It’s private by default. And then ask, are you an AI? How can you make mistakes?

Zooko 04:30:40 What about what about an AI? How can you make mistakes?

Vlad Costea 04:30:43 No, I asked the AI that gave me this reply like, aren’t you an AI that understands how this works? So how can you make any mistakes?

Zooko 04:30:51 No, it’s like humans. He’s just learning from what other people say. Like, people say that a lot. It’s totally not true. Like you. Zcash. Well, the main thing is the difference between money and flight versus money at rest.

Like if people use anything including Zcash, Monero or anything else as an attempt to add privacy to money in flight, it will probably fail. It might feel in slightly different ways for different tools, but it’s basically a bad idea.

Whereas if they use Zcash for money at rest, it’s currently not only the safest, but also the simplest thing you can possibly do. Like everyone watching this download Zar, it’s actually an app on your phone cash, cash, Zcash wallet.

Zooko 04:31:48 And then it shows you a QR code which is your address. Or you cut and paste your address. Yeah. See that? Well that’s that’s Xhosa or is that a difference? Well it doesn’t matter. They both work. They all work. It’s okay. Mine has a light background. You’re in, like, dark mode night or something? Yeah. Like, that’s. That’s it.

Like you’re done now? No. You just tell someone to send money, Zcash, to that address, like there’s no steps. And, if you’re treating that as a passthrough where you’re going to send that like you tell someone, you know, send me one zec to this address and then I’m going to send one ZEC to this exchange or whatever.

You won’t get privacy because nothing, including the best possible privacy tool that could ever possibly exist, can give you privacy when you do that. But if you tell someone to send you a zcash or half a Zcash or whatever to your wallet, and then you just become a ZEC holder, now you have the best possible privacy on the blockchain.

Zooko 04:32:53 there’s zero information about your holdings that anyone can discern from the blockchain. What was my point? So yeah, it’s it’s really annoying, that thing where Grok and ChatGPT or whatever, they’re just sort of believing what they hear, you know, which everyone does.

Humans also do believe what they hear. It’s really annoying to me that what people hear on the internet is that Zcash is difficult because extra steps like privacy is not the default. No, that’s false.

When you install that wallet and you tell someone, send me money, there’s no extra steps, you’re getting privacy. It’s the default anyway. whatever. Fortunately, it’s not my job to disabuse everyone in the world of their misconceptions.

Vlad Costea 04:33:44 Right? But let’s imagine this situation. You buy some Zcash on an exchange, maybe Binance or Gemini or whatever, and you withdraw to your address like this. You put it here like someone hypothetically sends me this. What? What kind of information do these exchanges or people know about this? Because they can see my address, right?

Zooko 04:34:08 Yeah.

Zooko 04:34:10 Yeah, that’s a good question. So. Let’s assume it’s not Gemini. Gemini is awesome, but it doesn’t really matter for this story. so let’s assume it’s Binance because it’s really widely used. So you you install SAS, you wallet on your phone, you log on to Binance and buy some Zcash, and then you click withdraw.

And then Binance asks you to paste in an address to withdraw to. Right. So then you paste in an address, you might encounter a user experience paper cut here where you paste an address and Binance says that’s invalid. And then you have to figure out how to get a different address out of your Zcash wallet to paste it decision to finance.

Hopefully you won’t experience that papercut, but basically, eventually you figure out how to paste it in the right address from your wallet into Binance. Now, Binance has your account information like whatever name, KYC and phone number, whatever you gave them when you signed up and they know how much cash you bought when you withdrew it, and to what address you withdrew it to.

Zooko 04:35:21 Yo, Tyler. Spalding.

Tyler Spalding 04:35:27 How are you doing, sir?

Zooko 04:35:28 Yes. Appearance?

Tyler Spalding 04:35:29 Yes. I’ve, I’m at a conference. so I had to just take a quick break, but I’ve been listening in. cool. And I met, I met Vlad before, but especially because he’s from the land of the bears. so that we have a mutual.

I love it, I love it. Yeah. and I was talking to him, quite extensively, and I said how you are probably my favorite person, or one of the very favorite people in crypto and the most influential.

And so he said that he was going to be talking to you. And then we just kind of were chatting. He says, you should hop in here and say hello really quick. So. So hello. Thanks. Yeah.

Zooko 04:36:14 Introduce Tyler to our audience.

Vlad Costea 04:36:17 Yes, this is Tyler Spalding, and he’s a basketball. Now he is the former CEO of Flakka, which is a payment service. I think if you go to Zushi, you actually find ways to pay with Flex.

Zooko 04:36:35 Advisor probably all the time. My girlfriend keeps telling me not to pronounce it like.

Vlad Costea 04:36:38 That, but.

Zooko 04:36:40 Yeah, you can buy stuff.

Tyler Spalding 04:36:44 that.

Zooko 04:36:44 Was the Zcash wallet by default, and you keep your privacy and it just works. And then you can eat a yummy burrito.

Tyler Spalding 04:36:52 The you know, that was, that was one of the things I, you know, I followed you, you know, Zuko and all this stuff that you’ve been working on for so long, I still can’t even remember, the first time we probably talked a little bit more seriously just about stuff, right? About business, crypto, whatever it was.

I don’t know if you remember, but I still remember this conversation because of how impactful it was. Where, I said, you know, Zuko, we we’ve got this other thing with Alexa, and we have all these aspirations and all these other things. But for now at least, you know, maybe it was a little more centralized than we would like. and we don’t have the non-custodial versions yet, and it is custodial and we’ve been transparent about that.

Tyler Spalding 04:37:32 But we know where it’s all kind of going, and we’ve actually gotten there now. But even at the time, it was, you know, there is a little bit more custody here. you know, what are your thoughts on that, knowing that this is sort of a, you know, a means to an end or there is more centralization here, you know, you being an OG and, you said, Tyler.

As long as it allows people to spend Zcash and use Zcash. I’m all in favor of it. And that was just super. And you’ve been consistent ever since. And like that was so refreshing.

And that, you know, Vlad, you know as well, you know, you know, I came from, you know, way back in the day with Bitcoin. that’s not quite often a response. and it’s two principles for its own good sometimes I think, and it gets in the way. And so that was very refreshing to have someone that was very, very, very pragmatic, about just the usage of this stuff and where it needs.

Zooko 04:38:30 And look at now I’m carrying around some Zcash in my phone. It’s self-custody in my phone. and when I go to Chipotle I put in like $23 worth. I type it in and then I can buy a $23 worth of Chipotle goods right there.

So a it just works be I’m not at risk of some centralized entity from stealing all my coins at any point, except maybe the $23 worth, I guess at some point. Whatever. and c I there’s no record linking back to my assets or my past transactions or anything about me, my home address or anything. So anyway, yeah, I like to be pragmatic because that’s what really, has a big impact on the world in the long run.

Tyler Spalding 04:39:22 Yeah, very, very much appreciated. And in listening to some of the story, I didn’t realize your brother had been involved. as much as he has been. So is your whole family just all geniuses now? I hadn’t, I hadn’t heard before. And we need to, And, Vlad, I wanna try to buy that computer that that you have also.

Tyler Spalding 04:39:47 So if you’ll actually sell that.

Vlad Costea 04:39:51 Place a bit, sir. I’m not sure what this how much this is worth, but I feel like you know that Indiana Jones meme like it belongs in a museum?

Tyler Spalding 04:40:02 Yeah. For sure.

Vlad Costea 04:40:04 I mean, I, I bought it and it’s been collecting dust, and I felt sort of sorry for it. I was like, you know, I’m not the big a Z catcher. It’s just that I bought this at the peak of the NFT mania. I was like, I should buy a physical collectible. But it’s pretty cool. I mean, I have some discs and some burnt laptop parts, and I’ve been holding this under the bed prior to this interview.

Tyler Spalding 04:40:31 Well, it was nice as the the visual representation as Zuko is walking through the story. I like you, you know, you had you’re able to show the the artifacts. Yeah.

Vlad Costea 04:40:44 Yeah. And I gotta thank you, Tyler, for joining because I guess the the concept with which I came like yesterday was that maybe in order to break the record, it would take some aid, you know, some people joining in, boosting the energy of the conversation, giving Zuko some, some appreciation because I feel like he’s very underrated, even though he’s been doing a lot of good work.

Vlad Costea 04:41:10 There’s someone on Twitter who just said Vlad hosts the Zcash takeover. Hope Zuko paid you very good. Good infomercial. That’s not the case, man. That’s not the case. I, I just happen to like Zcash, and I think it’s the most ambitious attempt to improve the Bitcoin design that we have.

Zooko 04:41:33 Nice. Yeah, it’s not all new to me. Of course a whole bunch of people more and more nowadays.

Tyler Spalding 04:41:39 I’m a huge, huge fan. So yeah, if I can.

Zooko 04:41:42 Tyler is an important contributor because of the Chipotle connection. Like, I don’t go to Ulta, but I go to Chipotle. Hopefully I’ll go to bed and beyond.

Tyler Spalding 04:41:51 Hopefully there’ll be many, many more. extremely strong large merchants getting rolled out this year. I know there’s a lot already that have been signed on and are kind of ready to go. I know there’s all sorts of stall marketing stuff, these huge, big companies. So I’m not actively involved in some of that. But, I’m hopeful a lot of that will be coming.

Tyler Spalding 04:42:14 So then even more so we can get even more adoption with folks. Yeah. So very happy to to give the shout out. I’ll be happy to talk about anything further, but I was mainly just trying to hop in quick to, to give you a little bit of energy to keep rolling because I want.

Zooko 04:42:35 To thank.

Tyler Spalding 04:42:36 You.

Zooko 04:42:36 I’m not even trying to win the.

Tyler Spalding 04:42:38 Oh, that’s way too much.

Zooko 04:42:42 I’m just gonna keep going until I get too tired or run out of things to say. But you missed the part. Probably where I poured my coffee all over my lap. I make myself another.

Tyler Spalding 04:42:49 I just saw that. That’s like just when I joined, I was listening in the background so I didn’t see it, but,

Vlad Costea 04:42:56 It was not on camera. I can tell you that because I did not understand what happened until he said, well, I just poured coffee into my lap and I was like, I hope it doesn’t hurt you. It didn’t burn. I’ve been drinking sparkling water, by the way, all the way through.

Vlad Costea 04:43:13 I, I don’t do caffeine. Maybe I’ll need a bathroom break from drinking so much, but I’m pretty good for the next four hours.

Tyler Spalding 04:43:24 Yeah.

Zooko 04:43:26 so let’s see. We did the past Bitcoin. We did the future tachyon cross link network sustainability mechanism Monero.

Vlad Costea 04:43:37 And now we didn’t go into Monero all the way like you abstain from commenting, I think I feel like I said more stuff than you actually did.

Zooko 04:43:45 Well, I said, I’m concerned that it’s not safe for users today. I think users should have a clear. Oh, yeah, I was saying users should know what they’re getting into, what risks they are taking, and then we tangent it on to privacy by default and usability. That’s a good time for Tyler to jump in because of usability. Usability is really one of the most important things. I want to make a really loud noise with my coffee grinder. Here we go.

Tyler Spalding 04:44:18 That’s, one question for you, Zuko. Around that. I only have a few minutes to. Because I need to run.

Tyler Spalding 04:44:24 I actually need to run here for another meeting. but, you obviously were around the whole time. As you talk around some of the usability, particularly around Zcash. You’ve been around since the beginning of Bitcoin where that was clearly, you know, myself, I got in purely around payments. It was all about payments.

It was, you know, using it as payments. you guys talked earlier about just how Zcash was modeled a lot, economic model, some of the components of Bitcoin, even when it comes down to addresses, everything else, the similarities, what Zcash is, it also just has the one token model. Is that something that what is different Bitcoin around Zcash. you know maybe it’s just the marketing the branding perception.

Is there anything different or anything planned to be different where Zcash doesn’t also fall into the same sort of a narrative where Bitcoin is now store value, store value, we don’t use it as payments. Right? It’s not getting transacted nearly in any way that I think a lot of people expected for, for good or bad or otherwise.

Tyler Spalding 04:45:27 Right. You could argue it found its perfect product market fit, in store value. But if Zcash looks so similar and we want to use it as as payments and using this as transactions. How do we kind of reconcile some of that? for people to understand it like, and I’m not saying that in any sort of negative way, but how how do you go about that with other folks?

Speaker 10 04:45:52 That’s a good question.

Zooko 04:45:54 The other.

Speaker 10 04:45:56 ZK actors.

Zooko 04:45:56 Than me have different ideas about that, which I really like. There’s there’s a bunch of you guys doing this huge major. Fundamental change to Zcash without any help for me because I’m not that into it. which is Zcash shielded assets. Have you heard of it.

Tyler Spalding 04:46:13 Yep.

Zooko 04:46:14 So that eliminates the one token aspect right. Now people can have other tokens on the Zcash network. and the other thing that we were just talking about just before you jumped in or a minute or two ago, was the new scalability protocol that Sean has come up with called tachyon.

Zooko 04:46:33 And you heard about that?

Tyler Spalding 04:46:34 Of course.

Zooko 04:46:35 To me that’s really critical. Like scalability. Like, I mean my perspective. I’m interested in your perspective of the Bitcoin OG, but my perspective was Bitcoin was totally taking off as a medium of exchange. the graphs showed like the classic exponential take off pattern. not just for Silk Road, but also for like Argentinian kids would buy their Microsoft games with Bitcoin. all kinds of things in addition to it simultaneously taking off like an investment store of value financial use case all all at once.

And then what happened was it hit the scalability ceiling, and all these startups went out of business because they were counting on Bitcoin to scale so that they could keep doing their business. And they totally got mugged. and then it basically, like, bounced off the ceiling and went downwards ever since.

Right. It’s no longer uses fewer and fewer places you can. It wasn’t it. Vlad just posted something about how places he used to be able to spin. No he can’t.

Tyler Spalding 04:47:46 Oh, yeah.

Vlad Costea 04:47:47 All around Europe we used to have these shops like there was a guitar store where I was buying stuff. Like I bought my microphone and sound card with Bitcoin on that shop, and I was looking to buy some stuff for interviewing on the go. So basically some reporter gears and I basically filled my basket and then I was like, okay, I’m gonna pay with bitcoin now.

And then I realized there is no more Bitcoin. And then I fell into this rabbit hole of searching for shops that used to accept bitcoin and they don’t anymore. I realize there are at least 4 or 5 of them. And then I tweeted about it because I was disappointed or angry.

But I think it’s because of regulations. Especially there’s this mica thing that is basically the equivalent of the travel rule, Fatf in the US. And I guess these shops were getting like a dozen orders using that, that were paying with Bitcoin every month, and they just decided it’s not worth the headache, the legal expense and whatever.

Vlad Costea 04:48:55 They said, okay, we’ll just remove it. And it’s so disappointing because the price is at an all time high. But the usability as a currency is super low. And the only way in which I can actually use BTC to pay is to sell it in some way for fiat. And some people will say, well, you can just get this debit card and blah, blah, blah. That that’s not the revolution for which I signed up.

Tyler Spalding 04:49:22 Yeah a lot of it is. Yeah. How do you avoid some of that trap with the utility of Zcash. If you want it to be the spendable asset, how do people perceive it in that way?

And I don’t think there’s one particular right answer, but, something I’m thinking about all the time with just various assets and or synthetic assets, you know, the stable assets issued against sort of like the original bit gold model that goes way, way, way back. But before, you know, Bitcoin even the white paper. Right. That was even the original model was, you know, a gold like asset that then would mint the USD asset, the synthetic synthetic asset against it.

Tyler Spalding 04:49:59 sort of like the maker, dye model, like it was almost exactly like that. so, so yeah, I was just thinking about that of, like how that’s evolved. All right. Well, I need to jump. I’m sorry, but that was awesome. To to. Yeah. Nice to see you again. Yeah, likewise. So I’ll see you guys, later on. Thank you. And good luck. And you can do it, Zuko. You can make it so. So make it happen. I’ll be back after my dinner. I hope I’ll follow up from there.

Zooko 04:50:34 All right.

Tyler Spalding 04:50:34 Enjoy your dinner. See you guys. Yeah.

Vlad Costea 04:50:40 Okay. I hope that was an energy boost. I’ve been speaking with more people to join, but most of them are either sleeping or else they they want to stay away from the public eye for some reason.

Zooko 04:50:53 Yeah, I can sympathize.

Vlad Costea 04:50:56 I was hoping to.

Zooko 04:50:57 Get something like this again.

Vlad Costea 04:50:59 Beta double V, as I called him, but he doesn’t seem to have replied.

Zooko 04:51:08 Well, instead of, trying to go for the record, let’s just think about is there anything more that our audience wants to hear about or. That is really interesting and we haven’t talked about it yet.

Vlad Costea 04:51:23 I don’t think we talked about the transition from Zcash one to Zcash two and what that was about. I still feel like this whole Zcash versus Monero conversation can have a more in-depth comparison. And there are still some questions in the chat from people. And they’ve been piling up for almost five hours now.

Zooko 04:51:46 Okay.

Vlad Costea 04:51:47 So you get to choose the first one.

Zooko 04:51:52 wait, what am I out of those three options? I want to know what people are asking about in the chat. What is this chat you’re talking about, anyway? Is this Twitter?

Vlad Costea 04:52:03 It’s Twitter and it’s also YouTube where live streaming across both platforms. So let’s start with the beginning of these questions. someone says pay attention to Zuko. Still can’t believe this episode is actually happening. Brings back memories. Is? Someone asked one nine hour mark.

Vlad Costea 04:52:28 Okay, let me get to an actual question. Question from jackknife. Can Zucco talk about Vitalik Buterin, his role on the scientific advisory group at the Electric Coin Company? What does the SAG Group do for Zcash?

Zooko 04:52:46 Question. well, I’m no longer. Directly involved with the electric coin company. at the time, well, Vitalik was involved from basically the beginning. He was one of the advisors to the, to Zcash, I think at the launch, if not shortly thereafter. Let me give him some tiny fraction of the initial, Issuance of Zcash coins.

What has he done for us? Well, he proposed the dynamic fee market upgrade which other Zcash are shut down. So then he took it over to Ethereum and it became IP 1559. But now we’re hoping to bring it back to Zcash now that Ethereum is proving it out. it advised me a lot on technical topics.

Well I can’t think of any at the moment. He’s always been really into doing knowledge proofs and privacy, but recently it seems like, he’s more focusing on privacy than he used to.

Zooko 04:54:09 I remember he and I were on stage together at some conference, like about a year and year and a half ago. I believe it was right after the merge. Was two years ago. Whatever. And he said at the time that his focus, his focus or and or Ethereum as a whole focus was scalability, but that he considered privacy like an important future issue or something.

But now I’ve seen a couple of like, headlines, which looks like he. In fact, I recently saw a headline in which Vitalik apparently said that solving privacy is a civilization issue. I really agree with that. I just gave a talk in Dubai. It’s like a 12 minute talk. You want to go watch a short talk?

And he just basically said, like, every sustainable. Civilization ever has had ubiquitous privacy. Every conversation is assumed to be private. There’s no third party that has the opportunity to listen in on your conversations. In every transaction. Well, not every. Most transactions are private, and there’s no third party that can spy on or intervene in transactions.

Zooko 04:55:40 Only in the last 25 years or so have we begun this unprecedented radical experiment that threatens civilization itself of eliminating that. And so I really agree. If Vitalik is now on board with civilization needs privacy. And now I don’t know if that answers your question, I don’t know. I’ve interacted with Vitalik a lot and learned a lot from him many occasions over many years. I’m getting tired. I don’t remember things anymore. I need to drink my coffee.

Vlad Costea 04:56:14 There was a second part to the question that was asking for what does the SAG group do for Zcash? So it wasn’t just Vitalik, but also the scientific advisory group.

Zooko 04:56:25 Yeah, we had this great group of brilliant minds all along. I think the Essar Group kind of was a variation or an evolution of the original set of advisors, the few people that came and went over the years. What they did was basically just give feedback on a few technical questions about consensus protocols, mostly economics. Tokenomics I just really liked them. They were all geniuses and really nice and helpful.

Zooko 04:57:02 I miss them. But they didn’t do much. They were basically volunteers. I think we might have paid them like one ZEC per month or something like that to advise us. I just wanted to help Zcash, honestly.

Vlad Costea 04:57:21 Let me see if I can put the questions on the screen. But in the meantime, Hisense says we need Zuko’s PUBG nickname.

Zooko 04:57:32 No way man, that’s private. Screw you. See you on the battlefield. You’ll never know who hit you.

Vlad Costea 04:57:40 Another question from jackknife. There is no publicly available for full archive of the Cypherpunks mailing list, possibly because of controversial comments made on it. Zuko. Is it true that you have a full history of it?

Zooko 04:57:56 No, no. I’ve looked. I wasn’t ever able to find a full history of it either. and that thing about it might be a partial history due to controversial comments. Sounds like speculation. I never thought about it before. I just assume it’s a partial history because data rots and people lose stuff. Anyway, I can’t find it.

Zooko 04:58:22 I can’t find even all my own posts on Cypherpunks mailing lists, but, oh, well. Like my Google+ profile, it is probably consigned to the memory hole for eternity.

Vlad Costea 04:58:34 Okay, I put the chat on the screen.

Zooko 04:58:38 Oh, I see it.

Vlad Costea 04:58:40 Oh wait, we should watch the live stream.

Zooko 04:58:43 Yeah, I’m looking for the live stream.

Vlad Costea 04:58:46 Okay. Question did Zuko watch the HBO documentary that asserted Peter Todd is Satoshi?

Zooko 04:58:53 Nope. Not interested. I’m not interested in Satoshi hunting in general.

Vlad Costea 04:59:03 Well, that’s something that Satoshi would say anyway. Moving on.

Zooko 04:59:08 Anything can be said is something that you would say.

Vlad Costea 04:59:12 Nate said that the division of labor is limited by the extent of the market, and put a link for econ lib.

Zooko 04:59:20 That’s Nate. That’s, Nate, who I mentioned a couple times earlier, once was inventing network sustainability mechanism, which is brilliant and then was helping coin mint cross link. it was one of the co inventors of Zcash along with me Matt Green Ian Myers Andrew Miller we added Sean Bowe.

Zooko 04:59:42 But anyway.

Vlad Costea 04:59:44 Hi Nate. It’s good to have you. someone tried to answer the question about the archive. High sense that go go into the other experiences lol. He was referring to your time in Amsterdam.

Zooko 05:00:04 that’s I, I choose not to disclose at this time to this audience.

Vlad Costea 05:00:09 Jackknife says, I want to have some David, some early digit cash collectibles slash memorabilia. Impossible to find that Zuko have any?

Zooko 05:00:19 No, no, I don’t have a thing. But my memories.

Vlad Costea 05:00:27 Bitcoin. Carl says you guys talk about groceries yet? And I think it’s about your tweet where you said that you just bought $100 worth of. I don’t know exactly what. And you said you wish more people were able to do this, and somehow this turned into a meme. I don’t know why.

Zooko 05:00:43 Yeah, it was interesting. It was an interesting experience. It was like, a lot of people like two thirds or a majority of the people who responded to that perceived it as me, like flexing, because I said my tweet says something like, I love being able to go to the grocery store and buy whatever I want, even if it adds up to $100.

Zooko 05:01:04 I wish everyone could do this all the time. Something like that. And I think maybe because, you know, it probably is because, I previously transparently disclosed how much I was getting out of the founder’s reward. In the interest of transparency and in this recurring theme of, like, no good deed goes unpunished. It’s like information does not cause people. To gain the right context. I guess information comes.

Information needs context to be useful or something. But anyway, I just disclosed in the interest of transparency, I didn’t. I see a lot of other like opaque, manipulative, scammy bullshit. and so for Zcash, we always erred really far on the side of transparency, like we disclosed the names of every one of our investors And then I decided to disclose how much of the founder’s reward is going to me and the rough distribution.

There’s this trade off between transparency and privacy. Right? I wanted users to. Have a clear idea of who and how much Zcash, who was getting Zcash and how much of it, what the concentration or distribution of it was.

Zooko 05:02:26 Stuff like that. I wanted them to be able to like hold those people accountable later. Like, did you sell all your Zcash or what are you doing with it or something? But on the other hand, I didn’t want to expose people’s privacy. So I ended up with this middle point where I decided to just like, throw myself under the bus and expose my privacy.

To set an example. So I disclosed that I was getting 0.9% of all the ZEC at that time at the beginning, like 2017 or whatever. And. Much to my surprise. Crypto, Twitter and CoinDesk and everyone took this and completely the opposite way that I thought of it. Like, my point was, I’m not getting very much of this point 9%.

It’s a lot or it was a lot in 2017, 2018. But for the purpose of evaluating crypto projects and the distribution of money and power and stuff, you should ask other crypto projects to disclose similar, you know, numbers to you and compare them. Nick Carter wrote at the time something like Zuko was the least remunerated of any crypto founder.

Zooko 05:03:47 That’s probably true because that was the era of, you know, these scammy ICOs and stuff anyway. But yeah, so crypto, Twitter and CoinDesk and whoever made me the poster boy for a person who gets rich from founding a coin, which was almost the opposite of what I think is accurate and what I intended by disclosing my point 9% cut anyway, was my point. Oh, and then in that context and then the price of Zcash was going down, I think by then.

And then in the context of Zcash going down and people having heard that Zuko is profiting from Zcash, then I tweeted, I love being able to buy groceries. I wish everyone could buy groceries, because I’ve been through some tight times where you couldn’t buy all the groceries you wanted and you had to pick and choose or like go back and put something back if you didn’t have enough at the end. You know, stuff like that. and that was very, you know, impactful and stressful experience. And a lot of people have that kind of experience.

Zooko 05:04:55 And one of my things that I’m most interested in, like in society at large is. Could we just make everyone rich? I think we can just make everyone rich. Or almost everyone. Like we’ve already done it over the last hundred years or whatever. Made several billion people at least middle class or comfortable where there used to be poor.

Let’s just do that again and again. Let’s just make, you know, like 90% of everyone, like, basically rich, like way richer than we are today. I really like that idea. And I also like because I really like economics. I like the thinking that making everyone rich in real terms, not nominal terms, is where people confuse.

Like, if you just give everyone $1 billion, all that does is make dollars worth less, which we’re probably going to be finding out in the near future. But in real terms, like you could like humans have the capacity to create like endless value and resources and help for one another and inventions and stuff. And then in economic terms, I think it’s making everyone rich in real terms.

Zooko 05:06:04 Is that the same as reducing the prices of everything? Like what if let’s forget about inflation. Let’s assume that dollars actually held the same value year after year for the time being. What if we could cut the price of everything to one tenth? Is that what they call deflation? And they think it’s bad for some reason?

Whatever. My point is, I really care about poor people not being able to afford all the groceries they want, especially if they have children, which I did. but in the context, maybe because it came out after the Zucco was rich story, or maybe because it came out when Zcash was going down and people were suspicious that like, I’m getting poorer.

Where’s the money going? Maybe Zuko is stealing it. I don’t know. But a bunch of people took that tweet of mine as like a flex, like, look at how successful and wealthy I am. Sure enough, on the boat or whatever. We have a few people, like quite a few people also responded saying, no, I hear where you’re coming from.

Zooko 05:07:04 That really hurts. It sucks. I’ve been there, man. Anyway, that’s the story of the groceries, and now it’s just become like, I think the for for years there was pretty substantial hate with the groceries joke slash meme. And I think the the implication or the energy behind the joke was you’ve lost money on Zcash and that’s because Zucco is profiting off of you. but now that stopped me because Zcash just stopped going down so bad. but now it’s just a joke about groceries. Now I just laugh. I used to flinch. Does that answer your question about groceries, Jack or Carl? Whoever. Carl.

Vlad Costea 05:07:46 Anyway, to answer his question, yes, Zuko did mention that he goes to Chipotle or something And pays 20 something dollars in Zcash using flex. So that yeah, we did discuss that.

Zooko 05:07:58 We covered it.

Vlad Costea 05:08:01 Up. Okay I’m scrolling. Jackknife said ordering two Papa John’s pizzas right now because I know this interview is going. Eight hours minimum.

Zooko 05:08:13 No, no, I’m just gonna keep going until I’m tired of listening and talking.

Vlad Costea 05:08:19 He also added that the stuff that you said is exactly what Satoshi would say to remain private.

Zooko 05:08:25 Yeah. Yeah. You can’t win. No, seriously, I don’t like. I like respecting Satoshi’s privacy.

Vlad Costea 05:08:33 So are you trying to imply that you might know who that is?

Zooko 05:08:38 No. What I’m saying, like it’s a good principle. Like. Yeah, I wouldn’t tell you if I did, but also I don’t. But also, it’s a good principle that I don’t know, like there’s this notion that someone who’s sufficiently important or prominent or something shouldn’t have the same kinds of rights as anyone else.

It’s like if the paparazzi were pointing cameras through your window, that would be a violation. Maybe you could call the cops on them. At least everyone would agree they’re in the wrong.

But if they’re doing it through some movie stars window, then maybe the movie star deserves it or we can’t avoid it or something. I don’t know, but just as principle like so she’s totally a hero of mine. Really seem to come from my culture.

Zooko 05:09:19 Like, even though I don’t know if I knew them under another name, they just seem to come from the cypherpunks like mindset, culture, whatever. But anyway.

Vlad Costea 05:09:32 Do you ever think about this that Zcash could have been more successful if someone likes to tell she or Satoshi himself had launched it, meaning that there was no company behind it, and it was just this rough code that was deployed on the internet and the community picked that up.

Zooko 05:09:50 No, I mean. The good question. I think. One of our investors encouraged us when we were setting up in late 2016 or so to think of Zcash as like that, like, a one shot disposable project. Like launch it and then scatter before the government finds you to stop you or whatever. And I said, no, it’s going to be a long term project. It’s going to require continuous loving care and upgrades because people change. The world changes. Anything static is going to become irrelevant.

Vlad Costea 05:10:45 Okay. So you believe that there is no way for Zcash to become a successful project if it was launched just like Bitcoin?

Zooko 05:10:58 No, I’m more interested in long term adaptation.

Zooko 05:11:05 The ongoing sustainability and the dynamic pattern of evolution and the existence of feedback loops is what I think is more important than over the course of 5 or 10 years than anything else. If you don’t want to go into it, you can say, well, what would have happened if we’d launch the cash and on October 28th of 2016, and then there hadn’t been a founders reward or a leader, a death fund, so there was no further funding baked in for the ongoing improvement of Zcash.

The one thing you can say is that version really sucked, right? We we launched as soon we. We hastened to get it live. So that both the technology and the coins could get into people’s hands before the government ever noticed.

I found out about it, decided to regulate it, and we succeeded at that. But there’s this nice rule in Silicon Valley. It’s like, if you aren’t embarrassed of your first product launch, then you waited too long to launch. We’ll see you at one point. Oh, you couldn’t run it on a mobile device.

Zooko 05:12:16 It required a laptop and a pretty strong 2016 laptop. And if you went to make a transaction, it used up all your Ram and heated up your CPU for like 40s to generate that transaction. But anyway, regardless of that, the fact that it’s not on a mobile phone right there is a non-starter. But my point is that launch was pretty phenomenal.

It was the product of about two years worth of work. It cost $3 million minus some change, like maybe two and a half or something million dollars. It was the product of a really amazing team that I was fortunate enough to to meet and pull together the superhero team, but it was a shitty product, right? No one could use it.

And like most of the the value of Zcash has come out after then, including, usability and product features like the app we mentioned and the Alexa integration that Tyler Spaulding was part of. So it makes it practical and useful and like convenient for non-specialists who are not enthusiasts or ideologues, but just like, like to buy burritos without exposing their personal information.

Zooko 05:13:39 Also, a whole bunch of scientific innovations like between Zcash 1.0 and today, not even counting tachyon. If we just go up to Zcash 3.0, which is like the current generation of Zcash, that’s several major leaps forward in humanity’s knowledge of zero knowledge graph cryptography that didn’t exist. And when we launched in 2016. See my point?

We could have stopped in 2016, but that would have been a pretty meager contribution to mankind compared to what we’ve got today. And that what we got today comes from the devotion and energy of the Zcash peers and the team, and the support of all these other people who care about it, like Tyler Spaulding. And from the money from the Zcash issuance, 20% of it going to fund development.

Vlad Costea 05:14:35 Okay. I met some guy also at the same event in Mexico. When Autopia was saying that he is into Pirate Chain and he was trying to sell me this idea that there are basically Zcash, minus all of the stuff that concerns the company, or allocating part of the mining rewards to the company or to the developers.

Vlad Costea 05:14:57 And they said, well, we’ve worked the code. It’s it’s launched just like Bitcoin and we are the true Zcash and blah blah, blah. And I wasn’t entirely sold on it because I said to him, well, you guys are bound to always be backwards and you have to just copy and paste the code, but you’re not really pushing anything. You’re not. So you’re not fulfilling the purpose of Zcash. You’re just another network that runs Zcash code. And maybe that’s useful in some way. But what do you think about Pirate Chain?

Zooko 05:15:31 I’m really glad it exists as, a data point. And before Pirate Chain there Chandler was the Cash Classic, which launched shortly after Zcash launched. And the whole point is Zcash Classic. Well, the the public, the, the public records, everything that I knew at the time about Zcash Classic was that it was like open source ideologues who wanted to eliminate the bounties reward part in order to make it fairer or whatever. and the private chain, in addition to eliminating I don’t know what they do with rewards, but the main thing I know about Private Chain is that they eliminate t addresses.

Zooko 05:16:18 So you can’t you can’t hold your ZEC transparently on parachain. And I really like those things because I think it’s a really good. Focus for people who think Zcash ought to have that.

But for years people would say, you guys should be great if it would just eliminate the dev fund or the founders board or whatever. And occasionally some other people would say, oh, in other words, it would be Zcash. Was easy. Classic. Similarly, with Private Chain, I think it’s a tiny, unreliable, sketchy project.

I don’t know much about it, so sorry if I’m wrong. but the main thing I see about it on Twitter is that they’ve eliminated t addresses. So now that you’ve reminded me about this, maybe from now on, when I hear people say they want to eliminate T addresses from Zcash, I’ll say, oh, while you’re at it, see how it works on private Chain first?

Vlad Costea 05:17:20 I guess this is useful for people who are concerned that there might be inflation bugs or something.

Vlad Costea 05:17:25 And if there is any issue with that, and there are no T addresses and no way for you to verify the supply the old way, like actually moving funds out of the anonymity pool. This can be a good way to prove that Zcash works as designed.

Zooko 05:17:45 I’m not sure your question, but I do have something I could add about that topic. Pretty good question.

Vlad Costea 05:17:51 So you mentioned that a good way to verify the supply at every step in Zcash is to make amounts public when you’re going out of the anonymity pool. Right.

Zooko 05:18:04 Well there’s this concept called a turnstile. And it can be separated from the concept of t addresses. You can. The consensus rules can require that Zcash, which moves from one anonymity pool into another, that the amount moved is revealed publicly. And that’s sufficient for a live, Publicly verifiable audit of the amounts. Well, without compromising end user privacy very much. So you can do that without addresses or with addresses.

Vlad Costea 05:18:48 Why was it necessary for Zcash to have this setup, which in hindsight is a bit messy? You have the T addresses which are transparent just like Bitcoin, and you have the Z addresses which are the ones that have the privacy.

Vlad Costea 05:19:03 They are the shielded ones. And more recently you added the U addresses which are the unified ones which are indistinguishable from someone looking from the outside. And why was it necessary to have this design? And what is the difference right now between the U addresses and the Z ones?

Zooko 05:19:23 Why was it necessary to have what design.

Vlad Costea 05:19:26 To not have what pirating has already? meaning only the shielded side of transactions.

Zooko 05:19:34 Why have three addresses?

Vlad Costea 05:19:35 Yeah.

Zooko 05:19:37 well, at the time, it was Nate Wilcox’s call, and his reasoning was. And I agreed with it at the time. We’re talking like, pre-launch 2016, maybe late 2015. His reasoning was, ease of integration with all the Bitcoin apps and services out there. They can all just reuse their bitcoin code, their code for interacting with Bitcoin, and they can use it to interact with Zcash with the T address. And I agree that that would be valuable. Much later I changed my mind and decided there’s another like better reason for t addresses, which is that transparency is a good feature.

Zooko 05:20:22 A lot of good uses. my favorite is a custodial service that’s holding Zcash on behalf of someone else. Like an exchange, it ought to store that Zcash in that address so that everyone can have a real time live audit of what it’s doing when it moves it.

And that happens in practice, like people have been tracking, finances Zcash wallets recently in order to see when it’s moved, how long since it’s moved, how much is left in different wallets and stuff like that. I think that’s really helpful. likewise with decentralized exchanges. They don’t they’re not custodial in the sense that there’s a human who has the option of taking your money and fleeing to Mexico.

But there there’s a bunch of information, like in Uniswap and in the Dex, like Maya, about how much money is moving through these various processes and coins. And I think society is better off if all that information is public in real time. So tea dresses are perfect for that. there could be other reasons. Like you might want. You might be like a non-profit or a government, and part of your governance structure is.

Zooko 05:21:39 I hereby swear that all my Zcash, I will keep in this transparent address so that everyone can monitor if it gets stolen or when it gets used, how much got used, all that stuff. So basically now I’m solidly in favor of t addresses because I think transparency is a really useful feature in some cases.

Vlad Costea 05:22:02 Right. So would you say that the existence of transparency affects privacy in any way or does it supplement it?

Zooko 05:22:12 I think it’s that’s a good question. A lot of people have differing opinions about this. I think my main, my main opinion is it doesn’t really have any effect. Like you’ve got that phone you showed us earlier, you have a Zcash wallet, you have zero or more Zcash in there. I didn’t really see your balance when you hold it up.

Vlad Costea 05:22:37 Oh you can’t.

Zooko 05:22:39 Okay. It was in like privacy mode. So it didn’t show your balance. Well yeah. Basically there’s this notion of the anonymity set or the size of the anonymity pool. And it it relates in a different way.

Zooko 05:22:54 It’s different, but similar to the thing we talked about earlier about hiding in a crowd. We were talking about hiding in a crowd or. Like adding decoy trails on top of your real trails or whatever versus not emitting information about yourself. And there’s this notion of the anonymity set at a technical level.

It’s a simple well, it’s not that simple, but at a technical level, there’s this notion of like, suppose you get a transaction, you look at your wallet, somebody’s sent you one side and it says, hi there, glad. Thanks for the podcast, love anonymous. And you say to yourself, I really want to figure out where this debt could have come from.

What what what do I have to go on? Now, the people who naturally sort of intuitively assume that it’s like it’s a hiding in a crowd kind of thing. They’re like, How many people used Zcash in the last hour or whatever? If you look closer, it’s irrelevant. Like the person could have or that’s not that information is not visible to you or to anyone.

Zooko 05:24:11 You know what I’m saying? You’re scrolling.

Vlad Costea 05:24:23 I just put the chat on the screen. Sorry.

Zooko 05:24:30 my point was point about the anonymity. Said, okay. So basically, no, I don’t think people using t addresses detracts from your privacy when you use Zcash. Another part of that is I think the Zcash anonymity set on chain is basically already big enough to be big enough for all practical purposes. So it doesn’t really matter if more people use it or if people currently using it stop using it. That doesn’t change anything, if that makes sense.

Vlad Costea 05:25:06 It does because it’s it’s by design, different from what you get in a coinjoin in Bitcoin or on Monero, where your privacy is given by the amount of participants joining the system representing at that exact time. But the way in which Zcash is designed with zero knowledge proofs is to give you the anonymity of basically every user who ever used it. Right?

Zooko 05:25:33 Right. And yeah, right. Like when you receive a transaction. You could ask yourself like the UTL that this came from like now this is my Zcash coin.

Zooko 05:25:58 How long ago did it take its previous hop. Right. Like, how long has it been sitting? Did did someone just receive 1.0 Zcash like one minute ago. And then they turned around. Give it to me.

So now it’s mine. It was one minute old. Or was it a year old or six months old or two years old or whatever. That’s the question. And the thing is, unlike you say. Just like you’re saying, unlike with Coinjoin.

And when you’re doing anything else, there’s zero information to you about whether it’s one minute old or four years old. It depends on when the technology was deployed and people started using it. Maybe six years old, depending.

Vlad Costea 05:26:41 Also, can you tell if a certain address sends or receives transactions? Obviously you can’t see the balance, but can you tell if it received a number of transactions or if it sends out any transaction?

Zooko 05:26:55 Great question. Is that from you or is that from the chat?

Vlad Costea 05:26:58 No, it’s from me.

Zooko 05:26:59 Oh yeah.

Zooko 05:27:00 That’s a great question. A really good way to answer it is to, open up Block Explorer. Can you do that on your chat? No. Never mind anyway. Go to I recommend.

Vlad Costea 05:27:11 Three.

Zooko 05:27:12 Three Even though they’re not sponsoring your podcast. And they should. It’s just a podcast that doesn’t have a lot of ads, because I hate ads, and it has a lot of accurate data about a lot of blockchain’s great exploits. I know your ads are some of the least hateable ads I’ve ever heard. They’re almost not even ads.

Vlad Costea 05:27:37 Okay, I’m. I’m on free expo.

Zooko 05:27:40 Okay. maybe get a. Zcash address. Let’s find a zcash address.

Vlad Costea 05:27:52 Where do I just find the Zcash address.

Zooko 05:27:55 Well people post them all the time on Twitter. let me see if I can find one. who are there any Zcash out there who posted any cash addresses recently?

Vlad Costea 05:28:07 Let me put my own just in case. I don’t want to duck someone else’s address. This is my show. I’ll put my address.

Zooko 05:28:14 Okay.

Vlad Costea 05:28:16 But I have to go to. Copy this and then send it to myself.

Zooko 05:28:23 You might learn something about unified addresses containing transparent receivers. When you do this experiment.

Vlad Costea 05:28:32 Yeah, I want to see that.

Zooko 05:28:34 Somebody recently got bitten by that. And then there’s a few folks immediately announced that they were removing transparent receivers out of their addresses. So I think I think that’s the current state of the art.

Vlad Costea 05:28:49 Okay. So I have this address, I pasted it, it’s super long, by the way.

Zooko 05:28:55 Is it begin with a U.

Vlad Costea 05:28:57 Yes it does.

Zooko 05:29:01 I have another suggestion. Open a website called Zcash dot space.

Vlad Costea 05:29:06 So on free Expl it says there are no search results found for your request you said. Zcash space.

Zooko 05:29:14 Yeah three Expo should be upgraded to parse that for you. But Zcash dot space will parse it for you.

Vlad Costea 05:29:22 It says the address is valid normalized I get this address once again. Address type unified UA receivers. Doesn’t see anything here.

Zooko 05:29:36 I’m trying to find the. Oh here we go.

Zooko 05:29:39 I somehow lost your screen cast. All right. So there’s I can’t really see it. I see Sapling Orchard and I don’t see what’s at the top. Normalized.

Vlad Costea 05:29:51 Yes.

Zooko 05:29:52 Oh. That’s interesting.

Vlad Costea 05:29:55 What is.

Zooko 05:29:57 What’s interesting is there’s no transparent receiver in there. But anyway, cut and paste one of those. Make your orchard address and this will answer your question right?

Vlad Costea 05:30:12 This result is due to the fact that I never sent to a non shielded address.

Zooko 05:30:22 No, I think this means the version of Sashi that you are running has removed transparent receivers from your unified address. Does that make sense? But I was originally trying to answer your question. Your question was can people see how many transactions a given address was participated in? So I have a suggestion to be the one that starts with zts. It says sapling address.

Vlad Costea 05:30:51 Yeah.

Zooko 05:30:52 Copy that one. Yeah. And paste that one into three.

Vlad Costea 05:30:57 You said 3XBL okay. Still it says there are no search results found for your request.

Zooko 05:31:10 Oh, right.

Zooko 05:31:10 Well that’s fair. Right. So the answer is shielded. Addresses never appear on the blockchain.

Vlad Costea 05:31:20 Right. So let me go back. This is my unified address. Can I do anything with this? Can I see anything about it?

Zooko 05:31:31 No. You need to see anything interesting. How about this? Withdraw some Zcash from Binance or Coinbase or something.

Vlad Costea 05:31:41 I don’t have any of these exchange accounts. I’m sorry.

Zooko 05:31:45 So I shift. Oh sorry. Doesn’t support Zcash. Oh all right.

Vlad Costea 05:31:50 Maybe what was the other one that supported privacy.

Speaker 12 05:31:53 Let me.

Zooko 05:31:55 Get a.

Vlad Costea 05:31:56 Fixed.

Zooko 05:31:56 Address out of Sasha and send it to me or signal.

Vlad Costea 05:32:00 So do what?

Zooko 05:32:02 Get it to address Sasha, if possible, I assume that’s still possible.

Speaker 12 05:32:07 Maybe try swiping.

Vlad Costea 05:32:08 Oh, yeah, I do have a transparent address.

Zooko 05:32:10 Okay. Signaling to me real quick.

Vlad Costea 05:32:12 Okay. Oh, if you send me any coins now, I’m going to fuel the conspiracy that you paid me for this.

Zooko 05:32:21 Oh, shit.

Vlad Costea 05:32:23 I got busted.

Zooko 05:32:25 Can I send you 1/10,000 of a zcash? Is that. I’m sorry. I’m no good. I’m no good at not fueling conspiracies. You may have noticed.

Vlad Costea 05:32:41 Okay, so I sent you a t address. Let’s see what happens.

Zooko 05:32:52 Okay. I’m cutting and pasting the T address. I’m clicking send and pasting in the tea address. And I’m putting 1/10,000 or whatever. Now, the question you were asking was, can you tell how many transactions, even if you can’t see the amount? So basically the answer is no. You can’t tell even how many transactions the Z address that you pasted into the block Explorer just shows like there’s no such information, right? It just says no hits or whatever. Because the Z address never appears on the blockchain at all.

Vlad Costea 05:33:50 Okay. So should I expect something to happen in my wallet?

Zooko 05:34:00 Yes, although it might take some seconds or minutes. Unfortunately, this is like the current user experience problem. In my experience, I spent a lot of time onboarding people onto Zcash and watching carefully how it works for them and has improved many of those steps, like eliminated the steps like this.

Zooko 05:34:21 The best improvement is eliminate the step entirely, but the one that is now the residual worst step is this one that you are now experiencing, which is somebody told me that they paid me. How long do I wait to get it? All right. That wasn’t so bad. Good job. I think we got lucky, but she said they were going to prove that maybe they’ve already started improving it. okay, so now you can cut and paste your t address into the block Explorer, and now you will see a lot more information because your t address is Bitcoin like and that it is transparent, like it’s publicly visible everything.

Vlad Costea 05:35:03 Also copy the transaction ID or the address.

Zooko 05:35:06 Yeah, that’d be perfect. Yeah.

Vlad Costea 05:35:08 Okay. Sorry if this is boring for some people, but for me, it’s really fascinating.

Speaker 12 05:35:18 Yeah, for me it’s fun.

Vlad Costea 05:35:23 But this is how you prove how a privacy system works. You you do a live demo.

Speaker 12 05:35:30 It was a huge.

Zooko 05:35:31 Change for me, like two and a half, maybe three years ago when I stopped arguing with people and started just offering to walk them through a demo.

Zooko 05:35:44 It’s like.

Vlad Costea 05:35:46 Free expo.

Speaker 12 05:35:47 People.

Zooko 05:35:48 People seeing it, people experiencing it really causes these light bulbs to go on over their heads, which my explanations totally did not accomplish.

Vlad Costea 05:35:58 Right. So this is what happened. You sent from the sapling pool to this T1 address, which is mine. This is the amount of Zcash that you sent.

Zooko 05:36:09 So so the first thing to notice is my address doesn’t appear.

Vlad Costea 05:36:15 Yeah. It’s from a pool.

Zooko 05:36:17 This is the entire transaction. Like all of the publicly visible information is shown here. My address is not in it. Your address is because yours is a T address.

But my address isn’t because it came out of the shielded pool. So no address is shown. Is the address is known only to my phone. Only to me, not to the block explorer.

Not to your phone, not to any miner, not to any third party. So that’s the answer to your question, is that not only our third party is unable to see how much you received, they’re literally unable to see that received anything, or how many times or when Or that your address even exists.

Zooko 05:36:56 They literally don’t know your address or anything about it unless you choose to share it with them.

Vlad Costea 05:37:04 Oh, interesting. It seems like I did receive other transactions to this transparent address.

Zooko 05:37:10 Right. So this is the thing that recently. Surprised a user in a negative way. They were thinking. They should get full privacy because Sashi showed them like a unified address and it was called shielded. Like here for your shielded address. Here for your transparent address. So they chose the shielded one. And then they were unpleasantly surprised to realize that the unified address, which she had called shielded, actually contained a transparent address that was linked to other things. So I think that’s why Sashi just now apparently remove the transparent address since you don’t have one in yours.

Vlad Costea 05:37:59 Okay, I wish I hadn’t shown this, but it’s useful. I’m sorry.

Zooko 05:38:04 I just happened again. This is a really good, data point. Next part of the. Demo is look at your UI and click shield only funds.

Vlad Costea 05:38:21 Yeah, I think this is far less than.

Vlad Costea 05:38:24 I think it barely pays the transaction fee, I think. But let’s see for now.

Zooko 05:38:30 It’s still basically paid you. Yeah, I sent you about enough to afford one transaction fee.

Vlad Costea 05:38:35 I think it still says receiving, which means I’m waiting for a certain number of confirmations.

Zooko 05:38:41 Yes.

Vlad Costea 05:38:44 So until I get the right amount of confirmations, let’s take the next question from the chat. Okay, now I need to crop this once again to only include the chat. This is what happens when you’re dealing with a live situation. Oh, okay. This is better. So jackknife says question can Zuko talk about his investments in iron, fish and Nim?

Zooko 05:39:20 Yeah, I didn’t invest in either of those or almost anything. I’ve made very few investments. I invested in Agora many years ago. It was new, and I invested in Ingonyama, which makes hardware acceleration for zero knowledge proofs. I think that might be it. But anyway, I didn’t invest in Iron Fish or Nim. I was friends with the founder of Iron Fish, Elena Alinsky.

Zooko 05:39:53 I like she asked me for advice. I gave her advice that I was hoping would be helpful. I posted about Iron Fish when it first launched and by the way, they recently sold out to, I believe, Coinbase slash bass I think is who they’re there. They join their team now. So that’s promising that Coinbase slash bass might be trying to add privacy features.

Nym also haven’t invested in them. Also haven’t been invested in them. I’ve known the founder of Nym, Harry Halpin, for many, many years, and I’ve read some of the science papers of some of the other, NiMH employees. and I’m very excited about the Nym technology, because it’s yet another one of those things that was invented by David Chang in the 1980s.

And, it and I think Nim it’s a mixed net, a mixed net is different from an onion router, named as an example of a mixed net, or is an example of a router. Onion routers can’t protect your identity from an attacker who can passively view both ends of your Tor connection.

Zooko 05:41:06 So if you open a door connection and you’re on like Centurylink ISP and us and you connect to a server and that server is also on Centurylink in US, then Centurylink can tell that you just connected to that server, regardless of whether you’re using Tor. So that’s because of timing, which is actually very closely related to this topic. We keep talking about about you can’t add privacy to money, and you can only have privacy to money and rest. I mean, so name is a mixed net. It has a better chance. I think you should, invite Harry Hellman from to your podcast.

Vlad Costea 05:41:44 I had him on, like, three years ago, and I did meet him like a couple of weeks ago in Amsterdam and also got some food from my girlfriend. Thank you very much. Oh. Anyway, he said he would join the show later this year when they launched something, which I don’t remember exactly what it was. It’s just that they are so obsessed with getting this design right that they don’t want to do too much media before they actually have something really that really makes them proud.

Vlad Costea 05:42:16 And I think they launched their VPN. Was it last year or this year in recent months anyway? It’s pretty good. It has this mixed net feature and I did try it. I’ve also posted I did something which is not recommended by anyone in privacy.

I basically bought an account and I posted they use Bip 39 seed phrases for it, which is interesting. I posted that on Twitter and I said, anyone who wants to try it, you can basically use it for free for a month. I hope they didn’t use it for anything shady. But yeah, I’m excited about it. I also got rekt buying some of the tokens.

But that’s that does not affect in any way the way in which I perceive this project, because it’s useful for everyone around. And also, I gotta ask you, because you mentioned this like four hours ago, I think that Zcash does not have network level privacy. Yeah. And why is it not embedded in the protocol to use Tor or Nim or something like this.

Zooko 05:43:29 Why what.

Vlad Costea 05:43:30 Well why is it not embedded maybe in the wallets or something as part of the user experience to also wastewater.

Zooko 05:43:37 That’s all folks are adding that they’ve already added, Routing over Tor for fetching the exchange rate. So when you open Xhosa, you click send. It has a ZEC field and a USSD field. Or maybe for you it has a Romanian. Euros or whatever.

Vlad Costea 05:44:00 Now we have our own bitcoin okay.

Zooko 05:44:05 and that is currently fetched over. Tor to try to reduce leakage about your activities to the the server that’s giving you the exchange rate and the server that gives you the exchange rate is centralized exchanges, which you probably don’t want to be exposed to. So I really appreciate that the SEC engineers were so thoughtful.

And then they tried to make it really reliable for the user by fetching like multiple exchange rates for multiple different exchanges over Tor. tour. And then once they got 2 or 3 or something answers, they would able they’d be able to provide you with an exchange rate. It would be more resistant to manipulation that way, in case one exchange was giving you a bogus exchange rate.

Zooko 05:44:52 But in practice, it usually doesn’t work for me. When I opened my sushi and I want to type in $10 and have it converted automatically to me for me to check two thirds of the time. I can’t like it is or is taking too long or something’s not working.

But they did announce recently folks that they’re right now and quickly and soon adding routing transactions over core, which again, I really appreciate. Like, I think that information leak at the network level is the worst danger, the worst privacy leak in Zcash today. And. I really don’t want to say anything negative about any company folks. They’re kicking ass. It’s actually the most useful thing ever.

It’s an infinite amount of work, and nobody understands how hard things are. so I definitely don’t want to be, like, bitching from the sidelines while they’re doing all the work. But I must say, board doesn’t hide your connection. If you and sir are both on the same ISP, or if the NSA is spying on you and also spying on the server, etc..

Zooko 05:46:17 So I’m really excited about Nim.

Vlad Costea 05:46:21 Yeah, Nim is great. Anyway, I did receive the amount. Oh, yeah. No, it says received.

Zooko 05:46:29 What were we going to do? Oh, I wanted to show you how sassy.

Vlad Costea 05:46:33 Shields? Yeah.

Zooko 05:46:35 Yeah. It’s very like it’s very much the default. This is one of my annoyances at the world, especially at would be erstwhile competitors saying that Zcash is problem is that privacy is not the default, but it is that that is the default right there. That’s happening.

Vlad Costea 05:46:54 Okay. So what what happened on the block explorer side. Does it look at that.

Zooko 05:47:00 If you don’t mind you might want to hesitate to show it again since you didn’t want to show your transaction history to all your viewers.

Vlad Costea 05:47:07 It’s already, you know, public by now.

Zooko 05:47:11 Okay.

Vlad Costea 05:47:12 The damage is done. They’re gonna come at my door for shielding. How much was it? to zec. So it still shows that I received this. Let me look at the transaction ID.

Vlad Costea 05:47:32 It came from the sapling pool. It went to this output. It wasn’t shielded yet. Right. It’s still in the transparent address.

Zooko 05:47:43 okay, here’s the history of this transparent address. Right. I think maybe the block explorer has not yet seen the shielding transaction that you’ve just initiated.

Vlad Costea 05:47:57 Okay, we can look in ten minutes or something.

Zooko 05:48:01 Yeah, even one minute probably.

Vlad Costea 05:48:05 Let’s go back to the chat because there was a comment by jackknife. I hope that it’s visible. He said Mark Miller, an OG with building the internet and early crypto pioneer. I thought Zuko just call him Marcus Miller, but he said Marcus Miller.

Zooko 05:48:22 Yeah, that’s a little initial. What I call him.

Vlad Costea 05:48:27 Dollar crypto said I’m all in for ZEC, But is there a Dex with enough liquidity to swap in size with little slippage? Please let us know, sirs.

Zooko 05:48:40 I don’t know for sure there are two Dex’s, so there’s. I keep forgetting that side shift is reduced. Hold side shift to put cash back. Dang it.

Zooko 05:48:50 Anyway, there are these instant exchangers that are custodial and could steal your ZEC in the middle. like side shift. Except the other ones that actually still support ZEC. There are two Dexs Maia and Ma I and near in E.R.. I’ve seen quite a few reports of people trying to swap other things for Zcash and Zcash for other things, usually with success, but I don’t know about liquidity, depth, size and slippage.

I did look at, I don’t know where to find it now. I looked at a graph of like the amount of liquidity that was posted in a pool on one of those. And it was only like $30,000 worth at the time I looked. That is any help.

Vlad Costea 05:49:43 Okay. There’s also a question from this guy who says I’m interested in mining, but there’s not enough content out there for a newb like me. So where do you start with Zcash mining?

Zooko 05:49:57 I don’t know, that’s a good question. I haven’t heard that question. The only miners have been professional, full time miners with giant farms of Asics for the last several years.

Zooko 05:50:08 The only thing I know for sure is that it’s not worth trying unless you own a mining ASIC.

Vlad Costea 05:50:17 So what kind of algorithm is Zcash running for mining? Is it Blake free?

Zooko 05:50:23 No, it is an algorithm called equi hash.

Vlad Costea 05:50:26 Oh the one that was used by Ethereum, right?

Zooko 05:50:30 No that was called ETF to cash.

Vlad Costea 05:50:35 Different. But I do recall slush pool was mining Zcash. Until slush left. Someone in the comments said that the best dex is ray of finance near bridge zec to near pool highest liquidity.

Zooko 05:51:00 Okay that’s useful intelligence.

Vlad Costea 05:51:03 And zero. Dart said that Maya is still a bit clunky at times and liquidity is not very big yet.

Zooko 05:51:11 Zero notes is a really good. Zcash Zcash.

Vlad Costea 05:51:18 This guy dollar crypto also said I think that the lack of available liquidity venues is what keeps ZEC from soaring.

Zooko 05:51:26 Yeah, I think liquidity is super important. but I’m not personally doing anything about it. Nobody else’s job. I hope that liquidity attracts liquidity. The Dex’s are both brand new. like, they might not even have fully battle tested UX.

Zooko 05:51:44 Like, Zaki, for example, is talking about integrating. I mean, the Electric Coin company, the makers of Sashi, have been talking about integrating the Dex’s Maya and or near into sushi. That would be awesome. That would be good UX. that hasn’t even happened yet.

Vlad Costea 05:52:01 Fnatic 89, says hi Zuko plus Vlad. Hi fanatic 89 with a FF. okay, there is a conversation here happening and I’m scrolling past it. They were talking and I ignored this and it’s really beautiful. Hisense said 100% privacy is normal. That culture is critical as well.

Zooko 05:52:43 Yeah, that was a great invention. Just afraid privacy is normal, which Zcash came up with. And now a lot of people have adopted it throughout the crypto industry.

Vlad Costea 05:52:54 I did see that. What’s it called? Generation Zcash or something. Gen Zcash. Oh yeah it’s a U not YouTube account. It’s a Twitter account where they post these TikTok style videos. And there was one with yourself basically being Sisyphus with a large Zcash logo or something.

Vlad Costea 05:53:17 And I think they ask you, what do you do for a living or something? And you said, well, I’m Cash’s biggest cheerleader and privacy is normal. And I read the comments and people are like, yeah, privacy is normal, but Zuko is not.

Zooko 05:53:35 That was fun. There’s more of those. I’ve been reading mean tweets. Apparently, reading mean tweets is a thing. On TikTok, you can see celebrities reading mean tweets about themselves as much as you want. Nowadays isn’t just the internet grant.

Vlad Costea 05:53:51 People watch that. It’s like you remember the React to React videos.

Zooko 05:53:56 I never actually watched them, but I heard of them.

Vlad Costea 05:54:02 Cause Fang says, I’ve been curious about Zack for a while, but never messed with it. I’m considering it. Where is it usable?

Zooko 05:54:10 Great question. Like does he want to? Does he live in a country where you can buy Chipotle? Does he want to Wanna just mess with a wallet? You can send a donation to Vlad’s wallet now.

Vlad Costea 05:54:27 Oh, no.

Vlad Costea 05:54:28 Don’t.

Zooko 05:54:28 My donation wasn’t enough to cover a transaction fee.

Vlad Costea 05:54:33 It’s all good. That’s why I have sponsors. That’s what a lot of people don’t understand. I met some guy in Amsterdam, and he was like, oh, man, you can charge like five K per episode with your followers.

And I’m like, no, that’s exactly why I have sponsors, so I can choose whoever I want to interview. And yeah, a bunch of sponsors. I’m not gonna name any names, but they asked me, why do you have multiple sponsors? And I was like, it’s what gives me more resilience. You know, it gives me leverage. It’s interesting.

It’s more liberating for myself in terms of just choosing who I want to interview and what I want to do with my content, because if I only had 1 or 2 sponsors, they would have more control over my content, right? And it’s like a quorum that, Yeah. Never tells me what I should do. And I sort of enjoy it.

Vlad Costea 05:55:23 And I don’t think this interview could happen if I had just one company telling me. Well, I don’t think that will bring in the views. Or it’s out of top off topic compared to the rest of the interviews. I think it’s interesting in the Bitcoin context, especially because Zcash is an improvement over Satoshi’s design. And it’s something that Bitcoin can still embrace. But seems like the culture is moving towards a direction where this is not part of the conversation anymore.

Zooko 05:56:01 Well. Maybe that, little two labs thing will enable it without the culture embracing it.

Vlad Costea 05:56:18 Dollar. Crypto asked me, dude, do you have a DVD player? What other vintage stuff do you have? Well, I have a PlayStation two. And I have an external DVD player. I think it’s also a Blu ray. Whatever. I bought it for basically preserving some of the stuff I have in my collection to be sure that I don’t know what’s going to happen with computers in the future. Maybe we’re gonna use them in the cloud. but I do want to preserve some of my memories from my childhood, some video games, some software that I have.

Vlad Costea 05:56:57 Like, you have no idea what it was like in Eastern Europe. We were pirating everything, and it was beautiful. You would go to someone’s house, see something that they had on their computer and ask, can I have this? And if they were one of the rich kids, they would have this CD writer, and you had to bring in a blank CD so they could burn that for yourself. And sometimes you get viruses. Well, times.

Zooko 05:57:26 I just thought of something. Based on what you said about the the culture of bitcoins moved away from that being part of the conversation. Seems like L2 labs is aware of Zcash as a technology, right? That’s one of the points at L2 labs is to add this and that, all these different features and functionalities from all these different projects. My question though, is does L2 labs want to add ZEC as an asset or is it BTC only as an asset?

Vlad Costea 05:58:02 No, it’s trying to use only BTC across all sidechains. So I don’t think there would be a mechanism to claim your ZEC Zach on the drive chain.

Vlad Costea 05:58:16 Okay, but maybe you can make that happen. Who knows?

Zooko 05:58:19 Well. That’s interesting.

Vlad Costea 05:58:20 Yeah. You should.

Zooko 05:58:21 I mean, if they’re not interested, then they’re not interested. But what about your other one of your other sponsors? Are they interested in supporting Zach as an asset?

Vlad Costea 05:58:32 I think on the trail you can issue your own token for whatever reason. And I was also going to mention this because you’re upgrading Zcash to enable these confidential assets. And if the drive chain is also going to upgrade to that version, you can essentially have Zach as a token.

Zooko 05:58:53 Right. Yeah. Okay. I give up what’s his name wins the the longest podcast competition Eric buzzkill. That was fun, Vlad. Thanks.

Vlad Costea 05:59:11 Okay, so if you wait just one more minute, we’re gonna hit the six hour mark. You can see that.

Zooko 05:59:18 And you might want to see what the Block explorer says about the time when you click shield my funds on your zushi.

Vlad Costea 05:59:25 I don’t think I think this is on the dust limit or something, because there’s no shield my funds button right now.

Zooko 05:59:36 Switch back. Is there? Like, what’s the bottom button?

Vlad Costea 05:59:38 Say add note.

Zooko 05:59:41 Can you hit the back arrow in the upper left hand side?

Vlad Costea 05:59:45 I just have a bookmark I think, and I can also hide the amount. I think the amount is just too small to shield it.

Zooko 05:59:58 What I do know is that Zushi won’t. Send from that key address of yours to anyone else so you don’t have to worry about.

Vlad Costea 06:00:11 So it’s not spendable.

Zooko 06:00:12 Yeah. And that also means you don’t have to worry about. Transactions being linked to incoming transactions.

Vlad Costea 06:00:22 This used to be a thing in Bitcoin. I think it still is when you get just attacked. So someone sends you a small amount of bitcoin and you’re going to be using that to pay a fee or something or to be part of a transaction. And they’re going to be able to trace your other funds.

Zooko 06:00:39 Yeah. Anyways, actually at some point Sasha is going to shield that Zcash for you so that you never have to think about that. Would you switch from Zcash of Bitcoin adopted Zcash capabilities.

Zooko 06:00:51 That’s something that you and I talked about hours ago Vlad. But maybe con missed it. Or maybe that was hours ago in composted that.

Vlad Costea 06:01:04 I’m curious about swapping some other currency into ZEC. Where could I swap to UA address?

Zooko 06:01:16 I think all the swapping services will send to your key address. So that’s what Vlad just demonstrated, where he posted his t address, and I sent 1/10,000 of his Ek to his T address. You can do the same thing where you extract your T address out of. He set into the swapping service, whether it’s let’s exchange I0 or my or near or whatever. So that makes sense. And then. It’s his job to shield your funds for you after that.

Vlad Costea 06:01:57 Jackknife also said I can’t believe he opened that computer. Does Vlad know? Does Vlad not know how to handle collectibles?

Zooko 06:02:04 Well, thank you for sharing that experience with me. That was fun.

Vlad Costea 06:02:08 I have this crazy idea that maybe I should write next to Peter Todd’s notes. Like I opened it on this date during my interview, and I also saved the Zcash block around the time when I opened it.

Vlad Costea 06:02:22 Yeah, so maybe I can write that for historic purposes. Do you think Zcash is more decentralized than Monero? It’s a question from the self-hosting art.

Zooko 06:02:34 I think the word decentralized is a bad word because it means different things to different people. And because what people really care about censorship, resistance, resilience, privacy, monetary soundness, etc.. And people say decentralized because Bitcoin and Ethereum, when they launched, they didn’t have good enough technology to insure these things.

And so the whole design of Bitcoin and Ethereum is that decentralization is what’s going to ensure these things. And I think that’s a bad design. Like if you want privacy, you don’t get it from decentralization. You get it from end to end encryption. If you want censorship resistance, you don’t get it from decentralization.

You get it from end to end encryption and to your knowledge proofs and, like availability and resilience and censorship resistance. You can get maybe from or Nim layers connecting to your Zcash. Basically just don’t use the word decentralization. Be more specific about what you want.

Vlad Costea 06:03:33 That’s all user wants to know. What what will Zcash look like in 15 years.

Zooko 06:03:41 I don’t know. And I’m way too tired to figure that out.

Vlad Costea 06:03:45 You’ll be 66 years old by then.

Zooko 06:03:49 You’re right. That’s incredible. I can’t believe I’m ever going to be that old. I can’t believe I’m this old now.

Vlad Costea 06:03:57 Zuko, a long time ago, you said you could make Zcash traceable for criminals. Is that still the case or you change the idea?

Zooko 06:04:05 Oh, I just posted a mean tweets video about that. What I said at the time was we could make Zcash too traceable for criminals, as long as they need to cash out to fiat through a sex. I never meant to make Zcash itself traceable. But in any case, I couldn’t if I wanted to, because it’s open source and there’s a whole bunch of other people who would stop me if I tried or would identify it and call it out if I tried. Okay. If we hit the six hour mark yet, then I’m about to stop.

Vlad Costea 06:04:45 Okay. I’m really sorry. You have, like, a dozen more questions. I apologize to everyone. There are some interesting ones, like what you would do differently if you started Zcash today.

Zooko 06:04:56 I don’t know. It’s a good question, actually, but are you tired to think of a good answer?

Vlad Costea 06:05:15 That’s fine. Okay. Thank you everyone for tuning in. It was a lot of fun.

Zooko 06:05:23 Glad. Yeah, it was super fun.

Vlad Costea 06:05:25 You can see that records are very hard to break. That eight hour interview was really something.

Zooko 06:05:31 I never intended to go eight hours. I was just going to keep going.

Vlad Costea 06:05:37 But still six hours. Five minutes.

Zooko 06:05:38 It’s I know that’s my personal record that counts.

Vlad Costea 06:05:43 And I think you’re in the top five right now. All right, there’s Eric buzzkill. There is Amir Taqi. There’s Michael Parenti, who spoke for like 7 or 8 hours. There’s also Paul Staats, who spoke for about five and a half. So you’re in pretty good company.

Zooko 06:06:05 Yeah, that was super fun.

Zooko 06:06:06 Thank you so much. I’m honored that you invited me and listened to all those stories.

Vlad Costea 06:06:11 And, six hours is double Vitalik.

Zooko 06:06:15 Oh, yeah. Yeah. I really liked your interview with Vitalik. That was really fun for me to listen to. All right, well, good luck with everything. See you on the internet.

Vlad Costea 06:06:23 Thank you very much, sir.

Zooko 06:06:25 Zcash.

Vlad Costea 06:06:26 Yeah. I’ll keep experimenting with this.

Zooko 06:06:30 Great. Thanks. Bye bye.

Vlad Costea 06:06:31 Bye. And also thanks to the sponsors once again HODLing that certify Sequoia Edge wallet layer two labs. Bitcoin.com news. And I think that’s it. Thank you very much, guys. I hope you’re not disappointed that I did not get to read all the questions. And I’ll see you in the next one. Bye.

Admittedly, Ethereum is sort of a sidechain for Bitcoin: with WBTC being the most popular and liquid way to use BTC on another blockchain that offers extended features, and Ethereum doing testing for features that were first proposed for Bitcoin (ZK SNARKs, as well as various approaches to building layer 2s). As a matter of fact, Ethereum started out as a protocol for Bitcoin and only got deployed as an standalone chain due to the OP_RETURN wars and various political factors which discouraged the use of Bitcoin 2.0 protocols (Counterparty and Omni/Mastercoin being the two most popular of them).

If maximalism is all about trying to maximize utility and bringing new use cases, then one could argue that Ethereum is the ultimate experiment for Bitcoin maximalism and cypherpunk culture — putting together some of the most interesting ideas in finance and following an ethos of applying decentralization to everything. One could also argue that Ethereum took some users from Bitcoin and offloaded some use cases away from the mother chain. Depending on where you stand, you can either celebrate the departure of token degeneracy to another network (which never really happened, just look at Rare Pepes and ordinal inscriptions) or else mourn for the loss of users and mining fees from their transactions.

What we know for certain is that Ethereum has been around for a decade and has remained a steady number two for most of its history. It attempted to disrupt internet companies, project fundraising, banking, and art markets at various stages of its existence. And the most interesting ideas have returned to Bitcoin thanks to brilliant discoveries such as BitVM and ZK proof inscriptions, which are all owed to Ethereum’s initial research.

Even Zcash, another Bitcoin maximalist project which got started for the purpose of improving Bitcoin’s privacy on the basis of the Zero Cash paper, received funding from the Ethereum team and continued its research to the point where it enabled technologies that today lay the foundations of Tornado Cash and Railgun. Thanks to this experimentation, today Bitcoin benefits from rollups and bridges such as Citrea, Alpen Labs, Starkware, and Build on Bitcoin (BoB).

This interview with Vitalik Buterin is meaningful because it outlines all of these truths and acknowledges that Ethereum has been a much more prolific research lab for Bitcoin than otherwise virtue signaling companies like Blockstream. It brings back some of the seemingly-forgotten spirit of Bitcoin-related experimentation with free open source software, it lays down some historical facts about Ethereum’s journey (from competing with NXT, Ripple, BitShares, EOS, and other Bitcoin 2.0 implementations, to facing its own technical challenges with scalability and user base retention), and it explains how it all relates to Bitcoin.

Vitalik also expresses his views on proposals to improve Bitcoin, such as Paul Sztorc’s Drivechains and Robin Linus’ Shielded Client Side Validation. And when he doesn’t analyze technical minutiae, he does one of the best breakdowns of Roger Ver’s fight with the IRS — thus proving that, beneath the ”public goods” persona, he is still a libertarian at heart and he hasn’t abandoned the first principles with which he’s joined the space.

This is a wonderful three-hour interview that everyone should check out, regardless of what you personally think about Vitalik Buterin and/or Ethereum. I’ve added timestamps to make navigation to various topics easier, but I wholeheartedly recommend listening to the entire conversation in order to fully grasp the mechanisms that drive Vitalik’s brilliant mind.

This episode is sponsored by Layer Two Labs, Citrea, Bitcoin.com News, NoOnes, SideShift.ai, and HODLing.ch!

Listen to Vitalik Buterin on YouTube, Spotify, Apple Podcasts, Twitter/X & More!

▶ Play video Watch on YouTube

Time stamps:

Intoducing Vitalik (00:01:00)  

Vitalik’s Early Involvement with Bitcoin (00:02:22)  

Writing for Bitcoin Weekly (00:03:01)  

Bitcoin’s Early Fees and Transaction Model (00:06:45)  

Evolving Understanding of Bitcoin (00:09:15)  

Bitcoin Cash and the Scaling Debate (00:10:25)  

Dark Wallet Project (00:14:06)  

Coinjoin and Privacy Innovations (00:16:41)  

Colored Coins and Bitcoin 2.0 (00:21:05)  

Transition to Ethereum Development (00:21:58)  

Current Layer Two Innovations (00:24:11)  

Scaling and Privacy Innovations (00:25:55)  

Ethereum’s Early Criticism (00:27:05)  

EVM’s Role in Smart Contracts (00:28:11)  

Challenges of Parallelization (00:29:23)  

Sandboxing and Security (00:30:24)  

Future Scaling Ideas (00:34:49)  

Ethereum vs NXT vs Counterparty vs Omni/Mastercoin (00:35:37)  

Lessons from Ethereum’s Success (00:37:07)  

The DAO Hack and Community Resilience (00:43:16)  

Ethereum’s Network Effect (00:45:43)  

Ethereum’s Ecosystem Resilience (00:49:35)  

Decentralization vs. Scalability (00:50:41)  

Critique of Ethereum Killers (00:51:21)  

Layer One and Layer Two Dynamics (00:52:53)  

SideShift (00:53:21)  

How Vitalik Cancelled Craig Wright (00:54:51)  

Current Characters in Bitcoin (00:58:03)  

Daniel Kravisz’s Views on Craig Wright (00:59:04)  

Manipulative Tactics in Dating Advice (01:00:34)  

NoOnes: Marketplace for Global South (01:01:19)  

Bitcoin.com News Evolution (01:02:40)  

Bitcoin Magazine is Now Pro Trump (01:04:37)  

Libertarian Shifts in Crypto (01:05:03)  

Ethereum Domain Name Registrations (01:06:09)  

Layer Two Scaling Decision (01:08:08)  

Hardware Requirements for Ethereum Node (01:10:45)  

Philosophical Questions on Scaling (01:12:01)  

The Dystopia Scenario (01:13:03)  

Importance of Full Nodes (01:14:24)  

Technological Innovations (01:15:27)  

Running Full Nodes in Ethereum (01:16:30)  

Privacy and RPC Trust (01:17:28)  

Adapting Ethereum to New Cryptography (01:19:53)  

Scaling Debate in Ethereum (01:22:04)  

Respect for Ethereum’s Approach (01:23:15)  

Zcash and Ethereum Collaboration (01:25:00)  

Challenges for Zcash (01:27:04)  

Impact of Developer Actions (01:28:01)  

Scaling Solutions in Bitcoin and Ethereum (01:30:43)  

Defining Rollups vs. Sidechains (01:31:40)  

Security Implications of Drivechains (01:34:03)  

Transition to Proof of Stake (01:36:19)  

ZK Coins and Shielded Client Side Validation (01:37:53)  

Thoughts on TheStandard.io (01:40:03)  

Backing Up Coins and Holding Keys (01:42:11)  

Evolution of Multi-Sig Technology (01:46:43)  

Privacy (01:48:14)  

Concerns About Centralized Data Collection (01:51:10)  

Impact of Snowden Revelations (01:53:35)  

Privacy as a Key Aspect of Decentralization (01:55:49)  

Ethereum’s Cypherpunk Roots (01:57:07)  

Feedback from Cypherpunks on Ethereum (02:00:42)  

The Inspiration Behind DAOs (02:02:07)  

AI and DAOs (02:02:40)  

Vitalik’s Public Image and Price Pressure (02:02:55)  

Media Attention and Its Impact (02:03:43)  

Decentralization and Attention (02:04:03)  

Price Influence and Market Dynamics (02:04:59)  

Focus on Ethereum’s Values (02:06:01)  

Historical Use Cases of Ethereum (02:08:28)  

Next Bull Market Narrative (02:09:38)  

DeFi Ecosystem as a Proven Use Case (02:09:45)  

Political Instability and Financial Security (02:12:05)  

Polymarket, Prediction Markets and Mainstream Adoption (02:12:20)  

Zero Knowledge Proofs and Privacy (02:14:20)  

Roger Ver (02:15:23)  

Principles of Freedom and Privacy (02:22:57)  

Critique of Blockstream’s Liquid (02:24:00)  

Bitcoin’s Role in Decentralization (02:26:15)  

Transition to RISC-V (02:27:37)  

Adoption of RISC-V (02:28:36)  

Redesigning Ethereum in A Time Travel Scenario (02:31:30)  

Challenges in Ethereum’s Development (02:32:45)  

Ethereum and Bitcoin Relationship (02:37:02)  

Complementarity of Bitcoin and Ethereum (02:38:40)  

Does Vitalik Still Use Bitcoin? (02:41:21)  

Lightning Network (02:42:06)  

Standardization of LN Invoies (02:43:20)  

Privacy Concerns with Bitcoin (02:45:42)  

Running Lightning Nodes (02:46:52)  

Home-Based Bitcoin Solutions (02:48:12)  

Tribalism in Crypto Communities (02:48:53)  

Ethereum’s Evolution and Ideals (02:50:06)  

Collaboration Between Bitcoin and Ethereum (02:51:10)  

Diverse Blockchain Future (02:51:45)  

Is Vitalik a Bitcoin Maximalist? (02:52:59)  

Community Values and Challenges (02:53:45)  

Cultural Dynamics in Cryptocurrencies (02:56:05)  

Layer Two Solutions for Bitcoin (02:59:31)  

Vitalik’s Online Presence (03:00:25)  

Closing Remarks and Future Guests (03:01:36)  

Full Transcript of S16 E24 with Vitalik Buterin

Vlad Costea 00:01:13 Hello there and welcome to the Bitcoin Takeover podcast. This is season 16, episode 24. We are live with Vitalik Buterin and this episode is sponsored by Layer Two Labs, NoOnes.com, HODLing.ch, SideShift.ai, Citrea, and Bitcoin.com News.

Vitalik, the goal of this episode right now is to explain to people why you’re such a Bitcoin maximalist, and you’ve done a much better job upgrading Bitcoin than companies such as Blockstream or ChainCode or whatever, which raise capital for Bitcoin specifically. But a lot of the stuff that was built for Ethereum is coming back to Bitcoin right now, and it’s really incredible.

And I also got to apologize to you because you turned out to be right in some regards. And I trolled you on Twitter a few times and I chased clouds. Just making fun that Ethereum 2.0 is not coming. It came. It never had an incident. It was cool. Thank you very much for your work. And let’s talk about Bitcoin and Ethereum.

Vitalik Buterin 00:02:13 Yeah of course very excited to get into it.

Vlad Costea 00:02:17 So I was thinking about a very logical way to pursue this.

Vlad Costea 00:02:22 So let’s talk about your involvement in Bitcoin first because there’s so much that people usually don’t mention when it comes to your contributions. And then we can transition into Ethereum. Sure. So when did you discover Bitcoin and what was it like back in the day.

Vitalik Buterin 00:02:41 Or early 2011. So I actually heard about it from two different sources at the same time. One was my dad just casually mentioning it, and the second was hearing about it from some the libertarian podcast on the internet. and I heard about which one.

Vlad Costea 00:02:59 Was it Ian Freeman?

Vitalik Buterin 00:03:01 It might have actually been. Yeah. I mean, I’m sure you know. March 2011. You know, within a year, the A’s will be able to nail down the exact episode. but, and basically I thought, okay, this is interesting. And, I figured I should take an honest, effort at, like, actually getting into this, community. And of course, you know, Bitcoin is a currency, and, normally with currency is you’re not supposed to buy them, you’re supposed to work for them.

Vitalik Buterin 00:03:29 And so I started scouring the Bitcoin forums. So looking for a Bitcoin job. And eventually I found this guy named Kiba who was starting this blog called Bitcoin Weekly. And he was offering people five bitcoins per article, which, back then was $4, to write, articles for his site. And so I actually very few people were taking him up on his offer. But, you know, I was, a high schooler with a lot of time on my hands.

So I went and did and, I wrote an article on microtransactions. you know, I got the $4, I. Yeah, I wrote a bunch more articles eventually. And despite, paying me, you know, basically, you know, like, five times below minimum wage, I, he ran out of money, and, I came up with this, fun, business model, which was, that I would write two articles a week, and then we would publish, the first paragraph of each one, and then we would say the rest of the article is held for ransom.

Vitalik Buterin 00:04:35 Here are Bitcoin addresses and.

Vlad Costea 00:04:37 Like shareware video games.

Vitalik Buterin 00:04:40 Right. Well, so this is like, it’s kind of collectively. Yeah. I mean, like, you liberate an article, right? If, like, everyone, throws money into a pot and it adds up to 2.5, then, we would release the rest of the article.

And, we did this, and then, we actually managed to keep on getting money and, if and so we kept, Bitcoin magazine running. I kept getting our bitcoin weekly running. I kept getting some bitcoin. Then, a few months later, Mihai Alicia was actually also from Romania. He, he reached out to me and he said that he was starting a Bitcoin magazine.

It would even have a print IPO. So he asked if I wanted to become the main writer. And so I did. and so this was all happening while I was still, in high school. And then, I moved to be again in university in 2012. I basically kept on, just being a writer.

Vitalik Buterin 00:05:39 And I think to me, the process of like researching topics within the Bitcoin world and then writing them was my introduction into just learning about all of the different aspects of what happens in the Bitcoin world, right? Like I talked about technical things, economic political things, different, different parts of the Bitcoin community, the kinds of like bitcoin accepting businesses that people were trying and then it kept going from there.

Vlad Costea 00:06:08 Yeah, a lot of us started the same way. We discovered it. And then we searched for jobs. I think when I started it was a lot more established. You could actually find publications and there were much more serious paying more than $4, but it was still not that much. But you said that your first article was about Bitcoin for microtransactions, and I’m curious to know if your understanding of Bitcoin has remained the same, or your expectation of Bitcoin, or you believe that it evolved naturally into this store of value phase.

Vitalik Buterin 00:06:45 So I think one thing that’s really important to remember about the like early 20 tens environment.

Vitalik Buterin 00:06:54 Is that like the fiat payment methods at the time? They charge crazy fees, right? Like it was a major pitch of bitcoin that these other means of payment, they would charge $0.29 plus 2.9% for domestic and plus 6.4% for international, I think was what PayPal took. And like it was standard advice, right, that if you were a bitcoin merchants company, you don’t even emphasize the self sovereignty, because that’s like weird stuff that appeals to a few people.

You just talk about how Bitcoin has low fees, right? You know, Western Union moving money for better bitcoin moving money far better. And it’s like unlimited amount of money for back then like very tiny transaction fee. And of course, you know what’s happened since then? I mean, obviously Bitcoin had its, whole situation and then fees went up.

And then there have been these, attempts with earlier to, to try to enable kind of still self-sovereign ways of transacting with, lower fees. but then at the same time, like the, you know, the world doesn’t stand still for you, right? And, you know, the the fiat payment methods have gotten better specifically in terms of fees, right? I mean, they’ve gotten worse in terms of not deployed for video, but, you know, they have gotten better in terms of fees.

Vitalik Buterin 00:08:13 And like, that’s definitely a different landscape, right? Like, back in the 20 tens, I think even like within the. Yeah. You know, like I suppose, you know, blockchain not bitcoin space. you could basically, yeah. Get away by tricking people into thinking that things that are actually benefits of digitization were, were benefits of blockchain, because like the that was the frame that people were thinking it.

Right. It’s like traditional paper stuff versus, you know, digital stuff, which is better and more efficient and, well, it happens to be on a blockchain, right? And today that’s not the game anymore. Right. And today, you know, you know, we have to admit that centralized fiat stuff is, very efficient.

It has, lower fees. It makes sense. Like you can afford to have lower fees if you only need one server, processing a transaction and you don’t need any other nodes, you know, executing it. So, you know, you don’t need anyone proofing it and so on.

Vitalik Buterin 00:09:15 You don’t need consensus. but, and so, you know, like, self sovereignty is like really the, the thing that, any blockchain, really can compete on with regard to centralized systems. so I think, yeah, like that is, you know, a really necessary adaptation. And in terms of, Bitcoin’s role since then, I mean, I think evolving into a store of value is like a very natural and sensible thing to do in the context of, nuts, like the the block size being limited and the like the chain only being able to process a certain amount of activity.

Right. It’s, you know, if you have a particular limitation, that’s just a, the natural thing to go forward to, that’s compatible with that limitation. I mean, I do think there’s, you know, all of the questions of like, is there were there other roads that could have been taken, but, you know, in this context, like focusing on being a store of value first, like it just makes total sense.

Vlad Costea 00:10:25 Yeah. I asked you this because I recall in 2017 that you seem to be in favor of the Bitcoin Cash camp, and there was a point when Bitcoin Cash was number two on CoinMarketCap and you posted that tweet which became famous or memorable. Congrats on this. Seriously. It was addressed to Roger ver, I think. And I’m curious to know if you still believe that Bitcoin should have scaled with bigger blocks, or you think that the current approach with experimenting with various types of layer twos is more wise in the long term?

Vitalik Buterin 00:11:03 By the way, did you end up reading the article I wrote? That was my review of the two block size workbooks.

Vlad Costea 00:11:10 oh yeah. I remember seeing that on Twitter when you posted it. And I agree with you, by the way.

Vitalik Buterin 00:11:18 Yeah. So by my view, they are adjusted to, to summarize, the array was that I think, you know, big bloggers were, responding to like very, very legitimate concerns and, like, there’s, a lot that’s, corrected their position, but at the same time, like, they as a faction, just like totally fails to have any kind of competence at actually executing on things and over time.

Vitalik Buterin 00:11:46 Like that’s basically what caused them to lose people, right? And so that it was a but there’s like, you know, the politics of, a situation. Right. And, the politics of a situation is like always a mix of, like, actual issues and the social factors.

I mean, I think, like, if I had to actually think through the issues, I. Yeah, I mean, like, if I had to go back in time and like, push, like, say like this, this would be some kind of approach. I would have probably said some moderate but moderate blocksize increase and then actually put some more effort into into layer two is at the same time. but and I think my reason for that is like, I, I do actually believe that, Self-sovereign payments are important, right?

And, I like basically the vision of, the world that I don’t want to see, right? Is like a world where you have theoretically self-sovereign money, but then it’s like gold, right? It’s like theoretically self-sovereign, but then it’s so inconvenient to do things with it directly that most people do things through centralized and not very self sovereignty friendly intermediaries.

Vitalik Buterin 00:13:03 And as a result, if the government ever, really dislikes it, they can just like do a repeat of good old Executive Order 6102 and then, like, basically, I know the whole game is lost again, right? So, like, I believe in, you know, like there being a large user base that’s, like, actually capable of, interacting with the chain and doing things directly in a very, you know, self sovereignty friendly way. And, but like I, I recognize that there’s a balance, right? And I recognize that especially in the context of the technology of the tens, you know, there would have been no way to do that, to scale up to the entire world without actually just completely breaking things.

Vlad Costea 00:13:48 Yeah, that’s another conversation that we should be having when we get to the Ethereum topic. But you mentioned that when you first discovered Bitcoin, you wanted to work for it because that’s how you earn money. I also know that you’re involved in Dark Wallet, and that was a project started by Amir Taaki.

Vlad Costea 00:14:06 And he presented some promo videos of you basically doing some jumps on stairs just to show that you’re a punk or something. And when I interviewed him, and that was a pretty long one, we spoke for about seven hours.

He seemed a bit bitter or something because he said, you know, around the time when he was working with you on Dark Wallet, you were not famous or anything, and he was like the star of the project. And then he left the space for a few years. And when he came back, he realized that you’re the celebrity and he has to basically prove himself once again. What was it like to work on Dark Wallet, by the way?

Vitalik Buterin 00:14:47 Yeah. I mean, I mean, first of all, just like Amir himself as a really impressive character, right? So he was working on Libbitcoin back in 2013, which was like one of the first or the first alternate bitcoin implementations. And that was actually the thing that inspired me to start working on PyBitcoin tools.

Vitalik Buterin 00:15:07 and so that was one thing. And then with dark wallets. yeah, I remember, I mean, Coinjoin was, the new technology that was just that emerging at the time. Right. And there was this big question of, how do we upgrade the privacy of Bitcoin? And this was when, you know, the Silk Road arrest happens.

And there were a few other things happen that just showed that like Bitcoin, blockchain analysis was actually getting really powerful. And just having your different UT be separate does not protect you, right? Or at least it does not protect you enough. And so the question is, well, how do you actually.

Yeah, like step up and get to the next level of privacy. so I started working started helping I yeah, I contributed, some, like, basic patches. I’m trying to remember. I mean, one of the things that we did is like, I believe, like, actually made it in a in a browser extension format to make it more convenient.

Vitalik Buterin 00:16:19 so no, that was really interesting. And though, of course, eventually. Yeah. Like we first covered Mastercoin and then Ethereum ended up, just started taking up all of my time. but, you know, we’ve been doing our best to carry our part of the privacy torch since then.

Vlad Costea 00:16:41 Yeah, you gave me the perfect hook to basically move on to the next topic, but I still want to provide a bit of context to this conversation of Bitcoin privacy in 2013, because there are two papers that came out at the time. The first one was Zero Coin and the second one was Zero Cash.

They had sort of similar authors, and they were proposed as soft forks for Bitcoin to improve the privacy with zero knowledge proofs. And I guess it was a bit too early for them. There were two avant garde and they were not accepted for merging. And Greg Maxwell put up this Bitcoin talk post in 2013. I think it was August. And he said, he’s gonna give out a bounty to whoever is gonna build the first coinjoin wallet.

Vlad Costea 00:17:26 And I think it was him who came up with the term coinjoin for the first time. Before that, it was just mixing. Yep. And there were three co-signers to this multi-sig. I think it was Theymos and Pieter Wuille and Greg Maxwell. Amir Taaki basically came up and said about a week later we have it, we built Dark Wallet.

We want to collect the bounty. And part of the reason why, and this goes into conspiracy theories, and I’m not sure if you’re a fan of them, but there was this character who emerged at the time, and he was sort of like the Michael Saylor of his era. It was John Dillon, and he donated to the bounty.

And Amir is still frustrated about this because he feels like that guy stole his opportunity to collect the bounty. So what John Dillon did was to donate some Bitcoin to the bounty and become a decision maker, and basically got his own seat at the table and said, you know, it’s dangerous to give this money to dark wallet because they’re using Bitcoin.

Vlad Costea 00:18:33 And there are some technical differences between Bitcoin and Bitcoin. And I don’t know, it was very political and very ahead of its time. And I’m fascinated by this whole story.

Vitalik Buterin 00:18:51 Interesting. Yeah I mean the whole like should be should our alternate implementations if even good topic is fascinating. I mean, I feel like I yeah, you know, I hope I get you a bit by parts of the conversation by with, Ethereum actually, like being this, like ecosystem where you have a lot of different clients.

And so I think none of them has majority market share now. And so we can actually see what it’s like live. It’s, I mean, I’m actually curious because I haven’t followed. Like, how have I guess? You know, like your and other bitcoin people’s opinions on the multiple clients topic of like been or evolved since ten years ago?

Vlad Costea 00:19:36 Yeah. Today there’s still a lot of infighting because of bitcoin knots and some some people thinking that it’s the pure way of running Bitcoin because it filters out inscriptions.

Vlad Costea 00:19:48 The perfect metaphor for that is like trying to stop the rain with a tennis racket.

Vitalik Buterin 00:19:54 Right? Yeah. I mean like the whole filter inscriptions thing like that. To me, it never made too much sense. Right. Because I mean, one obviously. Yeah. You know, if you want to dump data on chain, then you can always just dump it throughout and to, and I and I feel like, like I’ve always Disagreed with it as a matter of, I guess, what you might call political strategy, right?

Because once you start censoring something, even if you can say you’re like censoring a category. Through a technical measure, like it still creates this, impression of, like, unreliability of like, oh, you know, will there be another category of usage that, gets decided to be unkosher and then at some point in the future.

Right. And, like I’ve always thought, like, hey, we have these, we have a free market. Free markets are, a great way of, like fighting pollution if there actually is a price mechanism and, you know, here there is and, and, and so we should just use it.

Vlad Costea 00:21:05 Yeah. Coming back to the topic of colored coins, you are a co-author of the paper as far as I know. And also around the time maybe a year or two later we got Counterparty and Mastercoin slash Omni, which were ways to create what was called at the time, Bitcoin 2.0, which was the idea that you can put other stuff on the blockchain, tokenize shares of a company or tokenize art, or pay dividends to investors using the blockchain.

It was pretty novel at the time. Of course, it happened on Bitcoin because it was the most popular and most robust network, but there were some limitations to it. And the story is that you wanted to build Ethereum on Bitcoin, and then you decided to create an altcoin.

Vitalik Buterin 00:21:58 Yeah. So basically, yeah, what happened was, that at first, we, I was thinking to build Ethereum as a mastercoin style. I guess the thing that today people call a sovereign rollup, right? It’s like a layer two. Except like there isn’t a way for the by which the layer one actually recognizes the layer two state because Bitcoin scripting, like I guess at the time, definitely didn’t have the ability to do that now.

Vitalik Buterin 00:22:25 Like maybe it kind of does or will because of like BitVM and OP_CAT. but originally you started to do it as a layer two. And then actually I started, making it a layer two on top of, prime coin instead of, Bitcoin. And the reason why I made that choice was actually because of this whole, op return, situation was happening. Right? And basically, yeah, seems to be like a, you know, if there is this, big faction that’s, saying like this, use case is, bad and wrong.

And they were seriously proposing and even implementing ways to censor it then, like, why would we want to be a layer two of a thing? Who is a developer community, like, actively thinks that we’re spam and is actively trying to censor it out in a few cases, right. And so for that reason, we just kind of went and I mean, at first did Prime Coin, but then eventually, yeah, what happened was that we yet realized that there was enough attention and enough development effort on the whole project.

Vitalik Buterin 00:23:36 So that like basically before that, I was literally assuming I would have to code up the whole thing myself, right? And I figured I would be able to code up some or two, but I would not be able to code up an entire blockchain with a peer to peer layer. Like I thought, peer to peer was totally incomprehensible at the time. And but then after like that moment, it was in January when we realized how much attention and how much development effort there was. We decided like, hey, let’s just make it an independent chain. And, things went from there.

Vlad Costea 00:24:11 Yeah. At this point, I gotta mention that one of the show sponsors, which is Citrea, is trying to build exactly what you said with BitVM and also a covenant. They want to build a layer on top of Bitcoin, like a sovereign rollup, which is offering extended financial services, like being able to borrow or maybe have some services like banking, but without the actual bank with protocols that you can verify.

Vlad Costea 00:24:40 Right now they’re on the Bitcoin testnet. If you want to download the wallet, you can check it out at Citrea.xyz. And the other sponsor I have to mention is Layer Two Labs. And that’s how we actually met. Vitalik. Because you’re you are on the Drive Chain Talk Telegram chat.

And I saw that you said something in there, and I double checked that that’s your account. And then I said, hey, Vitalik, when podcast and you DM’d me, they’re also trying to build an Ethereum sidechain for Bitcoin. And I think they have the latest version right now.

It’s called Zside. No no that’s the Zcash one, ETHside I think. And it’s really interesting because they’re taking your work and they’re trying to bring it to Bitcoin which proves that there is value to it. Contrary to what the Blockstream people will say.

Vitalik Buterin 00:25:35 That’s cool. Yeah. I mean yeah it’s, it’s definitely been interesting to like see there’s a new wave of people doing like various kinds of, layer two things, various kinds of like optimistic and approving things.

Vitalik Buterin 00:25:55 onto on top of the bitcoin’s, script. It’s, Yeah, I mean, I yeah, it’s, it’s cool to see and it’s also just like, so deeply fascinating on a technical level. Right. Yeah. The whole like puzzle of, you know, how, how you actually write something like, an optimistic, proof system or a. Yeah, ZK prover on this, look, very tiny stack based language that only supports a couple of things.

And, of course, you know, I ended up making the EVM, considerably more complicated, you know, in part because I didn’t want every death to have to go through that kind of, process. So I think since ten years ago, I have like somewhat warmed up to that over time. so that’s been, like, it’s been interesting to just go through, you know, different scaling and privacy scenarios and start to see what the, what, the benefits are. but, you know, it’s, I mean, I think, you know, having, more innovative ecosystem besides doing these kinds of things is great for everyone.

Vlad Costea 00:27:05 Yeah. When it comes to Ethereum, what I’ve been thinking about this, basically that when you started this, people told you that it’s not going to scale and you’re actually there are two sides of it, the side that said, it’s not going to scale. And the side that inspired you to write the Bitcoin maximalist article from 2014 where someone told you, hahaha, whatever you’re building, we’re just going to copy and paste the code onto counterparty. I think at the time we’re going to take your EVM, we’re going to make it happen on Bitcoin.

But in spite of this, you went ahead with it. And the criticism from Blockstream and Adam Back and all the others, Greg Maxwell was that it’s never going to scale and there is no way for this to work. But you found a way to work with ZK proofs and rollups, and I have some respect for you because basically you went head on with this approach and then you found a way to make it work, as opposed to just saying, well, it should not be tried because it doesn’t scale.

Vitalik Buterin 00:28:11 Yeah, I think I thought that clearly. Yeah, just. The benefits of, well, of an EVM style approach to smart contract programming. I mean, I think we definitely see them, right?

Like, they are high in the sense of just making it easy for people to build all of these different DeFi protocols that have happened on top of it, whether like Uniswap or they or any of or any of these others. it’s, like there’s a lot of, logic that you can do in, like 10 or 15 lines of code and so on. but at the same time, you know, I do admit, some of the, limitations I had when I was, 19. And, like, there’s definitely big parts of the, the just constantly wishes I could send back some extra programming Wisdom back to the 19 year old version of myself, right? so with, scaling. Right. like the two axes that you want to disentangle, I think. one is like the VM and, two is the, parallelization.

Vitalik Buterin 00:29:23 Right? And because those are separate. Right. And since then we’ve seen there’s been a couple of these examples of, VMs, I think even some of the private blockchain projects from the late 20 tens, did them and now some other, others as well, right. Where basically it’s, like a UT based system, except you’re allowed to have an arbitrary program, determine whether or not, a particular transaction is valid.

And then if you do that, then, like, you can make a lot of Ethereum like, things happen. but at the same time, you have, like, full paralyze ability and you do have, like, somewhat worse, death in some respects. Like making something like Uniswap is harder, right? because, like, basically for something like Uniswap to work like every cent, like you need to have sort of one UT representing the Uniswap state, and then every sender would have to basically, you know, the last senders, transaction. But like you would get parallelized ability.

Vitalik Buterin 00:30:24 Right. And the other thing is this like difference between sort of minimal script and, a full virtual machine. And that’s something that just like the the critic intuitively felt wrong. And I think the reason why the critique felt wrong is that I wrote about this in more in more detail.

There was an article from, about, I think almost a year ago on, glue and co-processor architecture. But I basically made the point that you can split computation up into two different parts. We are one part I call like specialized heavy computation, which basically, you know, it includes AI. It includes cryptography. And that’s computation is like heavy, but it’s also it has a lot of structure to it.

And so you can make like very optimized implementations of it. And then the other part I call business logic and business logic is like you know, like for I equal zero, I was at 100. I++. If this then do that. while this do that and so on. Right. And like that stuff is very unstructured and often hard to optimize.

Vitalik Buterin 00:31:32 But it’s also like very friggin trivial, right? It’s like 100 opcodes when we’re talking about CPUs that can do a billion cycles a second, right? Like if you think about, you know, an elliptic curve multiplication right inside of an EC model, you have a loop that that multiplies the points, and then it goes through the addition process like 256 times.

Right. So it’s like compared to that like business logic is trivial. And so people complains like why 2:56 p.m.. Like why? Interpreter. Inefficient, but like that never actually mattered too much though. Although recently I think some you know, I don’t know if you saw the risk five stuff. Right. Actually, you know, the conversation is is changing a bit I think.

But there’s definitely ways in which I was like a little bit overoptimistic. Like, I think that even being 256 bit and so on, like it was a not it was not fatal, although it was also definitely far from optimal. and then the other critique that I remember at the beginning was the whole sandboxing thing.

Vitalik Buterin 00:32:37 Right? It’s like, hey, how do you actually. Yeah, like VM sandboxing is just known to be a very hard problem. Like, how do you prevent bugs where somebody can, like, escape out into the computer? And that, interestingly enough, I think it never ended up being a problem even once.

Right. And so basically, yeah, you know, we’ve had consensus bugs. We’ve had, like a resource, based on, like, denial of service bugs. We’ve had all kinds of bugs. I don’t think we’ve ever had a sandbox escape bug, possibly even at any implementation. I mean, definitely not the major ones. Right.

And I mean, possibly they’re the reason might have been that the the kinds of VMs that people normally try to sandbox are just more powerful, and their implementations are more optimized than they try to sort of like, have much more like 1 to 1 correspondence between, you know, the top level VM and the underlying thing. Whereas like the VM started as just being a very naive interpreter and that’s just like natively much more sandbox able.

Vitalik Buterin 00:33:39 I think my other response back then is like, if we ever had a sandbox attack, then the sandbox attack would almost by definition, or a sandbox escape attacks, and that attack would like, almost by definition, run differently on every different computer because different computers have different data in the other parts of the machine. And so it would just immediately cause the consensus failure.

So there’s just like a very natural and obvious fire alarm for that sort of thing. But we don’t know that that ended up not happening. I mean, on the parallelization side, I think the detractors did have a very valid point. It ended up not being a fatal point. It ended up being about. But but still a valid point. Right.

And if you look at some of the layer one scaling ideas that we have for 2026, like something like block level access lists and like statelessness and a few other things. So like basically a lot of the scaling related ideas we have like basically, yeah, actually get end up trying to go into the direction of trying to like capture some of the benefits of the UTXO model, which is basically explicitly declaring what state you’re accessing, which, enables parallelization and enables a lot of other things.

Vitalik Buterin 00:34:49 Actually, yeah. There’s also an access list based solution for like long term state size sys management. so, you know, look, we’re sort of trying to, I guess, move from, you know, like single threat, just very naive, single threaded to something where you might call it sort of a halfway point, like basically something where, like whoever is responsible for building the block for the first time has to add some or some extra information or even people who are responsible for sending the transactions. they have to add some extra information. And then from then on, it gets executed in parallel. so, you know, like a lot of, really fascinating, like software engineering and thinking has happened there over the last few years that was just totally not a thing ten years ago.

Vlad Costea 00:35:37 I want to take just a step back, because Ethereum started out as this proposal for a Bitcoin 2.0 protocol, and at the time you had a lot of competition. There was counterparty, there was Omni, there was NXT.

Vlad Costea 00:35:53 and these guys seemed very professional. Like if you look at their videos back in the day, they promised a lot of transactions per second. They had a Dex from day one. They, they were very well funded and they seemed to be I don’t know, no offense here, but you are like a very young person doing this project with Ethereum.

But these guys seem like, you know, they have gray hair and they basically sharpened their teeth coding. And they came up with this very compelling marketing and I’m not sure exactly what went wrong. And NXT was also a proof of stake since day one. They made a lot of promises that they’re more advanced and they’re superior from a technical point of view.

But somehow it was Ethereum that is the one that we speak about today. And there’s also ripple, which initially was proposed like this. At one point you almost got a job at ripple. I’m happy you didn’t. But yeah, you you faced this competition from the early days, and yet Ethereum ended up becoming the dominant Bitcoin 2.0 implementation platform for tokens for computation for all of this cool stuff.

Vlad Costea 00:37:03 Why do you think that is?

Vitalik Buterin 00:37:07 Either. Yeah. I mean, I think, Ethereum was I mean, one it was the one that went all the way, right, in the sense of like actually offering general purpose programming. this is actually a lesson that, interestingly enough, Ethereum itself had to relearn in the layer two world. like I remember back in 2020. Yeah, or 221 looping, this was the very first ZK rollup on Ethereum, and it was even a stage two ZK rollup.

So it even that like it was fully trustless, like didn’t have any, Security Council like backdoor stuff in it and, it did everything. It even did all of the hyper efficient stuff like it compressed transactions down to like 16 bytes.

And so the transaction costs on it were crazy low. It was there, but then it just never got too much traction. Right. And the reason why is because it was not a fully VM, right? It supported payments. It supported like Dex. It supported very basic things.

Vitalik Buterin 00:38:07 But the thing that people wanted is full programmability. And of course, like that was even more true in 2021, where there were these huge masses of developers that were used to full programmability and they demanded full programmability, and they even demanded, like the EVM specifically, like even the differences between like the EVM and the EVM minus five features are like big enough to cause a lot of projects, not to not go in one on one way or two, and instead of go to another one.

Right. But like the difference between the full programmability and the, what I called in, mastercoin, the Swiss Army knife approach. where you say, these are 20 applications that I like. Let me support those 20 applications and let’s do nothing else. that was like basically the problem is, you know, there’s always going to be applications where you don’t realize that those applications are even possible, or you don’t realize that there’s a completely different way of doing them. And so, that was that ended up, just not succeeding.

Vitalik Buterin 00:39:15 And, you know, the the full programmable approach, ended up succeeding. There were also other really interesting ones, in the early days. Right. Like, I remember, I mean, Bitshares, Bitshares launched a little bit after. Right. And, I mean, I always, like I have a bit of a soft spot for, bitshares.

I think, because, I mean, first of all, like, to me, I like, I think a lot of, Daniel Larimer’s entourage are just total snakes. But I think I’ve always thought that Dan Larimer felt like a really, actually interesting person. I mean, he was clearly very philosophical, like he actually wanted to, like, make the world a more free place.

And I also respected them for doing innovation on the like economics and mechanism design side. Right. Basically. Yeah. Like one thing that they did was the whole like shares and angel shares thing where like anyone could launch basically a network that’s part of their network. And then effectively if like the, the major shareholders have 20% of your thing, then like it’s this sort of one community that all shills and supports each other.

Vitalik Buterin 00:40:26 So work together. then like inside of each of these first Bitshares, then EOS, there was the whole, delegated proof of stake thing. And like on the one hand, like I always criticized it really hard. Right.

And I wrote all these articles like basically saying that coin voting is bad and voting is broken. But at the same time, like, I really respect them for trying something, right? I yeah, like I respect how they managed to have all of these different nodes. Like there was an event later.

I know there was like EOS, New York, EOS Shanghai, like EOS, Hong Kong, all these different nodes that were actually communities that were trying to, you know, support development support and like marketing for EOS. so I like to me, the like the economics were always one of the big weaknesses of, I guess what you might call, you know, the open source free software, like freedom friendly software kind of world, right? Which is basically that like traditional software, like it has business models.

Vitalik Buterin 00:41:28 But those business models depend on having walled gardens, having a lock in, having a lot of control over the user. And, if you don’t have those things, then, you know, what you’re building effectively is a pure public good right. It’s non excludable and non rivalrous. And you know in a traditional economics textbooks the only way to fund public goods is taxation. And of course you know as libertarians we don’t like taxation.

At least you know from the government. Right. And so you know we get like, well, this is like it feels like, a lot of people sometimes like, think that I’m this, like, crazy socialist because I talk about this problem so much. Right. But, like, you know, like to me, like the, the motivation was always like, I want business models for things that respect people’s freedom and like, don’t try to create like, corporate logic.

Right. And, like, if we could solve that problem in a generalized way, then, like, it basically means that the quality of all of this stuff that we depend on, you know, including zero knowledge proofs, including, you know, like basic, protocols and like, software, cryptography, everything is just going to be so much better and we’re actually going to like stand a chance at competing with, you know, the major banks and, and, and Venmo and, you know, like, Alipay and, and and so on and so on.

Vitalik Buterin 00:42:54 so I respected, Daniel Larimer for actually trying. Right. then and I felt like, yeah, you know, I, I guess I Bitshares and then EOS were probably the big one from, in the, I guess maybe 2015 to 2018 era. And then, you know, obviously others, started showing up later as well.

Vlad Costea 00:43:16 It’s funny that you foreshadow my upcoming question because I was going to ask you about Ethereum killers. Right. You launched the network. I think it went live in 2015. You’re going to turn ten years old very soon.

And then in 2016, you had this rocky moment when you had the DAO hack and you had to make this political decision to basically return the funds and that caused like a community split. You still have Ethereum Classic today.

They’re probably still not happy about some stuff, but regardless. In 2017, Ethereum was established as this major asset. The number two that almost flipped Bitcoin. You know, and what happened after is that a lot of people were trying to create a better Ethereum.

Vlad Costea 00:44:03 So you had neo, you had NEM, you had EOS, the one that did an ICO for an entire year. You had a lot of them. It’s very hard for me to make a complete list of all the ones that were trying to come for Ethereum by promising that they offer more expressive smart contracting or programming in multiple languages or whatever.

But none of them gained the network effect. And even today, you’re competing. And there are some people in the chat mentioning Solana, you’re competing with Polkadot. You’re competing with, I guess, Avalanche. I’m not sure if it’s a direct competitor, but it it tries to do sort of the same. There’s also Tron.

It’s it’s a weird story. That guy Justin Sun tried to be you, like, in creepy ways. And yet Ethereum is still holding its position and it still has users. It still has investors who build stuff. And it’s curious to me that you’re maintaining this, okay, because you started out as the underdog of this whole battle.

Vlad Costea 00:45:10 I think maybe you’re not underfunded, but you are not the most experienced team of developers. And then you grew the chain, and then you had all of these contenders trying to take Ethereum’s position. But they did not succeed, even though they they claimed some sort of superiority. And I wonder what’s the secret for this? How do you get people to stay even if there is something that claims to be technologically better.

Vitalik Buterin 00:45:43 And I think. The way that I think both, you know, like people working on Ethereum and people who, like stay here on Ethereum, tend to talk about it as, like Ethereum is like the one. other than, Bitcoin that’s, like actually has a credible story that it has a high level of, decentralization.

Right. And, like this is something that we get that we hear all the time, right? Like, basically, yeah. You know, if, Vitalik hates you, you’re safe on Ethereum.

If this, other person, hates you, you know, like, are you necessarily safe on their chain? Right? And like, a lot of those other chains, like they do, like, make, like a dao fork equivalence things for all kinds of different situations.

Vitalik Buterin 00:46:33 I mean, I think I saw, like hyper liquid, I believe. Like recently. Yeah. Like, did, reversion to get some, money back. but then it’s like they did that for some things, but then they did not, do that for other things. so, like, Ethereum is like the one where people actually get trusted not to, not to bug you in one of those ways.

And. Well, what was interesting about the DAO fork, right, is that, like, a lot I think a lot of people thought like at the time that it was a precedent. but then, you know, in 2017 and 2018, like we did, also get some counter precedents, right?

Like we got the parity wallet hack and it happened twice to like a couple of other hacks. There were a lot of situations where there were hundreds of thousands of eath that were lost. And there was a question of, like, can Ethereum? Will Ethereum do a hard fork to recover those funds.

Vitalik Buterin 00:47:31 And like, we could have. Right. Like, that was, it’s recovering money that’s lost is sort of a much in some sense even feels like a more innocuous thing than, like breaking, like taking money from one place to moving it, moving it to another place, like, it feels like the sort of thing that has no losers.

Right? But, like, we ended up not doing it right. And I think when I say we like, I mean, I don’t mean, you know, the foundation, I mean the whole ecosystem. Like, there were even, carbon votes like eath holder votes, at the time. And, those were heavily opposed to doing those kinds of recoveries.

Right. And like since then, you know, Ethereum has it’s really, yeah, disrespected, like user immutability, like pretty much at all like possibly the worst thing that might have happened where, like, some contract with $10, in it, like five years ago. that, like, stopped working because of, like some hard fork that had to change some gas costs to protect the whole chain against denial of service attacks.

Vitalik Buterin 00:48:38 I mean, I’m actually I’m not even sure if like, like when we did those gas cost increases, like we did very carefully like look through the whole, like ecosystem and see, like, is there anyone that’s affected? There were a lot of analyses. and so like we do that the that the downside was like basically none or almost none, but like theoretically, I mean, like there were like there might have been like one very tiny thing, but that’s basically it. Right.

And then on these other chains, like it’s regular that, you know, there’s like some trader that loses $10 million because like someone else, some other trader has, even like a strategy that sort of where it’s even debatable whether or not it’s legitimate and then like, you know, hey, if you could get the big guys to revert for you, then, like, you could get reverted, right? So that was one thing. Also the multi client ecosystem means that Ethereum actually can survive without the foundation right.

Vitalik Buterin 00:49:35 Like like if I had to ask you know like what are the ecosystems that can totally survive and keep going without a haircut. Maybe slower but without a hiccup if their foundation, suddenly disappears like Bitcoin? Definitely. Right. And, I think like, I think Ethereum has, has gotten to that point. Right. But like, which other ones.

Right. So I mean, so that was one and then I, you know, there’s like a strong culture of like, caring about, like, if we do this L1 thing, will that actually interfere with people’s ability to run nodes? There’s a culture of, like trying to build privacy related things and or tornado cash happened on Ethereum.

And then, of course, railway and privacy pools happened on Ethereum. Now tornado cash is back on Ethereum. so there’s was this like deep culture of caring about these things. And generally Ethereum killers, like they don’t try to compete with Ethereum for that segment, right? Like they basically try to compete with Ethereum along with what they consider the pragmatist axis.

Vitalik Buterin 00:50:41 Right? Which is basically saying like, hey, high levels of decentralization are overrated. Let’s instead, like go for higher scale. And, you know, we’re going to have like 20 or 30 major nodes, right? And so they do deliver on higher scale. I mean, well, so they deliver less than, they promise often. Right. So like, I think all of these chains ends up like they promise, 10,000 TPS because that’s what you could do in a test environment. But then in a live environment, they pretty much all end up topping out in the hundreds of TPS. so.

Vlad Costea 00:51:18 I don’t even think they have so many users in the first place.

Vitalik Buterin 00:51:21 Right? Exactly. And a lot of the usage is subsidized by the foundations. A lot of it is that like very, very short term things. So but but like the, the kinds of like people and applications that they get. Right. They, they do tend to be people who, you know, care about decentralization less, care about, open source less, even care about security practices less.

Vitalik Buterin 00:51:50 And, you know, the famous quote is from, somebody is like, I, I value speed more. Right. And so, you know, it’s like basically, yeah, those but for those kinds of users, like, there’s, definitely. Yeah, a lot of, non Ethereum options and there’s even market segments where they’re winning. Right.

And like I think that’s fine. Right. And I mean for and the way that Ethereum has historically competed for that segment basically is truly or Surulere to us. I look to have done quite well. Right? And you know, a base has gone up to. It’s like 150 TPS now with the extra hard fork.

The amount of like blob space, like amount of data space for layer two is just going to go up by two x. And so bass and the others are going to go up even faster. So hey yeah. You know, this was also another one of those kind of arguments for the. Yeah. The the layer two approach.

Vitalik Buterin 00:52:53 Right. Like there’s things that you can do on layer one. And then there’s things that you can do on layer two. And like on layer two you have a little bit less decentralization. But you know, like you can do this smart this like smart contract and proof system stuff, to just, basically make it be as, like, still as self-sovereign as possible. And, you know, they’re doing the best job of that, that they can. So, you know, I think that’s fine. Fun.

Vlad Costea 00:53:21 Yeah. You opened lots of. You made some references that basically foreshadow topics that I want to ask you about. There is tornado cache. There is the layer one versus layer two situation, because I remember when Ethereum was you had lots of crazy ideas. At one point you said you can use Bitcoin Cash blocks to unload data from Ethereum. You also wanted to do sharding, which I don’t think went too far. But there are some alternatives to Ethereum that tried sharding. But anyway, before we explored these topics, I got to present two more sponsors.

Vlad Costea 00:53:57 One of them is signify. So if you’re listening to this and you want to buy some Ethereum, you can actually do that on SideShift in a way that requires no registration. And let’s say you have Bitcoin and you want to swap it for Ethereum because you you want to make Ethereum go up in terms of BTC.

You can do that on SideShift or if you don’t believe in Ethereum anymore and you want to buy something else like Trump meme coins or whatever, you can still do that on SideShift. But usually I tell people when they get paid in stablecoins, use site shift to get free market money.

I think that’s a more honorable way of accessing the service. But Andreas Brekken, who is the CEO of SideShift, says hello. And also, I know that he was one of the biggest contributors to your list of Craig Wright lies on GitHub. He was sending two articles and submitting pull requests, and I think that’s right.

Vitalik Buterin 00:54:51 Well, you know, the story of that list, like the list is actually his list, right? basically, yeah.

Vitalik Buterin 00:54:58 The reason why it sort of ended up being my list is, because, what I made, April to his list to add a few examples. And then I think he got a, like a takedown notice from, Craig Wright, and so he did not feel like he wanted to like he he did not have the legal muscle to properly fight it off.

And so I believe he took it down. but then those same lawyers, of course, came for me. And like, I actually did not even realize at the time that just making a pull request means that you’re making a copy of the GitHub repo, within your own GitHub. Right. And so they came from me.

And then of course, with, Ethereum Foundation, lawyers, like, I decided like, hey, no, you know, we’re going to fight this. And, actually, they yet never actually came to a lawsuit. I think they were too intimidated to try. And so, like, the, the that copy of, the list, which was originally I was like, basically.

Vitalik Buterin 00:56:01 Yeah. On GitHub slash and slash, I think Cult of Craig. I forget if there’s dashes or not like that. ends up being one of the last, copies of it, but, it’s, Yeah. That was, one of the biggest and the most fascinating documents. And the great is just that, such a character.

And I mean, at the time, I think, convincing as many people as possible that, like, he actually is a fraud was, you know, obviously really important because the guy was just, like, causing so much damage and just, like, distracting so much effort toward all of these, like, pointless, and, given for even fraudulent things. But now, you know, he’s quiet and, of course, you know, the courts have, ordered him to be even more quiet. So I guess, you know, that was about one.

Vlad Costea 00:56:58 This is something else for which you don’t get much credit, but you’re responsible for it because you said in 2018, I think it was on the stage of Deconomy in Korea that you don’t want this guy to be invited anymore, and you sort of canceled him from all crypto events, and he was only speaking at Coin Geek sponsored conferences or whatever.

Vlad Costea 00:57:21 So when you did that, it had an impact across the whole industry. He was no longer invited to speak. Before that, he was sort of like a curiosity. People were curious to listen to him and see if he has any compelling arguments when you spoke against him. I haven’t seen him speaking at major events anymore.

Vitalik Buterin 00:57:46 Yeah. I’m trying to think. I mean, now that I think about it. Yeah. You’re right. I don’t think he has been at a non coin geek thing since 2018.

Vlad Costea 00:57:57 So I guess you didn’t even realize it, but it’s sort of obvious.

Vitalik Buterin 00:58:03 And I’m curious, are there any of, like, who are the biggest, I guess, like, fun characters in Bitcoin these days. Like, are there any that kind of, you know, measure up to all of the crazy stuff that happened in the late 20 tens?

Vlad Costea 00:58:20 No. Not really. I don’t think we have a Mircea Popescu or whatever.

Vitalik Buterin 00:58:27 All right. I forgot. Good old Mircea.

Vitalik Buterin 00:58:29 Yeah, I forget him too, I think. Right. He also offered to. I think he offered to, like, buy. Yeah. And, like, he basically shorted ETH by making a public, offer to buy people’s if at, or to sell people. You said 5000 to 1. despite, like, not having any, I’m not sure if anyone took, took him up on his offer because I think people didn’t really didn’t even trust him. but, that was, yeah, his his stuff was so crazy.

Vlad Costea 00:59:04 But I had, what’s his name, Daniel Kravisz on the show, like, a couple of weeks ago. And he still believes that Craig Wright is Satoshi. And I asked him, you know, did he prove anything to you? Did he show you anything compelling? Was he able to win a court case? And he said, no, but he taught me stuff about Bitcoin that I previously did not know. And I was like, what? Didn’t you know this guy? So I guess, you know, Daniel, he wrote some of the best articles about Bitcoin in 2014.

Vitalik Buterin 00:59:35 Yeah. You know that kind of reminds me a bit. I mean, I saw this like a very weird tweet a couple of weeks ago. It was a dating advice for right leaning people in Europe. And the this this guy was like very crazy, right?

But the thing that he argued was like, hey, you know, if, like, if you become, if it becomes clear to a woman that, like, you support, you know, like right leaning crazy stuff, then like, she is going to totally like, nope, out of out of there. And, his argument was that you should first tell. Like tell her.

Ask her who Otto von Bismarck is. And like most Europeans like, don’t really know much about him. But I guess, like, no one in any country on average knows that much about any history. But like basically, if you like show to her that like, you know more things about Europe than she does then like she would be. Yeah, become more open minded.

Vitalik Buterin 01:00:34 And I mean, this stuff is like, totally. Yeah. Crazy. Right? But, I mean, I like, I, I definitely don’t, Support any of those, like, manipulative styles. I’m not sure if they, if they even succeed. Right. But, like, I guess, it feels like, making a show, teaching someone else something that they don’t, something they don’t know about, something that they care about is like a common, I guess, I guess, guess you could call it scam or tactic, or a kind of one of these sort of black hat tactics for impressing people. so, yeah, it’s, something you definitely want to be careful about.

Vlad Costea 01:01:19 Yeah. And once again, you did a pretty good job with this. And I gotta plug this. Let me finish up with the sponsors, and then we can have a free flowing conversation. NoOnes.com is a website which has a peer to peer marketplace, which tries to onboard people from the Global South and the Middle East.

Vlad Costea 01:01:39 CEO Ray Yousef says hello, by the way, and he also says he owes you an apology. And also he wants to have you for a workout to do chest or legs together. Okay.

Vitalik Buterin 01:01:51 Okay. Oh, well, keep that in mind.

Vlad Costea 01:01:54 And there’s also Bitcoin.com news. And for a few years, Bitcoin.com was a Bitcoin Cash website. And it’s my duty to inform people that now they know the difference between Bitcoin and Bitcoin Cash, and they followed the incentives of the market. And if you open Bitcoin.com today, it’s more centered around BTC and they have pretty good journalism. If the listeners have any time to read news, I think it’s pretty balanced. I would dare say it’s more balanced than Bitcoin Magazine, which is maybe too Trump centric. But anyway, check it out. Also, I should ask you about that one. How do you feel that Bitcoin Magazine is now like a Trump publication? Yeah.

Vitalik Buterin 01:02:40 Yeah. It was pretty crazy to see the evolution of that whole thing, right. I mean like it definitely became Bitcoin maximalist pretty quickly.

Vitalik Buterin 01:02:51 Then it became a Trump thing quickly. I forgot like Bitcoin magazine. Are they also the ones that do the Bitcoin 2024 or like the the conference.

Vlad Costea 01:03:01 Yeah I, I guess you were. You were at one of them like, two years ago, right?

Vitalik Buterin 01:03:06 I actually don’t think I was the closest was that there was in 2021 in Miami. And like, I didn’t go to the conference, but I was like once the, you know, like some surrounding, like events and just talking to people.

Vlad Costea 01:03:22 I think David Bailey posted a picture of you attending, and that’s what I remember.

Vitalik Buterin 01:03:26 Right, okay. I mean, it was well attended, something like definitely not a big, big win event, but I saw him like also on Twitter. I don’t know if it was them or another one, but like it was there was like an article like Russia legalizes crypto mining. And then they had this, like very cheerful, congratulatory thing of like Vladimir Putin holding up a glass of vodka. And it was like, oh, God, you know, like it’s like, do you guys even remember what it was? And, yeah, it’s, it’s pretty wild.

Vlad Costea 01:03:58 Yeah. I mean, I look at your style of journalism, it was mostly technical and also some travel stuff, like you went to Room 77 in Berlin, you went to Israel a few times to attend some hubs in there. Yep. And the Bitcoin magazine today is very different. Like I read your article about announcing Ethereum and it was not how should I put it? You are not selling the token, you are just explaining what this is, why you’re launching it. Why? Why it makes sense. And I don’t know, it changed a lot. I think it changed over ownership twice after you sold it.

Vitalik Buterin 01:04:37 Okay. I did not know that, but.

Vlad Costea 01:04:39 I think it was Charlie Shrem that bought it from you. And then it was David Bailey.

Vitalik Buterin 01:04:44 Right.

Vlad Costea 01:04:47 I hold some copies, some old copies of Bitcoin magazine. I don’t have them here, but it’s interesting that there was clearly a shift, and I used to work for them, by the way. I wrote for them for about a year.

Vlad Costea 01:05:01 Wrote about 50 articles.

Vitalik Buterin 01:05:03 Yeah. I mean, it feels like there’s been a lot of these, like bigger political shifts that have happened and definitely a lot in, libertarian lands. And, I mean, I think crypto was part of libertarian land from the very beginning. And so it had its own mirror image of like, basically every part of that.

Right. And, you know, you see these days, like, there’s some libertarian parties arguing that the government should ban synthetic meat and, you know, there’s a bug. A lot of them are saying all kinds of things that I personally don’t consider to be very libertarian. so, you know, people a lot of people change a lot.

There’s, a lot of drift. I mean, there’s a lot of intersection between that and, Bitcoin. so it’s, Yeah. You know, you definitely don’t want to like someone saying and doing things during one year is definitely, again, no indication that they’re going to do the same things 5 or 10 years in the future.

Vlad Costea 01:06:09 Yeah. You also have a question which I found interesting from a guy who’s named EarlyNFT.bit. He’s into Namecoin stuff, and he says that on November 27th, 2013, someone from Ethereum Foundation registered the domain name Ethereum and set up the domain To The Moon Ethereum. The very next day, the domain Too The Moon.bit was registered on Namecoin, even though Ethereum bit would not be registered until January of 2014. To the moon wasn’t a very popular thing at the time, so it’s unlikely that the two registrations are not from the same individual. Would it be too forward to ask if Vitalik personally registered these names? I hold the deed to both.

Vitalik Buterin 01:06:53 Yeah, unfortunately, we didn’t do that. That was not us.

Vlad Costea 01:06:57 Okay. He said he holds the deeds to both name name coin records and would be happy to reunite them with their creator at no cost.

Vitalik Buterin 01:07:05 Okay. Oh, no. Yeah, I appreciate that. We can follow up.

Vlad Costea 01:07:10 If the person who registered to the moon on Ethereum is listening to this.

Vlad Costea 01:07:16 Then you can get the name coin asset too.

Vlad 01:07:23 Perfect.

Vlad Costea 01:07:24 Yeah. So let’s get back to the conversation about Ethereum and scaling the base layer. Because I remember you had lots of proposals and approaches. In the end you settled for Layer twos.

And some people were unhappy and they just became nihilistic. Went to Solana or whatever said oh we just want to do meme coins on the base layer because it’s simpler or I don’t know exactly the consideration. Maybe it was fees Is.

And I gotta ask you, why did you decide to go to layer two? Even though there seemed to be like sort of a resistance to it because this was the Bitcoin approach to do layer twos, but Ethereum was gonna scale on chain also.

Vitalik Buterin 01:08:08 Yeah. So basically, yeah, we made that decision around late 2019. And the reasoning was that, like our development effort as the Ethereum Foundation was limited, we had limited resources, we had limited people. And also all of our team was like full speed ahead trying to figure out the merge.

Vitalik Buterin 01:08:33 And, the merge was like a really big grant project. And of course, you know, lots of people were saying it would never happen at all. Right. But eventually, you know, it did end up happening like, it took a long time to get there, right? And, in 2019, we basically just I did not want to distract people from working on the merge.

Right. And so we did account abstraction as an an ERC. So like a second layer standard, that like people could opt into instead of being a protocol feature. though, now actually with, 7701 it’s, well, going in seven, 702, it’s going back in the direction of, sort of becoming a coming back to being a direct part of the L1.

And then for scaling like similarly, we. Yeah, decided, that, the given that the L1, R&D time is like so concentrated on the merge and, and other things, that, we just, like we did not have the resources to do it directly.

Vitalik Buterin 01:09:37 And so we just did the pragmatic thing and said, like, okay, let’s, invite other people in the ecosystem to do it, and, let’s, basically, yeah, do the equivalent of, sharding, but where, You know, instead of the shards were a protocol feature there like a thing that other people could create. And then you would have, like fraud proofs, zero knowledge proofs, verify that whatever is happening in those layer two is actually that is correct.

And so people would be able to, you know, get the benefits of like being connected to Ethereum and being like fully self-sovereign and all of those things in a way that pushes, the TPS, much higher. Right. And of course, you know, it definitely took a while, but over the next, 4 or 5 years, that’s, basically happened.

Vlad Costea 01:10:32 Here’s a question that’s popular among Bitcoin circles, and people like to dunk on Ethereum because of this. What kind of hardware does it take to validate Ethereum to run a node?

Vitalik Buterin 01:10:45 So today, You can you can absolutely do it on a consumer laptop.

Vitalik Buterin 01:10:52 So, the so the laptop that I’m using to talk to you right now, it’s, Dell XPS 15, it’s totally managed, managed to sync and run a, node. and actually, yeah, it managed to do an archive sync. So which actually means that you’re not just downloading everything since Genesis, but you’re actually directly verifying every single transaction since Genesis.

And it managed to do that sync in four days. so right now it’s like very possible, I think. but this topic is, interesting because, I mean, I think you’ve probably seen, but we’re looking to, like, there’s a lot of momentum right now to also increase the scale of the L1 as well. Right?

And, there’s a lot of these interesting questions of like, well, you know, like what is the role of things like phono and even going to be going forward. Right. And, and so there’s this, there’s this like interesting philosophical rabbit hole that’s being like I think Re-exported. Right. And like basically, yeah.

Vitalik Buterin 01:12:01 You know, the ultimate goal, right. I think, is, we want as many users as possible to be interacting with the chain in such a way that they actually are verifying the rules of the chain. And the reason why this is important, is, I mean, I had this, kind of like, mini story in, one of my posts a couple of years ago.

I think it was on, like, limits to scalability. let me, try to, quickly find it. I can, see if if the story is, here, there. I’ll just read it out. so this is, imagine, like what? Like this story would be told in, one of these, like, highly scalable chains where no one’s running full nodes.

At 2:35 a.m., you receive an emergency call from your partner on the opposite side of the world who helps run your mining pool. Or it could be a staking pool. Since about 14 minutes ago, your partner tells you your pool and a few others split off from the main chain, which still carries 79% of the network according to your node.

Vitalik Buterin 01:13:03 The majority chain blocks, chains, blocks are invalid. There’s a balance error. The key block appeared to erroneously assign 4.5 million extra coins to an unknown address. An hour later, you’re in a telegram chat with two other small pools who were caught blindsided just as you were, as well as some block explorers and exchanges. You finally see someone paste a link to a tweet containing a published message announcing new on chain sustainable protocol development funds.

The tweet begins by the morning arguments on Twitter and on the one community forum that was not censoring the discussion. Discussions are everywhere, but by then, a significant part of the 4.5 billion coins had been converted on chain to other assets and billions of dollars of DeFi transactions taking place. 79% of the consensus, though, is in all the major block explorers and endpoints for light bulbs. We’re following this new chain. Perhaps a new fund will fund some developments, or perhaps it will all be embezzled by the leading pools and exchanges and their cronies.

But regardless of how it turns out, the fund is, for all intents and purposes, a fait accompli, and regular users have no way to fight back, right? So this is kind of the, you know, the dystopia scenario that we’re trying to get away from, right? Basically, a scenario where a majority of the mining power or stake power can just like push a change to the protocol could be creating new coins, could be changing the rules, could be deleting some contracts or whatever.

Vitalik Buterin 01:14:24 And like because regular users are not actually validating the chain. Like they just like everyone just accepts their new blockchain by default, right? So this is what we don’t want, right? And I think in Ethereum like we’re Are 100% set in stone. that’s, like, we do not want a future where that kind of scenario is possible.

And so we’re like, we want to do everything to fight against it. Right. So in the tech with the technology of the 20 tens, the only way to fight against this kind of thing is basically for as large as possible, a set of users to actually run their own full node directly.

Right. And, but in the 2020s, you know, the game changed in a lot of ways, right? so like, basically, we actually have a whole bunch of technologies that basically all have this flavor of one actor spends more resources to add some kind of extra information, and in exchange, the process of verifying the blog for everyone else becomes much easier.

Vitalik Buterin 01:15:27 Right. So and obviously, yeah, you know, ZN Snarks are one of them actually, stateless clients are another example. Right. Basically what what what happens there is, you could have one node that’s creating the block. Also, add on Merkle branches for everything that they’ve accessed. And then all of the other nodes that are that are verifying, like they would just verify everything through those Merkle branches.

And so they would require somewhat more bandwidth, but they would not require any hard disk space. Right. And so they would be able to sync instantly. Yeah. They, it would, it would not take up space like a much larger number of, just existing computers would be able to do it.

And then of course, like one node creates a block. And then for everyone verifying it, it just becomes trivial. Right. So like sum to me the bigger like possibly even the bigger embarrassment right now is with Ethereum is like one is of course, that there’s like a relatively small number of people running full nodes.

Vitalik Buterin 01:16:30 But the other is that on the in wallets, like there’s a large number of users that are not even doing light verification, right? They’re basically just fully trusting RPCs. And, I mean, I think even in, in Bitcoin, right? I think like a pretty, a pretty small portion of, users are like actually directly running, fully verifying bitcoin full nodes. Right.

Vlad Costea 01:16:57 Yeah. Last time I checked, they’re like 15,000. And I don’t know that there may be 100,000 users of the main chain every day.

Vitalik Buterin 01:17:06 Right? Yeah. So 50,000 is still good, right? But, like, I think what we want to get to is we want to get to a world where, you know, the average, like MetaMask, user like within MetaMask, you just have a. Yeah, and Ethereum node, and that Ethereum node is actually fully verifying the Ethereum chain. Right. And of course, to do that, like you need like you would be able to do it with ZK Snark. Right.

Vitalik Buterin 01:17:28 And so with a snark, basically one person creates a snark. It proves that the whole chain is valid. And then, another user would or any other user would be able to just verify a proof and they know that the chain is correct. Right.

And then we also came up with this technology called data availability sampling, which verifies that not only is the data valid, but the data is also like also has actually been published to the internet, which is important. Right. Because, that’s another kind of invalidity that, cryptography is never going to capture. so that’s some I, I don’t know if also you saw this, but recently I published, this if magician’s post, it’s called, a maximally simple L1 privacy, roadmap.

And a big part of it that I talk about is basically, how do we make like, things like tornado cash and railway, a default part of people’s user experiences? and, that just means incorporating them into existing wallets, like using private sense by default. but another big part of it also is the other big reason to use a full node, which is privacy, right? Because if you use an RPC, then first of all, you’re trusting the RPC node to tell you the information and to be correct.

Vitalik Buterin 01:18:42 But also you’re trusting that RPC node to not log your private data. Right? It’s like, you know, if you’re use doing some like say, politically sensitive donation and okay, maybe, you know, you use tornado, you use railway. And so there’s no on chain evidence. But then if you’re going through an RPC node, then like whoever controls the RPC node, they see what requests you’re making. They see what transactions you’re sending.

They see everything. Right. And so the question is how do we get around that. Right. And so we’re starting to also think about, you know, various like privacy technologies to make it possible to do reads privately. Right? So I guess, like the big change that we’re trying to adapt to is that, like, there’s all of these new technologies, like all these new forms of cryptography, including snarks, also including peer, including a lot of things.

Right? They all have this property that they basically allow, like a little guy to connect to a big guy and get but but at the same time, like get all of the same guarantees without doing all of the big stuff themselves, right? And like, that didn’t exist in the 2010s.

Vitalik Buterin 01:19:53 Right. And a lot of the mentality around, like full nodes, like it, it was, created in an environment where like that, like that totally new option did not exist. Right. And so now we want to like Ethereum is going through this process where we’re rethinking, you know, one, we want verification to be available to everyone. And we want everyone to verify by default.

And you have snarks, you know, we have data availability sampling. We have all of these things. That’s good. Right? Two is, we also want participation in consensus to be. Yeah. as, distributed as possible. Right. And then there’s the question of, you know, like, what is that like? Does that mean decentralized stake pools? Does that mean, solo stakers that does that mean, some, some combination of them?

How do we make either decentralized staples or solo stakers competitive with, the big pools for as many people as possible. So that’s also another discussion. And then, there’s some of these kind of heavier tasks, right? Because, the price of, the whole thing is like, it’s it’s, basically like, let’s say 10,000 times cheaper to verify a block.

Vitalik Buterin 01:21:09 But on the other hand, some one person needs to do 100 times more work to generate the proof. Right. And then who does that work that works? Going to take more effort than one single computer. How do we ensure that that’s still going to be like globally distributed, so we can still rely on at least one of those two to continue existing weekend proofs, even in some pretty exceptional cases.

Right. So there’s, and like, I think the other thing that’s important, right, is that how do we said layer one is never going to scale like everything goes on layer two is we would have basically had the same debate. Right.

Because, but instead of having that same debate with regard to Ethereum, we would have had that same debate with regard to like a base. Right? Because it’s like even if theoretically you have all of these proof mechanisms saying, like all on base, like whatever happens on base, you’re safe. Like as a user, you still need the practical ability to ensure censorship resistance.

Vitalik Buterin 01:22:04 You still need the practical ability to ensure that if the base nodes go down, you can still take your coins out, you still need all these practical abilities. And so like basically the exact same kind of thing would be happening. Right? So there’s yeah, I mean, there’s a lot of, really interesting discussion happening on those, on those topics, right now, I guess, you know, you could call it.

You can call it Ethereum’s scaling debate, though. I feel like it’s, like we’re less of a debate and, and more collaborative and hopefully, yet with the newer cryptography, like, we’ll actually be able to address all the different, types of people’s concerns at the same time. But, you know, this is like the thing that’s happening right now.

Vlad Costea 01:22:55 this is why I have respect for your work on Ethereum, because I don’t think there’s any conversation in so-called Ethereum killers about getting rid of RPC and just using servers, because that that basically creates points of failure and also makes it less censorship resistant.

Vlad Costea 01:23:15 You can have a few of these servers basically denying service to some countries or deciding that some transactions are non-standard or undesirable or whatever, or they come from certain addresses and they’re not going to be broadcast. And that’s not something that you want to have in something which is supposed to be sovereign and global and neutral and everything else that we claim to care about in Bitcoin.

Sometimes, because I get disillusioned that there are times when I realize that some of these talking points were just LARPing to make the numbers go up. But I remember Eli Ben Sasson was probably the first person to talk about this in 2013. He’s a co-founder of Zcash and now Starkware. And he was talking about doing instant things of the full node just by verifying a ZK proof.

And that has been the dream for like a decade. And it’s cool that Ethereum is embracing this approach. And on the topic of ZK stuff, I know that Ethereum has paid through the foundation. A lot of the research that basically created the rollups and also the ZK snarks became more advanced.

Vlad Costea 01:24:30 I think Zcash had like five iterations right now. They finally got rid of the trusted setup, and they also have smaller transactions with Halo two and your thread pools. And it’s pretty cool. And I was gonna ask what’s the relationship between Ethereum and Zcash? Because as far as I know, Zcash was like this experimental lab for Bitcoin to bring privacy to it. And I don’t see it coming anymore.

Vitalik Buterin 01:25:00 Yeah, Zcash still exists. It’s still around. It has a community. I mean we’ve collaborated on cryptography. Yeah, quite a bit. we’ve used some and obviously like Ethereum is fully dependent on or at least Ethereum’s privacy side is fully dependent on technology that they’ve significantly helped the pioneer. I mean, we’ve also, given them, advice on, proof of stake related, things. So there’s definitely been like some very positive interactions between those two communities for quite a while.

Vlad Costea 01:25:35 That was very diplomatic of you. Well, what do you think about Zcash nowadays. Do you think it still has chances to recover.

Vlad Costea 01:25:43 Or was it sort of abandoned by the investors and everyone was bullish on it.

Vitalik Buterin 01:25:50 I think I mean it was definitely a not like it definitely hasn’t been abandoned by its team obviously. Right. And people are still, like working hard on pushing it. I think, the challenge that it’s had is obviously, you know, the challenge of, the coin retaining value.

And, I mean, that’s, that’s a hard thing for a lot of projects, right? It’s, like one of those things in the crypto space is like, sometimes, Like technical value and, like, economic value can be just, like, so disconnected from each other. I mean, you know, they’re like. Yeah. It’s the position, that they’ve, like, put for, themselves, right? Is basically.

Yeah. Saying like trying to be a bitcoin like thing. but then at the same time, like becoming the, the standard bearer of privacy, it’s, I mean, it’s a challenging thing to succeed at, right? Because I think, like, if you want a sort of bitcoin like legitimacy, like a big part, like the biggest part of it is not technical.

Vitalik Buterin 01:27:04 It’s social. Right? It’s, and a big part of it is just like this mode of having an established community, this, history of, not making crazy decisions. this, This history of people valuing your thing. So it’s a and definitely a challenging a game that, they’re playing. though like I definitely wish them the best. And like, I definitely really hope that they, succeed because I think it’s, you know, a world where people can be. It’s a really important technology to succeed is, including financial aid is definitely a better world.

Vlad Costea 01:27:42 Yeah. And I think without Zcash, correct me if I’m wrong. I don’t think railgun or tornado cash would be possible.

Vlad 01:27:51 Correct?

Vitalik Buterin 01:27:52 They would.

Vlad 01:27:52 Not.

Vlad Costea 01:27:54 What do you think about the situation of the Tornado Cash and Samourai developers?

Vitalik Buterin 01:28:01 Yeah. I mean, it’s, definitely, yeah. Crazy that, you know, the government’s, like, actually started, like going after developers in, that particular case, right. It’s like the sort of thing where there’s a large category of software where, like I said, once you start opening up, that, that, that Pandora’s box, like, just, becomes risky and like, you know, like that action that probably made the, you know, the US a significantly less attractive, destination for many different kinds of, of software developments.

Vitalik Buterin 01:28:42 Right. Like, I feel like, you know, the really strong advantage that, the US has as a jurisdiction is like the First Amendment and all of the, you know, the strong history of, protections that are associated with that. Right? And so, if that like, if you, weaken, that I mean, even for code, I mean, like the like these are precedents that can easily become abused in all kinds of ways.

I mean, obviously, I think the cash thing itself is an abuse because I think, privacy is, is good for the world. Right? And I think, like, even if you don’t believe privacy is good for the world, I think, there’s, plenty of other ways to, like, go after it that don’t involve going after developers. but then separately, I believe that, you know, privacy is good.

And, like, we, we should not go after it. like, basically. Yeah. Like my view. My general view is that, you know, to the extent that, we do need to go after bad actors, which, you know, we do like, and, you know, I think, you know, like, in North Korea sending, there, like, thousands of soldiers to attack Ukraine is bad, right? And, like, if there’s ways to, go after that, then we should.

Vitalik Buterin 01:30:03 But basically, like, I think that should happen at the layer of goods and services rather than at the layer of money, as much as possible. so and like the layer of goods and services is like, even the easier one. like, it’s going to be the easier one in the future, right? Just because, you know, the physical world is just, inherently much more transparent, right? Like, I think if we can keep the, the money layer as free as possible, then, you know, like, to me, that feels like, you know, the right, just like, balance or distribution of, responsibilities.

Vlad Costea 01:30:43 Yeah. For the longest time in Bitcoin, the holy grail has been that of creating sidechain for scaling and figuring out a way to not have a federation or not have a trusted setup. And in Ethereum, I think you had plasma. You had what what was the name of the Lightning Network equivalent writing? Raiden. Yeah. Like the God of Thunder from Mortal Kombat? Yeah.

Vlad Costea 01:31:13 That one. And there was a lot of experimentation that led up to the rollups, and I think it’s been a few years until you came up with that and you decided that it’s really good. I usually ask people this, and I’m curious to know your distinction between them. How would you define a rollup as compared to a sidechain?

Vitalik Buterin 01:31:40 I think the difference is in verification. Right. So a side chain is just it’s a loosely defined term right. It’s basically just a chain that has some kind of connection to a parent chain.

A roll up is you know, to me it’s specifically a chain where all of the underlying data is, posted to the parent chain as opposed to being somewhere else. And the reason why data being posted to the parent chain is important is that it’s actually a critical part of the security property.

Like basically, yeah, if you imagine, you know, the operator of, the roll up, some just like, suddenly disappearing. Right. The whole point is that the safety of your coins inside of a rollup are not dependent on anything to do with the roll ups.

Vitalik Buterin 01:32:34 Like, operator, you know, ecosystem multi-sig, coin holders, whatever. They’re only dependent on the underlying chain, right? And so the if the operator disappears, then you need some way to get your coins out. Right. And if you don’t have the data then you don’t have a way of actually doing that.

And like you don’t have a way of actually proving that you have those coins. And so now there are other ways to achieve like a similar type of guarantee. Right. So plasma is the other really big category. And now we have int max which is doing this interesting type of hybrid role of plasma for privacy. so.

But you know, and so with that data published on chain, you have this like really strong security, guarantee that basically if you have a coin inside of a roll up, then if it’s like actually a full roll up and, like the training wheels are taken off and so on. And of course, the security of the proof system is correct. Then you have a guarantee that you that you can turn your coin in the side, the roll up into a coin on the underlying chain if he wants to.

Vlad Costea 01:33:46 What do you think about drive chains on Bitcoin? I, I basically mentioned the topic previously, but I didn’t ask you exactly what you think about the security implications of it. You’re going to have the miners securing these chains. So you trust them with escrow with the funds.

Vitalik Buterin 01:34:03 Right? I think a big part of the philosophy like to me has always been that, like, there’s this higher level of trust in the miners, right? Like basically, yeah. The way that, you know, remember, the design is like, you know, you have like basically different kind of tiers of block sizes. And then like as a user, you can, you know, you can verify some of the tiers, or you can also choose to not to, to not verify higher tiers.

But then the question is like, well, what happens if there actually is a 51% attack, right. And you know, with if there’s a 51% attack, then again, like the thing that you do not want, right, is you do not want the 51% attackers to, like, actually be able to, like, steal the coins, from, from inside of, like, any of these constructions and then turn them into like valid coins on, like whatever is the underlying chain.

Vitalik Buterin 01:35:06 and so here it’s this, framework where, like, what even is the, you know, sort of the L1 versus, like, what is higher layers that kind of gets a bit blurred, which is interesting. it’s there’s like something that’s, elegance to that approach, though. There’s also something that where like there’s an aspect where like, I would just, you know, like, prefer knowing like, this is, like this particular thing is, the thing where we agree that it’s, we agree on what the validity rules are. And, like, even 51% of miners can’t say it can’t break them. And then we try to scale past that in ways that 51% of miners also can break.

Vlad Costea 01:35:55 Some people in the chat are curious about this, and I think it’s a legit question. Was the transition of Ethereum from proof of work to proof of stake purely ideological in the sense that you wanted to have a lower energy consumption and basically escaped the Greenpeace campaign that was run against Bitcoin. Or is there something more to it?

Vitalik Buterin 01:36:19 so I think there’s a few arguments for proof of stake.

Vitalik Buterin 01:36:21 Right. So I mean, the environmental thing is one. But then also you need to keep in mind too, that, like the benefits of, not consuming energy are something that also benefit the ecosystem because, like, the ecosystem doesn’t have to pay for that energy in the form of, higher emissions. Right. Like issuance. so, like, there’s this big, you know, like, problem that everyone’s thinking about, right?

Which is basically, yeah, you know, like, once issuance runs out, then, like, how do we pay for security? And, like, there’s theoretical arguments for why proof of stake could give you a higher economic level of security for the same or significantly higher level of economic security for the same budget. So that was also one of the reasons.

And then another reason is that proof of stake has this concept of finality, right? Basically where after a very short time, a block can get to the point where like basically enough Stakers have signed onto it in such a way that if the chain ever deviates and the like reverts that block and it goes in some different direction, then like there would be evidence by which all of those stakers would like basically lose all of their coins.

Vitalik Buterin 01:37:36 Right. And so you have like a very high economic level of security that appears like very quickly after a block. And that’s like a useful property that a lot of people care about. So I think it’s probably a combination of those three things.

Vlad Costea 01:37:53 I want to get to the topic of privacy. But before that, I’ll take a couple a couple more questions that I think are interesting in the chat. Robin Linus, who is the creator of BitVM, actually tuned in and I’m really happy that he’s listening. He says I’m happy that he’s heard of BitVM. Would be interesting to hear his take on ZK coin / ZK CSV which is client side validation. It’s a paper that he published. I’m not sure if you read it or if.

Vlad 01:38:21 You’re curious to read it.

Vitalik Buterin 01:38:23 ZK CSV. Let’s see.

Vlad Costea 01:38:25 The paper is co-authored by Liam Eagen and Robin Linus and Jonas Nick.

Vitalik Buterin 01:38:33 An intellectual descendant of earlier embedded consensus protocols. and then, basically, yeah. So the idea is like you have client side validation, but then I’m assuming I’m just kind of reverse engineering this, that it’s like you can client side validate master coin style protocols using like basically snarks.

Vitalik Buterin 01:38:56 And then the other thing that you can do is, of course, if you have things like things like VM or things like the things start where wants to do with OB cat, then like you could make Bitcoin scripts that are themselves aware of the execution of these, like embedded consensus things. I mean, basically like this sounds like this is like basically layer two, right? Like like this is rollups. So I think it’s great.

Vlad Costea 01:39:20 You’re good at this. You didn’t read the paper. You just assumed what this is about. And you’re right. Except that the comparison he made was with counterparty as a protocol, not Omni, but. Right. Yeah. Yeah, you’re spot on. And there’s another question from someone who has my sponsor. Very early on he was working on Volterra and he built something that’s called the standard on optimism or no arbitrage. And he’s curious what you think about his basically BlockFi. Without the company, it’s like a lending protocol called a standard. He’s been building this alone.

Vlad 01:40:03 I don’t think.

Vlad Costea 01:40:03 I’ve seen for feedback.

Vitalik Buterin 01:40:05 Yeah. What’s it called?

Vlad Costea 01:40:07 TheStandard.io.

Vitalik Buterin 01:40:09 TheStandard io.

Vlad 01:40:11 Okay.

Vlad Costea 01:40:13 I owe him, like, a big favor. He used to own an exchange called Vaultoro, where he was selling gold and bitcoin since 2015 or whatever.

Vitalik Buterin 01:40:23 Right. Okay. So Unchained vaults, multi-asset collateral. I guess, like, I’m like, do you have a, I guess, a one sentence summary of, how it differs from like, of type of things?

Vlad Costea 01:40:40 I don’t know, I’ll wait for him to reply and let’s move on to other topics. Until then, I don’t want to shill anything. I’m just curious about your thoughts and on stuff?

Vitalik Buterin 01:40:51 Yeah, I mean, I think, you know, these kinds of things are definitely. Yeah, like, really valuable. I mean, I think to me, the big thing is that just giving like regular people access to like stable valued assets with competitive APIs in a way that’s like fully, globally accessible and fully self-sovereign, that’s like big, right? That’s it’s something that’s really valuable to a huge number of people.

Vitalik Buterin 01:41:20 And as the technology matures, it just keeps on improving. And like it actually. Yeah. Has gotten to the point where like I’m not constantly worried about like smart contract risk overshadowing whatever tiny interest points I can get. And so that’s, it’s been good to see the ecosystem get to that kind of state. so I expect more and more people to, like, actually start just like doing the bulk of their banking in crypto for that reason.

Vlad Costea 01:41:54 I have a question from the last sponsor I will show today, which is HODLing, their service that supports people with their self-custody. And the question is, what is your recommended way for people to back up their coins and to hold their keys?

Vitalik Buterin 01:42:11 is this on bitcoin? On Ethereum generic?

Vlad Costea 01:42:15 generic I guess.

Vitalik Buterin 01:42:16 Okay. I mean, I can just like, say the setup that, like Isaiah used to recommend. basically, yeah, like half a big multisig. so like on Ethereum, I use, like safe and I mean, I’m sure on Bitcoin there’s great multi-sig as well.

Vitalik Buterin 01:42:36 And you have some number of keys and the majority of those keys should ideally be held by. Yeah. Like people that you trust who are maximally distant from each other and who don’t know each other. So they should not definitely not know that each other are the are the key holders.

And then, you know, just to make sure that they, know about security questions and they know how to like, you know, if you ask them to, to, make a transaction, like how to verify that it’s actually you instead of someone hacking your account. so this is kind of, you know, like my relatively high effort in high. Yeah.

And high value setup. if you want something that has, like, less involvement, involvement from other people, like, I do think Multi-sig is the gold standard for everyone, right? And I think the general principle is he wants like a multi-sig between different things whose reasons for failure, failure are not coordinated, correlated with each other. Right. and so one example is like things that physical devices that you control.

Vitalik Buterin 01:43:42 One of them is like things that you remember. So. Like, I mean, even, like Brain Wall. It’s really fine as long as you like, actually make sure you remember them. one is, other people, institutions if you can, though, if it kind of sad to see that there actually haven’t been many institutions that have been offering this kind of like be part of your multi-sig as a service. I remember back in 2013, I think it was like Ryan Singer had a company that was, trying to do that.

I forget his name. It’s like starting to come back in Ethereum lands, though in Ethereum Land, the thing that’s like really starting to take off is, things like email where like there’s like email, there’s like ZK government ID like there’s a lot of these, like basically you take like some centralized form of trust and then you basically you make a smart contract wallet where that smart contract wallet has a rule that it only accepts a transaction. If you can prove that you have control over that, like that form of ID.

Vitalik Buterin 01:44:42 And then the idea is like, you obviously don’t want that to control your whole accounts, but you just like use that as like one of your, one of n and you know, you can mix and match different ones, right? So, ideally, yeah. I mean, you know, you would even, use, like, some commercial provider from one jurisdiction and then, you know, some government ID from a totally separate, jurisdiction.

And then the majority of it can be things, that say you control, like, basically, yeah. You know, you want to have a multi-sig and then you want, like, the different pieces of it, like you want some core subset. Right? So like let’s say if you have a 3 or 5, you want three of them to be things that are like, like reasonably accessible to you. And you want the other two though, like really.

Yeah. Aim much harder on the, on the security dimension. And then just like choose things that you’re that that’s that you’re confident in, and like at the beginning, you could even start with something basic or like, you can start with, you know, your phone, a hardware wallet and a piece of paper, right? And that’s, like, totally fine, right? And then over time, you can, like, basically switch over and migrate them to different things.

Vlad Costea 01:45:53 Yeah. Sometimes I think in the past I was criticizing Ethereum people for using browser extensions and storing thousands of dollars or even more using these. Yeah, without any proper backups. But I think right now it’s a lot more professionalized. MetaMask has access with your Trezor or whatever to be able to sign transaction from a third party device, which may most likely is not tampered with. And yeah, I think the industry has come a long way. Also, when I asked Mike Belshe from BitGo the same question, he said that Multi-sig is works pretty well. Basically, his whole business relies on it. So. it’s sort of a big deal.

Vitalik Buterin 01:46:43 Yeah, multisig has definitely come a very long distance since I first started talking about it 12 years ago.

Vlad Costea 01:46:53 What was it back in the day? Was it on Electrum or Armory, or were you just coding it yourself?

Vitalik Buterin 01:47:01 I’m trying to remember, like I remember I wrote that article in Bitcoin magazine where I was like, I like advocating for people to do a more multi-sig thing.

Vitalik Buterin 01:47:09 I remember I actually wrote a multisig wallet back in 2013, because, like, there weren’t good ones back then since I remember, like, I remember the bitcoin Bitcoin wallet was one of the very early ones that had good UX. I am, and I’m not sure what’s and then the for the Ethereum Foundation’s Bitcoin we like basically we did a custom solution with like a lot of custom scripts. And I mean, I ended up using pi bitcoins a lot for my share of the signing. so it was definitely like a very OG era back then, but now it’s much easier.

Vlad Costea 01:47:52 Yeah. I want to ask you about your views on privacy, but before that, Robin Linus came back with an extra explanation saying that he said ZK CSV when its actually called Shielded CSV. And the advantage is that it decouples CSV transactions from Bitcoin transactions, giving you scalability.

Vitalik Buterin 01:48:14 I see it. scalability because the transactions, like, is there some way that the transactions don’t actually have to be on chain or like, do you still have to pay the data cost?

Vlad Costea 01:48:26 I don’t think they’re on chain.

Vlad Costea 01:48:28 And I recall there was like an equal size to them, like 50 bytes for all transactions.

Vitalik Buterin 01:48:34 Right. Because if they’re not on chain, then like you have the whole issue of like, well, who is responsible for like storing that record, right? We have if you have assets inside of that system and like, how do you as a user know that you can actually like have the evidence to take them all out? and then it gets into a rabbit hole. There’s like a bunch of, like different ways to solve problems that have different trade offs.

Vlad Costea 01:48:59 It’s funny, Robin started typing, but we gotta move on to the privacy topic because you wrote a very good article, which I think explains a very deep philosophical truth about privacy, that you don’t care too much about it until you realize that it’s a bit too late and you wish you had it, you wish you cared about it, and also that the norms and the laws in meatspace, in real life, they change very fast. And you don’t know how the stuff that you do today that is totally moral and totally legal is going to be interpreted in the future.

Vlad Costea 01:49:39 And I like this. It wasn’t along the lines of oh, privacy is normal. Oh, you know, I don’t have anything to hide, but you shouldn’t care about what I do. You presented some very compelling arguments in there, and I recommend people to check it out. It’s on Vitalik.ETH.limo. I don’t know why it’s so, but.

Vlad 01:49:58 It’s so.

Vitalik Buterin 01:49:59 Basic. So. Okay, okay, I can explain that. so the site is on ENS, right? So actually the entire site is like a sort of self-sovereign site in the sense that it’s like the it’s hosted on IPFs, you know, like the decentralized, file storage and then, it uses, ns to store the, like what the root hash is of the, of the whole file structure. And, each limo is like a forwarder, like, it’s just that, a thing for people who have browsers that don’t support ENS directly to be able to access the ENS websites.

Vlad Costea 01:50:39 Yeah. So why are you doubling down on privacy and what are the limitations that you envision for this because you’re not going full Monero saying that, oh, privacy should be for everyone and I don’t care about criminals and stuff like this.

Vlad Costea 01:50:53 Even though if you read the Cyphernomicon by Tim May, he outlines it very clearly that privacy should be there and protect individuals, even if there are some exceptions. Sometimes when criminals use it.

Vitalik Buterin 01:51:10 So I think in the crypto space we talk a lot about protecting individuals from abuse by centralized actors. And what one of the kind of philosophically awkward things, that, you start noticing is, that, like, the things that blockchain blockchains give you, right, is they give you guarantees, that, like, a service basically won’t bug you by editing the spreadsheet, right? But, in reality, the thing that people, are most worried about on the topic of abuse by centralized services, it’s not even abuse by editing the spreadsheet, right?

I mean, sometimes it’s about changing the rules. Sometimes it’s about the service disappearing. But like probably even most often, it actually is about, like, like services collecting your data. Right. so if you think about, like, the biggest complaints about centralized AI, I mean, one of them is, of course, that the I could just rug you by disappearing and like, that has happened to a lot of people’s, you know, like AI girlfriends, which is, I boyfriends, which is definitely sad.

Vitalik Buterin 01:52:24 Right? So, you know, if, if you use AI for that, you should definitely run it locally. but,

Vlad Costea 01:52:32 And seek.

Vlad 01:52:33 Help. Yeah.

Vlad Costea 01:52:34 Sorry.

Vitalik Buterin 01:52:36 The other. but but then the really, like, the bigger one is basically like, hey, OpenAI is getting all of your data and they’re all probably training on it. And, you know, if they’re training on it, then, like, they just have no way to guarantee that your personal data is not just, like suddenly going to become accessible to some, like, random, cleverly engineered query, some, like a year in the future. Right.

And then there’s all these concerns about, you know, like digital surveillance. And then actually, this is an interesting anecdote. so, like in the mid 20 tens, China started, like, pushing really hard to push out a lot of, like American tech services, right? Like Uber was one example and like one half of, the reason why is, of course, that, you know, like they want to have, like, control people through, like users doing things through local services.

Vitalik Buterin 01:53:35 But then there was also another reason that, like, made that whole push significantly stronger. And that reason was like it actually came from, the Snowden revelations. Right. Like the Snowden revelations spooked a lot of people because they realized that, like, wait, like basically every American tech company is like actually a vector for the US spying on people.

And like, there was a lot of, like people discussing this, I mean, like within China and, like a lot of, discomfort with this. And like, that probably was, the moment by which, sort of us tech companies stopped, like being viewed by the world as being sort of like, you might say, sort of basically blockchains in the sense of like, oh, you know, it’s neutral.

We don’t care who runs it. It’s a freedom platform. And then they realize that there are like levers of control, so That and the prospect of like, basically U.S. tech companies getting a lot of people’s data was like this really big, like second arguments, right? So even governments are afraid of, you know, your data being spied on by the government.

Vitalik Buterin 01:54:39 Right. As the lesson there. Right. It’s a and if you just think about it, like practically right. the big I think the biggest risk that a lot of people have in terms of abuse from a centralized actors just is centralized actors abusing them by selling their data.

I mean, you know, if you’re like location data from phones as being, like, sold off in all kinds of different crazy ways, like, just all kinds of data could, could get sold to third parties, it could get hacked by third parties. So like, a lot of different things could happen to that data. Right? And, the and like, that’s something that’s like, you all really wants to be protected against, right?

It’s also, you know, there’s freedom of speech, but then you also want freedom after speech, right? It’s like in all of these, different situations, privacy is just like it’s this really key aspect of, decentralization and of censorship resistance. And it’s something that I think like, what’s interesting is that the very in the very early cypherpunk days, right, that that was highly valued.

Vitalik Buterin 01:55:49 Right. Like Zcash, very privacy preserving, like it was basically considered mandatory that if you’re going to create an eco system, the point is that it’s an encrypted cash system, right? But but then in the blockchain era, we just did not know how to do, like privacy preserving cash without a centralized operator. until ZK SNARKs came along and ZK SNARKs did not exist back in 2008. And so because, like, I think because we did not know how to do it like our community is just like felt a lot of pressure to sort of devalue it.

Right. And to basically, yeah, instead emphasize like, oh, you know, if the bad guys can’t edit your spreadsheet anymore and, now, you know, we have snarks. And so I think, like, there’s no good reason for us to not care about this whole really important big aspect of, of like, freedom and decentralization and censorship resistance. And so we really, yeah, needs to go back to making it be one of the front and centers of the discussion.

Vlad Costea 01:56:53 Would you say that Ethereum is a cypherpunk project? Because I guess the Blockstream side has been trying for years to frame it as this JP Morgan experiment, you know?

Vitalik Buterin 01:57:07 Yeah. I mean, I think, like Ethereum has a lot of, deep cypherpunk roots to it. And both are both the cypherpunk roots that Ethereum itself created in terms of like things happening on it, but also even the influences of a lot of the early contributors. Right.

Like, like I definitely like read things including the, you know, work of David Shaw and the Crypto Anarchist Manifesto and all of these, David Friedman’s Future Imperfect, I think, also was like, has a lot of cypherpunk, parts to it, though I mean, the thing that I like about David Friedman so work is that I think he has this like trait that I share, which is he doesn’t just care about freedom. He also cares about, like, making society work in the context of, freedom being respected. And he just put a lot of, like, deep work into figuring out institutions that could, try to do that.

Vlad 01:58:07 and.

Vlad Costea 01:58:07 He also plays World of Warcraft.

Vlad 01:58:10 Yes. See, I.

Vitalik Buterin 01:58:12 Mean, games are just like, like really lovely environments for experimentation in so many ways. Right? Yeah, it’s I think it’s like he even said at one point that this is one of the reasons why he really likes, like the idea of having games that, they are these, like, closed environments in which you can try out all kinds of different institutional ideas and then, like, see how they actually work.

And it’s like, we’ve arguably even seen some of that. Right. Like probably less on the like economic mechanism design and governance side and more on the communication side. Right.

Like things like discord, you know, they have their roots in the gaming era. And then, a lot of those, like that ends up, turning into like, software for all kinds of companies to use, even, like outside of, the crypto world. so a lot of that also, I think a lot of, you know, like free software, and, open source influence.

Vitalik Buterin 01:59:08 And one funny thing about Gavin Wood, one of the, co-founders from early on, right, is like, he did not even come from the Bitcoin side. He came from the free software side. And the problem that he was solving is like, well, how do we make free? Like the ideals of free and open software work in the context of software needing to be sort of like massively multiplayer, right?

Because like classical free software is single player, right? But then if it’s massively multiplayer, it’s not just the software that matters, it’s also who runs the database, right? And if the database is run by someone who could run you or could, you know, like seize your data or like change the rules on a whim, then like, it doesn’t even matter if the software is open and free, right?

Because like, they just don’t have so many levers to abuse you. Right? And so that’s like his gateway into Ethereum is like actually solving that problem. Right. So like a lot of the especially earlier contributors, like a lot of their motivations that came from some of these like both free software, heavier and even more privacy heavy.

Vitalik Buterin 02:00:17 Types of contexts.

Vlad Costea 02:00:19 I know that the Ethereum denominations carry the names of cypherpunks like the Dai, the Finney. And I was curious if you were able to get any feedback. Of course not from Hal Finney, because you did not launch while he was still alive. But if there is any feedback from David Cham or Nick Szabo or Wei Dai if they said anything about Ethereum.

Vitalik Buterin 02:00:42 Yeah, I think I mean, Nick Szabo definitely wrote some very positive commentary. Yeah, at the beginning we had a few email exchanges, though since then I think both after the DAO fork and also I think after like we kind of diverged politically. Yeah, he’s definitely been much cooler.

Vlad 02:01:00 I remember that.

Vlad Costea 02:01:01 2018.

Vlad 02:01:02 Yeah.

Vitalik Buterin 02:01:03 Yeah. let’s see who else. thinking of the other denominations. Well, I guess the guy was also called the Shannon. Claude Shannon is obviously also not around. Neither are Charles Babbage or Ada Lovelace. Wait, I think we’ve, like, actually met him. Like, I think at least once, although the topic was like more about like AI safety and like AI futurist types of topics rather than Ethereum specifically.

Vitalik Buterin 02:01:30 I mean, funnily enough, there’s, a totally different person named, Wei Dai who, is like kind of involved in Ethereum. I think he runs, the, the, the De Infra Summit that’s happened a couple of times and has some other projects.

Vlad Costea 02:01:45 it’s funny how this works, because if you read the white paper for B money, it’s very similar with Ethereum. I think it’s closer to Ethereum than to Bitcoin, or at least that’s my reading of it. Were you inspired by B money when you wrote? I mean, I’m not sure if you wrote the white paper yourself, but.

Vitalik Buterin 02:02:07 I did write the white paper. I was thinking, what my inspirations were. I mean, they were definitely, like, pretty. Yeah, eclectic, I guess. like. A big a big part of it was just like various, you know, like, work on, like programming languages that I’d personally seen in the years of, of programming that I had since then. I think also Daniel Suarez’s diamond, that, novel is like a really big inspiration for the concept of DAOs.

Vitalik Buterin 02:02:40 and then, of course, the original diamond was, I and now we actually have AI at a level that can possibly do those kinds of things. And now we’re actually starting to look into AI DAOs. so.

Vlad Costea 02:02:55 I want to ask you a couple of personal questions, because through this interview, we had like 21,000 viewers and most of them in the chat were complaining about the price I’m scrolling right now. They’re just saying price, price, price. Some of them are shelling their own token. But what I want to ask you about, is it difficult to be in this position where everyone expects you to do something to pump the price and they they basically correlate what’s happening with ETH, the token, with your private life?

I remember at one point in 2017, there was a fake news report that you died or something, and you had to come up with a piece of paper where you wrote the block hash of a recent block to prove that you know you’re still alive. It’s insane what kind of stuff is happening out there.

Vlad Costea 02:03:43 And it sort of sucks that there was also that documentary about Ethereum that somehow turned out to be your biography, and it’s unfortunate that you get so much attention. And sometimes it comes at the expense of the project or at the expense of other builders.

Vitalik Buterin 02:04:03 Yeah, totally. I yeah, Yeah I think. This is like one of the challenges that like, I’ve been trying to do over the last like over the last couple of years of, like how to do a better job of, like elevating some of these other people that have been taking on different aspects of Ethereum and seeing, you know, like some of them really come to the front as like very independent actors.

Right? There’s a you know, people are research people on developments. I mean, also even people like, like PCA versus who has been, you know, like pushing on privacy more and more lately. so, it’s, Been, starting to get some, progress. and like, I definitely personally, you know, like, I, I definitely don’t like having that kind of attention.

Vitalik Buterin 02:04:59 I mean, it’s even, like, it’s bad for me personally, right? Because it’s like when everyone has that, that many expectations about every single thing I do. And then like, I don’t have freedom, right? the yeah, yeah, that always price thing.

Like, I’ve just come to acknowledge that there is, a large group of, of people for whom that’s their primary focus. and, like, that’s the thing that they care about. And like, I cannot, affect, you know, the eath price anymore than, like, Obama was able to affect the price of gasoline or whatever. It’s, I mean, for me, it’s like even less, right?

Because, like, I have way fewer levers than, you know, like Obama did in the US. it’s like, even when, well, you know, like, I make significant, like, announcements that crypto Twitter gets worked up about, like, the price doesn’t move. Right. And so in some ways, you know, like, I like to be like even that sort of market acknowledgement of Ethereum’s decentralization in some way.

Vitalik Buterin 02:06:01 Right. but. There’s like, like basically especially in the short term, you know, prices like pretty random and there just aren’t many ways to affect it in either direction. And so if you can’t affect it, then, like, you just, acknowledge that you can’t cater to the kinds of people that, like check whether it went up or down today.

I actually went up, it’s, it went up about $50 over the last 24 hours, interestingly enough. but, you know, like, as a signal of, like whether or not Ethereum is good at doing good or bad, like, good or or badly in general, I yeah, I tend to focus on what I can change and what I can change is basically, yeah. Is Ethereum the kind of ecosystem that’s being effective at supporting Ethereum’s underlying values? And that’s something where I think the answer is, I mean, like being honest, it’s definitely sometimes yes, sometimes no. And I’m doing my best at like really pushing so that the the fraction of the pie.

Vitalik Buterin 02:07:05 That’s. Yes. keeps on growing and expanding and, you know, when, like when, you know, now we have, lots of functioning privacy protocols on Ethereum. That’s a win. you know, now we have, functioning, layer twos that are at stage one. And so they’re like halfway to the ladder of being, like, fully trustless.

So that’s a win. you know, the L1, gas limit going up and that happening like safely in a way that keeps the protocol decentralized. But, you know, when that happens, that’s a win. the Ethereum protocol not being vulnerable to DDoS attacks anymore, that’s, a win. you know, currently. Yeah.

Like, I still think we haven’t quite solved the problem of how to make, like, really optimized, sort of like self self-custody and decentralization at the same time, especially for newer users. But there’s progress on that happening. So I just try to focus on the things that I can change and like focus on improving the parts of Ethereum that like, I think I can improve and should improve, and so we can do our best.

Vitalik Buterin 02:08:19 That’s like making a platform that can, you know, like keep, like humanity open and free and safe for the 21st century.

Vlad Costea 02:08:28 If you look at the Ethereum page from 2014, it advertises some use cases, which ironically ended up being focal points of bull markets. Distinctively like if you look at the 2014 page on the Wayback Machine, you’re gonna see that Ethereum is advertised for enabling decentralized companies.

And there was this Dao moment in 2016 or something for allowing art to be tokenized. And there was the NFT mania. And there was also something about being able to do Kickstarter style fundraisers. And we had the ICO moments in 2017 and 2018, and it’s really cool how all of these use cases somehow ended up being the center of bull market narratives.

And I was going to ask you, what do you think is the next big bull market narrative? Because right now it seems that only some acknowledgement from politicians and institutional adoption is driving up the price. But there is not something coming from within the community for use cases which are like fashionable, like NFTs were four years ago or something.

Vlad Costea 02:09:38 Which one do you think is the next bullish narrative?

Vitalik Buterin 02:09:45 So I expect that Ethereum is going to bifurcate in the application layer into kind of scaling proven use cases and then doing like really interesting and, and cool things. And so like to me, the big scale, the big proven thing that Ethereum has is the DeFi ecosystem.

And like even just like as I mentioned, right, the fact that, you know, you can, do things like, like hold stablecoins and, I mean, if you want. So, like, you could even hold the algorithmic ones. And so you personally don’t have risk of getting rocked by, like one of them, and, like actually getting competitive, interest rates. That’s like a product that a huge number of people in the world want.

And then if you’re holding if then like, that’s, you know, you’re also effectively benefiting from the ecosystem of other people doing that. Right? And then at the same time, there’s, the ability to, easily move between different, tokens, you know, the ability to do, like all kinds of more complicated things, even just like hold them in fact, effectively.

Vitalik Buterin 02:10:59 Yeah. So that to me is something that’s like starting to be proven for Ethereum. And there’s just like a large group of base of people that do this kind of thing quietly. And I think an even larger base of people that can do it. If the technology is improved to the point where it can be.

Yeah, like really effective and just like really easy for people to participate and like I expect, right, that we’re entering this period of greater political instability where like basically, yeah, I don’t think there’s any country in the world that has a zero chance of like basically becoming the next Argentina in terms of the kinds of stuff that a desperate government does to its people’s finances to try to stay afloat. Right.

So like I, I saw, I recently like basically I asked GPT to just quickly tell me, like, what is the volume of DeFi hacks divided by what is the TVL of DeFi? And the answer is it’s like basically half a percent, right? And that if you stick to conservative protocols, it’s like less than 0.1 percent.

Vitalik Buterin 02:12:05 Like, I think at this point, for any single country going forward, for the next decade, like the chance per year that you will be robbed of by, yeah, some kind of crazy political move is very plausibly greater than half a percent, right? So like, I think there’s just like a very valid thing there that like we have that’s very usable to a huge number of people. So I think that’s one. and then there are obviously other things that are happening that are super fascinating, like prediction markets, are. And what if the reasons why I talk about them is like, I mean, I’m a big prediction market enthusiast.

I mean, obviously Paul is as well, right? It’s like a big topic for me for a couple of reasons, but the thing that Poly Market did in 2024 is it broke out and it got mainstream adoption even among people who would otherwise not care about crypto. And I mean, they even got sort of three sided adoption, right? There’s like the sort of relatively naive people who just like bet on things and some like for fun and excitement, there is like really sophisticated people that do some deep analysis of like what probabilities should be.

Vitalik Buterin 02:13:15 And then there’s people who read the markets and they use that as a source of information. Right. And like even in that third category, like I’ve seen very mainstream US political intellectuals, even the types of people who would normally be the types to say like crypto is useless and it’s a scam.

Like even they they’re retweeting screenshots of Poly Market, right? So it’s like a really big adoption success in that sense. But like realistically in terms of, you know, how many fees wouldn’t pay to Ethereum. I mean, even if like polygon, kind of like moved to being a full roll up and like paying a bunch of fees to layer one, like, definitely. Yeah.

Not a huge amount compared to some of the, DeFi use cases. Right. But at the same time, like, I think it really improves Ethereum as an ecosystem that, you know, like things like quality market also things like true markets, that like exist in, in our world. then I mean, there’s like a lot of fascinating stuff that’s that our world is doing with zero knowledge proofs.

Vitalik Buterin 02:14:20 Right. And I don’t know if you, saw but like today. Yeah, Google announced that they’re doing, like, privacy preserving age verification with zero knowledge proofs. And like, to me, the whole age verification thing is like kind of math. But, at the same time, like it being privacy preserving is better than it being not being privacy preserving.

And, you know, like the fact that technology that our ecosystem is incubating is like Actually starting to get used by mainstream actors is just like, really cool. I. Yeah. So that’s, like I think there’s, you know, there’s this like, long tail of just interesting and cool things, but like the way that I see it, like that’s also not the money go up there.

The number go up narrative. Right. That’s like that’s the narrative that makes Ethereum be the kind of ecosystem that like someone who is a cypherpunk or a dev or a researcher would wants to participate in. Right. And, I think realistically, you know, the number go up narratives are going to be dominated by a fairly small number of financial use cases.

Vitalik Buterin 02:15:23 And like I think that’s fine. I think that’s fine if they are honorable financial use cases. Right. Because, you know, over the last six months, like we’ve seen a huge amount of what I would call very dishonorable finance, right. Like there’s a lot of these, like, I think like meme coin things where, like, I’m definitely not against all, like, all meme mean points by far, right?

Like, I’ve been a Doge fan and a Doge supporter for a decade, right. But like the type that sort of go up and down within like 12 hours and, like effectively they have sort of like they, they don’t feel like good food. They feel like heroin, you know what I mean?

Like, not like that kind of stuff I think is less honorable. And just also especially, you know, political points because I think like that just turns into, like basically a political corruption vehicle, so that like, if Ethereum succeeded by being the home of that kind of stuff, then, you know, I would be unhappy.

Vitalik Buterin 02:16:21 But if Ethereum succeeds by being the home of just all kinds of people in, environments that either are politically unstable today or could become politically unstable tomorrow, which is like the whole world, being able to just safely, yeah, save, and, grow their wealth with their families then like, that would be a really happy outcome.

Vlad Costea 02:16:43 Yeah. I mean, these are use cases, which I guess were not envisioned in the original design from a decade ago. And it’s cool that you keep on shipping code and building stuff. And yeah, the the Polymarket phenomenon is really incredible.

And the way it was used during the US elections was mind blowing. And even Bitcoiners embraced something that’s built on Ethereum, the same guys who otherwise say, oh, Ethereum is an unregistered security or whatever they like to say.

They basically said, this is legit. This is something that we’re interested in using. And. I feel sorry for asking you this so late into the interview, but I’ve been meaning to. What do you think about the situation of Roger Ver.

Vlad Costea 02:17:32 I feel like it’s a very divisive situation among libertarians. There are some OGs who defend him, and then there are some others who say, well, I’m not happy about his attitude during the block size words, and maybe that he does deserve to go to jail because of this.

Vitalik Buterin 02:17:50 Yeah. I mean, I think as a matter of principle, saying that someone deserves to like, go to jail because of like unrelated context that he did in some other situation, whether that’s taking, you know, what you consider the wrong size of the block size war or whether that’s expatriates from the US, because I know some libertarians have been going more nationalist lately.

Like, I don’t like, I like, I think being cool with someone, being wrongly imprisoned, for those, reasons is, just because you don’t like him for other reasons, like, that’s very wrong, right? And I think it’s, like, important to stand on that, point of principle. And I mean, I have, you know, like, looked somewhat at his case.

Vitalik Buterin 02:18:39 And, my, like, my impressions are in, like, these kinds of situations. There’s obviously, like, all kinds of, information on, that’s like, hidden for a long time. There’s a lot of things that are not visible. Right. But like, if, like, his case is basically.

Yeah, that’s, you know, he tried to comply and, he. Yeah. You know, the coins that they were going after him for were coins that he like, you know, like a gift to his wife, like even like before the whole, expatriation and, the. Yeah.

Like, basically that he did his best to, like, honestly comply with a law despite that law, in my opinion, being being fundamentally, unreasonable. Right. like like the whole like, you know, like us, you know, like, you have to pay taxes that no matter where you are to be a citizen thing. and like, I, I think that’s, If those facts are the way they are.

Vitalik Buterin 02:19:40 But there’s a lot of facts that does make it look like effectively, yeah, the government is going after him because it wasn’t because it wanted to go after libertarians, right. And so that’s like unfortunate. Right. And then the way that it went after his lawyers and like basically yeah grabbed their private information like that feels like a serious breach of attorney client privilege.

Right. So I, definitely, yeah. You know, I hope that, Roger gets like, a very here, like the fair opportunity that he deserves to make it that, to make his case. I mean, everything that I’ve seen, it definitely suggests that, you know, things are not with the the way the government makes it seem.

Vlad Costea 02:20:21 Well, I’m happy you’re so well acquainted with the case. And you mentioned some details and the distinction that you made in the beginning against, I guess, what we could call karmic justice is very important. Like some people think that just because they don’t like someone and they did something to them in the past, then they deserve to go to jail for unrelated reasons.

Vlad Costea 02:20:45 And it’s really unfortunate to see this in the Bitcoin community.

Vitalik Buterin 02:20:51 So yeah, I think, right now, like the thing that we really need, right, is to just like remember what our roots are. And I mean like that I think that means like remember what our principles are and right. And that, you know, the principles, I think are that, you know, we believe in, things like open source. We believe in things like privacy. I believe in things like freedom.

And, like, these are principles that, we, believe in, like, because, you know, like having a strong guarantee that these principles are broadly applied is good for society and good for humanity, but maintaining those principles requires not turning them off in specific cases that you think is a convenience, right? And like the whole concept of a blockchain censorship resistance, is that right? Like, I feel like, you know, if you’re going to be okay with, throwing Roger beer in jail for some unrelated thing to do with the Blocksize war, like, how can you not be in favor of the Dao Fork at the very least, right.

Vitalik Buterin 02:21:55 Like, you know, the like.

Vlad 02:21:57 The.

Vitalik Buterin 02:21:58 Basically, the DAO fork is like a thousand times milder, like. And it’s not even getting into government coercion. Right? so that’s, Yeah, I think, just there like, there are a lot of people right now who claim to be upholding, principles, but then just, like, completely ignore them when it’s, convenient for the sake of, like, some political tribe or like, some kind of personal dispute.

And I think if things, go in that direction, then, you know, the credibility of, institutions that they care about will go to zero and that that will be replaced by, credibility in, basically cults of personality where they might like one, but then they might discover the, the one that comes after it is just completely. Yeah, go after them and destroy them. So no, I, you know, I think, we need to, you know, believe in freedom, believe in, a rule of law.

Vitalik Buterin 02:22:57 I believe in fairness and, also believe in, privacy and censorship resistance on chain for everyone.

Vlad Costea 02:23:05 That’s really beautiful. I’m gonna cut this and make it a short clip because it’s so nice. I want to ask you something about Ethereum, which has puzzled me for many years because Blockstream has been marketing liquid, which is their federation slash sidechain, as a competitor to Ethereum.

And they said, you know, Ethereum is the place where they do. CryptoKitties is the place where they do ICOs. And some of them are fraudulent. But you know we are serious about this. We’re like business people. We want to tokenize for companies on Wall Street. And we can do everything with regulations and blah blah, blah.

And you talk to our lawyers. But what was funny that actually happened is that people use Ethereum anyway, because it turns out that the Wall Street people don’t like regulations either, or they think there may be too much and they don’t want to deal with them. They would rather build in a permissionless way.

Vlad Costea 02:24:00 So to me, it’s been very funny. Like, why do you think this happened? Is the world waking up to the Cypherpunk ideology?

Vitalik Buterin 02:24:09 I mean, I think now is a very good time for the Cypherpunk ideology because the world has had multiple recent and very yet painful and crazy examples of what all the possible alternatives are. so it’s, Yeah. And and Again ultimately, like, what might my critique of some of the stuff that happened in the late 20 tens? And, I mean, I actually think this applies. This applies to liquid, and I think it applies even more to some of the Ethereum enterprise.

Stuff that happens is that, basically the thing that they wanted to do is they wanted to create a compromise between centralization and decentralization that gets the best of both worlds. Instead, they ended up creating a compromise between centralization and decentralization that gets you the both the worst of both worlds, right? Like if you look at the Ethereum chain, enterprise chains like often the pattern is they do a very good job of getting their first five partners, and then the five partners get together and they create this lovely chain and it seems like it’s amazing.

Vitalik Buterin 02:25:13 But then when it comes time to expanding from five partners to 25 partners, nobody else is interested. Why? Because they don’t want to join an ecosystem that’s dominated by like, the first five major banks, right? And then at the same time, Like if you’re moving from a centralized server set up to a permissioned blockchain, like you still have to deal with BFT, you still have to deal with writing everything in the EVM.

You still have to deal with asynchrony, but you still have to deal with like basically 80% of the problems of building on a fully public blockchain, right? And so it’s basically basically just ended up being completely, you know, the worst compromise. And like, you get the downsides of being decentralized without the upsides.

And I mean, my impression is, is that a very similar thing ended up happening with liquid. I mean, liquid definitely like these. Yeah. Like it was a consortium sidechain. Like it was basically the thing that, like did like bitcoiners that criticized rollups for being for being for like years later.

Vitalik Buterin 02:26:15 Right? Which is just like being a multi-sig. Right. And, you know, with Ethereum, like, this year, we’re finally making serious pushes that’s, moving away from that and getting to your tools that are secure in a decentralized label, like what? It was just like that all along and it’s like, yeah, it’s, you know, it’s not decentralized enough.

And at the same time, like, it’s just, it does like it ended up not offering enough of, the benefits that people wanted. Well, this is probably the other thing, right? Like the whole sidechain elements thing, like, there was a there were a lot of these beautiful ideas of how to upgrade, bitcoin scripts.

And they’re like, very technically beautiful. But they were also sort of not the thing that devs wanted. Right? Like the thing, the devs one is like something that just compiles from an existing language that’s like at least looks like, you know, like C plus plus or Python or JavaScript, right.

Vitalik Buterin 02:27:11 And then and that’s the thing that, you know, the EVM offered. That’s also the thing that, I mean, like risk five, offers. It’s but it’s not the sort of thing that like Bitcoin scripts plus 2 or 3 languages with like with simplicity and like a much more famous or much more fancy working is is going to offer. Right. So I like, I think as a product, it just sort of got stuck in the middle in that way.

Vlad Costea 02:27:37 Yeah. It’s beautiful that you mentioned it, because you said over the last month that you support the transition from EVM to risk five as far as I know, risk five is the standard for open source hardware, which allows you to verify every piece of hardware, like the processing unit and the motherboard. And everything is built in a stack where it’s open source and verifiable, and it’s very cool. I think it’s made some great progress over the last decade. And my first thought when I saw that was that it’s cool that Ethereum is still moving fast and breaking things and basically pushing the entire industry forward.

Vlad Costea 02:28:16 But on the other hand, you have like a multi-billion dollar industry of EVM products. Some of them even coming to Bitcoin and trying to bring financial services to BTC. So do you think it’s too radical or do you do you think the industry will follow through with RISC V.

Vlad 02:28:36 I mean.

Vitalik Buterin 02:28:36 I.

Vlad 02:28:36 Think.

Vitalik Buterin 02:28:37 The question is not binary, right. And the question is always like how much adoption a thing gets. So if you look at like WebAssembly, I mean it’s gotten like it’s a level of adoption within browsers. So it hasn’t really gotten too much further beyond that. I mean, risk five has a lot of advantages because just like such a a simple and kind of naturally canonical architecture. the yeah, I mean, we’ll see what its adoption in hardware looks like.

And then the other question is like what its adoption in ZK VMs looks like, right. Because, one of the reasons why I suggested it is because, like, more like something like two thirds of the SSC, the limitations that are being built today, they’re being built by making a XXvi of RISC V and writing the RISC V.

Vitalik Buterin 02:29:23 Right. And so the argument is like, well, if this is how provers work, then, you know, you might as well just expose the risk factors smart contract developers already directly. And then, you know, you get like 100 X gain, by, you know, just completely removing both the EVM overhead and the overhead. like, that’s inherent to having an interpreter. so that, is, it’s like really nice, right? Then the question, of course, is like, you know, ZK proving is still a rapidly moving space.

Is it going to be even more different in 2 or 3 years? And, I guess, you know, we’ll see. but, you know, right now, RISC V is definitely looking like, a super promising, choice. And I think, like, we should do an honest effort at, like, also evaluating the, like Cairo style, like very optimized VM route. though the, the challenge with that is that, like often if the prover tech changes, then the VM that’s optimized for the previous prover often ends up being like worse on the next prover than it does on risk five.

Vitalik Buterin 02:30:34 Right. like like that was definitely true for the 256 bit stuff. And so now the question is like if we yeah, make something that optimizes around like say, yeah, you know, like 32 bit prime fields, you know, like koala bears, like the, the, the big one right now is like, it’s like two to the 31, minus two to the 24 plus one, or something like that.

And then like, imagine if two years later, all the provers just switch to being, over binary fields, then, like you, you risk creating something that was actually. Yeah, even worse than, risk five. Right. So that’s like it’s it’s all a matter of kind of prediction. Right.

The downside of choosing risk five is like, well, what if it turns out that risk five is like 100 hundred times less efficient than a super optimized VM. So yeah, it’s, I think it’s, we’ll have some period of, discussion for this. I think hopefully we’ll converge to something like by the end of the year or so.

Vlad Costea 02:31:30 I look forward to that. If you could travel back in time like a decade ago and redesign Ethereum with the knowledge that you have now, what would you do different?

Vitalik Buterin 02:31:41 Definitely just make the VM basically be something like risk five. like the VM just ended up having a lot of needlessly complicated bits. There’s like ten different features of the Ethereum that are just needlessly pointless. Like, one of them is that even being 256 bit, the other is the Merkle tree being like hex instead of binary. it turns out like the reason why that was done is to optimize for databases.

So you only have to do like eight reads and writes instead of 32. But the thing that I completely missed is that you could make h 3D like binary from the perspective of marketing, but from the perspective of databases, and that option just totally did not even come up to me. I think, there’s a lot of, like, probably like half the pre-compose that we did. We should have just never done them. Probably most of the pre-comp files, like, they just ended up contributing a lot to consensus risk without actually getting the benefits of, the, like, getting a lot of usage on them.

Vitalik Buterin 02:32:45 Probably the only exception is the, elliptic curve stuff. And that ended up being, like, the bedrock of the Ethereum privacy ecosystem. I think we should have never done Caddyshack, or we should have just that done shot to physics from the start. There’s like a bunch of technical things. There was also, like, there’s social things that, Could have been different.

Like one like crazy idea that I sometimes like. Think about like as a sort of alternate history, as like, what if Ethereum had had no sale and no pre mine, but instead there was some kind of voting gadget by which, like 30% of the supply could go to fund that development for some period of time and the like.

Basically, the argument was like, you know, it would have still developed the. Yeah, like there would have still been a lot of resources for development, but at the same time, like, it would have at least actually been an open system from day one. And like, just not even having the foundation as a central actor from the beginning.

Vitalik Buterin 02:33:58 so that was a, you know, I don’t know if that would have been, would have worked. But I think things that.

Vlad 02:34:05 Like.

Vitalik Buterin 02:34:06 Could have been interesting to try. Then. Of thinking, I mean, a lot of like individual choices in terms of, like how to deal with, like the people aspect of starting Ethereum. And, you know, I’ve talked about that in a bunch of different, occasions. On the proof of stake, I think, like we should have gone with a simpler and crappier proof of stake at the beginning, because, like, we just ended up spending way too much effort on an overcomplicated protocol that’s, like, actually ended up having quite a few security issues.

And so now we’re actually going into single slot finality. And so now we have, a lot of this, research, around, around like an optimized protocol that’s, like, gets you the same kinds of properties in terms of, like finalizing, but the chain also being able to continue. If a lot of nodes go offline and, the and the like.

Vitalik Buterin 02:35:13 I made an implementation of it and it’s like only like the, the full thing is like 300 lines of code. so that’s like basically I think we should, we should have done, something simpler instead of showing like overoptimism ending up creating something that, like, needs to be replaced anyway. yeah. Like basically there’s just a lot of little things. also, I think, for privacy, I’m, the challenge was caring about privacy at the beginning was like, we did not have zero knowledge proofs.

Right? but, I mean, we I guess we very plausibly could have had an, like, in a privacy ecosystem that started off being sort of Monero like, with ring signatures and then upgraded to snarks over time. I also think we should have started much earlier on the wallet side of privacy, like basically making it. Like a more default experience inside of wallets. Like that could have a there’s a lot of things where I think one of our biggest weaknesses is like, we haven’t paid enough attention to the wallet layer, right? I think it’s true even today.

Vitalik Buterin 02:36:18 Right. Like a lot of people have these big complaints about like cross-sell to interoperability and like I look at them and over half of the time the thing that they’re complaining about is a UX issue. So had we, like, done more at the wallet layer that, like a lot of things about Ethereum, could have been much better than they could otherwise have been, like even the whole two click to trade thing.

Like obviously there’s like EIP 702 fixes that. It makes it not necessary. But there’s there’s ways that the like wallets could have been designed better to make that a one click experience for for users as well. Right. So you know just a lot of those kinds of little things.

Vlad Costea 02:37:02 Today WBTC on Ethereum, which is a wrapped Bitcoin, is like 100 times bigger than lightning Network and Liquid and rootstock, and it seems to be a pretty popular choice for people wanting to do DeFi with their Bitcoin. And I was going to ask you, first of all, would you say that Ethereum is a layer two to Bitcoin under these circumstances? And secondly, do you see this use case becoming more popular in the future?

Vitalik Buterin 02:37:30 Well, it’s it’s technically not a layer two because they don’t have verification.

Vitalik Buterin 02:37:34 Right. But I guess in that circumstance Ethereum is a sidechain to Bitcoin. Yes. and you know, if bitcoin DeFi happens then Bitcoin will also be a sidechain of Ethereum, which is, you know, pretty fun. but, then, Yeah, yeah, it’s definitely interesting to see those use cases take off more.

I mean, the one thing that I wish for is definitely for them to be stronger on the business side. Right. Because I think right now the. Yeah, like it’s like basically a multi-sig and then like I think didn’t like like it get bought by Justin Sun recently or like something like that.

Right. And like, I think you want something that’s, where the security doesn’t depend on knowing who the operators are. And like, increasingly, that kind of thing is actually possible with the technology. And so I think like, it just needs to be some team to just go and actually build it.

Vlad Costea 02:38:40 Do you see Bitcoin and Ethereum being complementary or friendly with each other, or are they actively competing for users and use cases?

Vitalik Buterin 02:38:50 I yeah, I mean, I think like realistically, yeah, I mean obviously some of both.

Vitalik Buterin 02:38:58 Right. Like I think there is a reality that sort of every cryptocurrency is competitive because they’re competing as places to store wealth. But at the same time, I think there’s a lot of, complementarity, as well. Right. Like just the kinds of use cases that they have, attracted so far have been very different.

And, and also I think both, you know, the two have, just benefited each other quite a bit on, technology. like, you know, Bitcoin is now doing layer two is I mean, basically all of, it the original Ethereum design was motivated by Bitcoin, either by copying Bitcoin or by learning from, you know, what we perceived as mistakes of Bitcoin and, I mean, potentially, you know, things could go in the other direction, like maybe. Yeah, you know, like Bitcoin would become a, a multi client ecosystem, over time. And, you know, like maybe things in the, like the experience of the Ethereum ecosystem could help there. and I mean, a lot of, like the kind of philosophical backbone is, shared.

Vitalik Buterin 02:40:06 Also just, the a lot of, like, the institutional, kind of backbone of the, you know, making sure the cryptocurrency stays, easily accessible to people. I mean, like, like that, like, stays legal, you know, like, stay is like having a friendly, regulatory posture, like, I think there’s, a huge number of, common interests there.

There’s, a huge number of common interests also in, like, cypherpunk values lower down the stack. Right. So, ultimately, you know, secure like your coins are not your coins. if you don’t, you don’t know if the hardware is going to rug you. Right? So, you know, you have to think about that.

Think about the operating system. You don’t know if if you don’t know the operating system is going to, radio. right? think about like, you know, programming languages. so, peer to peer networking, right? Like peer to peer. Like, I think the needs of, are very similar.

Vitalik Buterin 02:41:08 so, like, there’s a lot of common interests and I think, like, more collaboration across those common interests. it would definitely be really great to happen to.

Vlad Costea 02:41:21 This question is going to be much more direct, because I guess for a number of years, there are people who built a platform basically vilifying you and calling you the King of bitcoiners and whatever. But the question is, do you still hold and use Bitcoin? Would you describe yourself a Bitcoin?

Vitalik Buterin 02:41:39 Yes I yes I, I still hold Bitcoin and I still I have sent a and I still have used it of actually I think I have like literally yeah. I believe within the last couple of months. I’ve actually sent a bitcoin transaction to pay for. I forget what it was. I think it was either a Namecheap subscription or like it was some some kind of subscription. So yeah.

Vlad Costea 02:42:06 Have you tried the Lightning Network because some people say this is the gacha right. It’s the end to all altcoins.

Vitalik Buterin 02:42:13 Right? I yeah, I mean I actually have not yet.

Vitalik Buterin 02:42:18 I think I’ve been, like waiting to see. Yeah. You know, like, it’s kind of solve its problems. Like, you get it, I get enough I get enough adoption. to get your point. I mean, is there, like a lightning? Like just like a desktop, like lightning friendly wallet that you could, recommend to me, and I’m happy to just, like.

Vlad Costea 02:42:42 Well, I would say so on mobile, the one that is non-custodial and works pretty well. There are a bunch of them. There’s Phoenix and there’s Blixt. I think Blixt is more nerdy. Has more options. Phoenix is, I think, more popular because they think has one of the largest nodes on the Lightning Network. Right. But for desktop, there’s Elan bits, which is pretty cool because it’s like WordPress. You basically have plugins that you add on top of your client, and you can unlock all the use cases that you want. You can make faucets. You can. But I think it’s by default custodial.

Vitalik Buterin 02:43:20 Right. How standardized is there? Like I guess like payments experience like if I yeah like pay for something with bitcoin that accepts bitcoin. like like what would be the like whether it’s, you know, like something like Namecheap or I mean like buying paying for plane tickets. Actually that’s also one of the use cases because like, you’d be surprised how often credit cards all break at the same time if you’re a nomad. like, what’s the probability that they’ll Accepts name, coin, or accept the lightning in a way that all of the different, lightning. Lightning wallets would be able to interoperate with.

Vlad Costea 02:43:59 Well, I think it’s been pretty standardized at this point. You’re describing issues that were true like six years ago or something.

Vitalik Buterin 02:44:07 Oh, okay. Okay. I yeah.

Vlad Costea 02:44:10 Then I think most wallets right now on mobile, they let you do submarine swaps, meaning that they go from lightning to unchain if you scan an engine address.

Vitalik Buterin 02:44:20 Right. Okay. No, that’s, I mean, that’s good. Yeah.

Vitalik Buterin 02:44:23 No, I definitely. Yeah. Have, Not, like, looked at the, like, practical, day to day use of, lightning, recently. I definitely is one of my faults. I will, I will make it, one of one of my top priorities then. It’s,

Vlad Costea 02:44:41 I think whatever uses BTCPay as opposed to centralized payment processors is also using lightning because it’s very easy to integrate. At the same time, it’s difficult for the operator to run a lightning node. And that’s another issue because the network became more centralized with Lsps, which is lightning service providers, and they take fees. Basically, it went back to the same issue that they were trying to solve with intermediaries taking fees.

I think I’m responsible for paying one of the biggest fees on the Lightning Network. Last year, when I bought my car, I basically sent coins from lightning to Kraken using lightning, and I paid like $50 for a transaction fee, which is ridiculous. I could have paid much less on chain, but there are some advantages to using lightning, which is finality and also fungibility, because sometimes in Bitcoin and this is an issue, I think about this a lot.

Vlad Costea 02:45:42 I receive donations to my addresses on my website, and then I use Coinjoin because I don’t want to have these coins associated with any identity, you know. And I’m concerned at the same time because I see, for example, North Koreans using mixers and stuff like this, and I have no idea what my coins are going to catch. So I put them on the Lightning Network, and I pay with this because it becomes more fungible. It’s sort of a very complex workaround. I’m not very happy with it. I wish it was much simpler, but I think it’s the use case that works for having Bitcoin privacy right now.

Vitalik Buterin 02:46:21 Right. Yeah. That’s good. I mean, one of them. Yeah. I mean, I remember reading, like in Roger beers, like a book he complained about, like some of those, intermediation aspects of, lightning. And just like the difficulty of, like people running their own, 24 over seven box. I in. But, I mean, it’s a bit like making any of these kinds of things work.

Vitalik Buterin 02:46:52 Well, it’s like really hard, right? Like, even, like, with, roll ups. Like, it’s basically been now five and a half years since the roadmap started, and, we’re just getting a stage one way or two now, so, hopefully.

Yeah, they’ll get the stage two over the next year as well. I mean, one of the things I’ve been thinking about for a while is like how we can make it easier for more people to run always on boxes, and, like boxes, like computers that, do some kind of service.

That just depends on them, staying online. But it sounds like a lot of use cases, right? Like a lightning node is one. Ethereum staking is one, and then, AI is the other one, right? And, I.

Vlad Costea 02:47:38 Mean, I can get you in contact with the Start9 people. There’s Matt Hill, the CEO. I know him very well. He’s been on the show and he basically has this box that has also like a marketplace from which you download the applications that you want to run.

Vlad Costea 02:47:54 It has Bitcoin core, it has lightning clients of your choice. It has AI, it has the Monero node if you want that. But they don’t have anything Ethereum yet. And if you are able to explain to them which client they should be using to make it work on that hardware, I think can be very nice. Okay.

Vitalik Buterin 02:48:12 Yeah, yeah, I’d be happy to talk to him.

Vlad Costea 02:48:15 Yeah. And there’s also umbrella. There are a bunch of projects that try to sell something that you just plug into the wall socket, and it’s supposed to work.

Vitalik Buterin 02:48:26 Right? Right. Yep. Yeah. I mean, I’ve seen, like, providers like this, you know, they’ve been around for a while. I think there’s like Freedom Box was one from back then. So it’s it’s definitely good to see it becoming more mature. Maybe it’s the sort of thing where there’s just once there’s enough of a critical mass of applications, then it just like flips from being like a hobby that you forget about to just suddenly being a very viable thing.

Vlad Costea 02:48:53 I think it can definitely happen at the same time, the communities are too tribal. And sometimes I think about this because, for example, when Casa, which is Jameson Lopp, it’s he’s not the CEO, he’s the CTO, there’s someone else who is in charge there. But when he announced on Twitter that there’s going to be support for Ethereum and other ETH assets, there was a backlash and people called him a traitor and stuff like this. And I guess some companies are afraid of basically losing this purity argument and saying that they’re Bitcoin.

Only in the case of start nine, they already added Monero, which I think is trying. It’s starting to get some acceptance among Bitcoiners that okay, this currency is not really fungible, but you can add Monero and there are some use cases there with Ethereum. If people understand that they can build contracts and whatever without being tribal and dogmatic, it can also happen because you guys have been able to lower their requirements. And I think the hardware also got exponentially better over the last decade or so.

Vitalik Buterin 02:50:06 It really has the hardware has gotten better. Also. The software has gotten better, like the the efficiency of, you know, like the EVM on the same software has increased by at least an order of magnitude.

And then the denial of service stuff has been completely solved. But yeah, I mean, I think, you know, to me, like, you know, the tribe should be. Yeah, I think first and foremost, not about a particular asset, but about the underlying ideals. Right.

And, you know, I hope that, as you know, in Ethereum, we can continue to convince all of you guys that, you know, we can be a very effective stewards of the UN, of the underlying ideals and, just making sure that, financial, self sovereignty and, a free and open internet can continue to actually be a, a reality. People for people, you know, even during a time when lots of people don’t, don’t want it to be a reality. So let’s, let’s work.

Vitalik Buterin 02:51:08 Let’s keep working on this.

Vlad Costea 02:51:10 You can disagree with me, but I still see Ethereum as a research lab for Bitcoin, and it took me a few years to develop this vision. But a lot of the stuff that you built benefits Bitcoin. And as you said vice versa. You’ve learned from Bitcoin’s breakthroughs and mistakes also.

Vitalik Buterin 02:51:29 Yeah absolutely.

Vlad Costea 02:51:30 And maybe the go on sorry.

Vitalik Buterin 02:51:34 Yeah. No it’s like it’s Just, you know, as I’ve said, there’s a lot of, plenty of very good opportunities to learn from each other and, collaborate more in that way.

Vlad Costea 02:51:45 Some people think that the future will be just 21 million Bitcoin, and that’s the only asset. But I think for a cypherpunk future, we’re gonna need like 4 or 5 or more blockchains which serve different purposes. Just like today we have visa, we have Mastercard, we have American Express. They’re very similar, but they have a different customer base, and they have trade offs that you can find. So I see in the future that we’re going to have Bitcoin.

Vlad Costea 02:52:14 Definitely something for smart contracts. Unless Bitcoin I don’t know how we’re gonna get that into bitcoin at this point. Even covenants seem to be very divisive. We’re going to have something for fungibility slash privacy definitely. We’re gonna have maybe something just for experimentation, like general purpose, whatever. And there’s always going to be, you know, the casinos, the pansies. It’s inescapable. Every generation has these. And technology doesn’t enable or disable anything.

Vitalik Buterin 02:52:56 All right. Well, it’s,

Vlad Costea 02:52:59 Yeah. I wanted to ask you before this that we what’s your current opinion on Bitcoin maximalism. Because you wrote two very different articles, one which basically tried to turn the term into an insult, and the other one which basically described carnivore lifestyle. And that I think if it was a prank, it was one of the best ever. If you were serious about the carnivore diet, I want to learn more.

Vitalik Buterin 02:53:28 No, my actual diet is like I have a lot of fish and a lot of vegetables. so, I guess, you know, it’s still, but, no, I think, the, like, philosophically interesting thing there, right.

Vitalik Buterin 02:53:45 Is, this the like what kind of a community are you needs to have to, like. Really? Yeah. Like, maintain, particular values even in the face of, like, very strong actors, including on the inside and on the outside, including governments and commercial, including people who, like, present themselves as being very friendly and, and, well and well meaning, like, all trying to push the ecosystem in some direction that goes further away from those values.

Right. And, well, these are problems that, like Bitcoin had to face. I mean, I think these are problems that, like Ethereum has to face as well.

Right? And I think, you know, if there isn’t a contingent of Ethereum culture that’s like very strongly, pushing for, like decentralization, privacy, censorship resistance, then like, there is a very natural way in which the ecosystem could, just like, slide into being a corporate chain where we sort of accept intermediaries out of pragmatism, and then they get, enshrined forever, and then suddenly we get don’t have self sovereignty anymore.

Vitalik Buterin 02:55:01 I mean, the challenge, of course, is, you know, there is such a thing as autoimmune diseases, right? And, there’s definitely a huge number of, very smart people that can be repelled by maximalism. Right. And so, and there’s, like a challenge in, getting a kind of, you know, the good parts of that without the bad, right?

Like, basically. Yeah. Like having a. Yeah, culture that is, like, Too strong without being cruel. And I think that is possible. And I think like that is the sort of thing that Ethereum definitely needs more of. And I mean, I think I like Bitcoin, I definitely really get needs and needs as well.

I think I mean like probably the, you know, like the failure modes are a bit different, right? Like I would say. Yeah. Like though in the in, in the Bitcoin case like it has been interesting to see some of these kind of newer attempts at co-opting. Right.

Vitalik Buterin 02:56:05 things. So like, you know, like basically Saylor ism. Right. It’s like, hey, you know, like people’s ability to self-custody doesn’t actually matter. Like, let’s let’s just be a fully institutional asset and, that, like, basically, I think the, the one of the big failure modes of, a toxic, like culture, aside from just driving people away, is that it often ends up being toxic in only one direction, right?

It ends up being, like, super vulnerable to like, people who present themselves as being like friends, right? I mean, even like Bitcoin Cash is vulnerability to Craig, right? Is like an excellent example there, right?

It’s the it was the thing that, Scott Alexander in one of his posts a long time ago, he described it as, the it’s the 50 Stalin’s, critique, which is basically his argument is like, oh, well, actually, yeah. You know, in the Soviet Union, you had plenty of room to disagree with the governments.

Vitalik Buterin 02:57:03 Like, you could totally say, like, hey, I think Stalin is great. I think Stalin is amazing. We just, he’s so amazing that really the biggest problem is that we don’t have 50 Stalin’s that are running and die, making the Soviet Union 50 times greater. And, and so his argument is like, well, actually, yeah.

You know, in any kind of, culture, you know, you’re going to have a sort of approved, you know, a direction to kind of be maximalist, right? And, you want to make sure that like, that also doesn’t start becoming a problem, right? So I yeah, I mean, I really hope that, you know, the culture of, like nodes, the culture of, like doing things on chain.

I mean, like, the more technical, sides of things can be. Yeah. Like stronger in, in Bitcoin to, like, really start to push back against, sailor ism more. I mean, maybe after the current political winds that kind of blow over, there’s going to be more of a, an opportunity for that.

Vitalik Buterin 02:58:03 And I think, I mean, in Ethereum, you know, the like I think the risks are somewhat different. Like the risks are basically that, people accept, just like adding in seven different types of intermediaries.

And then all these intermediaries are like VC funded startups and they, you know, like market themselves as being Ethereum alliance and like being friends and, And, like, we need a strong contingent to try to, push against that. So it’s like, that’s necessary, though. Also, we, like the the way that that happens, should not be capricious. Right.

And like, the downside is always, like what happens when it is capricious, right. What happens when like it is kind of random and, it’s like the equivalent of, you know, like having, like, police officers without laws where, like, they just, you know, there’s no speed limit, but they just, like, randomly decide like, hey, you’re going too fast and like, let’s, like, take away your entire car for it, right? So.

Vlad Costea 02:59:05 Yeah. And I, before I let you go and I gotta acknowledge that you’ve been here for three hours. I have a lot of respect for being able to go for so long before losing interest. Is there anything in Bitcoin today that gets you excited for the future? Something that gives you hope that the project can still scale and become private and get everything that it currently lacks.

Vitalik Buterin 02:59:31 I mean, I think the the layer two stuff, is it right? I think like to me, yeah. For Bitcoin to really like succeed and be vulnerable. its needs like I think it needs to have a strong technical core and not just a, financial core, because if it just has a financial core, then the tech becomes perceived as something that should just be outsourced for convenience.

And once you have that, then like the decentralization begins, right? And so like seeing the renewed excitement around like around the object based historical tours, around inscriptions, around all of these protocols, like, I think that stuff is good, right? And the more that, Bitcoin does things like that, I think the better.

Vlad Costea 03:00:19 Thank you very much for the telling. Where can people follow you and read your latest thoughts?

Vitalik Buterin 03:00:25 Yeah, so there is my blog, which is on ENS at Vitalik. And if your browser is not ENS capable, then that’s Vitalik.eth.limo. There is, there are my socials, which are Vitalik Buterin on, forecaster and, Twitter. there are I mean, also, you know, I can also I think lens is Vitalik for me as well. then there’s like various kind of haphazard, you know, like podcast and, in-person things that I do in various contexts.

Also writings in other places. So, Ethereum magicians and ether research are very big ones. And I think you should also follow those to see some, Some writings by other people about Ethereum. So no, I’m definitely in many different, places online and offline.

Vlad Costea 03:01:26 Thank you very much. Vitalik, come to ETHDam next week if you can, but don’t give an answer because your OpSec should not be compromised if you want to join.

Vlad Costea 03:01:36 Thank you to everyone who listened to this. It’s been a pretty high number, 33,000 people. Thank you very much for tuning in. And thanks to the sponsors once again, Citrea, Layer Two Labs, SideShift, Bitcoin.com News, No Ones, and HODLing. Thank you very much. I’ll see you next week with an interview with portal, which is the sort of layer two solution that’s trying to do swaps between Ethereum and Bitcoin with the Lightning Network. I don’t know how how that works. I’m going to learn from them next week. And I guess good night. It’s five in the morning here already.

Vitalik Buterin 03:02:15 Yes, yes. Good night.

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Explore the intricacies of building on Bitcoin, the importance of community, and the future of decentralized technologies. Learn about exciting new features, security enhancements, and the vision for a more accessible and user-friendly Lightning ecosystem.

Ben Arc is definitely one of my favorite builders in the space, and I’ve always admired his energy and work ethic. You might remember him for his contributions to the hardware wallet market via Bowser wallet, or for his left anarchist philosophy. He’s been on the show four times before… and on his fifth appearance, he really takes his time to express his opinions about everything. This new episode is 7 hours, 23 minutes long – a significant milestone which makes it an instant classic which encapsulates the vision of a consummate builder who’s reaching his peak.

If you can’t spare 7 hours to listen to Ben Arc, in spite of my momentary disappointment, I encourage you to use a faster playback speed and also navigate through topics by using the provided timestamps. This way, you’ll be able to make the most of Ben’s wisdom in the shortest amount of time. However, I must prevent you that his sweet Welsh accent will keep you listening for hours on end. So don’t expect to get bored and drop out, this is quite an addictive marathon!

This episode is sponsored by SideShift, LayerTwo Labs, Bitcoin.com News, Citrea, NoOnes.com, and HODLing.ch

Listen to Ben Arc on Apple Podcasts, Spotify, YouTube, Twitter/X, or this audio player!

▶ Play video Watch on YouTube

Time stamps of S16 E17 with Ben Arc of LNBits:

00:00:53 – Introducing Ben Arc

00:01:08 – Ben Arc and LNBits V1

00:02:23 – LNBits beta version and V1 release

00:02:36 – Amir Taaki’s Post-Syria Experience

00:03:08 – Rojava and Anarcho-Syndicalism

00:04:08 – LNBits development timeline

00:05:16 – Early stages of LNBits and Lightning

00:05:33 – Disillusionment in Bitcoin Space

00:07:20 – Stepan Snigirev and Specter DIY

00:08:11 – Modularity and extensions in LNBits

00:08:38 – Nostr and Bitcoin’s Future

00:09:04 – Bear Market and Bitcoin’s Value

00:10:00 – LNBits API and extensions

00:11:10 – LNBits as a sandbox for innovation

00:11:24 – Trump, Memecoins, and Market Downturn

00:12:31 – LNBits V1 new features and improvements

00:13:18 – Desired Bitcoin Adoption

00:14:12 – Dogecoin and Market Desensitization

00:15:09 – Bitcoin’s Correlation with Stocks

00:16:26 – Bitcoin’s Utility and Bear Market

00:17:41 – LNBits Investment and Thunderfunder

00:19:12 – Bear Market Camaraderie and Future

00:20:29 – Bitcoin’s Humble Beginnings

00:22:20 – Dan Kaminsky and Len Sassaman

00:23:38 – LNBits security and real-world testing

00:23:51 – Satoshi’s Anonymity Strategy

00:25:35 – John Nash and Satoshi Candidates

00:28:00 – Building extensions and ease of use

00:29:32 – Nick Szabo’s Coding Abilities

00:30:34 – 600 Billion Meme Origin

00:34:34 – Hardware Wallets from AliExpress

00:39:09 – State of Lightning and future outlook

00:39:33 – Ledger Leaks and Supply Chain Attacks

00:41:42 – Trezor Security and Multisig

00:44:35 – Fiatjaf and Nostr

00:46:46 – Liquid Network Utility

00:51:51 – Nostr and IoT applications

00:52:48 – Lightning Network and Cross-Chain Swaps

00:55:48 – Bitcoin as digital gold and speculation

00:57:05 – Blockstream, Sidechains, and Federations

00:58:22 – Ideal money and Bitcoin’s role

01:00:03 – Luke Dash Jr and Bitcoin Knots

01:00:47 – Layer 2s

01:03:15 – ZK-rollups

01:07:40 – Competition and collaboration in Bitcoin

01:07:58 – SegWit2x and BIP Bureaucracy

01:10:57 – Ecash and Cashu’s development

01:11:11 – OpenTimestamps and Simple Proof

01:16:13 – Future Bullish Narratives for Bitcoin

01:17:29 – Improving Lightning Network design

01:22:43 – LNBits journey and future vision

01:25:08 – Businesses giving up on Lightning

01:30:01 – Node solutions and Raspberry Pi

01:34:54 – Zapstream and value-for-value content

01:37:05 – LNBits in five years

01:42:17 – Getting started with LNBits V1

01:46:33 – LNBits shop and hardware projects

02:00:00 – Nostr signing device

02:02:03 – Public key cryptography’s importance

02:03:40 – Supporting LNBits and Nostr

02:05:05 – Nostr identity provider services

02:08:53 – Nostr’s independence from blockchains

02:11:53 – Melvin Carvalho and Bitcoin community

02:14:02 – Nostr’s Bitcoin echo chamber

02:17:03 – Nostr client discussion

02:18:26 – Elon Musk and politics

02:21:33 – Anarchism and private capital

02:30:31 – Roger Ver and taxation

02:37:05 – Bitcoin block size debate

02:41:13 – Bitcoin as medium of exchange

02:54:30 – Turkish Lira and the blind drummer

02:57:03 – Lightning Network’s early days

03:05:05 – Strike and other Lightning companies

03:12:23 – Digicash and online payments

03:13:47 – Online identity and privacy

03:18:34 – Coinjoining and fungibility

03:22:13 – Privacy coins and Zcash

03:29:12 – Nostr, disinformation, and Phil Zimmerman

03:44:04 – Nostr growth and adoption

03:47:22 – Nostr applications and user growth

04:00:41 – Nostr Identity Purchases

04:05:27 – Private Key Backup Methods

04:06:41 – Nostr Development and Features

04:09:13 – Mallorca Blockchain Days

04:10:02 – Early Bitcoin Development

04:11:54 – Bitcoin & Nostr Adoption in Japan

04:15:28 – Nostr Conference Experiences

04:16:08 – Upcoming Conference Attendance

04:18:44 – Paralelni Polis Closure

04:20:25 – Room 77 Closure

04:21:14 – Early Bitcoin Wallets

04:24:20 – Early Bitcoin Figures

04:26:03 – Nokia N900 & LG Prada

04:28:36 – Ethereum and LocalBitcoins Origins

04:29:05 – Decline of Bitcoin Meetups

04:30:41 – Michael Saylor’s Hope.com

04:38:05 – Saifedean plagiarized Dominic Frisby

04:41:14 – Saylor’s Economic Views

04:45:35 – Consumerism and Planned Obsolescence

04:51:36 – Global Power Shifts and China

04:57:11 – European Union CBDC

05:03:04 – Cypherpunk Dream and Cryptography

05:06:03 – Politicians Using AI

05:15:24 – Bitcoin’s Future and Replacements

05:20:44 – Bitcoin and Altcoin Development

05:24:41 – Lightning Network Importance

05:28:03 – Quantum Computing and Hard Forks

05:34:46 – Bitcoin in Suriname

05:42:09 – Secret Word

Andreas shares insights on non-custodial exchanges, privacy coins, and the impact of regulatory changes. The episode also covers the technical difficulties of implementing privacy features and the political landscape of Bitcoin development. The conversation highlights the ongoing innovations and risks in the space, emphasizing the need for better security practices and user experience.

Last but not least, we discuss shitcoins and how layer two technology such as Drivechain can make them obsolete. And yes, we do mention the Shitcoin.com weekly newsletter too.

This episode is sponsored by SideShift, LayerTwo Labs, Bitcoin.com News, Citrea, NoOnes.com, and HODLing.ch

Listen to Andreas Brekken on Spotify, Apple Podcasts, YouTube, Twitter/X & This Cool Player!

▶ Play video Watch on YouTube

Time stamps of S16 E16 with Andreas Brekken:

Introduction to the Podcast (00:00:51)
Vlad welcomes Andreas Brekken to the Bitcoin Takeover podcast and mentions the episode’s sponsors.

Interviewing Sam Bankman-Fried of FTX for Shitcoin.com (00:01:50)
Andreas reflects on past interviews with Sam Bankman-Fried and the unexpected collapse of FTX.

Clustering Analysis and Customer Funds (00:02:44)
The speakers discuss clustering analysis like Arkham and its role in identifying FTX’s mishandling of customer funds.

Bybit’s Technical Issues (00:05:18)
The conversation shifts to Bybit’s technical problems, including issues with their Ledger hardware wallets and transaction signing.

Historical Context of Exchanges (00:09:26)
Andreas shares insights from his experience running a fiat exchange and the challenges of traditional banking.

Shapeshift’s KYC Controversy (00:11:13)
We mention Shapeshift’s transition to KYC and its impact on user migration to SideShift.

Privacy Coins and Regulatory Challenges (00:14:59)
The discussion covers the challenges of integrating privacy coins like Monero and Zcash into SideShift.

Bitcoin Cash Hard Forks (00:20:45)
Andreas reflects on the contentious hard forks in the Bitcoin Cash community and their implications.

Lightning Network Integration (00:22:23)
Andreas reflects on SideShift’s early integration of the Lightning Network and the challenges faced.

Vulnerabilities in the Lightning Protocol (00:26:17)
The conversation touches on recent vulnerabilities in the Lightning Network and concerns over its viability.

Critique of Lightning Network’s Design (00:28:29)
Andreas critiques the fundamental issues of the Lightning Network, questioning its long-term viability for transactions.

Submarine Swaps (00:29:28)
Discussion about submarine swaps and their potential benefits in trading BTC on-chain for BTC on the Lightning Network (and vice versa).

LNBits Launch (00:29:44)
Giving credit to Ben Arc’s LNBits, a wallet integrating Lightning Network. The founder also supports Drivechains.

Lightning Wallets (00:30:19)
Overview of various Lightning wallets and their functionalities.

Comparison LNBits with Start9 (00:30:40)
Discussion on the differences between LNBits and Start9’s operating system for nodes.

Lightning Network Experience (00:31:15)
Andreas Brekken & Vlad share past experiences with the Lightning Network at Bitcoin conferences.

Wallet of Satoshi (00:31:37)
Conversation about Martti Malmi using Wallet of Satoshi for payments and its custodial nature.

Bitcoin Variants (00:32:26)
Exploration of different types of Bitcoin, including wrapped versions on various chains.

Decentralized Finance (DeFi) on Ethereum (00:34:00)
Discussion on using Bitcoin as collateral in DeFi applications on Ethereum.

Citrea Project (00:35:26)
Overview of Citrea’s goal to build a ZK rollup on Bitcoin for trust-minimized solutions.

Multisig Solutions (00:36:30)
Exploration of multisig as a decentralized solution for Bitcoin security.

Automation in Bitcoin (00:41:18)
Discussion on the lack of automation features in Bitcoin compared to other chains.

Political Dynamics in Bitcoin Development (00:47:15)
Analysis of the political landscape affecting Bitcoin Core development and decision-making.

Bitcoin.com’s News Coverage and Bias (00:51:27)
Comparison of news outlets’ coverage of Bitcoin and their political biases.

Market Volatility and Performance (00:53:14)
Discussion on Bitcoin’s performance compared to stock markets during volatility.

Peter Schiff Appreciation Era (00:55:42)
Reflection on Peter Schiff’s role in promoting Bitcoin despite his criticisms.

Peter Schiff Debates (00:56:23)
Discussion on Peter Schiff’s debates about Bitcoin versus gold and his influence during the Occupy Wall Street protests.

Eric Voorhees’ Evolution (00:57:00)
Overview of Eric Voorhees’ transition from Bitcoin to building platforms like ShapeShift and his libertarian ethos.

Bitcoin’s Growing Influence (00:58:15)
Reflections on Bitcoin’s increasing recognition from influential figures and nation-states.

Future of Bitcoin (00:59:15)
Speculation on what advancements might come next in the Bitcoin ecosystem.

Layer Two Labs and DriveChains (01:00:34)
Discussion on the establishment of Layer Two Labs and its focus on drivechains.

Innovation in Bitcoin (01:02:05)
Exploration of how altcoins fuel innovation and development in the Bitcoin space.

Convenience of Layer Two Solutions (01:02:51)
Benefits of using Bitcoin as a fee asset for layer two solutions and trading platforms.

Decred Listing? (01:09:53)
Inquiry into why Decred is not listed and its lack of visibility in the market.

Andreas’ Favorite Shitcoins (01:11:49)
Andreas shares his favorite cryptocurrencies and insights on the current market dynamics.

Shitcoin.com Weekly Newsletter (01:16:31)
Information on how to follow Andreas Brekken and engage with his weekly newsletter on Shitcoin.com.

Full transcript of Bitcoin Takeover Podcast S16 E16 with Andreas Brekken

Vlad Costea 00:00:51 Hello there and welcome to the Bitcoin Takeover podcast. This is season 16, episode 16. We are live with Andreas Brecken and this episode is sponsored by Sideshift, which is Andreas’ business, Citrea, LayerTwo Labs, which Andreas is also supporting. Bitcoin.com news, NoOnes.com and HODLing.ch. Andreas, it’s really good to have you. I’ve been trying to get you on the show for a while now, and I gotta say, I spent a lot of time yesterday watching content on Bitcoin.com. It’s so underappreciated.

Andreas Brekken 00:01:28 Yes. Well, yeah. Thanks for having me. It’s, It’s it’s one of those, content and, like, content, websites where, we’re followed by most of the people we want, to follow us. You know what I mean?

Vlad Costea 00:01:50 It was funny, you even had interviews with SBF, which I thought was interesting because before the shit hit the fan with FTX. You’re trying to be nice to him. Say, oh, you’re doing such a good job. You had such a fast rise to the top and stuff like this.

Vlad Costea 00:02:08 Funny. Yeah.

Andreas Brekken 00:02:09 Yeah. That was, I hope if I look back on that interview that, we weren’t part of the problem, because. Honestly. But that situation, I had no idea what was going on, but, neither did the people who work there.

Vlad Costea 00:02:25 Yeah. That’s true. It came seemingly out of nowhere because they seem to be in a good position with a lot of political support, because they paid for that and a lot of people loving their service. They actually had a service which worked pretty well.

Andreas Brekken 00:02:44 Yeah, it was so good. And it was a it was a bit different back then because I’m sure now you noticed there’s a lot of services that, scam the chains and do clustering analysis on wallets because back in the day there was like one kind of a clustering wallet explorer you could use. I think it was called Smart Bitcoin Explorer or something like this, where it tries to guess which UT or which coins belongs to the same wallet. But it wasn’t very good. It was hardly maintained.

Andreas Brekken 00:03:15 but these days there’s a lot of these, there’s certainly Arkham, which, I don’t know if that’s the only EVM on Solana now. It’s Bitcoin too. And there’s, I’m trying to think of the last one, but there’s a few of these. And obviously in addition, all of these, AML software solutions, they’re also doing clustering analysis like Chainalysis and stuff because with that with FTX, the big thing is that they, they had very obviously sold all of the customer Bitcoin and Ethereum to purchase their own token, FTT.

So if anybody had been looking at the clustering closely and been following that, I think more alarms would have been raised earlier. especially maybe for example, for example, maybe some hedge fund who’s really into this stuff would have looked into all the wallets and been like, wait, they don’t have any Bitcoin, Ethereum, they sold it, they only have FTT. And then they could have started this massive campaign to short sell the FTT token, which, which, and when you do short selling campaigns, you want other people to do it too, right? so then they probably would have, posted a research online that shows you they don’t have any money.

Andreas Brekken 00:04:40 but I think we were just not used to doing so much clustering analysis today other than trying to, like, track, tainted coins. So I’m hoping this kind of thing is not won’t happen again in the same way today. But we don’t know because we had the Bybit 1.47 billion not long ago. And I think at that time people were following much more closely on chain, which assets Bybit have to try to make an assessment on whether or not they’re solvent.

Vlad Costea 00:05:18 Or in the case of Bybit, I would not say it was a hack. It was more of how should I put it? Lack of attention and the fact that they use tiny ledgers with their tiny screens. I know you have a history with ledger. You actually posted a review of the unit when it came out, the original one that had no screen but Bybit were using, I guess, the 2017 version of ledger for signing, and they did not see exactly what they were signing, and that’s a big issue.

Andreas Brekken 00:05:51 Yeah. And I mean, there’s the way this was being done.

Andreas Brekken 00:05:57 There were so many issues. at the same time. First of all, they were using, they were using a web interface as the wallet, on the desktop. And this web interface would, would ask the ledger device to sign transactions. So what, what the North Koreans did is they compromised the web interface, which was hosted on Amazon or whatever.

Right. This compromised the web interface. And, and, and made it so that it would show fake information. If, if the wallet that was being managed was the by bit wallet. So all that is there. And I’m not saying there’s anything wrong about that. Stuff happens. You’re moving quickly I get it.

But even when I was running an exchange in Norway back in 20, like 1314 when we were using any kind of web tools or like dealing with mnemonics and passphrases and private keys and all this stuff. And it was like that you, you download the tool onto your computer as the zip file of the GitHub, and when you want to use the tool, you just open it on your computer.

Andreas Brekken 00:07:17 That’s like that’s the bare minimum because otherwise they can just change the GitHub. So that’s the bare bare minimum. And then the next step would be you can run it on a separate computer than the one you’re using normally. It still has internet so it’s still a bit unsafe but a separate computer where you download it and you never change it. and then then you’re looking a bit better, but the attack could already have been made some time ago.

So the next issue is that the ledger that was signing the transaction did not know the contents of the transaction. So it just says, do you want to sign? And there’s a bunch of, of, numbers and characters. So it wouldn’t really help no matter what you did, unless the ledger, had a complete understanding of the effects of the transaction.

But because this is on Ethereum, it’s not deterministic because the chain is always changing. So, unless you want to download the whole Ethereum blockchain into the ledger, it cannot know the exact effects. So, so I simply I mean, I want perfect to, to be the enemy of good enough, especially when there’s so much money.

Andreas Brekken 00:08:42 So I think download the zip files to one separate computer. Step two. And from there on, maybe try to find some air gap solution. But there were there were more problems than the size of the screen in my opinion.

Vlad Costea 00:08:57 Yeah. It sounds to me almost as if there is a market for hardware wallets that run full nodes and are signing devices for these very complex contracts. But I wanted to say that what you’re running right now is so much more sophisticated than the normal exchange with site shift. You have trading pairs and you got a balanced liquidity between them. It’s not like you’re holding any user funds, right?

Andreas Brekken 00:09:26 Yeah. So yeah, I mean, the last time I was, running my own exchange, which is a while ago, I was doing Fiat on the exchange. This exchange was called just coin com, and it was being run out of Norway with a Norwegian bank account, and we had Fiat there. We were doing, Norwegian kroner, euros and all this stuff. And the banking is banking is just, causes a lot of problems for your business.

Andreas Brekken 00:09:59 You as an exchange, you just don’t don’t have a bank account because it, it contaminates the whole business with these problems of the traditional finance system, but, So my main takeaway from running that business, which was, which was fairly okay, was that I would never have fiat again, digital only. But the concept of not doing custody of funds was not really.

Was that a deliberate choice for something like that? It just happened organically because there was no need to be a custodian. So it wasn’t a design goal to not be a custodian. The design goal was to make it as easy as possible the user, and it turns out the easiest for the user.

It’s not used as a bank account because the user has its own bank account. It’s called a wallet, which already has an on the phone, computer, or hardware. So that was simply that the way with the least steps was no custody.

Vlad Costea 00:11:13 And it’s pretty cool. I remember one time in 2018 I think when. What’s the name of the other one? ShapeShift.

Vlad Costea 00:11:25 They’re the ones who added KYC. And I remember I was hanging out with some programmers who were dealing with Bitcoin payments, and they were like, we’re just changing our integration right now from ShapeShift to site shift, because you guys did not do KYC.

Andreas Brekken 00:11:42 Yeah. That was that was a pretty easy. That was a pretty easy switch for us back then because we just, We just had a compatible API to to shapeshift. So anybody could just change the domain, to get it done. And that’s actually something we did for the Bitcoin wallet because they had the integration that was broken. So we just made everything. We made a ShapeShift compatible API that we offered. So you just change one word. and this is, that’s how we bootstrapped a lot of, a lot of our business, was by offering, offering people using competitors to have an easy transition into, into using us.

Vlad Costea 00:12:36 it was a very interesting time because I think shapeshift came before site shift. Correct me if I’m wrong.

Andreas Brekken 00:12:44 Absolutely. I I’m not sure the funding date, but, multiple years.

Vlad Costea 00:12:54 I remember Erik Voorhees was very proud of ShapeShift, and he kept promoting it, and I think it had the strongest brand at the time. It was the best known. Yeah, it was like the Xerox of non-custodial exchanging.

Andreas Brekken 00:13:10 Absolutely. And, there’s a there’s a few more now.

Vlad Costea 00:13:14 But you you guys, what I wanted to add is that you guys have become that after they added KYC. ShapeShift was never the same. Even after they figured out a way to eliminate the KYC, they did not get back their customer base.

Andreas Brekken 00:13:28 Yeah. It was, I mean, I’ve always been a huge fan of Eric and the rest of the team over there. I’ve even met the CTO of it at Poco. And he was, no, no, it was not an, at a Bitcoin event. And he was talking a lot about how they were trying to move the shop into DeFi instead. So, and yes, I did I did monitor the volume of ShapeShift when they went through this transition. And I mean, I’m a ShapeShift user.

Andreas Brekken 00:14:02 and it just it was it was done in a very rushed way. And I’m sure they had a very good reasons for this, but it was rushed so quickly that, it killed their business, which made me, which made me even more excited to continue, for us to continue it, because I was I was very certain that there was a way to run this business, and having a some sort of and having a balance, having some balance between privacy and dealing with all the regulations that are out there and, painted coins and all this, that there is, that there is a way to do it. And also, I mean, I’ve seen we had competitors even at that time who were doing it.

Vlad Costea 00:14:59 Yeah. I got to ask you because you mentioned the word privacy, but when I’m checking for privacy coins like Zcash or Monero or something, I realize that there’s no support for it. And I see that one of your competitors fixed floats. I think they somehow support it, but they also proved that they have enough information about the transactions to give it to blockchain analysis if required.

Andreas Brekken 00:15:25 Yeah, yeah. So there’s so with, with the privacy coins, the road we took was very, very simple. if, if the corn started getting too much heat, which I would define as too many, too much illicit use, you can say by volume or as a percentage.

But once the coin starts attracting a large amount of illicit use, then then you need to start looking at it because, because because people who are, making transactions where the source of the money is no good, whether that be, drugs or stolen funds or whatever. Right. then it has to end up somewhere. The value has to end up somewhere.

So the the main thing is you just don’t you want it to not be you. So once you see this kind of trend developing, for example, Monero. Right. as you see the trend that is becoming something like that. Then, we will either reduce the maximum size you can do, like drastically or just from a, an internal, for example, with Monero, it was a pretty easy choice to, to remove.

Andreas Brekken 00:16:54 And that, that that worked out well for us because, I think Binance removed it after us and then it’s then it’s hard for us to balance as well. But that was attracting a lot of, illicit use and Zcash I mean, zero on the team there. Great. But it was very difficult to integrate. And they changed other formats all the time and all the hard forks. So there is a way to integrate Zcash today, which I’m open to looking at, Unit, which is they have another transaction format which is designed for exchanges to know something about the transaction. I can’t remember the details.

Vlad Costea 00:17:41 But I think now they have the unified addresses. They used to have two separate ones, the transparent and the shielded. Now they have the unified that works with both types of transactions.

Andreas Brekken 00:17:53 We did add unified support, which I know because I made that code, but they have added yet another format. Now I believe that is oh man. Yeah. And we were having a lot of issues with our Zcash wallet over the years.

Andreas Brekken 00:18:09 I did difficulty in keeping the wallet consistent, which means, that the wallet is correctly tracking unspent coins. It was not doing that. and, you know, there are very few wallets I’ve researched and rebuilt and stuff like this than Zcash. and I’ve spent countless of hours trying to figure it out. So when the day was a pretty, pretty easy choice to delist it because there were, huge technical issues.

Vlad Costea 00:18:50 There’s this guy, John Packard, who’s commenting on my stuff all the time, and he posted a video of you under our video. And then this one, you’re basically scolding the developers for adding some sort of what’s it called, time stamping, basically to avoid 51% attacks. It was like a centralizing thing. Yeah.

Andreas Brekken 00:19:16 You’re talking about the, The emergency difficulty adjustment that they did back in the day.

Vlad Costea 00:19:26 Yeah.

Andreas Brekken 00:19:28 But.

Vlad Costea 00:19:30 you had more energy in this one.

Andreas Brekken 00:19:32 Yeah, I I’m not sure which one. I’m not sure which clip you’re talking about, but the difficulty adjustment, I when I don’t know how to change bitcoin, I just listened to Paul Sztorc and he said the easiest thing for Bitcoin Cash to do to have a successful hard fork is just make one change in the hard fork.

Andreas Brekken 00:19:57 And that change is set the difficulty to zero, and then just run the chain and just let it happen. that’s what they should do. But instead they made a huge number of changes on the difficulty adjustment algorithm, which backfired. I think it caused too many oscillations in the, in the difficulty. So then they had to make a second, difficulty adjustment change, and I’m sure several after that. So, hopefully I wasn’t holding them too badly. But I do agree with pollsters that, that there were too many changes done, by the Bitcoin Cash artwork and, and it may have been smarter just to increase the block size limit and set difficulty to zero.

Vlad Costea 00:20:45 And hindsight, I guess there were some decisions about the design of BCH that sort of compromised any potential that it could have had to flip Bitcoin, but it was interesting back in the day because nobody had this. Maybe pollsters had it, but nobody really could figure out what’s going to happen. It seemed like it was civil war within the community, and one group actually had the at Bitcoin account on Twitter, the BTC Subreddit and also Bitcoin.com.

Vlad Costea 00:21:26 So yeah, there was a fight for the Bitcoin brand, and the hard fork that increased the block size did not win. Maybe because they kept on hard forking and creating new versions of it so they could not really agree on something. Maybe it was obvious since they had a b, c they had unlimited.

They had classic XT too many implementations, and I guess even though they agreed that they should scale with big blocks, it was vague in terms of how whereas Bitcoin BTC decided to just use second layers. And that’s another interesting conversation because site shift was the first of its kind. The first exchange to add lightning, and also, I think the first to remove it.

Andreas Brekken 00:22:23 Yes. And we also had, We also had liquid blockchain, liquid support very early on. I can’t recall if it was like day one, but it’s very, very early blockchain liquid. And also, we’re a member of this, blockchain liquid, the liquid Federation as well, as a kind of passive but, supportive. So I’ve.

Andreas Brekken 00:22:52 Yeah, I was just, I was trying to start support for everything because, remember, we had Bitcoin cash and also tokens on Bitcoin cash and, yeah, the goal was to, to give to give the user what he wants. It’s not up to me, to, to decide what you want. And it was an interesting it was also an interesting way for me personally because I was implementing all of this. It was an interesting way for me to learn more about this stuff, because I’ve written reviews on blogs about lightning where I was trying it.

But one thing is, trying it as a user that implementing it on an exchange is really, really different. So I got a, I got a second look at what it means to operate the lightning node and to integrate with that lightning node from your own software to, to do what an exchange does, which is, detect, deposit, send withdrawals and know its balance. So I had to go through the steps of adding all these functions. It was the first invoice deposit method we have.

Andreas Brekken 00:24:12 which means in most coins, there’s an address to your deposit, too. But for lightning, it’s actually flipped around. So the person who wants to receive funds, they create an invoice and send it to you, and you pay it like you would pay your bills or something. So that was that was an interesting challenge.

And we ran it for a number of years. And it had it had very little usage, I will admit. And we had huge problems, maintaining the node, which means maintaining, payment channels. So we actually ended up, I ended up asking a lot of lightning experts for help on how to best run the node and manage the challenge.

So it would be easy to both send and receive funds from, from scratch. But we never really got there. In the end, we were even paying someone, I believe, to run our lightning node. We were like, experts on lightning. But even then, we had a a very high percentage of failed payments, both inbound and outbound, which was leading to, to bad user experience.

Andreas Brekken 00:25:31 And so it was just a conversation between me and the support team, which went like, what do you guys think about lightning? Is, is how bad, how bad is it for the users? Like how many issues do they have? And it was clear that there were just too many problems for the users and and not enough volume. so it’s not some animosity thing. It was running okay. but just too many issues. And it had been so many years that I decided to drop it and start focusing on other Their Bitcoin layer two solutions.

Vlad Costea 00:26:17 That’s interesting because your decision to drop lightning coincided with a paper. It wasn’t quite a paper. It was more of a blog post published by one of the main developers of lightning, who revealed the vulnerability with the protocol.

Andreas Brekken 00:26:36 I’m trying to remember what that was. The vulnerability.

Vlad Costea 00:26:41 It was, I think, November of 2023.

Andreas Brekken 00:26:47 Do you remember the attack vector?

Vlad Costea 00:26:50 I think his name was Richard, if I’m not mistaken. The the family name. Just a second.

Vlad Costea 00:26:57 I’m gonna find it. Lightning. Antoine Riard.

Andreas Brekken 00:27:04 Good memory.

Vlad Costea 00:27:07 It was in October, actually. 23rd of October. Bitcoin developer exits lightning network amid security concerns. There’s some news reports about this. What’s interesting about this guy Antoine is that he didn’t want to talk too much about it. He said he’s going to talk about it when he finds a fix for it. And it’s been a while.

Andreas Brekken 00:27:33 Are you saying there’s no fix?

Vlad Costea 00:27:36 I’m saying he hasn’t found one. I’m not saying there is no fix.

Andreas Brekken 00:27:40 Okay. Yes, interesting I think. I mean, with lightning, it doesn’t really matter to me because I think there are much more fundamental issues that make it not viable as really anything. so that they’re finding more issues is just like more nails in the coffin. But at the end of the day, the concept of this pre-paid channel balances. It doesn’t work because, because you need to have all your money in a hot wallet. And and as, as Bitcoin, maintains the store value role that it has, people are going to want to use their bitcoin as collateral for a mortgage or something.

Andreas Brekken 00:28:29 Right. And you can’t use your bitcoin as collateral and channel balance at the same time. So there’s just too many things. And like Paul Sztorc said, with the current Bitcoin block size, it wouldn’t be possible for people to open enough channels, for everyone to use it as a payment. And the list is simply too long. You always have to be online. routing is impossible.

Vlad Costea 00:29:01 Well, haters are gonna say that lightning is so disruptive that it puts your business in jeopardy because it can do atomic swaps between chains. Things, and if you can do that, you’re not going to need side shift anymore.

Andreas Brekken 00:29:13 I would love that, that technology.

Vlad Costea 00:29:18 I think it was one of the main selling points. They were saying, oh, it’s this highway between blockchains. You can swap Litecoin and Bitcoin. I think they actually did that.

Andreas Brekken 00:29:28 Yeah they did. It was called something submarine swaps I believe. Yeah. That would that would be fantastic. but here we are.

Vlad Costea 00:29:42 Even so, I’m gonna interview tomorrow.

Vlad Costea 00:29:44 This guy, Ben Arc. He built something that’s called LNBits. And after about five years or more, I think six years, he finally got out of beta. He’s launching version 1.0 of LNBits. And he, despite working on lightning, is super enthusiastic about drive chains. And he’s saying, you know, lightning can actually be the layer on top of these drive chains to do swaps so you can get your, for example, Zcash Bitcoin swapped for Ethereum bitcoin or something.

Andreas Brekken 00:30:19 Yeah. I’m looking at the LNBits website. Okay. It’s like a wallet with lightning I’ve seen this I’ve seen a few lightning wallets.

Vlad Costea 00:30:33 It’s like WordPress. You know they have a lot of plugins and they try to make it easy for people to use.

Andreas Brekken 00:30:40 Yeah. Is it like start9 maybe?

Vlad Costea 00:30:43 No, I wouldn’t say Start9 is sort of an operating system for a node.

Andreas Brekken 00:30:49 But it has plugins doesn’t it?

Vlad Costea 00:30:50 Yeah.

Andreas Brekken 00:30:53 Okay. That’s cool. Yeah, I guess this this could be on a start, man.

Andreas Brekken 00:30:55 Yeah. Okay. That’s cool. Well, best of luck to to Ben. I, I try lightning every few years to see if it works. The last time was at a Bitcoin conference, I guess 2 or 3 years ago in Miami, and it was like sort of working.

Vlad Costea 00:31:15 I interviewed Martti Malmi and he finished, I guess you guys are sort of neighbors or Scandinavian neighbors, but he was telling me that he’s using wallet of Satoshi, which I thought was funny because he was the first guy to work with Satoshi in 2009, but at the same time he seemed so non combative. I don’t know how I should describe it, like he didn’t care much that it’s custodial.

He seemed excited about something that’s called Zcash, which is a layer on top of it’s not quite a layer. It’s more like a protocol on lightning to mint these extra coins that have better privacy. And it works pretty good with custodial wallets, but it sort of defeats the purpose. I mean, you have privacy with your transactions, but the mint can rug you.

Vlad Costea 00:32:11 So what’s the point?

Andreas Brekken 00:32:13 Yeah. Yeah, I haven’t heard of that one. When it comes to when it comes to lighting, I was just totally out of the loop.

Vlad Costea 00:32:26 But I see on site shift right now, and this is an advertisement. Guys, you should check out signify that you support multiple types of Bitcoin. You have BTC, the most obvious one. You have Bitcoin wrapped on avalanche. You have liquid Bitcoin. You have Coinbase wrapped Bitcoin on Ethereum. You have Coinbase wrapped Bitcoin on base. You have Coinbase wrapped Bitcoin on Solana and also rootstock which is pretty interesting. Rootstock. Yeah RSL.

Andreas Brekken 00:32:58 Yeah. So I’m just going to admit right now I did not do the integration for Rootstock. There was another engineer. So I don’t have much expertise. When it comes to Rootstock. But I. But for the other ones you mentioned. I mean, obviously, one thing stands out. Which is that most of these other bitcoins are issued on chains. Other, are issued on chains. which for the Bitcoiners is a fork of Ethereum like avalanche.

Andreas Brekken 00:33:34 So. Well, to be more exact, the avalanche itself is not a fork of Ethereum, but there is a component of avalanche called avalanche C, which is a fork of Ethereum. So, yeah, because then you do notice that people have resorted to using Bitcoin that is issued on EVMs, which are obviously IOUs issued by centralized entities like Bitcoin, I believe, was done by BitGo, and there’s still some involvement from Justin Sun, of all things.

And GBTC is of course issued by Coinbase and so on. So. So it is as, as I do I do think of myself as a Bitcoin at first. It’s a bit unfortunate that. This DeFi use of Bitcoin has been pushed out to folks on Ethereum because DeFi is DeFi is cool.

There are very specific use cases of this because you can on Ethereum, you can deposit your Bitcoin to complete the decentralized marketplace. There’s a few. The biggest one is called AV. To my knowledge, it has never been hacked and it has a huge amount of liquidity in it.

Andreas Brekken 00:35:04 You put it there and you can borrow stablecoins and you can, you can offramp the stablecoins. Go buy a house. Pay your bills. something like that. So there is an on chain, completely permissionless loan, that is happening, with your Bitcoin as collateral.

Vlad Costea 00:35:26 Yeah. One of the show sponsors is called Syria, and they’re trying basically to build a ZK rollup on Bitcoin to fulfill the same goal of WBTC, but within an environment that is more trust minimized as opposed to trusting BitGo with custody. Yeah, yeah, but I think they do need some sort of covenant soft work right now. They operate on the testnet. And they’re just waiting for the right time. I mean, of course they can do it without the covenant, and it’s been proven that it’s possible, but it’s super expensive and not the most efficient way to do it.

Andreas Brekken 00:36:08 Yeah, no, I think that would be really nice. There’s, there’s been there’s definitely other ways to do it. I guess the thought chain way is that you just have, there’s a multisig and there’s people, and there’s people with nodes, signing on the multisig.

Andreas Brekken 00:36:30 And I assume you get punished for for lying or something like this, you know, it’s okay. And, and there is a project on Ethereum called Eigen layer, which I’m very surprised has not implemented a permissionless bridge from Bitcoin and Ethereum. You should I said. So if anybody from Ireland is watching this and wondering what’s happening.

It’s like the best possible use case for your technology, but it can roll up on other initiatives. Yes. again, it’s just like letting you know what perfect to be the enemy of. Good enough. So I think more people should make permissionless. we can call them bridges or IOU systems to get Bitcoin and other chains because we, because now we’re using Bitcoin.

That is, if you don’t have change by completely centralized entities. And that’s no joke because, I haven’t even looked. But I assume Coinbase can freeze your CPV to zero. Of course they would make that. It’s a public company. They’re not going to let you just like run around with their IOUs, right? So so there are real issues here.

Andreas Brekken 00:37:49 and. Coinbase is huge. But for example, with Bitcoin or Justin Sun, you should be very concerned that they might be using your bitcoin as collateral collateral for something and you’re not aware of it, and you’re not going to find out until they’re liquidated. And your bitcoin that they will custody is gone. So there’s very real reasons that we should want to have more decentralized solution to this. I mean obviously I would prefer to have DeFi on Bitcoin itself. But until we get there, there should be safer ways to use your Bitcoin and other chains.

Vlad Costea 00:38:29 You seem to be very enthusiastic that we get DeFi, maybe that we’re going to get something like Syria implemented. But given the amount of conservatism that I see right now, I think the latest version of the hope is that people say, well, at least we didn’t change Bitcoin. So you can do it on these other protocols, but they’re not Bitcoin.

Andreas Brekken 00:38:51 And I mean, there’s a there’s a much stronger corp, which is, we don’t need if it’s stupid.

Andreas Brekken 00:38:58 That’s the strongest corp. it is saying, it doesn’t matter that we can’t do it, because why would it do something that I think is stupid?

Vlad Costea 00:39:08 Well, if I started on Bitcoin with counterparty, with Omni.

Andreas Brekken 00:39:15 I would go as far as arguing that, multisig is,

Vlad Costea 00:39:20 Is interesting.

Andreas Brekken 00:39:25 Because you can, Would you say that escrow is is some kind of, Does that get close.

Vlad Costea 00:39:37 To default if you have multiple signers? Yes. If you’re just one person using a multi-sig.

Andreas Brekken 00:39:42 No, no multiple signers. and if you think about it, Satoshi was using you takes a model to pay you, using your own bet as part of your winnings, so it could work on zero conformations. Let’s put a DeFi to me. It’s like, there’s a trustless in the bet. It’s something. I think financial platforms can enjoy it. So yeah I agree. Bitcoin bitcoin had and has DeFi. So. Yeah. Because I guess the people who say we don’t need define bitcoin, they’re fine with the DeFi we do have.

Andreas Brekken 00:40:23 So it’s like they’re setting the bar somewhere.

Vlad Costea 00:40:25 No they’re not fine with it. I think counterparty, which has the rare pepper’s and has all of these tokens. I think there are companies Samourai wallet. When they launched, they actually issued some tokens on counterparty.

And you can actually search for the samurai token on a Counterparty explorer, and you can see which party is on which percentage. It’s pretty interesting what Bitcoin is missing from this equation is automation. Everything on counterparty or omni or whatever, because USDt was also made on the omni layer, which used to be called Mastercoin.

But what’s missing is the automation part, which you can program to, for example, schedule payments or pay dividends every time of the month or whatever. You can also it doesn’t scale, but that’s another conversation.

Andreas Brekken 00:41:18 Yeah, the scheduling part is very interesting on the blockchain because it doesn’t actually run any programs in the background, but that’s been solved on, on, on all kinds of other chains like Ethereum and Solana, where, other people run the scheduled thing for you and they’re incentivized to do so.

Vlad Costea 00:41:42 Yeah. I mean, there is a lot of interesting experimentation that’s happening out there sometimes. So I went on the stage last year, and I did a presentation where I told the people, which consisted of a lot of toxic maximalists, that Zooko and Vitalik are actually much better maximalists than Saifedean or Jimmy Song because they’re trying to push the limits of what’s possible. And most of this is coming back to Bitcoin one way or the other from the original inscriptions, which brought back a new way to embed data into Bitcoin and use that.

And people figured out that they can use zero knowledge proofs to the actual research into adding privacy to Bitcoin, which I think Zcash is the best research lab for this kind of stuff. It’s unfortunate that it did not get much market traction, but the work that they’re doing, if you compare with zero coin and zero cash, were back in 2013 compared to their implementation. Now it’s like. Light years ahead and I have a lot of respect for them for doing this.

Andreas Brekken 00:42:57 Yeah I agree.

Andreas Brekken 00:42:59 I mean I would say also that same like pulse starts working on drivechain. I think he is the biggest Bitcoin mixer. I don’t think he’s ever had anything else.

Vlad Costea 00:43:10 I think he’s the only true Bitcoin maxi because everyone else is conservative compared to what he’s doing.

Andreas Brekken 00:43:17 I agree.

Vlad Costea 00:43:19 He’s pushing the boundaries of what’s possible on Bitcoin. And that’s what bitcoin maximalism should be about.

Andreas Brekken 00:43:25 Yeah I agree I think you know I think in a perfect world Paul George would be the would be the CEO and president of Bitcoin.

Vlad Costea 00:43:37 Maybe not the CEO but maybe the maintainer of core. That would be hilarious.

Andreas Brekken 00:43:43 we could call in the I mean, I was obviously joking, but I mean, I sort of overall like the Linus Torvalds has for Linux and so on. The benevolent dictator. Right. But that is, sorely needed. I don’t even know who’s running core anymore. I really I don’t know, like, I don’t know who’s the main character.

Vlad Costea 00:44:01 There’s no main character right now. We have someone named Ava Chow.

Vlad Costea 00:44:05 It was Andrew Chow, and I would say Ava and Gloria Zhao, and there are a couple of others, but basically they agreed that they’re not going to merge any piece of code that is controversial. So we are part of this era where I think during the blocksize was core developers had a more prominent role. They opposed to the blocksize increase.

They figured out how to increase the block size with SegWit without a hard fork, and it was more clear that they want to be in charge and they want to push the vision of what Bitcoin should be. But I think somewhere along the way they sort of gave up. They stepped aside. Maybe Craig Wright had a role to play in this.

Maybe he was more successful than we like to admit. And getting people to quit the project. But nowadays we’re stuck with a conservatism that’s very shortsighted and irrational. Like even to get something like. I’ll use the example of OP_CAT, right. You add two strings of data together and you can use that to build different structures.

Vlad Costea 00:45:19 It was coded by Satoshi. It was rewritten by a bunch of guys using TypeScript. It’s safer. It no longer poses the risks that Satoshi feared it’s on.

Andreas Brekken 00:45:33 Which were unlimited. Unlimited data growth. Right?

Vlad Costea 00:45:36 Yeah, that that was his concern that you can do loops to basically crash the nodes on the network. But my point is that Bitcoin Cash has it. Liquid has it. So if you want to break something or you’re super concerned about something that you’re capable of doing to break the chain, you can actually destroy BCH.

You can break be cash if you’re such a crusader, Maxi. But at the same time, I think the opposition to it is very weak. It’s just more of an opposition to change at all. And there is not a real conversation about the benefits of this.

And it’s always an appeal to who’s supporting it. And it’s such an ugly political game where instead of talking the merits of something and once again I thought core was a meritocracy. They are talking about who’s supporting this and they appeal to the authority or the reputation of that person.

Vlad Costea 00:46:41 And they say, oh, wait, if Greg Maxwell, you used to call him one. Meg. Greg, if he’s against something, then I guess a lot of people will say no. But if someone likes it, like Woody Wertheimer or whatever, they’re gonna say, wait, this guy has a bad reputation among our circles, and therefore it must be evil. And this kind of logic is so detrimental to any healthy conversation.

Andreas Brekken 00:47:13 Yeah.

Vlad Costea 00:47:15 Because I think Greg Maxwell likes it, by the way. Andrew Poelstra likes it. The Blockstream Research Department actually posted some articles explaining what you can do with OP_CAT on Bitcoin. But now I don’t know how. How did Bitcoin become so political? It’s still a mystery to me. It used to be more of a competition of ideas, more of a meritocracy. Maybe you know better.

Andreas Brekken 00:47:43 I’m not an expert on Bitcoin development. I, Even during the, even during the blocks, that was because I wanted bigger blocks, because I’m using this stuff. I just want more throughput.

Andreas Brekken 00:47:58 Right? even then, I was more. I was mostly paying attention to the main characters was not so much, not so much the development process because I’m an application developer. so I don’t make the chain. I barely follow the development of the chain. I just use the chain. So my only interaction with the developers is when I go on IRC or wherever they hang out now. And that’s the question is how do I do this? And that.

Vlad Costea 00:48:31 That’s fair. But you do listen to Paul’s thoughts And in hindsight, I think he had the best vision of the block size. Worst outcome.

Andreas Brekken 00:48:45 He’s usually right about these things. And I mean, I think the outcome in hindsight, the outcome, it’s not obvious, but the outcome that we get is something that I guess happens a lot in all kinds of organizations, which is, which is when there’s when there’s a splinter group that breaks out, there’s a tendency for there to be further breakouts in that group once they have broken out and then further breaking out of those again, because there’s no you’re leaving one power structure or organizational structure and you’re not really replacing it with something.

Andreas Brekken 00:49:32 So there is a need for a structure and a new one. And of course, in the splinter group there will be many spicy personalities who all wanted their way. And I guess it it makes sense now that it may be inevitable that those personalities will also clash.

Vlad Costea 00:49:57 Yeah, maybe. What did you still think? Maybe in, let’s say, August to December of 2017? Were you on the side of big blocks 100%, or did you also pay attention to the other side?

Andreas Brekken 00:50:14 Yeah, I mean, to me it’s just a few lines and the colleges change a number and you get more transactions. It’s still the team I’m on today, but I don’t think it’s realistic, to perform that hard part. They would. And the thing is, like, in these kind of debates. I don’t need to have it my way. I just, I just wanted to say that I prefer if there’s more throughput and increasing the block size is an easy way. Then if it if it turns out the consensus is no, which we have seen today, right? Then I’m fine with that.

Andreas Brekken 00:50:53 It’s technology. Like I just work with what I have with my bigger blocks. We do one thing for smaller blocks, we do another thing, smaller blocks. We’re more like a settlement layer. We’ll have to have to scale some other way. Bigger blocks. We’ll do more transactions on chain. It’s not like it’s not like one of these, outcomes or realities. It’s the death of this project or something that’s very dramatic. That’s not my department. It is. I propose we improve the tools we do or we don’t. And I work with what we get.

Vlad Costea 00:51:27 Yeah, I gotta say, one of the sponsors of the show is Bitcoin.com News, and I was reading that in 2017, and I was super confused about SegWit to wax and all of the stuff happening at the time, but nowadays they’re pretty good. I gotta praise them because they gave up on this angle where they were trying to push BCH as the real Bitcoin, the one that follows the white paper, and they have pretty balanced news coverage as opposed to Bitcoin magazine, which is super pro-Trump, super focused on American politics and what’s happening.

Vlad Costea 00:52:03 Yeah, I had David Bailey on. And right now he’s a Trump loyalist and there’s nothing wrong with that. But at the same time, I do like my news to be less biased or more focused on presenting the information as opposed to pushing a certain angle.

And I think right now, Bitcoin news that Bitcoin.com is the URL, they have pretty good news about geopolitics. They also cover some stuff related to gold and stock markets and events happening in markets I don’t usually think about, like in Asia and Europe. Actually, I think about the European markets, African, Asian markets. They have some coverage on that and I find it useful sometimes.

So if you want to escape your bubble and not focus on what Saylor is saying all the time, you should check out news Dot Bitcoin.com once in a while and you you’ll find different perspectives on the events. Right now we are at $74,000 per Bitcoin. The longer this podcast goes on, the lower we go. Now we’re back to 75. I’m sorry we bounced back a bit, but it’s a bloodbath.

Andreas Brekken 00:53:14 Oh, man. the big altcoins, I think I think at some point I saw Ethereum was almost down 20% for the day. That’s it. That’s a big one even for us in crypto, because I remember I was reading, I was reading this morning, I was in the news bulletin. They said the Chinese stock market was down 10% in one day, the worst since 2008. And I like 10%. That’s like, that’s nothing for us. That’s just called a Monday.

Vlad Costea 00:53:46 Yeah, it is Monday. And Ethereum is down 18% right now. Yeah, sort of insane because we were pushing this technology as a hedge. Right. We were saying, oh, if you don’t want to get screwed by the stock market or by inflation of your national currency, you should buy bitcoin, man. Just buy this. Keep buying it, DCA into it, hold it, never sell it, blah blah blah. It seems to be performing much worse than your stock indexes and it’s correlated. And I think that’s the worst part because of course there’s volatility.

Vlad Costea 00:54:21 Of course this is going to happen. But when it happens at the same time as docs, it just makes us look bad. It destroys narratives. Maybe it’s healthy. Maybe it’s what we deserve.

Andreas Brekken 00:54:34 Yeah. It’s, At the same thought, there were a lot of people, including the Winklevoss brothers, yesterday, talking about this decoupling as, people started calling it the decoupling. Decoupling. And so many people were talking about it yesterday. Oh, man, I’m so glad this decoupling is happening. You know that the stock market is going to shit in. Bitcoin is holding well. apparently no decoupling. I don’t follow other assets. I don’t know how gold is doing, but I assume, gold is doing much better than Bitcoin. I’m not. I know you’re Peter Schiff, Max. I saw on your Twitter.

Vlad Costea 00:55:22 I’m not a Peter Schiff maxi. I’m in my Peter Schiff appreciation era. I think I respect the man much more right now because he was pretty right in hindsight. It’s easy to make fun of him, but he was sort of right about this whole store of value narrative.

Andreas Brekken 00:55:42 I think. I think Peter Schiff has been one of Bitcoin’s strongest promoters, because if you think about it, he produces, he’s been producing content about Bitcoin for more than ten years. He’s been very, very active talking about Bitcoin. And because Bitcoin was so small and he was quite influential, it was always very helpful that he was talking about Bitcoin. So I, I was always suspecting that Peter Schiff might have more bitcoin than we think because what else is always talking about it. It could be that.

Vlad Costea 00:56:17 It just wasn’t on his website.

Andreas Brekken 00:56:20 Oh there you go.

Vlad Costea 00:56:23 But are you still there? You froze. Oh, you’re back anyway. I’m still here. What I was gonna say about Peter Schiff is that back in 2014, he was having debates with Erik Voorhees, and it was in a format of Bitcoin versus gold. Right. And at the time, a lot of people knew who Peter Schiff was because he, he amassed a huge following in I think it was 2008 to 2009 when he was going to these Occupy Wall Street protests.

Vlad Costea 00:57:00 And he was trying to interview people to ask them to get them to speak about their movements and also help them understand that their anger is maybe misguided or misdirected, and they don’t really understand how the system works. So I watched some of his videos. I have huge respect for his approach. And I think in 2014 he had many more followers than Erik Voorhees.

Erik Voorhees was super obscure at the time, so he gave a platform to this guy and enabled him to speak about Bitcoin. What’s funny is that if you listen to Erik Voorhees in 2013, 2014, he talks in the same language and uses the same analogies that people like Saifuddin took like five years later and built a platform with them.

Erik Voorhees basically moved on and he figured out, okay, these are the limitations on Bitcoin. I want to do something else. I’m going to build all of these chains. I think he did torching he he also built shapeshift.

Andreas Brekken 00:58:08 Yeah.

Vlad Costea 00:58:09 So he has moved on past Bitcoin to build some other stuff that maybe is useful to him.

Vlad Costea 00:58:15 And he his moral compass is dictated more by his libertarian background. He doesn’t care much about supporting only one project. He just wants to do stuff without the state, and that’s sort of his ethos. But these guys who listen to him in 2014 built a platform using exactly the points that he was making.

And it’s so funny. But once again, if you go back to Bitcoin talk, you’re going to find the same points being discussed in 2010 2011. And it’s like eternal September. You know it’s like Groundhog Day. Same conversations every cycle. Very little is actually new.

But it seems like the stakes are getting higher every time. I’m actually wondering sometimes what’s next after this. We got the president of the United States talking about Bitcoin. We got the world’s richest man talking about Bitcoin. We got a bunch of nation states buying bitcoin and mining Bitcoin.

Andreas Brekken 00:59:15 Yes, I. I’ve been. I’ve been wondering as well, like, what is the next, what’s the next thing? Because it feels like we’re running out of things because all the things, all the stuff we were dreaming about back in the day, like ten years, plus all this stuff we were dreaming about, most of that has already happened.

Andreas Brekken 00:59:41 We were like, you know, we were imagining one day banks will own Bitcoin and you can have like bitcoin in your bank and maybe countries will have it, maybe countries will mine bitcoin. And we had like all these crazy ideas.

Literally all of that happened already. So what is the the only the only like next thing. On the store of value goals that I can even think of is it would have to flip gold replace gold as a star start.

It’s the only thing I can think of. On the technology side, I’ve just completely given up. I mean, nothing happens in Bitcoin. The only thing I’m sure of this stuff is really nice, but, maybe we’ll get dropped in when we deserve it.

Vlad Costea 01:00:34 I was gonna ask you about that because you’re the man who turned pollsters. He was basically this guy talking about prediction markets and drive chains. But you supported him to become the CEO of layer two labs, as far as I’m aware.

Andreas Brekken 01:00:53 yeah. I mean he had been he had been working on drug chain for a long time.

Andreas Brekken 01:00:56 His work was for some time. It was financially supported by Rajveer. And Paul went on to make layer two labs that work on this project. So, yeah, I’m one of the investors in that. but I wouldn’t say that it was like my initiative in any way. He was, It’s pretty clear what he wanted.

Vlad Costea 01:01:23 No, of course not. And if you go to the Bitcoin.com YouTube channel, you’re going to see that the first series of interviews was actually with him. That was many years ago, and he’s been pretty consistent in his views. He has been making the same points for a long time, maybe a decade or something.

Andreas Brekken 01:01:44 Yeah. Yeah, I really think, I think we’ll get drafted when we deserve it. And, and that would be the last fork of Bitcoin, unless there’s some very serious, security issue, of course.

Vlad Costea 01:02:05 Well, that was going to be my follow up question, because in altcoins you have experimentation. And that experimentation is fueled exactly by what we call the shit coin, right? You buy the shit coin that developers are going to get paid and they’re going to build something.

Vlad Costea 01:02:21 But if you have everything built on Bitcoin, you’re not going to benefit from the same development budget. You’re just going to take the existing tech and you’re maybe you’re going to update it, but it’s not going to be as groundbreaking as it currently is. So maybe having these shit coins right now is a net benefit, even though we’re not having this utopian future with only 21 million coins and the world economy running on them.

Andreas Brekken 01:02:51 Yeah, but if you get something like drive change and you get layer twos, this is sort of like on Ethereum, you have Ethereum and layer two is. Now that the benefit you get from that on Ethereum with layer two is, is that The coin you need to hold to pay for fees to make transactions on the layer two is ether. So the layer two has the same fee paying token as the layer one times the user. You just need the one token. and that would be the same with drive chain that the main chain the base asset, the fee asset is Bitcoin.

Andreas Brekken 01:03:34 And on the different layer two is the base asset or fee asset. It’s also Bitcoin. But the thing is people are still going to make coins on the layer two is on Bitcoin. It’s the fee asset will be bitcoin. So it will be huge convenience for everybody right.

And when the fee asset is bitcoin it means that people will prefer to use bitcoin as a token on the chain. So if there’s when there’s trading platforms you’ll often see that they’ll be trading pairs quoted in Bitcoin because there would be like a, you know, a shared coin bitcoin pair where the coin is quoted in Bitcoin simply because people have bitcoin already.

It makes it a bit easier, but it certainly does not mean that there’s going to be no bitcoins. So and we see this on on all the other chains right. People launch projects. If it’s a decentralized trading platform. If it’s a betting market, if it’s a lending market, all these things have their own Bitcoin. And like you said, the coin is used to pay the developers.

Andreas Brekken 01:04:43 and they, they usually try to make it so that if the platform is successful, the coin is successful. and then after that follows the debate, which was like, why do I have to buy a Bitcoin? Can’t I just invest in the platform and you buy me in Bitcoin and reward me in Bitcoin? So all this stuff is already being done in other chains. So I don’t think we’re going to lose this mechanism where innovation is fueled by the creation of bitcoins, where it’s used as this like bizarre funding mechanism. I just think when we get around, this is going to be a lot of shift guys.

Vlad Costea 01:05:20 Well, you know, Paul’s pitch is that we’re only going to have the 21 million coins and nothing else.

Andreas Brekken 01:05:27 And yes, but but there would of course be an Ethereum compatible sidechain and that would let people issue tokens. And I know that people, I’m sure there would be, and there would be, some kind of name registry chain, like we’ve had in the past with big names and all of this.

Andreas Brekken 01:05:53 and I mean, names are kind of coins in some sense, although not fungible. And I believe he’s also talked about big assets. I forget which one he prefers the. And if there’s a lightning. Lightning sidechain, you can have coins on that. So they will. Yeah. Paul himself will only be supportive of Bitcoin. But certainly other people would introduce bitcoins.

Vlad Costea 01:06:19 It’s not like you can’t already have shit coins. You can issue shit coins with oridinals. You can issue bitcoins with BRC 20. You can issue bitcoins with counterparty, with omni. You can create bitcoins on liquid, which is supposedly holy because it’s built by Blockstream.

But you can build bitcoins. And ironically, I have a French friend. He built something that’s called moulacoin on liquid and it’s the most traded asset. And that’s super ironic because Blockstream made liquid for the purpose of tokenizing Wall Street.

That’s what they wanted. Ironically, Wall Street doesn’t like regulated stuff, so they want to Ethereum or something like this. Yeah, and right now, Blockstream gets volume on their blockchain with a meme coin that was made by someone.

Vlad Costea 01:07:11 It’s good. It’s so beautiful. It’s like Elon Musk says that the most hilarious outcome is the most likely. Or something like this. But I gotta pick the lowest hanging fruit here because you mentioned coins, shit coins, tokens, whatever. There is also the side shift token. And why does side shift need a token and how does it work?

Andreas Brekken 01:07:36 Yeah, that’s a very simple one. when we raised seed capital, it’s a question of how do you do that? Like, what is an easy way to to raise money from investors from all kinds of different places and all this. So the easiest way was simply you give me, you give me a dollars, I’ll give you a token.

That was the simplest model we’ve seen to work for so many people. And, we also needed it because we want to have an affiliate program. We wanted to pay the affiliate in something, and, it just makes sense to pay affiliates in your own token. And also, then I also don’t have to become a custodian for USD.

Andreas Brekken 01:08:27 so they affiliates who get kickbacks from sharing referral links and things like this. They also get, they get paid in that. So that that is the reason, for having the token. And then we have a staking mechanism which is done on Ethereum. And the reason for that is simply people who stake things are more likely to hold it for longer time. And when they have longer term holders, it attracts other holders. So it’s it’s a well-proven number. Go up. Mechanism.

Vlad Costea 01:09:02 Okay. Also, on the topic of drivechains, which I don’t want to end this quickly, we spoke about some concepts like bit names, bit assets and Ethereum and Zcash.

You can actually try all of that on I think it’s layer two labs.com/download. And you can download the. Net version of the software. You go to the telegram channel that’s called drive chain talk. And you speak with the others.

They can send you some free signet coins so that you can interact with them. You can basically see the future of Bitcoin there, and it takes maybe a couple of hours of installing stuff, synchronizing and setting up, and afterwards you’re gonna see that it’s much simpler than Lightning Network.

Vlad Costea 01:09:53 It’s the sort of user interface to which you’re accustomed. It’s like Bitcoin Core but for different use cases and it can be pretty cool. I don’t know. Check that out. Layer two labs download. And I also have to ask you about something that someone in the chat asked Griftofer Columbus said Decred ftw. And I checked and there is no decred. Is it because it’s an old coin and it doesn’t have many supporters? Or is it because it has some privacy and there were some regulatory issues?

Andreas Brekken 01:10:35 Yeah, I kind of lost you there, but I think you’re asking me why we don’t have decred, right?

Vlad Costea 01:10:39 Sort of. Yeah.

Andreas Brekken 01:10:40 Yeah. there is no reason. It’s simply not on my radar. I what I used, what I used to say is we’ll list something if it’s on the top 250 Stay for both. Market cap and volume. And looking at it now, it’s like 250in market cap in volume I’m not sure. So that is the only reason we make exceptions for this all the time.

Andreas Brekken 01:11:11 But that is the main thing because it’s and of course Bitcoin and Solana and and Ethereum will list quicker because there’s much less overhead to start a new chain. but I’ve never really I’m not familiar with Decred. I’m sure it’s a wonderful project. I’ve just never looked into it.

Vlad Costea 01:11:37 Yeah, you told me. You have to go. I’m gonna ask you one last question. Actually, two of them. One of them is, how can people follow you? But before that, you are the CEO and owner of Shitcoin.com, right?

Andreas Brekken 01:11:49 Yes.

Vlad Costea 01:11:49 So what are your favorite shitcoins?

Andreas Brekken 01:11:54 First of all, just to be clear, I’m the chief enchilada officer. We have a very, very limited staff that we produce on good content. My favorite coins give me, like, funny ones or, like.

Vlad Costea 01:12:11 I don’t know.

Andreas Brekken 01:12:11 What’s going into projects.

Vlad Costea 01:12:13 It’s whatever it means to you.

Andreas Brekken 01:12:15 Yeah.

Vlad Costea 01:12:17 not financial advice, by the way.

Andreas Brekken 01:12:19 I do, I, I do like Harry Potter. Obama, Sonic. Inu.

Vlad Costea 01:12:25 That’s a classic. The ticker is BTC.

Andreas Brekken 01:12:28 Yeah. The ticket Bitcoin actually in all capital letters. So I like it mostly because I can just memorize the name and people are always surprised. I know the name and I will always like Dogecoin a lot.

I was on Bitcoin talk back in the day when when Dogecoin started and there was the whole mania and the the bobsled team and everything. Not always like Dogecoin. Or. Or new stuff. I like hype just because I like this project called Hyper Liquid, which is, seems to be the first popular. Very kind of fast.

Looks like FTX. Like for trading, for trading coins. So it gave me some hope that we’re moving to a more decentralized, future. But I don’t know if the token does anything useful, but I like the project. Can I say BFV this because it’s a bit counterculture to like VSV? Now maybe I should get into BSB is still around.

Vlad Costea 01:13:37 It is. But the reason why I would never touch that is that I know it makes the people I don’t like richer.

Andreas Brekken 01:13:46 So okay, good point. I shouldn’t buy that. Okay. I was I was going to buy it for fun. but it’s still there, you know? Yeah. That’s it. I the thing is, I don’t really have any favorite coins. I, I like bitcoin and drive chains, which is supposed to get us away from sitcoms.

Vlad Costea 01:14:14 Oh, you’re you’re undergoing therapy.

Andreas Brekken 01:14:21 yeah. I mean, I’ll always have sitcoms because it’s an excuse to follow a project. But when it comes to what I believe in long term, it’s, actually investable assets. I think it’s very hard to to to something other than Bitcoin.

These other projects like Solana, Ethereum. They will have their day in the spotlight and the token price will moon and so on. But over time the question becomes why would anybody hold Solana Sol? And the answer is yeah, they needed to buy fees to pay for transaction fees.

And then I say, okay, so you’re saying you need $5 million to pay for transaction fees in like some investment fund, or do you need $1 million in Solana? In fact, do you even need $1,000 in Solana to pay for all the transaction fees for the rest of your life? And the answer is no.

Andreas Brekken 01:15:16 So, So there is, there will be a hype cycle, but at the end of the day, the other coins are just useful for paying transaction fees. And you don’t need much. You don’t need much if there are Solana to justify. So then you might just want to start because.

Vlad Costea 01:15:35 You have this Venn diagram on Bitcoin.com, which shows that the stupidest people complain about bitcoins and the smartest people love bitcoins. coins. No, they don’t complain. The stupidest people love shit coins, the smartest people love shit coins. And the people in the middle, they’re the ones saying no shit coins are bad.

Andreas Brekken 01:15:55 Yes. I think that’s very true. The it’s because the the Jedi at the right side of the IQ bell curve. It’s just the enjoyer. He enjoys being a bit clumsy. He enjoys buying shit coins. He enjoys very enlightening. He enjoys travelling because he’s enjoying his life.

Vlad Costea 01:16:21 You’re right. It’s a bell curve. It’s not a Venn diagram, I mislabeled it. Where can people follow you on this?

Andreas Brekken 01:16:31 You can follow me on Twitter, the username Bitcoin.com, and then you follow my Twitter, which is a B RCM.

Andreas Brekken 01:16:41 I’ll let you post a link to that because it’s hard to say.

Vlad Costea 01:16:44 Yeah, it’s Bracken, but without most of the letters.

Andreas Brekken 01:16:49 Yes. And, and of course go to the com slash newsletter. I publish a newsletter, every week, with my, dear editor Blake, we have published 239 newsletters in a row without missing a week. And it has no alpha. As we say, it’s only memes. So I recommend that you read that. And, if you’re looking for a job, especially if you’re an engineer. Front end or back end, even, we’ll even take five coders. Then please go to satisfy slash.

Vlad Costea 01:17:29 What vibe coders? I might actually stand a chance now.

Andreas Brekken 01:17:33 Yes.

Vlad Costea 01:17:36 Thank you very much, Andreas. And thanks to the sponsors once again, Bitcoin.com news, layer two labs. The sideshift, obviously. And also news.bitcoin.com. I forgot to tell you about that one, but it’s a marketplace for gift cards and they also have a debit card for spending. It’s pretty cool.

Vlad Costea 01:17:56 It’s basically the evolution of paxful by the guy who made paxful, but in a more decentralized way, and that empowers the global self. Pretty cool, it’s called NoOnes.com. Check out now HODLING.ch that some guys from Switzerland who help you with your self-custody. If you want to learn more about that, you should listen to their interview, which is in the previous season.

I think it’s episode 50 something. Their name is Polto and Darko. You can look for that one. Thank you very much, Andreas. It’s been fun to talk, and I recommend people to check out your Bitcoin.com YouTube, because beneath all of this memeing, there is a lot of wisdom to be learned and discovered.

Andreas Brekken 01:18:42 Absolutely.

Today, Marko Tarman is the Lead Mining Manager at NiceHash – a company which specializes in renting and commodifying hash rate, which opens up a convenient marketplace for people who produce hashes and seek to sell them to the highest bidder. The beauty of NiceHash has always been the automation of mining – the average video gamer who owns a powerful GPU can choose to put his machine to work a few hours a day, so he can receive BTC payments.

In the background, this hobbyist miner will most likely be securing another chain such as Ethereum Classic, Beam MimbleWimble, Firo, Zano, Kaspa, or Alephium. But the chain gets picked automatically based on the existing supply-demand dynamics, in order to maximize the profits of the hashrate provider. And the BTC payments can even get sent via Lightning Network, as NiceHash owns one of the most popular and liquid nodes.

In this episode, Marko Tarman makes use of his extensive experience in order to talk about current trends in Proof of Work mining and try to predict the future of the industry. Though the projections might seem a little gloomy in the era of Proof of Stake DeFi, there’s still enough experimentation in the world of Proof of Work to keep the markets interesting. However, Bitcoin mining is already in its industrial phase and most likely will never revert to hobbyists using their home rigs.

We also talk about regulations in the European Union – especially MiCA, which accelerated NiceHash’s decision to move out of Slovenia. The company recently relocated to Switzerland in order to function just like before. On the other hand, the NiceHash Pay service had to be put on hold until further regulatory clarity.

Towards the end of our conversation, Marko also reveals a new partnership between NiceHash and M2. Now miners will be able to access loans which allow them to hold their coins over longer periods of time, thus offloading the pressure to sell the rewards in order to pay the bills. This type of deal should definitely impact markets, as fewer miners will sell their coins out of immediate necessity.

Listen to Marko Tarman on YouTube, Spotify, Apple Podcasts, Twitter/X, and More!

This episode is sponsored by Sideshift, LayerTwo Labs, Citrea, Bitcoin.com News, NoOnes.com & HODLing.ch

▶ Play video Watch on YouTube

Time stamps:

Introduction to NiceHash (00:01:16)

Role of Lead Mining Manager (00:02:11)

Mining Popularity and Trends (00:02:52)

Mining Algorithms and Projects (00:03:40)

Profitability in Mining (00:03:57)

NiceHash Marketplace Functionality (00:06:03)

Profit Switching Mechanisms (00:07:44)

Impact of Mining Dynamics (00:09:49)

NiceHash’s Role in Mining (00:10:39)

Understanding NiceHashable (00:14:12)

51% Attack Explained (00:15:05)

Mining Algorithms Supported by NiceHash (00:18:08)

NiceHash as a Marketplace (00:19:19)

ASIC Boost vs. SHA-256 (00:20:32)

Advantages of Using NiceHash (00:22:00)

Bitcoin Payouts for Miners (00:24:45)

Popular Mining Algorithms (00:27:08)

Proof of Stake Is Proof of Shit (00:28:52)

Proof of Work vs. Proof of Stake (00:29:01)

Impact on Hobbyist Miners (00:29:31)

Fairness of Mining Distribution (00:30:43)

Regulatory Concerns (00:30:56)

Developer Security in Mining (00:31:39)

Algorithm Development (00:32:00)

Ethereum Classic’s Hash Rate (00:32:53)

Mining Profitability Insights (00:34:15)

SideShift & bitcoin.com News (00:34:47)

Historical Mining Profitability (00:37:07)

Sustainability of Mining Model (00:37:26)

Intimidation of New Miners (00:40:00)

Early Mining Experiences (00:41:59)

ASIC Mining Challenges (00:44:18)

Regulation in Mining Industry (00:46:35)

Competition Among ASIC Manufacturers (00:48:20)

NVIDIA’s Focus on GPUs (00:51:29)

GPU Mining History (00:52:56)

Current GPU Prices (00:56:01)

Chip Shortage and GPU Prices (00:56:45)

GPU Mining and Hash Rate Utilization (00:57:17)

Decline in GPU Mining Profitability (00:58:11)

Future of Proof of Work (00:58:44)

Home Mining Resurgence (01:00:59)

Evolving Mining Algorithms (01:02:41)

ASIC Mining Algorithms and Risks (01:03:03)

NiceHash Payment Processing Features (01:05:10)

Lightning Network and Compliance Issues (01:09:22)

Mining Profitability and Market Dynamics (01:12:55)

NiceHash’s Innovations (01:13:44)

Hash Rate Marketplace Differences (01:15:44)

Bitcoin Blocks Mined (01:17:05)

Buyers of Hash Rate (01:19:25)

Buyers of Hash Rate (01:24:26)

Competition for NiceHash (01:25:13)

Complexity of NiceHash Services (01:26:39)

NiceHash Product Offerings (01:27:01)

Future of NiceHash (01:31:16)

Regulation in Mining (01:32:04)

Trends in Mining (01:34:37)

Concerns About Mining Centralization (01:36:11)

Evolution of Mining (01:38:31)

Hope for Decentralized Mining (01:39:39)

Future of Proof of Work (01:41:30)

Quantum Computing Threat (01:43:47)

Adaptation of NiceHash (01:47:57)

Staking Pools Discussion (01:48:11)

Marco’s Future Plans (01:49:02)

Merchandise and Community Engagement (01:50:18)

Final Thoughts and Contact Information (01:52:34)

Partnership Announcement with M2 (01:53:50)

Hash Rate as Collateral (01:54:34)

The Short-lived Commodity (01:55:03)

Access to Loans (01:55:54)

Game Changer for Miners (01:56:11)

Repaying Loans with Hash Rate (01:56:25)

Full Transcript of My Interview with Marko Tarman:

Automatically Transcribed With Podsqueeze

Vlad Costea 00:01:16 Hello there and welcome to the Bitcoin Takeover podcast. This is season 16, episode 15 and we are here with Marko Tarman from NiceHash. If you’ve been in this space long enough, then you have heard about the expression “nicehashable”, which means you can rent enough hash power hash rates to be able to 51% attack a network.

And for a while this was an important metric and NiceHash. Last year in November, if I’m not mistaken, has turned ten years old. You had this anniversary party? I was invited there.

It was nice to speak on stage, and we were supposed to do this interview at the time. But you’re super busy with organizing stuff, but I’m really happy that we can do this right now. And right here. Marko. It’s good to have you.

Marko Tarman 00:02:05 Yeah. Thanks for inviting me. I’m super, super excited that you can finally record this.

Vlad Costea 00:02:11 Right. So, what do you do at NiceHash?

Marko Tarman 00:02:15 Well, my official title is lead mining manager. But when it comes to, let’s say, medium sized companies, in terms of employees, everyone must wear many hats, so do I.

Marko Tarman 00:02:29 So I mostly take care of mining site of the marketplace, which includes business development, some marketing, key account management, product management and all this or all these things kind of merge into one, role. And I have that role.

Vlad Costea 00:02:52 Well, it sounds exciting. Is mining still as popular as it used to be? I see that most of the projects launching nowadays, they just go proof of stake. They don’t care too much about decentralization as back in the day. I remember when I first got in, every coin was proof of work and they were experimenting with various algorithms. Some of them even had multiple mining algorithms that they were using for, I guess, consecutive blocks to interchangeably switch.

Marko Tarman 00:03:23 I think that was that was a Raven. 616 or how was it called the before? It was 616 or something. And there was actually 16 different algorithms inside one. I think that’s what you’re talking about.

Vlad Costea 00:03:40 Yeah. I remember at one point there was Virge, and that one got 51% attacked in 2018 or something.

Vlad Costea 00:03:46 And one of the existing algorithms.

Speaker 3 00:03:51 Yes, probably.

Vlad Costea 00:03:53 So is proof of work still a big deal?

Marko Tarman 00:03:57 Bands from what perspective are you looking for or asking? Because from, let’s say from miner’s perspective, there’s just a few coins that are still available and people still have interest in, you know, miners are mostly profit oriented, and they will only mine coins that have, enough profits for them to be sustainable.

So if there’s a coin that or if there’s a coin that’s that maybe has zero potential zero usage and the price is not high enough, people won’t make it, obviously. So the first thing to think about is, is the project interesting for the for the general public?

Because if people are using it like they are using Ethereum, for example, then there will be enough, volume on it, enough usage. And the price of the coin normally does go up. Or at least it’s evolving. And then you will have miners. But if the projects are like shit projects, then you wouldn’t see as much of traffic on it.

Marko Tarman 00:05:08 No usage. And there there wouldn’t be any mining at the end of the day. So there’s no security of that project and it all goes hand in hand. but from the token perspective, like from new coins and stuff, as you said, there’s a lot of proof of stake proof shit. coins. you you can also, like, think from the through the same eyes or watch from the same eyes that if because they might know that there’s not going to be as much usage of the coin.

And this means there’s going to be enough miners mining the on the project, on the blockchain. They rather launch a proof of stake, coin in order to to have a decently or not decently or have some sort of security better than a few miners.

Vlad Costea 00:06:03 Yeah. It’s definitely interesting how the dynamics have evolved. Nice hash. Is this service that opened up a marketplace for hash rate. And let’s say that you have a I think nice hash is not for A6 specifically because A6 can only mine one type of algorithm.

Vlad Costea 00:06:23 But if you have GPUs, I think you’re searching for the coin that is most profitable. And nice hash makes that very easy for you to use your GPU rig to mine whatever works and whatever makes most income.

Marko Tarman 00:06:37 That’s not entirely true, actually. The three biggest algorithms for marketplaces analysis are all basic, algorithms. So the best one is to find 256. The second biggest one is script algorithm, which is for Dogecoin, Litecoin mining, sometimes bells, coin mining or any other script coin actually. And the third biggest one is hash marketplace where buyers can buy or sellers can sell the hash hash hash rate.

But yeah, back in the day, true power was in profit switching for GPU miners. And that’s how Nexus actually grew a lot, especially in the Ethereum days. what nice offers is what I like to say two layer profits. You think first layer would be on the algorithm itself. So you have one algorithm, for example, let’s say script algorithm and buyers who are buying this algorithm hash rate will be mining different coins.

Marko Tarman 00:07:44 For example, they can buy my Litecoin became mine. Dogecoin became my my better coin. I think there is another, script coin. They can do merge mining. They can do what they can by the hash rate to mine any coin that’s running script, even if that’s newly launched.

I know Vlad coin. and it’s if it’s running on script, buyers can buy the hash rate, and they can they decide where they will send the hash rate, and they normally send it to the coin. That’s the most profitable at that moment, because they will be doing arbitrage trading with the hash rate. So that’s the first layer. Even if you’re mining on Sha 256, there’s different coins that are mineable with that algorithm.

And there are buyers who identify different opportunities and direct buy a lot of hash rate for a short amount of time, let’s say a day, maybe two, but they’re willing to pay more than the buyers buying the hash rate for Bitcoin mining. That’s the first layer. Then we have the second layer which is only applicable applicable on GPU mining.

Marko Tarman 00:08:52 So because Asics can only mine one algorithm, but the GPUs can mine different algorithms. So a GPU might might be used for heavy not sorry, capo EDC, hash beam or some other algorithm. And whenever the highest paying the algorithm that’s highest paying, then the miners will be sent to that algorithm. So, for example, if I have a GPU running on, and there’s a very high price for my compute power on Capo algorithm, then my GPU will start mining or selling the hash rate for capo buyers. You know, that’s the second layer of profit switching, which is only applicable for GPUs. I hope that that makes sense.

Vlad Costea 00:09:49 Yeah, I’ve interviewed on the show some people, for example, there is a privacy project called Beam, which is based on the minimal Wimple protocol. And there are also the people from Decred, and they were quite unhappy with the evolution of proof of work because they said there is far less. How should I put it? Commitment and users and most of them just mine, whatever is most profitable.

Vlad Costea 00:10:17 And they were a bit disillusioned with how proof of work actually works for their networks, because most miners come and go and whenever the price goes down, they see large amounts of miners dropping and they sort of blamed it on nice hash. And for me, it was very funny because I understand that there is a market for this and everyone wants to maximize the revenue.

Marko Tarman 00:10:39 Yes. Look, we are the only hash rate through hash rate marketplace, so there’s no other player in the industry where you can platform where you can buy or sell the hash rate, within seconds. You know, there’s no contracts. There are no there’s no forwards. Everything is happening in real time. and this gives people an ability to have a second market, you know, apart from that, where only blockchain is issuing the rewards, you know, there’s humans that are willing that have some, feelings on what, what to mine and do that profits, which I was talking about before. And I think that’s quite important to have in the ecosystem.

Marko Tarman 00:11:27 Like it’s the secondary market for the hash rate actually, where humans are the ones that are setting the price. And regarding your, statement that Nitish is the blame for it. We just made things easier. So if there’s a GPU miner that has an option to mine five different coins, they would have to do manually switches between different algorithms all the time, you know?

So if back in the day Ethereum was the most profitable, they had to find a pool for Ethereum. They had to set up a wallet, they had to mine on that pool. And then when I don’t know, Beem was more profitable, that the same miner would have to switch to mining boom boom coin.

And he would he would left some dust on the first pool, and start mining on beam and then exchange beam to the preferred currencies. And then they have to do this step, these steps all over again for the third coin. For the fourth coin. And there’s a lot of manual work, whereas there’s, there was the buyer who did that.

Marko Tarman 00:12:36 and in my opinion, this would have happened anyway. You know, people would just go where there’s more profits that just sadly, that’s the nature of mining. There’s only a few people that truly care about projects. I’m talking about the miners. There’s only a few miners that truly care about projects, about coins securing the network. But 90% of miners are profit oriented. It’s business for them.

Vlad Costea 00:13:05 Yeah, I forgot to mention the sponsors of the show during the intro, so I’m gonna say them now. It’s SideShift, Citrea, Layer Two Labs, Bitcoin.com News, NoOnes.com, and HODLing.ch. Thank you for supporting the show. Now, I got to ask you, Marko, and I’m gonna try to share this on the screen. There’s this website that’s called crypto 51 dot app, and it has most of the proof of work coins in a table with their symbol and market cap and mining algorithm. Current hash rate, one hour attack cost and there is zero percentage which is called nice hashable.

Vlad Costea 00:13:42 So basically how likely it is for you or how much of this hash rate to 51% attack you can rent on nice hash. Let me send this to you so you also see it. I was going to ask you what it means for some of these coins. For example, there’s Pirate chain which is 269% nice hashable. What does this mean?

Marko Tarman 00:14:12 Okay, so. Let me check. yeah, I know, I know, yeah, I know, I know the website. Okay, so first thing to note is that all of the buyers are nice. Hash must complete KYC before buying any hash rate. So even if there was a player that wanted to hurt a project, they would be able. I mean, he basically gave out all the identification documents and there’s I think nobody’s stupid enough to do that. then for the for what does it mean? Do you want me to explain what does that mean? Or nice hashable or.

Vlad Costea 00:15:02 Yeah. Yeah, I think that’s useful.

Marko Tarman 00:15:05 Okay. So it means that you can buy.

Marko Tarman 00:15:10 So let’s explain the 51% attack first. So in order to attack a project, you can do a double spend problem, double spend on the network on the coin. So you can spend the same coin twice. And in order to do that you need to have at least 51% of the hash rate, theoretically, to, Up to do the double spend.

But keep in mind that this only gives you 1% over what the other, chain has, so it will still need a lot of luck to do that with 51% of the hash rate. Actually, you would need about 80%. Let’s say that you would have consistent blocks and that you would grow the hash rate way faster, the chain way faster than the than the actual miners. and.

Yeah. If the nicest owns enough hash rate or not owned. Sorry if nice. If a buyer can buy enough hash rate through nice hash, they can direct that to their own solar pool and they can manipulate the blocks, how they want. Theoretically. I’m not sure if I explain that good enough.

Marko Tarman 00:16:28 but essentially, if there’s more than 51% of, Network Coins network hash rate available to be bought through naysayers, then that could pose a threat for the project.

Vlad Costea 00:16:40 Well, yeah, you can also 51%, as in obtain 51% of the hash rate and just get the majority of rewards.

Marko Tarman 00:16:51 Yeah, getting the rewards. I think it’s not easy to actually for the security of the project.

Vlad Costea 00:16:58 Oh, I’m just saying you can do this. Doesn’t mean it’s the most rational approach.

Marko Tarman 00:17:03 Yeah. but still, I’ve been with NASA for seven years, and I’m not aware of any such, like, such thing that happened. And to be frank, if there’s a shit coin that’s running, an algorithm that the developers didn’t have, resources to develop their own algorithm. Then they pretty much it was their own mistake. Because if I create a coin on, Sha 256, then a slightly bigger mining farm can control the whole hash rate of my whole project. So if you want to have a decentralized, proof of work coin, it’s very advisable to build your own or develop your own algorithm that, you have that there’s not many Asics available for that algorithm.

Marko Tarman 00:17:59 No.

Vlad Costea 00:18:01 Right. Now, how many of these mining algorithms are you aware that exist?

Marko Tarman 00:18:08 I have no idea how many nice hash algorithms.

Vlad Costea 00:18:12 At least how many of them you support a nice hash.

Marko Tarman 00:18:16 Oh, we support about 30 algorithms. Different algorithms. Keep in mind that majority of them have, just a small amount of hashrate available now. Like I said, the majority of hashrate we have or the volume we have or is on Sha, we have hash in script, marketplaces I think on for example, on heavy hash we have about 3% of Caspa network, roughly speaking. So it’s a very small amount of hash that we own compared to the network hash rate. on the Bitcoin network we have about 1%, of network hash rate. So Bitcoin is definitely not nice. Hash table. and on script I think we have about 5% of dogecoins hash rate.

Vlad Costea 00:19:13 Does nice hash mine at all or do you only offer the marketplace for it?

Marko Tarman 00:19:19 We are a software company. we don’t own any hardware apart.

Marko Tarman 00:19:24 For one for testing. So we are involved in mining.

Vlad Costea 00:19:31 I think that’s an important distinction to make because you’re just the middleman enabling the marketplace to live and for the miners to direct hashrate wherever the market. There is money, you know.

Marko Tarman 00:19:45 Yeah. I mean, yeah, we are just a broker of hashrate, but we don’t buy or sell the hash rate. We just connect buyers and sellers. We’re just a platform that allows buyers and sellers to to make. It’s kind of like electricity grid, where the electricity grid is the one that allows, power plants to connect with, electricity buyers. So maybe you at home. So we’re just that utility grid for hash rate?

Vlad Costea 00:20:17 Yeah, it’s definitely interesting. I’m looking right now at Add the list of algorithms you support from Sha to 56. What’s the difference between ASIC boost and normal Sha 256. By the way.

Marko Tarman 00:20:32 So Bec, I think in 2018 there was a protocol improvement which allowed ASIC to use less electricity for the same amount of work. So basically I think this started in the S9 era, and you could drop the power consumption by 20% by using the AC boost protocol.

Vlad Costea 00:20:56 But wasn’t disabled when SegWit came around. If I recall correctly, I think it only works on Bitcoin Cash.

Marko Tarman 00:21:03 No, it works on normal Bitcoin. at the time there was no Asics that actually supported that. You had to upgrade the firmware. So it’s there was a software solution on both sides. So on Bitcoin and also on the on the minor side, but it definitely is still around because everyone is using AC boost right now. If you’re using, any minor, any AC right now, it’s running AC protocol. We’re just we just, left it running for technical reasons. I mean, the naming is stay the same.

Vlad Costea 00:21:40 So now let me ask you the question that maybe every miner will ask when they listen to this interview. Why would they work with nice hash? Why would they sell their hash rate to nice hash as opposed to celo mining, or as opposed to joining a pool?

Marko Tarman 00:22:00 Because of the reasons I explained before, because there’s profits between, two layer profits teaching for ASIC miners, there’s one layer profit switching, which means that the buyers are always buying the hash rate to mine the most profitable coin.

Marko Tarman 00:22:19 And essentially, that means that the seller is always selling the hash rate to the buyer who’s paying the most for that hash rate. And that’s especially noticeable on script algorithm and Casp algorithm, where the buyers are doing wonders with the hash rate and essentially the rates on basically the majority of algorithms experience some sort of spikes quite often. So you would like just if at the end of the February, there was a huge spike by about 40% higher periods for a few hours on on Sha algorithm. So miners mining at that point earned about 40% more than other other miners using pools.

That’s just one of the reasons, like we are fully we are also fully, regulated in Switzerland, which comes in handy for institutional miners because we are, compliant and audited. We also have all of the, features or products, you would expect from any other mining pool. And we also have a very detailed statistics about the worker, about the worker that’s mining through nature. So you would not only see the accepted and rejected spit on, the Nicer, you would also see the type of rejects for each worker for the past seven days, which is I think we’re one of the few, if not the only ones.

Marko Tarman 00:24:04 we’re offering this kind of detailed view for the for the miners, not to mention the, the different products that we offer. So from asset manager the firmware the custom firmware for, Bitcoin and custom miners. And yeah, that’s just a few of the benefits that I can think of right now.

Vlad Costea 00:24:27 Is it possible for someone who maybe has a powerful gaming computer and cannot bind Bitcoin with that, because it’s not very efficient to mine something else designated by nice hash, but receive their rewards in Bitcoin. And if yes, how popular is this feature?

Speaker 3 00:24:45 You see, I.

Marko Tarman 00:24:47 I forgot the most important part when you ask when you ask me the previous question. So yeah, obviously the bitcoin payouts are quite a big benefit, especially if you’re using GPU as you said. But more importantly, if you’re mining, with heavy hash async or script ASIC, you know, selling the hash rate to get bitcoins is quite beneficial. Instead of just, mining Litecoin, Dogecoin and then have to exchange that to to Bitcoin through an exchange, then you have additional work, you pay additional fees for the exchange, etc..

Marko Tarman 00:25:28 So definitely Bitcoin payouts are one of the biggest advantages on Irish.

Vlad Costea 00:25:35 I remember at one point I think it was Anthony Pompliano who is usually referred to as pump. He released his ASIC miner. No, it wasn’t an ASIC miner. It was a home mining device. It was commodified to the point where you just plugged it and connected it to the internet and was working, and it was just, I think a Radeon 480 GPU with an Intel Celeron processor sold for $700 or something. But the point is that I think it was connecting to a nice hash or a similar service, but it claimed to offer you payouts in Bitcoin. So people bought that thinking that they’re actually mining bitcoin, which is funny.

Speaker 3 00:26:20 Yeah.

Marko Tarman 00:26:21 Like there’s a lot of people still don’t understand how nice it works. Many people think that we’re doing is exchanging on cash. But in reality the buyers are paying for your hash rate in Bitcoin. So if theoretically we would change that to USD, then the buyer the sellers would get paid in USD.

Marko Tarman 00:26:45 and yeah, that’s that’s something that people don’t understand about Nitish and they don’t understand how they can mine bitcoins with their GPUs right now.

Vlad Costea 00:27:00 What are the most popular mining algorithms and what are the most profitable ones actually.

Marko Tarman 00:27:08 Or GPUs or Asics?

Vlad Costea 00:27:10 Both.

Marko Tarman 00:27:13 I mean, for GPUs. If I’m not mistaken, Leo is quite high, but honestly, I haven’t been following, the GPUs seen so much lately. there’s, you know, since Ethereum went to a proof of sheet, they, the GPUs have been jumping around different algorithms all the time. So as soon as one small coin is, you know, how the price increases of these coins for like, 100%, within a few hours.

And at that point, it might be beneficial to mine that coin, but it’s only for about a few hours, maybe a day, maybe two days, until more miners join in the difficulty jumps and then the periods drop, and then they go back to the previous most profitable coin. And I think this is happening a lot right now.

Marko Tarman 00:28:04 So in that case, I think nicer is still the best option because they will do all the hard work for the miner. from the AC perspective, it depends on the AC bye, of course, but I would say that, script is quite profitable right now with the new airline machines. But again, it comes down to the investment versus the revenue. You know, there’s different, different things to look about. Look around when talking about profitability on ASIC algorithms, it’s not so simple.

Vlad Costea 00:28:47 I’m not sure if I misheard it, but did you refer to Proof of Stake as proof of shit?

Speaker 3 00:28:52 Yes.

Vlad Costea 00:28:53 Why is that?

Marko Tarman 00:28:55 Don’t you think it’s the same?

Vlad Costea 00:28:57 Well, it’s not about what I think. I’m just trying to understand how you think.

Marko Tarman 00:29:01 I mean, it’s it’s also just a joke. but it’s also partly true because, of course, from the decentralization, perspective, proof of work is more, secure. It’s easier to ramp up your market share or your network share through mining. And it also fucked up a lot of GPU miners.

Marko Tarman 00:29:31 Or the GPU miners that there were on Ethereum. There was a lot of hobbyist miner. I, I know a nice there was a lot of people from countries where earning $3 per day was a lot for them.

They I even received personally emails from people in third world countries saying that they think nice because, they can provide to their families with, simple mining rig. you know, and this Proof of stake. Move pact. A lot of this, hobbyist miner. Let’s say smaller miners. And since then, mining has become an a business that only bigger players can join in profitably.

I’m talking about, of course, people can buy smaller basic machines like Btcs. but they’re not going to make a living out of it. You know, I’m talking about, again, these people who can barely afford, a GPU, or maybe get it somewhere secondhand. But now they they’re they were they are left out of the game.

Vlad Costea 00:30:43 I think proof of work is definitely the fairest way to distribute, because you get a free market of hash rate and you get participants competing for the rewards in proof of stake.

Vlad Costea 00:30:56 It’s all about how much of a stake you acquire with Resources that you have from somewhere else. So if you’re rich, you’re gonna be able to buy a large stake, and then you’re also going to earn higher rewards. But the reason why it’s so popular, on one hand, it’s because regulators I guess they were fooled by the whole environmental argument, and they decided that they should leave it alone, even though it’s it’s pretty close to a Ponzi, if you ask me, because you can create a token out of nothing and then sell it to people and secure the system through the fact that some people stake it, which means that they don’t sell it.

Marko Tarman 00:31:38 Yeah.

Vlad Costea 00:31:39 Yeah. But on the other hand, it also gives some developers peace of mind from the fact that they can get 51% attacked because they might be a minority chain in terms of hash rate. They did not write their own mining algorithm, so they are constantly under the threat of getting attacked.

Marko Tarman 00:32:00 Look like I explained before. Any legit developers, any legit project will develop their own algorithm.

Marko Tarman 00:32:08 They will have to put some extra efforts for doing it, but they will have a new algorithm. They will have zero basic manners at the time of launch. They will have GPU miners on it, and the GPU miners will slowly ramp up the the hash rate, which which is exactly what you were saying, like the reward from the blockchain will come slowly towards the miners and the miners will slowly take over the they will slowly grow the network hash rate. Whereas with a proof of stake you can simply buy in 50% and. And have the control of the network.

Vlad Costea 00:32:53 You’ve mentioned the situation of Ethereum a few times and I was wondering, why do you think the hash rate did not go to Ethereum Classic, which was created exactly for this? It was waiting for this moment when proof of stake happens, and they were supposed to take the miners, but it seemed like there was also a fork from Ethereum that tried to be the proof of work fork. And I don’t know exactly what happened.

Marko Tarman 00:33:21 From my understanding, the issue is that there is not enough people using the the Ethereum Classic and the price is too low.

Marko Tarman 00:33:31 So if there was more profits when mining Ethereum Classic, there would be more miners mining it. you know, if the price of the Ethereum Classic will grow, then there will be more miners and the profitability will come back. And as I said in the beginning, miners are profit oriented. Nobody’s willing to pay Hundred dollars or euros per month for electricity in order to support a project. I’m talking about residential miners. So they are after profits. And if they don’t make, they aren’t breakeven. They’re not going to support the coin.

Vlad Costea 00:34:15 Yeah, that’s a good point. Let me plug a couple of sponsors, and then I will ask you about the profitability of mining from a historical point of view, because some OGs say it was never really profitable to mine. And even back in the day when you could do it on your laptop, you’re not really making a lot of money if you sold immediately. But before that, I gotta tell you about site shift, which is this place where you can swap pretty much every coin with low fees and there’s a lot of liquidity for it.

Vlad Costea 00:34:47 I think for small amounts you don’t have to register or do any sort of KYC. I think for large amounts they ask you for some documents, and let’s say that someone pays you in stablecoins and you don’t want to hold on to stablecoins because I guess we’re still in a bull market.

You can swap it for free market money, even if it’s Bitcoin, even if it’s like coin, even if it’s trump coin. I’m not going to judge you for your choices, but you can do that on site shift and the fees are pretty low. So check out signify. And I think they’re also integrated in edge Wallet and Cake Wallet and Bitcoin.com wallet and a few others.

So you might be using it even if you don’t know about it. And there’s also Bitcoin.com News, which recently has been doing a pretty good job. Now they know the difference between BTC and BCH, and they have some good geopolitical news. They have some good gold news, which I read recently because ironically, gold is hitting all time highs and Bitcoin is not.

Vlad Costea 00:35:56 It’s a pretty funny situation. We were supposed to flip gold when moon and check out Bitcoin.com on the news section. They have pretty good journalism. They’re less biased than Bitcoin magazine when it comes to American politics. They also present some news from India, from China, from Russia.

And to me, that’s pretty interesting because it doesn’t only focus on one part of the world as being the one that’s important. And now, Marco, I, I have a friend who has been in Bitcoin since 2010. He was making videos about it, like in the summer of 2010, when he was much younger and people were making fun of him in the comments that the price is only a few cents and it dropped and I want to know.

He told me that mining was never really profitable, and even back in the day, you had to pay a lot of money for your electricity and there was no guarantee that you’re gonna make it back. Of course, in hindsight, if you held your coins and you did not sell the bitcoins to pay the electricity bill, you would get very rich.

Vlad Costea 00:37:07 But do you think this model is still sustainable? Should miners still Hodl and based on your experience, was mining always this industrial and all this intimidating where it seems like it’s a bit too late for you to join into mine?

Marko Tarman 00:37:26 I would partially agree with your friend. I remember when I started mining back in 2012. There was a small short period where mining was quite profitable, but then shortly after you were barely making it even. One.

And there were always these circles of profitability where mining was more profitable for maybe a few weeks, a few months. And that’s when people started buying more machines. You know, getting into the mining. But as soon as people did that, the difficulty would rose and you started earning less.

And then again, people started dropping off, turning off their machines, and you were kind of making some money, but not that much money again, until there was a new bull run. And just in late 2022 or maybe in 2021, the GPU mining was very profitable.

Marko Tarman 00:38:31 With 130, 90, you would be making maybe $10 per day or even more. But yeah, again, when people started mining more and more, the profitability would go down. So Essentially there were some times where mining was profitable, but it’s a lot. You would get a lot of advantage if you already owned the machines.

So one of my biggest mistakes was that every cycle, which at the time I wasn’t aware of cycles, I sold all of my GPUs. I did that twice. And third time when I didn’t sell them. is actually when I made the most money, because I was barely making it.

Even I was covering the costs of electricity through my pocket, you know, from the salary. And that’s when I staked the most bitcoin. But then again, how much difference would it have made if I just bought Bitcoin at that time? It’s hard to tell. Probably I would have roughly the same amount. so yeah, to answer your question about if, What was the question again?

Vlad Costea 00:39:46 Well, there were two sides of it that there was the one about the historical perspective.

Vlad Costea 00:39:53 And wait, what what was the other point?

Marko Tarman 00:39:56 If it’s still US industrialized or something like that?

Vlad Costea 00:40:00 Yeah, yeah. Today it seems very intimidating to enter the market to become a miner. And it seems like it’s almost too late, you know. Was it always like this? You looked at it and you’re like, oh, with my GPU miner, it doesn’t make much of a difference.

Marko Tarman 00:40:14 Well, I think the difference is that a lot of people own GPUs, whereas pretty much nobody owns an ASIC machine. So in order to start mining, you know, to test the thing, you just have to ramp up your like install and start mining. It literally takes a minute and you get to experience mining.

And then you can decide, okay, this does make some money. I’m willing to invest in a couple of more GPUs and a couple more mining rigs, but now there’s really hard to start mining. First of all, Asics machines are quite expensive compared to GPUs. I mean, there’s lines that go up to, you know, €8,000, it doesn’t $8,000 or even more, which is a problem on its own.

Marko Tarman 00:41:08 But also the machines are loud. They they use a lot of electricity, which you don’t have. You don’t have the breakers in your home to support them. You know, these kind of things, do not make retail mining easy. So, yeah, going into a mining business right now from ground zero is intimidating, I would say. But back in the day, you know, you just ramp up a GPU and that’s it.

Vlad Costea 00:41:39 Yeah. I guess these guys who mind like yourself from the early days and without any guarantee or any idea how successful this can become, I don’t think back in 2012, when you started mining, you could even imagine that one Bitcoin could reach $100,000.

Marko Tarman 00:41:59 Yeah. Definitely not. I was, I think, 16 at the time. I was, you know, just following my older brother. And I remember Bitcoin was, I think about 20 or 200 per, per piece, per per coin. And yeah, obviously I had no idea that it has such a potential.

Marko Tarman 00:42:21 You know, I remember back in the day, I was, you know, always trying new things out. There was platforms where you could click on ads, get some tokens for it, and then get, I know, a cheaper, I know gaming mouse or something like that. And it was all basically a scam. So I thought, okay, this must be a scam also. but then, yeah, I got some bitcoins. I sold them quickly. I bought some, some games, you know, for, for gaming, etc..

Vlad Costea 00:42:53 On steam or what?

Marko Tarman 00:42:56 through Blizzard’s store.

Vlad Costea 00:42:58 Oh, they were accepting bitcoin back in the day.

Marko Tarman 00:43:01 No, no, no, I exchanged it of course. Of course. Yeah.

Vlad Costea 00:43:05 So what’s the game that you bought for super high price.

Marko Tarman 00:43:09 I actually bought packages of cards inside Hearthstone if you know the game. Yeah. So I then it just I think soon after the, when I started mining or a couple years later I started playing that and I just had some pocket money, you know, to buy these packages.

Marko Tarman 00:43:27 And I had a lot of good cards, but yeah.

Vlad Costea 00:43:31 Yeah, I was gonna say before I interrupted mid-sentence that you guys are like the heroes of the project because you secured it when there was almost no guarantee that it’s going to succeed over the long term. And I’ve also spoken to a guy who said he was purchasing ASIC miners in 2013, and he sold some bitcoin to buy Butterfly Labs basic miners.

There were some that he received. There were some that he never received, and he could never make back the bitcoin that he spent on Asics because the price went up, the hash rate went up. And he was hoping that, okay, I sold this bitcoin, but now I’m gonna have much more hash power, so I’m gonna make it back. It did not work like that.

Marko Tarman 00:44:18 No. So I’ve got a lot to say around this. First thing is I my first A6 that I bought was D3. antminer D3. And I remember at the time there was, like a rule Especially everyone was talking on bitcoin talk that never buy through a reseller, always buy through the official, official manufacturer.

Marko Tarman 00:44:42 So I went on Bitmain and I started refreshing the page because I knew that I know at midnight the machine would be listed. So I went on the page, started refreshing the the web page. But there was so much traffic on it that I couldn’t get through to make an order. So but once I got through it, I paid.

I still think it if I remember correctly, it was 0.5 for bitcoins for the antminer, but it took them three months to ship it to me because it was like a prior pre-order or something like that. And by the time I got like at the time of order, it said, that I was going to make about $30 per day.

By the time I got it, it was only $3. And that’s the amount of electricity I would pay daily. So I just. I never run that machine. Not for a single day, but I spent half a bitcoin for it. It was the worst. The worst. that’s a mining related decision I made. And since then, I’ve been hating.

Marko Tarman 00:45:50 not for a long time after that, I’ve been hitting, ASIC machines.

Vlad Costea 00:45:56 It’s pretty crazy when you think about it. I’ve heard stories of people receiving used miners, even if they ordered from the official store.

Marko Tarman 00:46:06 I guess that’s also true. I at the time haven’t looked into it that much to check if there’s any dust or stuff like that on it, but it was a common practice. Of course. Why would you sell a machine if you can make, the if you can make a double the money in a few few months, then by then opposed to selling the machine?

Vlad Costea 00:46:31 It’s such a crazy industry when you think about it.

Marko Tarman 00:46:35 I mean, I think we’re in a process or like before it was Wild West, you know, from the mining perspective. And we are already in that more, regulated environment. We’re moving towards that regulation where many people aren’t really a fan of, but because there’s only machines, because the mining has become business, where only the companies are doing it in majority, I think, it will become regulated, industry.

Marko Tarman 00:47:15 And one of the, let’s say, reasons is because we’ve let mining become GPU miners. We let down the GPU miners. If there were still GPU miners, there would be hobbyist miners. and I think there wouldn’t be such high regulation as we’re seeing in the next years.

Vlad Costea 00:47:40 If I understand correctly, you’re not a fan of basic miners.

Marko Tarman 00:47:45 No, that’s that’s not true. Like, I, I am a fan of basic mining, but at the time when I made my first decision to buy an AC machine, I, I kind of hated it at that point. Yeah, I’m not saying that regulation is bad because there’s ASIC mining, but I’m saying that if there was more GPU mining, then that might be better for for decentralization, for, for masses. You know, for the people.

Vlad Costea 00:48:20 Why do you think we got to this point where we only have 2 or 3 manufacturers of basic miners Because naturally, the solution for this situation where you get maybe used miners and by the time you get them, they’re not very profitable anymore.

Vlad Costea 00:48:37 The solution is to have more competition, to have more chip makers enter the market and deliver a product that’s so good that it pushes everyone to innovate. But we haven’t seen much of that.

Marko Tarman 00:48:51 I don’t know. my guess would be, first of all, I don’t think that Bitmain or other manufacturers are still running the machines at scale as they did before. You know, before selling the the machines. I think that they just manufacture them and ship out. but maybe the reason is that Bitmain is simply too big. they can manipulate the prices of coins. there are patterns.

I’m not saying anything, but there are patterns But before they announce a new machine for a new algorithm, the price of that coin does ramp up. Exactly. That happened on custom machines when they announced, Casper Asics. maybe they’re just too big, you know, to to fight against. I don’t have a strong opinion why this has happened.

Vlad Costea 00:49:57 Well, maybe that they’re big, but at the same time, Samsung is a much bigger chip manufacturer.

Vlad Costea 00:50:03 Qualcomm is a much bigger chip manufacturer. Intel, AMD, all of these companies, even Apple, they have not tried to compete with Bitmain. And right now, Bitcoin is a much bigger deal than it was before. Yet I haven’t heard announcements about other companies entering the market to compete with and miners and what’s. Miners and what else is popular?

Marko Tarman 00:50:31 Avalon. Avalon is is the third biggest one. But there are some US based companies that are starting to do it already. For example, if you heard about them, there’s big deals ASIC.

Vlad Costea 00:50:47 That’s a new company, right?

Marko Tarman 00:50:49 Yes, yes. So there are a few trying to compete, but I guess the maybe the the margins simply aren’t high enough for these companies to, to compete. Maybe they have better investment elsewhere. Elsewhere. I don’t know.

Vlad Costea 00:51:10 Nvidia for example, is responsible for maybe not single handedly, but running most of the AI infrastructure. And I’m surprised that they went all in on AI, but they haven’t made any moves in mining.

Marko Tarman 00:51:29 I mean, if you look back into the 20 1617 era, they sold a lot of GPU mining GPUs. I’m not sure if you’re familiar with, how is it called the P 106, P 104. Have you heard about these GPUs?

Vlad Costea 00:51:48 so those were RTX ones.

Marko Tarman 00:51:51 No no, no. Those were the mining specific GPUs. And that was the first boom of GPU mining, I think in 2017. at that time, I still had a computer, service in my hometown, and I was also selling, computer parts. and when I made my my first GPU mining farm, with about 600 GPUs We used the 104th, 104, which is, I think, if I remember correctly, the GTX 1070 equivalent. so those were GPU mining only. sorry. yeah. GPU mining only GPUs made by Nvidia. Later on, AMD attempted to follow this also, but they weren’t as successful. they had like the if 570 model, something like that for GPU mining.

Vlad Costea 00:52:56 It seems like 572 was quite popular.

Marko Tarman 00:53:02 500 what.

Vlad Costea 00:53:03 570 x two from. That was.

Marko Tarman 00:53:07 From MDS. Then the 580 or 70. Because at that point, if you would get a hold on any of these GPUs, you were happy because there simply wasn’t any GPUs. And I remember, we had, like a collective order with our clients, and we ordered like a couple hundred of GPUs, and Nvidia sold a lot of GPUs back at that point. Maybe one could also argue that this is actually what kickstarted the the GPU development in a way that Nvidia did later on. I bet they made a lot of money on it.

Vlad Costea 00:53:45 And they could be making A6, but they’re not.

Marko Tarman 00:53:50 That’s a good point. I guess their their focus is on GPU processor, not on an async process, or because that’s where they got the knowledge. You know, maybe the market is simply not big enough for them or maybe they don’t. Yeah, maybe they have the the main knowledge in GPU sector. By the way, there was also a CMP GPUs later on that was in the RTX 3080 era because the RTX 3080 had a lock on it.

Marko Tarman 00:54:21 Not sure if you heard about it. It was like a hash rate lock. where how is it called? It was LH like light hash rate or something like that, I forgot. And, this lock basically prevented the GPU to run at 100% when mining. Somehow the GPU Bios detected the the high memory usage on the GPU, which was the patterns looked like from the Ethereum mining.

And they simply throttled the GPUs. And as a as like an alternative, they created a three MP GPUs which weren’t locked in such a way. And by the way, I was the first one to have the LHR unlock out there for all of the GPUs, which we are quite proud of.

Vlad Costea 00:55:17 Really cool. I’m looking at the Nvidia website. They seem to have the latest model is 98 from the CMP series. I guess this was discontinued after Ethereum switched from Proof of work to proof of shit, as you call it. But it’s pretty cool. I have some video gamer friends and they seem to hate mining as a whole because they they think that because of it.

Vlad Costea 00:55:50 And also they hate cryptocurrencies because they get this feeling that because of cryptocurrencies they can’t find affordable video cards anymore.

Marko Tarman 00:56:01 I mean, that was that’s a three years old story because right now the GPUs are quite cheap. If you look at if you try to look for 30, 70, 30, 80 GPU, which was the mine, which was the mining GPU. you could get it quite cheap. but yeah, in 2021, there was a big shortage of GPUs. And obviously, obviously a gamer would be, mad or angry at the miner. but then again, if they bother GPU, they can also mine with it. So a lot of my gamers were miners. that unfortunately, is just, how economy and capitalism works.

Vlad Costea 00:56:45 Yeah, I think there was a chip shortage all over the board in 2021 because of the pandemic. And I remember some people buying GPUs, playing video games with them for a year or two. I think they bought them in 2019 or something, and then they sold it in 2021 for the same price, if not more money.

Vlad Costea 00:57:04 Yeah.

Marko Tarman 00:57:06 Yeah. The the price of the GPUs went like they went through. It was really big. Spike. There was a lot of demand.

Vlad Costea 00:57:17 Nowadays, would you say that acquiring the most powerful gaming GPU, like the 1490? RTX is good for mining, or is it still capped in terms of hash rate?

Marko Tarman 00:57:33 the Nvidia later on removed the the cap for the lock. So right now all the GPUs, can be fully utilized for mining.

Vlad Costea 00:57:45 Which is pretty cool when you think about it. But once again, the gamers are gonna be angry.

Speaker 4 00:57:52 I mean.

Marko Tarman 00:57:54 Not no, not necessary because there’s no, no. And there’s no demand for mining with GPUs at the moment. No, but I don’t know anyone who would be buying additional GPUs to mine right now, at least not on a scale.

Vlad Costea 00:58:11 That’s interesting. So you’re saying there’s a decline in profitability for mining with GPUs?

Marko Tarman 00:58:18 Yes. Since it even went to proof of it.

Vlad Costea 00:58:22 So there are no more popular coins that you can mine with a GPU.

Marko Tarman 00:58:28 There are coins. They people are still mining, but they’re not investing. I would say they’re not investing so much in new equipment, at least not on a scale as there was in 2019 or 2021.

Vlad Costea 00:58:44 So, given this observation, how do you see the future of proof of work? How is it going to end up just large mining farms running Asics?

Speaker 4 00:58:55 yes.

Marko Tarman 00:58:56 Yes. This is, I think, the future because first of all, there’s no good projects that are run on GPU mineable algorithm. And another thing to note is that there isn’t really a GP only, GPU only mining algorithm, so all algorithms, majority of them can be mined with Asics. The question is, if there’s an ASIC manufacturer that’s willing to invest time and money into developing an async machine for the algorithm. Like even Ethereum was supposedly a GPU mining algorithm. So they’re Hashimoto or Hash, but there were Asics running on these algorithms. E9 I think, I think from Antminer is an AC that runs on, BTC or hash.

Vlad Costea 00:59:56 Yeah. They launched that very late. I think it was one year before the switch.

Marko Tarman 01:00:01 I think a bit more, but yeah, it was quite late. So my point here is that there is no such thing as ASIC resistant, or maybe a GPU only algorithm. There could be AC. how do you say algorithms that are harder for ASIC manufacturers to create async machines for?

But every algorithm in theory, as far as I have talked with our developers, is, async. The question is just how much money there is and how much. How much the manufacturer wants to invest. so at the end of the day, yes, if, if a project or a coin becomes very, very popular, there might be a big interest to create an ASIC for it. Async machine.

Vlad Costea 01:00:59 I’m saying this became depressing pretty fast. I was gonna ask you, if you believe that there’s any future in home mining. Because there seems to be a new resurgence in hobbyist mining. You get these nerd miners, these big tax supers.

Vlad Costea 01:01:15 These firms are replacing their A6 with new generation ones. So there’s an opportunity for you. I think in one was it 2021 that China banned large scale mining? And a lot of these machines ended up on markets being bought second hand by hobbyist miners. And I think there will still be a market for this. But do you believe that people will keep on doing it, or are they just gonna give up because they’re not making too much money?

Marko Tarman 01:01:46 Let let me just correct you on the first question or like statement that is getting depressed. There’s still a lot of projects that are continuously working. The the the the Their project in order to stay. For example, CPU only mineable. for example, Monero is such such a coin that has maybe 5 or 7 different algorithms since its beginning, because they’re always evolving in order to keep the Asics out of the equation. So you had Kryptonite? algorithm Kryptonite v1, Kryptonite v2 there is random x, etc. so, all of these, there are still some coins, some projects that hate Asics.

Marko Tarman 01:02:41 so yeah, just I wanted to let this out. And the second question was about, can you remind.

Vlad Costea 01:02:51 Me hobbyist home mining, if you think it will become a phenomenon or it’s just a trend or a fad.

Speaker 4 01:03:00 Okay, so the hub.

Marko Tarman 01:03:03 If you look at the industry right now, we and we go to the ASIC mining, we have three different algorithms. So it’s a script and we have a hash. And if we compare them by the margin, the Bitcoin mining has the lowest margin in terms of efficiency.

And like if you have a machine how much you’re going to earn then the script or Dogecoin. Litecoin is the is slightly there’s slightly more margin, slightly higher earnings and but there’s slightly more risks in terms of difficulty increasing very quickly. And the last one is Casper where the profits were higher maybe a year ago.

The profits for Casper were really, really high. So with the machine you would be or you could be earning maybe $50 per day, but there’s higher risk. And it has proven true that the cost of mining right now is not as profitable as it was one year ago.

Marko Tarman 01:04:04 But Bitcoin mining profits are still relatively similar to what they were one year ago. I’m talking with one ASIC machine. So you always have this, let’s say levels of investments. And a retail hobbyist miner will be more inclined to invest in more, in machines that have higher, risks but also higher potential rewards.

And you can see Casper miners is mostly done by smaller, smaller miners by, you know, people who have one machine, maybe they have a garage where they can connect a machine. There’s a lot of more these kind of miners on Casper, but you don’t get as many miners on similar miners with Bitcoin basics because the margins are simply too low. Of course they are such miners, but they might be hosting with hosting facilities, etc..

Vlad Costea 01:05:10 I have two more questions that come to mind about Nice hash. But before that, let me tell the audience about two other sponsors. They are trying to build the future of Bitcoin. One of them is layer two labs that’s trying to build merged mind sidechains.

Vlad Costea 01:05:26 And if they become successful and they activate Bip 300, you’re going to have a sidechain for pretty much every use case that’s out there. There will be a sidechain for Ethereum. There will be a sidechain for prediction markets. There will be one for privacy with Zcash cryptography. There will be one for scaling with very large blocks that get pruned every few months.

And you can actually test that it’s on the Bitcoin testnet, and you can download the software on your computer at layer two labs download. And I think it’s available for every operating system out there. It’s interesting. And it can also solve the security budget problem in Bitcoin because there’s uncertainty. If there’s going to be enough fees to make up for the diminishing revenue.

There’s also Citra, which is trying to build this zero knowledge roll up on Bitcoin. They’re sort of like arbitrary on Ethereum in the sense that they want to bring a suit of not a suit, a suite of applications that are not available on Bitcoin. I believe their endgame is to make WBTC, which is wrapped Bitcoin that you have today on Ethereum.

Vlad Costea 01:06:40 That’s custody by BitGo. More trust minimized so that you can have these financial services where you get stablecoins against your Bitcoin in a way that is much more cypherpunk. Than having custodians in the middle. And Syria today has this software that you can test on the Bitcoin Signet. You can find it on Syria that x, y, z that city x, y, z. And you can give it a try.

And these two can actually represent the future of Bitcoin. Thank you for setting for my ads. And now the question about nice hash. I see that you guys also have this payment processing feature or service that you added to your website. I remember paying with bitcoin at the bar at the hotel in Maribor and it was the same terminal, the same user experience.

I was disappointed after the conference because I stayed an extra day that they did not keep it. I asked if I can still pay in bitcoin and they said no, we we only had that during the conference. And what is this and how is it different from something like BTC pay or Lipa or some other services out there.

Marko Tarman 01:07:52 It’s quite similar. Actually, we have our lightning node, which is, by the way, one of the biggest and oldest, lightning nodes. We’ve started it, I think in 2009 19, the node. And then after a couple of years of growing it just organically, we decided that it might be a good solution to offer Bitcoin payment payments through lightning, for, you know, for our clients.

Speaker 4 01:08:22 You know.

Marko Tarman 01:08:23 Or even as a payment solution, on the conference, at the whole conference was, the whole hotel was there was an option to pay with, with bitcoin, with lightning through our app, through wallet of Satoshi, however we wanted. And there was actually a lot of bars around the town around Maryborough, where you could pay with Bitcoin. I think about 20 20 bars offered bitcoin, payments. But unfortunately lately we’re seeing a lot of regulation issues. The mica, the travel rules, especially because we cannot develop it as much as we would want. So we’re putting a small hold on the development here.

Vlad Costea 01:09:16 Small hold on the development of what more exactly the node or nice hash pay.

Marko Tarman 01:09:22 The nice cash pay the node is running normally our users can still use it. but the payment or of goods might be a problem because it’s hard to determine where the funds come from. And because of the travel rule, we have to know where the funds come from and where they go. Simple as that. And this is a problem for all. Actually, for all of the bitcoin, payment processors.

Vlad Costea 01:09:52 Yeah, that’s sort of insane because on the Lightning Network, you have pretty good sender privacy. You don’t know where the funds come from, and there is no public ledger to reveal exactly where it comes from.

Marko Tarman 01:10:06 That’s the issue. Yeah.

Vlad Costea 01:10:08 So no, that’s the feature. It’s not an issue.

Marko Tarman 01:10:12 No, no. Yeah. It’s not it’s not a software related issue. It’s more like a legal or regulation compliance related, issue. But we’re still we’re still keeping an eye on it. We’re we’re finding ways to offer it to more people, to more merchants, etc..

Marko Tarman 01:10:33 It’s not a problem if there’s an Irish user that wants to pay through it because it’s inside the platform. but as soon as something else comes, some someone tries to tries to pay from other, wallet provider for example wallet for Satoshi, then that’s an issue from a compliance or regulatory perspective.

Vlad Costea 01:10:55 I see that your lightning node has 1072 channels, and 888 808 nodes are connected to it with a node capacity of 151 Bitcoin, which is quite impressive. I think that’s like what in US dollars.

Marko Tarman 01:11:17 Oh, that’s that’s quite a lot.

Vlad Costea 01:11:21 I think one Bitcoin today is $80,000. So 100 is $8 million. And then you know it’s a lot of money.

Marko Tarman 01:11:32 Yeah it’s a lot of money.

Vlad Costea 01:11:33 You have to secure it very well.

Marko Tarman 01:11:37 it’s one of the oldest. I think actually if you Saw them by the the when the channel when the node was created. It’s definitely the the oldest and the biggest. But, we’ve made payments worth more than one and a half built bitcoins through the lightning, node. So yeah, it’s, it’s definitely something that we are working on a lot.

Marko Tarman 01:12:03 And we actually, I love I love all of our miners to get payouts in lightning. So even small miners, can get paid every four hours. maybe just to satoshis if they want.

Vlad Costea 01:12:17 That was gonna be my follow up question, because sometimes the rewards are so small that one on chain transaction basically takes up more most of what the miner has earned. Yeah. And especially in times of high demand, when fees are like $20 or more, it can be very inconvenient for the user. Yeah. And you can either use a blockchain that has low fees like Litecoin or something. But I’m not sure if the user wants that or I guess you you have been using the Lightning Network for this.

Marko Tarman 01:12:55 So nice. If you only have Bitcoin withdrawals at the moment, we’ve had before we’ve had Litecoin, Ethereum and all other coins when at the time we still had an exchange. but yeah, you can withdraw through lightning, without them pretty much for free. and because the node is so well connected, you can pretty much send it anywhere.

Marko Tarman 01:13:17 There is no issues. You know, all of the biggest exchanges are connected. Binance, Kraken. Everyone is connected to each node. And a lot of times they actually asked us for some assistance etc..

Vlad Costea 01:13:31 It’s pretty interesting.

Marko Tarman 01:13:33 But by the way, I’m quite proud that Nicea was the first one that offered miners bitcoin payouts in writing. So we were the first one there also.

Vlad Costea 01:13:44 So this was before ocean mining?

Marko Tarman 01:13:48 yeah. That was I think about a year or a year and a half ago.

Vlad Costea 01:13:54 Yeah. Not so long ago they launched and they claimed to be innovative, but it seems like Nice Hash has been doing it way before.

Marko Tarman 01:14:04 Yeah.

Vlad Costea 01:14:05 But you guys don’t get as much credit. Like, I don’t hear people praising you and saying, you know, these guys are innovators and they have been doing this.

Marko Tarman 01:14:14 You know, maybe, you know, how is there any Europeans are or maybe like, in that part of Europe that that part of the world, we don’t we aren’t as an American who push themselves out, you know, as much like you would say, an American company, doing and saying a lot of good things about itself and about what they accomplished.

Marko Tarman 01:14:42 Maybe that’s just something that it’s not natural to us. Maybe you can relate. but yeah, like we’ve been ahead of our ahead of time for ten years. The marketplace is ahead of time. It’s still ahead of time. and there’s, like, a lot of stuff that you can do with hashrate, marketplace commoditization of the hash rate, etc. and, yeah, Max has been very, innovative throughout these years. Like I said, we’re a software company. We’re still a development company in our core principle.

Vlad Costea 01:15:21 the only other hash rate company that I’m aware of is called lumen. I’ve interviewed the guy behind it, Ryan Condren, but it’s very different in its business model because it’s built on, I think arbitrary and like on Ethereum, and it has its own token and very different.

Marko Tarman 01:15:44 What Ryan did is, is very great. he what he was able to build was astonishing. but there’s a few differences between ISIS and what they offer. First of all, the last time I used it, which was, I think more than a year ago.

Marko Tarman 01:16:02 So maybe there’s a lot of different stuff now. you had to set up your own proxy to receive the hash rate or to buy the hash rate, which is quite inconvenient. you had to buy the hash rate from a single buyer. Seller. Sorry, which was not as interactive or so simple as it is on ISIS.

You simply set up the pull address where you want to set the hash rate, you set how much bitcoins you want to spend, what’s the price you’re willing to offer how much you want and press a button and you get the hash rate if the price is high enough. You know, that’s the biggest difference. It’s nice. It’s really, simplified. Simple commodity marketplace.

Vlad Costea 01:16:51 Yeah. And I see some statistics on your website. It seems like you have mined 169 Bitcoin blocks. And I think it’s a very beautiful number, 169. Really nice.

Marko Tarman 01:17:05 we haven’t mined any blocks. I’m not sure where you got that info. Maybe there is a difference. Oh, you’re probably looking.

Vlad Costea 01:17:11 At.

Marko Tarman 01:17:11 Mine. Yeah. Easy mining. That’s a different product. Yeah. So easy mining is built on top of the marketplace. And easy mining allows everyone to buy hash rate with the click of a button. You know, you could get, from the top of my head.

You can buy a hash of hash rate For an hour with $5, or maybe one bit of hash for an hour for $5. And in that time, you’re solo mining, your hash rate. You’re actually owner of the hash rate for that hour.

And if your hash rate confirms a block on our solo pool, which is closed for the public, if you confirm a block, you will get the whole block reward. So these are the blocks confirmed. So you would probably see Raven Coin, Casper Lite coin and Dogecoin and Bitcoin. So these are the the the coins for which you can buy the hash rate with a click of a button. Yeah.

Vlad Costea 01:18:15 Yeah. You’re very right.

Marko Tarman 01:18:17 Yeah. Because this is not a mining.

Marko Tarman 01:18:21 It’s more than a mining pool. it’s it’s a marketplace for hash rate. And buyers are the ones that are competing or confirming the blocks on the blockchain. It’s not nice and not sellers of hashing. Technically speaking, the buyers of hashrate are the miners from the pool’s perspective or from the blockchain perspective.

Vlad Costea 01:18:45 That’s an interesting thought. The buyers of the hash rate are the miners.

Marko Tarman 01:18:51 Yes, because they are the legitimate, legitimate owners of that hash rate, because they bought the compute power, they bought the commodity. And it’s a short lived commodity. It only exists in a fraction of a second, and they own it in that time. But if their hash rate confirms the block, they get the reward from the blockchain or from the pool. Depends either solar mining or poor mining.

Vlad Costea 01:19:25 Who is usually most interested in purchasing hash rate. Like why would anyone want to do this? Is it just to prop up their coin to make it look good for a certain amount of time? Is it because they think the time is right to mine at that point, because the difficulty went down or something?

Marko Tarman 01:19:46 There’s different.

Marko Tarman 01:19:47 There’s a lot of reasons. Different reasons. let me just try to explain the most the ones that make the most sense. So obviously there’s arbitrage, arbitrage traders, buyers who are doing arbitrage trading with the hash rate. Because it’s a marketplace, you can buy the hash rate at a lower price than what the hash price is, what the full pay rate from the pool is.

So let’s say that the pool pay rate is, $50 per hash per day. So that’s the unit of price or hash rate. And you can buy the same amount. You can buy one better hash or one extra hash or nice fish for 48. Better hash for, 4048 bitcoins per Peter. Hash per day.

So you’re making 4% on this trade. and if you, if you buy the hash rate or nice hash and sell it on a pool, because theoretically the pool is buying the hash rate, in order to liquidate it on a blockchain. you’re making 4% on that trade. Of course, deducting the fees, etc. maybe at the end of the day you’re making one 8% from trading that hash rate.

Marko Tarman 01:21:05 So these are the arbitrage buyers. They they are actually buying all the available hash rate in the marketplace that there is if it’s priced under the hash price. And this is like one of the unique, unique things of nice hash is that if there’s at least two buyers to big enough buyers, they will always compete for the hash rate until they reach a break even price. And that’s the first type of buyers.

The second type of buyers would be solo miners. Let’s say that I want I’m thinking about buying a bit to do some lottery mining, or if I want to buy the, the hash rate, I can buy hash rate for $5, get ten per hash for for a couple of hours, or maybe one better hash for a couple of hours and have decently high enough chances or probability, sorry probability to confirm a block.

And these are solo miners, solo buyers who are buying the hash rate in order to have, a probability of hitting a block. Right. And these guys must outbid the arbitrage buyers in order to get the hash rate.

Marko Tarman 01:22:25 Otherwise they aren’t getting the hash rate, so they will have to pay 51 bitcoins for, sorry, bitcoins dollars per hash per day in order to outbid the arbitrage buyers. And in that point, you have, a demand that’s willing to pay more than what the blockchain is willing is paying out a mining pool. So that’s that human factor that’s only available through marketplaces. Then you can also have, a mining pool, a mining pool mined by the hash rate in order to increase their luck, or maybe in order to stress test their, their servers.

Maybe there’s, an insurance or, you know, if for hosting providers insurance in terms of buying the hash rate is viable because if they have a contract to provide 59% uptime of their clients machines and they the hash rate drops, the uptime drops to, let’s say 94%, they can just buy the additional hash rate in order to compensate the the amount of hash that’s missing for the client. And they will not be get fined. they will not get fined from the because maybe they have that in the contract or whatever.

Marko Tarman 01:23:49 So it’s also a way of securing or insuring the the mining for hosting.

Speaker 5 01:24:01 So these are just a couple of examples.

Vlad Costea 01:24:05 I guess the most popular one that comes into popular culture is to just acquire a lot of hash rate to get that 51% share. So that’s why I asked you. Because there are all of these business use cases which are not the most obvious.

Marko Tarman 01:24:26 Yes there is. Like, the buyers of hash rate are really smart people. Most the ones that I have had a chance to meet, are mathematical. They. You know how to turn around numbers. They are also aware that FX pulls, some of the FX pulls, are not. How should I frame it? might not have the most legit payouts. So they find out that if they do their own mining pool, they might get better payouts if they have enough hash rate. and those are the guys that are willing to pay more than what the other buyers are.

Vlad Costea 01:25:13 Is there any competition for nice hash. Really? Because it seems like you have a pretty unique business here.

Vlad Costea 01:25:20 And if you don’t have a lot of competition, the next question is why?

Marko Tarman 01:25:28 nice Fish is a very, very technically advanced product. and I’m quite certain that it’s way more complicated than any exchange, you know, and any other mining pool that, you know, Regarding competition, there is no direct competition that I’m aware of. And I think the reason for this is because I know a couple of guys that have tried, but it’s not as simple as starting a mining pool.

You know, with the mining pool, you simply have to set up a node that communicates with the blockchain, give out other miners your IP address, count their shares, and based on these shares, give them out the payout. Do an accounting for some or. I’m oversimplifying things, but, Nice. This type of service is way more complicated. and yeah, I think that’s one of the main reasons why there is no direct competition that I’m aware of.

Vlad Costea 01:26:39 So the reason why is the complexity of running this type of business.

Speaker 5 01:26:47 Yes.

Marko Tarman 01:26:47 Technical complexities.

Vlad Costea 01:26:50 Okay. Is there anything that nice hash can also do that we haven’t talked about?

Marko Tarman 01:27:01 Are we talking about mining. Right.

Vlad Costea 01:27:03 Mining or some other services like the payments processor that we talked about but seems like it’s on hold.

Marko Tarman 01:27:11 We? We have a lot of products. obviously the core product has been. And I think it will always be the marketplace. It’s the product that has been ahead of its time for ten years.

Like it’s the same identical product from ten years ago. and there are other products like you mentioned is mining, which allows buyers to buy packages of hash rate and start solar mining with a couple of clicks without owning any hardware. there’s the the GPU mining things that we did, which was quite impressive. There was the exchange that we unfortunately shut down. and there’s future product projects, products, products that I’m not sure if I can talk about yet, but I think it’s the next step in the mining industry, like generally speaking, globally speaking, I think that’s the next logical step, in mining.

Marko Tarman 01:28:20 But there’s a couple of couple months more until we can talk more about that.

Vlad Costea 01:28:25 Oh, you’re making me wish I waited, like a couple of months more to have exclusivity on the news.

Marko Tarman 01:28:32 We can still do it later on.

Vlad Costea 01:28:34 Sure. Yes. Let me plug the last two sponsors. And they’re not last. It just happens that the order was like this. And then I’m gonna ask you about the future of mining and the future of nice hash.

So no one’s dot com is a platform where you can trade just like a nice hash in a peer to peer fashion. You can exchange gift cards, you can exchange a lot of stuff that you find useful. And most of the customers are from the Global South and the CEO of No One’s There.

Youssef is very passionate about empowering Africa and the Middle East. And he talks about this scheme that he made where there’s a percentage for every middle man along the way, because he says that everyone gets a seat at the table and everyone eats. And they also have a spot market where you can trade your coins.

Vlad Costea 01:29:26 And also they have a debit card that you can use for spending your coins if you’re into that. But their main businesses with these gift cards and swapping coins in this peer to peer market and it’s very popular in Nigeria as far as I’m aware. And you can check it out on no one’s. It’s basically the cooler and a bit more decentralized version of Paxful because they used to work at Paxful, he was a co-founder, and now he wants to do something that is more aligned with his values.

And last but not least, I gotta tell you about Hollinger, which is a business that’s based in Switzerland, and they’re trying to help you with your self-custody. So if you have a lot of Bitcoin and you’re afraid of keeping your keys in the house because you might get rent attacked by someone, or you’re part of a company that’s starting to buy bitcoin and you don’t know how to set up a quorum of keys so that the CTO will not basically spend everyone’s coins. You can reach out to these guys that are based in Switzerland.

Vlad Costea 01:30:37 They will offer you much better privacy than other businesses, and they will teach you the principles of good security, whether or not you need a hardware wallet, whether or not you should set up a multi-sig, what type of multi-sig, and so on. So check them out on HODLing. And now, Marco, tell me more about the future of Nice Hash because you have had the ten year anniversary. There was a big party You had basically a conference that was thrown around this party. And what’s next?

Marko Tarman 01:31:16 are we talking about niceness or mining in general?

Vlad Costea 01:31:20 I guess both of them. I started with nice hash. But then I’m also gonna ask you about trends in mining that you see that emerge.

Speaker 5 01:31:26 Yeah.

Marko Tarman 01:31:27 Nice. Hash has moved our headquarters to Switzerland. before we were based in British Virgin Islands and operating from British Virgin Islands. Might not build a lot of trust among the users, the potential users that we’re trying to target. and we have become very strict with compliance with KYC people with a mandatory KYC and.

Marko Tarman 01:32:04 This, I believe, will be the future of Nightwish and also the future of the whole mining industry. We are observing that the majority of real miners throughout the world. I’m talking about bigger companies that operate serious hash rate, will have to follow or we’ll be looking for hash rate destinations that are audited, that are compliant and that that can suit these kind of players, these big institutional miners or just big companies, let’s say, not necessarily necessary publicly traded companies.

That’s that’s the reason why that’s one of the reasons why we have moved our Headquarters to Switzerland. and yeah, unfortunately, because Ethereum went to. To proof of shit, we have to change our priorities, change our focus, and adapt in order to survive.

Maybe in order to survive is not the correct word, but in order to grow even more so, we had the future of mining. Also, I think, lies in regulation. That might not sound, a lot cypherpunk ish. I understand that. But again, as we discussed throughout this, podcast, Bitcoin mining, especially bitcoin mining has become an a business, profit oriented business.

Marko Tarman 01:33:57 It’s not one CPU, one, one vote anymore. It hasn’t been for a long time. And, yeah, I think, this is this kind of future has a lot of potential. I mean, a lot of a big. There’s a big chance that this is the future of Bitcoin mining regulation. I mean.

Vlad Costea 01:34:25 Well, in terms of one CPU, one vote. Are there any projects that you’re following and are aligned with that that you like?

Marko Tarman 01:34:37 I’ve been following stratum V2. Again, the biggest issue with stratum v2 is that it doesn’t bring any additional, benefits to the miners or to the pool operators. It’s just an additional value to Cypherpunks Banks are a bit like Bitcoin maxes.

Maybe I’m not using the correct terms, but what I’m trying to say is that if the miners don’t have any monetary benefit, they are less likely to adopt something that’s not, that’s not going to benefit them. Again, I’m generalizing a lot of miners, not all miners are the same, but in my opinion, a lot of bitcoin miners are running Bitcoin mining facilities as a business, not as a support system for Bitcoin.

Vlad Costea 01:35:34 Which sort of sucks. But at the same time, you know, it’s a business. You can’t blame them. They invested a lot of money. They have skin in the game. You can’t blame them for running their business in a certain way.

Marko Tarman 01:35:49 That’s correct. And, nobody has all the Answers. Neither do I. Unfortunately, the reality is that there’s a lot of Bitcoin miners that are strictly profit orientated, and I don’t have a solution. I’m just stating out facts.

Vlad Costea 01:36:11 Is it possible for these nation states that amass a large percentage of a hash rate to order these private companies that own the hash rate to coordinate attacks, for example? I remember Peter Todd being especially concerned about what’s the name of the big mining pool foundry from USA, because all the miners are owned by the same company. It’s not a pool in the sense that you have lots of participants.

Marko Tarman 01:36:45 As far as I am familiar with foundry situation. they they are part of NY, the IG, the AI, company, which is like an investor company.

Marko Tarman 01:37:02 and yes, a lot of funding for miners, for mining companies, supposedly, comes from that direction. And that’s also a reason why foundry was able to grow so much. supposedly, again, I don’t I haven’t fact checked this, but yeah, the foundry is definitely the biggest player in that sense. And, who knows who is truly behind it, who is truly running, you know, pulling the shots. And, and.

Vlad Costea 01:37:39 It’s funny because when most of the proof of work mining, especially the ASIC one, was happening in China, there wasn’t so much talk about regulation, it was much more of a free market, even though China does not really like free markets. And now that a lot of the mining is happening in the US, we talk much more about regulating what the miners are doing. We talk more about maybe censoring some transactions in some mining circles, using go fake lists or whatever to blacklist some utx shows. I’m not trying to get you to make some sort of unpopular comment, but it’s just an observation that mining was better off when it was mostly happening in China.

Marko Tarman 01:38:31 I think it’s not maybe related to the fact that it was in China, but to the fact that it hasn’t evolved so much at that time. if you if you understand what I’m trying to say, that at that point, mining was still not as involved evolved, evolved as it is now. So before it was still more of a hobbyist kind of thing.

Not entirely hobbyist, but there was still like it just this industry just started to take some steps at that point. And those were the first steps. And I think since since four years ago, the Bitcoin mining is a completely different game. I think that’s the that’s the blame instead of the where the hashrate is located.

Vlad Costea 01:39:20 Is there any trend in the world of mining that gives you hope and makes you feel like, you know, maybe that the days of freedom and just mining from your bedroom are not over yet?

Marko Tarman 01:39:39 That’s a good and a thought. Another hard question at the same time. So You’re asking me what projects could be good for coal mining? Or like what? Some.

Vlad Costea 01:39:53 Something that you like and gives you some hope, you know, for the future that it will not just be these large farms that are massively regulated, and it’s up to the nation states to decide the future of the security of these networks.

Marko Tarman 01:40:11 Maybe if I take a different approach, which is a bit philosophical and, you know, there throughout the history there was different products, where its development wasn’t the final stage. As we know, the steam engine was, I think, the first, engine with internal combustion. it wasn’t the last stage of, let’s say, See trains.

And there there was new technologies that were developed later on for making the train move. you’ve got digital locomotives, you’ve got electric locomotives now, and maybe the next one will be hydro powered locomotives. So maybe it’s the same thing for proof of work. I don’t know. I’m just saying that maybe there will be something that’s even better than proof of work in the future to make to prevent a double spend. And that’s definitely not proof of stake.

Vlad Costea 01:41:30 I see some projects taking a hybrid approach where they have proof of work and proof of stake at the same time. I’ve seen some experiments with what what was it called, proof of authority and stuff like this. But I haven’t seen. I guess it might be because of the VCs funding these projects that there isn’t much innovation being funded. There is.

You can find research papers that get published from people who think of better ways, but they don’t really get funding, because if it’s proof of work, it’s obvious for the investors that they should invest in infrastructure and make money off of mining. If it’s proof of stake, it’s obvious for them that they just buy a large amount of tokens and they stick them and they keep earning rewards for something else. It’s not that obvious for them to figure out.

Marko Tarman 01:42:27 Yes, it’s it’s hard to say. Maybe the proof of work is the best way. Who knows? but yeah, there were definitely a lot of attempts to make, consensus mechanism better. Or like, different consensus mechanism.

Marko Tarman 01:42:43 you also had, if you remember, something like proof of storage, that kind of, mechanisms. But I think proof of work was still like the, the best way. Yeah. I don’t know, maybe there was just simple wasn’t simply wasn’t enough funding in that direction because regarding these projects that have proof of usefulness, etc., I think they make the algorithm first or the proof of whatever first, and they then they get the funding because that’s the way of getting the funding. you know, maybe it should be the opposite. Yeah.

Vlad Costea 01:43:27 There are some people who think that Bitcoin will live and die with Sha256. Do you think that’s the case that Bitcoin is forever stuck with Sha256? Or do you believe that in the future, something much more efficient will come along and it will shift the entire industry?

Marko Tarman 01:43:47 But if if you think about, maybe you’re targeting quantum computers here, but. Even if the quantum computers can crack or when or even, I don’t know, can crack the Sha 256, that’s definitely going to be definitely going to be a point where Bitcoin will fork to something else.

Marko Tarman 01:44:17 I think that’s the only, let’s say reasonable. Or probable event that might happen in order to get the Bitcoin off Sha 256.

Vlad Costea 01:44:33 If I understand correctly, the threat for or the threat from quantum computers comes in terms of attacking the signature system, which is ecdsa. And cracking that one to basically guess or brute force. Private keys from public keys.

Speaker 5 01:44:53 And.

Marko Tarman 01:44:54 Also the blockchain. You can also reverse rewrite the blocks from the unlock block 500. If if a miner a quantum mining computer starts making the blockchain from block, you know, 800,000 and they can outrun the normal miners, then that will be the longest chain. And that chain will be the correct one. Even if there was the the blocks were empty.

Vlad Costea 01:45:30 Yeah, that’s an interesting thought to have. And it’s going to massively disrupts what’s going on with miners. So yeah, I guess we should expect in a decade or two to switch to something else.

Marko Tarman 01:45:46 I wouldn’t be paranoid about this, because if there there will be a quantum computer that can, that can crack the Sha256 encryption.

Marko Tarman 01:46:04 There will also be, you know, military uses encryption for communication all the time. And I think they will be the ones that will find a way to hide their communication from quantum computers first. And that’s the same. That same, let’s say principle or mechanism could be probably used on Bitcoin. But yeah, I’m not I’m not an expert in quantum computers to say any more smart stuff around it.

Vlad Costea 01:46:38 Also, it’s pretty philosophical because you have to imagine a world where all of these assumptions are destroyed. All of the miners for Sha256 become basically paperweights or door holders or something, and then you have to start from scratch and figure out a way for Bitcoin to survive. I think Paul Pugh from Edge Wallet said something along the lines of Bitcoin is mostly the 21 million coins and we can have them on any network ever.

It doesn’t have to be the current one. It can be any other one if we discover something better. What’s important is that the holders are maintained, and I’m not sure if I 100% agree because there are some benefits to using the Bitcoin network unless we figure out something so much better than this?

Marko Tarman 01:47:33 Yes.

Marko Tarman 01:47:34 And that’s that. Then we get back to the the discussion we had before. Maybe proof of work is not the best or the final technological advancement we have in order to prevent double spend.

Vlad Costea 01:47:50 But if proof of work doesn’t turn out to be, the future is nice hash ready to adapt to that?

Marko Tarman 01:47:57 That’s the far, far ahead. And probably not something that I could answer, but who knows what the future holds.

Vlad Costea 01:48:06 How come nice has never offered staking pools?

Marko Tarman 01:48:11 Because we’re we’re in majority a mining company or a mining development company or something like that. And.

Vlad Costea 01:48:23 And I guess you could do something similar with staking or not. I don’t know.

Marko Tarman 01:48:30 You know. You know, there’s obviously a lot of companies have been looking into ways to offer staking, but I guess it’s not as simple as that. And, yeah, I prefer not to like, talk about, talk about this.

Vlad Costea 01:48:50 I’ve asked you about the future of mining. I’ve asked you about the future of Nice Hash. But what’s next for you, Marco?

Marko Tarman 01:49:02 From a business perspective, definitely help grow.

Marko Tarman 01:49:06 Nice customer. get nice cash, even more recognition, get nice hash, even more hash rate. And, help the company grow.

Vlad Costea 01:49:18 And spread the merchandise around. I see people in airports sometimes with nice hash hats or t shirts, and I tell them, nice t tee shirt.

Marko Tarman 01:49:29 Yeah. That’s, that’s when you get if you give much away on on the boot. But yeah, I’m happy to hear when people say that they saw, nice merch.

And I am oftentimes approached by people whenever I’m wearing this, this kind of t shirt. they said in Slovenia, actually, they work for nice. I know this company. I’ve been using it, and like when we were in Miami for the first year in 2022, it was so fun.

We went to a dinner. When we came out, there was like, guys passing us, hey, nice. Hey. What’s up? and, you know, it kind of gives you a feeling of what nice actually is and what it has achieved through, throughout these ten years, we’ve had millions of users.

Marko Tarman 01:50:18 And I guess this this can be seen throughout the when you’re walking on the street, actually.

Vlad Costea 01:50:28 Millions of users and many of them are walking on the street. I was gonna ask you, are you giving merchandise as a gift to some of the users when they achieve certain milestones? Like for being around for a long time or for offering a large amount of hash rate?

Marko Tarman 01:50:49 Not much. We don’t give out merch because I think big miners don’t want merch. They want lower fees on the pool. Let’s say a nice hash. but we had a shop where we where people could buy the merch, and we also give it out on, on most of the conferences that we go to. We just, you know, give out the merch. And because there’s so many people at these conferences, there’s a lot of t shirts that’s getting, given away.

Vlad Costea 01:51:23 And they’re nice and nerdy because they’re not like a Bitcoin t shirt where it says Bitcoin and people recognize what it is. It’s nice hash. So unless you are very deep into bitcoin and you understand mining and you have some knowledge about it, you’re not gonna get it.

Marko Tarman 01:51:40 It’s kind of abstract. At the same time, it’s you know, we’ve been joking about a lot because nice hash. And we were on the conference in Amsterdam at the time. I had a presentation about hashing. So I titled the presentation Amsterdam Hashing. and, people who understood the joke, were like quite impressed because nice hashing, which kind of means smoking pot or hash. that was the direction we were where we tried to make it a little bit more funny.

Vlad Costea 01:52:15 you send people to the coffee shop.

Marko Tarman 01:52:18 With nice hash.

Vlad Costea 01:52:23 Nice. I’m not sure if I have any more questions for you at this time. Marco, is there anything that you wanted me to ask you about, but I haven’t.

Marko Tarman 01:52:34 no. I think we pretty much covered everything.

Vlad Costea 01:52:39 Where can people follow you? A nice hash.

Marko Tarman 01:52:41 Maybe. Just a disclaimer that, most of these thoughts are my personal ones, so most of these shouldn’t be related to the company. Yeah. Very important. Yeah. Very important. so people can find me on LinkedIn, but, with my name, they can find me on Twitter or X as it is now.

Marko Tarman 01:53:07 and those are pretty much the most important, ways of reaching out to me. Then I’m also available on telegram. but, yeah, these are the.

Vlad Costea 01:53:16 Ways. Quite responsive. I’m impressed. We set this interview up in a very short amount of time with minimal interactions.

Marko Tarman 01:53:26 Yeah, I mean, the whole company, the way how we operate. We’re trying to be agile. So I guess, the sooner we did this, the sooner we can move on with other stuff.

Vlad Costea 01:53:39 Right. So there is something extra that we wanted to say and we forgot. And we’re adding this segment to the podcast. Marco, what is it that Nick Nice Hash has just announced?

Marko Tarman 01:53:50 Yes. We announced a partnership with M2. for me, the list. Most of people should already know the M2 company and they are often offering loans for especially for especially for miners. And, the loan can be backed by bitcoins, but it could be repaid, in a flexible, more flexible way, including hash rate. So that’s how NASA partnered with M2, where the loan for the first time, I am aware, can be repaid by hash rate directly.

Vlad Costea 01:54:34 So hash rate is the new Bitcoin. You don’t never sell your hash rate. Borrow against it.

Speaker 6 01:54:42 Yes. Yes.

Vlad Costea 01:54:44 Crazy.

Marko Tarman 01:54:44 And that’s that’s something, very big. Especially for, for miners.

Vlad Costea 01:54:53 But it’s not like you can hold the hash rate, right? You got to deploy it. You got to use it, and it happens one second after the other.

Marko Tarman 01:55:03 Yeah, sure. Hash rate is a short term commodity. Short lived commodity. And, you’re basically using the hash rate to repay the loan.

Vlad Costea 01:55:15 I found the announcement. It’s on Business Insider also. And two partners with nice hash to bring crypto lending solutions to miners worldwide. Let me also put it on the screen. I haven’t heard of them two. By the way, I don’t know what they do exactly or where they’re based. I gotta look into it.

Marko Tarman 01:55:38 Yeah, look into it. It’s, quite big company. I like one of the core features or products is the exchange. But as you can see, they’re offering loans.

Vlad Costea 01:55:54 Yeah. It says right here by Collateralize. Their BTC miners can now access convenient USDt loans, enabling them to scale their operations, cover expenses, and optimize profitability without selling their valuable assets. Man, this is a game changer.

Marko Tarman 01:56:11 It is. And this is just the first step.

Vlad Costea 01:56:15 For a long time it was like this. Miners had to sell some of their coins to be able to pay their expenses. Now they can hodl much more.

Marko Tarman 01:56:25 Yes, and they can loan against. They can a loan. Get a loan against their funds. And repay it with a portion of their hashrate, so they can decide how much hashrate they want to use to repay the loan. The more hashrate they use, the more the higher share of the the hash rate they use to repay the loan, the faster they will repay it. But they will be left with less, less, income, let’s say less balance.

Vlad Costea 01:56:59 Really great. I’m happy that we recorded this extra segment because it’s worth a mention.

Marko Tarman 01:57:05 Definitely.

Marko Tarman 01:57:07 Thank you.

Back in 2021, I’ve written a long article that explains the origins of Counterparty and how can anyone can use it in order to issue NFTs with it (thanks to Grittoshi and Roberto Scott, it was also translated in French and Spanish). But now that the protocol is being maintained by Adam Krellenstein, more features will get added to make the ecosystem much more competitive against dedicated token platforms such as Ethereum and Solana. The first contributions include improvements to the core codebase, making it easier to run Counterparty nodes, and the creation of the Horizon suite that consists of a wallet and a blockchain explorer.

As of 2025, Counterparty also faces steep competition from the ordinals and runes, as well as BRC20s and STAMPs. All of these are Bitcoin-native ways to create tokens on the most secure blockchain of them all, and in the end it will be the protocol with the strongest community and the most active user base that wins.

On the other hand, Counterparty is quite a honey badger. It’s been around for longer than a decade, it faced multiple boom and bust cycles and there were many instances when it appeared to die. But it keeps coming back because lots of Bitcoin artefacts were built on it and the world is filled with collectors who want to hold a piece of BTC history.

In this interview with Adam Krellenstein, we talk about everything which concerns Counterparty in 2025: including the conflict with former maintainer Jdog, who served as main developer for about a decade and built his own infrastructure (Freewallet.io and TokenScan.io). Furthermore, I introduce to Adam my Bitcoin Heads collection (of which he might become an esteemed member) and the new DAVIDPEPEBTC art token that my girlfriend created (which was distributed as an airdrop shortly after the episode ended).

Overall, it was a productive discussion that gave me hope that Counterparty might rise again.

Listen to Adam Krellenstein on YouTube, Twitter/X, Spotify, Apple Podcasts & More!

This episode is sponsored by LayerTwo Labs, SideShift, Citrea, NoOnes, Bitcoin.com News, and HODLING.ch!

▶ Play video Watch on YouTube

Time stamps of my interview with Adam Krellenstein:

Introducing Adam Krellenstein (00:00:50)

Counterparty’s Unique Features (00:01:30)

Historical Significance of Counterparty (00:02:09)

Comparison with Mastercoin/Omni (00:03:19)

The Birth of Bitcoin Maximalism (00:04:48)

Vitalik’s Influence and Ethereum (00:08:43)

Pushback from Bitcoin Core Developers (00:09:16)

Concerns about Data Storage on Bitcoin (00:10:36)

Counterparty Software and Decentralization (00:12:51)

Art and NFTs in Counterparty (00:14:51)

Airdrop Announcement (00:14:24)

Off-Chain Data Storage Challenges (00:16:00)

Counterparty’s Original Vision (00:18:19)

The Popularity of Digital Art (00:18:51)

The Role of Digitally Native Assets (00:19:32)

Article about Counterparty on Bitcoin Takeover Website (00:21:08)

The Role of Bitcoin in Counterparty (00:22:30)

Decentralization of Counterparty Launch (00:23:12)

XCP Token Creation and Burning Mechanism (00:24:27)

Value Creation vs. Destruction (00:26:00)

Onboarding Users with Dispensers (00:29:41)

Counterparty’s Development History (00:31:01)

Challenges in Running Counterparty Nodes (00:35:30)

Counterparty 2.0 and Ledger Fork? (00:39:17)

Community Dynamics and Development (00:41:00)

Future of Smart Contracts on Counterparty (00:42:58)

Counterparty Ecosystem Health (00:43:46)

Atomic Swaps Feature (00:44:18)

Layer Two Proposals (00:45:18)

Comparison with Ordinals & BRC20 (00:47:44)

Counterparty’s Functional Advantages (00:48:30)

Sponsors (00:49:29)

Expectations at Launch (00:52:31)

Future of Counterparty (00:53:39)

Cultural Shifts in Bitcoin (00:55:23)

Collaboration with Ordinals (00:58:54)

Differences Between Runes and Counterparty (01:00:09)

Encoding Data in Bitcoin Transactions (01:01:07)

Future Improvements for Counterparty (01:03:11)

Community Dynamics (01:03:58)

Counterparty Wallet Development (01:05:36)

Bitcoin Head Cards (01:07:04)

Community Engagement and Nostalgia (01:08:29)

Bitcoin’s Security Budget (01:09:21)

Transaction Fees and Counterparty (01:10:33)

Recommended Counterparty Wallets (01:11:30)

Data Storage on Bitcoin (01:12:32)

Ecosystem and Community Reception (01:15:08)

Pepe Cash and Market Trends (01:16:45)

Current Developments in Counterparty (01:18:10)

Counterparty Roadmap (01:21:14)

Use Cases of Counterparty (01:23:35)

Stablecoin Possibilities (01:24:30)

Can Bitcoin Privacy Kill Counterparty? (01:25:38)

Counterparty’s Resilience (01:26:26)

Discussion on Counterparty’s Usage (01:26:46)

Closing Remarks and Where to Follow Adam Krellenstein (01:27:02)

Counterparty Communication Channels (01:27:18)

Airdrop Announcement (01:27:46)

Shoutout to Chris Derose (01:28:25)

Full Transcript of this interview about Counterparty, with Adam Krellenstein:

Vlad Costea 00:00:50 Hello and welcome to the Bitcoin Takeover podcast. This is season 16, episode 14. We are live with Adam Krellenstein, and this show is sponsored by layer two labs, Citrea, SideShift.io. Blockchain. Not blockchain. Bitcoin.com News and NoOne’s dot com and HODLing. It’s really good to have you, Adam. You are one of the three co-founders of the Counterparty protocol on Bitcoin, and currently you’re also the maintainer. I know that you’ve left the space in 2015. You came back last year, I think, and it’s pretty exciting to have you around your true OG.

Adam Krellenstein 00:01:28 Thank you very much. Thanks for having me on the podcast.

Vlad Costea 00:01:30 So let me ask you this because today we have all of these token protocols. We have networks that were built purposely for issuing tokens. We live in the pumped fund era where you just, you know, with a few clicks on Solana, you can issue a new token, but counterparty uses Bitcoin for paying the transaction fee.

Vlad Costea 00:01:52 It uses the Bitcoin network for storing the return data. It’s more sophisticated. It’s also arguably more permanent. But what are the reasons for anyone to use counterparty today as opposed to something else?

Adam Krellenstein 00:02:09 Yeah, that’s a good question. There’s definitely a lot of yeah, a lot of other options out there right now. part of the reason that there’s so many options is because counterparty was really one of the first token issuances. Platform. counterparty was where spells of Genesis were created.

And that was, I think, maybe the first ever NFT platform, or a collection rather. and of course, papers were created on counterparty. So there’s a lot of, you know, historical gravitas to the counterparty protocol. in terms of today. The reasons to use counterparty are, it’s on Bitcoin.

That’s the most important thing. and it’s directly on Bitcoin. It’s not a sidechain. it’s not a rollup. It’s actually on top of bitcoin. And you’re using Bitcoin paying bitcoin fees use for counterparty issuances. And the second thing is that you have lots more functionality actually with counterparty today than you do even with other NFT protocols.

Adam Krellenstein 00:03:05 Not all. but many of them and I would say generally the Coinbase ones. and these are features that were developed and innovated by counterparty, as early as 2014.

Vlad Costea 00:03:19 as far as I know, the launch of the protocol was in January of 2014. Yeah, I’m not sure if it was before Omni, which used to be called Mastercoin, or they launched around the same time, but they serve sort of the same purpose.

Adam Krellenstein 00:03:34 Yeah, it was around the same time. what happened is that Mastercoin had raised a bunch of money in 2013 to develop the protocol, and they released a couple of incompatible and extremely limited versions of that protocol where you could pretty much just send Mastercoin around and you could really do anything. and counterparty, counterparty. We sort of raced ahead and we built the whole thing with, centralized exchange and, all of the, you know, what we came to be known as D5 features, betting, trading, dividends, etc., etc. and we launched that in January, and it took a long time for Mastercoin to really, you know, and later on need to implement any, even a small fraction of those features.

Adam Krellenstein 00:04:25 So I think counterparty was really the first functional platform like it, the first functional DeFi platform, definitely the first decentralized exchange. the first thing like is that really existed, but the original idea did come from Mastercoin. the, the idea of a meta protocol originated there, and then counterparty with counterparty took it and ran with it and like actually built it.

Vlad Costea 00:04:48 Yeah. Also counterparty. Not too many people know this, but it’s what basically led to the creation of the term Bitcoin maximalist because in his blog post from 2014 or 2015, I think it was 2015, Vitalik argues with someone on Reddit who said, it’s so cool that you guys are building this EVM on Ethereum, but we can just take that and put it on counterparty and your software is going to be just pointless.

It will never take off because we have Bitcoin, which is more decentralized, more resilient. It has a greater network effect. And it was because of someone making this comment about counterparty adopting features that Vitalik wrote that article and coined the term Bitcoin maximalist.

Vlad Costea 00:05:36 And I think it’s incredible.

Adam Krellenstein 00:05:40 Yeah, that might have been me. I was I was phantom freak on Reddit and and in 2015, I built a proof of concept supporting the EVM to counterparty and therefore to Bitcoin. and, Vitalik and I had a nice friendly back and forth where, I implemented the EVM and then he implemented counterparty features inside the EVM. And we always had a, I think a very friendly competition. and to sort of, you know, see what the best architecture was and, yeah, but it was also sort of a nice sharing of ideas. there was no animosity there.

And it’s more that it wasn’t just that counterparty is the reason that that Bitcoin maximalism sort of as a term, was, was invented. But, Vitalik has said very publicly that’s the reason that Ethereum exists as a separate blockchain is counterparty. with counterparty, we had built, you know, smart contracts on top of Bitcoin. And there was a lot of pushback at the time from the Bitcoin Core developers to what we were doing.

Adam Krellenstein 00:06:42 They didn’t like it. And this started the the so-called return wars in 2014, and the that animosity and the attempts by the Bitcoin Core developers to the unsuccessful ones to ban and block counterparty from Bitcoin are what convinced Vitalik and Joe Lubin to create a whole new chain, because they were worried about that censorship and they were worried about, you know, fighting for, extending Bitcoin. And they correctly realized that that the that, you know, a good alternative was to just build a new blockchain.

Vlad Costea 00:07:17 The person on Reddit who replied to Vitalik and said, you thought meta coins were a bad idea, but an altcoin was a good one. Blah blah blah blah blah. You created a potential competitor and existential threat to Bitcoin. Of course we would eat your innovation. Face it, it’s over. You’ve lost.

Adam Krellenstein 00:07:33 No, no, that wasn’t me.

Vlad Costea 00:07:35 It was half hand 84. Okay, so this guy became famous for inspiring Vitalik in his article and he. put this under a rather hostile example. So there was one of his own about trying to understand why counterparties deemed evil or too powerful or potentially dangerous to Bitcoin.

Vlad Costea 00:08:00 There is another section which I guess was about you, but the link is broken right now. And there is this post for a rather hostile example. And this guy, I think, is what triggered Vitalik. And I think it’s beautiful because it was because of counterparty that we ended up having this term of a Bitcoin maximalist. We had this article that started it all. And I also have to ask you, when people say that Vitalik intended to build Ethereum on Bitcoin. Is it specifically about counterparty? Because I know he was also working on colored coins before that.

Adam Krellenstein 00:08:43 he, he there’s a there’s a tweet from him, saying that Ethereum would have been a counterparty style meta meta protocol if it hadn’t been for, the efforts for the Bitcoin Core developers to, to block it. so it’s a sort of a direct thing. yeah. I mean, I think in general, in 2014, everyone was trying to figure out what the right way to do these things was, and it wasn’t clear whether to build on top of Bitcoin or to or to, you know, build a effectively a competitor, which is what Ethereum became, in a lot of senses.

Adam Krellenstein 00:09:16 I was like, I don’t know, having a more synergistic relationship with Bitcoin. I like Bitcoin a lot. And I think that it’s, it’s function as digital gold is very important. And, Ethereum doesn’t have that. Ethereum is just gas. Ether is just gas for, you know, for the smart contract system of Ethereum.

And the the fact is that, you know, counterparty wasn’t a lot of ways ahead of its time. that that really at there was a much more pushback by the Bitcoin core developers and by the Bitcoin community at the time to meta protocols than, you know, I think was warranted. And I think it’s been proven out.

I mean, at the time, the Bitcoin Core developers were panicked about the possibility of storing 80 bytes of data in an upper turn. And now with, SegWit and taproot, you can store hundreds of kilobytes in a single Bitcoin transaction. And it’s totally fine. and the popularity of, you know, recent, colored coins esque, you know, what you could call a meta protocol, like ordinals and runes shows that, it’s it works.

Adam Krellenstein 00:10:25 it’s totally fine. And the Bitcoin ecosystem, I think overall benefits from having those protocols built on top of it, rather than just being more altcoins.

Vlad Costea 00:10:36 Yes. And we gotta get into this. Right. Because you mentioned the upper term was some developers were super concerned that data getting spammed on Bitcoin is going to lead to some sort of on one hand scalability issue. And on the other hand, I guess they were concerned that possibly there might be some sort of rare Pepe or spells of Genesis card that is more valuable than the entire block reward, and this can destroy the incentives for miners to try to double spend blocks or transactions.

Adam Krellenstein 00:11:12 Yeah, I mean, I argued this extensively at the time. I don’t think that’s the case. it’s already the case that I mean, it’s it’s already, you know, you have the case that some Bitcoin transactions are more valuable than other Bitcoin transactions. And that’s why you pay different fee rates for different Bitcoin transactions. and if you know the value is in a rare pepper or something like that, that’s fine.

Adam Krellenstein 00:11:32 You’re paying bitcoin fees for it. it doesn’t. And you know, at least the clean ways of storing data in Bitcoin don’t bloat the blockchain. If you’re storing the data in turn, then any node that wants to can prune that data. and it’s just not important. it doesn’t create some sort of major crisis. And again, like people are storing. yeah. I mean, 500 times more data today in a single Bitcoin transaction. If I’m doing the math right, then people were panicked about at the time and it’s fine. you know, Bitcoin fees are fine.

Vlad Costea 00:12:06 At the same time, as David Johnston put it. The issue with these meta protocols is that the network at large is not aware of what’s going on. So you need some dedicated software that’s being maintained and I guess also operated by some third party entity. And you have to trust that they are running a server in good faith. You have to trust that the code is good and that there is some extra risk that’s added on top.

Vlad Costea 00:12:37 And it’s not as decentralized as Bitcoin, even though it’s an upper term Bitcoin transaction. The software that is required to decipher what’s happening there is not Bitcoin.

Adam Krellenstein 00:12:51 yeah, I don’t agree. I think that that’s technically not correct. it’s I mean, it’s not the Bitcoin Core software, it’s an additional piece of software. But there isn’t any there aren’t any servers that are required to to use counterparty or to run counterparty. it’s the way to think about the counterparty software is it’s just an extra module that you run next to Bitcoin.

It’s sort of like you’ve added additional software to Bitcoin Core. and Bitcoin Core doesn’t know about it, but it’s just this other thing. And it’s not really very different from the distinction between full nodes and and minor nodes where you’re just running different software and you’re interpreting the additional data differently. it’s fully compatible. And it has really, you know, in the vast majority of cases, the exact same security model as Bitcoin.

Vlad Costea 00:13:38 At this point, I have to ask you if you have access to view the screen of our live stream, because I want to show you something.

Adam Krellenstein 00:13:46 Yeah, I can look at that chart.

Vlad Costea 00:13:49 You can check it on your computer, phone or whatever.

Adam Krellenstein 00:13:53 I think I see it on Twitter. Yeah.

Vlad Costea 00:13:55 This is your sister. It’s part of the Privacy Vampires collection, number 11. It was drawn by my girlfriend today. And she used the picture that you sent me for the thumbnail for inspiration. I don’t know if your hair is this brown right now, but some changes can be made.

Adam Krellenstein 00:14:15 But. Very cute. Thank you. That’s very, very cute. I’m a fan.

Vlad Costea 00:14:20 I’ll send it to you.

Adam Krellenstein 00:14:22 Thank you. Awesome.

Vlad Costea 00:14:24 And also, for the people watching this, I promised on Twitter that there’s going to be some sort of airdrop. I’ve created this. Just a second. I need to switch tabs. It’s called David Pepa BTC. It’s my girlfriend’s drawing of the statue of David, but turned into a Pepe and holding a bitcoin. As you can see, the penis is also here and it has the signature of the artist on it.

Vlad Costea 00:14:51 The description says that nowadays David slays Goliath with his Bitcoin. No slingshot required. Drawn by onion March of 2025. So only 21 of these were issued. The supply is locked and I’m going to give away ten of them during this live stream. All you have to do is put your counterparty address in the chat, and I’m going to look for that and send to the first ten people.

And another ten have been locked in a dispenser for about 21 bucks. So everyone else who is late will have to get it from the dispenser if you want it, I don’t know. I don’t know why you would want this, but it’s pretty cool. It’s nice art, and it’s a nice memory of what counterparty can do and what it does.

And proceedings will go to my girlfriend. I’m not keeping any of this, but it’s cool. You can do this with counterparty, but I think part of the trade off when you do something like this is that that the data, like the image and the description and everything is not stored on the Bitcoin nodes.

Vlad Costea 00:16:00 Maybe this is beautiful because you’re not bloating storage on full nodes, but if one of these services like Imgur or wherever you store your image gets shut down, even what was the popular one? I think it was IPFs that was being used during the NFT mania. You still have to trust that someone’s going to host this for yourself, and the representation of your token is going to be there.

But there’s also the conversation. I’ve had Theo Goodman on the show like four years ago, and he was very adamant about this point that the token is the art, and it’s the token itself that you’re buying the name of it, the supply, the meaning that it carries and not the art. The art is just a representation of what it’s supposed to mean.

Adam Krellenstein 00:16:51 Yeah, I think it’s a complicated and subtle, the relationship between the token and the art. I think arts art’s tricky to define. Right. And what people find valuable about it is it’s different and changes. I think I frankly am not thrilled that NFTs are, NFT data is stored off chain, on centralized servers.

Adam Krellenstein 00:17:13 I think that that’s generally counter to the idea of it. I think that it’s also a solvable problem. We’re actually, in the process right now of developing a protocol change for a counterparty that will increase the data storage capabilities of counterparty significantly. So you’ll be able to go from, you’ll be able to store hundreds of kilobytes of data in a single Bitcoin transaction, and also it will reduce counterparty fees significantly for all but the simplest transactions, to make it in line with ordinals.

But ordinals has done for years. and we’re working harder than right now. So, in the future, one will be able to store the actual NFT image on the Bitcoin blockchain if you want to, and in a way that’s fully provable. So nodes that don’t want to store it don’t have to.

Vlad Costea 00:17:59 I was going to get to this, but at the same time, I have to mention the fact that when you launched counterparty, it was an attempt to bring real world assets. This was the terminology at the time to Bitcoin, and you’re thinking it’s going to be useful for companies that want to stay online and decentralized to issue shares and dividends to their investors.

Vlad Costea 00:18:19 Or maybe it could be used to tokenize commodities like gold, silver. Anything else? Or stocks like Apple or Microsoft, whatever you could do this to. But in the end, it seems like art became the more popular use case. And I keep wondering why. What is it about art that is more trendy or more fun than tokenizing some real assets?

Adam Krellenstein 00:18:51 Yeah, I think that’s one of the ways that counterparty I mean, that was that was a wrong conception of mine. I think I was wrong about that. The original idea, as you said, was to sort of take existing real world assets or, you know, existing financial assets and sort of create a link to, to, a blockchain, right, to Bitcoin and counterparty, and to move existing systems to a blockchain.

And I think that that’s still possible, and it’s much more possible today than it was. and I’m looking forward to it. And it’s already happening. Stablecoins are a very clear example of this where we’re actually moving. there’s some there’s a clear link between, you know, Fiat, and a digital asset.

Adam Krellenstein 00:19:32 But what was really pivotal in allowing blockchains to take off and in their usage, and for DeFi to take off after counterparty was created, was digitally native assets. and art was the first example of that. I mean, you know, there were some there were some gaming and gaming tokens and gaming art and that sort of thing. But I think the financial systems tend to be heavily layered, and incrementally built.

And when you try and sort of move a complex off chain asset on chain wholesale, it’s a very slow and painful process where the benefits are not super obvious. But if you start with something as simple as NFTs, then you can build, lots of functionality on top of that. Then you can build markets on top of that, and it’s much more natural and easy to do so.

And there’s the incentive to do so is much clearer. So the problem is sort of in a sense that counterparty launched with a Dex without first having digitally native assets to trade on the Dex. And, I mean, at the time, the idea was to sell and trade XP for Bitcoin and other other tokens that people were creating, but there wasn’t enough adoption or takeup of those at the time for it to be compelling.

Adam Krellenstein 00:20:47 And so, you know, the usage was sort of moderate. And now that there are billions and billions of dollars in NFTs out there and other DeFi assets, there’s something to trade. and that’s very powerful. And you can do things on blockchains that you can’t do using traditional systems because of their architecture. And that’s very compelling as well.

Vlad Costea 00:21:08 Something else that I want to bring up on screen is this article that I wrote back in 2021. So it was December Burr, 29, of 2021. It’s called Bitcoin, NFTs and counterparty and how to get or create your first one. It was also translated in French and in Spanish, and I see it getting a lot of clicks sometimes.

The reason why I want to bring this up is that I actually put some information that’s useful for myself right now about the creation of counterparty, because when you decided that it’s going to have a token, you also burn some Bitcoin. And I want to see exactly because I also put a link here. If I remember very correctly, I put a link to the transaction where you actually burned.

Vlad Costea 00:21:57 I have to look up burn. Yeah. So you burned 2131 bitcoins that were sent to an address. That’s called one counterparty. The bitcoins are still here and have been here for a long time. I see that there are still transactions that send money to this address. What’s the story behind it? Why did you decide that you’re going to burn 2100 something Bitcoin for the creation of this?

Adam Krellenstein 00:22:30 Yeah, the inspiration was very much Bitcoin and Satoshi. Satoshi created Bitcoin to have a to have a mining mechanism right where you’re actually destroying energy to create Bitcoin. And the nice thing about digital currencies and meta protocols like counterparty is that you can you then you don’t have to do it again.

If you want to create another token using the same mechanism, you can just burn Bitcoin to create XRP. You don’t actually need to have any mining, you know, actually mining hardware or use any real world energy. because you now have a digital token and that you can use in the smart contract. and so it’s like a cleaner, more efficient way of doing the exact same thing.

Adam Krellenstein 00:23:12 instead of burning energy, you’re burning tokens. I’m burning Bitcoin. And yeah, the counterparty launch was a I mean a particularly decentralized and fair launch. I mean, I think one of the the most decentralized and fair in the history of cryptocurrencies, we thought that was very important.

I think it’s very important. I think it’s it’s important to have cryptocurrencies be decentralized. that’s not to say that, you know, there weren’t problems with the trade strategy, right? We didn’t have any funds, for the team to develop anything.

Right. We didn’t have any resources. it was just, you know, a Bitcoin talk forum post with a GitHub repo link and that’s about it. and that hamstrung counterparty and, you know, for, for, you know, for a long time, specifically when it became competitive with Ethereum, which if, you know, some number of months later, you know, raised $20 million, which then went to, you know, promoting and developing the that technology counterparty was always meant to be.

Adam Krellenstein 00:24:14 Was always very cyberpunk. and very true to the Bitcoin ethos and idea and proof of Byrne, I think is a very beautiful way of of representing that.

Vlad Costea 00:24:27 But why was it 2100 something Bitcoin. Why wasn’t it 200 or.

Adam Krellenstein 00:24:33 That’s how much people decided to burn and people could burn as much as they wanted more or less. there was a limit on the address to sort of encourage decentralization, but, when you burned Bitcoin by sending it to this address, this undependable address, you destroyed the bitcoin, and then you created counterparty in a, in some ratio, which decreased slowly over time. And if anyone who could do it could do it. and that created XRP the the currency de novo. So there’s a limit there.

Vlad Costea 00:25:03 No. You can argue that the supply of XRP is backed by a supply of BTC that was burned.

Adam Krellenstein 00:25:11 You can say that in a way. I think that, you know, you know, Bitcoin isn’t really backed by the energy just, you know, destroyed to to mine it.

Adam Krellenstein 00:25:20 but there’s a link and that’s very important.

Vlad Costea 00:25:24 It’s an interesting, interesting approach because it makes, you know, nowadays everyone launches a token and they don’t consume any energy. They don’t have any sort of expense. They print it out of thin air, and then they expect to sell it to someone else for another asset that actually requires work. So it’s beautiful that you did this, but at the same time, I guess it’s painful in retrospect, thinking that at 100 K per bitcoin, that was how much? 20 million.

Adam Krellenstein 00:26:00 Billion. Yeah. Yeah. It was a large value destruction. probably one of the largest, most, you know, intentional, value destructions of its kind. yeah. But, you know, to create Bitcoin, you have to, I think, to create new things. You have to you like you have to it wasn’t a destruction. It was a conversion. Right. It was a it was a transmutation of Bitcoin as gold to exp. and I think that that’s, a very useful paradigm.

Adam Krellenstein 00:26:28 again, the same way that energy is destroyed to create Bitcoin. it should be hard to, to create a cryptocurrency. that’s not to say that. Yeah. Like there are problems, right? You know, it turns out that if you create the money out of thin air, then you can, do a lot of then you have a lot of flexibility that you wouldn’t otherwise have. but, the destruction wasn’t just destruction. It was also a creation. And, and XRP had value as soon as that transmutation occurred. and so overall, the net value create, you know, net value of the system went up. And that’s the important thing.

Vlad Costea 00:27:04 Yeah. Right now I’m looking at site Shift, which is one of the show sponsors, and I checked to see if under swapping service, they also support SCP and it’s not here. And it’s slightly disappointing because I understand why some centralized exchanges would not list SCP, but site shift is a bit more cypherpunk. So maybe if someone from Site shift is listening, you should list SCP for swaps at the same time.

Vlad Costea 00:27:31 SCP, I think the best way to acquire it is to watch these dispensers, right? And I’m going to get into that. Let me finish the ad for site shift. So they have pretty good liquidity for most of the popular coins. You can check it out. And let’s say that someone pays you in stablecoins or whatever USDt, you don’t have to touch it.

If you don’t want, you can just swap from USDt on let’s say theorem to Bitcoin. You put your Bitcoin address here and you click shift and then you just send the person who’s about to pay you the USB address. And as soon as the payment goes through, you’re going to receive Bitcoin in your wallet. And it’s stress free. It’s pretty cool.

It’s a good way for you to swap. And even if you don’t know about site shift, I guess you already do it. And while it’s like edge and cake and whatever, it’s in the background if you’re swapping between coins. So check out Site Shift I. And also I got to tell you about Bitcoin.com News, because now they know the difference between BTC and BCH.

Vlad Costea 00:28:39 And that was in the previous episode of the show that I interviewed their CEO, their new CEO, and Bitcoin.com is now much more about the real Bitcoin and also has news about gold, about other countries that are adopting Bitcoin around the world. It’s not so US centric, and I sort of enjoy reading the news there sometimes.

So go to news Dot Bitcoin.com and check out some of the articles. They tend to be pretty good. So now I got to ask you about smart contracts, right. Because dispensers, as described by Nick Szabo when he was talking about the definition of smart contracts, are sort of the first kind of smart contracts.

You put some acid in there and then you set the price for how much you want to charge for one asset, and then whoever comes in and sends a transaction of that value is going to get the asset. And counterparty has this dispenser system. And it’s really beautiful.

Adam Krellenstein 00:29:41 Yeah. I don’t think dispensers, were the first smart contracts. I think there were a lot of smart contracts that came before.

Adam Krellenstein 00:29:47 that said, dispensers are extremely useful for onboarding people, especially into the counterparty ecosystem. and it’s still one of the most, one of the easiest ways to, to get, counterparty assets. There are other ways now Atomic swaps were released in October of last year and that’s really a nice alternative to to dispensers. It’s, trustless in a way that dispensers or not. But when. Yeah, when counterparty launched, we had contracts for difference. We had betting we had, a decentralized exchange, all of which are, smart contracts.

Vlad Costea 00:30:22 And it was so ahead of its time. Right. There were colored coins before counterparty, but all of these features.

Adam Krellenstein 00:30:31 Were just for issuing a token. You could issue the token, you could move the token and that’s it. And that’s a you know, I don’t know if I would call it a smart contract. It’s so simple. Bitcoin itself has very simple smart contracts. Right. has multi-sig. It has time lock. It has it has features that are, smart contracts.

Adam Krellenstein 00:30:50 they’re just very limited and richer. Smart contracts are, were really instantiated with counterparty in 2014.

Vlad Costea 00:31:01 Why is it that so much of the story about counterparty begins and sort of ends in 2014? Because when I first discovered counterparty, I used counter wallet, and it seems sort of like a ghost town. It was like this utopia of what can be done in Bitcoin that was built in a pretty rough way, but never finished. Then I discovered free wallet, but it’s free wallet IO, not the free wallet.com. That’s sort of a bad wallet. You don’t want to make this mistake. And I discovered free wallet and it it’s much nicer, but it still feels like it’s something from 2016. Maybe it was not updated in terms of user experience.

Adam Krellenstein 00:31:44 Yeah. The fact is that the counterparty ecosystem had extremely little development over and nine year period. and that was even though counterparty was there were a couple of things. One is the counter party was ahead of its time. Right. And so it sort of took a long time for people to start using counterparty the way that it was intended.

Adam Krellenstein 00:32:02 The second thing is that there weren’t yeah, there just wasn’t a lot of resources being put to it. the when when I left as lead maintainer, I guess really the end of 2014, early 2015, there was a trickle of development, afterwards, but very little. And the code base is more or less or was more or less the same, you know, in a year and a half ago, you know, after after 8 or 9 years. That’s a problem, especially in such a fast moving space.

Like you need to maintain software, you need to, you know, keep it up to date. counter wallet was abandoned. it was developed by Rob Dermody originally. it was open source, but no one really worked on it. part of the reason was that there wasn’t any funding right now and had like, there was no counterparty foundation with the Treasury to develop it. And counterparty itself wasn’t sort of valuable enough or popular enough to sort of build this, you know, flywheel ecosystem supporting it.

Adam Krellenstein 00:32:59 And there was a time when, you know, that sort of changed temporarily during bull markets, but it you have the infrastructure of the ecosystem was, you know, really a sorry state. a year and a half ago and 15 months ago, counterparty had some of the first centralized exchange support of any altcoin with the first coin listed on Poloniex. But when the software wasn’t maintained, it became harder and harder to run.

And, you know, user adoption didn’t keep up with other coins and platforms, to say the least. So, what I’ve been working on for the past 15 months is fixing that. is fixing the node software, getting it working, getting it running, getting it deployable. fixing just so many bugs. in the, in the protocol that sort of crept in over, over, over the years, and adding new features like the atomic swap feature that I just mentioned. and another one’s, Ferramentas is is a thing that would actually originated in counterparty but didn’t really have full protocol support.

Adam Krellenstein 00:34:01 And now we have support for that. so what happens when when people don’t support an open source project? And that’s unfortunately the kind of thing that happens in the open source ecosystem. a lot. What’s distinctive about counterparty is that even though it was neglected for so long and just not maintained, it still kept its core user base.

It still kept a ton of value on it, and the value on counterparty grew. And it has this, you know, wonderful tight knit community of people who continue to use it and continue to appreciate its OG status. even though it’s a terrible pain to use and it’s impossible to, to get XP and so on and so forth.

Vlad Costea 00:34:47 Well, there are people like Joe Looney who are building interesting tools. There is also a doc will maintain the protocol for a while, but always my criticism was that you have all of this renaissance running a Bitcoin node with all of these cool implementations and node in a box solutions and whatever, but somehow it was always difficult for normal users to run their own counterparty server, and it would be so nice if you could have this add on next to your node, because something like umbral has apps that you can install.

Vlad Costea 00:35:22 If you can get Counterparty on Umbral, you’re basically going to increase the user base by a few thousands.

Adam Krellenstein 00:35:30 Yeah. the development work that happened in the counterparty ecosystem over the past decade was not really on the protocol, and it wasn’t on the node software. It was really minimal. you know, it was dozens of commits over the course of over years. And those commits sometimes Times added features or made made things better at dispensers was. Was implemented. but it also really often made it worse. there was a like an important patch and a protocol change.

In the fall of 2023, which accidentally introduced a massive critical consensus dependency for the node software. so you had to run this other piece of software next to counterparty in order for it to work. And it became, you know, that was just sort of one example of, of and that’s been reversed now, thankfully. but it just became harder and harder and harder to run the node software. 15 months ago, it took weeks to catch a node up from scratch, and everyone was just sort of copying around databases using this bootstrap mechanism because it was so hard to catch up with the blockchain.

Adam Krellenstein 00:36:34 and there were consensus bugs just everywhere. it was really a mess. And the, the software was really like saying that it was maintained is is really a stretch. It was not well maintained. It wasn’t kept in good shape. it was very hard to use. And, that’s because it’s a it’s a hard thing to do.

It requires dedicated effort. there’s, you know, it’s a bit of a thankless task. And what people did build was, you know, tools and, and services on top of that. And people started to conflate the tools. the block explorers and what have you with the underlying node software. it became a very centralized, vertically integrated ecosystem.

Instead of having lots of block explorers and lots of wallets. and then having a core team sort of maintaining the node software, it was a couple people that just sort of built their tools on top of counterparty and didn’t really improve counterparty itself. And that yeah, it has like that was very harmful. and it costs a lot of downstream effects.

Adam Krellenstein 00:37:35 And, you know, we’re paying for it now. thankfully over the past 15, 15 months, we’ve made huge, huge, huge progress to, to fix that, no. Software catchup has gone from weeks to. I think my last run was ten hours. the, you know, the consensus bugs have been fixed.

The extra extraneous dependencies have been fixed, the API has been rebuilt and redesigned. new features have been implemented. so many bugs have been fixed, the CLI has been revamped. Everything is just sort of, you know, yeah, it’s it’s it’s better and it’s working. And that really should help people build on top of counterparty and run their own counterparty nodes in a way that they really haven’t been able to, to do for a while.

Vlad Costea 00:38:17 Yeah, I think that’s pretty cool. And this also is a very good way for me to introduce the question about the hard fork. Right? Because I used to check I, I’ve created a bunch of stupid tokens on counterparty and I used to check them out on exchange.

Vlad Costea 00:38:36 Com or I think it was exchange IO right now if I type exchange it redirects me to token scan. And on token scan. There is this notice on top of the website and I’m going to put it on the screen. It says notice the counterparty ledger experience the ledger forked block 80 866,000. And now two ledgers exist. This side is showing the counterparty 2.0 ledger. You may also view the counterparty classic ledger. So essentially what is counterparty 2.0. And do assets now exist on two different clients on classic and 2.0.

Adam Krellenstein 00:39:17 Yeah. that notice is dishonest and FUD. it doesn’t represent reality. what happened is that George got angry and he started running an old version of the counterparty software and calling it Counterparty Classic. and no one uses it like it’s not. It’s not a real thing. it’s just a he’s just angry because he he he rage quit the the whole community and the protocol and all of that. counterparty has gone through multiple protocol upgrades, like most blockchains. and I mean, you know, J dog just didn’t like one.

Adam Krellenstein 00:39:54 and so he decided to pretend that an old version was like the one true version, coincidentally, like the last version that he, he nominally was maintaining. so there isn’t there aren’t two ledgers, there’s just counterparty. This is in the FAQ on the official website. and it’s really unfortunate that that notice exists there and scares users away. I think it’s really sad.

Vlad Costea 00:40:17 I was a word that there’s some drama. I had no idea it’s this bad.

Adam Krellenstein 00:40:21 But it’s sort of a tempest in a teapot. Right? the only outward manifestation of it is this scary notice on token scan. and, you know, this is not the first time that that, J dog and token scan have attacked the network and forked it or pretended to fork it or what have you. It’s just, you know, bad personalities, and, like, animosity. the entire rest of the ecosystem totally ignores this. and, I encourage people not to use tokens. Can I know it’s an exchange or, you know, whatever things are called these days.

Adam Krellenstein 00:40:54 there are good alternatives out there, and I think that people should switch to those.

Vlad Costea 00:41:00 Yeah, but I still have to ask, what is counterparty 2.0?

Adam Krellenstein 00:41:05 It’s not a thing. it was like an affectionate name that was given to, the like the development that happened over the past year and a half to improve counterparty, and add new features to it. and, but it’s not like a new version or anything. there’s just been continual improvements to counterparty. and an important set of features that were released last year. but it’s all fully backwards compatible and totally normal. It’s not a whole new version. It’s not a whole new protocol.

Vlad Costea 00:41:36 I was thinking because in the Reddit post that I referenced from 2014, there was this mention that DVM is going to get added to counterparty, and this has been a major talking point, bringing Ethereum smart contracts to Bitcoin with counterparty. And I was thinking that maybe counterparty 2.0 is the manifestation or the implementation of that.

Adam Krellenstein 00:42:00 No, no. so yeah, as I said, like I did a proof of concept of the EVM to counterparty in 2014.

Adam Krellenstein 00:42:07 And we didn’t have really have the resources to finish it. There wasn’t really a strong demand for it. and there really hasn’t been a lot of demand for it today. I think counterparty would be great if it had a virtual machine. I think that it could be a lot better and more functional. The community doesn’t really seem to want that. people are not excited about about smart, you know, about about programmable user created smart contracts on counterparty.

If that changes. At some point I would love to to work towards implementing a virtual machine on on counterparty. but no counterparty to point out was just sort of a name for like a protocol change that happened in September. And then when I went live in October to add atomic swaps and, Ferramentas as a like features, in like a very incremental way.

Vlad Costea 00:42:58 Okay. That’s really good to know. But at the same time, I believe that there is low demand for more smart contracting features on counterparty because it’s so easy to put your assets on Emblem Vault and then issue them on Ethereum or whatever.

Vlad Costea 00:43:15 I know that during the peak of the NFT mania, people were doing this with the rare papers and they were getting a lot more aetherium, at least in terms of US dollars, than they could get in counterparty dispensers, because there was much more liquidity on OpenSea or whatever. So maybe that people think that they issued something on counterparty, but they have other means to benefit from this extra expressivity of smart contracts somewhere else.

Adam Krellenstein 00:43:46 Yeah. I mean, yeah, the there are a lot of reasons, I think, for that. again, the counterparty ecosystem is not in a particularly healthy state. Even when people started, even when the markets were good. Right. Like there’s a distinction there. Like people confuse the two. They think, well, prices are up and liquidity is up. Therefore something is is good in the protocol and infrastructure and that’s not the case. and so people were, you know, forced to use dispensers which, have major problems. Right. people can get rugged very easily. you can have accidental dispensers and so on and so forth.

Adam Krellenstein 00:44:18 and so people and there wasn’t any infrastructure. Right? Like it was hard to get XRP, etc.. So people were limited, you know, forced to use other solutions which have class. You, which have other trade offs. ideally, I think people would use native counterparty features and trade NFTs on Bitcoin. and that’s now possible with the atomic swaps feature, which, everyone was extremely excited about and is excited to, to use. and the wallet support and explorer support is coming along because everyone has to build everything. everyone has to build a lot of stuff from scratch.

But there are currently, I think, three different marketplaces for atomic swaps where you can trade your red peppers for Bitcoin. Totally trustless, in a single Bitcoin transaction. And the hope is that, you know, even though the market’s down right now, obviously, there’s just everything is dead. at the next bull market, when it comes, people will be able to use that feature instead of, existing ones.

Vlad Costea 00:45:18 What do you think about layer two proposals for Bitcoin? And I guess many of these ideas have also introduced the argument that there is no reason for these assets to exist on layer one, and it should be kept small and minimal, and everything with tokens should be traded on layer twos.

Vlad Costea 00:45:39 I remember there was something like RGB that was introduced specifically to build something for tokens for colored coins, but it never really took off. And I was wondering if you have any opinion about this, or let me put on my toxic maximalist hat and say, oh, this should not be. This does not belong on the base layer. And there is someone in the chat actually mentioned that there is a mining pool, ocean mining that is censoring ordinal inscriptions. And I’m not sure about counterparty transactions, but there is certainly a movement that’s trying to discourage this from happening.

Adam Krellenstein 00:46:19 Yeah. I mean, there are lots of thoughts. I mean, layer twos are a big space. I mean, you know, it encompasses everything from I think counterparty is a meta protocol to colored coins, which are, you know, extremely simple and you know, their own thing to lightning, which is purely a scalable scalability system. I think that, I think it’s important that whenever you build a new system that would have a good synergistic relation, like a new layer two would have a synergistic, you shouldn’t build something that either, you know, causes like actual true bloat on the L1.

Adam Krellenstein 00:46:57 You shouldn’t be moving transactions off chain. And then just like settling them, you know, in some way or just like finalizing them on Bitcoin. I think that that is like, creates a bad economic incentive for people to, you know, move transactions off chain, right? and, you know, people are always going to fight about this, but the fact is that counterparty has been around for 11 years now. it’s not going anywhere. and mining, you know, and Luke juniors mining pool or whoever, you know, can can, you know, block it if they want, but it doesn’t matter. there’s strong economic incentives for everyone to, for Bitcoin miners to accept ordinals, inscriptions. and it’s a good thing for the ecosystem as a whole. whether whether you like the art or not.

Vlad Costea 00:47:44 I have to ask you this because I’ve also mentioned ordinal inscriptions. When we started the episode, we compared counterparty with something like Solana or Ethereum, or maybe today it’s easier to issue a token and you don’t have to understand how anything works.

Vlad Costea 00:47:59 But we also have on Bitcoin some competition for these counterparty assets, which is represented by BRC 20s, by ordinal inscriptions, by runes. And what is the difference between those? They’re all native on Bitcoin, but they operate in different ways. But at the same time they try to fulfill the same purpose. So why should people still use counterparty and how can counterparty interact with ordinals?

Adam Krellenstein 00:48:30 Yeah, there’s a there are. The biggest difference is that counterparty is much more functional. it can do a lot more stuff than ordinal descriptions or runes or ERC 20, which are just create token, send token, receive token. Like that’s it. counterparty can do a lot more stuff. and and on the other hand, you can now use the atomic swap feature to trade counterparty assets for ordinals. for instance, trustless. I think it’s all one big, healthy ecosystem. and, it should be collaborative rather than competitive. And there are multiple options, right, which have different, you know, different trade offs. Right? A different architectural trade off.

Adam Krellenstein 00:49:13 The meta protocols are different from colored coins. are different from ordinals. And but they all have their own, you know, quirks and features and things, and so we should generally support interoperability between them.

Vlad Costea 00:49:29 Yeah. Sorry I got distracted sending you your Pepe. Thank you. You can check it out on telegram. And there’s also a short video that shows how it was drawn. So I spoke about layer two. So I gotta tell the listeners about the two sponsors that are trying to become part of the future of Bitcoin.

One of them is layer two labs, and they’re trying to build pegged sidechains for pretty much every use case. There is even one for assets and tokens like Ethereum. And there’s another one for privacy and there’s one for prediction markets. And there is one for scalability and low fees.

And you can actually test the software today. It’s not just some sort of wild idea that was proposed. It’s real software that you can download from layer two Com slash download. You can go there and find the software for Linux for windows Mac OS.

Vlad Costea 00:50:24 And you can go to. There’s a telegram chat that’s called Drivetrain Talk. And you can request from users to send you some testnet coins. And that can actually be useful for you to understand how the technology works and whether or not this can be the future of Bitcoin. The other project that is trying to become part of the future of Bitcoin is Syria.

They’re building what they call Bitcoin’s first ZK rollup and sort of like arbitrage on Ethereum. They’re trying to bring an entire suite of financial applications on Bitcoin, such as lending and borrowing. And I think their endgame is basically to take WBTC, which right now is tokenized on the Ethereum blockchain, but it’s custody by BitGo and make it more trust minimized and also on Bitcoin.

So they’re using I think actually inscriptions that they’re putting into blocks. They’re inscribing ZK proofs. And then they’re using that for their layer two to have their own sort of language. It’s still a I think it bears a lot of similarities functionally with counterparty. And this just proves that this idea of meta protocols was very much ahead of its time.

Vlad Costea 00:51:45 If you want to trace the trail, you go to citrate XYZ and they have a button for their testnet, and they also have a faucet through which you can get some coins. You paste your wallet address and you can have some fun today. So check that out and thank you for being sponsors of the show.

Now I got to ask you, back in 2014, what were your expectations when you launch counterparty? Did you always believe that it’s going to be this honey badger of token protocols. Or did you think it’s going to be the token protocol that’s going to take over all the use cases and bring Bitcoin into the mainstream? Or what did you think about it?

Adam Krellenstein 00:52:31 I don’t think we had any particular grand ambitions or expectations. The idea was to prove that you could use a blockchain or for more than just Bitcoin. That was the that was the mantra and implement peer to peer finance at what we call it at the time, with now what’s now called DeFi on a blockchain. and we did and counterparty ended up not being the place for most of the development and most of the energy and most of the economic value went.

Adam Krellenstein 00:52:57 But it was very important for. Yeah, like its historical position, for being for having so many firsts and, that that was really the goal. and I think we achieved that. Right.

Like, we, we showed that you could build all of this stuff. and it turned out that that that when other people built it, it tended not to take the same form. It tended to be on other chains because we sort of we were also the, you know, the on the front lines of figuring out what you could do with Bitcoin without, you know, without changing it fundamentally. and it turns out that people were not ready to do stuff on Bitcoin yet. my hope is that in the future they will be.

Vlad Costea 00:53:39 What makes you think that counterparty in 2025 might still get traction and become a popular use case? And how is it going to be different from 2014 when we had these written words? Were Bitcoin core developers were limiting the amount of data that can be put into blocks.

Adam Krellenstein 00:53:58 The biggest difference is that the the power balance in on the Bitcoin blockchain has shifted significantly in 2014.

Adam Krellenstein 00:54:05 The the core developers had all of the power and miners had very little power. The miners just sort of did what the core developers said. And now, because there’s a lot of value associated with, for instance, ordinals and accepting ordinal transactions and, you know, receiving ordinals fees, the Bitcoin Core developers can scream all they want about how it’s terrible for the ecosystem. But, you know, on the ground the miners are like, no, this is great for the ecosystem. I’m getting all these fees.

It’s, you know, increasing adoption etc., etc.. so the power is shifted and it’s shifted from a, from a unhealthy centralization to a healthy decentralization. Like, it’s we’ve realized the original vision of Satoshi, that the miners are the ones that actually have the power to determine what occurs in the protocol, how the protocol is going to evolve. and that’s why I’m frankly not super, optimistic that, you know, all these other sort of protocol enhancements to Bitcoin are going to go through because I think the miners don’t benefit.

Adam Krellenstein 00:55:02 the ecosystem doesn’t necessarily benefit. it’s, you know, sort of good from a technological perspective. But, you know, it’s it’s perfectly safe, but it really does, in a sense, change how Bitcoin works in a fundamental way, in a much more fundamental way than accepting, you know, 81 bytes and not return. so unclear what will happen there.

Vlad Costea 00:55:23 I’ve heard this story from someone. I cannot disclose the source, but he said that he spoke with someone from counterparty might have been you and asked him a similar question. And the answer that he got was that we want the culture worse. And now the culture in Bitcoin is very different from what it was like in 2014. And there is much more openness to the idea of assets and to the cultures.

Adam Krellenstein 00:55:47 Or we want the culture wars we won.

Vlad Costea 00:55:50 As in we the users who like counterparty and stuff.

Adam Krellenstein 00:55:59 yeah. The I think that, you know, the pendulum swings. and I think that Counterparty in 2014. It won the battle around, you know, censorship and it it’s, you know, it sort of was the, you know, the, the spark that started, a lot of innovation and development.

Adam Krellenstein 00:56:25 I don’t know if it won the culture wars. Yeah. I think like meta protocols in L2 have definitely won. I think that people are now doing things on Bitcoin that they otherwise were not able to do. And frankly, a lot of like the credit credit goes to ordinals. And Casey for having blown the doors open there for having really shifted the narrative around what people want to do with Bitcoin and what people can do with Bitcoin. and so that wasn’t, you know, counterparty per se.

But you know, architecturally it’s very similar. And you know, there’s a there’s a, you know, a very interesting historical link there between, you know, the the fights about including ordinals and descriptions and blocks and the block block size was of 2014. counterparty was showed something, showed that something was possible, and people reacted in all sorts of different ways to that, which had interesting, interesting consequences.

Vlad Costea 00:57:19 You mentioned ordinals a few times, and I want to point out that for some, something which I issued as both a counterparty asset and an orderly ordinal inscription, I’m going to put this on the screen.

Vlad Costea 00:57:32 I hope you can watch it too. I was able to change the description, which basically is ord, and followed by the string that describes the ordinal. And what this did basically was to take the picture from the blockchain, because I inscribed the JPEG right.

And right now I’m certain that there’s going to be permanence to this. I’m not relying on Imgur anymore for this Vlad head, which is my creation. I have this collection of Bitcoin heads.

You can find them at BTC heads.com. And I think I should also turn you into bitcoin head. You should be part of history. There’s Mike in space. There’s wells that you might know Matt bitcoins Theo Goodman you should be part of this.

Adam Krellenstein 00:58:21 Thank you. Yeah sure. Happy to.

Vlad Costea 00:58:24 But it’s also interesting to me that there is this way for you to change the description of your assets in a way that enables you to use the image from ordinal inscriptions for your counterparty assets. There is this synergy between the two protocols, and I think it’s beautiful.

Vlad Costea 00:58:42 When did this happen? Because I don’t remember. I think when ordinal started happening, there was sort of a rivalry between the two protocols, but now it seems like there’s more collaboration.

Adam Krellenstein 00:58:54 I’ve always been very in favor of collaboration. especially, you know, within the Bitcoin space and across loos. I mean, you’ve been able to update descriptions for a long time from from day one, I think. so that’s perfectly possible.

Vlad Costea 00:59:12 I’ve also seen that Roger Moore, what’s his first name? Casey. Casey. On his podcast recently, he started talking very positively about counterparty.

Adam Krellenstein 00:59:24 Yeah, yeah. That was that was nice to see. I thought it was a very good discussion.

Vlad Costea 00:59:29 It’s almost like he he’s paying respects to the protocol, but it might also mean that he might be interesting to collaborate and build for counterparty. Have you discussed with him something along the lines of building something together?

Adam Krellenstein 00:59:44 I haven’t no, I think that, I would yeah. As I, as I said before, I have a great deal of respect for him for, for the work that he’s done.

Adam Krellenstein 00:59:52 I think that ordinals is really like, a very powerful thing. and I think it’s been very good for the Bitcoin space overall. no, we haven’t spoken. I think we have pretty different visions about how about what to build in the future, but I’m not sure. exactly.

Vlad Costea 01:00:09 When he launched the runes, which are basically a way for inscriptions to basically be divided into multiple tokens, he used the same upper term that was used for counterparty. And I always wondered, what’s really the difference between the two.

Adam Krellenstein 01:00:26 Runes is much simpler. it’s just it’s just much simpler. That’s sort of the thing. yeah. I mean, counterparties account based, and like as well and that and there’s a lot of similarity there. but counterparty is a is a much more complicated and sophisticated system, frankly. for better and for worse.

Vlad Costea 01:00:51 When I send a counterparty transaction, for example, for issuing a token, I see that it’s not just a pattern, it’s a multi-sig. And there are multiple amounts of Bitcoin going to different addresses.

Vlad Costea 01:01:04 And I’ve always wondered what’s happening there.

Adam Krellenstein 01:01:07 Yeah. There are multiple ways of encoding data in the Bitcoin transaction. Bitcoin blockchain using counterparty. and it’s it’s changed a bit over the years if it’s a small amount of data, if it’s if it’s less than 80 bytes, then you just put it in an upper turn. And it’s the it’s it’s cheap and easy. and then when we wanted to put more data, in, in a transaction, then historically we used multi-sig outputs, which are expensive and not very elegant. you can actually encode data in the signatures and store large amounts of data in Bitcoin that way. the that is obsolete tech. we developed it in 2014. and it was never upgraded even after the Bitcoin protocol change, to make it much easier to store large amounts of data, in a Bitcoin transaction.

And, it’s sort of like really, you know, confirming the obsolescence of multi-sig. That’s another thing that we’re working on for the, for the, for the upcoming protocol change for counterparty, which is to allow for inscription like encoding of data in Bitcoin transactions so you can store much more data and more cheaply and multi-sig encoding.

Adam Krellenstein 01:02:27 It’s going to be it’s just, you know, I don’t think it’ll be used anymore because it’ll be strictly more expensive. But it does the same thing.

Vlad Costea 01:02:34 This was going to be my follow up question. If there’s going to be a point in the future where you can actually put the JPEG or the MP3 file directly when, as part of the transaction that issues the token. And also is is it possible because I’ve always seen this as Sort of an inconvenience. When you create a token. You create it first and then you you have to make another transaction for the purpose of locking the supply. You think it’s possible to do it all in one transaction and from the beginning say the supply is locked?

Adam Krellenstein 01:03:11 Yes. Possible? yeah. All of these things are possible. And these are the kinds of things that we need to we need to implement, in counterparty to make it, you know, more usable and friendly and powerful. but, yeah, I mean, you can already store a lot of data in a counterparty transaction.

Adam Krellenstein 01:03:28 It’s just very expensive. with the upcoming protocol change, it’s going to get much cheaper and you’ll be even more.

Vlad Costea 01:03:36 You suggested, like, 30 minutes ago, that there’s some sort of political struggle within the counterparty community. And Jdg created the nomenclature for a counterparty classic and the 2.0 version. Doesn’t J dog also maintain free wallet which is the most popular wallet out there?

Adam Krellenstein 01:03:58 yeah he does. I.

Vlad Costea 01:04:00 Think that is free wallet on Counterparty Classic. Or how does it work?

Adam Krellenstein 01:04:07 There is no Counterparty Classic. It’s just an old version of counterparty. free wallet supports that old version of counterparty, and it supports the latest version of counterparty. As far as I know, there really isn’t much of a division, right? Like there’s J dog, and then like, maybe a couple people on telegram that like, you know, like him or something like that or hate me, that, you know, are sort of angry about everything. but like, the whole ecosystem beyond that is pretty clear and have one mind, like they just support the latest version of counterparty.

Adam Krellenstein 01:04:36 Of course. there isn’t really like an ongoing debate. there’s just J dog. Who, who? Yeah. Maintains the most popular wallet, and token scam, which is probably still the most popular block explorer for counterparty. and he’s, you know, screaming and ranting about, you know, how I’m ruining everything and everyone’s ruining everything and so on and so forth. And, you can either, you know, be involved or you can ignore it. which is, I think, the healthy option. And frankly, there have been a lot of, good, new explorers and wallets and things coming out. so people will have an alternative to free wallet, and tokens again. So, yeah.

Vlad Costea 01:05:15 That was going to be my follow up question, because if these services rely on the work of someone who is not necessarily friendly with new developments, you’re going to need to build new wallets and explorers and everything else.

Adam Krellenstein 01:05:29 Yeah, yeah. So personally, I’ve been working on and free and open source wallets called Horizon Wallet.

Adam Krellenstein 01:05:36 which, is, yeah, I think like a, you know, becoming a full featured alternative to free wallet. it’s a web wallet right now. It will be a desktop wallet. It will be a mobile wallet soon. but right now it’s just a web, a web wallet and an extension. and, it integrates with a number of explorers that are out there. another one that that’s, Yeah.

And you can see the full list of all of the alternatives for free wallet and token scan on the counterparty website. everyone can see their exactly what’s what’s available. yeah, it was a it was a bad situation where everyone was dependent upon, Jorge’s projects to do anything with counterparty for a long time. and there have been growing pains for the ecosystem as, as it’s been, you know, maturing as it’s been decentralizing again from that vertically integrated, centralized thing. and these things take time because, you know, wallets are sticky, right? Everyone’s just going to, you know, keep using the same thing because they’re used to doing it.

Adam Krellenstein 01:06:40 that’s where their tokens are. But you can import your tokens or you can import your passphrase into other, other, other wallets. You can use other explorers out there that are, better and more modern. and people should, you know, I think, explore those options, especially because they’re not, like, if nothing else, because they’re not developed by someone who is actively attacking the network. again, like, yeah, unfortunate.

Vlad Costea 01:07:04 I mentioned earlier that I would be interested to put you on one of these Bitcoin head cards. Basically immortalize your head in one of these cards. Yours would be number 23. And I’m going to read you the information from Casey Schroeder Moore’s card, which is number 22. And it has the following description. Ordinal inscriptions plus one terabyte. How many podcast episodes plus six, six, six? The name of the card is rather more strength creator for the inscriptions, destroyer of narratives, weakness. Nobody cared who he was until he put a jpeg on the blockchain. Special attack makes sets rare again.

Vlad Costea 01:07:46 Ultimate attack accidentally fixes the Bitcoin security budget. And actually, there’s another topic that forks from this one. But I was going to ask you, what would you say is your strength, weakness, special attack and ultimate attack?

Adam Krellenstein 01:08:01 Oh, that’s yeah, that’s a lot to to to describe off the cuff. I’m gonna have to let the community decide on that one.

Vlad Costea 01:08:09 So if anyone’s listening to this watching, let me know what I should put here for. Yeah, please.

Adam Krellenstein 01:08:16 Please feel free to to give. Give me lots of weaknesses. that’s that’s fine.

Vlad Costea 01:08:21 It should be only one, like, the dominant one.

Adam Krellenstein 01:08:23 Yeah. Really, really, really bad and mean weakness. That’s okay.

Vlad Costea 01:08:29 Yeah. I’m gonna make this happen. It’s fun. I, I miss it. I haven’t done this in, like, 2 or 3 years. But counterparty is like this, right? Sometimes you do something very cool And you’re having a lot of fun. And then you see that the community moves on to the new flashy thing, which happened to be ordinal inscriptions.

Vlad Costea 01:08:48 And I sort of forgot about it for a while, but then I saw that it’s still going. So you come back to it. It’s like Hotel California, right?

Adam Krellenstein 01:08:57 It’s still going, it’s I mean, I think it’s in a lot of ways the ecosystem is healthier than it has been, you know, since it first launched, perhaps, the market’s down. Right. and that’s a total bummer. but, yeah, I mean, as, as, like I’ve been saying I’m in this for the long term and I think counterparty is not going anywhere. So I’m very eager to see what comes next.

Vlad Costea 01:09:21 There’s this point from the ultimate attack of Casey, furthermore, which is accidentally fixes this, the Bitcoin security budget. This is an important point, right? Because currently the culture in Bitcoin encourages people to hodl, to not spend, to not make on chain transactions. If they make any transactions at all, they should happen on second layers like lightning or whatever. So who’s going to pay the miners? Because the miners are receiving diminishing block rewards every four years, that’s 210,000 blocks, which means that someone has to make the transactions on chain.

Vlad Costea 01:09:58 And it’s sort of ironic that these people who just want to trade art on the blockchain are the ones that pay much higher fees than the ones who brag about digital gold and never selling and stuff like this. And in the end, who’s gonna pay the miners? Because it all comes down to this.

Adam Krellenstein 01:10:19 I think that’s a good question. Yeah. As I said, I think this is good for the ecosystem. I think that the economic model that Satoshi created is very general and very flexible. and if you’re transactions more valuable, pay more fees.

Vlad Costea 01:10:33 Sometimes I do that because there’s this distinction on block explorers where they say the fee and the effective fee. And sometimes when I send a counterparty transaction, let’s say that I set the fee at seven satoshis per byte, I get three satoshis per byte as an effective fee, and it takes much longer for it to get confirmed. So whenever I send a counterparty transaction, I put the fee basically double. What is the priority fee at that moment to be sure that it’s going to get confirmed.

Vlad Costea 01:11:08 And I’m not sure exactly why this is happening. Maybe that this account system with my address is sort of messy, and I have lots of other shows and it gets like that.

Adam Krellenstein 01:11:20 You know, that’s a wallet problem. I encourage you to use a different wallet.

Vlad Costea 01:11:26 Which wallet should I use for my counterparty transactions?

Adam Krellenstein 01:11:30 I think the, the I mean, I personally developed, Horizon Wallet, which is again, free and open source. There’s no, like, profit associated with it. I like it. and I think it’s probably the most full featured alternative, to free wallet. And it’s modern and has a correct fee calculation. so I encourage you to use that. You can also see other wallets at counterparty. I o do they tend to be more focused on particular ecosystems like where Pepe is or what have you? yeah.

Vlad Costea 01:12:01 I typed counterparty. Com and I don’t know who owns this, but they posted this meme with g dog riding a bicycle saying a peaceful day and counterparty. Then he puts a stick between the what you call these, the rims of his front wheel, which is Beaton’s, and then he falls crying, saying damn stamp spam spamming transactions.

Vlad Costea 01:12:25 Oh, and that’s another big one. It’s stamps by Mike and spaced. We haven’t talked about that. Yeah.

Adam Krellenstein 01:12:31 Yeah.

Vlad Costea 01:12:32 What do you think about them? Are they excessive because they’re. They’re basically the least efficient way of storing data on the Bitcoin blockchain.

Adam Krellenstein 01:12:43 Yeah. I what do I think about that? I, I like overall like the project. I wish that they hadn’t been kicked off of counterparty the way that they were, by job. I think that that was pretty toxic.

I don’t like the way that they store the data on the Bitcoin blockchain. I think it’s I think that I understand why they do it. I think that it’s not good for I think that that actually does sort of it. Bloating.

Bloating is a strong word. it’s not a very clean or elegant way to do it. It’s not being a good blockchain citizen. but the fact is that Bitcoin is permissionless and you get to do whatever you get to do. so I’m generally supportive of, of the project, and I think they do a lot of cool stuff.

Vlad Costea 01:13:25 Right now I put the website on the screen. We have the wallets that are recommended. There’s Casa toucan. I’ve never heard of this one. An official wallet for the Spells of Genesis game. Okay, that explains why. Even though I have a couple of cards, there’s the horizon wallet, which you said you’re developing. There is rare Pepe Wallet, which I tried a couple of times, but it was sort of unmaintained. And that’s why I switched to Free Wallet. And I see that you put a disclaimer here that this provider supports a fork of counterparty. Using this service could lead to loss of funds.

Adam Krellenstein 01:14:04 Yeah. That’s correct.

Vlad Costea 01:14:06 And for explorers you have Horizon Explorer, which I guess you also built Mempool I’ve heard about this one XRP I o and there’s also token scan, which I don’t understand why it’s not exchange anymore. That used to be the one.

Adam Krellenstein 01:14:23 Yeah. I you know you’re going to have to ask you talk about his grand plans to buy his own company and sell his own company and create all sorts of new brands.

Adam Krellenstein 01:14:35 He just he’s, you know, he’s sort of done with counterparty, and so he wants to do other stuff. And, he’s rebranding because of that. But not my not my thing to to to comment on.

Vlad Costea 01:14:44 When you decided to come back to the project, what is what was the community reception? Because I guess Jay Dog has been like the guy for a number of years, and it was also Joe Looney and a bunch of others. And you just emerged after. How long has it been? Eight years or nine and said, okay, I’m going to maintain this. And what what was the community like?

Adam Krellenstein 01:15:08 everyone was really excited. at the time, Jay was in the process of, of, of forking the network, again or for the first time or whatever, he was actually attacking the network. It wasn’t really a proper fork either time. he was he just decided that he didn’t like, the way that the fee system worked. And he was, you know, angry about, the people, how people were using counterparty.

Adam Krellenstein 01:15:38 and so he just decided to attack the network, and, and so people were really eager to have that not happen. they really wanted, I don’t know, stability and, like, a healthy ecosystem. and again, like, counterparty had not been actively maintained, by George or by anyone else. and and so, yeah, the perception was very good. People were very excited about all of the, you know, good ways of improving counterparty. and I think that, you know, a lot of that enthusiasm has persisted. and, you know, I mean, I’m working with Joe on a regular basis. he’s great. everyone’s very everyone’s pretty happy and collaborative in this space. except for Datadog. and it’s unfortunate that he had so much power of the community for so much time. And that he he has that you know, that brand and these assets.

Vlad Costea 01:16:31 I remember I think it was in 2017 that Pepe Cash was so big, it was one of the top 100 projects on CoinMarketCap. I guess it was much higher than that, but it was such a big deal.

Vlad Costea 01:16:45 Just this Pepe Cash that was used for trading where Pepe’s. But in the description it said that it’s for sports cars and luxurious houses or something like that. I got to look it up, but it was so funny. Do you remember that or were you around at the time?

Adam Krellenstein 01:17:06 I wasn’t around so much, but yeah, Pepe Cash is I mean, one of the most liquid assets on counterparty that people traded. I think more than almost anything else besides XP. and it’s interesting that it sort of didn’t, you know, in the, in the Common Knowledge, you know, didn’t take the, didn’t get the mindshare that like, you know, Pepe tokens on ETH, on Ethereum did. even though it’s really the first Pepe coin, and, yeah, I mean, I think that that will probably change at some point in the future.

Vlad Costea 01:17:41 It says right here that Pepe Cash Card is useful for buying houses, fast cars and yachts. And there’s this picture of Pepe with three lambos in the background.

Vlad Costea 01:17:51 I guess it’s two lambos in the Ferrari and a very large mansion. Fun times.

Adam Krellenstein 01:17:59 Yeah.

Vlad Costea 01:18:00 I gotta ask you what’s what’s like the fun or bullish narrative for counterparty right now? Who’s still building on it? Who’s still issuing tokens?

Adam Krellenstein 01:18:10 I mean, the volumes are down a lot. I mean, the the exciting thing, I think is what people are building behind the scenes on the infrastructure side. I personally working on the wallets And the and horizon market. Atomic barometers are very exciting. They had a ton of usage when they first came out, but, not a lot of usage since then.

People are still figuring it out. And, you know, there’s a lot more that can be built on counterparty if the community wants it. we can put and then the liquidity pools on counterparty, we can have all sorts of fun, exciting stuff. in the short term, transactions are going to get much cheaper.

And that’s a very important thing, right? yeah. Fees have been unreasonably high for a long time because of the bad encoding methods, and the tech debt in the system.

Adam Krellenstein 01:19:00 So that’s what’s coming up immediately.

Vlad Costea 01:19:06 I gotta say, it’s pretty exciting. I want to ask you about the roadmap, but before that, let me plug a couple more sponsors. So no one’s dot com is this peer to peer marketplace where you can actually sell gift cards or other types of assets that you might have. To a lot of people online.

More than 200 countries are supported. There are 169 peer to peer market offers right now, and thousands of users and a lot of liquidity. So if you want to basically take part in this economy and sell your gift cards for Bitcoin or other coins, you can sign up to no ones. They also have this visa card.

So if you want to spend your coins instead of selling them to an exchange, you can actually get the no one’s card. And also they have an ambassador program and a lot of cool stuff, so check them out. They also have a spot market by the way. So if you’re not into peer to peer and you like to trade on an exchange, they have that too.

Vlad Costea 01:20:07 It’s very popular in Nigeria. And what Corey Youssef describes as the global south. And you can check it out on no one’s com. And last but not least, there is HODLing, which is a service from Switzerland that helps you with your self-custody.

So if you have a lot of bitcoin and have no idea how to manage it, or you are part of a company that’s about to buy bitcoin and have no idea how to set up a multi-sig or how to manage it, you can reach out to these guys and they’re going to give you their expertise and also give you the benefit of a Swiss service that has more privacy than something that’s based in the European Union or the US. So check them out.

It’s hodling, and if you lose your keys, they also have this recovery service which is not guaranteed to work, but they can at least try to recover your coins. So of course there’s a fee involved. So is there any development roadmap right now or what would you say is next over the next year for counterparty?

Adam Krellenstein 01:21:14 Yeah, there’s a public roadmap on, on GitHub.

Adam Krellenstein 01:21:17 all of the developments and all of the planning happens in transparent, you know, like full transparency on GitHub. and, and you can see like there, you know, a couple protocol changes. There’s the one we’re working on right now. yeah, there are a number of major milestones for improving the command line interface that we can bring back the CLI wallet for counterparty, which would be a big deal. it’s been broken for, I don’t know, half a decade, at least. improve the database structure, performance, improve the API, all sorts of things beyond that. and, you know, I’m eager to hear from from, you know, people what, what the priority should be. there hasn’t been enough, I think, engagement on GitHub and the milestones, in terms of what people actually want to implement there. because you can do a lot with counterparty. but also people, you know, reticent to, to change it.

Right? It’s been the way it’s been for a long time.

Adam Krellenstein 01:22:15 and, you know, they sort of want it to be better and worse. But, you know, now that the node software and the protocol are in much better shape than they were, they’re in pretty good shape. a lot of what needs to be built is, yeah, the tooling, like, you know, the wallets have to get better. The explorers have to get better. people want it to change support. That’s an important, like centralized exchange support, because there’s just more liquidity. and they want, you know, marketing and communications and, you know, so to me and all of these kinds of things, which, you know, is also like a perfectly valid request.

Vlad Costea 01:22:49 Yeah, that would be actually cool. I’m looking at the GitHub right now, and I see that the repos are actually maintained, which is pretty nice. And I looked at the documentation. It seems like it focuses on how to run a node. And it’s been updated, which I appreciate.

Adam Krellenstein 01:23:06 Yeah, it’s been all updated fixed.

Adam Krellenstein 01:23:08 There’s, you know, updated, you know, dynamic. and programmatic API documentation. yeah. We want people to be able to build on counterparty. and, it’s it’s getting there.

Vlad Costea 01:23:22 What would you say is a use case or something that you can do with counterparty? That is very cool. But at the same time it flies under the radar and it’s so underrated that you want to mention it.

Adam Krellenstein 01:23:35 Oh my God, there’s so many different things. the alternatives are so limited. Like you can’t do anything right? Like you can create a token, you can move it. but, you know, all sorts of, like, you know, I mean, locking dividends, I mean, the Dex itself, right, is sort of not used enough. yeah. There’s so many, so many different things that you can do. and I mean, the new fermenting feature that we, that we released is very exciting because it’s a much more powerful, flexible system than anything that’s out there, at least in the Bitcoin ecosystem.

Adam Krellenstein 01:24:11 and so I encourage people to develop on that as well.

Vlad Costea 01:24:14 I know that tether USDt first launched on the omni layer, which used to be called Mastercoin. Do you believe that it can come to counterparty? And if not, is there any plan for some sort of stablecoin, decentralized or otherwise?

Adam Krellenstein 01:24:30 I don’t know. Any plans for a stablecoin. I think it’d be great. it’s totally possible.

Vlad Costea 01:24:35 You think it would be like, what’s the one on Ethereum that’s supposed to be decentralized? Do you know what I’m talking about?

Adam Krellenstein 01:24:46 Yeah, there are a lot of them. I don’t yeah. Yeah.

Vlad Costea 01:24:50 So I see that you’re a bit rushed, but how would this stablecoin look? Would it have a central issuer, or do you think it can be done using the counterparty functionalities in a way that’s decentralized counterparty.

Adam Krellenstein 01:25:04 Yeah. I mean, I think if for all the all the stablecoins have a centralized issuer, as far as I know, like or they’re built on a house of cards. those are the two options generally.

Adam Krellenstein 01:25:17 but, I don’t have any particular plans for that. eager, if, you know, if someone knows how they want to do it, let me know.

Vlad Costea 01:25:26 If Bitcoin adds base layer privacy with confidential transactions or something similar, you think that’s the end of counterparty because you can no longer see what’s being transacted and what’s being issued?

Adam Krellenstein 01:25:38 No no no. I mean, Bitcoin is very, very unlikely to change in such a way that would make counterparty a, you know, not viable. that’s not going to happen.

Vlad Costea 01:25:49 But hypothetically, if you have that, can you still operate and have the same markets?

Adam Krellenstein 01:25:55 I yeah, I can’t imagine what such a change would look like. That would be a problem. yeah, I yeah, I know of no proposal on the table That would be a problem for counterparty. there are a lot of different ways of implementing privacy. like everyone in the whole Bitcoin protocol changes that. It only use confidential transactions. there’s still ways of embedding that data in, in Bitcoin transactions that you’d be able to use for counterparty.

Adam Krellenstein 01:26:22 It’s not going to happen.

Vlad Costea 01:26:24 Okay. How can you kill counterparty.

Adam Krellenstein 01:26:26 You can’t. Isn’t that great?

Vlad Costea 01:26:30 Yeah it upsets some people, but I guess it’s all the right people.

Adam Krellenstein 01:26:35 Yeah, I think so.

Vlad Costea 01:26:36 Can you do prediction markets on counterparty?

Adam Krellenstein 01:26:39 Yep. In 2014 you could do it.

Vlad Costea 01:26:43 What changed?

Adam Krellenstein 01:26:46 nothing really changed. People just didn’t use it a ton. It didn’t have a lot of wallet support. people haven’t done, I mean, any made any bets on counterparty in a long time? I think it’s just ecosystem support, you know, and communication. but it’s perfectly possible.

Vlad Costea 01:27:02 Okay, Adam, I see you’re a bit in a hurry with your answers, and I don’t want to hold you any longer. It’s been one hour and 30 minutes. It’s been enough.

Adam Krellenstein 01:27:12 Yeah.

Vlad Costea 01:27:13 Thanks. Now. Torture. How can people follow you and keep up with the latest developments?

Adam Krellenstein 01:27:18 Yeah. I mean, telegram is always good. There’s a counterparty channel, at Counterparty General. there’s the counterparty official Twitter account.

Adam Krellenstein 01:27:28 yeah. yeah, that’s my personal Twitter, account. AG Crellin. Stein. there’s my Twitter handle at t sol. there’s the counterparty website. there’s the counterparty mailing list. All of the all of the above.

Vlad Costea 01:27:46 Yeah. And for everyone listening, there is still the airdrop that is taking place for the first ten people who paste their counterparty addresses, and you get one to add them. Don’t worry. Even if you don’t post it in the chat, you can get it. David Pepper BTC, which you can find today on any explorer. It was drawn by my girlfriend and I think it’s pretty nice art. And that’s like a nice reward for you because you listen to this and you care about this and you care about counterparty in general. One last question, though. Do you remember Chris DeRose? I think he was like the marketing guy for counterparty.

Adam Krellenstein 01:28:25 Yeah, unofficially, yeah. He was a he was a very, a vocal proponent of counterparty back, back, way back in the day.

Adam Krellenstein 01:28:32 he was great for counterparty.

Vlad Costea 01:28:34 Yeah. I’m going to send this to him because I guess he’s excited if he finds.

Adam Krellenstein 01:28:38 Out.

Vlad Costea 01:28:40 He’s traveling a lot, he’s traveling in South America, and he’s looking for the meaning of life. And I did an interview with him last year. You can check that out if you want.

Adam Krellenstein 01:28:51 Cool. Yeah. Definitely would love to reconnect.

Vlad Costea 01:28:54 Thank you very much, Adam, and I wish you best of luck with counterparty.

Adam Krellenstein 01:28:59 Thank you. Yeah.

People who would previously sit at the same table, discussing utopian ideas about the future of the Bitcoin project in the back of some bingo ballroom, now found themselves fighting – and the clash was so chaotic that on one point Bitcoin.com, the @Bitcoin account on Twitter, and r/BTC on Reddit were all supporting the BCH fork.

Indeed, this process of allowing the market to choose the “real Bitcoin” is cypherpunk and in the spirit of decentralized open source software. But it also left casualties on both sides, which manifested socially and financially. For a few years, old friends could no longer talk to each other. History was rewritten to erase or diminish the merits of people on the other camp, while boosting the deeds of new names that emerged. And the truth was suppressed in the name of wartime propaganda.

About eight years later, the situation is much more clearer. Analyses on past events can be made with greater wisdom and a much clearer head. Former rivalries are no longer significant, as Bitcoin has entered a new era in which the enemies are much more fierce and resourceful than “small blockers” and “big blockers”.

Under these circumstances, Bitcoin.com has stopped pushing BCH as “the real Bitcoin” and the distinction between the two networks is much clearer. Corbin Fraser, who has been appointed CEO of Bitcoin.com in March of 2024, spearheads this new pragmatic approach which prioritizes market realism over any dogma. Today, the website is much more impartial and diverse in the topic it presents in the news section. The news are broader, the perspectives concern multiple parts of the world, and the journalists have more autonomy to pursue stories from the broad world of cryptocurrencies.

Such is the vision of Corbin Fraser, the new CEO of Bitcoin.com who admittedly adopted BCH months before Roger Ver got on board. Under these circumstances, I’ve really wanted to get Corbin on the show in order to reminisce on events from the past, rebuild bridges that were irrationally burned, and try to bring back the old Bitcoin spirit that we need today more than ever. However, don’t let the moments of reflection mislead you that this might be a nostalgic conversation – Corbin Fraser and I are both optimistic about the future and feel varying degrees of optimism towards new breakthroughs in the world of computer science, cryptography, and free open source software!

▶ Play video Watch on YouTube

Listen to Corbin Fraser on YouTube, Twitter/X, Spotify, Apple Podcasts & More!

This episode is sponsored by LayerTwo Labs, Bitcoin.com News, Citrea, Sideshift, NoOnes.com, and Hodling.ch

Time stamps of my interview with Corbin Fraser:

Introducing Corbin Fraser (00:00:50)

Bitcoin.com’s Evolution (00:01:52)

Support for Multiple Cryptocurrencies (00:03:05)

Challenges of Tribalism in Crypto (00:06:51)

Origins of Bitcoin Cash (00:09:07)

The Scaling Wars (00:12:14)

Misconceptions About BCH Leadership (00:15:23)

The Meme Warfare (00:18:31)

Promoting Token Swaps (00:20:09)

Bitcoin.com News and Geopolitics (00:21:16)

Respect for Peter Schiff (00:22:01)

Occupy Wall Street Insights (00:22:12)

Bitcoin Cash vs Bitcoin Debate (00:24:25)

Vitalik’s Perspective on Forks (00:25:04)

Nomenclature and Propaganda (00:26:17)

Cola Wars Analogy (00:28:31)

Future of Bitcoin Block Size (00:29:56)

Lightning Network Adoption Challenges (00:30:04)

Alternative Layer 2 Solutions (00:31:27)

Lightning Network’s Technical Limits (00:32:33)

Bitcoin SV and Centralization Concerns (00:33:42)

Impact of Community Divisions (00:34:44)

Chaos of Forks in 2017 (00:36:58)

Bitcoin.com’s Business Approach (00:40:04)

Lightning Network Whitepaper Block Size (00:41:06)

Discussion on AI and Block Size (00:42:39)

Satoshi’s Misjudgments (00:43:46)

Censorship and Community Chaos (00:45:34)

Personal Losses During the Block Size Wars (00:47:08)

Bitcoin Cash’s Price Surge to $3000 (00:47:38)

Miner Hesitation (00:48:30)

Current Features of BCH (00:51:55)

Emergence of Cash Tokens & Failure of SLP (00:56:02)

Building on UTXO (01:00:18)

Ethereum’s Rise Post-Scaling Wars (01:02:10)

SushiSwap & DeFi Summer (01:03:53)

Vampire Liquidity Attack (01:05:08)

Speculation Around Chef Nomi (01:06:27)

Development of Aave & Compound (01:07:30)

Community Dynamics in BCH (01:08:32)

Debate on Development Tax (01:09:43)

Amaury Sechet’s Influence and Community Split (01:10:14)

Forking and Community Fragmentation (01:12:12)

Transition to Ethereum and DeFi (01:14:39)

The Role of Multi-Chain Strategies (01:19:12)

Privacy and Zano (01:20:41)

Operational Security and Privacy in Crypto (01:23:09)

Government Regulation and Crypto Development (01:24:31)

Zano’s Hybrid PoW/PoS Consensus (01:25:56)

Fact-Checking from Bitcoin Cash Podcast (01:27:13)

Bitcoin Cash Upgrade Schedule (01:28:14)

Twitter Spaces Collaboration (01:28:47)

Privacy Solutions in BCH (01:29:29)

Mike Hearn’s Prediction on Forks (01:30:05)

Misleading Media Influence (01:30:57)

Dollar Cost Averaging Strategy (01:31:50)

Self-Custody Solutions (01:32:02)

Ownership of Bitcoin.com (01:33:54)

Roger Ver’s Contributions (01:34:22)

Support for Roger Ver (01:36:25)

Government’s Stance on Crypto (01:38:47)

Reading Roger’s Defense (01:39:59)

Misinterpretations of Roger’s Position (01:41:08)

Evolution of Roger Ver’s Views (01:42:31)

Market Humbling Experiences (01:42:54)

Elon Musk’s Influence (01:43:37)

Current Crypto Market Sentiment (01:45:01)

Celebrity Influence on Crypto (01:46:05)

Kanye West’s Coin Speculation (01:47:01)

Kanye’s Meme Coin Ventures (01:48:05)

The Decline of Meme Coin Interest (01:49:16)

Overvaluation in Crypto Projects (01:50:50)

Block Size Wars Reflection (01:51:48)

State Actors and Bitcoin’s Challenges (01:52:51)

Blockstream’s Business Struggles (01:54:41)

Developer Commitment and Innovation (01:56:34)

Stablecoins vs. Bitcoin Adoption (02:00:05)

Future of Stablecoins and CBDCs (02:01:33)

Block Size Debate and Social Consensus (02:04:08)

George Hotz’s Perspective on Innovation (02:06:48)

Ethereum’s Rapid Development (02:09:07)

Ethereum’s Challenges (02:11:29)

Bitcoin’s Cautious Approach (02:12:05)

Testing Protocols (02:13:15)

User Education on Risks (02:15:35)

Brock Pierce’s Influence (02:16:21)

Community Engagement (02:18:17)

Listing Criteria for New Coin on Bitcoin dot com Wallet (02:20:34)

Integration of Privacy Coins (02:22:58)

Zano’s Potential (02:24:01)

User Confusion with Bitcoin Domains (02:28:21)

BSV Integration Decision (02:30:36)

Balanced News Coverage (02:32:04)

Introduction to New Developments (02:33:07)

Embracing a Broader Crypto Perspective (02:34:05)

Closing Remarks (02:34:46)

Final Thoughts and Future Plans (02:35:03)

Full transcript of my interview with Corbin Fraser:

Vlad Costea 00:00:50 Hello and welcome to the Bitcoin Takeover podcast. This is season 16, episode 13. We are live with Corbin Fraser who is the CEO and has been the CEO for one year of Bitcoin.com, and this episode is sponsored by SideShift.ai, Citrea, Bitcoin.com News. Coincidence? I was going to invite Corbin anyway. Layer Two Labs.

NoOnes.com and HODLing.ch. It’s really good to have you, Corbin, because I’ve noticed on Bitcoin.com News that there’s been a change over the last year, and when I announced this episode, it became evident that the people are not happy, the BSV people are not happy, that they don’t get covered. And it seems like the BTC people are not happy either because they have PTSD from the previous administration. So this is going to be fun.

Corbin Fraser 00:01:40 Yeah, it’s good to be hated. You know, I, I think if you’re not, if you if you don’t have a couple enemies, you’re probably not.

Corbin Fraser 00:01:47 You’re not living life to the fullest. So.

Vlad Costea 00:01:52 So what is Bitcoin.com today? Because It is a bit confusing for anyone who remembers it promoting. First of all, I think it was just Bitcoin Unlimited and Bitcoin Classic and stuff. And then it was SegWit to to X and then it completely went BCH over BTC and now it’s more balanced. If you read it it’s very hard to recognize.

Corbin Fraser 00:02:20 Yeah. We are we’ve certainly changed. Right. Like I think Bitcoin.com has gone through multiple evolutions, in its history. I think folks who’ve been around the Bitcoin space for a while definitely remember, we still get this every once in a while.

You know, we’ll show up at a conference and someone’s like, oh, you’re from Bitcoin.com. How’s he doing? They kind of give us that.

Like, we feel bad for you kind of eyes. And he’s like, I does this false, belief amongst a lot of bitcoiners that Bitcoin.com or that Roger created BCH and, I probably had more to do with than Roger or Bitcoin.com prior to me doing Bitcoin.com stuff than Roger or Bitcoin.com.

Corbin Fraser 00:03:05 But yeah, Bitcoin.com did support, Bitcoin Cash heavily, you know, during the, scaling wars. That was a tumultuous time in Bitcoin history. And, yeah, I mean, we’ve we’ve kind of, taken a softer approach over the past few years. you know, we started supporting Ethereum.

We started supporting more chains and more tokens and just kind of taking a more pragmatic approach to crypto in general. you know, in our pre-show, we were talking a little bit about how there was a lot of friction for new people coming in to crypto and Bitcoin and being like, they walk into a door and just see, like a monkey shit fight of tribes fighting and, you know, chaos. And it’s like, I’m just here for digital gold or I’m just here for digital cash.

I don’t I don’t care what the fighting is. I’m just give me some assets that aren’t, you know, US dollars or Canadian loonies or whatever. And, yeah. So I think we’ve really, over the last few years kind of tried to soften that.

Corbin Fraser 00:04:04 obviously, you know, BTC has remained BTC, still exists. You know, we still support it. And, you know, even when we were more supporting BC we never stopped supporting BTC like we always had it in the app. It was always in there. there was there was briefly talk of should we pull it?

We just yank it out and let people go their own way. The choice is kind of an important thing. but yeah, like, lots of us fought to keep it. You know, there was always, I think everyone in the company always kind of saw this as, like, let’s head your bets. We don’t know what’s going to happen.

Like, during that, scaling wars, there was certainly some belief amongst people that like BCH could become bitcoin, you know, and there was like especially in the beach community, there was always this like thought that, well, we just have the longest proof of work and a bigger market cap. Maybe the exchanges will have to call it Bitcoin.

Corbin Fraser 00:05:03 And, that never played out right. You know, you can look at the charts. It didn’t didn’t quite play out that way. That being said, you know, people still building stuff. They’re still doing stuff. We are doing our best to, you know, elevate them where we can, but we don’t prioritize them over, you know, Bitcoin or over other assets.

We’re just trying to support things in a neutral manner. it’s obvious people coming to Bitcoin.com are looking for bitcoin, right? That’s the orange one. So helping them get into that orange coin first and then guiding them through to say, hey, there’s other stuff too.

If you want to try some Ethereum, if you want to try some BCH, if you want to, you know, try Zeno got Zeno now. So like it’s giving people choices. I think it’s kind of a, I don’t know, cleaner way for a company to run. yeah. Seems to be working. Well, or growing, so growing is good.

Corbin Fraser 00:05:53 Yeah.

Vlad Costea 00:05:54 It’s funny because you put yourself in this middle ground where you’re not pleasing the hardcore Bitcoin. Only people who hate toys they hate. Even the fact that I remember at one point there was a website called Bitcoin Dash Omnicom, and the guy running it did not put my website there because I had this ticker with prices, and it wasn’t just Bitcoin in there, it was also Ethereum.

It was, I don’t know, the altcoins that were fashionable at the time. This was 2018 or something. And the funny part was that I priced it in BTC. So basically it was ETH, BTC, XRP, BTC and whatever. But just the mention of these coins made him so upset.

He said, you will never make it on my website. And he blocked me and he hasn’t spoken to me since. And at the time, you know, it was a big deal for myself because I was just starting out with my own venture and I was thinking, go. I’m not really making friends here.

Corbin Fraser 00:06:51 Well, that’s kind of a weird. It’s a weird place to walk into, right? If you’re like, okay, I want to build. I want to offer my my skills. I want to support this this technology and, you know, make a life for myself in it.

And then you’re immediately slapped in the face by not being pure enough. Right. You didn’t pass the purity test. So now I hate you. I’m blocking you. You’re banned from my groups. Go away, you know. How dare you? Yeah, we still get that too.

Like, man, I’ll be on Twitter sometimes and I’ll see someone reply. you know, either to you or to like, some, you know, someone arguing for beach. And if I tap, you know, I tap the the little link to maybe leave a comment or think about leaving a comment. And it’s like, now I’m already blocked, you know, like, yeah.

Speaker 4 00:07:35 So I think there’s a I.

Corbin Fraser 00:07:37 Didn’t pass the purity test either.

Corbin Fraser 00:07:39 Bitcoin.com is still not on Bitcoin. Org. You know, they list all every bitcoin wallet imaginable, not Bitcoin.com. You know, we didn’t. I don’t know if we’ll ever get on there. yeah. So it’s sort of like, yeah.

There’s no true Scotsman when it comes to Bitcoin. I think the maximalists will, you know, push you away. but unfortunately, like, it’s not just the BTC maximalists, right. Like there’s BCH Maximus too, and there’s Ethereum maximalists, and I don’t know, the monotheism of tribalism. It’s weird.

And I think we were talking about this a little bit in the pre-show, just that like the there’s ego and then there’s people talk in their books and like trying to pump their bags and they’re clearly either over positioned in one asset and only want it to succeed or yeah, their ego is just so. And or maybe their identity is so caught up in this one type of asset and what it stands for with it maybe a little more closed off to considering other, other options.

Vlad Costea 00:08:44 You made two interesting statements that, first of all, it was not Roger or Bitcoin.com created BCH, and that you were much more hardcore into BCH than Roger ver. So yeah, I guess you’re very qualified to answer the question. So who created BK and why?

Corbin Fraser 00:09:07 I mean, BC wasn’t really created by any one person. I would say it was like a it was a natural progression after years of infighting. It’s unfortunate it had to happen. It’s unfortunate.

I mean, like, I think if you could, knowing what we know now, if you could go back to 2015 and fight harder and shake, you know, go to these, these bitcoin, miner meetings and summits and, you know, try to really fight a little harder to keep the community together. I do think Bitcoin would be a lot further than it is now.

And that could include price, that could include adoption, that could include like the network effect. But it didn’t happen. Right. But yeah, I think like my recollection, there was a slack group called BTC forks, and it was just this discussion with like a mix of Bitcoin Unlimited people, Bitcoin XT people, Bitcoin ABC, people who I don’t think they were named Bitcoin ABC at the time.

Corbin Fraser 00:10:08 C++ in there you had Yarnold Paul, you had Peter Risen, you had who else was in there? Lots of lots of large blockers and people Jeff Garlick might have been in and around there as well. but yeah, a lot of the large blockers were in there, and it was kind of a place to convene and just talk and open discussion, open invites. It wasn’t like a private group.

It was just you could join. It was like in the sidebar of BTC, and it was a place to just kind of keep more in the loop, at a faster pace than like the new posts coming up on RTC. and yeah, I mean, like after just years of trying to get a modest increase in block size, Anne-Marie was the one that was like he went full French and was like, I’m just doing it with Napoleon.

And, it was like, I’m just doing it. Screw it. I’m going to do it if anyone wants to follow. Good luck. Right. And then some people, you know, I think because he was bold enough to just say, I’ll just do it.

Corbin Fraser 00:11:10 He started kind of building up some momentum and, and, eventually managed to get like boo to support which unlimited and some of these others. And, yeah, I mean, like, I would say it was, it was like, it was a group effort amongst a bunch of different slack participants to just say, let’s just do it because S2 is not happening. They’re going to rug pull on us any day now. And sure enough, they did.

And, you know, I think the debate had hit a crescendo where people weren’t able to discuss freely, big blocks or scaling or using Bitcoin as money in our bitcoin. I don’t know if, like, famous is still around there, but he was like the biggest perpetrator of just blocking or banning people from our Bitcoin. So if you wanted to talk about these things like how are we planning to scale this, how can we improve adoption, how do we use this in merchants so people can use it for coffee and diapers and groceries? you know, instantly, just very quick.

Corbin Fraser 00:12:14 Didn’t take long to get, and it didn’t take much to get kind of kicked out of our Bitcoin. And then people ended up in BTC and sure enough would see some of the posts from, you know, the the the big block community, which may have included Roger that may have included, you know, other folks from from Big Block Camp.

And and it was just a lot of people just sharing, like I got banned for just talking about this stuff, what’s going on. And, you know, there was still talk of, well, maybe the S2 is happening. Some of the big blockers were really hoping, hoping that for that two megabyte, two megabyte block, that’s all they wanted.

And, that didn’t happen. And I mean like, Yeah, I guess when I say, like, I supported it before any more so than Roger, it was like, yeah. I mean, in August, what was it? August would have been August, 2017.

Vlad Costea 00:13:03 Yeah. It was the 1st of August when on one hand you had SegWit that activated on BTC and there was the big fork.

Vlad Costea 00:13:12 Yeah. They happened and they.

Corbin Fraser 00:13:14 Yeah. So they wanted to they wanted to hard fork before SegWit was activated to preserve the SegWit chain. That was the the idea. Right. And that was kind of like, let’s have a save state in the event that the miners support this thing more, maybe we can preserve the state and save Bitcoin.

That was kind of like maybe the, the hopeful case. Right. and there was like a lot of I, I wasn’t in all the backroom talks, but there was a lot of miners that were supporting big blocks. and you saw that in those in that first like month or two hash rate was kind of bouncing all over.

This was before switch mining had kicked in as well, where a lot of the pools eventually figured out that switch mining was quite profitable and they could just flip flop. And if they just took a indiscriminate position on mine, whatever’s profitable, which most pools do, then they just started flip flop in their hash rate depending on difficulty and stuff like that.

Corbin Fraser 00:14:09 But prior to that, there was like these noble miners that are coming in to, you know, mine and try to put more hash rate, put more proof of work on BCH. And the hope was, yeah, longer proof of work or market cap or interest or businesses adopting it, more, economic activity happening on chain, that it would become Bitcoin and didn’t work, But some cool stories from it though, right?

Vlad Costea 00:14:39 Yeah, there are some cool stories, but I got to backtrack a bit because the general perception about PCH and this is straight from the Jimmy Song playbook or something, or Samsung, now they’re gonna say it was so BCH was this unholy alliance between Roger ver on one side and Jihan Wu on the other side. And then there’s this conspiracy about the ASIC boost which was deactivated by SegWit. So in the case of Jihan, it was about being able to use the ASIC miners that they got from Bitmain. And his mining pool is and Paul. Right.

Corbin Fraser 00:15:23 Yep. Yeah. And Bitcoin.com.

Corbin Fraser 00:15:26 we were running a pool at the time as well. We no longer do. But yeah. So it was a lot of and again, I was just a developer at the time, right? So, you know, I was in the office with some of these guys with Roger, but there wasn’t, as far as I could tell, it wasn’t like Roger pulling the strings, which is, I think, what everyone wants it to seem like.

Roger was kind of, a supportive participant, but not like, I don’t think he was like the Wizard of Oz that the Bitcoin maximalists like to think that he is when it comes to BCH. That would probably like The Wizard of Oz was really like Bitcoin, ABC like and kind of like the group around that.

They were like they were the ones really, I’d say like working every angle and it was awesome to watch it. So like Bitcoin ABC also controlled Bitcoin Cash dawg at the time. And I was a contributor there. and that’s actually how I kind of got involved in, Bitcoin.com and, and in, kind of more of the big block camp as well.

Corbin Fraser 00:16:28 Was just being a contributor there, from a web development perspective. but yeah, I mean, like, it was, like Roger was really hoping out, like he was holding out hope for this to to activate. And it wasn’t until that it officially got yanked that he was like, I think we got to support this thing. But meanwhile, there was already people in Bitcoin.com that were like, already like, clearly, this is the thing that we have to support from a, you know, as a big blocker supporter.

This is the this is the option. This is the only option because you’re not going to get S to X. And, you know, he didn’t really buy it until it, until it was officially announced that they’re not doing that kind of thing. And once SegWit was activated and there was no it seems like there’s no more discussion related to, block increase. it just like it led to Bitcoin.com supporting Bitcoin, Bitcoin cash, more that at least that’s how I recall it. Yeah.

Vlad Costea 00:17:29 Yeah. It’s interesting how your story is very different from what all of these memes have been telling for years, and the block size words were crazy in some ways. And the craziest part is that it was basically a war between brothers.

It was people who used to sit at the same table and interact and have fun and go to Satoshi’s round table, or scaling bitcoin or whatever, and then they had to become enemies. But what made it more interesting was that 2017 was this bull market year, and a lot of new people found out about Bitcoin.

So when they entered the space, they had to pick a camp. And when they picked a camp, they I guess for them, fighting was not weird because they didn’t participate prior to that. So for them, fighting was just the name of the game. They had to understand, okay, you’ve joined this camp and this is the enemy and you have to post memes against them or something.

Corbin Fraser 00:18:31 Yeah, I mean, I think that was when it kind of evolved from, like the the war kind of changed from a war of debates, which the debates were never it wasn’t a long war.

Corbin Fraser 00:18:41 That was like a short debate, because, frankly, the communication lines were completely owned by the small block camp. Bitcoin talk our bitcoin a lot of that was just yeah, controlled. So you couldn’t really freely discuss these things. And then by the time things moved into this, well, there’s already two different camps now.

So you got to pick your team. by then it was just propaganda, warfare and memes. And like, to be fair, the Bitcoiners had better memes. They just did. They had to they had a a more organized, they had a more organized meme army. And I say that with like, respect because it was like they were good.

And I think Paul Sorkin, you talked about that in your, episode a couple, couple episodes back. But, yeah, I think that they were able to cherry pick certain things and run the gambit on it where it would just and again, because they controlled the communication lines, they could spread those ideas further than the big block camp could spread their, you know, their w their any of their like, spicy memes or ones that kind of made you sort of stop and second guess what was happening.

Corbin Fraser 00:20:00 the reach was largely, yeah, the amplified. yeah.

Vlad Costea 00:20:09 Yeah. I’m going to say something very controversial and possibly get into a tiny fight with you as a follow up. But before that, I got to tell you about Sci-Fi, which is a pretty cool website where you can swap between a lot of tokens and coins. So if someone offers to pay you on stablecoins or whatever.

And you probably shouldn’t hold on to stablecoins when we’re in a bull market, you should buy some free market money. I’m not. You know, for the sake of this episode, I’m not going to see which Bitcoin, but you should probably get something that is going to benefit from the bull market.

So if you want to do that in a way that requires no sign up, and I don’t think they do KYC unless it’s a very large amount. But if it’s a small amount, you can get by and you go to side shift, you just maybe you don’t want to touch because the other coin or Usdc or whatever, because you don’t have a wallet, you just put your bitcoin address in there and you ask them to send the stablecoin to another address, and you’re just going to get the swapped coins into your wallet.

Vlad Costea 00:21:16 You can send that directly into cold storage or whatever. You don’t have to worry too much about it. It’s cool. It has a lot of liquidity. The fees are pretty low. Check out site shift.

I and I also have to tell you about Bitcoin.com News because they’re very different nowadays. They’re not the same as you’re going to find out throughout this episode. So if you want to read about geopolitics, which is mostly what I enjoy reading on the website, there’s a lot of stuff for you.

And there’s also stuff about gold, which I respect. I think it’s ironic that gold is in the middle of a bull run, which was unexpected, and Bitcoin is not at the all time high, at least not this year yet.

Corbin Fraser 00:22:01 Peter Schiff is laughing right now. He’s laughing at all of us.

Vlad Costea 00:22:05 But I sort of respect Peter Schiff because he’s been me too consistent and I have respect for that.

Corbin Fraser 00:22:12 I started following Peter Schiff during the Wall Street riots back in. When was that 2008? That sound right? Yeah.

Vlad Costea 00:22:26 I think it was later. It was.

Corbin Fraser 00:22:28 Was it later? When were they doing the.

Vlad Costea 00:22:30 Wall Street.

Corbin Fraser 00:22:30 Protests?

Vlad Costea 00:22:31 I was.

Corbin Fraser 00:22:31 I was.

Vlad Costea 00:22:32 A freshman in university 2011 I think.

Corbin Fraser 00:22:36 And he would, he would go around Occupy Wall Street and just interview people and kind of you know, he’s like, I’m a Wall Street guy. What do you want to know?

Vlad Costea 00:22:43 So he wasn’t he wasn’t saying I’m a Wall Street guy. He was saying I’m part of the 1%.

Corbin Fraser 00:22:48 Yeah, that was it. That was it.

Vlad Costea 00:22:50 So if you are angry at me, could you please explain to me why you’re angry? And it was interesting to see that people could not verbalize their anger. And much more than that, I remembered there was a kid who was trying to get under his skin, basically try to get a job. So, you know, you’re rich and I’m looking for a job. And I asked him, okay, how can you help me? What can you offer me? What skill do you have? And he was not able to say it.

Vlad Costea 00:23:21 And I think it was like an eye opener for a lot of people watching that. And for the guy in this conversation, because he was feeling entitled to getting a job from someone rich, but at the same time, he was not able to explain why or how he’s about to contribute.

You know, what kind of value he’s going to bring. And I remember watching that, too. But I was maybe in my third year of university or something. I was just watching YouTube videos, but that that was really great. I respect Peter Schiff. I wish I could get him on this show, but I’m not sure if he’s interested in having these conversations.

But the controversial stuff that I’m about to say, which is not really controversial, it’s technical. There was this narrative, especially being promoted in 2018, that BCH is the real Bitcoin. And I think sort of that’s where the war was lost because maybe philosophically you can argue okay, so toss you might have said this and we can interpret it as him being on our side.

Vlad Costea 00:24:25 But if you’re running a pre SegWit client of Bitcoin let’s say a 2014 version of it, you’re going to validate BTC. You’re not going to be on the BK chain. It’s not aware of the BK chain. Be sage was the fork. But some people try to frame it as it’s the continuation, it’s the real one. You can philosophically based on your understanding and perception of Bitcoin, argue that, but you can technically argue that because if you run the software, you’re going to be on BTC pre SegWit, but still you’re validating BTC blocks.

Corbin Fraser 00:25:04 Yeah, I think at the time too, there was a I think Vitalik came up with a blog post around that time where he actually said that Soft forks were more I can’t remember the exact word that he used, but weren’t as clean as a hard fork. I don’t want to say that they were, like, villainous, or it was something like that, that a hard fork was actually a clearer representation of how to how to solve these, like, scaling issues.

Corbin Fraser 00:25:29 And, his his take was like, it should have been a hard fork, but it wasn’t. And I think for a lot of the big blocker camp, they tended to agree with that. they also saw that preservation of the chain of signatures is kind of being like a, a bit of a, like one of the hills to die on. And then I think there was sort of this, it was like a it’s just like a overarching belief that, even though that the technical.

Yeah, like, like validating, transactions was wouldn’t work. Right. But for them, it was like, well, we can merge it back in at some point. And I, there was a lot like the gap from how that.

Speaker 5 00:26:16 Would have been done.

Corbin Fraser 00:26:17 Nobody ever knew it was like. As far as I know, is just like a lot of well, once where the biggest proof of work and the biggest chain, we just naturally become Bitcoin because, you know, I think the idea was, well, the where does who gets the ticker right? And you might even remember BCH had a different ticker when it started.

Corbin Fraser 00:26:33 It was BK at first, then it became BK. And it was just like these like nomenclature, again, like propaganda. You know, it was like, can you convince enough exchanges to call this one asset BK or BK? Okay. Well which asset is it? You know which ones, which ones?

The real BK is the BK one or the BCH one. but then yeah, you have to go down the technical route as well. I, I don’t disagree that that was a flaw in the propaganda, but I would say that there was like enough, a way to describe BCH as being more bitcoin than bitcoin because of its. Again this was like where they would often quote and myself would quote, the white paper.

Right. It was like this going back to Bitcoin is a peer to peer electronic cash system. Well which one’s more like electronic cash? The one that can cost $50 to send a transaction, or the one that can cost less than a penny to send. and I think that was like, enough of those, you know, you put it in a table.

Corbin Fraser 00:27:42 Looks really easy to say, though. This one’s a little bit more Bitcoin than the original that’s currently high fees removed this chain of signatures. Yeah. But yeah I think this is where I wouldn’t disagree that that was probably a failed propaganda attempt, but it’s all propaganda. That’s kind of the fun thing.

It was all it was like, who can you how many people can you convince? And, you know, I think, like, there’s probably some reality. You know, there’s some universe where maybe the propaganda worked, maybe the communication lines were more on the big blocker favor, and maybe, maybe some of that worked, I don’t know. we’ll never know, but it’s, Now, is it a fun time?

Vlad Costea 00:28:31 This reminds me of what I was reading in university about the Cola wars in the 1980s, when you had the new Coke that changed the recipe. And then you had other types, not just Pepsi. You had other brands that were manufacturing a sweet drink, just like that one.

Vlad Costea 00:28:47 That said, this is closer to the original recipe, and it’s more like Coke than what Coke is selling nowadays.

Corbin Fraser 00:28:54 Yeah.

Vlad Costea 00:28:56 I think it’s sort of similar, and I do believe that BTC is going to get a block size increase sometime. It’s only a matter of time because I look at all of these and maybe it’s unpopular with some of the listeners, but I look at some of these proposals to improve it, and I realize that they’re going to run into the same wall of scaling.

Corbin Fraser 00:29:22 Yeah, I.

Vlad Costea 00:29:23 Agree. Of course they want to do thousands, if not tens of thousands or hundreds of thousands of UT O’s in one transaction with covenants. But how do you exit that? That’s the big issue.

Corbin Fraser 00:29:36 Well, I think that was always part of the debate as well. Was like, well, in order for lightning to actually become successful, the the the chain is going to need to scale. but I think it at least my read on the current Bitcoin market is that lightning has I want to say it’s failed, but it’s failed to adopt adoption in the same way that L1 BTC has.

Corbin Fraser 00:30:04 And, I think now there’s more challenger, L2 and Sidechains and kind of like. Competing solutions to solving some of the high fees and creating more utility on Bitcoin. that I don’t think lightning is going to make it in the long run. That would be my take. And this is largely why we have not built any support for lightning. Not to mention like there’s just so it’s a high friction onboarding. often at least every, every attempt I’ve had using lightning has had like the only ones that worked were custodial by nature. the ones that. Yeah.

Like, I’m sure if you maybe run your own node and you want to deal with all of the Watchtower chaos and, you know, but I think, like, probably not something you’re going to see mass adoption for just unless they can improve some of the, the user friction, which I think is not going to it’s not going to happen. I think people are more likely to adopt something like rootstock or Citra or, strata or like, I don’t know, there’s like tons of these different L2 narratives that are happening and they’re like L2, L2, s, you know, in quotation marks.

Corbin Fraser 00:31:27 I’m a big fan of Bitcoin layers. I don’t know if you’ve been on that one. Someone’s like, it’s a good summary of all of the different L2 systems or attempts at kind of like L2 in quotation marks, that are being built either with VM or some sort of like threshold bridge. But they all have their trade offs. And I think even with those trade offs, there’s less friction on some of those than there is in trying to make lightning work.

Vlad Costea 00:31:58 Yeah, it’s crazy that there is a lot of stuff, and lightning had a very good start. It had the first mover advantage. It had the benefit of everyone agreeing that this is the way to go forward. It was the L2. What you said about lightning requiring big blocks is true. It’s in the white paper. If you look at the Lightning Network white paper, I think it speaks about and I don’t want to be wrong. I will look it up. But I think from memory it speaks about 128 megabyte blocks or even larger than this.

Vlad Costea 00:32:33 So it was really.

Corbin Fraser 00:32:34 Hard to run your Raspberry Pi on that, right? Like, well, I think.

Vlad Costea 00:32:39 Block size is about storage, mostly MB and internet speed. So I think it was someone who was able to run a BSD node on a Raspberry Pi, and that’s another can of worms, right? VSV because they, these guys sort of emerged and they took some of the people who were heavily involved in BCH and they said, oh, you guys have big blocks of 32MB or whatever. Well, we’re going to do Giga megs and that. That’s a direct quote from Calvin.

I don’t even know how you pronounce his last name. Is it air ary airs? He’s the one who said this, and it seems nihilistic to a point because I think Amari, he was on my show and he was very reasonable, and he explained that there should be a block size limit for the same reason why there is a speed limit on the road, because there is some laws of physics at play and you should be cautious with how you balance the system.

Vlad Costea 00:33:42 And b b SV was basically like, no, we’re just going to make it one gigabyte and there’s going to be this guy Ryan Charles, who’s going to put his vacation pictures on the blockchain, and we’re going to have a social media like Twitter running on the blockchain. And we’re going to have all of these applications that make no sense there There is no reason for them to be on the blockchain. But they did this just because they could. And they made it so centralized that even some exchanges gave up on running nodes. But it was still interesting. And I believe that they stole part of the big block narrative.

Corbin Fraser 00:34:18 Yeah, I think there was a little bit of dilution there, right? I mean, obviously Bitcoin Cash then forked off from BK into SV and then again into E cash. So yeah, I mean like there’s a lot of brain drain, right. Just from that camp alone of people trying to build stuff now is all that stuff extremely useful? Is it making the world a better place? I don’t know.

Corbin Fraser 00:34:44 Maybe someone finds it useful, but is it making it less decentralized or creating friction for people that want to spin up a node or. Yeah, yeah, maybe so, yeah. But it does make me wonder though, that like how how much further would we have been if we had all managed to just get along? You know, if we had just gotten a few more people in the room together, fight it out, you know, debate a little bit longer, try to concede some areas for the big blockers.

And I, I kind of feel like that’s part of the reason why I do like Paul talks, you know, bit 300, 301. Kind of like the idea of like, yeah, you can innovate, you can do whatever you want. But it all comes back to BTC. There is something kind of appealing to that. And I would hope that if Bitcoin is going to go down that path of like bigger blocks in the future, that they consider that possible risk of more hard forks and more break.

Corbin Fraser 00:35:52 How many people that are currently contributing to Bitcoin Core could potentially say like you know what, I believe more in this version of Bitcoin. I’m just going to go over there instead and start contributing to this new thing. because I just I would have to assume that if there is a Bitcoin blocksize increase on BTC orange coin, then there’s a high probability of people trying to create fork, whether that’s through propaganda of like salty people from, say, the big block camp trying to run that and create, some chaos or whether that’s from like actual BTC believers who are going down that purity check of like, well, the one you guys are the upgrade you guys are proposing.

I completely disagree with. I disagree with it so much that I’m going to put money mining hash rate power all towards this new, this new thing that I’m going to run instead. and I mean, we saw that hostile kind of like hard fork happen in BCH as well, where you might recall, there was a Bitcoin classic. I don’t know if you remember that.

Corbin Fraser 00:36:58 There was like okay, so there was a few of these like rogue bitcoin forks that kind of emerged around 20. I think it was like 2017, 2018 and like yeah there was like Bitcoin. I think there were it was like any time that Bitcoin Cash would do a hard fork, someone would try to kind of like, I want to say it was like an attack on the chain, but they would just try to like, talk about how like, oh, I’m upset with this hard fork.

So I’m going to run my own chain called Bitcoin Classic. And I think that one was that it was discovered that that was run by like some BTC maximalists that were just trying to screw with the team. and then there was like a few other, you know, Bitcoin gold was around that time as well. Then there was like some really weird ones like Bitcoin diamond and then there were Bitcoin private. And then there was yeah there’s just a whole bunch of like random, you know forks that were happening of like no no no.

Corbin Fraser 00:37:47 Now there’s this other chain. And it was always this like deceptive you know, come, come move your hash rate over here instead. And these are the coins you really want?

Vlad Costea 00:37:58 no. But, at this point, I’m convinced that in 2017, there was this moment where maybe enemies of Bitcoin realized that one way to destroy it would be to secede. Until the community is so divided, they can no longer agree on anything. Yeah, maybe that was part of the attack vector, because I believe that the BC fork was created in somewhat good faith because of disagreement.

I agree with with a very technical parameter on which there was no consensus, but stuff like Bitcoin gold, it was just made for miners that were using GPUs to make some extra revenue. And something like Bitcoin Diamond. It was, I don’t know, a very small change in parameters and something like Bitcoin private. That was a scam that basically had the 1 million BTC premium for the founder, I think. What’s his name, rat or something?

Corbin Fraser 00:38:53 Yeah, I knew it started with an R.

Corbin Fraser 00:38:55 Yeah, I think it was red.

Vlad Costea 00:38:57 I remember that scandal. It it came from. No it didn’t. That’s Virge. I’m thinking about something else, but that that was another privacy scam. anyway, it it it was a very interesting time and very wild. It feels like nowadays I look at these Solana meme coins, and they’re in no way as interesting as the times when you would see a 51% attack on the network, and there were all of these tiny forks, very small networks. I remembered I mentioned verge earlier, there was an attack on verge. I think it was running like three different mining algorithms or something. Very crazy stuff.

Corbin Fraser 00:39:41 I kind of, yeah. I mean, I look back on the chaos period there, as with like some rose tinted glasses. I know some people Live in the past, right? And the really angry. There’s probably some people I know for a fact. There’s some people that hate the fact that that Bitcoin.com has taken a more softer approach towards just supporting everything we’re not.

Corbin Fraser 00:40:04 You know, I’m not telling everyone on the team to like, everyone drop what you’re doing, and we’re going to bang the Bitcoin Cash drum for the next six months, like we’re business. the.com stands for company. You know we’re we make money.

We try to make money here. And yeah I mean like us supporting more things. It’s great. But it is it is this like I look back on all that stuff and just kind of say, like, probably, growing pains that needed to happen.

And it was a great stress test for Bitcoin, and it was a great stress test for any other potential offshoot civilizations that want to break off where they now have different playbooks that we didn’t have. Right. And, whether that whether that’s used for good or evil, I think that that’s going to depend on like, and what people are trying to do with, with, with bitcoin. So.

Vlad Costea 00:40:55 So in regards to the conversation we had earlier about lightning. I’ve opened the lightning whitepaper and this is at page 55.

Vlad Costea 00:41:06 I had to scroll a bit to find it. It says if all transactions using Bitcoin were conducted inside a network of micro payment channels to enable 7 billion people to make two channels per year with unlimited transactions inside the channel, it would require 133 megabyte blocks, presuming 500 bytes per transaction, and 550 2560 blocks per year. Current generation desktop computers will be able to run a full node with old blocks pruned onto terabyte storage. So these are the assumptions of the Lightning Network as described by the whitepaper.

Corbin Fraser 00:41:46 Gotta get those Giga egg blocks in.

Vlad Costea 00:41:47 Right now it’s just 133. It’s not Giga Mag yet.

Corbin Fraser 00:41:53 What is it, Giga Mag? I’m like, is that.

Vlad Costea 00:41:56 it’s like nine, nine times larger than this.

Speaker 6 00:42:00 Okay.

Vlad Costea 00:42:03 that’s 1024MB. 133 seems much smaller, but still 133 is 133 times larger than one. And you can still do four with SegWit. That that was always interesting to me because this was not really advertised in its time. SegWit was presented mostly as a fix to the malleability issue.

Corbin Fraser 00:42:33 Yep, yep.

Vlad Costea 00:42:35 There wasn’t much talk about this four megabyte limit.

Corbin Fraser 00:42:39 Well there was like I think there was talk of like AI And I may be quoting out of line here, but I do recall there being, Adam back actually supporting like, well, we could, you know, with SegWit, we could introduce modest increases in the block size and that these discussions were had, during the New York Agreement, during some of these like S2X minor meetings and stuff like that of like we had some businesses, saying, hey, let’s graceful increase. We’ve got people using bitcoin for payments online donations online. they shouldn’t have to pay a high fees to, to do that.

And it’s going to hurt the network effect. And so I think like there was there was talk of doing modest increases and then kind of got rug pulled. I mean, I don’t want to say rug pulled. It just got they re-evaluated that and decided it wasn’t worth doing. but I mean, like, yeah, there are Satoshi archives of this is maybe temporary.

Corbin Fraser 00:43:46 This is a limit we’ll put on and maybe remove later. I don’t know, but then, you know, I think there’s like, some cases to be made about like. Well, not everything. So. So she said was going to be the best thing for bitcoin. Like I can concede to that as well. Where I do hear some people in the bitcoin camp being like, why are we listening to Satoshi? He’s been gone for like 20 years since like 2011, right? So yeah.

Vlad Costea 00:44:13 Well Satoshi was wrong in some cases. For example, he was naive and assuming that everyone was going to mind solo, he did not foresee the creation of mining pools, but it happened under his watch. So yeah, that was interesting. He was also wrong about. So there’s chapter ten, I think in the white paper that’s called privacy.

And he believed that just generating a new address for every transaction was going to be good enough for privacy. And it turned out to not be enough. But if you look at some other conversations in which he was involved, he was very interested in zero knowledge proofs and the stuff that Zcash is doing nowadays, except that he did not have access to these libraries.

Vlad Costea 00:45:00 And Satoshi was also using the term node to also mean miner. And that’s one way in which people misread Satoshi today. They read node and they think it’s about some Raspberry Pi validating the chain. But it’s really about miners at the time. A full node was also a miner. I think for a while you had in Bitcoin the option to turn on mining.

Corbin Fraser 00:45:34 Yeah. I think, there’s a lot of things that I disagree with. I think in hindsight, from the big blogger camp. But there’s still a lot of stuff that I do agree with. Like, I do agree that, the censorship of those channels, did create the chaos that the Bitcoiners hate so much. You know, like, had those debates been allowed to happen, perhaps more concessions could have been made. Perhaps the community could have kept together. so it’s kind of like ripple effects, right? Not XRP effects, just ripple effects, you know? Yeah.

Vlad Costea 00:46:20 I, I think, honestly, it’s good that you guys did this.

Vlad Costea 00:46:24 And by you guys, I mean Amari and you as a participant and everyone else because it was maybe more pure and intentions. It could have been a state actor. You know, someone who was really trying to succeed and really trying to break Bitcoin. But this was like a war between brothers or something, and maybe it was more emotionally charged than something else, but also it was more cypherpunk. I guess it was just this one, guys who disagreed on something and they said, okay, let’s let’s see who’s right. And this was the free market way to see who’s right. It was costly for some people.

Corbin Fraser 00:47:08 Oh yeah, a lot of people lost money, myself included. And I I’ve told this story to a few people, but I lost a shit ton of money just by selling Bitcoin, being, like, going all in on BK. Guys, this thing’s the future, you know? So yeah, I, August. Yeah. What is August 1st? August 2nd. As soon as there was a market I was like, all right, I’m selling my bitcoin for more BCH.

Corbin Fraser 00:47:30 And, yeah, I was buying all the way up into those $3,000 per bch candles, You know.

Vlad Costea 00:47:38 That was another pretty high moment, right? When Vitalik tweeted congrats on this. Seriously. It was.

Speaker 6 00:47:44 I mean.

Vlad Costea 00:47:45 In late November of 2017, the price of BK went to $3,000 or more on some exchanges, and it became number two. There was BTC and right under it on CoinMarketCap it was BCH. And it seemed like that was the moment when the block size was escalated to the highest point. It seemed like BCH actually stood a chance.

Speaker 6 00:48:11 Yep.

Corbin Fraser 00:48:13 Yeah, there was opium in the air that, like this might actually work. We might actually flip this thing and then what happens? But it didn’t happen. So, you know, we’ll never know.

Speaker 6 00:48:24 Yeah.

Corbin Fraser 00:48:25 Fun times.

Vlad Costea 00:48:26 What do you why do you think it did not happen?

Corbin Fraser 00:48:30 I think I think there was a lot of miners that wanted it to happen, but were too scared to commit. There was a there was I, from my understanding, at least through the rumor mill on some of these slacks and different groups and stuff like that, was that there was enough hash power to potentially do it, but there was just miners that kind of in the wait and see, and there were so many people on the wait and see boat that the opportunity was just gone, that that was just what I heard.

Corbin Fraser 00:49:02 I’m not a miner, you know? Yeah, just I think, I think there was probably like a three month window where maybe, maybe there could have been an even bigger, concentrated effort where more hash power could have happened before the switch, mining pools and stuff like that. But I think it just didn’t, didn’t pan out that way. Yeah.

Vlad Costea 00:49:25 I want to ask you about the current features of BC and how it’s different from BTC today, because I guess it’s much more than just the block size limit being increased. But before that I’m gonna plug two more sponsors.

One of them is layer two labs, created by Paul Staats. He’s the CEO and he’s trying to unite Bitcoiners and not just bitcoiners also bring Ethereum people. And I guess some Solana people and prediction market people who mostly use Poly Market these days.

On his invention, which is the drive chain. It’s a miner dominated sidechain. It’s a proper sidechain, unlike something like liquid or even rootstock. And it requires this Bip 300 to get activated.

Vlad Costea 00:50:11 To me it’s very interesting. And he already has functioning software. So you can download from layer two labs.com/download the latest version of every client. You can run that on every OS that you might have on your computer. And there’s also a telegram chat that’s called drivetrain talk. And you can interact with users. They can send you free coins so that you can play with them. You can swap them between chains.

You can do a lot of interesting stuff. Just be open minded because it might be the future of Bitcoin. And there’s also another sponsor that might become the future of Bitcoin. And that’s the trial. They are running this layer two which is compatible with the Ethereum Virtual machine EVM sort of I think their long game is to tap into the liquidity of WBTC, which is custody by BitGo and tokenized on Ethereum.

They’re trying to create a more trust minimized way of doing that by leveraging the security of the Bitcoin chain. But what you will be able to do on Syria if it comes to the main main chain and mainnet, is that you’re going to be able to access financial services, such as borrowing stablecoins against your BTC and all sorts of DeFi stuff that today is not possible on Bitcoin because of the limited scripting language.

Vlad Costea 00:51:35 So keep an eye on Syria. You can already get the Signet version. You can find it on their website which is Citra citra.xyz. And thank you for selling through my ads. Now I got to ask you what’s different about BCH today compared to BTC?

Corbin Fraser 00:51:55 Before I get into BCH and again, I’m not I’m not like I’m not a beach guy, you know, like I, I still love bk, I still use bch. I think it’s great, but I’m not like in the trenches like some of these guys are, However, maybe actually before I get into some of that stuff, maybe I should mention Paul’s talk.

Tried to save me, man. There’s, like, I went for beers with Paul in, like, 20. Would’ve been maybe 2019. He was out in Tokyo visiting Roger. And then we went to this, went to Ebisu Yukiko. Which, if you’ve ever been to Tokyo, the Yoko Cho’s or like, that’s that’s the place to go. Have a couple couple drinks, eat some meat on skewers, hang out with some locals.

Corbin Fraser 00:52:43 It’s like these really cramped alleys of just, like, noise and little stalls. And, Yeah, we took Paul with me and one other guy, and we did bottle up for some drinks just to kind of hear his take, because we knew he wasn’t, he was, like, sympathetic to big blockers, but wasn’t, you know, a big blocker himself. So I kind of wanted to hear his perspective.

Speaker 6 00:53:06 And, you know, he was he was.

Corbin Fraser 00:53:08 During those beers was like, it’s not going to work.

Speaker 6 00:53:11 And he was.

Corbin Fraser 00:53:12 So matter of fact, like, it’s not going to work. Guys, I don’t want to tell you you’re betting on the wrong horse.

Speaker 6 00:53:17 And, and, and I.

Corbin Fraser 00:53:19 Remember trying to convince him.

Speaker 6 00:53:20 No, no, no, here’s why.

Corbin Fraser 00:53:22 It’s better. He was like, I hate to tell you guys it’s not going to work Too much cell pressure. Never going to happen. you know, you made some crucial mistakes, and, but it was it was a very enlightening conversation, and, and, I think that cemented my belief that Paul is maybe one of the smartest people in Bitcoin, in the sense that he’s able to see multiple points of view and see the good and the bad in the mall.

Corbin Fraser 00:53:53 And, he’s just so well read and so well researched that if there’s anyone that can help Bitcoin scale, I do believe that some of his solutions may be, maybe a path forward. So I’m keeping a very close eye on on drive chain. And you know, the bit 300 and bit, 301 and things like that. So and we’ll see where that goes.

Yeah. But yeah. Funny aside, but yeah. So what was it. What are the what does it got going on versus BTC these days? All right. my understanding, they’ve gone through various hard forks in the past. I mean, they hard fork every six months, I believe, which is incredibly annoying. stop doing that, guys. but they do it, and everyone has to upgrade and update.

You know, it’s fine for the most part, until it’s not. But, yeah, they’ve just got this habit of hard forking, which is, I guess, good for getting changes in. And, I think some of the recent stuff was like the adjustable blocksize limit.

Corbin Fraser 00:54:57 So they don’t really have like they’ve kind of got a floating a floating block size. So if blocks become full, they just grow. And if they don’t I, I guess they could be wrong here. I guess they stop around like 8 megabyte or 32MB. I can’t remember where they upgraded to last.

I might be 32. but yeah, I believe it’s just like this floating point thing. Then they’ve got cash tokens, which are like minor validated tokens which emerged after SLP completely flopped. for those of you guys who don’t know, Bitcoin Cash was like trying to take the idea of colored coins. And then which was like this discussion on Bitcoin for quite a while.

Like, we could bring tokens to Bitcoin and I would I mean this is like I think around counterparty Usdc was on on Bitcoin and stuff like that. and then there was a lot of discussion in the big blockers on how to do this correctly. And I think there was a lot of pushback specifically from Bitcoin ABC related to the colored coins implementation.

Corbin Fraser 00:56:02 And it was like too risky to do it. We don’t want to mess up the main stuff. Let’s just find a way to do this without. And then I think a proposal came through from a few different folks.

I think Emergent Reasons was in there, maybe. And like Journal football and some of these there’s a few other names on the on their white paper for SLP. And it was this idea of like, can we get tokens into the opera turn?

And how much, can can we build? Can we build a whole token ecosystem around this, this idea of like using dust transactions or like, I can’t remember if it was like these have drawing a blank now and how what the minimum size was a 564 sats or something like that. and and every, every you had to do this on chain transaction and, you know, there would be these like off chain indexers that would validate the token inside the utxo to justify, you know, how much of your Spice token, if you had a thousand and then you send one token, then you’d have 999 tokens.

Corbin Fraser 00:57:02 But it was all this like off chain indexing and it wasn’t really tied to miners. You know, they the miners just took the profit from these, like, kind of empty sats that were just floating around. And, yeah, index services would have to run and just update stuff. We had tremendous support for it in the wallet.

It was great. Like SLP was pretty cool for a while until it hit like some indexing scaling issues where some of the token depth just got so big like UST for a little while was even on SLP, and it got so much utility and so much adoption, but just like failed to scale.

And then I think, yeah, there was just like a, I think some consensus amongst the group that, okay, this attempt it was great, but we need something better. And then I think that’s kind of when cash tokens emerged. So now they have these minor validated tokens which are a little bit more I could be wrong here, a little bit more like colored coins.

Corbin Fraser 00:58:00 and also they’re trying to build up this new ecosystem of tokens on cash tokens, but they’re completely different than SLPs, and none of the old stuff really works on it. And some stuff I’m sure migrated over. But, yeah, they’re, they’re they’re effectively trying to create like a utxo bitcoin version of, you know, DeFi without the EVM.

So they’ve you know, you can you can build these somewhat smart contracts. They’re kind of dumb smart contracts, but they’re contracts nonetheless using script. But nobody can write in script because it’s a huge pain in the butt. So they ended up writing, I think Roscoe Callis, who actually interned at Bitcoin.com, created this cool, compiling language a bit like solidity called, cache script.

And cache script lets normie people kind of write in a JavaScript friendly kind of language that compiles down to a script and lets you do some stuff like covenants and lets you do stuff like time locks and lets you do stuff like, I don’t know, I guess other cool stuff. So, yeah, I mean, they’re trying to build a whole ecosystem.

Corbin Fraser 00:59:11 Their infrastructure has improved a lot, I would say, in the last six months to a year. There are some real tokens on there. It’s not just silly memes and stuff like that there.

I think they’ve just launched a, stablecoin on there as well. they do have a Dex as well that’s using these like UT order books to, kind of simulate what, like a Uniswap AMM or automated automated market maker kind of, Dex does. so you can actually fund LP now on chain, you can swap on chain. some. Yes. Just some like interesting projects emerging out of there.

So I think for any builders that are still interested in the idea of like utxo building and using Bitcoin to do stuff, it’s probably one of the best places to play around with. Of course, there’s, you know, also Aecac, which has similar things. And I think they actually kept. I could be wrong. I think they kept SLP, I think they managed to keep SLP going and I think they found some ways to scale it and then VSV.

Corbin Fraser 01:00:18 I have no idea. I kind of fell out of the loop with them. I’m sure they’ve got their own their own things as well.

But I think for like folks that are more interested in building on the UT exo base and instead of like an EVM, there are tools and communities out there to support that. They’re not as popular as EVM. EVM is still kind of the USB right now. It’s, very easy to build.

And I think the tooling and the adoption, the TVL, the yeah, the liquidity and the volume that you see across Ethereum and arbitrage and all these other ETH, L2 and rollups and all the other stuff, they’re they’ve kind of found a nice, product market fit for both institution and for retail to use on chain DeFi. I think that’s, that’s the hope is that some of the Bitcoin Cash builders can gobble up some of the dev mindshare there. we don’t yet support any of the cash tokens, you know, stuff we’re kind of keeping an eye on, I think based on volume, if it can make us money, if swap partners integrate, if side shift were to start integrating that stablecoin, that would be a good plus for us to maybe be a reason for us to start supporting, because we could actually get a little bit of a fee off every swap.

Corbin Fraser 01:01:40 But, yeah, I think like there’s a lot, a lot of headway being made there. but yeah, we’re not like in the trenches with the BCH people as much as we were in previous, eras of Bitcoin.com right now. It’s just like build a great business that keeps growing, you know, help, help more people come into bitcoin. Use Bitcoin as a way to let people try anything, whether that’s stablecoins, DeFi, NFTs, you name it. You know.

Vlad Costea 01:02:10 It is a bit ironic, right? Because the revenge chain for the block size wars was not BC and it was not BSD and it was not Aecac. And I guess we should also get into Zcash, because that’s another interesting can of worms to open. But it was Ethereum that took most of the users, most of the developers. Everyone was angry at Bitcoin for not doing some stuff they want to Ethereum.

Corbin Fraser 01:02:37 Yeah, I mean DeFi summer on Ethereum was the that was like the funnest time I’d had since the, since the scaling wars, to be honest, like, I loved I loved all of the chaos that was emerging out of Ethereum, and it was like high risk.

Corbin Fraser 01:02:53 Like you had to be kind of stupid to have money deployed on some of these very untested, unaudited smart contracts and dexs and different lending, borrowing protocols and stuff like that. But it was a it was an exciting time. And I think when you get that many builders contributing to this idea. And then there is this mix of greed, right?

And there’s the mix of scams. Then there’s the mix of like, hey, we could actually create a better financial system on chain that’s open 24 over seven, that lets people trade, lets people fund markets and do market making, which is typically reserved for like the elite, the wealthy, the, you know, like it tickles all the right middle fingers that we like to give to the status quo. but it’s like, especially in those early days, it was high risk, right?

There was all these, like, silly, like, food coins coming out, like sushi happened. And then. And then chef Nomi shrugged, which was weird.

Corbin Fraser 01:03:53 I don’t know if you guys followed that one much, but there’s this there was this prolific developer, an anon, that came on to the scene during, during DeFi summer. This was after yam and after I think it was.

There’s a few other like maybe Y Ern was around that time as well. and then sushi came out and had this like really great user experience for swapping and like funding LPs. And then it was trying to cannibalize all of the market from Uniswap, which Uniswap at the time didn’t have a token. Things were a little bit clunky and there was like no rewards. They didn’t have a token.

So like they weren’t able to kind of incentivize people to do helping to like fund markets on like, Ethereum USDt pool to support more on chain transactions on these decentralized exchanges. so then Sushi came out. They had they had a, yeah, a really cool user interface, and they had LPs just like Uniswap. But then they also had rewards. Everyone likes a rewards, right? Like it’s like, hey, you do some stuff, you get some stuff.

Corbin Fraser 01:05:08 and it was kind of a mad dash to just clean house. So you had all of these, like, high net worth individuals just moving money in solely to capture as much of these tokens, because there was the hope that these tokens would go up in value. And for a while, I’m sure some of them did.

And I’m sure, this was kind of like an opportunity for them. They were calling the vampire liquidity attack. And the idea was like, yeah, we’re going to attack Uniswap by just using the LP rewards to siphon off as many of their LPs over to us, where we can pay them more with our token. And. Yeah.

And then, I think at some point, Chef Nomi, who was this anon just rug pulled basically, and like token Price crashed. yeah. And then there was like a lot of speculation on who that may or may not be. some weird, some weird, some weird theories went from being like it was someone in there’s like there was a theory that there was kind of a DeFi group that was just running a multiple versions of these, and that that person may have been involved in more than one.

Corbin Fraser 01:06:18 There was theory that Chef Nomi could have been Sam Bankman-Fried and people from the FTX camp, which I always kind.

Vlad Costea 01:06:25 Of thought was like, yeah.

Corbin Fraser 01:06:27 Interesting theory. And I think there was a lot of people trying to compare the the messages and the format and the tweets and be like, there’s some similarities here. Look, the way they.

Speaker 7 01:06:36 Use the periods.

Corbin Fraser 01:06:39 But yeah, I don’t know if they ever proved that. but it would be really interesting to know if who actually was Chef Nomi, because I think he made out pretty good. And then sushi crashed and then it went back up. Eventually the community kind of managed to save it, and then more of these dexs kept popping up and more of these different tokens.

And then you had like more, you know, Ave was out at this time, so you could like, lend and Borough compound was out at this point as well, which is another lending borrowing pool. and it was like. Yeah, we’re building. We’re like, I think they were kind of building like, like a parallel financial ecosystem that was like emulated the traditional financial ecosystem, but 24 over seven and on chain and using these smart contracts.

Corbin Fraser 01:07:30 And early on, people were like, this thing’s never going to work. You know, it’s never going to get that much adoption. TVL is going to be a few million. Not many people are going to use it. But then market maker started moving in and good bots moving in, and you had people building robots between different LPs so that you’d have like a Ethereum Usdc pool on like Uniswap and then a theorem, Usdc pool on sushi and then another one on like pancake swap or some other thing.

And then you’d have these bots, just like trying to gobble up, gobble up, price disparity and making sure that they’re making money. And it was really interesting to see. And again, all of that stuff could have been on Bitcoin. It could have been on Bitcoin. And I think what’s interesting is the BCH people better or worse.

They’re still trying you know and I feel like that’s this is kind of where I like that they take a tech progressivism approach. I don’t mean that in a political way, but like a just they’re just trying, you know, they’re just seeing what they can do, see how far they can push the envelope.

Corbin Fraser 01:08:32 I think in some ways, though, I understand why Bitcoin would not want to take that approach because of I mean, you want to keep your top spot, right? There’s this like game theory of well when you’re when you’re at the top, you don’t have to take the risks that people below you have to in order to try to climb. So yeah.

Vlad Costea 01:08:54 I do like this perspective that this could have been on Bitcoin because it’s being presented by both sides. The ones that are wishing that this happened on Bitcoin and the ones like Jimmy Song or whatever, who think that there are unorthodox use cases and wrong ways of using a blockchain, you know, they say, oh, this is sacred, this is holy.

We should thank God for Bitcoin. We should worship this invention. If Satoshi did not use this in this way, then it’s clearly not the intended way. And it’s really funny when it comes to this, but I got to ask you about Aecac because at one point there was this conversation within the beach community that there should be some sort of dev tax for the developers to get paid.

Vlad Costea 01:09:43 And there was also, I think Mari fell in love with this avalanche protocol and he wanted to implement it. And for some reason he forked off from BC. He created his own coin again. It was his second rebel moment. And now we have split communities, I guess some people from BC one to Aecac. I’m not sure how many of them, but he seems to have built his own little cult. Yep.

Corbin Fraser 01:10:14 Yeah. I mean,

Vlad Costea 01:10:17 Can you argue that Omari sort of created BC and then he destroyed it with his hard work?

Corbin Fraser 01:10:26 no, because I think it was more of a hostile takeover than it was a middle finger. I think this was kind of. I think there was enough people in the community that just wanted the French man out. He became kind of a Donald Trump figure within the community where it was like, nah, a French man. Bad Emery’s a dick. Gotta get rid of the dick. Toxic. And it was kind of like, I think this was also during a period where price wasn’t doing great either.

Corbin Fraser 01:10:56 Right. So you had probably, you know, contributors that just didn’t have a lot of money. And it’s like, hey, we just if we want to keep this thing alive in the bear and multiple bears, there needs to be some funding in place. And yeah, I think the approach, I think there was a lot of weird things that happened around that dev tax as well, because there was people that were for it and then that, then they pulled their support for it.

And then there’s a lot of people kind of using a lot of the like libertarian tropes of like taxes, all taxes, bad. This is a bad tax. We don’t need tax. And, you know, it’s a slippery slope. You literally put a little tax in there going to take more and more. Granted, I think they I think they actually did increase the tax on cash eventually. So maybe they were right. But yeah, it is.

It was kind of one of these things where I think Amari did have a lot of say and sway in the community, but there was a lot of people that stood to benefit by not having him involved as much, where I think they felt like they could probably move faster because in some ways Armory was like, not, how do I explain this? As far as I could tell? And I have nothing but respect for Amari and what he did and the work that he contributed.

Corbin Fraser 01:12:12 And I think he’s probably one of the more interesting big blockers in the whole space. So like, I think what he says still matters. I follow him a lot on on on X still. But, I think there’s a lot of people that like, stood to benefit from just being able to get their changes in quicker without Amari stopping like he was.

He was a benevolent dictator and he was like a self-professed thing that he called himself. And in a lot of ways I think that was needed. Like, I think like we see this inside Bitcoin.com, any, any, any new feature, any new project, any new like thing that we build is led typically by one champion, Not a group, not a. You can’t resign by committee.

You know, the things typically need a champion. And Amiri was the big blocker champion. And yeah, I think there was enough of a committee that wanted more or wanted a different wanted something different that kind of he was getting in the way. And then it seemed to me like, kind of like, let’s just get rid of the French guy, push him out.

Corbin Fraser 01:13:22 You know, we’re gonna get rid of this pesky, this pesky benevolent dictator and try something else. And, yeah, I think he just didn’t get the support from, whether it was the miners or the businesses or the community, I think he’d kind of, like, burned some bridges by, you know, being French, if I can put it bluntly. You know, he’s just, Yeah, occasionally.

Thorny. but he at a big heart and still has a big heart. I think he like. Yeah, he’s probably done more for the big block community than anyone else, so I don’t want to disparage him in any way, but, yeah, I think he kind of emerged from that as far as I remember. And that was actually like the big, at least for me.

That was like the pin where I was like, What have you done? You know, because I there was this, was it, it was, it was a, it was one of the OGs. On the Bitcoin Core developers that theorized that if too many forks happen, it would just splinter off into, like, you know, a thousand pieces and like, you’d have forks upon forks on forks.

Corbin Fraser 01:14:39 And I think that was kind of like after the BSB fork. And I was like, oh man, just lost him, lost some more mindshare. And then E cash work happened. I was just like, all right. Maybe he was right. Maybe he was right all along. I’m going to think of the name, but now it’ll come to me.

But, I think for me, that was kind of where I started saying, okay, well, and in some ways, I have Anne-Marie to think because I got more involved in Ethereum and EVM and DeFi Summer because of all of the drama involved with that, I was just like, I’m just done with drama, I’m done with, I’m just done with debates. And you know who’s better and who’s, you know, the arguing.

What I loved about the Ethereum and EVM communities, they were just building and there were still debates and stuff like that, but it wasn’t so hostile. It didn’t seem like, like people were just permissionless building and not feeling like they had to negotiate with the subreddit and negotiate with the community.

Corbin Fraser 01:15:43 They would just launch stuff, they would deploy smart contracts, send out a message and say, hey, anyone want to try this thing? It’s, you know, unaudited. You know, do your own research. Good luck. but I kind of liked that permissionless building aspect of what they were doing, and, yeah, I wouldn’t have probably become DeFi pilled had it not been for more of those big block debates that just kept going, man, they just kept going.

And I think for all I know, countless people, that that was kind of the breaking point for folks to say they’re just, there’s more to crypto than having one team and being a monotheists and nothing wrong with being diversified. You kind of can be involved in more communities. You can have your finger on the pulse of more things, and you don’t miss out on opportunities.

And, like, I think I’m not. So. bold in my in my bag, hold my bag holding ability to say oh, the things that I hold are going to be absolutely the things that are going to be popular, relevant and most useful five years from now or ten years from now.

Corbin Fraser 01:16:59 I like even even bitcoin. I’m of the belief that it is at the top now. Will it be in 50 years? I don’t know, I mean security budget, will something cooler come along? Will there be other issues with BTC that other chains solve because they were perhaps more quick or more able to adapt or who knows? I think like you look at Myspace, they probably thought they had it in the bag. Right. Or the world’s.

Speaker 7 01:17:27 Biggest social.

Corbin Fraser 01:17:28 Media platform until you’re not.

Vlad Costea 01:17:33 Yeah, there’s a lot to unpack there. First of all, I would never see this in the Omari that I interviewed last year. Like, he did not seem toxic at all. He seemed very nice, soft spoken, educated and able to make very compelling arguments about stuff and very wise in retrospect, you know, talking about past events. But I don’t see this guy going, as you said, full Donald Trump on RTC or whatever.

Corbin Fraser 01:18:05 Yeah, I don’t think he actually went full Donald Trump. But I think the perception from the community was that he did.

Corbin Fraser 01:18:12 If that makes sense.

Vlad Costea 01:18:15 That’s fair, especially in writing where people can misinterpret tone.

Corbin Fraser 01:18:19 Yeah. Yeah.

Vlad Costea 01:18:22 And you spoke of revenge chains and Ethereum is the revenge chain for bitcoiners. A lot of big bloggers went to Ethereum to build stuff, just because it was fun and because nobody told them not to do it, and because they could do more stuff that was not possible on Bitcoin and some of the same energy. I see it today and something that you just added to the Bitcoin.com wallet, which is Zeno.

I see a lot of big blockers looking at this and saying, you know, this is our chance to be early into something, you know, to have our own thing, to have something which is like Monero, but for assets, it’s like the Ethereum of privacy coins. And I see a lot of big blockers agreeing that this might be a successful chain.

Corbin Fraser 01:19:12 I think the majority of big blockers have become multi coins over, over the past since 2017. Right. I think they’ve just had to in terms of maintaining some level of, I don’t know, diversification, like you don’t want to be exposed to just one single asset or one single alt, let’s put it that way.

Corbin Fraser 01:19:35 some people might only be like a single asset person for BTC. That’s probably done them pretty well. had they had they just not done anything? Might have spared all of the, the storms a little bit better than folks who kind of went down these different war paths and tried more things and lost money on Luna or, you know, silly FTX issues and all the other stuff. but yeah, I think like, Bitcoin Cash people tend to be a little bit more, I think, on the high openness or higher in openness, because they’re more open to changes.

I think this is just like something you saw on the, on the, on the progressivism that you see in terms of like them adding and changing the protocol regularly, and they’re not afraid to kind of try things. Perhaps they’re the wrong things, but, you know, build it, build it first and then make it good later. It’s one philosophy to live by, and it’s one way to kind of try and fail fast and maybe make some improvements.

Corbin Fraser 01:20:41 so yeah, I think them taking a bigger interest in another form of peer to peer cash, like Bitcoin cash was kind of the main one that continued banging that drum in terms of like, let’s make this thing useful for as many people around the world, rich or poor, you make less than a dollar a day. You can still use Bitcoin cash if you want to buy a coffee or a cookie from the bake sale, you can do it with Bitcoin Cash. but I think there’s probably a lot of people that like, well, there’s some flaws still in, in, in public blockchains, which is like if I am spending, you know, $10 on, I don’t know, diapers or whatever, you kind of don’t want the merchant to know your entire transaction history or be able to hunt you down and say, oh, this guy buying diapers has a ten grand on him, let’s go hit him with a wrench and take his money. so I think, like, the privacy aspect of Zeno gets people.

Corbin Fraser 01:21:42 Like, it solves the problem. And, yeah, it seems like they’re building out, tokens as well. So you can have privacy. You can have, protocol level privacy on your token assets. And then we’ve been talking to the, team behind Confidential Layer and exploring that in terms of like, is there a way to do a trustless bridge for Bitcoin and other assets to give them privacy? through Zeno, which maybe it’s not as graceful as like L1 privacy or, you know, having that baked into the Bitcoin protocol.

But scratches an itch gives people some ability and confidence that they’re perhaps less, prone to attacks, which I think is, you know, in this day and age that Jamieson does a great job maintaining that GitHub repo of just all of those, public or all of those news articles on different people that have been attacked, assaulted, kidnapped, hostage related to their crypto holdings. I think especially in countries where your dollar goes a long way or your Bitcoin goes a long way, or your Ethereum or stablecoin goes a long way, it doesn’t take much like desperate people will do desperate things.

Corbin Fraser 01:23:09 And yeah, not not making silly mistakes like showing your crypto balances and, or using chains and then completely anonymizing yourself to your merchant who might have a cousin who, need some cash and he’s willing to do anything for it. And robbing a bank is hard hitting a guy over the head with a wrench. Maybe. Maybe easier.

So privacy to me kind of makes sense from like a just operational security standpoint, but also just from a like nobody, nobody in the right mind would be like, hey, here’s my public bank account. Anyone want access to the CSV of what I’ve been spending my money on where I shop? You know what I do? Same with businesses like nobody wants. Nobody wants their business. You know, like you. You don’t want to.

You typically want to protect some trade secrets, right? You don’t want to show who you’re paying, who’s your provider, who’s, you know, just like having a base level of privacy is good. And that, you know, I think this is kind of an unfortunate part of like crypto is there’s still these it’s not even just, you know, assaults and stuff like that, but you got like governments going after people that are just writing code, you know, samurai devs, wasabi guys.

Corbin Fraser 01:24:31 tornado cash, like anyone that was providing some of this were kind of being. Especially under the Biden administration, it seems like, targeted specifically to say like, hey, we don’t we don’t we’re not going to allow that. So don’t do that. You’ll go to jail or will, you know, slap you with some giant.

I think the tornado cash ones are the most interesting because they I believe they charged them with the money laundering that was done using the protocol, but it wasn’t done by the developers. So like the fact that they enabled it, the fact that they created the code for it, deployed it on solidity, on a few chains, and then any idiot can go and, you know, put some money in, pull some money out, and it’s, untraceable.

All of that gets attributed to them. It’s weird. And I mean, in my head, all of that whole anti crypto stuff that we were seeing over the last four years really seems to have been led by the active government and administration in the US, and I think they just have such a long arm when it comes to pushing that in other countries.

Corbin Fraser 01:25:56 so it’s a wonder that the Zeno people are still fighting for it, and I’m happy they are. you know, they’ve got this interesting proof of work, proof of stake hybrid consensus thing, which I don’t fully understand, but it seems to work. so, I mean, for folks that are looking for that, it’s a great opportunity to try it out. You can go go grab the Bitcoin.com wallet and go swap into some Zeno right now. you can swap back into any other asset as well if you don’t actually want to hold the the piano and, you know, yeah, it’s an interesting use case for crypto. And I think it’s something that they talked about so often in the early days, but now it’s sort of just taken the a bit of a back seat for digital gold and getting the government to buy our bags and, you know, supporting more strategic bitcoin reserves, which it’s interesting that it’s all happening so quick. but yeah, there is something kind of, the fact that the code exists, the fact that we have the technology to offer this privacy, but we don’t and it’s not bigoted to more protocols.

Corbin Fraser 01:27:09 suss. Right. It’s just it’s weird.

Vlad Costea 01:27:13 Yeah. It seems like we got fact checked by the Bitcoin Cash podcast guy.

Corbin Fraser 01:27:18 He says you should have him on. Actually, he’s he’s great. Jeremy. Jeremy’s great.

Vlad Costea 01:27:22 Satoshi did, in fact, predict mining pools, which he called server farms. It was part of the design implicitly. I sort of disagree here, because it was also Satoshi who emailed Laszlo and tell them, hey, could you please stop with your GPUs? I want everyone to mind with their CPU. So maybe that he saw this coming, but at the same time he did not want it and had no idea how to solve this without becoming this sort of dictator who tells everyone, okay, from now on, yeah, you can only mine with your CPU. And this was before Monero. Yeah.

Corbin Fraser 01:28:00 Kind of the same thing with like them telling Wikipedia don’t do this yet. Or was it Wikipedia? No. It was, Wikileaks. Wikileaks. Yeah. Being like no, no no no that’s not that’s not rush it.

Corbin Fraser 01:28:10 Yeah guys we’re pretty small here. So yeah.

Vlad Costea 01:28:14 And he also says the same Bitcoin Cash podcast account says BCH has a one year upgrade schedule since 2020. Post xQc, huge efforts have been made to minimize upgrade and convenience each time. I guess this was this comment was posted in regards to your I think statement that every six months there is a hard fork.

Corbin Fraser 01:28:37 I think it used to be six months, and then I think they did scale it back to a year, which was yeah, that’s still nice. It’s still annoying, but it’s still nice. Nicer than six.

Vlad Costea 01:28:47 I remember nine months ago or something. I was part of a Twitter Spaces call, which was, I guess, one of the first moments when BTC developers wanted to talk with BCH developers and try to learn from each other, share some lessons, tell to each other, okay, we’ve done this and you’re doing this. Especially now that BTC is trying to add some opcodes that were removed, like bobcat or something that is entirely new, like CTV and BCH already has that and something else that BCH has, and maybe We forgot to mention in this episode is called Cash Fusion, which is a form of Coinjoin.

Vlad Costea 01:29:29 And it’s supposed to offer some of that privacy, even though it’s not perfect because it doesn’t hide amounts. It just obfuscates the origin of the funds. So it solves part of the sender privacy problem. But it doesn’t solve the amounts privacy problem. But my point is that technically there are more differences than this. One has a small block size, and this one has a larger block size in times of high demand. So there is a bit more to this story than just block size.

Corbin Fraser 01:30:05 Is it Mike Hearn? I think it was Mike Hearn. Yeah, I think he was the one that predicted that the bitcoin if if these forks were to happen that it would decay. I think he was the one that I was trying to remember the name of. But yeah. He left Google in 2014 to focus on Bitcoin full time, but quit the project in 2016, famously declaring that it’s a failed experiment.

Vlad Costea 01:30:30 I remember that because I wanted to buy Bitcoin at the time, and when I saw his statement in the Wall Street Journal or something, I was like, I’m so happy I didn’t buy it.

Vlad Costea 01:30:40 Hahaha. Like, I was so smart to wait because look, it’s it’s a failed project, so why bother? And then the next year it came back to $1,000 and I got slapped in the face.

Corbin Fraser 01:30:53 Yeah. That whiplash. It hurts, man. Still hurts.

Vlad Costea 01:30:57 It still hurts. But, because it it’s one of these moments when you realize that on one hand, you’re being misled by mainstream media and they’re telling you the stories that maybe they’re financiers or whatever want you to hear.

But on the other hand, mainstream media will never make you rich. So if you follow the news on CNN or whatever. And that’s your main source of news. And you believe that if you follow these news, you’re going to be able to time the markets or whatever and get rich.

You’re way behind by the time you know that there’s this sell the news event that happens. By the time you see it on TV that something went up. Yeah, big players are going to be selling. So unless you’re opening short positions or something and you’re good at this and you know how to manage it, you’re late.

Corbin Fraser 01:31:50 Yeah. There is something to be said about just the dollar cost averaging. You know, it, set it and forget it. It’s kind of nice. It’s nice to do. It’s nice to be able to do.

Vlad Costea 01:32:02 Also want to get into more Bitcoin.com stuff. But before that, let me plug two more sponsors. One of them is Hotaling, which is based in Switzerland, and they’re offering self-custody solutions for people who don’t know how to set up their own self-custody, because maybe they have a lot of bitcoin and they don’t want to keep their keys inside of the house. And it’s a bit frightening in the event of a $5 rent attack.

So you go to these guys and they’re going to help you set up a multi-sig or set up multiple hardware wallets or something that fits your use case, because every individual or every company has different needs. And I guess they mostly work with companies that are acquiring Bitcoin, and they don’t want the CEO or the CTO to be able to access the coins and spend them whenever they want.

Vlad Costea 01:32:51 So they set up this quorum and yeah, that’s one of the use cases. So check out HODLing. And last but not least, there is no one which has grown from this peer to peer marketplace for gift cards, which is the primary use case for it. And now they also have a visa debit card for spending your coins.

They also have this centralized spot market where you can trade. And it’s very popular in Nigeria and a lot of these African countries. CEO Yusef says that he’s trying to empower the global South, and if you want to be part of this movement, where, as CEO Yusef says, everyone eats because there’s a fee that every middleman is able to get along the way.

Then check out no one’s dot com. It’s a pretty cool peer to peer marketplace, which is also ideologically driven. And now let’s talk about Bitcoin.com because it underwent a lot of changes. First of all, I want to ask you who owns it these days? You’re the CEO, but are you also the owner of the domain?

Corbin Fraser 01:33:54 I, I own 0% Bitcoin.com.

Corbin Fraser 01:33:58 Yeah. no. it’s all Roger. Roger. Roger is the the Godfather, right? Free. Roger. If you guys. I feel like maybe I should speak to because I. I’ve been watching your stuff forever, but. And it’s great. and I think you are able to cut through both camps in the sense that, like there’s the small blockers, the.

Vlad Costea 01:34:22 I don’t see the camps, honestly.

Corbin Fraser 01:34:24 I think the camps are kind of over at this point. It’s sort of just like, yeah, immunities, let’s say. But yeah. Roger is, honestly one of the kindest guys I’ve met. I’ve, I got an email from him to come work for him back in 2016, 2017, somewhere now would have been 2026, 2017. Yeah, I think it would have been around November, maybe October. And yeah. Like there was not, you know, like the, the hostile like monster that I think the Bitcoin maximalists want him to be. It’s just not who he is. Like, he genuinely does care about the economic freedom of the world.

Corbin Fraser 01:35:10 That is his life’s mission. And when people are taking jabs at him for, you know, throwing the middle fingers up at people, when he cares a lot about certain things or when he’s, you know, just talking about the things that he cares the most about and then kind of. Talking him down as if he’s, like, not a contributor to this whole ecosystem, like crypto in general or Bitcoin in general.

Like Bitcoin wouldn’t be where it is today without this guy. And I’ve seen him onboard more people to Bitcoin and crypto and Bitcoin cash to, you know, than anyone else in the world. Like nobody’s done more like yeah Bitcoin.com we’ve got like I think over 50, 56, 57 million wallets across our whole ecosystem. And the large majority of those are Bitcoin, you know?

Yeah, some of them for sure are Bitcoin cash. Some of them for sure are Ethereum. But you know, people come to Bitcoin.com and get Bitcoin first and foremost. So you know like the companies that he runs, the investments that he’s made early on, have made him the prolific person but also made him a person to attack.

Corbin Fraser 01:36:25 So I think like, you know, if you’ve taken the anti Roger pill from X to say, oh, this guy is just the creator of BK, which is not like I said, I was in on BK before he was. So, you know, the guy just wants to see decentralized peer to peer cash for the world. And I don’t think he really cares what flavor that is. I, I think he just wants to see challengers and support challengers and, like, create a more fair world where it’s not just big bankers, corrupt government.

Like, he’s like he’s the OG guy who’s like talking about some of the, injustices of governments. And, you know, I don’t have too many great things to say about Canada, and I don’t really want to comment too much on us since I’m not an American. But yeah, he’s he’s he’s been like, at the, at the heart of these debates and these discussions since the early days. So I kind of feel like the people that give him a hard time in the orange coin camp still, or the orange coin community.

Corbin Fraser 01:37:39 yeah. I think they kind of got to, like, maybe try to drink some water, you know, desalinate their bodies and kind of just realize that this guy, this guy probably did more for Bitcoin than every single one of us.

So, if that’s not worth a little bit of support for him, I don’t know what is. so I strongly encourage everyone, if you do support Roger, do support what he’s done for the whole space, go to free Roger Norberg, help this guy get free. He doesn’t deserve to be extradited. There’s a lot of chaos and weird lawfare behind his case that make me say that.

There’s like, that anti crypto administration that went after Samurai and Wasabi and Tornado and Ian Freeman and all these other guys that were just trying to build businesses and like there’s builders on bitcoin and crypto. It’s like Roger got using it. He was caught up in that like the government doesn’t want this or the government didn’t want this to succeed. Now that they’ve got a position in it that’s like well maybe the strategic Bitcoin reserve.

Speaker 8 01:38:47 They’re probably not a you know, they’re.

Corbin Fraser 01:38:48 Not opposed to buying a bunch or finding a way to accumulate more. And then hopefully China buys their bags and then other countries buy their bags. And it just becomes this weird game theory. But you know, I think, it’s not going to be seen as like the US As being like, incredibly supportive of Bitcoin building and crypto building until some of these guys are like let out or freed or had their cases dropped or whatever it takes, because it’s like, if you’re a builder and you’re like, all right, where could I go? Where could I go to go build on Bitcoin and crypto?

I don’t think anyone’s signing up yet to go to the US. Probably going to Dubai, probably going to Singapore, probably going to Japan, going to places where there’s like clear rules and consistent like over a longer period of time where things have been kind of, predictable people like if you’re building stuff and you’re building a business and putting your time and effort and sweat equity and money and, you know, moving your families, you’re probably going to want to do that in a place where you’re you’re not going to risk, I don’t know the long dick of the law coming after you right now.

Vlad Costea 01:39:59 On the topic of freeing Roger. Go to free Roger now.org and read the motion to dismiss because most of the stuff that you might read on Twitter about him, or some of the stuff that you hear from your government is covered here, and you should read this. You have all the documents, all the evidence.

This is basically the way in which he defends himself. So if you want to understand all the points of view, I guess you already know the point of view of the US government and the IRS. But you should read this too. And after that, if you’re compelled by the documents and the arguments being presented, there are 14 of them, 14 exhibits, then sign the petition.

I don’t encourage people to blindly do anything based on some sort of affinity or affiliation thing for yourselves and read this first. And I just got the most funny comment ever on Twitter about Roger. There’s this guy named John. He’s at Pac Art collector on Twitter and he said, Roger sold out on Bitcoin.

Vlad Costea 01:41:08 What the fuck? Roger sold out on Bitcoin. He’s angry because he’s a BSV supporter. Just let this sink in for a moment. Roger sold out on Bitcoin.

Corbin Fraser 01:41:26 Is that because the Bitcoin SV people still call bitcoin SV Bitcoin.

Vlad Costea 01:41:33 I guess no no. I think the meaning is that he or am I misinterpreting this sold out on bitcoin for me means that he chose Bitcoin sold out on. Or does it mean that he gave up on something but he was never on the SV camp so no. Makes no sense.

Corbin Fraser 01:41:57 So when you had Roger on you, you were kind of asking him about, you know, would he ever support some of these other deltas? And I think you guys had maybe discussed briefly, maybe it was rootstock and some of these other things. you know, I brought that stuff up to Roger before as well. And I think he’s kind of, of at least the reed I got was like, open to anything. Like he’s not a maximalist in any camp anymore. I think for a period, for sure, it was just BGH only.

Corbin Fraser 01:42:31 but I think he’s kind of like become a little bit more, you know, he’s evolved. He’s evolved, like all of us, you know. I was for sure a maxi for a little while. And then I stopped being that. And, you know, people change, I think, I don’t think anyone sold that on anything. You just. You live and learn, right?

Vlad Costea 01:42:54 I think the market is sort of the best mechanism for humbling anyone. It doesn’t matter how big you are, it doesn’t matter how right you are. Many consecutive times, at one point you’re going to lose. You’re going to learn. And it doesn’t matter if you’re Bitcoin only either. If you’re BTC only you’re going to be wrong at one point. Just like how long has it been? Four years ago, I was very convinced that Bitcoin is going to go to $100,000 during the bull market. I remember I was so excited about Tesla accepting bitcoin. I was so high on the opium I was thinking okay this is it.

Vlad Costea 01:43:37 This is the moment we’re going to go to one 100 K. And then Elon with just one tweet brought like a four month bear market until it came back again. It was insane. And he was pushing Dogecoin at the time. It’s still crazy to me that Dogecoin is merged mind with Litecoin and Litecoin. going stir saved Dogecoin. And right now Litecoin, which is being used much more in commerce, is less popular on markets than Dogecoin. Still, after all this time, it’s really incredible. It’s as Ellen says, I guess, that the most likely outcome is the most entertaining.

Corbin Fraser 01:44:19 We we would regularly have these Elon bumps to Bitcoin.com whenever he was doing those tweets. yeah. Like occasionally just, you know, DDoS products or website would just get hit with a ton of traffic during those periods. And it was like this Elon effect of like, oh, why did we break new all time highs on installs? Oh, yesterday Elon put a tweet up. Okay. That makes sense. Sure. Yeah.

Corbin Fraser 01:44:49 yeah. It’s interesting. I mean, I think the shocking thing is that You’ve got someone like Donald Trump now talking about Bitcoin, and you’ve got the US government now and the administration talking about bitcoin. And it’s like it doesn’t seem to be moving the needle as much as the old Elon once did. And I think there might that could be due to the market exhaustion.

That could be due to just we’re not at that point in the cycle yet. We’re retail’s excited. and I saw some tweet this morning of, a poll that was I think it was shared on mainstream media, and it was like a screenshot of someone’s TV, something like, would you would, would you be buying Bitcoin or something like that?

And it was like 84% like, no. And it’s like maybe 14% or yes or something like that. And yeah, I mean, like, I think there’s we’re in a weird cycle this time relative to the previous ones where there’s so much FOMO and so much excitement from like, the public and, and we’re sort of like, still feeling the repercussions of the past relative to like FTX drama, the Luna stuff, NFTs being a thing for a while and then not being a thing at all.

Corbin Fraser 01:46:05 And now it’s kind of like rebuilding some trust with retail that like, hey, the stuff is there’s still like an underlying value to what cryptocurrency projects are trying to build. Not all of them. There’s of course, bad actors and every everything.

But you know what, what’s happening is like, it just kind of feels like there’s not, we don’t have Paris Hilton going on, like Jimmy Fallon or whatever, being, like, I’m buying a monkey jpeg. You know, we haven’t seen that. We haven’t seen that part of the cycle yet. will we again? I don’t know, maybe.

Maybe that was it, right? Maybe that maybe now it’s just, like, more serious. But it could also be six months later. You’ve got Kim Kardashian doing another, you know, crypto promo for some random altcoins or something like that, or Kanye is going to launch a swastika meme coin or something like that, you know?

Vlad Costea 01:47:01 I’m actually following Kanye West closely right now because I believe this is just my personal belief.

Vlad Costea 01:47:08 He keeps teasing that he’s going to launch a coin at one point. He circulated this press release and CoinDesk did not respect the embargo. And they publish that something about a coin and very specific details. And of course, it did not happen.

I’m not sure if if this was just a publicity stunt or it it was stalled by the fact that the embargo was not respected and it became public. But my point is that I believe that Kanye is trading on Poly Market because there is a market for him that specifically asks the question, do you think Kanye West is going to launch a meme coin?

And there are moments when he posts about it and a lot of people buy yes shares, and then he ignores it for like 2 or 3 weeks and doesn’t mention anything about it. And that’s when it goes down. And he could be gaming this. I mean, it’s so easy.

Corbin Fraser 01:48:05 I like the idea of, of Kanye being in the trenches in poly markets and trading on sentiment. I find that kind of funny, I hope, I hope he is.

Vlad Costea 01:48:17 I also believe that Kanye is not as stupid as he pretends to be. He used to walk around wearing Satoshi Nakamoto hats and now he acts like, oh, what’s Bitcoin, I don’t know. I have no idea about this. How does it work? Okay, how about I launch my own meme coin? I think now his narrative is that he got deplatformed by Shopify, and he’s trying to create his own coin to use that to purchase stuff on easy.com. I’m not sure how that’s gonna work out. I feel like we’re going back to 2017 when there was dental coin. and people were creating a token. Yeah, exactly.

Corbin Fraser 01:48:58 Yeah.

Vlad Costea 01:49:01 There, there was a chain or a coin for everything that you could possibly imagine.

Corbin Fraser 01:49:07 Yeah, I don’t necessarily.

Vlad Costea 01:49:08 There’s already a Kanye West meme coin. It’s called coin West coin.

Corbin Fraser 01:49:16 Yeah. I think the meme coin, I don’t know, it does kind of feel like, at least in the last month, that the meme coin meta has sort of devolved, maybe like interest is kind of like waned a lot from just like a few months ago where everyone was following in to fart coin and everything.

Corbin Fraser 01:49:34 and now everyone’s like, oh, after like the melodrama with, what was that? Libra? And then, yeah, there was the Trump coin that did pretty well and then not so well. And then Melania.

Vlad Costea 01:49:46 Trump for this because he brought nihilism into the market. Before that, it was super optimistic and positive, and it seemed like the best possible timeline. And then he brought his meme coin, which went into the top 20 CoinMarketCap ranking in one day for only trading on one market, which was the Dex on Solana.

And when you see that happening and you understand that it actually happened, and this is top 20, now you start asking questions like, wait a second, if this is top 20, then what about the others? Could you argue that they’re overvalued a bit because this one was able to pull this off on the price is a bit too high on everything else. Like, can’t the same phenomenon happen to any other coin where you get it popped into the top 20 just like that by a bunch of people? So yeah.

Corbin Fraser 01:50:43 Like Arthur Hayes was, interviewed by our news team, Bitcoin.com News.

Vlad Costea 01:50:50 I saw that they. Yeah. Great. And,

Corbin Fraser 01:50:53 Yeah, he, and he he talked a little bit about how he feels like a lot of crypto projects are just overvalued. Everything’s overvalued, and that his belief is sort of like, things need to come down to actually get more investors back in because, like, nobody wants to buy the top. And, you know, when you look at kind of, the on chain treasuries of some of these different projects, like, do they justify the price that they’re currently trading at, or are you just buying the VCs bags, you know, the early investor bags.

And, yeah, it’s kind of an interesting, you go through that, that CoinMarketCap list or the CoinGecko list or whatever. Yeah. There’s a lot of stuff in that top 100 that kind of does occasionally make my head go tilted and wonder what that what. Okay. Yeah, but the markets, like you said, you know, they can humble you.

Vlad Costea 01:51:48 What would you say is your main takeaway from the block size words? And if you could go back, you mentioned something about pushing bigger blocks in 2015. But if you could go back in 2017 at that one point, do you believe there was something that could be done to prevent a hard fork? And I don’t mean hard fork in the sense of an upgrade. I mean, this split between communities.

Corbin Fraser 01:52:15 I think a modest two megabyte increase would have deflated the potential chaos by a huge order of magnitude. I think it would have made BCH unviable contender from day one.

Vlad Costea 01:52:31 Do you think there was any sort of malevolence at the time, because the New York Agreement was vilified so badly for like a couple of years after And people sign and get were presented as enemies of Bitcoin or something.

Corbin Fraser 01:52:51 So I think there’s like some people that do feel that there were state actors involved either at that time, before that time or after that time. I don’t know if I don’t have any, any real proof or anything like that.

Corbin Fraser 01:53:09 Besides, maybe it would make sense if I if I saw this challenging asset coming in, what would I do to create the most chaos, to reduce its impact or reduce its ability to succeed? A lot of the things that they did hurt, I would say Bitcoin’s overall network effect.

And yeah, I mean, if you pull on that string or where the tinfoil hat tight enough, you might say, yeah, seems fair, seems like a possible thing. But, I think there was a lot of like, you know, the road to hell being paved with good intentions. I think there was a little bit of that as well.

Like people just were trying to do the right thing. They thought they were doing the right thing. They were maybe getting enough feedback from the right people or from their circles, or they were in their bubbles. And, you know, kind of it’s probably a mix of probably a mix of mix of both. That or it’s just the latter, but I don’t know.

Corbin Fraser 01:54:03 I think there’s a lot of a lot of special interests that don’t want Bitcoin to succeed. even now, even with the administration, even with strategic bitcoin reserves there, there’s groups that don’t want bitcoin to be a thing. You know, you see this with, the IMF deal with El Salvador, you know, trying to like encourage them to say hey, hey, hey, hey, hey, we’ll give you this juicy Billy Dollar loan or whatever it is, but you guys got to stop doing some Bitcoin stuff. Got to cool your jets there, Bukele and, Yeah, it does make you wonder.

Vlad Costea 01:54:41 From the point of view of a big blocker, how does it feel to see that Blockstream did not succeed in pretty much anything there? Sidechain is a failure there. Lightning client is a minority client. Very few services use it. Their mining operation, they they try to. I think that’s the only profitable project. Their wallet is not very popular. Their hardware wallet is not very popular. They tried on purpose to make liquid very compliant and in line with regulations.

Vlad Costea 01:55:11 Then they said you can do tokens just like on Ethereum, but with privacy. It did not work out because it turns out Wall Street or whoever they were shilling liquid to also like something that’s not very regulated and is more free and gives them more freedom to build stuff. So does it feel good to see that Blockstream? On one hand, they seem to have won the block size wars, but they lost from a business point of view on every front.

Corbin Fraser 01:55:42 Yeah, I mean, my initial one word reply was joy. But, yeah, I mean, like. I think the people involved in Blockstream, there’s probably some really hard working developers that want to make this thing work. But I’ve seen this in Bitcoin.com, too. You know, we we’ve had we’ve had developers. That start something and they’re just, building for the sake of building, you know, there’s momentum that’s put behind a project and there’s lines of code that have already been written, and it’s easier to just try to solve these, like, little quirks and problems rather than go back to the whiteboard and say, like, maybe we should try something else.

Corbin Fraser 01:56:34 And you kind of get this like pot commitment for these ideas. So on the one hand I yeah, there’s a little bit of what is it schadenfreude. But then there’s also like. I would hope that that some of those builders that are trying still will come see the light and say, let’s try something else. Like I want more building on Bitcoin, I want more building on crypto. I want to see more people trying things that do support using Bitcoin as a peer to peer cash system, whether that’s L1 or L2 or some other thing.

I do think the permissionless aspect is kind of critical for this thing to succeed. I do believe in self-custody first, you know, and I think, like, certain compromises may need to be made in the short term, which I think maybe that’s it seems like that’s sort of the small blocker camp position where like, it always struck me as really strange that that when the big blockers would say, well, you can use it for money, they’d be like, no, no, no.

Corbin Fraser 01:57:49 Well, you can use bitcoin as money to just you have to use this lightning app. And it’s completely it’s, you know, just try it guys. It’s totally fine. And then kind of read the, the the fine print and it’s like oh this is a custody wallet okay. And technically I guess it works until it doesn’t. Right. Or until the funds aren’t there or until you’re your channels censored, which we’ve seen.

So yeah. Yeah. It’s strange, but yeah, weird like joy. But I hope that some of the, the, the people that are actually building those tools will continue to find success in new tools that they perhaps want to build that are more useful or don’t have some of these flaws that I think are going to prevent them from being successful and so far have prevented them from being successful.

I think there’s infinite upside in like, the things that we can build as a human race on chain. I think there’s like, I’m like a tech optimist in that sense. But yeah, I think like there are paths that you can just say, hey, that didn’t work.

Corbin Fraser 01:58:58 Try something else.

Vlad Costea 01:58:59 So from the point of view of someone who remembers Bitcoin being used on Expedia, on steam, on all of these services back in the day, before it was before it was to Bitcoin camps. How does it feel to watch tether and stablecoins in general do what Bitcoin was supposed to do in terms of adoption? You see all of these nations, all of the unbanked people who don’t have access to bank accounts They use stablecoins.

And to me, it’s a bit painful. It feels like we sort of got defeated because they use a proxy for the US dollar, a substitute for it basically that is valued as much as the US dollar and is being traded on these permissionless networks. It used to be Bitcoin two where tether was launched, but it’s not BTC that got this adoption, at least not yet. Does it feel like we failed in some way?

Corbin Fraser 02:00:05 On the one hand, I feel like I feel like, stablecoins have added a lot of value to Bitcoin that probably wouldn’t be there without it.

Corbin Fraser 02:00:14 Like being able to enter and exit. The volatile aspect of it has probably saved a lot of people in those periods of uncertainty. so in some ways, thank you to tether, you know, thank you To circle like they’re helping people. but I do think when you pull on the thread of, like, has this weaned or neutered Bitcoin adoption and being for it to be used as money for the world.

Perhaps. Yeah. you know, I think you could even go a step further and say that. Yeah, like stablecoins could be the Trojan horse for CBDCs, right? Like, it’s all on chain. It’s all public. Maybe you don’t necessarily have, like, the ability to hone in and like, censor an individual, but you can censor an address, you can censor, you know, you’ve got blacklists on on tether.

This is how they stop some of the major hacks and stuff like that. So yeah, it does make me kind of wonder if the, if the stablecoins are actually the panopticon or if they’re a net benefit in the sense that any.

Corbin Fraser 02:01:33 Private fiat issued currency. whether that’s like the US dollar or the, you know, Eastern Caribbean dollar, like they can all technically go on chain and provide some value to their users. And maybe there’s an easier onramp for individuals in different regions to come on board via stablecoins into the on chain decentralized money of Bitcoin and Ethereum and Bitcoin Cash and Zeno and any anything else.

So, that’s maybe a wishy washy answer of like, maybe, maybe it could be. But I don’t know. I guess right now I, I, I’m taking the information of where is tether putting their profits. Right. And they’re putting their profits into, well, more than just crypto right there. It seems like they’re diversifying. So they’re supporting, rumble.

So like competitor to YouTube. YouTube is extremely censored platform content creators at the very difficult time saying anything that’s even an iota too close to the edge. and Rumble has scratch that itch for a lot of content creators. so that’s maybe a net benefit for humanity. more more competition in the in the content space.

Corbin Fraser 02:02:53 Great. you know, we’ve we’ve seen their investments into, like, different payment services and things like that in El Salvador and, making these, like, different AI plays as well. I don’t know, it seems like they don’t seem like, they’re doing evil, if that makes sense. Will that always be the case? I don’t know, yeah.

Vlad Costea 02:03:18 Yeah. The there are two points of view. There’s the conspiracy stuff From journalists like Whitney Webb, who’s very convinced that the Trump administration will not do a CBDC because they can control terror, and that one is going to turn out to be the CBDC.

And then you have optimists who say that terror is basically like the Trojan horse that teaches people how to use the wallet, how to buy coins, because they do need something to pay the gas fee. They need Ethereum or Tron or Solana or whatever. So it’s interesting to see this, but I do hope that eventually it all comes back to the most decentralized and resilient technology. And I don’t think we’ve had anything better than Bitcoin from this point of view.

Vlad Costea 02:04:08 We’ve had faster stuff. We’ve had more private stuff, but with various trade offs. Yeah, I know we’re about two hours into this interview and maybe you have other stuff to do, but I want to make this point towards the end of the episode.

Whenever there was a talk about a block size increase in Bitcoin, it was controversial because technical arguments were brought. At first it was about storage. They said, you know, it’s expensive to store this.

Then when storage became cheap, they said, well, bandwidth is still very expensive in some countries and it’s sensible at this point to maintain it at this level because, you know, it’s hard to get internet in some village in Africa and you tend to agree you’re like, okay, but then you get Starlink internet and you realize, okay, you can now have internet in the middle of the desert at the speed of broadband, it’s pretty good. It’s reliable. Then you’re going to get more competition for Starlink. The prices are going to be brought down.

Vlad Costea 02:05:12 But what you really discover during this evolution of technology process is that it was never about technical arguments. It’s most likely about social consensus. The fact that some people accept this and some people don’t. And what Bitcoin BTC is trying is to keep everyone on one chain, even if they’re not happy.

And the alternative that they have is BCH, which unlocks some potential, but at the same time has lower liquidity and fewer users. And I still believe that BCH is sort of this blackmail chain. It’s running because if anything goes wrong with BTC, it can take the miners, you know it, it can become the dominant chain. It becomes more unlikely as time goes by.

I think BK is going to run into an existential crisis as soon as more halving cycles happen and the rewards are diminishing. So the price does need to go up for them to be able to keep the operations going. But it it it’s interesting and it’s open source. It’s permissionless, it’s cypherpunk. And I’m not mad that it’s out there.

Vlad Costea 02:06:30 There are people who are mad that BCH exists in the first place and that it’s survived over the years. I think this sort of competition between networks and the fact that you have alternatives and a backup plan or whatever is interesting.

Corbin Fraser 02:06:48 Yeah. Like I think, do you know who George Hotz is?

Vlad Costea 02:06:55 I don’t think so. Let me look it up. How do you spell that, George?

Corbin Fraser 02:07:00 George G.

Vlad Costea 02:07:03 I know how to spell George.

Corbin Fraser 02:07:04 Yeah, he said George Hotz. Geohotz. Yeah. He, he was like, the first guy to hack the iPhone.

And he was like, the guy that got, Sideloaded apps were working on iPhones, and I think he was like, he was like a kid when he had the Sony PlayStation. And, he’s now got he started comma AI, which was like a an open source DIY self-driving car tool that you could plug into your, into certain cars and then let them drive, kind of like full Self-Driving mode on on Teslas and stuff like that. you know, he’s contributed to Twitter and contributed to, he just started Tiny Corp., which is like a build your own or I think it’s like an LM in a box, company.

Corbin Fraser 02:07:55 But he’s got a great timeline, and he talks about, like, the professional management class and how he’s just, like, extremely opposed to, like, design by committee and like these ideas of these people that just, like, slow progress to a halt by creating an environment where people are seeking permission instead of moving to just try things. And I think that’s something that Bitcoin has kind of been invaded by. It’s like you’ve they’ve kind of got a bit of a professional management class within it. If you’re not in the circle, you’re out.

And if you can’t get consensus, you end up like Paul Storch who’s just been beating this Bip 300 and Bip 301 for how many years now? We’ve been talking about drive chain. And yeah, it like the permissionless building of Ethereum was one of the coolest things I saw in a long time, where it was just so fast and people were deploying new, new code every day, new new smart contracts, new products that were just launching. And they’d launch it and some would fail and people would lose money, and some people would make money, and it’s chaos.

Corbin Fraser 02:09:07 But it was also like fun. And it was also how you got to a point where we have, you know, now Uniswap v4, you’ve got lending borrowing tools on chain. You’ve got perpetual, you’ve got bull tokens and bearer tokens and you know, NFTs and governance voting. And a whole ecosystem has been built around the tools that, were just launched on chain without anyone having to ask for permission. And I feel like that’s probably, I mean, Ethereum price. Oof, not good right now, but it does make me feel like the EVM aspect of it, and the ability for anyone to just deploy code without having to convince the miners, convince the developers, you know, negotiate, meet with people, talk about it for eight months, think about it, debate it again, gets pushed back another year.

Like that is probably the thing that could kill Bitcoin is just other projects being able and more willing to move faster. And yeah, I would hope that Bitcoin has a mechanism to support moving faster without the PMC, without the the need for consensus, where you can just try and fail and you might lose money and you might win money and you might create a community and it might all go to zero, but you kind of need a place for an innovative layer to exist on Bitcoin.

Corbin Fraser 02:10:47 And right now, yeah, it’s all happening off Bitcoin. So, it’s great that Bitcoin’s available for anyone to buy you know sell swap. They can transfer it without permission. There’s some aspects that are completely permissionless and that’s great. But for people that are trying to build it’s not as supportive as other other projects.

Vlad Costea 02:11:10 If I close my eyes and imagine that you have sort of this East Coast accent, I could believe that your pulse starts for a minute there. Telling people about drivetrain.

Corbin Fraser 02:11:25 Yeah. He’s a he’s a smart guy.

Vlad Costea 02:11:29 He is. And I think he’s very much ahead of his time. Even though people say, oh, you came up with this drivetrain ten years ago. It’s old. We have this new flash Elta system. It still doesn’t solve the security budget problem of the SSC Rob stuff. It’s exciting. I do want it to happen because all of this stuff is bullish. It’s good to have more users and more use cases, but ultimately you need some sort of way to pay the miners and to keep the proof of work going.

Corbin Fraser 02:12:05 Yeah, I mean, I think that’s been Ethereum’s biggest problem with their blobs is that they’ve they’ve made it so cheap for anyone to launch stuff on Ethereum where it’s like they need to add some tariffs. It’s the ironic part. They need they need a Donald Trump version of Vitalik slapping tariffs on every single L2 to support the value of Ethereum, because right now just they’re selling space at a discount like a and then the lights are just like profiting. And now they’re trying to debate amongst themselves who’s most ETH aligned in terms of what they’re doing with their ETH treasury.

And are they burning it or are they. Are they spending it or are they selling it, to whole the whole weird other problem that they’re dealing with over there. But I think those are potentially similar problems that Bitcoin could come across if and when it does have its own innovation layer or ability for people to start rolling up chains and creating these alt l ones or sorry, L2 that somehow roll back up onto to L1 via what VM to. Is that the latest thing that they’re pushing now? yeah.

Corbin Fraser 02:13:15 It’s interesting. But like the good thing is there’s other projects trying, right? And people can learn from other people’s mistakes. So in that sense, maybe it’s good that people are trying and failing in other areas.

While Bitcoin can kind of move a little bit more slow and gracefully and purposefully, in some aspects, like I wouldn’t want it to become Bitcoin Cash where it’s doing a yearly upgrade, that would be probably too risky for how much activity we see on, on, on Bitcoin in terms of, the network effect. It’s just very risky to make those changes on, on the, on the main chain right now. but you gotta have some place where people to build without having to seek validation from whoever. Peter. Todd, you know?

Vlad Costea 02:14:06 Yeah. But at the same time, there’s always the Peter Todd in the conversation who says, you know, there is a testnet for that, but how how do you get newbies and people who don’t care about this? They just want to gamble on the testnet? Or how do you evaluate how much liquidity or how much how much of a market share you’re going to get with this unless you launch some sort of live net?

Corbin Fraser 02:14:30 I agree.

Corbin Fraser 02:14:31 I mean like probably the, you know the was it of all they had V1 and then V2 and they had some issues early on and they improved them. But I don’t know if they would have improved them if they hadn’t been on mainnet without like real money at stake, where the incentives are to beat the shit out of this protocol.

See if we can steal the money. Right. This is like you’ve created like a an opportunity for both a white hack, a white hat hacker, and a black hat hacker to potentially, you know, stress test these things. But you can’t really get the same level of stress test under a testnet because there’s just no financial incentive. Nobody’s going to.

Then the only way to do that is to like. You need kind of like the VC money, or you need an OG whale to say, hey, I’ll put up some money into this. If anyone can break in, I’ll pay out a bounty. But it’s not quite the same as like having stuff in production and being able to try and fail fast.

Corbin Fraser 02:15:35 And you know, as long as people know when they’re integrating or interacting with those experimental projects, that it’s like to do your own research on anything, just only put in what you’re willing to lose. Don’t be crazy. you could lose it all. It’s just brand new or it hasn’t been audited or it’s only been audited once. It needs probably a few more audits and maybe a little bit more time to cook before you should go. Tell your mom and dad to sell their house and sell their car, and put their money into this new lending protocol that lets you borrow against your Bitcoin. And it’s like, yeah, make smart decisions.

Vlad Costea 02:16:21 Yeah. And once again, it’s a very interesting market. I have to ask you this. Does Brock Pierce have any involvement in Bitcoin.com? Not because I do remember seeing a video of him in which he was talking about Bitcoin.com going Bitcoin only, and he was arguing that he is not a big fan of the idea because he’s this market competition maximalist. But if the market demands for it, he’s all for it because he follows what the market asks.

Corbin Fraser 02:16:54 Yeah, I mean, I remember seeing that video, I’ve met people within Brock’s circle. Interesting people. I think there is. I would say there is like an interest in terms of like what’s happening in Bitcoin with kind of a Bitcoin renaissance of like all of these new ltas and all these people that are just like in the last year, from the ordinals and all the other things that were kind of like just being launched. It did feel for a while and maybe even still does that, like people are building again on Bitcoin and that’s exciting. I don’t know if the market has necessarily moved back to Bitcoin yet.

We haven’t seen a mass exodus from, you know, other ether Solana to say, hey, we’re just going to redeploy these contracts on this new Bitcoin EVM. But maybe that could when the right one comes along, maybe when people build enough trust in one I don’t like, I wouldn’t fade the possibility of one of these Bitcoin L2 or Sidechains that have an EVM layer that have, been beaten up enough where people can trust them to have some of these, like major players in DeFi that are primarily on Ethereum and other EVM chains to say, yeah, let’s get on there.

Corbin Fraser 02:18:17 That seems like a no brainer. There’s a ton of potential Bitcoin users that we could offer these same services to. Of course, I mean, they’re they all want to make money right. So I kind of think that very possible. Yeah. But I mean, like in terms of will Bitcoin.com ever just stop supporting other assets? No, no, why would we do that? We’re going to support as many things as possible.

It’s kind of like, there’s been a few Bitcoin companies that started as like bitcoin companies. Then they added more chains or added like some stablecoins, and then they went back to just being Bitcoin only. but I don’t think they typically do as well as the ones that just kind of like, hey, support the market support what’s happening. There might be new things that come up.

Yeah. So I think like having like a wider casting, a wider net for new projects. It’s great. We want to be able to support new things that are happening, new interesting things, new, you know, if there’s new ways for people to earn, using their crypto and it’s safe and it’s trusted and, it’s been beat up enough, you know, yeah, we’d be eager to integrate more things.

Corbin Fraser 02:19:35 we are looking at Bitcoin layer two like we have been. We have devs digging into Citra. We have devs digging into strata. We have you know, we’ve had guys digging into root rootstock and some other things. So like the interest of having Bitcoin.com support of Bitcoin layer two is high. just whether we can find one that we feel confident enough to say, let’s show it to our users.

And hopefully it’s not going to like be a big giant rug. So will we be the first to integrate one? Maybe not, but like I think once, once there’s some confidence in, main net L2 that does support some of the ideals of Bitcoin, I would say.

And when I say that OG Bitcoin like being able to use it as money for the world and all the other things. Yeah. Why wouldn’t we? Of course we would support one of these, maybe more. but I don’t know if we’d ever retract and say like, hey, we only do orange coin now.

Vlad Costea 02:20:34 So you recently listed Zeno, which is right now number 411 on CoinMarketCap and CoinGecko.

Vlad Costea 02:20:41 And my question is, by which criteria do you choose something that you’re going to list, which what are you looking for more. Exactly. Because it seems like there are like 400 projects ahead of this that you could have picked for listing, but you didn’t. You went for this one.

Corbin Fraser 02:21:00 I think for us it’s like what? What provides utility for users. And, you know, we do these user surveys across our ecosystem. So anyone with our wallet app or if you’re in our email list, we send out some occasional user surveys like what’s what do you wish that your wallet had that it doesn’t have right now. And occasionally people, you know hit it with Doge or like we just want Doge so all we care about.

But then the recurring thing going back several years for some of these surveys is that, privacy is a big one. People want privacy because if you have any value on your wallet, like more than a few grand, it’s kind of like it’s kind of scary. You kind of want to be confident that if it’s in your wallet, you don’t have to worry about prying eyes.

Corbin Fraser 02:21:47 And, yeah, it seems like it solves a use case for the self-custody angle, at least for us. But yeah, like in terms of, like our, our listing process, I mean, we support every token we have, you know, wallet connects. So like any, any ERC 20 token on an EVM chain we support in our wallet, we are always looking for, for for new chains to integrate. it’s kind of just like what tickles the developers the most.

Yeah. Because again, going back to, like, we need a champion for pretty well every, every project like nobody’s that nobody’s there is no champion for them to coin. Do you know what I mean? But finding a champion for privacy, pretty easy to find amongst, a team of of crypto devs.

Vlad Costea 02:22:37 Yeah. Right now I’m looking at the Bitcoin.com wallet, which I’ve installed on my phone. Seems to have BTC bacterium, avalanche, polygon BNB.

Corbin Fraser 02:22:48 You’ll have to add wallet for Xana.

Vlad Costea 02:22:52 did you also add Monero or Zcash? That was going to be my follow up.

Corbin Fraser 02:22:58 Yeah, we would be, open to it. I mean, I think if we again, if we find the right champion who wants to like take on the, the battle, in the wallet space that we can do. Yeah. We we we don’t really pick any sides right now. It’s just we thought privacy is cool.

Zeno seemed like a fun one. I think we like the idea of. I mean, especially because we do think about it from, like, a profit angle. Like Zeno having tokens does give us a greater long tail potential revenue path for the wallet to generate more income through swapping from like a Zeno asset to another token on Zeno.

So being able to kind of support more things with one chain kind of easier than just supporting one chain that only has one coin. Or like Monero, you only get more narrow, arrow right with Zeno. In theory, we might get hundreds of tokens as a result of integrating that one chain.

Vlad Costea 02:23:55 Okay, so you believe it’s like the next Ethereum, but what? Privacy?

Corbin Fraser 02:24:01 I mean, yeah, I think there’s a lot of Ethereum projects that are trying to solve that.

Corbin Fraser 02:24:06 You know, there’s data ownership protocol. There’s a rail railgun, a rail rail gun, railway rail gun, rail gun. there was SSC money for a little while and then they after tornado, they kind of went dark on that one for a little bit. or Aztec. I think it was.

I think I think they’re still around, but I think they shut down the Zeke money part. so. Yeah, like, we’ve been kind of keeping an eye on, like, the privacy space for quite some time. And then it was just like, well, we got to take a pic on one and let’s just commit for a few months of building, integrate it and see it through to fruition.

I think Zeno. Yeah, has a strong possibility of having its own ecosystem. Its going to be small at first, but all the good things are right. So, yeah, for us, it’s just like an opportunity to support another ecosystem. You know, it’s no secret that there’s some people that don’t like us, and there’s even some people that don’t like us.

Corbin Fraser 02:25:04 it’s kind of nice to be liked by a community for a change. You know, Santa seems to like us right now. It’s cool.

Vlad Costea 02:25:10 I guess this is the best position, right? When everyone has a reason to hate you, you must be doing something right.

Corbin Fraser 02:25:18 I hope so, I hope so, yeah.

Vlad Costea 02:25:22 So, Corbin, how can people follow you on Twitter? You’re the CEO of Bitcoin.com now. You’ve been the CEO for a year or a bit longer than a year. you’re also on these podcasts and live streams. I see you on Twitter slash X.

Corbin Fraser 02:25:39 Yeah, we do these, live streams on Friday, Friday morning, Asia time. So what would that be? Thursday night? America time? And, yeah, we do these token narratives and we just talk about the crypto space as a whole. I’m occasionally reading out some, some news updates for Bitcoin.com news. yeah. You can find us at, at BTC, TN, which is the Bitcoin.com news channel. Twitter we’ve got at Bitcoin.com, which is like the official brand domain Twitter.

Corbin Fraser 02:26:09 And then we’ve got, yeah, my own personal, which is just at maple Syrup sucker. But instead of er at the end, it’s just, I think due to character limits or something like that old, old, old alias. but yeah, you can find me there and, Yeah, make sure you come check out Bitcoin.com, like, if you haven’t seen it in a while. play around with the news, try out our wallet app, Self-custody, if you want to try.

Zeno, go download the Bitcoin.com Wallet app, hit the add wallet, and then you can add Zeno in there. we haven’t enabled it by default on all of them, because you do have to sync the whole chain. because privacy wallets are fun. They they all need to be synced. whereas, our back end can resync wallets for, you know, Bitcoin and some of these other chains. so yeah, go, go, go play around with it, try out Bitcoin.com. and we’ve been around since, the news has been around since 2015, but the wallet’s been out since 2017.

Corbin Fraser 02:27:06 Got swapped by side shift in there as well. You should go try out the swap feature by the the show sponsor, side shift. actually, Side Shift was like one of our earliest integrations into the wallet app. so they when they did, they launched their first API and it was kind of like built around like ShapeShift was like a really big swap provider for a while.

And then they had to add KYC because they were American. And again, all these like anti crypto things were just making it so hard to do crypto businesses there. They had to kind of like neuter a bit of their product to make it work. They’ve the sense added like Thor chain and some of these other like things which I think are still having their own issues at the moment.

But, side shift came around and they just had this like easy plug and play swap API that made it very easy for wallets to change from one asset to another. And yeah, it’s been been very useful for our users. So folks that want to come in to Bitcoin, they can when the market’s too rocky, they can get a go to stablecoins or go to other assets and you know, try out more things.

Corbin Fraser 02:28:10 Play around with DeFi, do some earning with the Self-custody. yeah. Just a good, good, beginner friendly wallet.

Vlad Costea 02:28:21 Yeah. And something I forgot to ask you about. And I feel like an idiot. It’s so late into the episode, but maybe it should be out there for the people listening to this. What was it like from your perspective when the BCH camp had at Bitcoin on Twitter and our BTC on Reddit and Bitcoin.com. While the BTC camp had our Bitcoin, and I’m not sure which Bitcoin account they had on Twitter, and the website is bitcoin.org. Was it confusing? Did did you get a lot of emails or something from people who were not getting it?

Corbin Fraser 02:29:07 We still get emails, but we get and like we get emails about some really strange stuff, like we’ll get emails about other people’s wallet apps and they’ll come to Bitcoin.com saying, I lost my Bitcoin on this wallet app called Coinbase. Can you guys help me? And we’ll get a lot of strange, strange messages from from stuff like that.

Corbin Fraser 02:29:30 So I mean like it does it does happen where people do get confused that Bitcoin.com has this like, very valuable domain name, very easy to type in. and there’s this assumption that it is the official place for Bitcoin. And, I mean, we’ve made it as easy as possible for people to get into Bitcoin.

So come a long ways from the, the old days of, you know, trying to push a little bit more on the peer to peer cash only kind of vibe. But, we’ve, we’ve we’ve evolved as a company and I think we’re eager to like, help more people get into Bitcoin.

Like, that’s kind of what it’s all about. Bitcoin is the gateway drug to everything else. We support Bitcoin and everything else. So do more gateway drugs. Right.

Vlad Costea 02:30:18 Speaking of and everything else, John at Packard, the guy who wrote the funny comments about Roger selling out to Bitcoin, he asked why no BSV on the Bitcoin.com wallet?

Corbin Fraser 02:30:36 I think we’re probably more likely to support E cash than BSB.

Corbin Fraser 02:30:44 I think there’s been a lot of litigious work around the BSB camp that we wouldn’t really want to touch, so I don’t think there’s any rush for us to risk launching it and then not integrating some feature that, some of the bad actors say is now like their copyright or something like that or their trademark. And it’s just, why would we why would we bother?

So, you know, we have an export your private keys and import them into your BSB wallet. Have some fun. But yeah, we’re probably not going to be jumping into BSB anytime soon. lots of other projects that I think are more interesting and again, goes back to like who’s the champion of this project? There are no champions of BSB at Bitcoin.com, sorry to say.

Vlad Costea 02:31:37 You know, to me it’s never really been interesting, but that’s another conversation for another day.

Corbin Fraser 02:31:44 Yeah.

Vlad Costea 02:31:45 Anyway, congratulations on the good work you’ve been doing on Bitcoin.com. Seems like right now it’s one of the most balanced news outlets out there. I prefer it over CoinDesk, or I’m not even sure if Cointelegraph is still around doing the same work.

Vlad Costea 02:32:04 Bitcoin magazine has gone full Trump and you guys are more balanced. You also present news about Russia and China. And it seems like when I open the web page for news, I get a more diverse perspective on what’s happening.

Corbin Fraser 02:32:22 Yeah. Our news team has been growing. We’ve been creating a lot more content on social lately to just trying to support more of the builders and the bitcoin space and the crypto space and just, you know, if you’re at any crypto conferences, you might see some of the Bitcoin.com news team eager to interview different projects and kind of cover what’s happening in the space. for the most part, like, you know, they they operate in a pure, like, news desk fashion.

They don’t let us, you know, they don’t have, like, me controlling them, saying like, hey, I want you to write about Corbin and how cool he is. Yeah. And write about these only for the next year, you know? They’re very, they run the news desk like a news desk, and, you know, they don’t want any influence.

Corbin Fraser 02:33:07 And we give them that freedom and say, like, great, have some fun, great, good content. You know, we do our best to just be a aboveboard crypto news company, as well as our wallets and all the other fun stuff that we’ve been doing. We are in the process of actually adding a wallet to Bitcoin.com, so we’re excited to like put that on web. So that’s going to be an MPC wallet.

So if you’ve ever used like some of the self-custody MPC tech, we’re, we’re hoping to ship that pretty soon here. going to be rolling that out a few regions and, yeah, just kind of see if we can get more news readers as well, get them access to some easy crypto and, yeah, have some fun with it. And I think the biggest thing is just like, I’ve got this great domain, this great brand, there’s no reason why we can’t use it to help Bitcoin and crypto and all the other cool stuff that’s happening, like, I don’t, I don’t see that we have to go down, like being a maximalist for anything.

Corbin Fraser 02:34:05 And I think for a lot of normal retail, when you talk about Ethereum, they’ll be like, oh yeah, that’s like a Bitcoin. You know, they’re not thinking of it in this like tribalism. They’re not in the trenches like us.

They don’t know the, the the minor details. But yeah, I mean like bitcoins for everyone, cryptos for everyone. It’s a lot of cool stuff we can do with it. A lot of great stuff we can do with this brand.

We’re very eager to kind of keep, keep building and, you know, get more people into the space, whether that’s through orange pills or green pills or Zeno pills or anything that’ll get people in. We’re just, eager to keep building, and we want to see more people build, so. Yeah.

Vlad Costea 02:34:46 Right. Thank you very much, Corbin. Thank you for your time.

Corbin Fraser 02:34:49 Keep up the great work, man. I love your podcast. I’m actually a little starstruck talking to you when, when I got on the first call, I said, oh, Vlad.

Vlad Costea 02:34:57 Thank you for waking me up at seven in the morning to do this. I’m not much of a morning person.

Corbin Fraser 02:35:03 No, you did. You did good. You look, You look like you’re ready to take on the world, man.

Vlad Costea 02:35:08 Messed up, but.

Corbin Fraser 02:35:10 Yeah. Looking great, man. Looking great. Thanks for. Thanks for having me on.

Vlad Costea 02:35:14 This was fun.

Corbin Fraser 02:35:16 We’ll do it again.

Vlad Costea 02:35:17 Yeah, let’s do it again. Maybe next year or something. Or whenever there’s some exciting news.

Corbin Fraser 02:35:22 Yeah. Sounds good man.

Vlad Costea 02:35:25 Okay, I’ll see you.

Corbin Fraser 02:35:27 Okay. See?

But his contributions didn’t stop at writing FAQs: he also coded plug-ins and worked on the Linux port of the Bitcoin software. In this interview, Martti Malmi (aka Sirius) brings back the spirit of the early days of Bitcoin. And for those of you who are trying to figure out who Satoshi Nakamoto might be, he also offers his perception of the person behind the pseudonym. Also, you can learn more about a true OG’s adventures in the land of Nostr and the Lightning Network.

This episode was recorded at Paralelni Polis in Prague, during Pizza Day 2024.

▶ Play video Watch on YouTube

Listen to Martti Malmi talk about the early days of Bitcoin and Satoshi Nakamoto on Spotify, Apple Podcasts, YouTube, X/Twitter and more!

Special thanks to the sponsors who made this episode possible: SideShift.ai, LayerTwo Labs, Citrea, NoOnes, Bitcoin.com News, and NoOnes.com.

Full Transcript of S16 E12 of the Bitcoin Takeover podcast, featuring Martti Malmi:

Vlad Costea 00:00:48 You are listening to season 16, episode 12 of the Bitcoin Takeover podcast featuring Martti Malmi, the first Bitcoin developer to join Satoshi back in 2009. This episode is sponsored by LayerTwo Labs, SideShift.ai, Bitcoin.com news, Citrea, NoOnes.com, and HODLing.ch. One thing that I have to mention is that we recorded this interview back in May of 2024, during Pizza Day at Paralelni Polis. So some of the ideas expressed might be slightly dated, but nonetheless, I’ve decided to keep this interview and publish it on a special occasion.

I hope you will enjoy it, because Martti really doesn’t do a lot of interviews. He doesn’t like to talk a lot. He’s rather introverted, but I do believe that in this interview he gave some interesting answers. And much more than that, this interview will help you understand the mindset of the people who contributed to Bitcoin very early on and what kind of expectations they had and what kind of work they might be doing today.

Vlad Costea 00:02:03 So enjoy. Hello and welcome to the Bitcoin Takeover podcast. I am Vlad and I’m here today with Sirius, was the first Bitcoin developer in the world. And one of the people who spoke with Satoshi and his name, his real name is Martti Malmi. He’s from Finland.

He was in university when he first discovered Bitcoin and he wouldn’t advise Satoshi, who was complaining to him, how to present the project to the Peer to Peer Foundation forum. When it was announced for the second time in 2009. And there’s quite a lot to talk about.

I don’t even know where to start these days you’re working on a Nostr client, which is called Iris. Yes. And to you is new store just as exciting as Bitcoin was back in the day?

Martti Malmi 00:02:53 Yeah, yeah, it is in a way. what? Bitcoin started pretty small and when I joined, Nostr was already pretty big. I started working on well, I had worked on Iris for a fairly long time, since 2019 or something, but on a different stack.

Martti Malmi 00:03:14 Then 2022, Jack Dorsey started using Nostr, and then when that’s when it got popular and I made Iris nostro client, it was already technically very similar. So it happened quickly.

Vlad Costea 00:03:31 I was one of the first people to just Nostr because I’m friends with Ben Arc, and he added me to a Telegram chat where there was Ben Arc, there was Fiatjaf, there was what’s his name, Melvin Carvalho. Yeah. Rockstar Dev and a bunch of others were coming up with ideas. Brainstorming how they can build their idea at that time was mostly political. They wanted to build a version of Twitter that is much better than Mastodon and cannot be politically censored. So that’s how they came up with the idea. And now, if I’m not mistaken, stands for nodes and other stuff.

Martti Malmi 00:04:09 Transmitted over relays.

Vlad Costea 00:04:11 Transmitted over relays, you know?

Martti Malmi 00:04:13 Yeah, it’s like the only actually self custodial social network as far as I know where the accounts are just public keys just like your Bitcoin wallet. And you don’t need a service provider.

Martti Malmi 00:04:26 No one can take it away from you. And actually the transmitted over relays part is optional as well. You can use whatever transport you could send to send messages on floppy disks or in mail or, or Bluetooth or whatever. Peer to peer configuration.

Vlad Costea 00:04:44 Yeah, it’s really exciting. I feel sorry for losing my keys because I tested it very early on. It was a client called Branle made by Fiatjaf and I created that. I just saved the keys in my browser history. And of course, I got a new computer and I transferred the data. And then I realized, okay, lost my keys. No big deal. I made a new account like 2 or 3 years ago when it had a resurgence. But I still regret that. I mean, I still have the public key. I can identify that one, but I don’t have my public key anymore.

Martti Malmi 00:05:17 You can just backdate the post. There’s no open time stamps or anything, so you can just make a new post sends it back that dates.

Vlad Costea 00:05:25 Oh yeah. But that that sort of defeats the purpose. I just wanted to have one of these first created accounts. I think that was one of the first 100 people to use Nostr, and it’s exciting because I wasn’t one of the first people to discover a Bitcoin. And when I heard about it the first time, I thought it was a stupid idea and it took me.

So I was 21 years old when I first heard about Bitcoin, and this was the year 2013? Yeah. So it was when that bull market was happening and I saw a meme on the internet. I was scrolling a lot of meme pages in university. It was called 9gag com. And I saw a joke about. So someone was trying to rob someone else saying, hey, give me all your money.

And that person said, I don’t have any money, I just have Bitcoin. And then the thief basically gave him some dollars, being like, oh, I feel so sorry for you. And I saw that and I was like, what’s bitcoin? So I searched for it and I read a bit about it and I said this is not for me.

Vlad Costea 00:06:27 It was the era of the Silk Road. I guess I was thinking, so this technology is being used to send money to anyone else around the world. And I was thinking, yeah, the narrative which was dominant at the time was to to bank the unbanked. And I was thinking, I already have a bank account, so why why would I need this? What’s the point?

I was super naive in my assumptions because I thought I can send money to anyone around the world, when in fact I can’t even withdraw all of my money from my account. I mean, I didn’t have enough money to reach the limits, but once you start making more and you’re thinking, do they really have my cash inside of these ATMs, or can I get everything?

No you can’t. If you want to close your bank account there, they’re going to schedule a call with the bank manager. And you’re going to have to explain why you want to do this and why you want your money in cash, which is strange.

Vlad Costea 00:07:21 So it wasn’t until I actually started working at the age of 25 that I understood the value. No, I was 24, that I understood the value of Bitcoin, but I kept following it and I wrote about this in my magazine. I told you about it, and I started from this idea that I thought it was a stupid idea, and it took me a few years of just stumbling upon it once again until I gave it a chance.

And I don’t want other people to get the same roadblocks, to follow the same process. Because I think we as humans should learn from each other’s mistakes if we want to actually evolve. Otherwise, we’re just going to be repeating the same cycles, which is not a good idea. But I admire you because you saw something in Bitcoin that nobody else has. In a time when it was just software published on a page and it was only for windows.

Martti Malmi 00:08:15 Ten.

Vlad Costea 00:08:16 How did you discover this?

Martti Malmi 00:08:21 so I wanted to change the world through technology rather than politics. And I figured money would be the most impactful thing to change because everything runs on money, economy runs on money.

Martti Malmi 00:08:37 And I tend to agree with the theory that even our culture and the whole society runs like downstream from economy. But money can create a lot of bad culture and Bitcoin can fix it. So I went looking for monetary alternatives.

There were some centralized options like Egold and Liberty Dollar and whatever. some of them were like, trust me bro. We have gold in our vaults. then I guess Liberty Dollar was later shot down by the government. They were all centralized, but I guess I was googling for something like peer to peer currency.

And then Bitcoin came up and had just been published. There was this plain and simple bitcoin.org main page. And I read the white paper, took some time to digest it, and sent the email to Satoshi to offer help.

Vlad Costea 00:09:41 Was it really that easy to go from someone who stumbles upon this idea to become an becoming a developer for the project.

Martti Malmi 00:09:48 Yeah, well, I guess it took a couple weeks. Like to, research this stuff or more. but, yeah, I mean, Satoshi gave me gave me, like, right away.

Martti Malmi 00:10:04 Gave me access to the SourceForge, Bitcoin SourceForge. Net page, which was empty at that time. or open source contributors are usually valuable. So better be a commodity, accommodate it.

Vlad Costea 00:10:22 And for people who don’t know before Bitcoin was on GitHub it was on SourceForge. Yeah, I don’t think anyone still maintains that repository on SourceForge. But it’s interesting how this all started. So it took you two weeks to go from someone who first discovered Bitcoin to coding for it, but do you remember what was your first contribution to the project?

Martti Malmi 00:10:45 Well, actually, he first asked me to do a FAQ and some texts for the website and stuff like that. Then later I set up the forums. You can read our email exchange which you can find it on my Twitter, for example. There’s a lot of exciting discussion about WordPress configurations and whatever CMS or forum software we used. So that’s what I did first. And during the summer of 2009, I also got the code compiled on my computer and started making some minor minor, UI features, mostly like minimize the tray, so like and start on system boot.

Martti Malmi 00:11:34 So more people would stay online and keep the network running. and also worked on the Linux port, although Satoshi did some of that as well.

Vlad Costea 00:11:48 That’s interesting because I’ve spoken with Brian Bishop, and he told me that he found out about Bitcoin because he was on the mailing list, and when he saw it on Windows, she was like, oh, this is a piece of crap. Why would anyone want to build a future of money on Windows? And she didn’t actually get involved until there was a proper Linux port. So I guess you’re important in this regard because you got a lot of people involved when Bitcoin came to Linux.

Martti Malmi 00:12:16 I hope so.

Vlad Costea 00:12:18 Oh you know so because it’s empirical evidence.

Martti Malmi 00:12:21 Yeah. And I needed it for my own server because I wanted to build. And later I did build an exchange service Bitcoin exchange.com where I needed this API to create Bitcoin payment addresses. So I was, It was not like an order book style page. It was basically just me buying and selling with automated pricing, but it was not very profit oriented.

Martti Malmi 00:12:53 I didn’t want to go through the hassle of accounting and paying taxes, so I didn’t want to take any profit from the business or the venture or whatever. so I just had some automated pricing script, and I ended up having 30,000 Bitcoin less when when I ended the exchange than when I started.

Vlad Costea 00:13:18 At the time. How much was 30,000? Bitcoin?

Martti Malmi 00:13:23 Not too much. Could have been like €2,000 or less like usually the orders were pretty small at bitcoin exchange.com like someone buys Weisser sells for €20. But I remember when I got the first. Someone first purchased Bitcoin for €1,000 and I was like, whoa, this is getting crazy. I think he got like 10,000. Why can I use some exponential exponential curve for the pricing algorithm? So the more you wanted to buy, the more the unit price would be.

Vlad Costea 00:14:04 At the time, there was no other third party to tell you what the price is, so you had to determine it according to your own criteria.

Martti Malmi 00:14:12 Yeah. Yeah. I guess there was no Liberty standards.

Martti Malmi 00:14:17 The exchange, the web page, the guy who who might sell the, first known Bitcoin to USD transaction where he bought 5000 Bitcoin for 5 USD from me.

Vlad Costea 00:14:32 Yeah.

Martti Malmi 00:14:33 Yeah, yeah, yeah. He maintained this website with price listings and specialty shop where he could buy SpongeBob stickers and other specialties.

Vlad Costea 00:14:45 You know what’s funny about the story? I mean, there’s also the one about you buying an apartment, which I think makes you a pioneer in buying real estate with Bitcoin.

Martti Malmi 00:14:53 Yeah, well, I bought my house. I mean, I’m excited for your first, but. Yeah.

Vlad Costea 00:15:01 But what’s funny about the story is that you’ll get a lot of new bitcoiners who will say, oh, this guy is such an idiot. You know, he had no, no conviction in this money system. No belief. He just sold it for $1 or whatever.

Martti Malmi 00:15:15 No, I don’t get a lot of that. Everyone’s like, I would have sold as well, but my purpose was not to sell everything. I.

Martti Malmi 00:15:23 I sold like a bit over half of my remaining. I had like maybe 20,000 bitcoin left at that point, and I sold a bit over half of it, but then Bitcoin exchange rate dropped to like $2. That’s year 2011. And I had to sell a lot of it at a low exchange rate. I had resigned from my job as a junior software developer, and finding a new job took longer than expected. And I went traveling to Japan and everything and burned too many bitcoins. But but I can’t. I don’t really feel like I’ve lost anything on this journey. Quite the contrary. Now that at least I got more than two bits.

Vlad Costea 00:16:18 It’s funny because we are right now at Pizza Day, which is an event that celebrates Laszlo’s purchase of two pizzas for 10,000 Bitcoin. And we had pizza, we had drinks. This is Paralelni Polis. I guess they’re going to rebrand starting next year. I don’t know about that, but it’s a lot of fun and it’s a nice way to remember what this used to be about.

Vlad Costea 00:16:38 And it’s important to build markets, you know, because people if you’re never going to sell, as some people claim these days and they’re going to hold forever, you’re not going to create the demand for the currency. You need people to actually own some coins for them to want more of it.

If you just hoard them and they’re like 100 people around the world who use it, that’s not how you scale it. That’s not how you get more adoption. That’s not how you increase the price. You need more people to want it. So how do they want it? They need to hold some of it first, and then they understand what it is and they’re going to want more.

Martti Malmi 00:17:14 Yeah. Well, I could still have, saved a few a few more.

Vlad Costea 00:17:23 Oh, really? You have some regrets about the way you spent your Bitcoin?

Martti Malmi 00:17:27 no. I mean, There’s sometimes there. There’s problems in life that money would solve. But sometimes it gets you thinking like, what if? But but, It’s no use.

Martti Malmi 00:17:40 spending time dwelling on the past. Future is the thing you can change.

Vlad Costea 00:17:47 In the present, not just the future. It’s what you start doing now. Yeah, but it’s really fascinating how those days were. And I was going to ask you something else, but before that. So I have some sponsors. I can just play the audio on top of this.

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Vlad Costea 00:19:18 Hey Anon, when was the last time you read the news on Bitcoin.com? And if you are into researching the geopolitical impact of Bitcoin outside of the US, or you simply want to compare the performance of BTC against gold, silver or natural gas. There’s always some content for you. While other publications are more political and display a higher degree of partisanship, news that Bitcoin.com is more neutral. So give it a try.

Martti Malmi 00:19:49 Wasabi wallet is really cool. Seems like a great business model as well until you get canceled by the government. I hope we can do improved Bitcoin privacy with, with other means that cannot be canceled.

Vlad Costea 00:20:09 Now, I was going to ask you this because you were the first developer to work on Bitcoin and you did some useful work. And Hal Finney actually, he was the first developer, if we put it this way.

Martti Malmi 00:20:23 As far as I know. He did testing around the early days. He did. I think he later contributed something to Bitcoin Core code.

Vlad Costea 00:20:35 So he tweeted very famously that he’s running Bitcoin. And then a week later he said looking for ways to improve privacy on bitcoin.

Vlad Costea 00:20:44 And I was thinking, if you had similar thoughts around the time that you realized, okay, this is not really private.

Martti Malmi 00:20:50 Yeah, I didn’t think too much about it at that time because we were under the radar at the time. I was aware that, like, it’s it’s it’s a public ledger, so you need to be careful. What? But I’m just a web developer. I don’t really know.

Vlad Costea 00:21:16 Did you look into other privacy proposals over the years and think, oh, this is so cool, we can have this in Bitcoin?

Martti Malmi 00:21:26 I don’t know. Not really. Not really. I guess the important thing to me about Bitcoin has been like the challenging the of the money printer first and foremost. Privacy is important of course, as well. I guess Lightning already does its fair share. And here, here at Pizza Day I’ve learned about Cashu, which is very interesting. Like a cache. There’s good stuff going on which has been discussed here.

Vlad Costea 00:22:04 But I do believe that Bitcoin can challenge the money printer and still be completely KYC in the sense that every transaction has an identity and use custodians for most transactions.

Vlad Costea 00:22:18 And I think that sort of defeats the purpose. I don’t know. Did you believe this or do you think it’s fine?

Intro Music 00:22:24 Yeah.

Martti Malmi 00:22:25 Yeah. Well, yeah, I, I think we need privacy in money and. Yeah, it’s not sufficient just to just have a public ledger for every transaction.

Vlad Costea 00:22:41 Do you like layer two proposals for bitcoin, or is there anything that caught your attention recently?

Martti Malmi 00:22:47 Well, I’m not too deep into Bitcoin these days, mostly with Nostre. Nostre. Use of Lightning… like Lightning is more or less integrated to all Nostr clients, including mine. so, you know, it’s good for finding people’s lightning addresses. And you can also zap posts a tip for posts on nostre that’s quite powerful. I think that’s something that Twitter might not be able to easily achieve because of KYC rules. So that’s pretty cool that lightning works. I just wonder if lightning providers like Wallet of Satoshi are gonna be canceled. I think they might be canceled in the future.

Vlad Costea 00:23:41 Well, they did shut down their operations in the US.

Vlad Costea 00:23:44 Yeah. And there was Phoenix, which is non-custodial, and they also shut down in the US. And that leaves us with important questions because, okay, we said it was bound to happen for custodial wallets because you can argue that they’re money transmitters. But then you had an LSP, which actually doesn’t hold the funds and only provides you the infrastructure for opening channels. Yeah. And that one also gets shut down. And it makes you wonder if you’re gonna run your own node. Are you under the same threat?

Martti Malmi 00:24:19 Yeah, it’s. I guess it’s more difficult shutting down individual nodes. And I guess you’re not a money transmitter. Or if you only serve yourself, it might be safer. if there’s many, many people running nodes.

Vlad Costea 00:24:42 I think that was the point in the evolution of the Lightning Network. I was part of this movement. It was called Rings of Fire, and the idea was to get these Raspberry Pi nodes routed over Tor and open channels with each other in circles. And basically everyone had at least one extra connection to which they could route transactions.

Vlad Costea 00:25:04 So we all agree to open channels in circles. And then someone had the channel with Bitrefill, someone had a channel with Blockstream or whatever, and we had a route to pretty much every major hub. But at one point I think the hardware was not powerful enough. And there’s also the reliability issue and the issue of forced closing of channels.

And I think, at least in my case, I was not really earning any money from routing. I was maybe making 30 base units a month. So one Satoshi per day. So there was no sustainability, as some people promised in the beginning that you can basically monetize or pay for the electricity of your lightning node through this, and it’s not even the reason why I shut down.

It’s just that I discovered that my payments were becoming less reliable, and it was easier for me to switch to an LSP like Phoenix, which charges you for the initial deposit. When you do the swap from main chain to lightning, maybe it has higher fees, but at the same time it just works every time.

Martti Malmi 00:26:11 Yeah, yeah, I must admit, I’ve never run a Lightning node myself. I use Wallet of Satoshi. It works really well for events like this where you buy beer with lightning.

Vlad Costea 00:26:25 Yeah, but people will argue it’s not really lightning. It’s just an account.

Martti Malmi 00:26:30 Yeah, that’s a good point. That’s a good point.

Vlad Costea 00:26:33 There is no way to verify that you actually use the lightning channel. And you’re not just transacting numbers from one server to the other. Yeah, exactly. It’s a bit scary. I do believe that the Wallet of Satoshi guys are nice and they don’t break the rules. They don’t create inflation. But there has to be a way to verify that.

Martti Malmi 00:26:56 Yeah. I wonder if we could have lots of these cashu, cash providers like local smaller communities, like one, one server admin geek serving, like the closest to 100 people or some something, or if that’s going to be outlawed as money transmitting as well.

Vlad Costea 00:27:22 I was going to ask you, did you buy alpaca socks or stuff like that in the early days or Casascius coins?

Martti Malmi 00:27:29 No.

Martti Malmi 00:27:29 Unfortunately not. They were selling alpaca socks like for like 15 bitcoin or what was the price? Something like that. And Casascius coins are valuable these days I hear.

Vlad Costea 00:27:43 Are they are nobody expected at the time for them to become this popular? There’s some trust involved there that, you know, Mike Caldwell, the guy who created them, might store on a notebook all the private keys that he ever issued. Like, you have to trust him, that he’s never going to rob his customers. But so far, he has an immaculate record. And I was going to ask you back in the day, what was the preferred way to hold your coins? You didn’t have so many choices. You just had Bitcoin.

Martti Malmi 00:28:16 Yeah, Bitcoin Core was the only choice for a long time. I don’t even remember if I guess it got some sort of wallet encryption. Maybe at some point. I don’t even recall. But that’s that’s what I used back then. Back in the day, Mt. Gox.

Vlad Costea 00:28:41 Mt. Gox.

Vlad Costea 00:28:42 Yeah. That was a very expensive lesson for bitcoiners.

Martti Malmi 00:28:46 Yeah, but on the other hand, they they lost 80% of their customer funds, but they had diamond hands for ten years. So it’s not a bad outcome for some creditors who might have sold their bitcoins if not for Mt. Gox.

Vlad Costea 00:29:03 That’s a fair point. Assuming that they’re going to get paid in fiat and that there’s going to be someone to actually make the payment, because I’m not sure how many of them actually got their money back.

Martti Malmi 00:29:17 they they say they’re going to pay back this year. Some of the Fiat is already paid back and they’re going to pay back. they are promising to pay back the bitcoins this year. I know, because I am a creditor.

Vlad Costea 00:29:32 Oh, so you have to receive some Bitcoin from them?

Martti Malmi 00:29:36 Yeah. Yeah. I guess it’s public knowledge. that they owe me ten bitcoins, which, get some of it back.

Vlad Costea 00:29:47 I was just thinking, can you buy the same apartment that you bought for many more bitcoins today? With the ten bitcoins you are going to get from Mt, Gox?

Martti Malmi 00:29:56 No, I’m not going to get ten bitcoins.

Martti Malmi 00:29:57 It’s going to be less, but I think I might. I’m not going to be selling them anytime soon. I mean, Bitcoin has existed for 15 years. And just think how far we might be in five or 10 or 15 years.

Vlad Costea 00:30:20 Where do you see the future of Bitcoin? Of course you have this ideological perspective that it must stop the money printer. It must end worse. But how do you think it’s going to function technologically? Do you think it’s going to be the same Bitcoin core and every one builds on top of it? Or do you think we might have some major changes in the way that it functions with new discoveries in cryptography and stuff.

Martti Malmi 00:30:43 Really? I think and I hope it’s going to be fairly resistant to change. I don’t have a crystal ball, and I, I don’t work closely with bitcoin these days, so I don’t really I might not have the most informed opinion, but I tend to be optimistic about Bitcoin. About Nostr. Those are the rays of light in the darkness.

Martti Malmi 00:31:16 even though there’s all this dystopian development going on with, with CBDCs, cities and scores and whatever, and recently these Bitcoin attacks on Bitcoin developers by governments.

Vlad Costea 00:31:35 You basically triggered me to start a rant right now because there is a project, Hamilton by MIT, and that’s a CBDC pilot that they’re trying to sell to the US government. And what MIT has been doing for longer than ten years now was to get Bitcoin core developers and give them money to fund them to continue the work.

But if you look at the white paper of Project Hamilton, you’re going to see that they use the UTXO model from Bitcoin. They use Schnorr signatures just like they used in Bitcoin with Taproot. They use a lot of specifications from Bitcoin and they do reference them all the time.

And they even use one of the developers Corey Fields. He’s a Bitcoin core developer. He also collaborated in the white paper and the technical implementation of projects. Hamilton. And it makes you wonder, you know, like all of these actors have been nice and benevolent.

Vlad Costea 00:32:31 Benevolent. But then they’re going to take the technology and turn it into something that Bitcoin is trying to oppose and was created to oppose.

Martti Malmi 00:32:41 Yeah. That’s interesting. And why don’t they just use tether? I guess tether is already. They don’t have full control over it, but it’s a bit like an extension of the United States dollar. And it’s interesting that tether is still running in some way.

Vlad Costea 00:33:01 Well, it’s not interesting and it’s not inspirational to look into the Treasury and see that tether is the company that buys 80 something percent of its holdings in US Treasury bonds.

Martti Malmi 00:33:13 Yeah, exactly.

Vlad Costea 00:33:14 So they’re an investor in the US government. Of course, they’re not going to get shut down because they hold huge amounts of it. If you ask the tether people, they’re going to say, oh, we’re just getting infiltrated. We’re like a Trojan horse. But if you look at the way it operates, it’s no different from a CBDC. They can seize funds, they can stop redemptions. It’s them who are in the middle of everything.

Vlad Costea 00:33:37 Peg ins and peg outs. I’ve actually they’re not cold like this. Issuances and redemptions. They issue tether to a client because they want to transfer money. There are some transfers in the middle and at the end, I guess some exchange does the redeem part. But in some countries, for example, my girlfriend is from Iran, and she told me this week that they the banned Tether in Iran was like, why did you not see this coming? And she was shocked, like, how can they do this? I thought it was technology like Bitcoin. It’s not.

Martti Malmi 00:34:11 Yeah, yeah. I wonder which direction that Trojan horse is going. This is like the US government infiltrating crypto or the other way around. I guess the optimistic case is that, like the current financial elites on the big capital are gonna get invested in Bitcoin and become stakeholders and be on our side, but I don’t really know.

Vlad Costea 00:34:41 Oh, yeah. Now we have ETFs. And whenever we look at the price, we have to check the news to see what’s happening on US markets and stuff like this.

Vlad Costea 00:34:49 It became too mainstream too fast. I guess most people didn’t have the time to process how fast all of this happened. And right now we just woke up with Blackrock and Michael Saylor and whatever, just telling us what Bitcoin should be and saying, oh, medium of exchange is a distraction. Yeah I mean what’s your I’m not trying to get into the whole fork with Bitcoin Cash because ideologically they’re very different. And they say Bitcoin should be used as a medium of exchange. But back in the day, did you perceive Bitcoin as a way to save or as a way to send money to other people?

Martti Malmi 00:35:27 Both in the early days, you didn’t like the transaction capacity was not really a problem. Usually there was zero fee when you were sending bitcoins, or maybe there was some like hard coded. Oh yeah. In one of my emails with Satoshi, I was wondering, I sent 10,000 bitcoins, but it ended up sending 10,000.2. What is the point two? And it was some hard coded transaction fee for large transactions.

Martti Malmi 00:35:54 But yeah, usually you could transact for free in the early days.

Vlad Costea 00:36:00 And that was if you read Andreas Antonopoulos book Mastering Bitcoin. He was speaking at the time in the foreword, I think in a later edition. No, but how would you put it? An older edition. He was talking about free transactions, and with Bitcoin you can move money for free all around the world. And of course it was a narrative at the time.

It was not sustained by technical realities or economics within the network. But I guess where I’m standing right now and I want to ask you about Sidechains if you think that there’s anything interesting about them, because I’m also sponsored by Layer Two Labs, and they do have a proposal with Drivechains, and I think they’re great for the mission.

I also have my concerns about what this means for miners, because there is a lot of talk about MeV and mining centralization and how they’re going to react when they have new incentives with fees coming from outside of the Bitcoin blocks. But what do you think about this concept of sidechains which are enforced by miners?

Martti Malmi 00:37:09 I’m not really familiar with, the whole topic to give really informed, opinion.

Martti Malmi 00:37:19 I guess we’re of course, gonna have to move stuff out of the layer 1 in one way or another.

Vlad Costea 00:37:28 I agree with this. And sometimes when people see that Bitcoin is fine and they should use I mean, I don’t want to shit on Fedimints because they do some cool stuff technologically. But it’s a bank. It’s a bank that they say anyone can open, but in reality it’s going to get centralized at one point and you’re gonna have humans.

Martti Malmi 00:37:46 Because if the governments are going to censor all the big actors, but not like the small community banks. I don’t know.

Vlad Costea 00:37:57 Well, my point is that I want people to be able to hold their own keys if they want. And if it becomes too expensive, there should at least be a sidechain where they can do this as opposed to telling them, oh, it’s too late for you to afford to use your own keys. Why don’t you go on this Fedimint, and you have to trust that the community bank is not going to steal your funds.

Martti Malmi 00:38:20 Yeah. Well, maybe you can trust your community bank. The people you meet in everyday life, at least for some small amounts, and have your savings in layer one or something.

Vlad Costea 00:38:35 You come from a high trust society, I think, and you look at your neighbors and you think that they’re nice. But if you look at the third world country and there’s a lot of talk about these places of the world, and there’s a lot of virtue signaling, and they say, oh, does the global South. I think that’s the way that it’s being defined.

And they say, yeah, they’re gonna want to look up to these leaders who are part of the community and so on. But honestly, I think I don’t want to speak bad stuff about anyone in particular, but I do think that some of these community leaders are going to see themselves with a lot of money and they’re going to say, oh, I can finally go and live my life in Switzerland or something and never be seen again by their peers.

Vlad Costea 00:39:22 So it’s a major concern, and there is no way to mitigate this other than falling back on law enforcement. So basically using the state as the security for this money system, which, you know, it was not supposed to be like this, I remember I’m going to ask you about this also, but I remember I had an interaction with Luke Dashjr and ask him, what do you think about Liquid, which is not really a sidechain, it’s more like a federation, and he told me it’s much better than a side chain, because if someone steals from you, at least you have a few companies to sue to get your money back.

And I was like, so is this really the security model that we have right now? You don’t it’s not cypherpunk, you know, you have to go to the states and ask for justice, as opposed to having cryptography and having computer networks and stuff like this.

Martti Malmi 00:40:13 Yeah, I guess it’s not perfect, but it’s better than having USD in the bank, I guess.

Martti Malmi 00:40:20 At least you can challenge the money printing monopoly.

Vlad Costea 00:40:27 Citrea brought the first ZK roll up to Bitcoin and is now building a Bitcoin backed economy that is EVM compatible with an extended suite of financial services that use the Bitcoin main chain to store only the basic smart contract data, While everything else from lending, borrowing services to privacy protocols will get built on layer two modules. Learn more about Citrea at Citrea.xyz and try their Bitcoin testnet applications today. NoOnes is the ultimate peer to peer exchange, serving more than 236 countries and aiming to empower the Global South.

It also offers a great place to buy and sell gift cards, and there is also a NoOnes Visa card for spending your coins at millions of merchants worldwide. Once it trade your coins, there’s a spot Exchange feature two and the system is designed in a way that allows everyone to get a cut. As CEO Ray Youssef says on No Ones dot com everyone gets a seat at the table and everyone eats. So do you remember in the first year of Bitcoin, the order of the people who joined? Because there were quite a few developers.

Vlad Costea 00:42:03 There was Mike Hearn, if I’m not mistaken. We joined in that first year. I think Greg Maxwell was also around and a bunch of others. Do you remember how they came along and what were? I don’t know any memories about them.

Martti Malmi 00:42:18 No, I don’t really remember them from the forum days. I met Mike Hearn in Switzerland 2014, maybe Marcel, but I don’t really remember about the forum things like, until the Wikileaks thing. the forum was pretty quiet and you could read all the up new posts on the forum every time you signed in. But after that, not so much. Wikileaks kicked the hornet’s nest as Satoshi said, and the swarm is headed towards us.

Vlad Costea 00:42:57 Yeah, and that’s when he left, right?

Martti Malmi 00:43:02 I don’t recall the exact timeline. Could be.

Vlad Costea 00:43:08 Well, what’s your impression of Satoshi? Because in some statements that you made, someone can take them out of context and say, oh, this guy must be Satoshi. But did you perceive him as being this Japanese man or American or some nerds in his mom’s basement or someone old?

Martti Malmi 00:43:25 Yeah, I guess, the name and, on some profile.

Martti Malmi 00:43:30 He said he’s from Japan. First. I thought he’s from Japan. He’s a Japanese guy. But I had my doubts because his English was so good. actually, when Dorian Nakamoto was outed, so to say, I first thought, I guess this is how I thought Satoshi to look like. Like this. And I guess it’s a good picture of Satoshi in our minds.

Vlad Costea 00:44:01 A lot of people and memes, they use that image for Satoshi still, but for Dorian, it was a nightmare.

Martti Malmi 00:44:06 Yeah. Yeah. I’m sorry for him.

Vlad Costea 00:44:10 So your mental image was that of a Japanese man, but not really Japanese because he was too good at English. Yeah, it’s funny because I think I read something similar that Gavin Andresen said that he thought it was a young man from Japan.

Martti Malmi 00:44:26 I didn’t think he was young. Maybe I thought he was older than me, like in his 40s or something.

Vlad Costea 00:44:35 Interesting. Well, it’s really wild how you just googled something peer to peer cash or whatever, and you stumbled upon Bitcoin, which means that the page was pretty well indexed by search engines.

Martti Malmi 00:44:49 Yeah. And at that time when you googled for bitcoin, there was just like one page of results. It’s pretty interesting.

Vlad Costea 00:44:57 I do recall, I think the first blog post about bitcoin, or one of the first was written by Zooko, the creator of Zcash. Was he involved in any way?

Martti Malmi 00:45:07 I don’t think he was involved in the early days as far as I know. Maybe he was on the Bitcointalk forums at some point.

Vlad Costea 00:45:17 Did you meet anyone in person from the Bitcointalk forum except for my my current?

Martti Malmi 00:45:22 No, no not really. Bitcoin was only in the online world for me for a very long time. Then in maybe I, I might have attended some small meetups in Finland later, like 2013 or whenever Bitcoin hit $1,000. There was some meet up in Finland that I went to. other than that, that I went to. Bitcoin Amsterdam 2014. It was surreal how big bitcoin had become like it had been only only on the Bitcointalk forums and IRC or wherever for me before that.

Martti Malmi 00:46:01 And then there was everyone I met, the Kraken guys there and BitPay was there and many people were there.

Vlad Costea 00:46:12 So what was the last contribution that you made? When did you stop becoming not stop becoming stuck? Stop being a Bitcoin developer?

Martti Malmi 00:46:21 I might have, made some commits to the code base, maybe in 2010. I’m not quite sure. Could have been earlier. 2009 is when I made most of my contributions, I think. then I maintained the forums for a while on bitcoin.org. Then I needed a real job and I had less time to work on anything bitcoin related. later. I just didn’t it wasn’t, interesting to me in any way to continue managing the stuff. and it was getting like political people were sending me messages like, what what what I should and what I should not put on the bitcoin.org Patreon, whatever. I’m not interested in that at all. So that.

Vlad Costea 00:47:16 Sucks. Yeah. So who took on that Theymos or…

Martti Malmi 00:47:21 they most continued with Bitcointalk forums and and I gave on the bitcoin.org domain.

Vlad Costea 00:47:29 You used to own it.

Martti Malmi 00:47:31 Oh yeah. Yeah.

Vlad Costea 00:47:33 And now is it Cobra.

Martti Malmi 00:47:35 Yeah.

Vlad Costea 00:47:37 Well, how did you do that?

Martti Malmi 00:47:39 I cannot go into details about that.

Vlad Costea 00:47:42 What? But did. Was it just like a friendly share, or did you get paid or.

Martti Malmi 00:47:49 No, I did not get paid. I’m not going into details, but I did not sell the domain.

Vlad Costea 00:47:56 It’s funny, because you basically had the keys to one of the most valuable domains in the world.

Martti Malmi 00:48:02 I don’t know, I guess it’s valuable for scams or something if you were a scammer, but I think domain names are shitcoins. They can be taken away from you. They are centralized and hierarchical and basically they’re just someone’s website. And you should you should always verify your code, your binaries that you download and be mindful of your sources.

Vlad Costea 00:48:29 Speaking of domain names being shit coins, were you into Namecoin? Were you around when that emerged?

Martti Malmi 00:48:36 Yeah, I saw it. I think Namecoin might have been one of… It might have been the first altcoin around.

Martti Malmi 00:48:45 I never used it, but I it was on my radar.

Vlad Costea 00:48:50 And I just. That’s why it wasn’t successful. So many people were into Bitcoin but not into Namecoin. And it was merge mined with Bitcoin. So if it became successful, transaction fees could go to the bitcoin miners to increase their revenue.

Martti Malmi 00:49:05 Yeah. But I think naming should be done with web of trust or with social graph. Like maybe we don’t need globally unique names. We could have like just like a dropdown. Search us on social media. You want to see. You want to say Wasabi wallet page. You just type wasabi and it fills in from your social graph. like the verified by your friends account.

Vlad Costea 00:49:36 Yeah, you mentioned Wasabi, and I just remembered that the guys I’m going to interview after this and this is backstage. Details are from HODLing. They’re from Switzerland and they offer this service. They’re also sponsors. They offered this service to help you set up your own self-custody solution. Maybe there are people with a lot of Bitcoin or companies that that wants to start adding Bitcoin to their reserves, and they don’t know how to manage this.

Vlad Costea 00:50:03 Someone who owns a lot of bitcoin doesn’t want to hold it in their own house because it’s a threat, possibly, especially if they’re public about it and the company doesn’t want to have the keys in the hands of a CEO, or only one person who can just do stuff, spend them or whatever. So they’re going to consult you into doing your multi-sig.

They’re going to tell you which hardware wallets you should be using. And they’re in Switzerland. So this means they have some privacy that companies from the US don’t have, and they don’t hold any of your keys. That’s very important because there’s a company called Casa in the US, and they promise that you never lose your Bitcoin because you give them one key.

You keep one and another one can be acquired through two factor authentication or something. So they don’t have access directly to it. You have to request it I don’t know it. It’s just it’s good for some people. It’s just not why I got into Bitcoin. Did you stick around to see anyway HODLing.ch.

Vlad Costea 00:51:03 Check them out. Did you stick around to see the rise of hardware wallets? Because I think that was a major shift in how people manage their bitcoin.

Martti Malmi 00:51:12 Yeah, I guess I’ve always followed on the sidelines and I did my hardware wallet pretty soon after they were available.

Vlad Costea 00:51:22 Was it the Trezor or BTC chip?

Martti Malmi 00:51:27 I have various, hardware wallets. I don’t want to go into details.

Vlad Costea 00:51:33 You probably paid, like, ten Bitcoin for the Trezor. The metallic one you did.

Martti Malmi 00:51:40 No comments.

Vlad Costea 00:51:42 Yeah. Anyway, at the time, it was the only way you could sustain or support a Bitcoin company. And I, I spoke with Stick, the co-founder of Trezor, and he told me that the bitcoin that they got from the presale because they didn’t have all the devices to ship, they sold everything in 2013 to be able to pay for the deliveries and everything. So the price went up and they did not benefit from that price pump. But I’m happy that their business is still around. What did you think about mining pools when they started emerging?

Martti Malmi 00:52:18 Yeah.

Martti Malmi 00:52:20 I don’t know. I guess I was thinking if it’s going to be a centralization risk. but I don’t think it’s going to be such, It hasn’t been a centralization risk to much. many of my friends were mining on GPUs as early as 2010. Maybe when. That’s when the GPU miners came out. Many of my normie friends were mining.

Vlad Costea 00:52:52 Gamers, right?

Martti Malmi 00:52:53 Yeah. Yes.

Vlad Costea 00:52:57 Why do you think so? Early on, there was this convergence of hardcore gamers using their GPUs to mine. And nowadays, gamers hate Bitcoin and every other cryptocurrency because they perceive this as being the factor why graphics cards became more expensive. But at the same time, gamers are the people who are technically inclined and might like Bitcoin. They’re gonna intuitively understand how it works because they probably also use BitTorrent or something else. Why do you think gamers are not really into Bitcoin these days?

Martti Malmi 00:53:33 I guess a bit. Bitcoin is a libertarian thing. of course everyone’s into bitcoin if they can, if they can mine it like back in the day on their GPUs.

Martti Malmi 00:53:49 Bitcoin doesn’t automatically convert people into libertarians as I’ve noticed. Many of my bitcoin miner friends are still social Democrat.

Vlad Costea 00:54:01 So if they mine, they agree to pay taxes on it to the state and think it’s helping society somehow. Yeah, really?

Martti Malmi 00:54:09 Yeah they do.

Vlad Costea 00:54:11 That’s insane. I mean, they’re pretty OG. I guess they got in early.

Martti Malmi 00:54:16 Yeah. Back when you could solo mine on a GPU. Weirdly, I even solo mined one block on a gap year at some point pretty late when it was still possible.

Vlad Costea 00:54:31 But it’s Finland, I guess. And I did six months of exchange in Sweden, and all they did for half, more than half the time it was just shoving down our throats the idea of the welfare state. They were saying we’re better than the Germans, were better than everyone else, were giving everything to everyone. And they took us to this immigrant neighborhood. And they had these people from Syria, if I’m not mistaken, and they were housing them, and they were sending them food and they were taking their kids to school, and they were giving them everything out of the taxpayers money, basically.

Vlad Costea 00:55:05 Yeah. And the social workers there were still concerned that these people are being marginalized and they’re not part of the center. They’re not part of the Swedish culture. Yeah. And I was thinking, how the hell do I sign up for this? Because I was paying €600 for my rent and it was much shittier than what these people had, you know. I was thinking, you know, I don’t think this scales, and obviously it did not.

Martti Malmi 00:55:29 Yeah. Scandinavian countries have been successful despite socialism. Well, if you take a look at the Economic Freedom Index, we are actually pretty high on the economic freedom despite the high taxation on whatever. And maybe I guess, like you say, the high trust society. That also helps maybe.

Vlad Costea 00:55:55 I come from Romania and we have more of a distrust in government, just like people from here and Czech Republic. Yeah, they were invaded by the USSR Army in 1968. Yeah. They brought tanks into this place.

Martti Malmi 00:56:10 Yeah. I guess in Finland and maybe other Scandinavia.

Martti Malmi 00:56:15 The corruption is on a higher level. It’s like legal corruption, legal ways of corruption.

Vlad Costea 00:56:22 Yeah. It’s different. The average person doesn’t have access to corruption, but at the high level, you don’t really hear about it much because they also control the media.

That’s another aspect of Scandinavian countries that I don’t get. Most of the press, like 90 something percent is subsidized by the government, and they see that they keep the money so they don’t get paid by, you know, evil advertisers from the private sector.

But this also means that they’re not going to report anything against against the powers that be. Yeah. So it’s hard to be, for example, libertarian news or whatever. Where do you get that in Finland? Do you have any TV channel that’s libertarian.

Martti Malmi 00:57:04 Social media, I guess. There’s one libertarian think tank in Finland, but that’s about it. And even that has been watered down in the recent years.

Vlad Costea 00:57:17 But there’s the Pirate Party that came out of Sweden.

Martti Malmi 00:57:21 Yeah, there was this whole pirate movement, which was inspiring even to me as a 20 year old computer science student.

Martti Malmi 00:57:29 Pirate Bay actually, I even like, modeled the the UI of Bitcoin exchange dotcom after pirate Bay. It was just like a similar, very similar look and feel.

Vlad Costea 00:57:41 That’s an interesting detail. And I think also the Pirate Party in Sweden was among the first organizations to use Bitcoin because it’s open source software. They were already into a bunch or something.

Martti Malmi 00:57:55 Yeah.

Vlad Costea 00:57:57 I went to one of their meetings when I was in Sweden, and they gave me a CD with ubuntu, and they said, give up on that windows crap, is this. I didn’t because I was an idiot. But yeah, they were very advanced from this point of view, very visionary. I hope that some people actually made some money and they can make a change now.

Martti Malmi 00:58:19 Yeah, yeah, I hope so.

Vlad Costea 00:58:21 Are you still optimistic about Bitcoin, or is it easy to get desolated by the events where ETFs and banks.

Martti Malmi 00:58:28 And I’m optimistic. I don’t know. I don’t know if I’m being realistic, but maybe it’s like a natural disposition to be optimistic.

Martti Malmi 00:58:38 What what else can we do. What’s the other alternative.

Vlad Costea 00:58:43 Well, I guess we can also be pessimistic to the point where we push people to create solutions. Yeah, because right now I think the adjective that people use is bullish and they say everything is bullish for Bitcoin. Yeah. The government captures it. It’s fine. It means they accept it as money. So we’re kind of get rich.

Martti Malmi 00:59:02 I am a little bit concerned about of course like maybe the ETF can be our Trojan horse into the financial elite. but maybe I can also see a future where all Bitcoin is KYC or outlawed and all that, or something that we might not even imagine.

Vlad Costea 00:59:26 Is there anything that you would change about Bitcoin if you could? Like if you had magic powers and you could change one parameter?

Martti Malmi 00:59:33 no. Like one wouldn’t change anything. No, no.

Vlad Costea 00:59:36 Didn’t you find it awkward that there are 21 million of them of coins?

Martti Malmi 00:59:42 No.

Vlad Costea 00:59:43 Or that there are eight zeros?

Martti Malmi 00:59:45 You just have to pick some number.

Martti Malmi 00:59:47 And Satoshi had his reasons.

Vlad Costea 00:59:51 Do you know why it’s 21?

Martti Malmi 00:59:55 I cannot give a lecture on it, but I think Satoshi explained it in some of those emails or forum posts.

Vlad Costea 01:00:04 Is it public?

Martti Malmi 01:00:06 Yeah.

Vlad Costea 01:00:07 Can you make a quick summary?

Martti Malmi 01:00:09 No, no I can’t. I’ve had two beers already.

Vlad Costea 01:00:12 Okay. I don’t know if someone discovers the forums and wants to get into the first year of Bitcoin. What do you think is a good place to start? What? What do you think is the highlight of this era?

Martti Malmi 01:00:31 what do you mean?

Vlad Costea 01:00:33 Obviously, it’s hard to go through everything, even though there isn’t that much. But what do you think is spicy or interesting or exciting to discover from that time? Well.

Martti Malmi 01:00:45 In the very early days, everyone was idealistic. That’s what why they were on the forums. It wasn’t about making money. That changed. Maybe sometime in 2010 when my normie miner friends started flowing in. there’s nothing wrong with that. It just means Bitcoin’s incentives are right to on board, not just the libertarians.

Martti Malmi 01:01:13 I found the forums nicer in some way, or more comfy or cozy in the early days, maybe because of the idealism. And just that it was a smaller community and nicer. But. But it was inevitable.

Vlad Costea 01:01:34 Do you still post on Bitcointalk?

Martti Malmi 01:01:36 No, I haven’t posted in a very long time.

Vlad Costea 01:01:40 Would you make a bridge from Noster to Bitcointalk or Bitcointalk to Nostr?

Martti Malmi 01:01:44 Haha. I don’t think it’s up to me. Well, I could make a bridge from Bitcointalk to Noster, I guess. Could be interesting.

Vlad Costea 01:01:55 It could be very interesting. Or even a bot to take some old posts and remind people what ideas were being spread around during the early days, because I guess you have a recollection of these events and someone who is new to Bitcoin doesn’t even know what to search for. They’re going to search for some sources, but they’re not going to go all the way back to see where this all started. So I think this whole movement of Bitcoin history can be very useful and at least reminding people where they started and what kind of people were involved in this, what kind of ideas they had and why it became big in the first place.

Martti Malmi 01:02:33 Yeah, it could be interesting if you could, like, make a snapshot of any point in time on the forums. And oh, would be such a nostalgic blast from the past. Say like 29 like 2009 version of.

Vlad Costea 01:02:49 I mean, for you? It’s nostalgic, but for some people it’s something entirely new that they had no idea existed.

Martti Malmi 01:02:54 Yeah, I guess it’s a bit like my emails with Satoshi. They have all always been in my mind in some way, but it was interesting to see people’s outtakes and reactions Like, to me it was always clear that Satoshi is not the CIA. When I saw him configuring WordPress with me. or maybe it was CIA playing 4D chess or something. But yeah, when you read the emails, I guess you get the. Have you read the emails? I did.

Vlad Costea 01:03:31 But my follow up question is, have you published everything or is there still something that you are keeping correlator or for destroying?

Martti Malmi 01:03:39 No, I published everything I have, but so I said in the archive, my email address changed, sometime in early 2011, and I don’t have backups of the new address.

Martti Malmi 01:03:57 So, you know, I don’t have my last emails with Satoshi.

Vlad Costea 01:04:00 Okay. In a way, it’s convenient because basically, when he left, Maybe he told you something. You don’t have it anymore. It’s lost. But it’s probably for the better.

Martti Malmi 01:04:11 Could it be?

Vlad Costea 01:04:14 Thank you very much, Marty. It’s been an honor and a pleasure. How can people keep up with your work these days? You still work on your Nostr client, Iris.

Martti Malmi 01:04:24 Yeah. You can go to Iris dot to slash Sirius iris.to/sirius. Or follow me on Twitter.

Vlad Costea 01:04:37 You still want people to follow you on Twitter even though you’re using Nostr?

Martti Malmi 01:04:43 You know, don’t follow me on Twitter.

Vlad Costea 01:04:48 Thank you very much. And it’s been an honor.

Speaker 4 01:04:50 Thank you.

Vlad Costea 01:04:55 Oh, is there anything else that you do some business you want to promote?

Speaker 5 01:05:01 No, not at the moment.

Vlad Costea 01:05:02 Okay, forgot to ask.