Jameson Lopp, Cypherpunk and CTO of Casa

You're listening to the Stephan Livera podcast focused on Bitcoin and Austrian economics. Listen in and learn alongside me as I interview some of the sharpest minds ranging from economists, software developers, investors, entrepreneurs, and writers. Hey guys, welcome to the show. This is your host Stefan, and today my guest is the great Jameson Lopp. He is a very well known cypherpunk within the Bitcoin community. He is also the CTO of Casa, one of the best key management companies that is out there today, and he is also the creator of Satoshi dot info, a Bitcoin statistics website, and he's also, the curator of one of the best known Bitcoin resource pages. so- First of all, thank you very much for coming on the show, Jameson.

Pleasure to be here. Thanks for having me.

Yeah, so look, I think, basically everyone, most of the people listening to this probably already know you, so maybe we can start with a bit of discussion on, you know, what are the things that you're thinking about lately from a Bitcoin point of view you're thinking about and working on.

Yeah, I mean, I'm basically continuing the security focus that I've had for the past three years, with our Vault product, the, Keymaster, which we're currently targeting for high net worth individuals, but of course, eventually want to make available to as many people as possible. And simultaneously, I've, started thinking a lot more about Lightning as we've been working on this plug-and-play node product. So I've, I've actually been in the trenches doing a lot of one-on-one customer support over the holidays recently, trying to, take some load off of our engineers' backs, and I've learned Quite a bit about Lightning and, you know, realize that it definitely still has a number of rough edges to be worked out. It's definitely still, you know, hashtag reckless to, to be operating a, a Lightning node with real money behind it, but I definitely see a bright future ahead and there's a lot of potential and we just need to keep on building.

Yeah, fantastic. Actually, on that topic, what are some of the rough edges you speak of around Lightning and what are some of the common pain points?

well, so there are- Security issues with, you know, regard to the fact that you're basically running a hot wallet, the stuff that we're running into more often, with our users is trying to figure out how to make it as, as seamless as possible for a lightning node operator to maximize the use of their node and, and so that basically means giving them a better understanding of kind of their economic position within the network and, and how They might be able to tweak different things in order to, maximize their connections or their routing, of, of money flowing through the, node that they're operating. And these are, you know, some of the big, like, unanswered questions is more on the economic side of things, is, is how will the liquidity of this network eventually be managed? And, and of course, we hope that it will mostly be managed by software and, and, Done on a sort of autopilot basis, but the, the autopilot functionality that is out there right now is definitely very early stage, and, from what we've been seeing, it hasn't yet reached the point where it can actually surpass what a dedicated human operator can do if they actually understand, how to config their channels.

Yeah, so I've understood, as I understand, there is a fair bit of skill that goes into the channel management component of it, and that can make the difference between You know, really having people route through you versus being one of the, let's say, nodes that doesn't really route many payments.

Yeah, so there's actually a fair amount of, I guess inefficient use of, of capacity on the network right now, and probably one of the best examples of that is actually the, the largest liquidity provider on the network, LN Big, whoever they are. They have opened up, I don't even know how many hundred, if not thousand, channels with various nodes on the network, and I'm, I'm pretty sure that the vast majority of them are actually not getting used, and, and they seem to have just kind of gone with the spray and pray approach, but, hopefully they'll continue to refine their own logic.

Right, right, yeah, that makes sense. I mean, I've, yeah, from the discussions I've heard of in the community, you know, guys like Alex Blosworth has a very, he has a very, For that, so I, I think, maybe that's just a learning journey that we all go on.

Yeah, there's, there's that, and, also, you know, just trying to take this to the next level where we, we don't want it to require someone to be, you know, technically proficient or, a nerd who is gonna be willing to spend a lot of time to actually understand the protocol or how the network works. we're really trying to build Plug-and-play solutions that are usable for your average millennial, and that's gonna be one of the biggest challenges I think is, is just continuing to build layers of abstraction, to, to have a better user interface and user experience to get as much of the, the complicated day-to-day stuff, hidden under the hood so that we can just present, you know, some nice graphs and charts and maybe some buttons for people to click, but, they shouldn't actually- Have to understand things like payment channel liquidity or, or, or like channel timeout configurations and all the, the various game theory that's actually going on behind the scenes.

Yeah, excellent point. Okay, and something I've seen you write recently was, a really great article, I think it was very illuminating, which was around, back more on the Bitcoin side, it was, "Who controls Bitcoin Core?" So Jameson, do you wanna talk through a little bit of the background of, you know, why did you write this article?

Well, Like a number of things that I write, it's usually self-serving. It's, it's usually something where I've had so many arguments about a specific, topic or specific point, within the ecosystem, and I'm tired of repeating myself and, and tired of like constantly forgetting a lot of the nuances behind some of these very complex ideas, is I just, sit down and write everything out and, you know, get some peer review input from other people in the community. community and try to build what is as close to, I guess, an authoritative, response or resource when it comes to a, a question about like how Bitcoin actually operates. And so the, the question of, you know, who controls Bitcoin or who controls Bitcoin Core as a repository comes up on a, a regular basis, usually by people who Look at one specific group or look at, you know, one specific piece of software and jump to a conclusion, and it's very easy to do because there's a lot of complexities that are, are going on here. And so I basically tried to go through point by point and explain to people how, you know, not only does Bitcoin Core as a repository have no control over the network because it doesn't push out updates to any nodes Node operators have to go and get the software and install it voluntarily, but even within Bitcoin Core, as a process of software development, there are a ton of checks and balances that are happening to minimize the trust and minimize the power of anyone who is operating in that repository, including the fairly short list of maintainers who have the ability to actually merge code into the repository.

Right, and so that is- I suppose just to call out the specific role that is in relation to the maintainer accounts that can merge code, but then as you explained in the article, that's really more like a janitorial function than a position of power.

Yes, for a number of reasons, but the, the biggest one being that everyone is watching everyone else within the repository, and because At the end of the day, this is all voluntary and nobody can really force anyone to do anything. if someone abuses the small amount of power that they do have If the rest of the organization, decides that they can't strip that power away, then they can always just leave, right? It's a kind of voice and exit issue, and, and that kind of plays out at many different levels, not just within software repositories, but within the entire crypto ecosystem, is that at the end of the day, anyone who has power in one of these public permissionless systems only has the- illusion of power from some perspectives, because if, if enough people disagree with their decisions and the way that they're trying to change or not change the system, then they can always just go create their own new network, their own protocol, and, and, and basically form a new focal point of consensus.

Fantastic. And then I like how in this article you actually went into the detail and you really sort of spelled out each of m- Who knows, this may not even be fully comprehensive, but there are just numerous controls that exist from a pull request security point of view and a release security point of view that each of these different points could catch a change or an unwanted change. Could you outline a little bit on some of those and then how, how you went about just identifying each of those? Was it just discussion? Was it just your own knowledge?

Yeah, I mean, a lot of it was reading the documentation. I mean, I already had a pretty general idea of, of how, the- build and release system happened, though I had never, you know, read it line by line and, and tried to look at the software that was being used. But, it, it really is all there on the repository, you just have to dig through, and, and find the documentation. And, and I learned a few things along the way, for example, there are scripts that you can run to verify all of the, the- Cryptographic signatures by the maintainers on every commit that they have merged into the repository, and they started doing that back in December twenty fifteen. So there's thousands of commits, that this script will go through and verify, and I had never run that before, and, and I decided that I wanted to better understand it, so I tried to run it, and I ran into a few issues, and I actually ended up contributing, some new documentation and new code to the Bitcoin Core repository as a result of that. And that's, I think, a great example of how this software and how open source in general works, is that somebody becomes interested in a project, they start learning about it, they start trying to use it, and they might find a pain point and figure that, you know, if it's a pain point for them, it will probably be a pain point for other people, and so they can save future people that same pain by, going through the, the process to Update code or update documentation, and, you know, that's how we make these incremental small improvements that over many years, end up creating extremely high quality software.

Fantastic. Yeah, I love the explanation there. Also, I think, a related, piece of news that came out was around the BTC-P or BTC Private, they had a covert inflationary premine. Now, people who are newer to- Crypto might fear that such a similar thing could happen with Bitcoin, but how realistic or unrealistic is such a fear? Would you suggest that Bitcoin Core has a much greater level of review and eyes on the code?

Yeah, I think the, the timing on that coming out just a few weeks after I published this in-depth ex-explanation of how to do secure open source engineering was, very fortuitous because And, and this was actually a question that I got, of course, after I, I published the post, several people asked, "Well, do any other projects out there in the cryptocurrency space have anything, you know, similar to this process?" And my, my honest answer is, I have no idea. I don't have the time to go and look at all of the, the development processes of all the different projects, and I would hope that the larger projects have similar processes, but we can see Very clearly that these really small projects that only have a handful of developers behind them, they, they simply don't have the, the manpower and possibly even the expertise with this type of engineering, which I have often said is, is probably closest, to something like an aerospace engineering, mindset where you have to be extremely security conscious and extremely, low tolerance with what is allowed to happen? Because the, the smallest little error can be a critical system vulnerability that results in massive harm. So that's, you know, one of the reasons why I think that Bitcoin Core as a project is extremely conservative. And, and why it's very easy for other, I guess, naive, less experienced developers to just look at it as, "Oh, it's just a piece of software, I can fork it and make changes to it." But without the necessary infrastructure around the development process, without enough eyes on the project and enough people watching each other to be the checks and balances, then it's very easy for either a malicious person to get in and make bad changes or- Or just for someone to, to, to screw up and, and, you know, have one bad line of code that, that makes it through review. And I think we'll probably talk about it later, of, you know, even, even a project like Bitcoin Core, which has some of the highest, level of, you know, quality assurance and engineering, mistakes can still happen.

Oh, exactly. And I suppose that's the perfect, opportunity then to ask my next question, which was around in the case of mistakes such as the recent CVE two thousand and eighteen one seven one four four, which was the, a couple months ago, which was the inflationary bug. Now, obviously, at the time, there was a lot of news around that, and I think some of this comes to that concept of consensus as well. So, you know, let's hypothetically say it had been exploited on the main chain rather than on the test net where it was. Do you think there would have been sufficient consensus to roll back to the non-inflationary chain?

Yeah, so this is where you can get really, philosophical, I guess, and start going down an infinite number of paths of like what could have happened. And so the, the question kind of becomes, what, a, what would the severity of it be, and b, how long, or how much time would pass? Pass before it wouldn't, was noticed and people would start, talking about trying to fix it somehow. Now, with an inflation bug, I imagine that would be noticed within an hour or two, because there are so many people who are running various dashboards and statistic sites and have alarms set that, that it would probably not, be able to go for more than a few blocks without somebody noticing, simply because, you know, you'd have the- The change to the UTXO set would, would increase, more than it's supposed to. So then the question is, well, how, how badly do they exploit it? So if someone created a billion bitcoins, I think there would be no question, that just like what happened back in twenty ten, when someone created something like a billion bitcoins, that, it was, rolled back, that the chain was rolled back, I think, a matter of hours worth, and, and they proceeded forward. Now You know, then the question comes, well, what if, what if it was exploited but not in a way that caused a ton of harm? Like, what if someone only created one Bitcoin or, you know, a, a few thousand satoshis, like they just exploited it to prove that it could be done? that would be much more difficult, I guess, and there would be a lot more contentious discussion about How drastic of a change, should, should be made, and, you know, how much, time would it be worth, basically reorganizing the chain to fix that? So, it's very difficult to predict all the, the different possible outcomes, because I think it's really more of this like multi-variable spectrum of things that could happen, and, you know, if, if it's something that caused a lot of harm, then it's not going to be particularly controversial to Try to fix it, but if it was less harmful and more of just like egg on your face, we've exploited the bug, then, we might just have to roll forward and, and fix it from that point on.

That's a very illustrative example, and it does come to some of this discussion around, you know, what is Bitcoin and what exactly makes Bitcoin. And so there was some recent discussion by Alex Morcos of Chaincode Labs, where he commented that some bugs are quirks of Bitcoin, some are just bugs that get fixed, in quotations. The quote, the code is the spec is misleading. Code, code is the best guideline we have to what defines Bitcoin, but common sense and social- Consensus are required too. So I think that's an interesting way to explain it, and some of that goes to this question of comprehending Bitcoin as a system. And I think in, in your article, you, you make an analogy to language. So there are, there are dictionaries, but the language is still spontaneous. The language isn't defined by the dictionary. Can you talk a little bit on that point? Yeah, I,

and I hate to use the word social contract because, that is so loaded, and, I don't, I don't, it, it This thing that we have to describe it. So, you know, there are a few aspects of Bitcoin that are fairly uncontroversial, that I, I think that there is consensus around them, and one of those, of course, is the twenty-one million Bitcoin limit. And One of the best examples I think that, that I can make about that is that, with regard to what Alex was saying of the code not being the spec. There was, in fact, up until just a couple years ago, the Bitcoin core had a bug in the code where It would actually create twenty-one million bitcoins like every couple hundred years. And, Peter Wille actually fixed this with BIP forty-two, which he posted on April Fool's Day a few years ago, but it was Actually not a joke, it was a serious Bitcoin improvement proposal where if, if the code hadn't been changed, then several hundred years from now, may have been eight hundred years from now, this overflow operation would have happened and, fifty bitcoins every block would have started being, being rewarded to the miners. And, you know, that's one of those things where I think everyone agreed that that was obviously a bug because we had this social consensus around the twenty-one billion, twenty-one million limit, and, and so it was completely uncontroversial to change the code and, quote-unquote, you know, change consensus or at least change machine consensus because the, the issue was that the machine consensus was not in line with human consensus. But of course, when we start talking about human consensus and What is the human consensus for this idea of this thing that we call Bitcoin? That's when it gets really gnarly, and a lot of people tend to want to revert to some other traditional system like, you know, democracy, some sort of voting system where some set of people vote or, or, you know, some technocrats, get to decide or, you know, create, an oligopoly even, where only a, a few people get to decide because we think that they're the best and, Of course, as I've argued, on a number of different articles and presentations, you know, this is crypto-anarchy. We don't really have any other type of system of governance that can really be equated to this, and that, that I think the best thing that you can equate it to is, Stuff like language, which is this sort of, organically emerging consensus that is constantly evolving, and there really aren't no, foolproof guarantees about like an aspect of a language, other than that it is probably going to change over a long period of time.

Yeah, for me, it really brings analogies in the ways that even from an anarcho-capitalist Austrian point of view, people might make arguments around what would the law be in such a society, and similar- Analogies there are actually drawn of, well, you see, there's lawyers and there's judges, but in the same way that dictionaries don't define, they don't fully define the law, they sort of, they might codify the law. And in some sense, the comments you were making there is similar to that idea of, and I love the distinction there between machine versus human consensus. I hadn't heard that terminology before, but it, it makes a lot of sense to me as well.

Absolutely. Basically, the way that I describe it is that the awesome thing that we've created These protocols is a way to automate human consensus, and in fact, the, most recent presentation that I've gone around and given a few times is, something that I call, using blockchains to automate bureaucracy and invert bureaucracy, and, I, I basically make the argument that what we're doing is we're creating basically a sentinel That is sitting out there on the network and it is, you know, checking all the rules for us. But we as humans have to agree to the rules first in order to actually run this, this guardian program that is, is checking them for us. And, and sometimes because it's software and because software is written by humans who are fallible, sometimes that software will have a bug or it will not be enforcing the rules that we think it is. And that is when the machine consensus may fail. Fail, and we have to fall back to the human consensus, which I think is the kind of foundational layer of all of this, cool crypto stuff that we're building on top of it.

Yeah, that's an excellent way to put it. The foundation, human consensus is the foundational layer on which we build the machine consensus. Okay, so we've had a fantastic year, you know, coming to the end of two thousand and eighteen, we've had so many developments in Bitcoin, ranging from Lightning Network on the main net, we've had- We've got liquid network going, we've got further developments in Blockstream Satellite, we've got Lightning wallets, we've got payment processors, there's been developments in the mainstream financial world. What were some of the highlights for you?

Well, I think the most, interesting development has been watching the Lightning network continue to mature and grow and, and starting to see some, some more real commerce start to happen on there. there's, I think, going to be a, a similar- A level, if not even greater level of development and expansion over the next year on the Lightning Network as more developers start hopping on and, and building more, applications on there, and as it becomes safer for the average user.

Right. And we've also seen, I think, you know, relevant to you very much so, is the multi-signature services. So we're seeing the rise of that. So obviously at Casa, you're heavily involved with this. And there are other providers such as, Unchained Capital who are coming out with this idea of collaborative custody as well. So That, that is a big development for the year, I think, and, do you have any thoughts on what we'll see over the next coming year or two from a multi-signature point of view?

Yeah, so, it's actually been interesting just this past week, of, we've, we've actually seen, a number of fairly large security vulnerabilities, get exposed, like, in Electrum and several different hardware wallets. it's, it's gonna con- Continue, I think, to, push the boundaries of what the average user needs to do, and I, I'm still very, strong belief that, anyone who has a non-trivial amount of, of crypto assets needs to have them in a multi-sig wallet, and that we need to build tools that, that allow people to, to leverage the, the hardware devices that are already out there, but to disperse their keys so that they're not having Any single points of failure. And so we're, we're trying to do that at Casa. you know, it is and always has been possible for, for people to do that, but we need to make it a lot easier. So, I think that Ledger and Trezor and these, these hardware wallets have made it a lot easier, for people to get to that first step of decent security, but there's still a lot of things that can go wrong, especially from user error or ignorance or negligence or just not understanding all of the possible loss scenarios where that, that, in my opinion, is the next level that we need to get to is creating, wallet software and, and wallet, best practices that basically protect the user from themselves.

That's a great point, because over time, obviously, individuals who can, who have, you know, a high level of Bitcoin will obviously, you know, they can use the premium services, but- Perhaps what we'll see over the next few years is a lot of people trying to do their own, roll your own multi-signature, and make mistakes and lose Bitcoin in the process, similar to how people saw exchange hacks in the past and so on. And, you know, the ecosystem might have hardened itself a little bit against people losing money on exchanges and so on, but- What now with multisig for, you know, individuals who, are at the more, let's say, retail level?

Yeah, I mean, there have always been, a number of possible pitfalls. In fact, I was just talking to someone earlier this week who told me that they almost lost a lot of money on a paper wallet, and that was due to this issue that not many people talk about, where it-- you may redeem money from a paper wallet, and if you don't send all of it to a specific address, then the rest- rest of it will go to a change address, and you may not actually, be keeping the private key for that change address. So, you know, that's an example of just one of the many possible pitfalls where if, if you're not highly sophisticated in, in how these protocols work, then you can accidentally send your money into the ether, as it were. So it's I mean, part of it is definitely user education, but I think if we're really trying to get to mainstream usage, then we need to kind of bake the user education into the actual software and hardware to really make it idiot-proof and have the, the guide rails of the best practices, built into these products in a way that it's very difficult for you to shoot yourself in the foot.

Well, speaking of, you know, doing your own cold storage. Do you have any thoughts on, you know, in terms of what your favorite options are? Is it Glacier Protocol? Is it some form of roll your own multi-signature?

Yeah, I mean, Glacier Protocol is so insane that, Really nobody should be doing that, unless you're, you know, operating like an enterprise level, operation or something. But, I generally tell people that the, the biggest improvement that you can get is, is just buying a hardware wallet. Like that is the best usability and security that anyone can get, at like an affordable retail level. And then if you're thinking about more long-term stuff, especially around inheritance planning Then it gets a lot more complicated because you have to figure out how you're going to split up your, your seeds and your keys and whatnot and, have them available to people who you somewhat trust in case you get hit by a truck or something. And so that's where it gets more complicated, and I, I have a blog post, that I, I think I wrote a few months ago about my solution that I used where, I basically took all of my, my private key data, all the instructions for recovering everything from all the wallets, and, created a encrypted data blob with VeraCrypt, and then I used Shamir secret sharing on this really long random, Passphrase, which was used to decrypt that, and then I basically took those different shards of the decryption passphrase and handed them out to my heirs and executors, and, you know, basically had a setup such that, you know, a certain number of them would have to get together and, and basically collude against me if they wanted to be able to unlock everything. And, and, you know, s-some, delicate, balances and trade-offs that you have to think about because while at the end of the day This system allows you to operate trustlessly. If you want your, assets to be able to be passed down if you cease to exist, then someone else or some other group of people needs to somehow be able to gain access to them.

Yeah, that's, yeah, it's a difficult, it's a difficult problem, and I think it'll, it'll just take time for easy solutions to come out for the, on the market for individuals. I think the, the other thing that would be interesting to just talk through in terms of what's happened over two thousand and eighteen is Some of the statistics, and now you recently came out with some of them as well, so I thought it might be interesting to just talk about the implications of some of these. So SegWit use has gone from ten percent to forty percent. Do you see any implications of that?

Well, I think that has been one of several factors that has led to the on-chain transaction fees going a lot lower. you know, demand in general has gone down, but in addition to, batching of transactions and the use of segregated- Witness that has, taken a lot of the strain off of like running into the block size or blocks, block weight limit, which then creates the, crazy fee market. also a lot of improvement has happened in different services, with regard to their fee estimation. I think that people are, are better understanding that if they're patient, they can save a lot of money in certain cases. One reason why I'm, I am okay with the fact that it's not, you know, a hundred percent or even fifty percent, is I think that this gives us, some breathing room, and I kind of see it as this, natural, oscillation with regard to adoption and, and hitting the, the on-chain block space limit is that If we're only at forty percent adoption now, and we start hitting another big adoption curve and start running into the block space limits, that means that we, we actually still have a lot of room for people to, Start using Segregated Witness and further increase the amount of on-chain volume. So there are several large services that are still not doing it yet, and, if we get to the point where the on-chain fees are getting really high, then I think, you know, some social pressure against those services to actually roll out their Segregated Witness, functionality would actually result in us, you know, oscillating back down Known for a while and, and giving us kind of, a relief valve for adoption. And, and this is of course all going on at the same time that Lightning Network adoption is increasing, and, you know, hopefully in the long term that will be able to, orders of magnitude greater effect of, improving the efficiency of people's use of the Bitcoin network.

Yeah, right. And, and then also the number of nodes Nodes is, well, reachable is sitting around nine thousand six hundred, and I think, as you mentioned, per Luke Dash JR's stats, that the unreachable nodes has gone from about ninety-eight thousand down to sixty-five thousand or so. do you have any comments on the number of nodes or maybe we'll see more of those come online with Lightning and, you know, more people buying, you know, the Casa node product?

Yeah, so I, I think that That has definitely declined along with the interest, where probably what was happening is a lot of people were just getting into Bitcoin and they were downloading Bitcoin Core, you know, running the full node, possibly even as their primary wallet, and That the majority of the stability of, of nodes that have kept on running are probably the ones that are actually being used for economic purposes or, or are being used by the more hardcore, OG Bitcoiner types, and they're not really gonna be going anywhere. Now, like you said, with Lightning, At least today, it's recommended that you run your own full node next to your lightning node, you know, that will change a bit in the future with, lightweight clients, but, I think that's a-actually, a great incentive for more people to, to start running full nodes so that, you know, they're able to operate trustlessly within this new network, especially now that Running one of these nodes actually has more of an economic impact, where, you know, you're able to collect some fees, you're able to actually, help improve the liquidity of this new network, which I think will ultimately increase the utility of Bitcoin and hopefully, you know, make the value go up as well.

Yeah, precisely. And another, good statistic is block propagation has come down to about half a second. So if I was, Total newbie, how would you explain to me what, you know, why does block propagation matter?

Well, it primarily matters in terms of preventing, blockchain forks. And what, what you want is for the network to all come to a consensus as quickly as possible about the latest update to the state of the blockchain. So If that takes several seconds or thirty seconds or a minute, then that means that miners who are working on the next block, they may not be mining on top of the same block, so they may actually end up creating these competing forks, which then of course, result in reorganizations and in general that, decreases the reliability of a confirmation for your transactions if, if lots of chain reorgs Organizations are happening, then people have less confidence in, the network and in accepting, transaction with only a few confirmations. There have been a few extreme examples on some other networks, especially like Bitcoin Cash and the Bitcoin, Satoshi Vision, fork, which I think created something like a Forty or fifty megabyte block that took something like forty minutes to propagate around the network, and I think they were having a whole lot of, of orphaned, blocks happen in the meantime. And I think in, in general, some of the stress tests that have happened on the Bitcoin Cash network as they've been trying to get their blocks up like around the twenty and thirty megabyte range have, have really pushed the limits there of, of what the current level of- technology for propagating data can really do on these decentralized networks.

Yeah, exactly. And, it's, it's-- I think there's also another implication just around, for miners as well, because they, they don't necessarily wanna be playing this game of having to constantly shuffle and juggle between the different blocks.

Well, yeah, I mean, it, it ultimately comes down to reliability. they would prefer That what they're working on is as stable as possible and, and they don't want to, to mint a block and put it out there on the network and basically have the reward yanked away from them because some other miner, got a block, you know, within a minute or so and, and the, the rest of the network decided to follow that miner instead.

Yeah, it's a bit sort of unjust. and then also from a mining point of view, the hash rate. So the hash rate has gone from nineteen exahashes per second to thirty-eight. Do you have any comments around what the implications of that are in terms of Bitcoin's security? Yeah,

I mean, it's, continuing to increase the thermodynamic security of the network. there, there was some interesting, Kind of fud going around recently of, of saying, you know, so much hash rate has been taken offline that, that now there's enough offline hash rate that could be used to basically fifty-one percent attack the network. And, you know, that may be true on paper, but I think in the real world it would be, extremely challenging to even find, those machines, assuming they're still operational, and then B, actually coordinate them to, to do that, and C, you know, still pay for the The electricity required to do that. But, it-- I think the more interesting question around this is, why has the hash rate continued to increase so much if the exchange rate has dropped so much? And, maybe that's because miners are still continuing to get more and more efficient and find cheaper and cheaper sources of power, or perhaps they're, really in it for, the long run, and, and a number of them may have been off- Operating at like a negative profitability for a while under the assumption that eventually the exchange rate will go back up and that they will be profitable in the long term.

Yeah, exactly. So it could be that they've been very speculative and thought, like many of us, we got really bullish during the, the two thousand and seventeen bull run and they may have over-purchased or overbought, and sort of overestimated the price growth that would come to them, and then now as the prices come down, they've had that reality check.

But this is just the nature of- Mining, right, is that, that there are extreme, volatility in a number of the different variables of, of mining and that, that results in some pretty fierce competition that, that ends up pushing a lot of the less efficient people out of the market.

Yeah, no, I think you're right. It's, it's very much a game of who can survive and who can s-speculate well over, you know, that multi-year cycle as it comes, and who knows what will happen with the next cycle? Maybe the next cycle we get another bitmain coming out Out of it, and it's another big, huge mining company.

Yeah, I mean, I'm, I'm still waiting for the really big chip makers to, to start ramping up and seeing some real, industrial competition.

Yeah, oh, do you think it doesn't, it's not at that level now?

No, no. you know, I, I think that, you know, we're still in the like, Bitcoin enthusiast industrial mining era. I fully expect that, that over the long term, this will change, as Bitcoin becomes Stream, you know, we will see the, the larger, more traditional, tech companies start to get in there and, and try to compete.

Okay. and we've seen a lot of Lightning channel growth, so I think we've spoken a little bit about Lightning, and then also the liquid side chain, so that launched this year as well, and there is, I think you mentioned there are twenty five BTC loaded into the liquid side chain. Yeah,

it's been pretty quiet. My understanding is that they're still ramping up, so I think twenty nineteen will be much more Interesting, for Liquid and seeing exactly how much pressure they can, take off of the Bitcoin main chain, and, you know, help out the exchanges and, and traders so that they're not having to flood the, the network whenever they're trying to rush for the exits or rush for the entrances.

Fantastic. Okay, so now I've just got a couple questions that are a bit more just random. one of the questions was around, again, coming back to this idea of ju- jurisdictional competition. So do you think Bitcoin may enable a future of mini-states that are more open to individual sovereignty, and could we see new and improved forms of social organization that are not as dystopic as modern nation states?

Yeah, I mean, in the long run, this is kind of one of my great hopes, is that, you know, going back to what I was talking about with, inverting bureaucracy and, and automating bureaucracy, is that I'd be Believe that Bitcoin is a very interesting experiment that if is successful in the long run, could not only revolutionize money, but revolutionize like how we think about governance. And, you know, of course, this is going more into the anarcho-capitalistic, philosophies and, and whatnot, but if, if we get to the point where we have created a type of technology that allows people to be more sovereign And we can duplicate that, to not only allow you to be sovereign about your money, but also be sovereign about many other aspects of your life, whether that's ownership of assets or ownership of your data, or, you know, ownership of the, the fundamental things that make you you. then that is where we start to get to the point where I think that an anarcho-capitalistic society might actually be doable. And this is because one of the reasons why these, hierarchical command and control governance systems have evolved and become so pervasive throughout human history is because they're very efficient ways of organizing society and organizing, you know, people's skills and abilities and allowing for you to, basically specialize in certain things. And The, the downside of that, of course, is that now, the average human who lives in a first world country probably can't take care of themselves very well, right? Like we don't grow our own food, we probably don't even know how to maintain most of the things that we own, rather we have specialists who take care of those. And so trying to transition from this type of society to a more self-sovereign anarcho-capitalist society, that transition is gonna be very tricky. And I think- I think that an integral part of being able to do that transition is basically being able to have all, all these autonomous agents that are working on your behalf in the background. And so you, you would have your autonomous agents that are working on behalf of your money and your other assets and, and, keeping track of other property and, and things that you have to maintain and basically, maintaining, you know- Contractual relationships with third parties who would be helping you with those various aspects. And so, you know, this kind of boils down to the, you know, who will build the roads, arguments, who will maintain the roads, who will, how, how will you have- various services that are currently highly socialized like, healthcare, law enforcement, fire, protection, et cetera, et cetera, is that, you know, it's perfectly possible for any of these things to be privatized, but the-- one of the main reasons that they aren't is that it's, it's just a huge cognitive overhead for you to maintain all of those relationships yourself. It's, it's a lot easier for a government, a government or some other third party to maintain those relationships on your behalf. So I think- The, the short version of the long-winded answer is that, you know, we continue to create these software agents that can basically, start to replace pieces of government functionality. So piece by piece, we can basically deprecate the state.

Yeah, that's a fantastic answer. And, you know, in examples of that, even as you mentioned, maintaining your contractual relationships. I mean, who-- on the question of who will build the roads? Well, maybe we'll have lightning channels and you will stream payments for your use of the road. roads and it will be ba-based on how much of it you use, and it's like a per user basis.

Yeah, I mean, I think the, the possibilities are endless, we just have to build the technology and, and hope that it is, a sufficiently, good improvement that people will want to voluntarily adopt it. And, you know, the first step I think is Bitcoin, and then, if that's successful enough, then we can start talking about next steps.

Fantastic. and also just had a question around Grin and Beam as mempool implementations. Do you have any thoughts on those?

Yeah, I mean, I'm, I'm keeping my, my eye on them. I believe they're both looking at, at doing mainnet launches just in, the next few weeks here. So hopefully that goes smoothly. They've both gone through a number of, of test nets. I was actually looking at trying to, to mine Grin, because I, I bought my first gaming computer in Probably at least five or six years, so I've got a, a nice new GPU, and, unfortunately, that's, you know, a Windows gaming computer, and it appears that, grin is, the miner is only really working on Linux right now, so I need to decide whether or not I wanna take the time to try to dual boot Linux and get that all set up, or, I don't know, it's, you know, never enough time to do everything you wanna do.

Okay. And then, lastly, what's the most private way to To have Bitcoin without, for an average person, to buy some Bitcoin without anyone knowing or the least number of people knowing. Do you have any ideas on, you know, if it's like a lo- you do like a local transaction and take it, you know, maybe use Bisk, take it into a wallet and put that through, you know, a coinjoin and then out into some kind of device?

Yeah, well, I mean, it, it, it mainly comes down to a real-world privacy problem. So the, the most private way that you can acquire- Any type of crypto asset or really probably any type of asset is of course to buy it with cash because cash, it has some of the best privacy of, of any monetary, payment systems out there. so, you know, if you can use, some sort of platform like, Local Bitcoins or Bisc or, Mycelium Local Trader, any of these things that allows you to meet face to face with somebody and do a cash transfer, then you have- Successfully onboarded yourself into the system without, tying your identity to those UTXOs. Then, you know, the question becomes, how do you remain private while you're using, the system? And that turns into a whole big mess, which in today's, standards, you'd have to be an extreme expert into all the different, types of privacy leaks and stuff, But the, the easiest thing, I guess, for a user who is going to be transacting and, basically leaving trails by interacting with various third parties, would be to learn about using some of the, the privacy tools that are out there like the Wasabi wallet or, Joint Market, or, or even, you know, Looking at some of the different, decentralized exchanges to basically allow you to hop between different cryptocurrencies, because that's probably one of the better ways to fully break the link between, you know, which UTXOs or which accounts are owned by you, since it's not really possible to do cross-blockchain analysis if you're, if you're doing, a swap that isn't recorded by a party that's doing AMLKYC.

Right, yeah, that makes a lot of sense. Okay, so I think that's pretty much all we've got time for. So, listeners, if you wanna find Jameson, obviously, you know, check out his Twitter. His handle is at Lopp, L O P P. His website and well-known resources page, Lopp dot net slash Bitcoin dot HTML. and I'll also include the link for "Who Controls Bitcoin Core?" Which was the article we spoke over. Jameson, did you have anything else that you wanted to, tell the listeners or any

I think that, you know, f-from looking at a lot of the, the st-st-the statistics I've been posting, of the sort of twenty eighteen roundup, the The one thing that people don't seem to be investing in as much as they should is education. So, you know, whenever anybody asks me like financial questions, especially about the crypto space, I, I generally say, you know, If you have to ask those financial questions, then it just means that you haven't invested in education enough because you're, you're not able to answer them for yourself. So, you know, do your own research, and this is still the wild west.

Yeah, no, I think that's a great way to finish it up. I think you have to make that first investment in education. And thanks very much, Jameson. It's been, illuminating conversation. Thanks for having me. So that's a wrap on my conversation with Jameson Lopp. Let me know what you

So it's definitely worth following what he does, whether that's with Casa or his efforts under his own name. As this is the final episode for the year, let's turn now to my own thoughts on the year in review with this podcast. I've been going for about five months now, having started in late July 2018. I'm really pleased with how it's gone so far, forty-three episodes in. I've interviewed many highly talented people within Bitcoin and I've steadily grown my listeners, followers, subscribers, and I just wanted to say a big thanks to everyone who has helped me, The guests of the show and Patreon and Bitcoin donors and people who share the podcast and all the people who gave it fantastic reviews. Last I checked, I'm sitting at about eighty-six iTunes reviews globally with an average of four point nine stars. I really appreciate all the support I've received from fellow Bitcoiners. If you'd like to support me, my Patreon is patreon dot com slash stephan livera. Patreon supporters get access to a private Telegram chat group for me and my supporters, and in that group, I share some inside gossip on what guests are up to. Coming, and we bounce around ideas in there. If you, understandably, have concerns with Patreon, you can alternatively support me on Tallycoin, that's tally c o dot i n slash stephan livera. Payments there can be done using BTC or Lightning payment also. At the moment, my preference is Patreon just because it has subscription, but I totally understand the concerns that many have with Patreon. Otherwise, if you haven't already, please do subscribe, thumbs up on YouTube, or five star rate and review it on iTunes, and tell your friends about the podcast. That's it from me. I hope you've had a great 2018, and I wish you all the best for 2019. Check out the show notes for this episode on my website, stephanelivera dot com. If you enjoyed it, remember to subscribe so you don't miss out on the next episode, and please share the podcast with your friends. You can also follow me on Twitter, my handle is at stephanelivera. Thanks for listening.