Title: S15 E66: Jameson Lopp on Michael Saylor, Bitcoin Ossification & Paranoid Crypto Anarchism
Podcast: Bitcoin Takeover Podcast (host: Vlad Costea)
Guest(s): Jameson Lopp (co-founder and CSO of Casa, Bitcoin self-custody and security researcher, self-described paranoid crypto-anarchist). Recorded in person at the NiceHashX conference in Slovenia (November 2024).
Published: 2024-11-20
Duration: 1:01:40
Episode URL: https://bitcoin-takeover.com/audio/?name=2024-11-20_s15_e66_jameson_lopp_on_michael_saylor_bitcoin_ossification_paranoid_crypto_anarchism_.mp3
Audio: https://bitcoin-takeover.com/audio/media/2024-11-20_s15_e66_jameson_lopp_on_michael_saylor_bitcoin_ossification_paranoid_crypto_anarchism_.mp3
Transcript: CORRECTED. Base: the pipeline's local Whisper medium.en transcript (int16) with automatic speaker diarization (Guest A -> Jameson Lopp, Vlad Costea). Unlabeled continuation paragraphs inherited the previous speaker. Second opinions (read-only): YouTube auto-captions of the published video oH4rGA83-e4 (zcash-documentary S15E66.en.vtt = bitcoin-takeover-articles s15-e66-jameson-lopp.en.vtt, same captions), word-aligned to the ASR (about 300 differences reviewed); YT time = mp3 time + about 5-8 s (drifting from ~+7.5 s early to ~+5 s late). A full local faster-whisper small.en (int16) re-transcription of the published mp3 with word timestamps served as a third opinion, plus 24 short small.en clip re-transcriptions at disputed spots; turn boundaries were checked with local TitaNet speaker embeddings on every small.en segment. Removed: hallucinated 'Subscribe to our channel for more videos. You' at the start (restored 'Hello there and welcome', 0:48). Restored from the audio: 'the Spiderchain, which is this' (8:11) and the ColliderScript exchange at 8:26-8:42 ('which basically involved doing hash collisions. And you know—' / Vlad: 'By StarkWare, and Ethan, and Andrew Poelstra.'; base ASR had 'Episode 1. and Eaton and Andrew Polster'), 'if Trump doesn't win' (23:20), Jameson's closing 'I hope so' (1:01:34). Turn repairs: 'Yeah, it's quid pro quo' (24:25), 'I think we're all' (26:53), 'This is another perfect example' (29:26), 'Well, yeah, the Mimblewimble' (32:14), Vlad's 'So one more.' (32:36), 'You know, what I think' (33:53), 'You can always scale' (36:52), 'I know that you're the kind of nerd' (44:32), Jameson's 'Could be.' (58:16). Name/jargon fixes: Casa (KASA), ossification (classification), Botanix/Spiderchain, Cashu (Casu), Ark, Nostr, fiatjaf (Viet Jeff), drivechains, LayerTwo Labs, BIP 300/301, CUSF, HODL/HODLer (huddle), MicroStrategy, sats per vbyte, SideShift, imminently, banking the banked, Cake Wallet, BitVM, BOB, Citrea, Alpen Labs, three coins (free coins), Litoshi, Andrew Poelstra, Neutrino, OP_CAT (up caps), users can't really use it, IOUs, tail emission (Taylor Mission), Amaury Séchet (Amari Sesha), Kryder's law, Eric Voskuil and Libbitcoin, Make Bitcoin Great Again, Hodling.ch, Sparrow (Spero), Seedplate, Trezor Safe 3/Safe 5, Coldcard/Q1, Trezor clone (treasure), secure element, Jameson (Jamison), bitcoiners (the coiners), hard fork (hardcore), Fedimint.
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[00:00:48] Vlad Costea: Hello there and welcome to the Bitcoin Takeover Podcast. We are here at the NiceHashX conference in Slovenia, and right next to me is Jameson Lopp. This is season 15, episode 60-something by the time I publish it. And we're going to talk about some controversial opinions about Bitcoin because we do like that. We do like getting canceled on Twitter, and we do not like Michael Saylor.

[00:01:13] Jameson Lopp: Well, let's just say that I'll agree with Saylor on some things and disagree on some things, and that's okay.

[00:01:20] Vlad Costea: That's perfectly fine, as long as he does not jeopardize the future of this project. Because he is playing a political game, we do have to understand that, and he's pushing a narrative about what Bitcoin is, to which someone like you and someone like me does not agree.

[00:01:38] Jameson Lopp: Yeah, I mean, we all have our own incentives, right? I think in one of Saylor's recent interviews, he definitely differentiated himself from the paranoid crypto-anarchists.

[00:01:49] Vlad Costea: Well, are you a paranoid crypto-anarchist? Is Casa a company for paranoid crypto-anarchists?

[00:01:55] Jameson Lopp: I mean, I would call myself a paranoid crypto-anarchist. Casa is somewhere in the middle, right? We don't require KYC. We certainly have the ability for people to work with us anonymously. But if people want to disclose more information about themselves to us as a part of, you know, authentication protocols, then we support that as well. So we're flexible as a company.

[00:02:21] Vlad Costea: Okay, so do you serve people who are not paranoid crypto-anarchists?

[00:02:26] Jameson Lopp: Absolutely. You know, Casa is really here to help people help themselves, and especially the non-technical people, the folks who they want better security, but maybe they just don't have the time and effort to climb the mountain that is required to understand all of the different decisions and trade-offs around self-custody.

[00:02:51] Vlad Costea: I've read a Bitcoin Magazine article from like eight years ago, and you were saying that Bitcoin needs like 128 megabyte blocks or something. Do you still believe that? Is it still possible?

[00:03:03] Jameson Lopp: Well, if I ever mentioned something like that, because I think I actually mentioned it in my talk a few weeks ago, usually that's the number I pull from the Lightning Network white paper, right? 133 megabyte blocks required for global adoption of the Lightning Network if we assume, I think, two channel opens and closes per year per person. So there are assumptions there, and there are things that we could do to improve the Bitcoin protocol that would actually drastically decrease the need for that much block space. You know, if we had, for example, the ability to do shared UTXOs, multi-party channels, we could get orders of magnitude improvement on how many people could be using a Lightning channel, which is, of course, one on-chain transaction to open and one to close.

[00:03:55] So the future is not set in stone, or at least it might not be if we haven't ossified already.

[00:04:02] Vlad Costea: Oh, I like that word. What do you think about ossification? Should Bitcoin just stop and say, you know, go to Ethereum if you want to do contracts, go to Litecoin or whatever, if you want low fees, use Monero for privacy? You think we're heading towards this multi-coin world? Because I see people building bridges, and there are a couple of them right now that are operational between Bitcoin and Ethereum. And I assume, unless we're going to scale and add more features to it, we're not really going to maximize what Bitcoin does.

[00:04:34] And that's what Bitcoin maximalism was about, not rejecting everything and saying this is already perfect. So I think the question is about ossification. Where do you stand on that?

[00:04:45] Jameson Lopp: Well, yeah, it's kind of funny because I would say probably most of the hardcore ossification proponents would not say go build on Ethereum or use other networks because they tend to be purists and think that, you know, people should only be using Bitcoin. So that's kind of stuck between a rock and a hard place there. Like if we can't continue to improve Bitcoin and add more functionality and utility and the ability to create more layers that offer other things to people, then I think that you should expect that people are going to go use other networks, other protocols that fit those use cases.

[00:05:24] So, you know, for me, though, I see it more as it's a decision tree and pathfinding type of issue. And basically what I mean is, you know, if we're trying to continue to explore the ways that we can make Bitcoin the best network that it can be, you know, serve the most people, preferably give people the most sovereignty and security and privacy and, you know, other attributes that a lot of us find quite valuable, then it's going to be a lot more difficult to do that if we can't have any improvements at the base layer.

[00:06:06] You know, this is a common trope in the space of, oh, we don't need to change the base layer because we can just do everything on other layers. And that's technically true with enough mental gymnastics, you know, with enough ingenuity. But I think that what we're seeing happening now is that it's so difficult to create a permissionless second layer on top of Bitcoin that the things that are happening most often are either the second layer is fully custodial. I think you could probably throw a lot of the e-cash mints into that.

[00:06:42] And, you know, e-cash is not terrible. You know, there's pros and cons there. Or it is a federated peg system. So, you know, semi-trusted, you're trusting some group of entities to maintain it. Or you're coming up with really complicated and convoluted game theory to try to create a more trustworthy peg. So you could, for example, you could look at Lightning Network and how it works. And it's fairly complicated in the sort of game theory and transaction construction that allows it to work. Or you could look at, for example, Botanix and their Spiderchain concept, where they've created this kind of rolling series of multisig wallets that are controlled by different sets of stakers, and essentially trying to create a game theory for that pegging mechanism where there's no single point of failure.

[00:07:41] And it gets really complicated and with complexity comes, you know, difficulty in ensuring security and stability. And so for that particular example, I think it's going to be a really long process of trying to tease out the optimal economic and other parameters of the game theory.

[00:08:04] Vlad Costea: So what's the name of that system again? Botanix or something?

[00:08:08] Jameson Lopp: Yes, Botanix is the company that is developing it. And the actual architecture is called the Spiderchain, which is this series of multisigs, where people are pegging in and pegging out the funds. And so, or even on a related note, just this week, the release of the covenants white paper, which basically involved doing hash collisions. And you know—

[00:08:39] Vlad Costea: By StarkWare, and Ethan, and Andrew Poelstra.

[00:08:42] Jameson Lopp: Yeah, yeah. And so, like, if you dig into it, it's fascinating concepts and an application of the existing tooling that is available to Bitcoin developers. But I don't think it's actually going to get used, at least not anytime soon. It's incredibly expensive and impractical. I think the current iteration of it basically requires tens of millions of dollars worth of electricity to be expended in order to find a colliding hash that can allow you to recreate this covenant functionality. So point being, you know, we're at the point now where while you can theoretically do almost anything with enough thinking through and creating, you know, crazy different theories of how to accomplish something, the practicality of doing a lot of these things is just not there.

[00:09:41] And so it's like, we're having developers spend so much of their time and mental energy coming up with what I consider to be impractical solutions that probably aren't going to get adopted. And this is all happening, I believe, mainly because people or developers are so pessimistic about even being able to soft fork in a new opcode that could add powerful functionality.

[00:10:07] Vlad Costea: Yeah, I agree with you on that one. You mentioned the Lightning Network. And I was thinking, what do you think about it? Because so far, the adoption has been underwhelming, to say the least. It was launched on the mainnet back in 2017. It's been about seven years since then. I think the adoption peaked in 2021. And since then, the number of nodes hasn't really increased. The number of channels hasn't really increased. They say it's efficiency and they're closing, closing smaller channels to enable bigger ones. But that's just coded language for centralization.

[00:10:39] It's not as decentralized as it used to be. I used to be a node operator. I used to try to route transactions. I failed miserably because I was doing it under Tor. And there are lots of quirks and design. I wouldn't call them flaws, but you have to be aware that they're there and they're not great. And so far, I did not see much action with Lightning except for these custodial solutions, which I think sort of defeat the purpose. Of course, the purpose of custodial solutions was in the beginning just to get people to get a taste of how Lightning is and then teach them how to be sovereign.

[00:11:16] But then it turned into, well, you should use an LSP. And if you don't want to use that, you should just download Wallet of Satoshi and use Cashu for privacy if you're into that. It feels like it drifted too far away from its initial purpose. I do remember Atomic Swaps being a goal on the roadmap somewhere. They were talking about it, building decentralized exchanges with Atomic Swaps. I haven't seen much in this direction. There's Portal, a project from, I think they're based in San Francisco. It's built by, no, I don't think Eric Martindale works there anymore, but it's built by these guys.

[00:11:59] And to me, it was interesting. But once again, I haven't heard too much from it. Seems like Lightning is getting abandoned right now in favor of Ark and other ideas. What do you think about this whole story of the Lightning Network, which was supposed to be the solution for scaling, the only one that matters?

[00:12:19] Jameson Lopp: Yeah, I mean, I think that it's clear that there's not going to be like one ultimate scaling solution. I think we need a lot of different solutions. You know, Casa was an early adopter of Lightning Network. We actually had one of the first, like, Lightning node in a box. And we only did that for a few years because it was so challenging to support. It was just like the support costs were through the roof. And I think that the explanation for what we've seen happen with Lightning so far is we saw, you know, first few several years of adoption and just interest in experimentation by hobbyists who had, you know, grandiose vision and hopes for the future.

[00:13:01] I was one of those myself, and I spent a lot of time, you know, carefully maintaining my node and trying to optimize my liquidity in order to convince other people to route through me. And suffice to say, you know, almost nobody who's operating a node on the Lightning Network is actually profitable. It's probably like one to five percent of node operators that are collecting enough fees to offset the things for like force channel closures that can be very expensive. So, you know, we have seen, I think, a bit of waning enthusiasm for being a sovereign Lightning user.

[00:13:46] But with Nostr, I think that has helped bring out a use case for, you know, actual like Lightning usage on a daily basis. Like we see people zapping each other. But, you know, you look into the statistics and I think 80 percent of zaps are happening through custodial wallets. So, you know, the takeaway is that it's still too complicated. And so most people are outsourcing the liquidity management aspect of it, aka running a node to third parties, if possible. Now, I gave a talk in 2018 or 2019 at the Lightning Conference in Berlin in which I made the argument that one of the most important things for Lightning adoption would, in fact, be for all of the exchanges to get onboarded into Lightning.

[00:14:40] And so far, I think we've only seen two or three. So from that perspective, I think we still have a ways to go. If all of the exchanges were onboarded into Lightning, that would do several things. First of all, if they implemented like the unified payment codes that were like both on-chain and off-chain for their deposits and withdrawals, I bet that that would significantly decrease the demand for on-chain transactions because about 50 percent of on-chain transactions are just people sending from one exchange to the other.

[00:15:11] Those should really be going through Lightning Network channels. Also, that would greatly increase the liquidity just in general. I think that if people could be running their Lightning nodes and they could be connecting them to their exchange accounts to basically have the exchange coming in and fixing liquidity imbalances and automating that, I think that would also greatly improve the ability for someone to run a sovereign Lightning node. But this is also why LSPs are a thing right now. It's kind of just like a hacky workaround. But liquidity management, I think, remains the biggest challenge in this space.

[00:15:51] And so it's going to remain like this until there's better tooling to automate all of that.

[00:15:59] Vlad Costea: I very much agree with you. I sympathize with the fact that you haven't made much money running a Lightning node. In fact, I think I lost more money than I actually made. And it's a bit painful when you think about it. But this is the cost of trying to be a pioneer in this field. So I was curious if you look into other L2s, because I've interviewed fiatjaf, the creator of Nostr, this year. He said, and I'm not exaggerating, he said, in terms of Lightning and stuff, just burn it all to the ground, adopt drivechains, use that for zapping, have this sidechain where all you do is just send tips from one to the other, prune that every six months so you don't have to store all of the transactions to make it scalable and easy.

[00:16:46] For people to validate. What do you think about drivechains? This show is sponsored by LayerTwo Labs.

[00:16:53] Jameson Lopp: Yeah, I'm not against drivechains. I've never been convinced by some of the fears that people have said that drive chains could totally upset the balance and game theory of mining on the main chain. It seems unlikely that like BIP 300 or 301 in particular are going to get consensus, but it may be possible for a sort of roundabout way of implementing drivechains if we can restore some of the other opcodes on the Bitcoin network. So this kind of ties into my push for us to enable more building blocks, more of these primitives on Bitcoin, because I think that that will ultimately drive more permissionless innovation and development of Layer 2s that are real Layer 2s and not just like bullshit multisigs.

[00:17:51] Vlad Costea: Yeah, I'm not sure if you're aware, but Paul is working on something that's called CUSF, which is Core Untouched Soft Fork. It basically involves talking to miners to activate. And he's hoping that very soon, I mean, he's very optimistic about it, but I hope in a couple of years or something, miners will realize that they're not really making much money and they could be making much more if they enable this just to exist out there in the wild for people to be able to, I don't know why we're so obsessed with pegs, pegging.

[00:18:25] Anyway, bad joke. But for users to be able to tap into these features, like on an Ethereum sidechain or a Zcash sidechain or something that only has assets on it, there is a lot of potential there. It's just that our culture, and I think that's the biggest issue, our culture has become complacent. The fact that we haven't improved Bitcoin in any way has not cost us anything because we went to the regulators, not regulators, to the institutions. And Bitcoin has become more regulated afterwards. And privacy has become more taboo.

[00:19:03] And in spite of all this, everyone's happy because the number went up. But they forget that we did go to 69,000 without ETFs and without a lot of this institutional stuff. And right now, the all time high, which we are witnessing today, I think is 77,000 adjusted to inflation. I think that's less than 2021, 69,000. So it's not like we made great progress by being in bed with bankers and these institutions. So we paid a high price for it. And we don't see the benefits.

[00:19:41] And we're not really making Bitcoin... You know, I think the white paper is aspirational, peer-to-peer electronic cash. We should aim to reach that. I think we have become also complacent with the store of value narrative. And we say you should only save in Bitcoin, whatever that means. HODL used to mean don't day trade. Now it means never sell. Michael Saylor says he will die with his Bitcoins. I guess we'll get to see that and how it turns out. But he did not buy the Bitcoins under his name.

[00:20:11] They're owned by a publicly traded company that has to pay employees and stuff like that. So we're gonna see how, how much of a HODLer MicroStrategy turns out to be. But what do you think about this whole cultural landscape where we're so against change, and it seems like every attempt to improve Bitcoin is regarded as an attack or a scam?

[00:20:34] Jameson Lopp: Well, it's also hard to quantify. You know, I do think it's the issue of a very vocal, vocal minority, especially, you know, OGs or just people who have their entire net worth invested in Bitcoin who are afraid. They're pessimistic. You know, it's a, if it ain't broke, don't touch it type of attitude. And, you know, my my pushback to that is, of course, that if you can't adapt the protocol to the world as it's changing around it, there are a number of things that can go wrong.

[00:21:11] So let's just, you know, look at the landscape today and put aside the cultural issues and look at, you know, we're at a nominal all time high. Whether you adjust it for inflation or not, we are in a bull market, at least the beginning of a bull market. And yet, if you look at pretty much any of the other metrics of the network, it's very much a bear market. Like nobody is transacting. Like the the fee rate, I think, is like two satoshis per vbyte right now.

[00:21:44] It's basically at the floor. So what seems to be happening? You know, the institutions and ETFs and stuff have have opened up new liquidity flows into Bitcoin through the traditional financial system. And so what does that mean? Well, nobody who's buying those are actually doing self custody. If you're not doing self custody, you're not doing on chain transactions. I think that's one of the reasons why demand for block space is so low. Also, we're just seeing billions and billions of dollars being funneled into the hands of a couple of custodians.

[00:22:21] And so I think you should ask yourself, you know, at what point do we start to get worried about the sort of systemic risk of having too much Bitcoin and too few hands? There's not really much that we can do to stop it at this point. So I think we prefer to sort of take the opposite approach and well, just do what I've been doing for 10 years, which is promoting self custody and like owning actual Bitcoin. That's the only way to keep Bitcoin out of the hands of these few custodians.

[00:22:51] And it's going to be a very interesting next few years to see how this all plays out. Because it's entirely possible that, you know, the institutions and Saylor and, you know, TradFi and whatever may decide to start to play a role in the governance of the Bitcoin protocol.

[00:23:12] Vlad Costea: I know that you often describe yourself as a cypherpunk. And in terms of U.S. politics, you're not a fan of Donald Trump. And you actually believe that if Trump doesn't win and the industry does not get this boost and this, how should I put it, this free pass to do whatever and continue doing business. We could actually develop more cypherpunk stuff to circumvent a regime that is against what Bitcoin is and what it's trying to accomplish. But now that we are in bed with the regime and the regime is in favor of Bitcoin.

[00:23:42] I've interviewed David Bailey last week. By the time I published this, maybe it will be two weeks ago or something. But he was different because I've interviewed him twice throughout the year. The first time it was before the Nashville conference. And then I interviewed him two nights before the election night. And he was a different person. He was saying, you know, we shouldn't just expect to receive stuff from the Trump administration. We should always give back to the Trump administration and keep him happy because he's a businessman.

[00:24:12] He likes to get praise and feel important. And as long as we feed them and we pump money into his projects and whatever, and we do something for America is going to be great for the industry. And to me, it sounds a bit like mafia extortion.

[00:24:25] Jameson Lopp: Yeah, it's quid pro quo, right? I mean, I think that's one of the upsides to Trump is that, you know, a lot of people look at him and see him as kind of unpredictable because sometimes he can have verbal diarrhea. But he is incentives driven, right? So if you incentivize him in the right way, then you may get him, you know, you scratch his back, he scratches your back. So I can I can certainly understand that. But also, look, we've got Trump for four years. And then that's it.

[00:24:56] Nobody knows what's happening after Trump. We could very easily swing back in the opposite direction and be back under, you know, Democrat controlled administration and Congress. So I I think I prefer to look at things in the very long term. Like I want to look at Bitcoin as a multigenerational project, not as a like four year election cycle project.

[00:25:19] Vlad Costea: Well, that's very diplomatic of you. You could say much nastier stuff, which you tweeted already, but you can check out his tweets anyway. I was going to ask you a sponsored question. What what do you do if someone offers to pay you in stablecoins?

[00:25:35] Jameson Lopp: So I actually I get reimbursed in stablecoins for a lot of the conference travel that I do, and I highly prefer that to wire transfers. It's extremely convenient. So I have I have nothing against stablecoins, but I don't I don't store my money in stablecoins. I just think that stablecoins are a superior way to transfer value and medium of exchange.

[00:26:01] Vlad Costea: But would you swap them for BTC on SideShift?

[00:26:06] Jameson Lopp: So, you know, I would either swap them for Bitcoin or just turn them into dollars and send them directly to my bank account. Usually in the case. So pretty much all the time that I get stablecoins is as a reimbursement. So I just immediately dump it for USD and transfer to my bank account because my bank account is going to be getting debited imminently to pay for, you know, flights and hotels and stuff.

[00:26:32] Vlad Costea: OK, so no buying BTC?

[00:26:35] Jameson Lopp: Usually not. For me, my my position is mostly to avoid having to sell Bitcoin at all costs. So I have almost no fiat in my bank account at any given time. And it's kind of a tricky thing to manage sometimes.

[00:26:53] Vlad Costea: I think we're all in the same position. We try to minimize the amount of exposure to banks because it comes from the don't trust verify ideology and years of banks closing down your account just because you bought some Bitcoin on a peer to peer exchange and someone who was an idiot, your counterparty during the trade, just put Bitcoin in the description and you're screwed. You don't have access to banking anymore. I think Bitcoin has done a much better job on banking the banked than actually banking the unbanked, which used to be the slogan for advocacy for the project back in 2014 or something.

[00:27:32] Jameson Lopp: Unfortunately, the vast majority of both my personal bills and our service providers at Casa only accept fiat. So we're still tethered to the fiat system.

[00:27:44] Vlad Costea: Did you try silent payments on Bitcoin? I think they're available with Cake Wallet and also I think Ledger integrated that. But it's a good way to do stealth addresses. And by the way, Cake Wallet, they're also sponsoring this. So it's sort of a question just to see what you think about a product that's out there. And it's also a BIP. It's 300 something.

[00:28:06] Jameson Lopp: No, I haven't played around with it myself. Well, we'll see how it goes. But you know, I'm generally bearish on privacy on Bitcoin. I mean, I'm generally bearish on privacy everywhere because so few people care about it. It is hard to get meaningful adoption of any privacy related stuff. And most privacy tools, you know, they're related to network effects. So like you have more privacy when more people are using privacy tools. And so the fact that so few people use privacy tools in the first place is almost like a self-defeating thing.

[00:28:48] It's tough.

[00:28:49] Vlad Costea: Yeah, I get that. But if you want to receive donations or whatever, you put a silent payment address. And it's a lot harder for someone watching the public blockchain to see what transactions you got. So it's a good way to protect yourself. Because honestly, why would you let everyone around the world to see what you're doing there to see your UTXOs?

[00:29:12] Jameson Lopp: Just accept Lightning.

[00:29:14] Vlad Costea: Ideally, just accept Lightning. So what else should I ask you about? Do you like BitVM and the stuff that's being built with it? It's the hackiest idea. It came out last year.

[00:29:26] Jameson Lopp: This is another perfect example of just how convoluted and, you know, the sort of mental gymnastics that developers have to go through in order to achieve the functionality that they're looking for, because they're basically hamstrung with such limitations on scripting capabilities of the Bitcoin protocol. So I mean, yeah, once again, I think the level of ingenuity is very interesting. I think it still needs a fair amount more efficiency gains to be practical. And it would actually be improved if we re-enabled some opcodes.

[00:30:05] Vlad Costea: There are two trends right now. You have the rollups, the ZK rollups. These are not two distinct ones. All rollups on Bitcoin are supposedly using ZK technologies, zero knowledge. And there's also the bridges, which are trying to use the features of other networks with your BTC. For example, there is BOB, which is built on Bitcoin. And that one is basically a bridge to Ethereum. You can use Ethereum smart contracts with the Bitcoin you already have on this rollup that they created. And there's also Citrea, Alpen Labs.

[00:30:38] So do you think that, and this is a big claim from the rollup people, that rollups are superior to sidechains? And for the longest time, the sidechain has been considered this holy grail of scaling Bitcoin. Now there seems to be this obsession from investors and also developers to build rollups. And what do you think about these?

[00:31:01] Jameson Lopp: I mean, I think it's too complicated to make an assertion that's that broad. If we're just talking about the state of things today, then that may be possible in the sense that sidechains of today are generally all federations. So then the question comes down to like, how is the actual rollup or like the sequencer or whatever run? And so it always comes down to the details, right? But sidechains, we've never achieved, I think, what we really wanted to with them. Rollups aren't perfect either, but that does seem to be the much hotter tech these days.

[00:31:42] So I'm all for continuing to experiment and push forward with innovation.

[00:31:47] Vlad Costea: Can you name three coins, which you consider are not scams or shitcoins?

[00:31:54] Jameson Lopp: Well, I've always been a fan of Monero. It does what it says it does. Other than that, well, we could trigger a lot of people by saying Grin, but Grin's basically dead at this point.

[00:32:12] Vlad Costea: There's Grin on Litecoin right now, you know?

[00:32:14] Jameson Lopp: Well, yeah, the Mimblewimble extension blocks on Litecoin. It works. Mimblewimble is not like the perfect privacy solution either. It's better than nothing. But other than that, I mostly use stablecoins. Tether's the best shitcoin.

[00:32:36] Vlad Costea: So one more.

[00:32:39] Jameson Lopp: Ooh, that's tough. I mean, I think you can make a strong case that Litecoin is not a scam. It does what it says it does. It wasn't pre-mined. Charlie Lee even dumped all of his Litecoins, so you don't have to worry about, you know, Litoshi anymore. But, you know, I don't find it particularly interesting. Other than like the Mimblewimble extension blocks, Litecoin played a key role, I think, in the SegWit, proving that as a thing. Oh yeah, Lightning as well. So I think it will be interesting to see if any of these other Bitcoin-proposed developments get adopted by Litecoin as a proving ground.

[00:33:25] I think one of the many problems with activating stuff on Bitcoin is that people are always like, well, we don't know how the economics and the game theory will play out. And you can't do it on a test network because the test network's not worth anything. So, you know, Litecoin as a test network with actual economic value, I think, continues to be an interesting tool to just keep in our back pocket.

[00:33:53] Vlad Costea: You know, what I think is interesting is that SegWit was activated about three months after it came to the main net of Litecoin. It was enough of a proof to demonstrate that it's safe and you cannot steal from SegWit addresses, which was the FUD at the time. I think Charlie Lee actually put $1 million worth of Litecoin in one address, in one SegWit address, and said if you can break this, you can actually collect the bounty. And then they activated on Bitcoin three months later. But in the case of Mimblewimble, this one has been on Litecoin for two years.

[00:34:27] Right now, they're rolling out the mobile wallets. They have been able to make this in a way that does not require a server, so you actually sync in a Neutrino type of way. You download block filters to your wallet. But still, I don't see any conversation in Bitcoin about this. It's almost like I've even asked Andrew Poelstra, who is the guy who first thought about putting Mimblewimble on an extension block like six years ago, and he said he moved on from that. He doesn't think about it too much.

[00:34:56] But it's still cool. It's better than nothing in terms of privacy. You can CoinJoin into it and out of it to make sure that there is not any, of course, you can mess it up by, let's say you peg in one coin and you get out one coin. It's sort of obvious. Or if you are the whale in that liquidity pool that's anonymized, of course, when you take the same amount of coins out, it's obvious that it's you. But you can still do some tricks to make it pretty good.

[00:35:24] And it has confidential transactions within the extension block. And the extension block is prunable and you can increase the block size in a way that you incentivize transactions to happen there. So basically, it solves scaling in a pretty elegant way that only requires one soft fork. And to me, it's a pity that we talk about CTV or whatever, when we could think bigger, we could do something that makes an impact to many more users. I'm not saying CTV is not great, or OP_CAT, but it's just that there are tools for builders to build something niche that is not going to scale anyway.

[00:35:58] We're going to hit another wall in terms of, OK, we built this, but users can't really use it.

[00:36:06] Jameson Lopp: Well, I mean, that's also just the nature of scaling, right? I think actually Andreas Antonopoulos had a great presentation many years ago about how Bitcoin fails to scale, how all technology fails to scale. You're going, you get more adoption and then you hit a wall and then you have to figure out how to overcome it and you scale past it and then you hit a wall. And so I think that's what we should expect to happen in Bitcoin as well. The only problem is if we ossify and we literally cannot continue innovating, then my fear is that the way that we scale is by everybody basically having IOUs at trusted third parties.

[00:36:45] Vlad Costea: But that's not really scaling. It's just, well, you can argue that Lightning is that, right?

[00:36:52] Jameson Lopp: You can always scale via making more trade-offs and allowing certain attributes of the network to degrade. That's how email scaled. Right.

[00:37:03] Vlad Costea: But it all comes down to who's going to pay the miners if that happens, who's going to want to actually pay for on-chain transactions to pay for this diminishing reward that gets halved every four years.

[00:37:18] Jameson Lopp: Yeah. No, that is an ongoing issue and is also kind of ties into one of my other recent presentations around block space economics. So we'll see how many people get triggered by that.

[00:37:31] Vlad Costea: What do you think about ordinals, by the way? Because it seems like they're the ones paying more fees lately.

[00:37:37] Jameson Lopp: Yeah. I mean, I don't invest or trade in them myself, but I'm not against using Bitcoin block space for non-financial things. I think that's something that you can't feasibly stop. It's not really worth us arguing about and trying to change the Bitcoin protocol to stop arbitrary data. The whole spam argument, I think, really comes down to the question of, do you take the perspective that spam is this subjective thing and you have your own criteria for what you consider to be spam and not spam? Or do you take a more objective, straightforward path of defining spam, which is the economic path?

[00:38:28] And I think that's what's more logical of spam is just stuff that is not really economical for people to pay much for. So people may not like inscriptions, but I think if inscriptions are, and the people behind them who are minting tokens and doing whatever they want on the network, like if they're willing to pay more to use Bitcoin block space than people are to make an on-chain transaction, then they should get prioritized for that. And we don't really know what the long-term sustainable path for having high fees to offset the declining block subsidy is going to be.

[00:39:14] We don't know what use cases of block space are going to drive that necessary high fee environment. It could be large institutions that are making large high value settlements with each other on a regular basis. It could be layer twos like ZK rollups that are paying for a lot of block space because they have a ton of economic activity happening on the other layer and they need to settle into the main chain. I think the more experimentation and different functionality that is out there being tested is going to give us a better chance at finding the highest value and use cases.

[00:40:00] Vlad Costea: Peter Todd came up with this idea of tail emission. He went to a Monero conference and he became inspired and then came and wrote a paper that says that tail emission is not inflation. Assuming that a lot of Bitcoin has been lost, if you add a certain percentage of tail emission, you're not going to think that you got inflation until like a hundred years. And this can then pay for the miners to keep going to have a more predictable source of income. Do you think this would be the end of Bitcoin if we get some sort of inflation?

[00:40:32] Is Bitcoin just the 21 million coins or is it much more than this?

[00:40:37] Jameson Lopp: Yeah, I mean, I think that's problematic because 21 million is, I would say, one of the strongest and most fundamental memes and rules of the protocol. It's obviously, it's one option, but I think that there are many other options that we should explore. And of course, I'm biased towards my block space economics research that I've been doing where I think really this is a supply and demand issue for block space. And there is many, many different variables at play. And I don't think that we have to resign ourselves to the current market for block space and the current set of use cases of why people might want block space.

[00:41:18] So there's a lot of different ways that this could go and we should, I think, just discuss them and try to figure out what we want to make available to people.

[00:41:29] Vlad Costea: I'm going to get killed for saying this, but the Bitcoin Cash people were not idiots when they kept the block size at 32 megabytes. And I did interview Amaury Séchet, who is the main developer or used to be the main developer of Bitcoin Cash and the guy who forked Bitcoin to create that chain. And he said he used the metaphor for roads that it doesn't matter if you use a faster car, you're still using that road infrastructure. And you should have limits in terms of how fast you can go.

[00:42:00] And that's the block size for him. And he explained why he believes that 32 megabytes is a sweet spot for having a certain, certainly reasonable tradeoff between scalability and also decentralization. Do you think that with Starlink today and also cheap storage and greater accessibility to relatively powerful computers, it's the right time or a much better time than seven years ago to increase the block size?

[00:42:30] Jameson Lopp: I mean, I think that's a truism that hardware and technology continues to improve. I had a number of charts in my presentation around block space. There are many different technological laws, whether that's things like Moore's law with CPU power or Nielsen's law or Kryder's law. These things are around bandwidth and disk storage and so on and so forth. All of these computational resources are deflationary, which means they become cheaper over time. And so I think the point being that over time, this maximum supported safe block size that could potentially be used on the network continues to increase.

[00:43:26] Because these resources become cheaper, you should be able to run a node at the same cost that is able to process more data. This is a complicated thing in and of itself, and you can argue about which of the things are the most important. I would say it's probably bandwidth is the one that is the biggest bottleneck and constraint. I've done a fair amount of research into the network as a whole and the sort of bandwidth that other peers out there seem to be making available to people.

[00:43:58] And upstream bandwidth remains a pretty limited resource just due to the nature of residential internet connections. They tend to be asymmetric in nature. But the short version is, yes, if block size always remains the same, then it's pretty much guaranteed that the cost of running a node will continue to go down. So then the question becomes, do we want to allow there to be more block space if we can keep the cost of the node around the same? And that's going to be a very contentious debate.

[00:44:32] Vlad Costea: I know that you're the kind of nerd who does benchmarks and publishes the results. And you do something, I think every year, in which you sync a full node with the latest version of Bitcoin Core and see if there's any improvement. You have this monster computer with a lot of RAM and a very fast processor and a lot of bandwidth. I think you have broadband internet. And it seems like there is an improvement. But recently I saw something from Eric Voskuil, the maintainer of Libbitcoin. He bought this $300 computer from Temu.com, this Chinese website.

[00:45:09] And he used that one to synchronize his implementation of the Bitcoin client, which is Libbitcoin, in only a couple of hours. And he said that with some optimizations, Bitcoin Core can also do that. Did you get to try that or what do you think about this idea of having parallel different implementations of the same client?

[00:45:31] Jameson Lopp: Yeah, so Libbitcoin node is just fundamentally architected differently in how it processes and stores the blockchain data. If I recall correctly, one of the big improvements is that it doesn't try to maintain a separate UTXO data structure. You save a lot of disk read and write right there by not having to write separate UTXO and then delete it when it gets spent and so on and so forth. So I think that's one of the big improvements. I think it's a lot more greedy when it reaches out to peers on the network and just downloads as much data as possible in parallel.

[00:46:11] So yeah, I mean, I haven't run v4 myself. I've been talking to Eric, of course, every year, like when you're going to officially release v4. Hopefully, I don't think it's going to happen this year, but maybe in 2025 we'll see a v4 release. But yes, I think it's good to have people trying completely different architectures to find optimizations because we've already seen some of the Bitcoin Core developers looking at this and saying, OK, actually, I think we can implement some of these in Bitcoin Core. So hopefully we'll see that happen.

[00:46:43] Vlad Costea: There's also the option to zero knowledge proofs for sync within a couple of seconds. It could be good for mobile wallets, but for some reason we're not there yet. Anyway, the question that I have for you is basically you are one of the poster boys of Bitcoin maximalism. There's that legendary picture of you with the Make Bitcoin Great Again hat with the guns. And people use that to describe what a Bitcoiner is. But at the same time, you don't really speak like someone would expect you to speak.

[00:47:15] You don't have the opinions of someone who is totally unreasonable and says that everything that is trying to change Bitcoin is a scam. So how do you mitigate with this difference between the image and the rhetoric?

[00:47:32] Jameson Lopp: Well, I mean, I think a lot of that cultural shift happened during the scaling wars. And I was definitely a lot more toxic during the scaling wars. And I felt like it was appropriate at the time because we were basically in an existential crisis. And then I kind of cooled off and became a bit more moderate after that had all died down. And what does it come down to? I mean, it comes down to I'm a technologist. I experiment with things. I want us in general to be experimenting more.

[00:48:08] I think it's fundamentally against the nature of how Bitcoin itself came into existence to be anti-trying new things. You know, Bitcoin didn't just appear out of thin air. It happened because a lot of people dedicated many years to trying different forms of electronic cash systems. So if we're going to continue progressing this thing forward without giving up on some of the fundamental valuable attributes of the system, I think we need to continue experimenting and innovating. So I'm going to be all for that, regardless of how much it may piss some people off.

[00:48:50] Vlad Costea: Is there any interesting experiment that you tried lately and made you realize, OK, they do this differently, just, you know, running a different wallet or whatever? No endorsements. This is no advice to buy anything.

[00:49:05] Jameson Lopp: Oh, well, I mean, I had I had some research, actually, that I presented today that was fairly new. And that was like looking at mempool data. And basically I discovered how difficult it was to have an archive of mempool data that you could query against. But, you know, I have a number of projects running in parallel, and they're not even all Bitcoin or crypto or privacy related projects. Like I've got a few health related projects that I'm doing where I'm trying out different types of peptides and trying to see, like, how that affects my body.

[00:49:42] And so I guess that's just my nature of experimenting and wanting continual improvement, not just within Bitcoin, but within as many different aspects of my life as possible.

[00:49:55] Vlad Costea: Have you heard of Hodling.ch?

[00:49:58] Jameson Lopp: No, I don't think so.

[00:49:59] Vlad Costea: They're sort of like Casa, but based in Switzerland, except that they don't hold your keys. They actually advise you on how to set up your multisig. This is sort of an advertisement, but I'm actually curious how you compare to this sort of service.

[00:50:12] Jameson Lopp: Well, there's a number of different Bitcoin self-custody consulting services out there where they basically help you set up, you know, Sparrow or Electrum or whatever. And, you know, that's great. That is like one aspect of what we do at Casa is consulting. It's just that we happen to also have our own software and our own set of predefined architectures that we get people into because we think that, you know, those are the optimal ways to do it. So I'm not against people helping other people get into self-custody.

[00:50:50] I think that's kind of the natural progression for a lot of this is sort of a viral effect, whether it's friends helping friends and family or whether it's, you know, individuals or small groups of people becoming somewhat more professional in going about taking their own expertise that they've developed and helping you spread the knowledge.

[00:51:15] Vlad Costea: Something else about your research. Can you name your favorite hardware wallets and your favorite metal backups?

[00:51:22] Jameson Lopp: Ooh, well, I mean, my favorite metal backups are just going to be the simple, like single steel plates. So whether that's like, I think Seedplate is one of them, but there's like half a dozen of them and they all work great. Hardware wallets, I don't really have one that I think is the absolute best because they all have different trade-offs. In general, I really, I am a fan of the new Trezor Safe 3 and Safe 5. They did really well on my performance signing tests, which basically means if you have a really large complex transaction, they can sign it in like one minute.

[00:52:07] Whereas like Ledger devices, I have seen take hours to sign incredibly complex transactions. Now, the new Ledger devices are nicer, like on the UX side. I like the screens and hopefully those screens will have better longevity than the Nano screens, which we saw fairly high failure rates for after several years. You know, if you want the hardcore crypto-anarchist wallet, then you're probably going to go Coldcard. The Q1 is also pretty nice. But, you know, all of these hardware wallets, like I don't hate any of them.

[00:52:47] It's just none of them, I think, are the best in absolutely every aspect of how they operate. And once again, that's like another reason why at Casa, we recommend doing multi-vendor, multisig, you know, having different devices so that if you hit some sort of edge case with one manufacturer's device, then it's unlikely to affect the others in your keyset.

[00:53:11] Vlad Costea: Now, my issue with Coldcard, and I'm going to be controversial again, is that they're not open source, they claim to be open source. They try to redefine what open source means, but they put some fences around their software and said, no, you cannot sell a product that's forked from our code base. And considering that they started out as this Trezor clone that was using Trezor code, and they renamed the files to make sure that nobody looking at their code understands that they're a Trezor clone. But they had to update their firmware according to the latest version of Trezor.

[00:53:44] That's pretty insane. And they they're not quite honest in their marketing. That's my issue with them. I'm not saying that devices aren't great, but I'm not a fan of what they're doing. But I do have some questions about their multiple security chip setup, because those are also not open source. So I would rather. So you mentioned the Trezor. I like it because it's simple. It does what it says it does. And even if it doesn't have a secure element, and I'm speaking about the first one, the one you can just use it and wipe it after you use it and then you restore from seed.

[00:54:17] You don't have to keep in that flash memory the information about your wallet. You wipe it after you use it, you install it once again, especially if you're HODLing, it's practical. But you do need to have a good backup, because if you don't and you don't find your 12 or 24 words, you're screwed. But there's also a joke about Ledger and also one about Trezor. I've heard some guys who said that they washed their jeans and they had their Trezor in their pocket and it still works.

[00:54:47] And the Ledger guys, sometimes they like to say, and I read this on some French forum, that, you know, I have this sophisticated device. It has high security with this chip that is unbreakable and this advanced cryptography that will take you millions of years to be able to brute force my seed phrase. And you can't take my coins. And then someone takes his Ledger and types the pin, which is his birthday, and unlocks it. So that's another joke, because Ledger discourages people from using passphrases because they see their security chip is good enough.

[00:55:20] So it's a crazy world out there where with hardware wallets, there is no perfect device. But there are tradeoffs and you have to understand why you need a hardware wallet in the first place. So what do you do these days, Jameson? What should people look forward to in terms of your work? I know you're also talking about quantum computing and the dangers that it might pose for Bitcoin. Can you make a short summary?

[00:55:46] Jameson Lopp: The short version is that, you know, a number of different organizations out there, like I think the National Institute for Standards and Technology, are saying that we need to be preparing for quantum computers that are sufficiently powerful that they can implement Shor's algorithm, which is basically a way to get a private key from a public key, which breaks a lot of cryptography, could potentially break elliptic curve that is used for Bitcoin. And they're saying, you know, maybe in the next 10 to 20 years, this is where things get really controversial because there are various.

[00:56:31] There are many variables at play and you have to make certain assumptions. But my main point, the reason I started talking about it is because, A, we have this whole Bitcoin ossification thing going on. B, we know that even if you can upgrade Bitcoin, it tends to take a long time to get through the consensus process. And C, I did a bunch of calculations of how long would it take in terms of block space to actually migrate to everyone to post-quantum. And that would be years.

[00:57:01] So I think we just need to get ahead of it. We need to start discussing what are our options that are available to us. And then there's also going to be a controversial discussion around what we do with all of the Bitcoin that is in the quantum vulnerable UTXOs. And so I mean, I can only think of two options. One is we do nothing and we resign ourselves to the fact that eventually quantum attackers are going to steal that money and potentially have a big impact on the market.

[00:57:36] Or two, we say we're going to make them unspendable after some point in time. So, you know, either one of those breaks some important properties that a lot of bitcoiners hold very dear. Either the fact that, you know, not your keys, not your coins, the inverse of which is your keys, your coins. If we allow quantum attackers to steal people's money, that kind of breaks the first one. And then if we freeze people's money, then that also breaks a sort of violation of sovereignty.

[00:58:12] Vlad Costea: That's going to be our Ethereum DAO moment.

[00:58:16] Jameson Lopp: Could be.

[00:58:18] Vlad Costea: But it's inevitable that we're going to have a hard fork, right? It's because of the timestamping process.

[00:58:25] Jameson Lopp: Yeah, though, I mean, you know, that's that's not for decades. And I think that we're going to have, you know, critical issues come up long before then.

[00:58:35] Vlad Costea: Is the hard fork still taboo? Like, do you think it's this hard to tell people, you know, update to this new version of the software? It's important.

[00:58:44] Jameson Lopp: You know, this kind of ties into ossification and the fact that there is no authority or controller or even way to reach out and communicate with everyone who is using Bitcoin. And so I see it as kind of like it's a it's an issue of of time preference. And I also had some research where I was looking at node operators and their timelines for upgrading node software. And that the latency or lag time to update your node software has been increasing over the years. And right now, I think it takes about three years for 95 percent of node operators to upgrade off of any given version of Bitcoin Core or whatever.

[00:59:32] And and so point being, I think that, you know, if it's a non-controversial hard fork, I think that it is feasible to do that. If you implement the hard fork far enough in the future, such that just due to the nature of software and, you know, security support, generally it's not recommended to run node versions that are more than two years old. I think that if you have a hard fork that activates far enough in the future, like five, six, 10 years, whatever, that it is possible to do that, you know, with a really, really low risk of chain split.

[01:00:15] Vlad Costea: If someone is looking at this and feels jaded and doesn't find anything exciting about Bitcoin, what would you tell them to look into to feel excited once again?

[01:00:25] Jameson Lopp: Hmm. I mean, you know, that that's tough because everybody has different things that they're interested in. Right. So if you're in into privacy, there are plenty of projects that can help improve your privacy on Bitcoin, you know, whether that's the e-cash minting, Fedimint, stealth addresses like you were talking about. PayJoin is, you know, a coin join protocol that I wish would be adopted more widely and lots of stuff out there. Or, you know, if you care about scalability, you know, there's a number of different projects that are trying to tackle that.

[01:01:07] But, you know, this is a permissionless environment. So if there is something that you think is missing, then you can certainly try to build it. Though hopefully you won't run into roadblocks where you find that you don't have the basic functionality that you desire to do that.

[01:01:25] Vlad Costea: Thank you very much, Jameson. And I hope we do this again and you prove to have been right about some of your assumptions.

[01:01:34] Jameson Lopp: I hope so. Thanks.