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The Honest Money Show is your guide to understanding what money really is, and where Bitcoin fits in. Hosted by Anja Dragovic, Australia's female-led, Bitcoin-only podcast, it cuts through the noise to explore how money shapes our lives, why the current system leaves so many people behind, and what a clearer, fairer future could look like.
Expect honest, accessible conversations with some of the most interesting thinkers in the space, the kind that take you from "I don't really get this" to genuinely curious. No hype, no pressure, just money, made clear.
Whether you're brand new to these questions or already deep in them, you're welcome here.
Joining me today on Honest Money is Jimmy
Song. Jimmy has written a lot of Bitcoin
books and I'm very pleased to have his
knowledge shared with the audience today.
Thanks for coming on, Jimmy. Thanks for
Thanks for coming on, Jimmy. Thanks for
having me. Before we dive in, I would just
love my audience to hear like a little bit
of your background story. You are one of
the more respected voices when it comes to
talking about technical things in Bitcoin.
So, yeah, would you like to give us a
little bit of a TLDR? Well, so by trade,
I'm a programmer and I have been since I
was nine years old. I got into computers
very early. I was a programmer straight
out of college working for various
startups. And I think I did something like
12 startups in like 10 years, something
like that. And after I learned about
Bitcoin, I got into the Bitcoin industry
starting in 2014. I did a few startups
there as well and eventually went off on
my own. I found through the Bitcoin
community that I could do things other
than just code for money, including
teaching other people about Bitcoin from a
technical perspective, explaining things
on YouTube videos and things like that.
So, yeah, that's basically my story.
That's the TLDR of it. I have a much
longer one if you care. And they're all
over YouTube at this point because I've
been doing podcasts like this for like, I
don't know, nine years now. So, yeah,
there you go. Love it. So what do you
think the main risks to Bitcoin are? I
think this is an interesting area to
explore. Yeah, great question. And I think
throughout my Bitcoin career, the answer
has always been a little bit different.
And the weird thing is every time I think
it's a certain thing and that thing
happens, it isn't quite as bad as I
thought it would be. In fact, it tends to
be much better than that, actually. It
ends up showing sort of like a different
aspect of Bitcoin. Back in 2013, for
example, I thought that Bitcoin
was something like dark net money and that
black markets were the main thing. And
that as soon as sort of like that digital
marketplace went away, that it would cause
Bitcoin to suffer. And of course, you
know, when Ross Ulpric was arrested for
being Dread Pirate Roberts, you know, that
that was thought to be sort of like the
death blow for Bitcoin. And it turned out
not to be. And, you know, we went on one
of the most amazing bull runs we've ever
had in Bitcoin, going from like $100 on
the day of his arrest to $1,100 like six
or seven weeks later. So, you know, things
like that happen. At 2017, I thought, you
know, keeping a unified community was very
important. Turned out not to be the case,
actually. You know, we had Bitcoin Cash
fork off and things were fine. And that
that sort of thing is not something you
would expect. But it's, you know, that
that's that's sort of Bitcoin for you
whenever things are not as well. Things
are not as bad as they that people seem to
think. And people, you know, they the
vulnerabilities that people assess Bitcoin
to have aren't necessarily
vulnerabilities. So currently, my my
thesis is that the biggest sort of
vulnerability point in Bitcoin is
development. And currently it is a little
bit centralized. And there's a few there's
one main project on GitHub. And, you know,
I may or may not be right about this, but
that's my current assessment, because so
much of what happens in Bitcoin goes
through those people. And if you
understand the dangers of centralization,
then this is one of the main ways in which
this could happen. Yeah. OK, so I would
love to know a little bit more about this
project and GitHub. Bitcoin Core, you
mean? Yes. Yeah. Bitcoin Core is the is a
software project for Bitcoin. You know,
the software basically checks that the
Bitcoin ledger is legitimate, right? It's
it's sort of like auditing Bitcoin on a
constant basis. We can't do that with fiat
money. We can't even really do that with
gold or any other commodity. There there's
no way to know, for example, what the, you
know, world supply of gold is. We have
estimates and we have guesses, but, you
know, if if Uncle Roger has, you know, 100
pounds of gold buried in his backyard,
like no one's going to really know about
it. And there's no way to get aggregate
statistics like that. What's interesting
about Bitcoin being digital is that you
can have an accounting of all possible
Bitcoin and and that's auditable. You can
also do that with other digital stuff
like, you know, the fiat currencies like
the dollar, the euro and many others. But
generally, those are not auditable by
outside parties. If if there's any audit
at all with any central bank, it's done
internally and not widely shared, mostly
because governments want to get away with,
you know, doing whatever they want with
the currency. The Bitcoin core software is
a way to verify the supply and verify that
none of the rules are getting broken,
particularly with respect to the supply of
the money itself. The Bitcoin software
enforces the the absolute limit of 21
million Bitcoins. And, you know, you can't
subvert that. Right. Like it's it's part
of the Bitcoin value proposition that, you
know, exactly how much it is. So that
software ends up being fairly important.
And, you know, there are a bunch of other
things related to the software, like, you
know, you can do software upgrades and
things like that, which which developers
have a hand in and so on. So it's
important for that reason, because it lets
you actually verify as a user that Bitcoin
is what it says it is and not have to
trust somebody with, you know, fiat
currency or almost anything else. You have
to sort of trust people. Right. Like you
have you have to trust that the Federal
Reserve is doing what it says it's doing.
It's not doing like the opposite thing
behind the scenes or something like that.
So it's it's that software and sort of
like the process around it, which seems
vulnerable to me in this era. Yeah. So I'm
obviously a newb when it comes to Bitcoin.
I've been around for two years and one of
the more most kind of dominant
conversations that have happened in the
Bitcoin space since I've been in is the
whole knots versus core debate. But that
obviously predates. It goes back a lot
further. So what what is the history of
Bitcoin core and knots? And when when did
it all start? Yeah. Bitcoin knots is is
what you would call like a derivative of
Bitcoin core. It's a the the technical
term is it's a code fork. So basically
it's a it's the same code that was changed
a while back. And this is one of the
benefits of open source software. Anyone
can copy it and do whatever they want with
it instead of following whatever the
people that control that software do. So a
lot of open source software like your your
browser that you probably use Chrome,
Google Chrome, for example, is open
source. And there are dozens of Chromium
forks. Chromium is their open source one.
You know, the Valdi, for example, is a
Chromium fork, a Kiwi browser. I think
even Brave is to some degree like a fork
of Chrome. But you can change the software
to whatever you like because the source
code is there and you can you can do
whatever you want. And that's what nots
was originally. And it was because the
developer that forked it, Luke Dashir,
he he had some differences with what the
core developers were doing, particularly
with respect to something called relay
policy. And this was, you know, many years
ago, I think, if I'm not mistaken, over a
decade ago. And he sort of maintained it
so that people that agree with him can run
that software. Now, what really
supercharged this particular debate in the
last couple of years was what happened
with OpReturn. And that's, again, like a
very old debate that came to the
forefront. But basically, in any Bitcoin
transaction, you have a designated field
for adding what you would call metadata to
that transaction. So adding a little more
meaning to the transaction, some some
arbitrary data that you can put there to
sort of market as something. So it's used
for all kinds of things. A lot of it is
kind of spammy, but some of it can be
considered legitimate. So, for example,
there's something called BIP47 or extended
pubkey privacy addresses and so on where
you can drop in your public key and
somebody can figure out a way to send you
coins on an address that's not published
anywhere. And that that's kind of a cool
like little use case. And it was
originally put there, I think, in 2013.
What happened more recently, I think it
was about a year ago that a little over a
year ago when they proposed expanding that
OpReturn sort of field from that was by
default 80 bytes to 100,000 bytes. Now,
100,000 is the largest transaction you can
have. So you can't go beyond that. So it
effectively uncapped what was previously
capped. And there were reasons for this
and so on. But the OpReturn limit has been
controversial for a very long time. It was
originally 40 bytes in 2013. I think six
months later, it got bumped up to 80 and
it stayed there. And there have been
discussions in the past about expanding
that to something a little larger. I don't
think too many people thought that it
would suddenly be uncapped like it became
about, you know, as a proposal a little
over a year ago. And that's that was a
large part of the controversy. And as a
result of that controversy, because
Bitcoin Core was fairly insistent that
this was something that they wanted to do,
a lot of people decided to go over to
knots because they were specifically
keeping that cap as a as a way for people
to lodge their protest, if you will. And
that's that's kind of what happened last
year. Knots used to be, you know, maybe
three to five percent of the network. It's
currently around 20 percent of all the
nodes on the network. So it's grown
significantly, largely as a protest to
Bitcoin Core.
Yeah, so why should the
average user of Bitcoin actually care
about the OpReturn?
It depends on your point of view. And both
sides have have different arguments on it
for people that are on the Knot side.
They're largely concerned with data that's
not monetary. So we know that Bitcoin is
really good money and it's done
fantastically well. But if you fill it
with sort of arbitrary data, which is what
the OpReturn field is supposed to be, it's
like metadata about the transaction. But,
you know, people have put all kinds of
junk into various transactions and various
different techniques. And this gives them
one more technique. For them, it's just
sort of sanctioning in some way the
legitimacy of data transactions that
aren't monetary. On the other hand, for a
lot of people on the Core side, the
OpReturn cap is only done at the policy
level and not the consensus level. So for
them, keeping those two things consistent
was very important. Now, if you don't
understand exactly what I just said about
policy versus consensus, it really gets
down into the weeds. But they have a point
there in the sense that if you receive a
new block, you might receive it a little
slower. If you. If your policy is
different than consensus and so on. So,
you know, for them, that's why they did
it. And, you know, there are arguments on
both sides. And depending on your point of
view, you might find one to be more
convincing than the other. I'm not exactly
sure, you know, what the quote unquote
best thing for the network is or if
there's even an objective answer to that.
But but but that's that's the argument
that we're currently that was in on the
network while this debate was raging.
That's really interesting. But is it even
possible to completely eradicate spam?
Like technically is possible. And I mean,
there are ways to do something so that you
can't like, you know, it's only as the
limits of what can be done are only.
Restricted by human creativity, which is
essentially infinite. Right. Like so. Can
you completely eliminate spam? Yes. You
make restrictive enough rules. You
probably can't. Right. Like to in the
sense that you're I mean, I guess you can
make fake pub keys or something like that.
But ultimately, there there are ways to
limit it if you if you really care to do
it. And of course, that would maybe break
a lot of other stuff and make a lot of
other use cases sort of null and void. But
if you're asking possibility questions,
it's only really limited by human
ingenuity. And I'm I'm not sure if it if
if it can completely go away, but you can
heavily restrict it if you if you want it
to. Now, that's a very different
conversation than are you sort of inviting
it in. Right. What's permissible and legal
are versus, you know, what's moral and
good are kind of two different questions.
And a lot of people conflate the two. And
that's kind of the a little bit of the
confusion here is that for a lot of people
on the not side, this is a moral issue.
And they they they don't want to help the
people that they think are abusing the
network or acting immorally, even if it's
sort of like legally allowed within the
blockchain. They they don't like it and
they think it should be discouraged in an
economic sense as much as possible. On the
other side, I think there's more of a
conflation saying, well, if it's legal and
there's financial incentive, people are
going to do it anyway and not really
recognizing that there's a moral aspect to
it, that that there's there's like a gap
in there in their thinking. If you're if
you're thinking from a pure materialist
perspective, then that tends to be sort of
how you assess it. So it's a lot of it is
two sides sort of talking past each other
a little bit and purposefully taking a
particular philosophical viewpoint to
discredit the other side, in a sense. And
honestly, it's a it's a little bit more of
a cultural war than than people sort of
want to admit to. But, yeah, that's that's
kind of kind of where we are. Yeah, it
certainly feels that way. But what is the
financial incentive to add spam? Because I
thought the core argument against spam was
that they're financially decentivized to
to add it because of the fees. Yeah. So
there's this whole thing about SegWit that
you have to understand to to understand
that economic argument that there's
cheaper ways to put spam out there using,
you know, op if within segregated witness
field and so on. And that's four times
cheaper than putting it in top return and
so on, which is why the debate has moved a
little to a different arena with BIP 110
or RTDS or whatever. And those are, you
know, that's the move. You know, the
debate has moved there largely because of
this argument that you can put it
somewhere else. Yes, you can. But you
still don't want to leave a hole. Right.
Like you might have an open front door,
but that doesn't mean you should like
leave the side door open. I mean, like
it's it like people might not might or
might not use it depends on the use case.
Again, that like how people use it is only
really limited by human ingenuity. And,
you know, who knows how people will use
it. So it's it's a little bit of it's a
it's a weird argument on both sides with
respect to that. Right. Because in a
sense, it doesn't matter because there are
other ways to do it. So then what? On one
side, they're saying, well, then don't
expand it. Why? Why expand it? You're not
really gaining anything. On the other
side, it's well, it doesn't matter. So we
should just uncap it. Like, I'm not sure
either of those things really either of
those like leads to leads necessarily to
that conclusion. It's almost like a side
thing. But yeah, it's it's ended up kind
of in a weird debate place. Hence why we
were now like sort of fighting at a
consensus level talking about BIP 110 or
RDTS. Yeah. About BIP 110. What is it?
It's a list of seven consensus rules that
are being added. So it's a soft fork that
essentially reduce particular flavors of
spam. So one of the biggest spam vectors
in recent years is is something called
inscriptions and and BRC 20 and things
like that. And they're all using something
called Taproot. And that was a soft work
from 2021. And what this what BIP 110 does
is it makes the particular form that
spammers have preferred illegitimate
on the network, illegal on the network,
which means that it can no longer go into
the blockchain. Now, the main argument for
that is and they're doing it in a in a
temporary way. So it's illegal for a year.
And hopefully that gets rid of the people
that want to use the Bitcoin blockchain in
this way. And, you know, all the other use
cases that depend on this can move, you
know, keep going as as they did before.
Sure. The that that's what BIP 110 does.
It's it's a it's a soft fork that's
temporary to which makes particular forms
of spam illegal. Of course, spammers could
choose to go do some other method, but
presumably that would have a cost and that
would be a deterrent because of the cost
that they would have to pay. Like if, for
example, you're depending on inscriptions
or something like that and you you have a
wallet that shows Bitcoin inscriptions by
reading these very specific types of of
data data that's stored in a particular
way. And suddenly that format has to
change. Well, you have to go and update
the software and distribute it to all
those people before and make it backwards
compatible and all that stuff, which would
presumably be a cost. And maybe that's
enough of a deterrent to get them out. Or
maybe they have enough financial motive to
pay that cost and keep going. Who knows?
But that that's the main idea behind BIP
110. It's a it's a way to deter spam by
making certain types illegal for a
temporary amount. Hmm. This might sound
like a strange question, but who are the
spammers? Yeah, they're largely venture
backed people that, you know, ordinals,
inscriptions, even something called
stamps. They're they're all, you know,
sort of trying to do something else on
Bitcoin that used to be done or are still
being done on all coins. So like meme
coins and things like that. And that's
always been possible. And, you know, even
back in 2013, there was something called
color coins on top of Bitcoin to do a lot
of that stuff. And in a sense, a lot of
the spam on Bitcoin is of that variety.
BRC 20 in particular. Inscriptions are a
little more nefarious
in that they just embed like like a JPEG
straight into the Bitcoin blockchain. So
instead of referring to some other token
or something like that. So it's it's a
very it's
it's a large ecosystem of stuff that have
built up for a while. I would say, you
know, colored coins, you know, there's
been protocols on top called like
MasterCoin now called Omni, Counterparty,
you know, BRC 20, obviously inscriptions,
ordinals. All those things are sort of
protocols on top of Bitcoin that may or
may not have value. Yeah. So some of them
get venture backing because, you know,
they they give great presentations, I
guess, or venture capitalists have too
much money and not enough money deployed
or something. But yeah, there there's
there's a lot of different people with
different motivations, but mostly they
want to make more money by printing their
money out of nothing, which is the story
that's been for all coins for a long time.
But are there any nefarious actors like
people that are trying to attack the
network through spam? I would say at least
a few are kind of like that. There's
there's no reason something like the
stamps protocol would exist except to
infuriate Bitcoiners. And, you know, if
you're if you're from an altcoin or
something like that, rethink Bitcoin has
its own value, I suppose, by saying, ha
ha, we can do this and troll you. Right.
Like, I mean, why do people troll on X or
whatever? It's a it's hard to tell what
their financial motives might be, but they
do it because they get some psychological
satisfaction, I suppose, out of out of
doing that or something. And that that's
like, I don't know, that's getting more
into human psychology or whatever. But
I've definitely seen that sort of thing on
Bitcoin. Yeah, it happens whether it's
financially motivated or not. It's it's
hard to tell because you never know who's
funding what. But I have seen it. Now, my
very oversimplified impression of the
whole knots versus core debate. I assume
I'm not alone in this, is that the knots
guys are the money people and core are the
tech people. Is is that how most people
who are not deep in the debate would
perceive it? I mean, that's probably
accurate in terms of the current
perception. I wouldn't say that's
necessarily reality. There's plenty of
very technical people on the knots side.
And there are people that at least have
some economics knowledge on the core side
as well. But I mean, that's with any
debate. People tend to characterize one
side as one thing and the other side as
another thing, which is kind of what
happens in a debate. It's you want to sort
of give a portrait of your enemies as
being out of touch in some way. And this
is this has been a debate that's been
going on a while. And that's that's
definitely happened. Yeah. Yeah. So this
leads us to production ready. What is
production ready? Production ready is a
501 C3 in the United States. And that's a
that's a IRS designation for a nonprofit.
So we're a nonprofit organization trying
to fund a an alternate implementation to
core and knots. So something that's
different than both of those that is more
representative of, maybe a certain group
within the Bitcoin ecosystem that is that
doesn't really agree with either one.
That's whose focus is much more on stable
software Bitcoin as money. But, you know,
being very, very conservative. And that's
that's what I yeah, that's how I would
characterize it. But yeah, we're the
funding organization for that
implementation. Yeah. And how did it come
about and how long has has like this
conversation taken place? Yeah, we've been
talking about it for almost a year now. We
didn't sort of come out with an
announcement until a few months ago. But,
you know, the people involved on the
board, me, Samson Mao, Parker Lewis, John
Ratcliffe. We've been talking for almost a
year about, OK, there there needs to be
something else because the people that
are, you know, the two camps are the
debate is getting particularly toxic. And
it doesn't represent a large majority of
what we think are the actual Bitcoin
users, many of whom actually don't care
too much about the debate and would rather
have something that just works. And so we
we wanted to make that available and and
and we've been talking about it. But, you
know, bootstrapping new implementation is
not so easy. So it's it's taken a lot of
twists and turns. And, you know, that's
part of why we established this
entity. And, you know, we thought a lot
about like how to design it. And those
conversations are still going and, you
know, how we want what role we want in the
ecosystem and so on.
Yeah, like I would
love to know about more. Like, obviously,
you said those conversations are still
going, but what role do you want to play?
Well, the role I'm playing is I I I've
been a Bitcoin educator for quite some
time now. And one of the weaknesses, I
think, of the current developer ecosystem
is that it's it's. Kind of limited the one
of the observations that we made about
core development is that it's largely in
the hands of fairly young developers. And
that wasn't the case, say, seven years
ago, but it has sort of gone out that way.
And we we've asked ourselves, OK, what
happened? How how did it get to be, you
know, so many young people? And, you know,
we we observed, for example, that there
are, you know, several funding
organizations, but they want a particular
type of developer. And the ones that have
the most influence within Bitcoin core are
the ones that are in these particular
offices. And I would say the London Brink
office, the New York Chaincode office and
the San Francisco Spiral office. And now
maybe even the local host office in San
Francisco as well. If you don't go into
one of those offices and you're a Bitcoin
core contributor, it's very hard to move
up. Whereas if you are in one of those
offices and you're working with a lot of
other core developers that have a lot of
influence, then you're much more likely to
get selected. Well, who's able to live in
these very expensive cities and just sort
of uproot their life and go go to those?
Well, you either have to live in have
already been living there or you're you're
young enough without too many attachments
to be able to move to those places. And lo
and behold, that's exactly what we've
gotten. We've gotten a lot of younger
developers that were able to completely
uproot their life. So, for example,
Michael Ford, who is one of the lead
maintainers of Bitcoin core, actually grew
up in Australia and he uprooted his life
and moved to London. And he now works out
of the Brink office in London. Now, is
that something he could have done if he
was, say, 15 years older and had a wife
and four kids or something like that? I
highly doubt it. But because he was in the
position that he was, that that wasn't
that was something that he can do. And of
course, he's got significant influence
within the Bitcoin community as a result
of doing that. Now, that's that's just one
guy. But there are many other stories like
that where the the the kinds of developers
that you get depend on sort of like the
incentives of the particular structure.
And the structure of core is such that you
kind of have to be in one of these cities
to become a maintainer, for example, or
even like an influential core contributor.
And we want to we want to we want that's
one of the things that we've diagnosed as
a part as a part of, you know, doing
production ready. So, you know, we want to
expand the developer pool and and change
the incentives a little bit so you don't
have to come into the office, for example.
There are lots of core devs that have been
contributing, contributing for many years,
but they're not able to move up in the
core hierarchy because they don't go into
one of these offices. And that's a little
bit of a shame because a lot of them are
very good developers with a lot of
experience and so on that that would do
very well if they were given more
responsibility and would have sort of
better instincts on what you know, how to
run a software development project and so
on. But they're they're not really
considered because they're remote and so
on. So that that's like an example of
something that we've been thinking through
how how to change things and make ours a
little bit different. We would love to get
more developers and stuff from, you know,
places that aren't so expensive like
London, New York and San Francisco and
instead, you know, get more developers
that are closer to the. Use case of
Bitcoin that we we think is important and
that being used as money. So, you know, a
lot of people in Nigeria, for example, use
Bitcoin very often because, you know,
their currency is is real crap. If you
could get a developer with that
perspective, it's a lot more useful than,
you know, somebody that gets paid, you
know, two hundred fifty thousand dollars
developing in San Francisco. That that's
not the world. I mean, not to say that
that perspective isn't useful, but if
that's the only perspective you have, it's
going to be very one sided, if you will.
So we're so that that's part of it. But,
yeah, my my role is education and
development. You know, there are other
people within our board that are more more
versed in fundraising and governance
structures and setting things up and stuff
like that, which, you know, we all have
our role. Right. And so that's yeah,
that's that's where we are. Sorry. Long
winded answer to a rather innocuous
question. But no, I loved it. I mean, no,
no, it's very important because I think
this is something that's going to be on a
lot of people's mind. Like those. What are
the incentive structures and how do you
pay developers to do what it is they need
to do without necessarily kind of
succumbing to those corporate interests?
Yeah, there's definitely a lot of a lot of
different interests that go in that we're
not entirely sure how they affect things.
So, you know, I mean, if Jack Dorsey, for
example, funds a significant amount of
Bitcoin development, how does that affect
things? Now, he might be just like an like
a very generous guy and does that. But,
you know, I mean, is that to say he'll
stay that way forever? I mean, it does
sort of put some pressure and or a
vulnerability point or attack surface in
case, you know, he does change his
politics or his mind or whatever. If if if
he starts like wielding around some of the
influence that he already has. I mean, I
and I like the guy, right? Like, I think
he's great. And and and I'm thankful that
he has contributed as much as he has. But,
you know, it like those kinds of things
you have to think more adversarially about
and not just sort of take the money and
think that it's it's all just sort of like
a like benevolent donation. So, yeah,
those are those are things that we're
trying to figure out and work through. And
in particular with our organization, how
do we like even on the fundraising side,
on the developer side, on the education
side, all of these, how do we make it so
that we're different than some of these
other organizations? And how do we make
sure that we're sustainable and that this
is a long term project, you know, that 15
years from now that there's not just three
different implementations, but maybe five,
six, seven, eight different
implementations that people are running
and, you know, done in a way that where,
you know, it gives like real
decentralization from a development
perspective with lots of different. On
ramps for developers, a lot of user
choice, a lot of user feedback that gets
incorporated into various implementations
and so on like that. That's that's those
are the conversations we're having. And
that's that's what we're aiming to do.
Hmm. Hmm. So it's been only recently that
you guys have publicly announced this, but
have you had any criticism yet or things
that other people have raised in the
community that you were like, hmm, this is
something we need to think about and
address? Well, I mean, there's certainly a
lot of trolling and and and that was to be
expected. You know, some of it from people
that I actually thought was was quite I
was quite surprised by because I thought
they were more mature than that. But, you
know, they're taking pot shots and saying,
oh, these guys have proof of podcast or
something like that and nothing else. Um,
I think the main criticisms I think are
around or at least advice that I've gotten
that I found very useful is around being
explicit about governance and things. Uh,
because if you are, um, you know, planning
something out for decades or something
like that, um, I think it was Warren
Buffett who said, like, if you're going to
invest in a company, make sure, um, it's
it's a business that's so obvious that an
idiot can run it because at some point an
idiot will. Um, and I think there's
there's some truth to that you want you
want to be. You don't want to be dependent
on having a brilliant charismatic leader
at the helm of an organization for it to
survive. You want to create a structure
that can survive, um, you know, bad
leadership even, uh, and make sure that it
can last through even that, uh, and, and
creating something like that is not easy,
right? Like, uh, there, there, there've
been lots of different attempts at, uh, at
things where people weren't successful or
they, they were successful, but then it
failed almost immediately. Once, once
there was some sort of trend leadership
transition and so on. And this is, this
is, this is the, this is the whole game.
It's that that's, that's what we're trying
to solve for. And it's, uh, um, it was, I
think, very good advice that we've gotten
with respect to that. Like, Hey, you need,
you need to, um, figure out how the board
transitions, how the software transitions,
how, you know, you pick certain people.
Um, you know, what, what, what their
responsibilities are and, uh, you know,
you, you need to set these things up, uh,
up front so that you're not caught with
your pants down when something happens and
you, you know, these things become
important. And have you started recruiting
devs or had any expression of interest?
Yeah, we, we've, uh, we've definitely been
recruiting, uh, developers. Um, obviously
we'd like, um, uh, you know, people that
are more senior and so on, but there,
there's been a significant number of
people that have expressed interest. And,
uh, given my education background, I've
actually come up with a few tools to, um,
get a lot of people up to speed and
hopefully contributing, uh, sooner rather
than later. Uh, and that's, uh, that's
something that I've been working on and
have been, um, testing with a bunch of
people. And, uh, and there, there's been
significant interest in that. So I'll,
I'll, I'll leave it there. There, there's
a bunch of developers that are interested
and I am trying to give them a path to
getting into the organization and being a
useful contributor. Like, I think this
question is probably thinking about the
core people, um, with these developers, do
you guys have any initiatives where you'll
be educating them on economics? Oh, good
question. We don't have anything like that
at the moment. Uh, but I, I do suspect,
uh, sort of like the, uh, the implication
of that question is correct in that it's,
uh, the economic understanding of what's
going on is probably as important to the
developer. Um, uh, uh, as the technical
skills. Um, and this is part of, I think
where, uh, uh, uh, you know, Bitcoin core
has sort of like maybe missed the mark a
little bit in that a lot of the economic
analysis that I've seen, uh, coming out of
the developers in the core versus knots
debate, particularly around op return. I
think we're very simplistic economic, um,
analysis. So for example, when they, they
would say, well, then they're economically
incentivized, so they'll do it every time.
And it's like, okay, so the miner is going
to make $5, um, but risk getting orphaned.
And I don't think you're taking the, you
know, stale block risk, um, seriously
enough, or, you know, even the bad will
that they would engender in the community
seriously enough. And for a lot of them,
they, they just, they weren't thinking
second or third order effects. It was
just, well, if a miner makes five more
cents by doing this, then they're going to
do it. And it's like, that's not how
calculations are made in the real world.
Um, you know, there's usually cost
involved with changing any policy, right?
Uh, even if it's just like a couple of
meetings, um, you know, and, and a few
hours of developer, developer time, that's
still a cost. And if you're getting five
more cents per block and you mine a
thousand blocks a year, yeah, that's like
50, uh, $50. That's not worth it for a lot
of these, um, uh, you know, these
companies. And you're, you're not really
thinking in a, in, in a real, um, way
about economics. It's just sort of like a
justification for what you already want to
do. So I, I think that's right, that, uh,
there does need to be some economic, uh,
education about, you know, what the real
costs are. And there's also been sort of
like, um, a demonization of miners in many
ways that they are sort of homo
economicists that will do anything for
even a little bit more profit. Um, but,
you know, as soon as you suggest that
developers might do the same, then they
get all offended that, oh no, developers
are angels and they, they only do what's
best for the network. And, you know,
there's no way that a little more money,
like, you know, a hundred thousand dollar
grant from this place would, uh, affect
them in any way. Um, like the truth's
always in between, right? Like you, you're
there, there's the ideal and there's what
you're economically incentivized to do.
And most people live in between somewhere.
Uh, now a lot of, a lot of people like,
uh, fall down to the level of their
economic incentives and only sort of like
do that. And a lot of other people are
very idealistic and only do what's
absolutely, uh, you know, living up to
their ideals. And we call those people
moral. Um, but, you know, most people live
in between and I, I don't think a lot of
the economic analysis that I've seen
really takes that into account, at least
from the core side. Um, and sometimes from
the not side as well. Hmm. Yeah. I, I
mean, I appreciate the challenge that is
ahead of you guys. And one thing that
keeps coming up for me is, is, you know,
obviously you're doing a lot of work to
think of the governance and what your
guiding principles are going to be as, as
you move forward with this. And because
there's always so much spotlight on
Bitcoin and it's so important to people,
this is like our one chance in a millennia
to do, to do something, um, that matters.
And that's why people are so invested
emotionally and, and financially. Um, I
guess the question I have is how, like if
new information comes to light as you
progress and you find that you guys change
your mind on something that you previously
had a strong stance on, how do you think
you might manage that? Because people tend
to latch onto those things and, yeah.
Like. Yeah. I mean, that's, I mean,
you're, you're asking us like how we would
change our minds about something and, uh,
and hopefully it's, uh, it's not like a
sudden thing. Um, and that tends to be
very bad if you're making decisions that
way, where it's, you know, you're doing a
180 on a very sudden thing. Um, you know,
I, my gut instinct is that it, that sort
of change would take years and maybe like
one person at a time. Uh, and slowly you
get convinced and then, you know, you make
little pivots here or little changes here
and there and eventually change the
trajectory and not do it in such a sudden
and, um, crazy way. Um, I, I, I would
characterize like what happened with op
return as more of that sudden thing, which
I think, um, a lot of people didn't
respond very well to. If they wanted to do
something like that, I think the right
move was to expand it slowly and see how
the network reacted and so on and see, see
if it was enough rather than sort of doing
it in a, in a sort of sudden way. Um, so
yeah, I mean, it's, it's, it's a hard
conceptual question because it really does
depend on the specific specifics and the
threat model and the attack, um, that, uh,
that we can foresee and so on. Uh, but
generally my, uh, my, uh, instinct is to
stay conservative with the client and
that's what we are billing it as. And that
means that major decisions like that
should take a long time and are, um, uh,
and shouldn't be done sort of suddenly or
willy nilly.
That's actually a really good
answer. And the reason why this question
came up for me is we've just recently had
the Australian budget released and the two
things that the Australian government has
promised they wouldn't touch. They have
touched. And so Australians are very
angry.
Election promises were broken and yeah,
it's a bit of a trending topic at the
moment in Australia. There's AI memes all
over the place. Yeah. Yeah. I mean, that's
kind of what happens when you put your
trust in princes a little bit. Right. And,
um, and this is where you want a system
where you don't have to trust them. And
that's kind of what Bitcoin is. And
hopefully for a lot of people that are,
um, angry at the government for not
keeping the promise that they gave them.
Well, that kind of shows you what their
promises are worth, which is very little.
Um, and whereas possession of something is
much better. Right. And that's, that's
kind of the idea behind Bitcoin. It's,
it's not a bunch of promises, which
pensions and retirement and, um, even to
some degree property, uh, like real estate
and things like that. It's not, you don't
actually possess it. Right. It's, it's,
it's, it's, you, you have use of it at the
pleasure of people that you're kind of
forced to trust. Uh, this is what's unique
about Bitcoin and that you don't have to
trust anybody and it is in your possession
and you don't have to rely on the goodwill
of others. And, um, and, you know, the
more of that you have, the more secure,
uh, things are for you. And that's the
pitch that I, I would give to the people
that are angry about the policies of your
particular government. Because, uh, like
that Warren Buffett quote, you know, at
some point there are going to be idiots at
the top of whatever thing. And if it
doesn't survive that, then it's probably
not a great system. Um, and yeah, that's
kind of where we are with a lot of this
stuff. And I have a final question about
the whole, um, not core and production
ready is I guess this might sound silly,
but I'm just going to go there anyway. If
any of those three turn out to be
completely wrong, is it terminal for
Bitcoin? No, I, I mean, that, that's kind
of the idea of having backups, right? And,
or, or whatever. And we, we've seen this a
little bit in the mining world where you
would have like a mining pool that would
have more than, uh, 45%, uh, maybe even
over 50% of the hash rate. You know,
things change and, you know, the, uh,
pools that were very popular 10 years ago,
they're not popular now and so on. And so
I think that's the natural way in which,
uh, which things tend to go. And if we
have more implementations, hopefully we
sort of blaze that trail and make it
easier for other implementations to come
along. Then if you lose any one of them,
then it becomes less fragile. Um, and
that's generally a good thing. Uh, it's a,
it's a lot better to have a hundred
customers. And if you lose one, you can,
you can sort of deal with it than to have
only one customer. Um, which unfortunately
most people have in this economy, right?
You have one boss and that's your only
customer and you get paid only by that
person. Uh, which makes you extremely
fragile. Whereas if you're running a
business or something, you usually have
many customers and, you know, even if you
have as few as like six or seven
customers, if you lose any one of them,
you're still okay. And that's, um, you
know, your, your day to day might be a
little more volatile, but longterm, you're
actually much more steady, uh, in that
way. And that's, that's kind of the model
that we would like to have for Bitcoin
development as well. And that you have
multiple implementations so that you have,
uh, this ability to recover should one of
them go down. Nice. Nice. Now I'm going to
pivot a little bit because I can't have
Jimmy Song on and not ask this question,
but is quantum a threat? No. I really
don't think so. And, uh, and you know,
it's been talked about for many, many
years. And as long as I can remember, it's
always like 15 years away or 20 years
away. And 15 years later, it's still, it's
for me, it's a lot like climate change,
right? Like people are always sort of
urgently talking about it, but you know,
I, I still remember in the eighties, uh,
you know, like people saying, uh, yeah,
the island of Manhattan is going to be
half underwater in 20 years, 20 years
later, it wasn't underwater, right? In
fact, like very little changed. Uh, yeah.
I mean, you might've had maybe a record
breaking day on the summer in terms of
temperature once in a while or something
like that. But, you know, that's, that's
kind of how I see quantum, uh, and really
honestly, like a lot of technology that I
hear in the press. Um, there's a lot of
incentive on the part of the researchers
and people working in a particular field
to make their field out to be something
much more important than it is. And that's
because they have to justify their salary.
And, uh, if you are the director of the
quantum lab at Google, well, you have to
justify the existence of the lab or else
you're going to be out of a job. So you,
uh, you know, put out press releases
saying this is imminent and blah, blah,
blah. If you make your living off of that,
it's very difficult to be objective about
it. And unsurprisingly, a lot of people
that are in that industry aren't very
objective about it. Uh, even if it's just
like an investment in a one or two of
these and not going to name names, but a
lot of the FUD around quantum and Bitcoin
come from people that have a direct
financial incentive to stir up that FUD.
Um, so, you know, I, I discount a lot of
it. Um, I mean, I'm sure there's like
nuggets of interesting stuff there, but,
uh, you know, when I read the papers from
physicists that actually know the, um, you
know, quantum manipulable forms of matter
and what properties they have, they don't
think it's going to happen in their
lifetime. And part of it is because the
forms of matter are so fragile and become
decoherent so quickly and have lots of
other properties that are very, very hard
to capture in a quantum state. Um, and
have all sorts of engineering problems
that have, uh, that haven't been solved
and don't appear at all close to being
solved. Uh, and very practically speaking,
if, if you're looking for verification
instead of just sort of trusting in some
media voice or something, well, why hasn't
any quantum computer factored the number
six using Shor's algorithm yet? That's the
smallest possible number that you should
be able to factor. And a classical
computer can do it in a nanosecond. Why
hasn't a quantum computer done that? And,
and, you know, that, that, that's the real
question is it's, uh, if there, if it's
actually imminent, you should see stuff
like that happening. Instead, it's all pre
-computed circuits and you can point the
computer at a random number generator and
it still gets the correct answer some
percentage of the time. And they're
touting that as something, uh, you know,
like a breakthrough or something. I mean,
this, this is where, you know, uh, a lot
of, uh, rent seeking science, uh, like
kind of comes into play. And a lot of, um,
a lot of things sort of work like that,
unfortunately, uh, in a world, uh, where
science is largely funded by fiat money.
Yep. And now before we wrap up, I want to
get a little bit philosophical. Um, I'm
really keen to know, obviously you've
written, uh, thank God for Bitcoin. And
one topic that I've read about quite a
bit, but haven't fully reconciled is
usury, the concept of usury. So the
practice of lending money with interest,
um, really various religious texts,
obviously, uh, against it. Um, when I read
about what it is in Austrian economics,
it's more explained as not inherently bad.
Um, it's more to do with time preference.
And as long as you are not putting
interest that is unreasonable or
predatory, um, then there can be a case
for it. But I'm keen to know what you
think. Yeah, it's a, it's a great
question. And this is actually something
that C.S. Lewis raised in mere
Christianity, uh, as sort of like a side
note. He was saying, you know, every, uh,
every church father in the past 1,500
years has condemned usury. But, you know,
there are modern economists that are
saying like the entire economy wouldn't
work without, you know, payment of
interest for borrowing money. And this is
where we need Christian economists to
actually evaluate that in a real way to
figure out is this moral or not. And I
think that's a, uh, this, this is where
you actually do need, um, a moral
perspective on the economic reality. Now,
my personal belief with respect to usury,
and this is something that we put in the
book, is that usury itself is a method of
enslaving another person, right? It's,
it's putting them into your debt
perpetually, uh, so that they can't get
out of it. And, um, I, uh, I used to
donate to international justice mission a
while back. And, uh, and one of the, one
of the presentations that they gave was
about this particular form of loaning and,
and, uh, collecting that happened a lot in
India, where they would lend somebody some
money, but the interest rate was so high.
And that they would be forced to work for
them and never be able to pay it off.
Right. And that I think is at the heart of
what usury is. It's a, it's a way to
enslave someone and capture them so that
they belong to you perpetually when really
like it's, it's, it's a form of slavery.
Right. Um, now what qualifies as that?
Like it gets to be kind of a complicated
question. Um, now under sound money, I
think you can make the argument that maybe
a 0% interest rate is like completely
normal, right? Like that, and that
anything higher than that may be
considered usury. Under fiat money, when
it's constantly expanding, I think, uh,
what the Catholic church came up with is
whatever that expansion rate is, that's a
limit to what you, the interest that you
can charge because you're not actually
losing. Otherwise you'd just be losing
money. Now, I, I think I have sympathy for
that view. Um, but I, I think at the heart
of it is that, uh, it's this attempt to
use money as a way to enslave somebody
else. Uh, and I don't know where the line
is between, you know, uh, getting somebody
or loaning somebody money so that they can
use it. Um, and it being sort of like a
difference in high time, uh, in time
preference between the two of you and
some, some sort of arbitrage between that,
um, or some way of trying to capture that
person's labor on a permanent basis of
some kind. Um, I, I, I, I tend to think
it's, it's something like that where
you're trying to, um, get another person's
labor, like permanently sort of in, in, in
almost like a slavery kind of thing. Um,
and that reminds me of like, uh, what
company towns used to be, right? Like
where they would pay you in the company
currency, like a coal town or something,
and you could only spend that money in the
company store. And that, that was like a
way to enslave you essentially to that
company. It really wasn't any better than
slavery in that way. Um, so like, that's
not any, there's no loans there, but I see
that as closer to usury than say, you
know, uh, you lending somebody money and
charging 5% interest or something like
that. It gets tricky though, because of
fiat money. And, uh, at least from any
bank's perspective, they can create money
out of nothing through loans. So for them,
I think it actually is usually, um, a lot
of people take out long-term loans again
for, for a house. And because of that
house, they're sort of enslaved to the
bank, uh, and the bank didn't do anything,
right? Like they, they had no opportunity
costs on the money that they lent. So for
them, it's, it's a way of capturing your
labor, um, a lot of your future labor, uh,
for essentially doing nothing. Um, and
that I think is kind of, uh, does hit at
the heart of usury, which is sort of
enslaving, not maybe the whole person, but
a part of a person for the purposes of,
um, without really providing anything in
return. Uh, it's, it's just, you're,
you're stealing from everybody else to do
it. So I would say that that's closer to
usury or that's my take on it. Um, and I'm
not sure if that really clarifies things
that much. Um, but for me, it's, it's much
more about, um, enslaving another person
and less about the mechanics of what
percentage interest is abusive versus not.
Hmm. No, it's interesting. It's helping me
kind of narrow down where, where I think I
might, uh, land on it. Cause the other
thing I was trying to reconcile in my mind
is, is if there's a difference between
doing it, you know, personally versus
through business. So obviously for me, it
would feel very morally wrong to lend
money to my parents and expect interest on
it. But I'm not sure if I feel the same
way, if I was, you know, a small business
owner and I'm looking to get a small
business loan and the lender wants to
charge me an interest because I need the
money now. They have it, um, now and I can
repay it in an agreed amount of time. I
agree completely with banking. Um, lending
does definitely very cleanly, um, sit in,
in the usury camp, especially with fiat
and fractional reserve banking like that
money doesn't even exist yet. They're
making money of it. It feels insidious,
insidious, but yeah, I'm not sure if I, is
there a difference morally if, if it's
done personally versus in a business
context? Um, I don't know if it's, that
would be the distinction. I mean, if
there's any distinction, it would be money
created out of nothing versus money that
has opportunity costs. So if you, if
you're lending, uh, I don't know, your,
your family member, some amount of money
that had, that money has opportunity
costs. Cause you're, unless you're a
banker, I guess, uh, you, you know, it's
coming out of your savings. And I think
it, uh, you kind of hit on it a little bit
with the small business. We're not used to
saving to go get what we want. And like,
that is sort of like a default shortcut,
almost like a mandatory shortcut that
we're all forced to take, uh, where we're,
you know, giving up some of our future
labor, uh, essentially to the bank so that
we can, we can get that. And that, that's
typically not how it used to work on their
sound money, uh, where you have to save up
to, you know, start a small business or
something like that. Instead of getting
quote unquote small business loans or, you
know, whatever, uh, the, that's a modern
fiat money phenomenon. And it's actually
caused a significant amount of damage
because a lot of these small businesses
didn't work out. Like 90% of restaurants
don't survive the first year or something.
And that's horrible. Like that, that means
that's a lot of wasted money, a lot of
wasted labor, uh, that could have gone to
something more productive. But because of,
uh, you know, the ability to print out of
nothing, this has, uh, caused essentially
civilization to go stagnate or go
backwards in many ways. So, um, I would
say that, uh, you know, real loans require
opportunity costs, um, and, uh, too much,
too many of the loans that, uh, I would
say the vast majority of loans in this
economy are ex nihilo and not, don't have
an opportunity cost, uh, ultimately
speaking. I mean, I, I know like VCs get
LPs to pay in and when they do capital
calls and things like that, but vast
majority of that money still comes from
the bank. Because if you're an LP at a
fund and you get a capital call for a
hundred thousand dollars, I mean, you're,
you're not taking the hundred thousand
dollars you have in the bank. Most, most
of them don't have a hundred thousand
dollars in the bank. Instead, they get a
line of credit from somewhere based on the
stock portfolio that they have. And then
they give that to the, uh, VC. And that,
that's how a lot of, a lot of that stuff
works is that, uh, you can monetize
whatever capital or whatever assets that
you have. And that's, uh, yeah, that's
kind of how it is. Well, thank you very
much for your time today, Jimmy. Do you
have any final thoughts that you'd like to
share with my audience? Oh, I think things
are, um, I don't know. I, I, I feel bad
for the people of Australia, particularly
really post COVID. Just, uh, you know, the
draconian, uh, things that happened there
and stuff like that. So I feel like, uh,
it's, it's been kind of a depressing place
in many ways, because you, I'm sure you're
seeing a lot of migrants come into the
country and things like that, which, uh,
are causing all sorts of chaos and stuff.
Um, this is where, you know, putting your
trust in princes doesn't work. Um, but
there is something that you can actually
hold and possess that's digital and is
very hard to take away from you. And
that's Bitcoin. So I would encourage all
of you that are depressed about the
current state of politics in Australia to
actually look into what Bitcoin is,
because, uh, money is often at the root of
almost everything. Perfect message to end
the podcast with. Thanks for your time
Jimmy. Thank you.