Title: S10 E9: Giacomo Zucco Ranks the Scamminess of Projects Built on Bitcoin
Podcast: Bitcoin Takeover Podcast (host: Vlad Costea)
Guest(s): Giacomo Zucco (Bitcoin maximalist, founder of BHB Network, RGB proponent)
Published: 2022-02-24
Duration: 1:30:21
Episode URL: https://bitcoin-takeover.com/audio/?name=2022-02-24_s10_e9__giacomo_zucco_on_bitcoin_scams_and_the_nuances_of_maximalism.mp3
Audio: https://bitcoin-takeover.com/audio/media/2022-02-24_s10_e9__giacomo_zucco_on_bitcoin_scams_and_the_nuances_of_maximalism.mp3
Transcript: CORRECTED. Base: local Whisper medium.en transcript with automatic diarization, reconciled against an independent local distil-small.en transcript and a full local small.en re-transcription with word timestamps (paragraph-level three-way comparison), with 20 doubtful stretches re-transcribed locally from short audio clips (medium.en; 5 of them re-run with tighter clip boundaries with both small.en and medium.en). Speaker labels fixed using local speaker-embedding similarity scores and by hand (Vlad Costea, Giacomo Zucco; the pre-recorded sponsor reads are labeled Ad voiceover). Names and jargon checked against the title, the show notes and the web (Baltic Honey Badger, Understanding Bitcoin, BIP 157/158/Neutrino, Counterparty, Rare Pepe, Pepe Cash, Mastercoin/Omni Layer/OmniCoin, OmniBOLT/Omni Lightning, Tether/USDT, Paolo (Ardoino), Bitfinex, RGB, Liquid/Elements, Blockstream, Samson Mow, Infinite Fleet, Volcano Bond/El Salvador, Rootstock/RSK, Stacks/Blockstack, Ripple Labs, Chaumian mints/CoinJoins, OpenTimestamps, Paul Sztorc, Ruben Somsen, statechains/spacechains/softchains, Peter Todd, Gregory Maxwell, Luke Dashjr, Nicolas Dorier, Pierre Rochard, Hal Finney, Satoshi Nakamoto, BitcoinTalk, Lawrence Nahum, John Carvalho/Synonym, OneCoin/Carlos Matos, Junseth, Blythe Masters, Factom, Backpage, Roger Ver, Bitcoin Cash, SegWit2x/New York Agreement, Ethereum Classic, Vitalik Buterin, Andreas Antonopoulos, Gavin Andresen, Craig Wright, The Bitcoin Standard, Knut Svanholm, Jimmy Song, Grin, Zcash, Monero, NXT, Linden Dollars/Second Life, Vaultoro/Glass Books, Wasabi Wallet, Max Hillebrand, Bitcoin Reserve). Light clean verbatim: ums, false starts and stutters removed; factual slips by speakers are kept as spoken. Intro music and the sung sponsor jingles are omitted. Remaining doubtful words are marked [unclear: best guess].
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[00:00:47] Vlad Costea: And welcome to season 10, episode 9 of the Bitcoin Takeover Podcast. I am Vlad and my guest today is Giacomo Zucco. And he is the man who redefined Bitcoin maximalism back in 2018 at the Riga conference. I think it's called the Baltic Honey Badger. It's been such a long time since I went to conferences that I forgot the name of it. But at the time he made a presentation which basically explained that everything that is not Bitcoin is a scam. And every attempt to change Bitcoin is a scam.

[00:01:24] But today we have so many projects that are built on top of Bitcoin and they issue tokens and they enable all sorts of stuff which used to be done on altcoins before. So it seems like everything is migrating back into Bitcoin. And are these still scams? And that's a very important question that we should be asking. And I'm very grateful that I have Giacomo here today.

[00:01:49] Giacomo Zucco: I'm also grateful to be back on this [unclear: glorious] podcast, that was very, very early when I first joined. So very happy to be back.

[00:02:00] Vlad Costea: Actually you joined last year when you were with Mir and we discussed everything except for Bitcoin.

[00:02:06] Giacomo Zucco: Yeah, right. But we had the previous one, or not? Just one. This is just the second.

[00:02:13] Vlad Costea: This is your third participation.

[00:02:16] Giacomo Zucco: Third?

[00:02:16] Vlad Costea: Yeah, if I remember it correctly. The first one was in April, I think, of 2019, before you were going to Understanding Bitcoin, the conference.

[00:02:25] Giacomo Zucco: Oh, yeah, right.

[00:02:26] Vlad Costea: The biggest issue at the time was BIP 157, 158 with Neutrino. And you were against it.

[00:02:33] Giacomo Zucco: Yeah. I remember, probably a failed opposition by me and Nicolas Dorier and Luke Dashjr. I remember that. Now it's basically... client-side filtering is basically a thing with Wasabi as well. So probably a little bit of a lost battle, but it was fun.

[00:02:54] Vlad Costea: Yeah. And we should get back to these problems sometimes. It seems like today has become such a complicated ecosystem in this Bitcoin space. And those little discussions that we were having are like nothing compared to what we have today.

[00:03:13] Giacomo Zucco: Yeah, true. Many fronts, many different fronts. It's very difficult to stay... We don't even know exactly who the friends and the foes in the discussions are anymore, because there are so many contemporary, synchronous debates that it's a little bit complex to keep up.

[00:03:31] Vlad Costea: Okay. So let's start with stuff that's built on Bitcoin and it might or might not be a scam. And this season of the podcast, I have had many guests who issue stuff on Counterparty. I've had Rare Pepe people who are very passionate about trading cards with frogs and they even brag about contributing to the security budget of Bitcoin by paying fees with their transactions because Counterparty is on top of Bitcoin. But at the same time, Counterparty has a [unclear: shitcoin] of its own, which was created by burning, I think, 2,000-something bitcoins back in 2014.

[00:04:12] Yes. So is Counterparty a scam?

[00:04:17] Giacomo Zucco: So first of all, I think we have to start with a little bit boring part about definitions because on Twitter, we also exaggerate terms and we like to use hyperboles and to be provocative and to joke and to be self-ironic. So you mentioned at the beginning, for example, my presentation in Riga, the one about Bitcoin maximalism, dissecting Bitcoin maximalism. And already there was this notion that the term maximalism was first created as a slur, as a criticism against one very specific position, which is the monetary convergence of any altcoin eventually into Bitcoin and the point about digital scarcity and the point that you cannot replicate digital scarcity.

[00:05:11] And that was basically the base of the maximalism argument at the beginning. Then we reappropriated this criticism, this insult in a ironic way, in a sarcastic way, like a typical reappropriation, and then it started to get used in order to put together any kind of criticism that any shitcoiner had about Bitcoiners debunking them or Bitcoiners criticizing them or Bitcoiners disagreeing with them. And everything basically became... got basically thrown into this large pot, this large umbrella term of maximalism. So I tried, ironically, in that presentation, to dissect different meanings.

[00:05:55] And of course, I had to actually explore other kind of debate. Again, it was mostly an ironic presentation, just like the one the year after that was actually the pro-shitcoin, the shitcoin apologism steelman presentation. It was still partially ironic, but the content is something I really believe in if the style was ironic. So we discussed a lot of stuff like changing Bitcoin. And many people still think about that when they think about maximalism. So the reaction to proposals to radically change Bitcoin, like SegWit2x, New York Agreement and stuff like that.

[00:06:35] So for many, maximalism is about defending Bitcoin against some kind of takeover, some kind of external pressure, some kind of the hijacking of the nature of the innovation, the nature of the project. So this is a meaning of maximalism that many people still think about. Then the other one was about the prevalence between long-term store of value and price discovery and monetary fundamentals over just paying your pizza with Bitcoin on-chain rhetoric. So there was this discussion about spending versus saving, and there was a lot of debate about that.

[00:07:19] And people defending the saving part in opposition, in partial opposition, to the spending part has been defined maximalism as well. And then there was all the discussion about style, like if you don't invest your time in taking seriously any claim by anybody and going [unclear: to the bottom of] any single detail and always be super kind and super... and you don't always assume good faith, then you are basically a moron, you are basically toxic, you are basically evil, you are close minded. And that expanded basically into recent events where everybody was mean with anybody on the Internet.

[00:08:05] That's basically somehow sent back to be about Bitcoin, maximalism or something like that. So the term is very loaded. But in this question you asked me, you are asking me to come back to the very first very specific meaning of the term, which is basically what I semi-ironically, because hyperbolically, defined as everything which is not Bitcoin is a scam. So let's try to dissect this claim a little bit. Of course, this claim cannot be literally true. Otherwise, I mean, oxygen that we breathe would be a scam.

[00:08:40] Gold, that served humankind for millenniums, was a scam. The Internet would be a scam. The personal computers would be a scam. The chair I'm sitting on would be a scam, which Pierre Rochard would agree with. So the point there is clearly not literal. We cannot dismiss everything but Bitcoin literally as a scam. What the sentence is trying to convey in a very hyperbolic fashion is that everything which is strictly similar to Bitcoin and explicitly or implicitly tries to reach the same goals and whatever project which is piggybacking the success of Bitcoin being money in order to promote something else, that's basically a scam, a scam not necessary in the sense that everybody knows that this is unrealistic and everybody is just selling that for profit.

[00:09:39] Scam means that most of the people believe that narrative, but the narrative can be arguably criticized and eventually debunked. Some of the people defending this argument are not even in good faith. They know that they are basically... they know that they are dishonest in the debate, but they have ulterior motives to keep defending the narrative. So some people are actually creating some kind of false claim in a conscious way. Some people are just following without maybe just exaggerating their own competence or their own level of information.

[00:10:17] And some people are actively dishonest. So scam is, of course, a very big word. There is the argument that if people want to peacefully trade some kind of good or service, that cannot be a scam, because both parties are agreeing. So in this way is not a fraud because they are both happy. They're just exchanging stuff. But there is a way in which you can still say that even something which has been chosen freely by people voluntarily interacting still can be considered somehow unsustainable or illogical or irrational.

[00:10:52] Or long-term disastrous. For example, I will argue that most psychotropic substances that bring you to dependence and abuse of such a substance, like heroin... I would argue that they are a scam, even if people are willingly buying that knowing what it does, because it doesn't work to make your life better to make you feel better. And I mean, sugar in Coke, we may define it a scam, because people don't place the negative long-term effects on your metabolic system and stuff like that.

[00:11:32] We could use the same term to describe something like fractional reserve in banking. When you open a bank account, you know that there is fractional reserve. So it's not like a hidden fraud. It's not like some secret that your counterparty hasn't explained to you. The problem is that everybody tells you that that's sustainable, that that will not create bank runs and crises and bailouts and economic cycles, which is false if you study the economic theory. So that's basically a scam.

[00:12:03] So in this specific instance, the point would be that everything which is piggybacking the success of Bitcoin in order to legitimate something that without the Bitcoin premise will be absolutely nonsense is in this sense a scam. Let me give you a few example. If you issue the share of a company, that's not necessarily a scam. I mean, it depends on the company. Typically, a company can have a lot of revenues and a lot of profit. And the sharing of the profit can be a legitimate agreement that you have with your shareholders.

[00:12:37] And that's completely fine. But if you issue the shares of the company, and you put .com in the name of the company during the dot-com bubble, and your company does nothing. And it's called pet.com. And it is supposed to be a revolution in pet food e-commerce, but actually you don't have any kind of asset, any kind of strategy, you have nothing but the .com domain. So what you're doing is leveraging a hype, leveraging some kind of excessive exuberant expectation over this new technology to sell the shares of a company that themselves will not be anything wrong.

[00:13:20] They will just be shares. But you sell a company that nobody would buy otherwise, just because you're piggybacking some kind of hype. You are basically abusing the expectations about the internet and the e-commerce and dot-com revolution to sell a company that doesn't make any sense. So if you now create the shares of a company, and you put them on some kind of so-called blockchain, these shares are still completely centralized. There is no way in which this share will be able to avoid SEC regulation, or they will really be bought without nominal KYC and AML by sophisticated investors.

[00:14:07] These shares will be just normal shares. But since you're putting them on some kind of blockchain, you're trying to convey the fact that they will somehow magically inherit the property of Bitcoin, which is actually something completely different because it's completely decentralized. So I will probably the specific kind of scam that shares on top of a blockchain represent for me are basically the typical situation of a cargo cult. So you have an airplane, and you know that an airplane can fly because you have seen it. So you build something with wood and bamboo that seems looks like an airplane.

[00:14:45] And you think that somehow you are magically [unclear: replicating] the characteristics of the airplane building that. So when I say that stuff, that tokens are scams, and that blockchains are scam and cryptocurrencies are scam, what I mean is that really reproducing the things that make Bitcoin unique and special in particular, and that justify the specific design choices of Bitcoin is, I argue that that's not possible, I may be wrong, we can debate that. But if we assume as I do, and as is my conclusion, that replicating Bitcoin itself is impossible, then every time that you are actually doing something completely different, that may be legit itself, like issuing shares of a company or just issuing, I don't know, a collectible and then I will enter a little bit into the specifics of Counterparty...

[00:15:40] Every time you do that, and you use the shape of the airplane to try to imply that they will be somehow magically inheriting the property of Bitcoin, I think that's basically dishonest. If that's the main value proposition on what you're selling, I think we could call them basically a scam in the same sense that pet.com was basically a scam. Let me give you a typical example that is recent and many Bitcoiners will not agree with me even many maximalists, because I'm touching something that we think it's exciting and interesting.

[00:16:18] And also it is done mostly by my friends, like friends of Bitfinex and friends of Blockstream. Think about the Volcano Bond of El Salvador, this stuff will be completely KYC/AML. Basically, it will not be a bearer instrument, it will have the name and the surname of the guy buying the bond. The bond will just be a government issued bond with some kind of economical logics, which is completely fine, because there is this idea to use the bond to buy Bitcoin also to fund a Bitcoin City and the volcano mining and then it will give back money.

[00:16:52] This is completely fine. I'm even thinking to buy 100 bucks of that just because I want to support the Salvadorian initiative. But what is exactly the point of putting that stuff on a Liquid sidechain? If it's completely centralized, if any kind of right that you inherit with this token will be any way decided by a centralized party, which is not just, in this case, the [unclear: entity] issuing the bond, but also the government, which will have to respect the rights conferred by the bond and they will have to do it in a way that will not be a bearer instrument, but it will be name-based.

[00:17:31] What would be the difference to just issue that on a centralized database? So if the reason you're doing that is because of like convenience or interoperability or reusing standards, I'm fine with that. But my suspect, and that may be the case with the Volcano Bond [unclear: itself], I'm not saying it's not, but my suspect is that in many, many, many of these objects, the reason you are pretending to reuse some Bitcoin sounding technology and design is because the fundamental value of your offer is just very, very poor and you are trying to boost the marketing of your offer with some magical cargo cult transfer association of idea between Bitcoin and that.

[00:18:19] So let's go to Counterparty, for example. Counterparty, I think, was a very cool idea to extend the capabilities of Bitcoin script in order to issue... I mean, since you have already an anti double spending system like Bitcoin, let's try to use it for other kinds of stuff. I think that, some other projects like RGB that I initially coordinated and launched and funded a little bit are technically more valid because they don't misuse the scarce on-chain resources, but still the idea was very good.

[00:18:56] The problem was when they had to create a new coin that was actually this Counterparty coin. This specific coin was actually directly competing with Bitcoin, but not in the sense that it could compete. It could not, but it was pretending to. It was sold in a way as if it was some kind of Bitcoin-like entity, which it wasn't, and it could not be. In the case of Counterparty, when I say sold, that's not even very fair because they, as you say, they didn't do an ICO.

[00:19:27] They just let people burn Bitcoin to acquire this Counterparty coin, which is way more honest because at least they didn't have the incentive to pump this token or to rug pull this token from people. So there was not a very bad incentive. A very bad incentive, for example, was in the similar project of Mastercoin, which is now Omni. Omni made a super scammy ICO where they pre-mined a bunch of these completely useless token, and they sold it to people selling the delusion that this token was somehow like Bitcoin, but it wasn't and it couldn't be.

[00:20:08] And then this token, basically, they branded it into OmniCoin, and then it just disappears into a complete irrelevance and something like that. Even when you talk about, when you think about Rare Pepes, like a Pepe frog collectible on top of Counterparty, even if there were these non fungible collectibles, like a Homer Simpson Pepe and stuff like that. they also created Pepe Cash. That was this kind of, fungible currency on top, which was mostly created for self-funding reasons, which is a very strong incentive.

[00:20:48] And I think a very perverse incentive. If you think about that, you also mentioned Rootstock. This is a classical example that really drove me nuts at the beginning.

[00:20:58] Yeah, sure, sure.

[00:20:59] Stop me, please, because I'm going on.

[00:21:01] Vlad Costea: I was about to ask you separate questions about Omni, RSK, Liquid.

[00:21:05] Giacomo Zucco: Oh, sorry.

[00:21:07] Vlad Costea: You just went and described all of them. And I feel like, you know, we should just conclude in regards to Counterparty as to what it is, because you described it as something that may have its own blockchain, because it copies the characteristics of Bitcoin, but it doesn't. It's a protocol that actually operates on top of Bitcoin. And every Counterparty transaction is settled on the Bitcoin blockchain, and assets are actually secured by the Bitcoin network. So I think that from this point of view, it's legit.

[00:21:40] Giacomo Zucco: It's not a separate blockchain, but it's a separate token. So my main point would be against the Counterparty token, even if the way they did it was actually very good. I think the only way you can... I think that if I had to suggest a hierarchy of good ways to issue a token, the first, the best way would be not to issue a token at all. So you just... if you don't need it, you don't issue it. There may be a point that Counterparty needed it.

[00:22:08] Because, for example, if you want to do, I don't know, automatic dividends, you cannot really enforce Bitcoin dividends on this upper layer, which is Counterparty. So the Counterparty script cannot enforce a Bitcoin rule, where some kind of satoshi-based dividend will be sent around. So you need somehow to abstract Bitcoin to this upper layer. And so the best way to do it will be avoiding it, if possible. If it's not possible, the second best would be to do a two-way pegged sidechain, or a two-way pegged system, where you block Bitcoin, you lock Bitcoin somehow, and you generate a Counterparty coin, which is equivalent to a Bitcoin, and then you destroy the Counterparty coin and you get a Bitcoin back automatically, trustlessly.

[00:22:56] This proved to be extremely difficult to do. There are a few ideas in how to do it in a nice decentralized way, which could be done by the coin witness idea by Gregory Maxwell, or some economical pegging ideas that I discussed with Ruben Somsen and other kinds of ideas. So there may be some idea there, but it's very, very difficult. Or drivechains by Paul Sztorc. Then the third idea is to do a one-way peg coin. So every time you burn Bitcoin forever, you generate a sidecoin.

[00:23:32] And there is no way back. So in this way, at least you are not diluting the digital scarcity of Bitcoin.

[00:23:46] You are just basically... every time you are creating the new coin, you are also reducing the supply of Bitcoin. So the total demand of Bitcoin decreases, but the supply is decreasing as well. So basically, you have this kind of symmetry. This would be the third best way. The fourth best way is a temporary burn, like the one they did in Counterparty. I think it would be better to keep it forever, like eternal burning, eternal proof of burn. But if you don't, what Counterparty did was actually not very bad. And then the fifth best would be to do what is called a fork coin, or a UTXO fork, or an airdrop.

[00:24:24] So you create a new coin, a shitcoin, but at least you give it one-to-one to any Bitcoin holder at a certain point in time. I think this was used to mislead people, like saying that Bitcoin Cash was Bitcoin, which is absolutely misleading. But if you don't use that in order to mislead people, in order to falsely promote your coin as Bitcoin, then the airdrop system is not bad. Then the sixth position is you just create a new coin from scratch, mining it from scratch, like Monero, like Grin, like Litecoin.

[00:25:01] And then the other is the pre-mine, which is even worse. You pre-mine something and you sell it. And then there's stuff like Ethereum, where you have both the pre-mine and also the ICO, where you sell a small part of the supply and you keep the rest. And you also falsify the market cap in this way. So in this way, Counterparty is not the best. Counterparty itself was just a layer on top of Bitcoin. I don't think it was a very scalable layer. I think there may be a better solution with client-side validation, but it was a layer on top of Bitcoin, completely legit.

[00:25:36] The Counterparty coin itself is more of a problem, but compared to OmniCoin, for example, or to Ether, it's way, way better, because at least they did a proof-of-burn thing instead of just doing a scammy ICO.

[00:25:52] Vlad Costea: Right. Let's move to Omni because I've seen that John Carvalho with his new company, Synonym, is using the Omni layer to settle transactions and also Omni Lightning, which I had no idea even existed.

[00:26:08] Giacomo Zucco: Yeah, OmniBOLT. So that was a little bit disappointing to me, but I completely understand John's point of view, which is practical. He's an entrepreneur now. So he has a timeline. He has basically deadlines and he has to deliver stuff. And one of his strong commitments with the startup were Tether dollars on top of Lightning. And we worked together on supporting the development, research and development of RGB for more than two years. But RGB was not at the time of the launch of Synonym in November, was not ready to issue and transfer USDT on Lightning.

[00:26:52] So not being ready and also being RGB more like a very open research and development effort and not really a startup ready product. He decided to pivot to this OmniBOLT, which is basically the Lightning version of the Omni protocol, which is the former Mastercoin protocol. What is Omni? Omni is something a little bit, it started a little bit like Counterparty. So every Bitcoin transaction includes an OP_RETURN. And into this OP_RETURN, so like a text, there is instead of just putting random text, you will put some kind of special code that will be interpreted by this kind of virtual system on top of Bitcoin.

[00:27:40] So it's like if I send you bank wires and into every bank wire, I just put some combination of letters and numbers and we play a battleship game with each other. So we reinterpret that we basically we give another meaning to the content of the Bitcoin transaction and we create an upper layer where there are more expressive contracts and stuff that you could not for many reasons do on the base layer. So the problem with this approach is that the miners are not really validating this content of the OP_RETURN.

[00:28:19] You can put there everything and if the Bitcoin transaction is correct, is valid, miners will still mine it even if the content of the Counterparty script is not correct. So for this reason, I prefer research that basically eliminate the script from the blockchain, they only use the blockchain as an anti-double-spending tool, and they just move everything else, the data, they just move it client-side. But Counterparty was, at least for that time, a good idea. Omni was similar. It was just the token stuff that made it completely different, in my opinion, because again, they created this Mastercoin, they sold the ICO, then they basically got all the investors wrecked.

[00:29:07] They renamed, rebranded the coin when the coin was basically completely, the value was basically zero. And eventually, when the investor were even more wrecked, when the coin was not even really requested anymore to do anything. So you have a system, you launch a token to support the system, you sell the token to investors, and then basically you rebrand the token and then you take it over from the system where it doesn't do anything, basically... you don't need it for anything anymore.

[00:29:38] So it was a complete rug pull. And now the Omni guys, they are adding this Lightning-like structure, it will not be really compatible with normal Lightning Network, it will be a completely different separate structure, which will be a little bit Lightning-like, because there will be payment channels that the Omni Layer can interpret as token transactions. So I understand why John decided to go with that because it's ready. The scope of the project is kind of limited. There is some very narrow focus on stuff that can be used.

[00:30:20] And also, I mean, Tether anyway is centralized. So the reason that Paolo and the Tether people, the reason they're using blockchains is mostly for interoperability, and for some level of protection from regulatory intervention. So it doesn't really matter where you issue Tether. It could be on Liquid, on RGB, on OmniBOLT, on Tron, on Ethereum, even on the worst centralized shitcoin, it doesn't really matter. The point is that the issuer is a centralized company anyway, and the redeemer is a centralized company as well. So the only thing is that they need this kind of decoupling between the transaction layer and the issuance layer.

[00:31:06] So they can resist regulatory interference better, and they can [unclear: interoperate] better with exchanges. But that's the only point. So Omni, I will just classify it as something just like Counterparty, but with a way worse and way more scammy token policy because they did the pre-mine and the ICO.

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[00:35:14] Vlad Costea: Okay, so now let's get to Liquid, because that's also a platform on which you can issue tokens. I know that Samson Mow did some sort of ICO with his game Infinite Fleet on the Liquid sidechain. And you can basically do everything that you do on Counterparty. I guess it's more scalable. I guess a lot of people would argue that it's not really a sidechain, because it doesn't really take into account the descriptions from the sidechain white paper from 2014.

[00:35:44] So how would you rank that?

[00:35:47] Giacomo Zucco: So let's start from the idea of sidechains, of the paper that you just mentioned. The idea was, instead of recreating from scratch a new shitcoin every time we want to experiment with Bitcoin-like architecture, we could create a different architecture, which is similar but different to Bitcoin's one, to Bitcoin's base layer. And we can do a two-way pegging, just like the one I was describing before, a two-way peg, where you just freeze a bitcoin, you create a sidecoin, and when you destroy the sidecoin, you unfreeze the bitcoin to the new address in a trustless way.

[00:36:20] So this was a very nice idea because the idea was to decouple the experimentation in the infrastructure with the new bootstrapping of digital scarcity, which doesn't make any sense. So the idea of sidechains was very, very good. Then they realized, the Blockstream people mostly, the authors of the paper, they realized that doing that the way they were thinking to do that with SPV proofs was not secure at all. Basically, it was giving miners the power to take all the money from the sidechain at any moment, especially in a very centralized ASIC production environment like the one we had during the block size wars, and even now, frankly.

[00:37:06] So it was dangerous, it was not secure. So they moved to this kind of federated approach where you have multiple parties, but you have a fixed... you have not an open, anonymous set of signers, but a known, fixed set of signers. And you have those signers basically getting ownership on the coin while they are frozen and releasing them when you want to pay back, when you want to go back with the two-way peg. And they release it promising you that they will follow the rules. And you trust them because they are either using these trusted computing systems, which is a very old concept.

[00:37:52] It was already imagined by Hal Finney with reusable proofs of work in the 90s and the early 2000s. It was already imagining these kinds of trusted computing ideas of remote attestation and stuff like that. So you either trust the hardware that these guys are running, or you trust that there are many guys in different countries with different interests. So they will probably not try to scam you. So the problem with this design and Liquid in general is that it's fine. But then most of the technical design level of Bitcoin itself doesn't make really much sense anymore.

[00:38:34] So the concept of having blocks, of having a chain of blocks, of having all this structure, which is mostly conceived in the context of proof of work and reorgs and heaviest chain and stuff like that and open participation. When you have a federation, you don't need that anymore. So the only reason that Blockstream reused the Bitcoin codebase to do Liquid is, I mean, what I discussed with them is that the main reason is mostly for interoperability. And because these guys are also working on Bitcoin, so they know the codebase very well.

[00:39:10] And so they just want to reuse the Bitcoin. And if they do something cool on Liquid, on Elements, it can be backported to Bitcoin eventually with easiness because they are keeping the same codebase. But 99% of the Bitcoin structure in a federated environment doesn't make any sense anymore. It's like you can actually... you can have the federates signing a threshold on any transaction and making the transaction final every time the threshold has been reached. You can do Chaumian mints. You can do something more trivial like Ripple, which is basically a static federation.

[00:39:46] You can do something way simpler than a sidechain when you have a federation. So I don't really, I mean, I think Liquid is fine because at least they haven't issued a new Liquid token, which would be completely beyond the point of a sidechain. It would just ruin the entire concept of what Liquid is supposed to do. But probably even in that case, the Bitcoin-sounding architecture is not entirely justified. And as you said, Samson issued stuff on top of Liquid for Infinite Fleet. I think that as long as the people using this token know that there is nothing that this token can do that could not be done at least for now in a centralized database, then it's fine.

[00:40:35] But as long as people will just invest more money, or will be more eager to play with this token, because they think that this token is somehow decentralized or like Bitcoin, or... I mean, people will probably have this kind of idea association, in which they may end thinking that this token will have some kind of censorship resistance, some kind of regulatory arbitrage capability, some kind of decentralization, some kind of strict policy that will make it super scarce in three generations from now.

[00:41:10] It doesn't have any of those things. It's a completely centralized token issued by a centralized game and used by a centralized game. And it could have been done at the same way, or even in an easier way, with a MySQL database. There may be legit reasons to use Liquid instead of a centralized database. I guess that the main reason is that, I mean, Samson is already working on Blockstream, so the infrastructure is already there. Why does it need to fire up a new database infrastructure where there is already one which is fairly reliable, and stuff like that.

[00:41:45] So I think you can justify technically, why you're issuing some kind of centralized token on a semi decentralized Bitcoin-sounding system. But if people that would not otherwise buy your game token, or your Volcano Bond, are going to buy it because they think it's similar to Bitcoin. I think that's the stuff that I don't really like, the stuff where I like to call bullshit, and to think better at what you're actually buying. I don't think that's necessarily the case.

[00:42:19] I remember discussing with Samson a little bit. At the beginning, he had an idea to use a monetary system for the game, a little bit like Warhammer gold, or like Linden Dollars in Second Life, on Liquid. But what I told him is that if you need a payment system in game, you already have one, it's called satoshi. You can use it either on Liquid or on main chain or Lightning, but you don't need to print new money every time you... I mean, it's absurd.

[00:42:51] The idea that you print new money every time you have a new product is like getting back to barter from money back to barter, it doesn't make any sense. It's completely unsustainable. And it creates very bad incentives. Instead, if you want to trade, not really money, but like objects of the game, like, in this specific game, you want to trade, starships, for example, then it makes sense to maybe turn your starship into a collectible that you can trade outside the game.

[00:43:22] I don't know how much sense it makes because it's, I mean, unless you have a federation of different games that will recognize your token, and give you some kind of in-game benefit for this token, like a new starship. In that case, it makes sense to have some kind of open standard. If you have a single centralized game, like Infinite... like the specific game, I mean, you could do that on MySQL as well. So I think Samson may have legit reasons to play with Liquid because, I mean, he knows the technology, he supports the technology with Blockstream.

[00:44:02] So it's not wrong per se to issue this stuff on Liquid. But people should know, they should realize that it's exactly the same as a centralized skin or weapon in Warhammer. It's just the same. It's not decentralized. It only exists as long as the centralized game will allow its existence. Not anymore.

[00:44:29] Vlad Costea: Someone's playing Warhammer.

[00:44:32] Giacomo Zucco: Well, I used to, but it's been a long time. After Bitcoin, I had to basically give up all the other pleasures of life. Well, not all, but most of them.

[00:44:45] Vlad Costea: Anyway, so you didn't quite answer the question whether or not you think Liquid is a scam, just like you didn't say if Counterparty is a scam. You just tried to classify it from the ideal case to the scammiest case. And I guess so far, we have quite good examples. But what about Stacks? I think that's a big discussion today.

[00:45:07] Giacomo Zucco: Yeah, it is.

[00:45:08] Vlad Costea: It used to be called Blockstack. It's secured by the Bitcoin network. It's built on top of Bitcoin. It has its own shitcoin. It has its own sort of Ethereum-like structure.

[00:45:19] It's kind of interesting when you look at it, but at the same time, not the kind of product in which I would ever invest.

[00:45:26] Giacomo Zucco: So the first thing is that you called me out. I'm not really giving you a binary answer. Yes, no. Since we are trying to be a little bit more sophisticated, a little bit more nuanced, I'm basically proposing a continuum where something clearly, honestly centralized, like issuing... I mean, if I make a website where you can play collectible cards, and I ask people to buy collectible cards on my website, or if I go... let's put it this way. Pokemon Go is at an extreme of the spectrum, which is completely honest in this sense that you know that Nintendo is the one creating the fake digital scarcity, the virtual digital scarcity of the Pokemons, because they are completely centralized.

[00:46:17] They can do what they want. They can issue new Pokemons. They can confiscate your Pokemons. It's just a centralized system. That's completely honest. Something like a shitcoin, something like ether, for me, or even worse, the ICOs, the fake decentralized ICOs on top of ether. I think that for me is the 100% dishonest example of something which is completely centralized, but is promoted, is falsely promoted as decentralized in order to leverage informational asymmetry, and to just scam illiterate investors. Everything else is a little bit in between.

[00:46:57] And as you clearly pointed out, Counterparty is way better than an asset on Liquid, which at least doesn't recreate the underlying monetary system, which is itself better than an asset on Ethereum, because then you also have an underlying shitcoin. And something like Rootstock, for example, stands in between, because Rootstock started just like Liquid in a way, even if without the strong federation model of the trusted company, but it was similar, with this federation. But then, in order to fund the development, they decided to also issue a proprietary platform coin of RSK, which didn't make any sense because the whole point of all the infrastructure was to avoid generating a new coin just to reuse Bitcoin.

[00:47:53] So you create all this structure to reuse Bitcoin, then you generate a new coin. It doesn't make any sense. Luckily, just like in the case of Omni, this coin is completely useless right now, or almost completely useless. So you can use Omni and you can use Counterparty, you can use Rootstock without owning any of those shitcoins. In the case of Stacks, it was something similar, but in a way, at least there was not the fake claim that there was a sidechain, at least at the beginning. But now there is a lot of affinity scam, there is a lot of attempt to represent your platform as more secure, because it somehow leverages Bitcoin security, which is a sentence, it's a claim that we should analyze closely.

[00:48:44] What does it mean that it is secured by the Bitcoin network? What it does mean is that basically, some of the characteristics of Bitcoin can give you some proof of something. But let me give you another example. I create a completely centralized structure like Pokemon Go, and then I take the dump of the internal database of Pokemon Go, and I go on opentimestamps.org, and I dump this database there, and every day, I timestamp on Bitcoin, the state of an internal database. Is Pokemon Go now secured by Bitcoin?

[00:49:25] If that means that I cannot change things anymore, I cannot confiscate Pokemons, I cannot inflate Pokemons, that's completely false. The only thing that Bitcoin is doing is giving some kind of timestamp characteristic on top of my internal structure. And in a way, if you really break it down, the security characteristic that Bitcoin is providing for something like Blockstack or Stacks are mostly relevant... if the centralized team with name and surname, which is in total control of the development and the adoption of Stacks. Because even if it's an open-source product, the network effect right now is such that if they change something, every single user will have to switch because they completely drive the network effect, just like in Ethereum.

[00:50:16] If Vitalik will change anything in Ethereum, everybody will have to switch. We have seen what happens when you don't like Ethereum Classic, you just basically lose completely the network effect. So it's completely centralized. Or the same in Monero. In Monero, if you don't agree with the centralized development team, you will be hard forked every six months away in order to change the proof of work in order to avoid ASICs and stuff like that. So in Stacks, you have a completely centralized system where you have a completely independent shitcoin, which is trying to recreate from scratch digital scarcity, and it cannot work.

[00:50:57] It will be, at best, itself a collectible in 20 years from now where people will just say, see, I have this private key where there is this kind of old, forgotten shitcoin on top, which is a Stacks shitcoin. But it is never going to become a sustainable, reliable, decentralized, neutral digital scarcity token. It will always remain idiosyncratically connected with that platform and will just lose relevance over time. So which part of all these processes that I described is secured by the Bitcoin network? Mostly this kind of...

[00:51:39] Proof of... There is like a provably honest time stamping. That's all. If you change the story in some of the Stacks applications, you can use the Bitcoin blockchain to prove that somebody tried to change the story in a way which is not even that straightforward anyway, because there is a difference between, like we discussed many times with Peter Todd, there is a difference between pure timestamping and single-use sealing, or proof of publication. There are two different concepts. But anyway, when you say... my concern with Stacks would be exactly this claim that it is secured by the Bitcoin network that may be used and it is used, especially in this context of this quote-unquote crypto market, which is a context in which 99.999% of investors, they don't have the slightest clue of what they're doing.

[00:52:38] They don't know what they're doing. They are parroting random pseudo-technical terms without the minimal understanding of what they're even saying. So these people will probably be the typical normie investor will hear, okay, this stuff is secured by the Bitcoin network. So it's probably... it's like Bitcoin, it cannot be shut down like Bitcoin, it cannot be confiscated like Bitcoin, it's scarce like Bitcoin, it will always have a deterministic inflation rate like Bitcoin. And all these things are false for Stacks, for the infrastructure and for the coin.

[00:53:15] So in a way, I'm not comparing. I mean, technically speaking, Stacks is slightly better than Ethereum, for example. But from the point of view of honesty of claim, I think we are very, very close. We have this kind of... I mean, is a proximity scam, an affinity scam, better than another kind of scam? It depends. In a way, in order to do an affinity scam, you have to say something true. And you have to try to leverage your proximity with this truth in order to sell your stuff.

[00:53:54] If you do a scam, which is not an affinity scam, you will have to claim something completely false. What is better, In a way, the affinity scam is better, because you're promoting... you're spreading more truth in order to promote your false claims, along with the truth. So you're mixing some truth and some false claim, which is better. In a way, the affinity scam can make more damage, it can seem more legit. And it can actually create more damage.

[00:54:29] Somebody could argue, for example, that I will argue that Ethereum overall created more damage than OneCoin. OneCoin is a completely centralized platform with a completely idiotic marketing style. And the people that fell for OneCoin, the Carlos Matoses of this world, they were probably already beyond help. I mean, you cannot say that OneCoin distracted a lot of smart money, smart developers, and it didn't really waste money, time or reputation of people that could otherwise have invested time, money, and effort and reputation on Bitcoin.

[00:55:11] Ethereum arguably did. So Ethereum, you could argue that Ethereum took something away from Bitcoin, from the point of view of being a distraction for young developers, destroying reputation, wasting time, and eventually, over the long term, also wasting money because during a bull market, Ethereum always overperforms... Ether overperforms Bitcoin, but then we know that in the bear market, it will underperform it, as always, with shitcoins, they are basically just Bitcoin derivatives. So which is better, the affinity scam, or the completely alien scam, which doesn't even mention Bitcoin at all.

[00:55:54] I think that being very passionate about Bitcoin, I tolerate more the scams that are completely unrelated to Bitcoin than the ones that are trying to be more proximate and more perceived as closer, with a strong affinity.

[00:56:14] Vlad Costea: Yes, but this takes us back to the debate about what Bitcoin maximalism is. And now if you look at Twitter, I know that you mentioned a few schools of thought. But right now we have two of them that are prevalent. We have the one which says Bitcoin is perfect as it is, and we should leave it alone and try not to build anything on top of it. Because, you know, we have the perfect store of value right now, and we shouldn't try to make it be more than this.

[00:56:42] And then there's the other school of thought, which consists of people like Paul Sztorc, like Ruben Somsen, and all the others who say, let's bring back all of the interesting use cases that we see in altcoins, like, you know, Zcash cryptography and Monero, maybe for privacy, and some smart contracts that actually work, and put them on some sort of layer on top of Bitcoin. So you have these that want to extend the functionality of Bitcoin, and those who want to preserve what Bitcoin is. And there is no wrong approach.

[00:57:16] It's just about what you personally need from the network at a given moment in time. But, you know, we can argue that we cannot stop any of these because Bitcoin is permissionless. And it's only a matter of convincing a small number of miners to also merge mine or secure another layer or sidechain. And something like Stacks is only a consequence of more projects returning into Bitcoin, because we have gone through that 2017 altcoin mania. We have gone through let's tokenize everything. We have gone through lots of phases.

[00:57:55] But now it's obvious that even Ethereum and stuff like that is trying to wrap Bitcoin and is trying to do stuff for Bitcoin. So in a sense, every altcoin out there is a sidechain for Bitcoin. Because it serves some kind of purpose, and it helps it scale to some extent. And we cannot stop any of this, but we can at the same time define what is more legit than the other use case.

[00:58:22] Giacomo Zucco: Yeah, as you said, I don't think there is a wrong approach. These two schools are actually both right in a way. I understand both. And in a way, I am with Paul and Ruben. I discussed with them a lot. And if you think about my presentation of RGB in Lisbon, I think it was 2018, it was exactly along these lines. I said, okay, people are going to try this crazy stuff anyway. And people will use Bitcoin as a base layer for their stuff because it's permissionless, so you cannot avoid it.

[00:58:59] So let's [unclear: stress test], giving them a good way to leverage Bitcoin, which at least makes sense technically, even if the things they're going to do with tokens don't make any sense. At least let's create a good standard to do stuff with tokens, which is not destructive for privacy, is not destructive for block space. It's better because it's client-side validated and blah, blah, blah. So the effort about RGB was basically exactly along these lines. There are people who are innovating in a way that I can consider a waste of time, but still they are going to do that and you cannot stop them.

[00:59:40] So at least let's find a good way to do it. And the work by Ruben that you just mentioned with statechains and spacechains and softchains goes in that direction exactly. Finding optimal ways to leverage Bitcoin since everybody will eventually leverage Bitcoin anyway. You cannot stop it and you should not stop it. So that's okay. I think the point, the real divisive point that would qualify as more maximalist, at least in this particular idiosyncratic definition, would be these two points. The first one is every time that there is a serious trade off, so you have to change Bitcoin in any meaningful way to accommodate for the stuff, you don't.

[01:00:27] Because I think this is just logic. We have two scenarios. Either this alternate system like altcoins can compete with Bitcoin at scale, and if they can sustainably, then there is no problem. It means that my maximalism is wrong. I thought that digital scarcity was not replicable at scale at equilibrium. If I'm wrong, then it will just replicate it. I will just buy... I will buy Ether, I will buy Dogecoin, I don't care. If altcoins can work, eventually I will just admit I was wrong and I will start to use altcoins because they work.

[01:01:03] If the altcoins do not work, then we don't have to be scared about competition. We don't have to rush or to make dangerous compromises because we are scared that these altcoins are taking stuff away from Bitcoin. Because the scenarios are just two. Either they can replicate or replace Bitcoin at scale. In that case, we will just use altcoins, including me. If I'm wrong and they work, I have no problem admitting it. If they don't work, we just ruined Bitcoin for nothing because there was no competition anyway.

[01:01:40] There was no really any competitive pressure anyway. So I think the first point, that I think Ruben's proposal, for example, completely respects, is to avoid something like the FUD about block space being about to finish and everybody dying because fees were too high and we have to rush to change Bitcoin to accommodate these use cases. I think Ruben's idea about spacechains and softchains and statechains, they are exactly in this line. You can do it. Let's do that in RGB as well.

[01:02:25] You don't change the base protocol. You don't put it in danger. You don't accept compromises just because you're following these dubious at best, complicated use case. And the second thing is that just because somebody is going to do that, and just because you can suggest them reasonable ways to do it doesn't mean that you have to be forced to consider this use case at the same level of priority. When we discuss these exotic cases, one of the things that I really don't like is when people are pushing me to say that these cases have the same level of priority or importance for my life or for the life of mankind.

[01:03:12] They don't. Sound money is something that, in my opinion, could change society and economics and even geopolitics in a radical way. While doing gambling with shitcoins, I'm happy if that's done on RGB in a more sustainable way and not on top of, I don't know, Solana. Technically speaking, that's fine, but I don't really care. I don't think that that use case is important. It doesn't mean that it's not legit. It doesn't mean that I want a cop to stop those guys. I don't accept that if I'm not equally interested.

[01:03:55] It's like you find the printing press and you see that the printing press can be used to print books. This will change forever the course of history regarding censorship and forbidden books and the spread of knowledge forever. Then somebody says that if you basically put the mobile tokens of the printing press in some certain way, you can use the printing press to do back massages to people. That may be true. Maybe there is some smart configuration of a printing press that turns it into a massage machine, and people will benefit a lot from this back pain relief.

[01:04:43] But it doesn't really matter, and I don't want to be bullied into saying that this matters. What really matters is the printing press. And all these kinds of use cases... 99% of them are stupid, like my example of a massaging printing press. Some of them may be less stupid, some may be feasible, some may be not. We can and we should propose better, smarter, more sustainable ways to do that, but let's not lose the focus here. I mean, we are talking about recreating a competition against the nation state money.

[01:05:24] We are talking about avoiding monetary censorship and monetary distortion by central banks. This is something to a level of importance. It's like somebody's discussing the cure for cancer, and the other guy is talking about a new hairstyle. Hairstyles are fun. You can follow fashion. It's not a crime, but let's not mix and let's not pollute something with historical importance with something which is just a fad, and you may follow it. You change your hairstyle. You color your hair. I don't care. You are free to do it, and it's not evil.

[01:06:04] But what I really don't like about the so-called crypto industry is that people are tossing together research to cure cancer with research to dye your hair with a violet color, which is a legit use case if you really want, but it's not even in the same category. It's something completely different, and I think the scam, of course, when you try to pump the need of dyeing your hair because you associate it with curing cancer, when you try to piggyback the marketing of Bitcoin in order to sell something that may be even interesting if you have that kind of nerd interest, but it's not really important in a general sense.

[01:06:52] Vlad Costea: Right. But we should remember that Ethereum is a layer five, right? If you recall... so I actually found this. So it's a post on Reddit by Junseth, which is from 2017 or 2018.

[01:07:06] Beautiful.

[01:07:07] And he says: "It's always been toxic, [unclear: mayo]. You know what blockchains are? [unclear: Here.] Toxicity is layer one. Layer two is libertarians. They provide the payment channels wherein the toxicity can be used. Layer three are the users, like prostitutes and drug dealers. They are served by layer one and two, but know nothing about the politics or the poison of layer one.

[01:07:31] They just know that they can pay their ads on Backpage. Layer four is the Blythe Masters and Factom, who provide an impenetrable regulatory shield that is doing its best to build broad regulation for MySQL databases. They are promoting magical thinking about how blockchain can do anything. This sends regulators in all directions, trying to make sure that blockchains don't become sentient. Layer five is Ethereum and Dogecoin, which lets noobs practice blockchaining without pooping on Bitcoin. Layer six is Roger Ver, who runs about screaming that there are hordes of hobbits at the gates of Moria wanting to get in to the cave filled with trolls.

[01:08:18] He's providing shield for layer five, which is actually where the hobbits enter, and it is absent of trolls. Rather, layer five is filled with farts. These farts are the fuel of speculative inflows into Bitcoin. This synergism is called Byzantine fault tolerance. Every blockchain needs all six of these elements to function. This is how we know that Ethereum isn't a blockchain. It is a layer five, not layer one. Toxicity is not in its fundamental layer. They're running on compassion. They will need to be replaced as the layer five infrastructure as soon as they begin using proof of stake.

[01:08:57] Perhaps ETC will become layer five. In any case, layer five is [unclear: a drop-in]."

[01:09:05] Giacomo Zucco: Incredible. Incredible. I always tell people, I mean, when they ask me what I should read about Bitcoin, I often suggest The Bitcoin Standard, or you can suggest books by Knut [unclear: Svanholm], or other more technical books by Jimmy [unclear: Song]. But actually, this should be mandatory reading to understand Bitcoin. This is perfect. This is absolutely perfect. There is everything here. Junseth, this is a masterpiece.

[01:09:32] Vlad Costea: I agree. And we can argue all day about Ethereum doing stuff, but this is kind of correct. It's not really a layer one. Technically it is, but in the way that it functions, it's more of a layer five. It's all about hype farts, as he calls it.

[01:09:51] Giacomo Zucco: Yeah. And they are all parasitary use cases of Bitcoin. They will not exist if Bitcoin didn't exist and function. All this blockchain hype, all this crypto hype is 100% dependent on Bitcoin keeping existing and keeping improving and keeping spreading and not the other way around. What maybe we as maximalists have to come to terms with is that these side effects are at least for a certain period of time, inevitable. So at the beginning, I remember myself. So I started out as a shitcoiner in 2013. When I understood that it was complete nonsense,

[01:10:32] I was a little bit disappointed at people doing that. It's like, I can stop it, I should speak out, I should stop it. Now probably we are coming to terms with the fact that you cannot stop it and maybe it was inevitable anyway. I still think that it could have been managed better if... I think that if you think of an alternate timeline where some prominent Bitcoin advocates start to be more vocal about shitcoin scams early on instead of just being dismissive and ignoring them. So if you think about somebody debunking proof of stake already in 2013, 2014 instead of just waiting after the noise is so high that you cannot overcome it with signal anymore.

[01:11:24] If you think about somebody like Antonopoulos not legitimizing a commercial fraudster like Vitalik Buterin as an innovator, while he is basically a fraudster. If you think about Gavin Andresen not legitimizing Craig Wright who is a con artist, I mean, we had the unlucky situation where some of the first and best, well, not always best, but some of the first and most visible and most known Bitcoin personalities decided in a very large number to legitimize this utter noise, this [unclear: farce], that is all this blockchain industry and this crypto industry.

[01:12:12] If more Bitcoin personalities, when Bitcoin was small, had been like Junseth instead of like the others, maybe the level... we would still have scams, because it's inevitable, but the level of confusion would not be so terrible for newcomers. A newcomer maybe could easily tell apart serious researchers from blatant scammers. Instead we had this kind of merging, this kind of legitimization, which at this point is somehow inevitable. And at this point it also provides bad incentives to join the ambiguity. Because if you... I mean, right now, if you are a Bitcoiner, but then you realize that you make more money doing shitcoin consultancy, you will have the temptation.

[01:13:08] You will suffer the temptation to legitimize things that you know are completely scammy because you can make more money with consultancy in this way. I felt this pressure on myself for most of my consulting work during these last years. I mean, it would be so much easier if I just stopped saying what I believe is true. And I just went with the dominant noise, leveraging confusion in order to make more money. But eventually, if you really love your job, I mean... I don't even think of that so much as an ethical problem, it's just also a personal satisfaction problem.

[01:13:48] If you really like to explain Bitcoin, to study Bitcoin, to research Bitcoin, to teach Bitcoin, to consult Bitcoin. Then, even if you make more money creating confusion and creating ambiguity and creating noise, you will prefer to make less money and to try to create signal.

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[01:17:51] Vlad Costea: So what was the shitcoin that got you started? I'm looking at 2013 shitcoins. There were not too many.

[01:18:01] Giacomo Zucco: Not many. The first one for me was Ripple, and I was scammed directly by Satoshi Nakamoto, because there is a comment on BitcoinTalk where Satoshi Nakamoto says that Ripple is a great project. The thing that I did not know is that he was not referring to the Ripple shitcoin. Because Ripple was a project of basically automatic debt and credit settlement in this kind of routing system for credit. A little bit like the Lightning Network without the collateral, something like that. And it was created years before Bitcoin, actually, and it never really caught up, because there are some fundamental flaws.

[01:18:40] But it was a very interesting project. In a way, it was even a precursor. It was even an ancestor of the current Lightning Network. Then this project was dismantled. And then new people came and they created Ripple Labs, buying the brand and launching a shitcoin, which was complete nonsense. It was like a central federation creating 100% pre-mined shitcoin, selling on the market just, like, less than 10% at the beginning. So creating a completely false market cap and claiming that the centralized federation was actually a decentralized system, but faster than Bitcoin.

[01:19:21] So 100% lies in every single aspect of the operation. But I didn't know back then. So I got really excited about Ripple because I was seeing Bitcoin... I was skeptical about Bitcoin at first. Then I was convinced that Bitcoin was working. And then for a while, my skepticism was broken and my critical sense was broken. I was accepting any single claim. So I started to look at Ripple and then NXT came. And I was excited by NXT because there was like a decentralized peer-to-peer market, a DEX.

[01:19:55] There were issued tokens. There were brain wallets, as a passphrase, with terrible entropy, with people creating low entropy and getting robbed all the time. But I thought it was a good idea. There was a browser-based wallet that back then I was like, oh, this is a very good idea, very practical, very good UX. And then I gradually understood why all that was basically noise and stupid. It was just created to grab my attention. And my luck was that I very early met with good Bitcoiners like Lawrence Nahum and others that explained stuff to me.

[01:20:39] So I was very lucky that my shitcoin phase didn't cost me a lot of money or a lot of time or a lot of reputation.

[01:20:49] Vlad Costea: This is fun. I hope you dumped your Ripple bags in 2017 in December.

[01:20:55] Giacomo Zucco: Earlier, unfortunately, earlier. But it's okay because the best thing is to dump your shitcoin at the maximum. The worst thing is not to dump them at all. So I did the second best thing.

[01:21:08] Vlad Costea: Yeah, I do recall in Riga, this was in 2019, when you mentioned that shitcoins are going to end up getting traded as collectibles and nobody's going to mine any new blocks. So people are going to trade, like, USB flash drives with keys to certain coins. So they're going to be like NFTs in a way.

[01:21:27] Giacomo Zucco: Yeah, exactly. I predicted NFTs, but we're still far away from that. There are still people wasting physical intellectual resources into something that cannot work by first principle. But anyway, there is time. We are not in a rush.

[01:21:46] Vlad Costea: Anyway, Giacomo, thank you very much for this interview. I know that you have another one that's coming and we ran over time. And it's interesting that we started from this idea that everything that is not Bitcoin is a scam. But at the same time, you developed this classification of how scammy something can be, starting from not existing at all to existing as a token on a platform, which is actually fairly secure and decentralized to getting, you know, I think this is the lowest denominator issuing a new ERC-20 token on Ethereum.

[01:22:23] Yeah, or I guess it's worse if you issue it on Tron. But that's another discussion for another day.

[01:22:28] Giacomo Zucco: Yeah, let me just finish with another claim. So some people maybe will appreciate this discussion with all these nuances. And then they will be maybe disappointed that when you go back to Twitter, and you have to... when I go back to Twitter and I have to tweet, I will get back to some kind of semi-ironic, oversimplified claim. But the point is that if you think about everything we discussed, you need a lot of time to understand what we discussed, you need some level of knowledge, you need some commitment, you cannot expect this kind of signal to reach over the noise, because the noise is very simple, it's very direct, it's very loud.

[01:23:11] The noise is buy this new coin, it's the new Bitcoin because it's faster, it has faster confirmation, bigger blocks, and Turing completeness, and ZK privacy, and quantum resistance. That's the level of noise we are facing right now. We cannot really face this level of noise only with this kind of super precise, nuanced conversation about levels of scamminess and levels of dishonesty, or misunderstandings, technical trade-offs. So I think it's okay to get back to saying everything but Bitcoin is a scam. That's basically it. Let me give you the final example.

[01:23:58] When you receive an email from a Nigerian prince, who is offering you money, you don't know him. You don't know. I mean, there are princes in Nigeria. Nigeria is a complex place. You can analyze it, you can go there, you can study the monarchic system in Nigeria. You can try to understand the claims one by one, you can verify yourself, but if you don't have time to do that, and our time is scarce, and our energy is scarce, our focus is scarce, then as a simplified spam filter, it's okay if you just delete every time you receive an email from a Nigerian prince, and if you just say, in order to be fast and to be practical, you say to your colleagues and your friends, guys, Nigerian princes are scams.

[01:24:46] That's a reasonable heuristic. It is not literally true that every guy from Nigeria who has royal blood is necessarily a fraudster, but it's a very good heuristic to say Nigerian princes are scammers in order to teach somebody to use email, especially a newbie. So everything we discussed now is true, but that doesn't mean that the sentence "stay away from shitcoins, everything but Bitcoin is a scam" is a bad heuristic. I think it's a very, very good heuristic from a probabilistic standpoint.

[01:25:23] Vlad Costea: Okay, that's fair. So I'm not sure if I have any more questions for you at this time. Thank you very much for your explanation, because it was a lot more nuanced and complex than I expected. I just expected you to say, no, that's a scam, like Carlos Matos four years ago: that's a scam. But yeah, there's a lot to analyze in this and I appreciate your work.

[01:25:50] Giacomo Zucco: Yeah, it's a matter of time preference at the end. Making a quick buck or making even a quick... something that can be perceived as helping Bitcoin adoption, like involving a new custodian, may feel very, very good at first in the short term, but eventually it will create more problems than anything. Whereas truth, truth is by definition sustainable. So if you stay true, and if you try to stay honest, that's more sustainable in the long term. I think that's the key point: it's low time preference, at the end.

[01:26:31] Vlad Costea: I very much appreciate it. And thank you for doing this.

[01:26:34] Giacomo Zucco: My pleasure.

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