S15 E22: Eric Voskuil on Libbitcoin & Bitcoin Culture

Eric Voskuil embodies one of the most harmonious combinations of cypherpunk ethos and Austrian economics… with a twist! As the maintainer of Libbitcoin for longer than a decade, he takes pride in offering an alternative Bitcoin client which features different optimizations and isn’t pressured by the politics of Core. Furthermore, as an avid reader of economics, Eric Voskuil has reached to the point where he regards the discipline as an axiomatic science and also advocates for theories concerning supply and time preference which greatly diverge from those popularized in the space by Saifedean.

Given his vast knowledge, Eric Voskuil has been able to write one of the best books about Bitcoin and economics you will find: it’s called Cryptoeconomics, it can be bought from Amazon for about $30… and for those who can’t afford it or don’t want to place an order there is also a GitHub repository which offers every article in its entirety free of charge, as well as a free audiobook narrated by none other than ZK Snacks CEO Max Hillebrand.

Cryptoeconomics has been around for about four years now, and despite not turning into a massive seller it received praise from lots of prominent bitcoiners. It’s not newbie-friendly, but once you understand it you’re out of Saifedean’s cave and more ready to engage in serious debates. It’s also a book which remains consistent both in terms of argumentation and focus to remain honest (as opposed to “bullish” for the sake of providing reassurance).

As a lover and perpetual seeker of truth, Eric Voskuil often finds himself at odds with the popular Bitcoin culture. He’s not a fan of Michael Saylor’s sustained attempts to destroy the cypherpunk spirit within the community, he doesn’t believe that learning about Bitcoin from memes is a good idea, and he doesn’t hold back from criticizing “spaceboi” Jason Lowery for making ridiculous claims with his “Softwar” theory.

Furthermore, as someone who values the pursuit of truth much more than popularity, Eric Voskuil also takes his time to explain the intricate details concerning the Libbitcoin-explorer incident from August 2023 – an event which enabled hackers to exploit the low-entropy of the private key generator. In a lengthy article, Eric explained exactly what happened and why the convenience of a short command line which generates new pairs of private keys has been removed from Libbitcoin. For convenience, you can also find a pretty in-depth coverage of this incident during the first part of our recording.

I like to regard this interview with Eric Voskuil as an aspirational reminder about why we are here using this decentralized internet money tech. Libbitcoin emerged as a protest against Bitcoin Core, which used to be under the political control of Gavin Andresen and some directors of the now-defunct Bitcoin Foundation. It’s command-line only, it’s cypherpunk, and it’s a complete rewrite of the Bitcoin codebase that was initially started by Amir Taaki. At the same time, Libbitcoin still finds itself in consensus with the rest of the network and fully validates transactions.

Eric Voskuil has also attained a scholar level of debating economics and encourages everyone to read Von Mises, Rothbard and Hayek before holding strong opinions. He is past the point where he refers to himself as an “Austrian economist” and seeks rationality and scientific models instead. It’s a really great interview and an incredible follow-up to the May 2020 conversation (which you can find across streaming services as S5 E8 of the Bitcoin Takeover podcast). Hope you will enjoy this one and learn something new.

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Time stamps:

The Libbitcoin incident and aftermath (00:00:17) Discussion about the August 2023 incident with Libbitcoin-Explorer, accusations, and response to claims.

Libbitcoin-Explorer command misuse (00:03:01) Explanation of the misuse of Libbitcoin-Explorer command leading to fund loss and the decision to remove the command.

History and rebranding of projects (00:05:18) Details about the rebranding and consolidation of projects into the Bitcoin repository.

Randomness and cryptography (00:08:49) Explanation of the decision to change the source of randomness and the debate about cryptography.

Security and documentation (00:11:59) Discussion about the entropy decrease and its impact on security, clarifying misconceptions.

Loss claims and response (00:19:24) Eric Voskuil addresses claims of Bitcoin loss due to the incident and the response from the Libbitcoin team.

Alternative implementations (00:23:20) Discussion about the implications of discouraging alternative Bitcoin implementations and the importance of multiple wallets and APIs.

The idea of no other wallets (00:27:04) Discussion about the implication of having no other wallets due to Mr. Hodl’s maximalist puritanism, and why the features of Wasabi Wallet don’t exist in Core.

Challenges in Bitcoin Core development (00:29:47) Discussion on the challenges and flaws in Bitcoin Core development, including issues with different platform implementations and the impact of corporate funding.

Alternative Bitcoin implementations (00:31:46) Core, Libbitcoin, Knots, and the concept of a single true implementation of Bitcoin.

Consensus and implementation flaws (00:33:36) Exploration of consensus and implementation flaws in Bitcoin, including the impact of flaws on the chain and the need for a different implementation to help people understand the rules.

Ordering of transactions in a block (00:43:37) Explanation of the significance of the ordering of transactions in a block and its impact on the validation process.

Character assassination and implementation choices (00:48:20) Discussion of attempts at character assassination and misinterpretation of implementation choices, including the use of pseudo-random number generators.

Conclusion and future development (00:47:05) Summary of the discussion and the potential for future developments in Bitcoin implementation and consensus rules.

MinGW and random number generator (00:50:11) Discussion on MinGW, Windows subsystem for Linux, and the use of Mersenne Twister for random number generation.

Mean comments and personal attacks (00:51:02) Addressing mean comments and personal attacks in the Bitcoin community.

Core developer influence and alternative implementations (00:51:19) Addressing the influence of Core developers and the challenges faced by alternative implementations in the Bitcoin ecosystem.

Bitcoin development funding and corporate influence (00:52:22) The impact of corporate funding and the Bitcoin Core group’s influence on development.

Bitcoin consensus and alternative perspectives (00:56:41) Discussion of Bitcoin consensus and alternative perspectives on Bitcoin development.

Corporate funding and open-source development (00:57:51) Exploring the influence of corporate funding on open-source Bitcoin development and the role of corporate sponsors.

Cypherpunk ideology and institutionalization (01:00:14) Clash between cypherpunk ideology and institutionalization of Bitcoin, as well as the influence of Michael Saylor’s perspectives.

Influence of narratives and Bitcoin’s purpose (01:01:27) The impact of narratives on Bitcoin’s purpose and the shift towards a focus on price narratives.

Bitcoin’s value and narratives (01:05:27) Critique of Bitcoin narratives and the importance of understanding Bitcoin’s value beyond price narratives.

Bitcoin as a store of energy and metaphor critique (01:08:24) Critique of the metaphor of Bitcoin as a store of energy and its implications for the understanding of Bitcoin’s value.

Bitcoin standard and monetary standard critique (01:11:05) Critique of the concept of the “Bitcoin standard” and its comparison to the gold standard.

Writing a Book (01:12:41) Eric Voskuil discusses how he started writing the Cryptoeconomics book due to repeated explanations of certain ideas.

Challenges with Bitcoin Community (01:13:43) Eric Voskuil shares his perspective on the challenges and misconceptions in the Bitcoin community, particularly regarding economic principles.

Austrian Economics Principles (01:15:15) Eric Voskuil explains the fundamental principles of Austrian economics, including subjective value and rational economics.

Supply and Demand (01:16:02) Eric Voskuil delves into the concept of supply and demand, emphasizing the subjective nature of value and the role of preferences in trade.

Time Preference and Interest (01:24:58) Eric Voskuil discusses the significance of time preference in economics and its role in determining interest rates and investment decisions.

Misconceptions about Time Preference (01:33:23) Eric Voskuil addresses misconceptions about time preference and investment, highlighting the misunderstanding of holding assets as low time preference.

Low Time Preference and Interest Rates (01:34:31) Discussion on low time preference, interest rates, and the impact on lending and holding money.

Consequences of Misunderstanding Time Preference (01:35:30) Exploration of the consequences of misunderstanding time preference, including the perception of perpetual yield and the casino mentality.

Narratives and Pump and Dump Schemes (01:37:25) Analysis of narratives around HODLing and the impact on market behavior, with a focus on pump and dump schemes.

Bitcoin’s Stability and Competition (01:38:17) Explanation of Bitcoin’s stability, the impact of increasing demand, and the presence of competition from other coins.

Sidechains and Lightning Network (01:40:50) Discussion of security trade-offs and competition, particularly related to sidechains and the Lightning Network.

Credit Systems and Economic Principles (01:45:13) Insight into credit systems, economic principles, and the relationship between credit and money.

Bitcoin’s Future and Government Intervention (01:50:20) Analysis of potential government intervention, inflation, and the impact on Bitcoin’s value proposition.

Demurrage Currency and Taxation (01:56:20) Explanation of demurrage currency, taxation, and its potential impact on the value of money.

Demurrage on Bitcoin (01:57:05) Discussion on implementing demurrage on Bitcoin and its potential impact on the market and security.

Inflationary Money and State Control (01:58:01) Exploration of how 51% hash power could bring the entire Bitcoin system under state control and its implications.

Security and 51% Attack (01:59:11) Analysis of the security of white and black markets in Bitcoin and the potential vulnerability to a 51% attack.

Securing Bitcoin and Transaction Fees (02:00:10) Explanation of how transaction fees and the willingness of people to pay for permissionless transactions secure Bitcoin against a 51% attack.

Mining and Bitcoin Security (02:03:36) Expressing on the importance of owning a Bitcoin miner, and its role in contributing to the security of the network.

Commercial Break (02:04:27) Presentation of ads for various Bitcoin-related products and services.

Value and Labor Theory (02:12:34) Explanation of the diamond-water paradox and the rejection of the labor theory of value in Bitcoin economics.

Stock-to-Flow Model and Predictions (02:17:35) Critique of the stock-to-flow model in Bitcoin and its deviation from Austrian economics principles.

Yogi Berra and Baseball Quotes (02:19:49) Discussion about Yogi Berra’s famous quotes and his influence on baseball culture.

Debate with Giacomo Zucco (02:21:08) Eric Voskuil discusses his disagreement with Giacomo Zucco and the resulting block on social media.

Challenges to Economic Study and Book Response (02:23:48) Eric Voskuil addresses questions and challenges to his economic study and book, including a response to a perceived race with Saifedean.

Open Source Contributions and Book Promotion (02:26:43) Eric Voskuil emphasizes his contributions to open source development and his approach to promoting his book without seeking financial gain.

Technical Discussions and Bitcoin Development (02:32:32) Eric Voskuil delves into technical discussions about Bitcoin development, including language implementations and architectural considerations.

Cryptoeconomics Book Recommendation (02:38:25) Discussion about the book “Cryptoeconomics” by Eric Voskuil and why you should read it.

Book Writing Process and Content (02:39:49) Eric Voskuil explains the origin of his book “Cryptoeconomics” and its content, including its length and the process of compiling articles into a book.

Translators and Wiki Posts (02:40:34) Discussion about translating Bitcoin resources and creating wiki posts for easy access.

Publishing a Book (02:41:39) The process of creating and publishing a book on Bitcoin, including its distribution.

Original Editions and Value (02:43:02) The scarcity and potential value of the original printed editions of Cryptoeconomics.

Debate and Trolling (02:44:19) Engagement with a troll and the debate surrounding the ideal money fallacy.

Spaceboi and Military Background (02:47:23) Discussion about Spaceboi Lason Lowery, his military background, and the appeal to authority fallacy.

Buy Cryptoeconomics (02:51:28) It’s a great book and you should definitely read it!

Addressing the Libbitcoin Explorer Incident

In August 2023, Libbitcoin faced a setback which concerns the Libbitcoin-Explorer command line feature to create new wallets. This oversight led to the unfortunate loss of funds. Eric explained that the tool was never intended for creating secure wallets but rather for learning and experimentation. To prevent further misuse, the decision was made to remove the command in question.

Contrary to some claims on social media, the entropy was not reduced from 256 bits to 32 bits. Eric Voskuil clarified that the tool generates the necessary 256 bits of randomness for private key generation, ensuring the security of the tool was never compromised.

The Importance of Alternative Bitcoin Implementations

During our discussion, we touched upon the misconceptions surrounding alternative Bitcoin implementations. Eric Voskuil emphasized that the incident was not a reflection of the risks associated with alternative implementations, but rather a case of a developer tool being misused. He advocated for the principles of open development and competition, which are vital for innovation in the Bitcoin space.

The Role of Consensus Codes and the Oracle of Truth

We explored the concept of an alternative implementation of the Bitcoin code base and its significance as an oracle of truth. The consensus codes and the potential impact of accidental bugs in client software were highlighted, underscoring the need for vigilance and thorough understanding of the technical aspects of Bitcoin.

The Cypherpunk Ideology vs. Institutionalization

The conversation took a critical turn when discussing Michael Saylor’s presentation advocating for the institutionalization of Bitcoin. Eric expressed concerns that this approach prioritizes the price narrative over the original cypherpunk ideology, which values Bitcoin as a tool for empowerment in countries facing economic and political challenges.

The Misunderstood Economics of Bitcoin

Eric Voskuil shared the journey that led to the writing of his book “Cryptoeconomics,” born out of a desire to clarify misconceptions in the Bitcoin community. He delved into the subjective nature of value, the concept of time preference, and the distinction between investment and speculation. His insights challenged the community’s understanding of economic principles, particularly in relation to Bitcoin.

Addressing Vulnerabilities and the Value of Bitcoin

Our discussion also covered the potential vulnerabilities of Bitcoin, including the risk of state control and the implications of implementing demurrage. Eric stressed the importance of active participation in the network, such as transacting and mining, to maintain Bitcoin’s security.

The Life Lessons of Yogi Berra and the Importance of Open Discussion

Eric shared anecdotes about Yogi Berra, whose philosophical quotes offer unexpected wisdom. He also emphasized the value of open discussion in the Bitcoin community, drawing from his own experiences with disagreements and the importance of understanding Bitcoin’s code at a deep level.