TFTC: A Bitcoin Podcast - Tales from the Crypt #14: JW Weatherman

Episode Date: February 21, 2018

**Sorry for the poor sound quality on my end of the mic. Recorded on my laptop and the mic wasn't configured properly.** Join Marty as he sits down with JW Weatherman to learn about the cypherpunk movement, JW's definition of modern-day slavery, anarcho-capitalism and how they all relate to Bitcoin. Hold onto your butts, the conversation broaches some controversial topics that will make you think about the systems we've grown up within. JW is on Twitter under the handle @WeathermanIam. Follow him.

What is up, freaks? Welcome back to Tales from the Crypt. It's your boy, Marty Bent. Trying something new today. Doing a live recording on YouTube. This is new for me, so bear with me. I'm very excited for today's conversation. We're doing this over YouTube because we cannot get this man in the studio. He's very conscious about his security and his OPSEC, and I'm very interested about the conversation we're about to have uh in regards to bitcoin i'd like to introduce you all to jw weatherman jw welcome to the show thanks man thanks for having me thanks for coming on i appreciate

your time um for those of you that don't know um jw weatherman is the co-host of the block digest podcast uh here on youtube and is also the creator of the bitcoin threat model btcthreats.com Yeah. JW, thanks for coming on today. I really appreciate taking some time out of your Saturday here to talk about Bitcoin's threat model. So I guess we're just going to start off, this is Tales from the Crypt. We're doing a little pre-interview conversation before we started this. So how did you find Bitcoin? You were saying you were initially skeptical of Bitcoin? Yeah. Yeah. So I've been in software security for almost a couple of decades, something in that range and um when i first heard about bitcoin it was from some clients actually

and uh and i had i had messed around with a few things earlier on seti at home and then i you know kind of got exposed through uh ibm actually was really crazy about second life for a while um and so they would actually have meetings with consultants in second life ibm and uh and linden dollars were being thrown around and i just thought it was a complete joke i mean it was just a waste of time and it wasn't useful. And the Linden dollars thing was just, you know, it was just digital money, but like not digital money. It was just, um, entries in a database. Right. Um, and so when I first heard about Bitcoin from a client, I was like, ah, here we go again. You know, these guys are going to have me walking around in a virtual conference room, you know,

uh, talking about Linden dollars, you know, uh, great. I hope, I hope I got my bill right, rate high enough on this one to make it worth it. So I totally dismissed it. And there wasn't a whole lot of interest from sort of the general, say, software security community in Bitcoin for quite a few years. There's still actually, I would argue, a surprisingly small amount of interest from kind of the broader community. But guys like Dan Kaminsky did do a security review and, you know, had good things to say about it. So I really, I blame myself for sure for not paying attention.

But yeah, it was maybe a year ago or something like that, that I took another look at it. And that's when I decided to do a threat model of it, which is just kind of a systematic security design review. And after I did that, or as I was working on that, I was pretty blown away with how amazing it was

and realized all of these guys that I've looked up to for years were working on it and just couldn't believe that i missed it well that's the uh that's the interesting thing i like about uh your your website or the pdf you have together with all the threats that you break it down into software and human sort of threats and yeah it's actually one thing i don't know but i don't know if you know but i've read a newsletter one thing i talked about today or excuse me this week with satoshi uh and sort of the the origin story of bitcoin and the fact that satoshi is anonymous is is something uh that actually helps bitcoin out

uh in the long run but um if he were to ever come back that could be a threat um to the network i would argue it could be actually i do i do i do address that in the threat model um more related to somebody claiming to be Satoshi, whether it was legitimate or not, um, is sort of the way that I deal with it. Um, and, uh, yeah, I'm, I'm sorry, go ahead. You had the Craig Wright example in it as a, as an attempt to attack. Yep. Yep. Exactly. Um, so yeah, the, the, the thing, one of the things that made me think of it and just to give you an idea of what a threat model is, you basically try to think of all the ways that you could break a piece of software and uh and a good threat model you know for decades

has included um anything that can be done that that software relies on so you know traditionally i would look at stuff like breaking into a data center and stealing a floppy disk with admin passwords sitting on top of uh you know a server um that sort of stuff um or social engineering right being able to call up the secretary and ask for a password reset so going into the physical world in that space is pretty normal for a for a good software you know security review um but bitcoin is interesting because there's a lot there's a lot more going on and uh um so as you're going through sort of all the ways that you could break it one of the ways that that i theoretically you could break it right and to to be clear when the the threat model is you know the summary of

the threat model is i don't know of any ways to break bitcoin right now but um but all the ways that I've thought of and anybody else has thought of that I'm aware of is in the doc. And one of the ways is you could pretend to be Satoshi and try to introduce a security flaw into Bitcoin. And I do believe that's exactly what Craig Wright was doing. And ironically enough, he got debunked by Dan Kaminsky, the guy that did the security review on Bitcoin all those years ago. And Dan's got this great, great post about a cryptographically provable fraud.

which i think that may be the only legitimate claim to fame that csw has is you know there's a lot of people that are in jail right now that are not cryptographically like provable frauds you know it's beyond a benefit of reasonable doubt but but this guy actually provided enough evidence to where you know there's not enough molecules in the universe for this guy to be satoshi it's uh it's a funny attack vector and it's funny i mean craig's probably isn't wasn't there actually recently like uh like somebody else who was claiming to be satoshi from new zealand yeah yeah i i didn't even look into it much um now just you know it's it's just sort of a joke to me uh and it was pretty early on because craig right it's not exactly uh he's not a credible sort

of pretender to the throne uh in any way but but yeah this guy kicking around new zealand did claim to be satoshi recently yeah um so one thing i actually i'm very interested to talk so would you consider i'm very interested to talk about with you is the cypherpunk movement would you consider yourself a cypherpunk or yeah yeah yeah absolutely um and and uh i'll give you a definition of cypherpunk um it's basically somebody that um i would say understands economics and then also understands encryption and how encryption is going to impact the world. Um, and it's, uh, it's a, you know, 30 plus year old movement, um, goes all the way back to the very roots of internet security, like even public key cryptography. Um, and so SSL or any sort of

e-commerce on online, um, is completely dependent on public key cryptography. Uh, early cypherpunks are the guys that are responsible for that. Um, they've been responsible for a lot of what we take for granted right now um and they're you know i believe they're also uh responsible for bitcoin um not just uh all of the antecedents to bitcoin but almost certainly bitcoin itself and and certainly it's the cypherpunk movement that's responsible for all of the significant developments post post the white paper as well yeah the one thing um i love about cypherpunks from what I read. I mean, just looking at the movement, if you will. I don't know if you would call it that.

Yeah, I think that's a fair term. Looking at it from the outside, looking in and sort of trying to have a little skin in that game. Cypherpunks are obviously hyper-focused on security. And the one thing I love about cypherpunk movement as an observer is you guys are hyper critical of ideas and you you test ideas take them to their limits and that's one thing you're doing with the bitcoin threat model is trying to to show bitcoin's limits and what we should be aware of and the attack vectors that do exist and so just having that first principle mentality of security is why i'm sort of drawn to bitcoin in particular as a project and then um again the satoshi narrative so i'm a big believer

in narratives and humans are very susceptible to falling into two narratives and there's no better narrative in the cryptocurrency world than bitcoin i mean the satoshi origin story um is going to be hard to beat in the long run and when you couple that with the lindy effect of bitcoin being um the only the the blockchain with the most longevity with the the highest uptime uh the longest uptime uh across the board uh it's gonna be hard to beat in the long run and the only way you're going to be able to beat it is via these threats that you sort of lay out in the bitcoin threat model um that's one thing i wanted to ask you is sort of satoshi in the beginning of the cypherpunk movement were you on that cryptography mailing list um yeah but i don't i i feel like

saying yes definitely overstates my importance so yeah i mean i was uh i yeah yeah but i i didn't make a significant contribution in any way to the cypherpunk movement um i i do have my own like claims to fame in software security but they would uh they would pale in comparison to anybody like any of the names that would pop into our head like adam back or way to high or how thinny or any of those guys so um yeah say saying that i was on the mailing list or you know julian assange um saying i was on the mailing list definitely makes me sound more important than i am but yeah Yeah, and I'm just curious to see how the nature of that mailing list is. Is it just like, it's a blast to everybody and anybody can read what's going on and then

chime in when they have an idea or a critique? Yeah. Yeah. I mean, it was just, it was a completely unedited forum with, I remember right, about 5,000 people on it, something like that. Most of us just got an email from smart people on Reddit. Most people were not posting or certainly not posting anything of value and just observing a bunch of geniuses working on hard problems. I think it's similar to the Bitcoin dev mailing list now. If you join that, anybody can

respond anybody can read it yeah no that's um one thing i actually talked about this movie because i like so the cypherpunks they've been congregating online for for decades now talking about these these uh these problems in software security and cryptography and um eventually economics when while trying to make uh digital money so a lot of the A lot of people out there, when talking about Bitcoin and blockchains and the overarching landscape, will say, ah, Bitcoin was the first iteration, like, it's going to be the MySpace of cryptocurrencies, like there's going to be another one to take it over and basically iterate on what it does and do what it does better. But what a lot of people don't realize is that the cypherpunk movement has been working on these technologies for decades and working towards Bitcoin. Bitcoin is not something that just showed up out of the blue, like it was an iteration of technologies that came before. So if you could help me explain why the Bitcoin is my space to an altcoin being Facebook analogy that a lot of people like to make, and sort of helping people realize that no, Bitcoin is actually like the gold caliber of digital money. um, it is not, uh, sort of the first iteration. Yeah. Yeah, totally. I think, I think part of

the reason that people get caught up in that concept of it just being like a thing that's going to be replaced is that they don't have experience with open source software projects because an open source software project, it's not, it's not really competitive the way like Coke and Pepsi were competitive, right? There's no, there's no real secrets and there's no reason that an open source software project can't take in ideas that are useful somewhere else. Um, and, uh, and to kind of put that, put it in perspective of history there all the way back to like 19, maybe early nineties, maybe a little, maybe even late eighties, there was some work being done on this stuff. Um, but DigiCash was a big deal a long time ago and people had a

lot of hope for it. And there's been several iterations, you know, including hash cash and money and probably, you know, a dozen smaller ones that have been attempts to create secure money. So an open source software project really isn't a piece of software. It's really a mission. So like MySQL or Linux, it was a group of people that were trying to solve a problem. And if somebody solved the problem better elsewhere, they sucked in those ideas and they shared and collaborated. And the only thing that's really different about Bitcoin is that the mission is to create a secure money. And so if somebody else creates, let's say a digital asset, a digital currency, however you want to say that, that is more secure or better than Bitcoin, we would want

to just bring in those ideas. The only thing that's a little bit of a catch is that with something that's a secure money, you can't, it's not just a piece of technology. It's also a unit of account, Right. So what we're trying to do is we're trying to create something that's really, really hard to steal, not just hard for your neighbor to steal, but also a government or anybody else, right. A corrupt government to steal from you. Um, and for it to be money, it has to be that thing that most people in the area own, right? It's like the, the store of value concept. Um, and really that's just a precursor for it to becoming a unit of account. And what that means is that when you ask yourself, how much money do I have? Or what's my net worth? Or last month was really expensive because we had to replace the tires on the car. Do you do that math in Bitcoin or do you do it in dollars or something else? So the mission of it being a secure money requires mass adoption. And that's why if we come up with something else in another open source project and we don't honor the existing balances, that could actually, even though technically it's a move forward because we have a more secure piece of technology, it could be a step backwards in the mission. So for me, I don't really care whether we call it Bitcoin or whether we call it anything else. I just want to achieve that goal, right? I want to get to the top of that mountain where we all have a secure money. And part of that, I believe, is honoring the existing balances in order to not slow adoption, right? So if Mimblewimble or something else pops up and it's better, and I wouldn't say Mimblewimble is better, but if it was better and it was an altcoin that replaced Bitcoin, even though it's better, it would actually hinder the mission of Bitcoin. And as long as it doesn't hinder the mission of Bitcoin, to me, that's Bitcoin, right?

I don't care whether we call it Bitcoin or whether we call it block coin. um if it honored the existing utxo set so it didn't slow adoption and was better that would be bitcoin to me okay and then yeah so nimble wimble for those of you who don't know it's uh that's another uh cryptocurrency that was that was dropped on a mailing list by an anonymous creator um correct yeah yep yeah yeah it was um uh yeah it was just dropped it was posted on a irc channel or something um and uh yeah we don't you know we don't know exactly uh who the author was and it's it's pretty cool i mean it's got some really interesting technology in it um but and i was kind of concerned about it for a while um i think i listed in the bitcoin threat model as a as a

sort of a threat um to to bitcoin and again when i'm saying it's a threat to bitcoin it's not i define bitcoin in the threat model as a mission of creating secure money So the only reason it's sort of in my mind a threat to Bitcoin is that it doesn't honor the existing UTXO set, right? So it could slow down that progress. But yeah, it was dropped out there anonymously. It's pretty interesting and creative. And I was a little concerned about it for a period of time. I'm less concerned about it now that we're making so much progress on confidential transactions and Schnorr signatures and that sort of stuff. Um, and the reason I was concerned about it as it's such a big rewrite,

it might have fallen into the category of something that, um, something that we couldn't just adopt into Bitcoin. And that's the other thing that I try to remind people of. If, if anybody does anything useful in an altcoin, there's like a 99% chance that if it was useful, we would just copy that into Bitcoin. Right. Um, it's an open source project. There's not like an ego involved in it. This is not different sports teams, right? Like, This is an open collaborative sort of experience writing open source software. Yeah, and that's sort of what I see the value of the altcoin space as, is testing out these ideas that could be interesting if implemented on Bitcoin, but we're not sure how they play out in the wild. Um, I'm a little more cynical than that because, um, like what most, what most people will say

that are really high on Bitcoin will say is yeah, 99% of the stuff in alt coins is, is scams, but you know, there, there's probably a, you know, a gem here and there. My perspective is it's all scams. It's a hundred point zero percent, uh, scam because there, there hasn't been anything that altcoins have done that worked and was useful and was brought back into bitcoin and that's not because they're all egomaniacs in bitcoin it's because really what's happening in the altcoin space um and confidential transactions in monero is is a good example because it's the least scammy scam coin i just spent some time with fluffy pony i think he's a good guy but but i still think monero is a scam and the reason is that um and it's good it's illustrative of what the best of

the best in the altcoins are. And what it is, is somebody in Bitcoin, Greg Maxwell, developed confidential transactions. It's a really good idea, but it's not ready for prime time yet. It doesn't work. It's just too big. It's too slow. It's a great concept. I'm talking a couple of years ago, a year or two ago, something in that range. And Monero picks this thing up. It's like picking up the throwaway scraps off the cutting room floor and they turn into an altcoin that now has has a significant market cap well greg hasn't stopped working right and and he's continued to progress and publish new innovations related to confidential transaction and now we're at the point where with bulletproofs and some other things we think that we actually

are pretty much there where it could be both confidential and actually work scale you know check all the boxes right and so that's going into bitcoin um yeah and that's as good as it gets months ago talking about uh gain deficiencies in confidential transactions correct yeah yeah exactly and that that has been the whole problem with confidential transactions they're confidential but they're absurdly large so they're useless right that that's where we had been for quite a while um but i mean this this space is moving fast yeah yeah that's that was the gist of the papers that were not there yet but we made some strides in making making confidential transactions is more efficient. So potentially down the line, they can be efficient enough to be implemented

in the protocol. Right, right. Exactly. So yeah, I think the picture that a lot of people have of the altcoins is like this, it's this whole ecosystem of creative things happening and there's a give and take and, you know, there's strengths and weaknesses. I see nothing but weakness. I see no innovation. I see no contribution. I see no creativity. I see some pretty creative marketing ranging from you know really bad music videos to somebody that's really likable and maybe not even thinking of themselves as doing marketing but that's that's all i see in the altcoin space right now yeah that's um yeah you're correct i mean like especially like with the icos and and actually uh mini bali from block stack um he had a great tweet the other day it was

about um basically saying that all these icos are are disrespecting like legitimate scientific literature that gets put out there in white papers it's not even people on fiber and stuff writing white papers you can pay somebody 10 bucks to wait write your white paper we actually had somebody at barstool sports we had an ico like firm there now there's firms of people going around and saying, hey, we'll help you structure your ICO to create your utility token for your company. And they were pitching Barstool, the company I wrote for, on creating a stool coin, utility token for a blog.

And I basically had to go. That's actually, that's a good name. We wouldn't even have to call it a shit coin. That's just a stool coin. Stool coin. but it's amazing like they literally came and they marketed like hey we'll write the we'll write the white paper for you it's like ah you're bastardizing like this this legitimate like white papers are supposed to be legitimately scientific and academic in a sense and and the sort of ico

erc20 token mania has has really bastardized that that sort of way of of putting out scientific literature yeah yeah yeah the term white paper has definitely been completely destroyed um i would never want to be credited with having written a white paper after what's been done to that um but yeah i mean it is kind of unfortunate uh but it's just a phase right i mean i uh the alt coins haven't really been major players um ever and um there's a lot of people that are to get taken, but it's, it's a short lived thing. Same thing with, with ICOs. Although ICOs are interesting because I think there is something there in that eventually stock ownership will be digital. And so that capability and actually, gosh, now this is Nick Szabo. So Nick Szabo is,

you know, arguably responsible for ICOs. He was the one that was leading the charge on colored coins which is a good idea um and that can be done on bitcoin um i think the thing that's interesting is that it was like the killer this is another example of just how stupid the altcoins are the killer app of ethereum was colored coins that was developed on bitcoin years earlier but nobody was greasy enough to run around and try to market that as something that people should do right now um because the sec is eventually going to come after you you know what a counterparty was doing on bitcoin it was uh i i feel like counterparty was doing um uh yeah i think maybe maybe they were they were allowing you

to yeah making it easy to create colored coins maybe on on uh yeah i think that's that's probably right i mean you could do it without counterparty um but yeah i think that's right yeah there was also a master coin in there somewhere um and i'm i'm kind of learning a lot of this history retroactively uh as well because i wasn't i wasn't paying attention when a lot of this stuff happened that's that's there's so much to learn in this space things are happening at such a rapid pace that it's hard to keep up even if you're paying attention every day yeah that's true yeah and then uh one thing i wanted to touch on would be uh uh yeah so from a dot design perspective just to me going forward like if we're going to scale this technology and we're going to make bitcoin go

mainstream it makes sense to me from a design perspective to have bitcoin as the protocol level and you just build layers on top of it that hook into the to the protocol level and you just want that protocol level to be slow dumb and simple to an extent just does what it what it markets that it's going to do which is enable peer-to-peer censorship resistant transactions um and then you can get get more complicated on layers above it that's why i look at projects like ethereum and other all coins that are trying to do everything on chain just from a design perspective makes completely zero sense to me like so as a security researcher like coming from a design perspective what would you say what would you say about like sort of a

layering model of bitcoin in the future yeah i think it it makes a lot of sense um and i mean there there are different ways to to do there's different ways to skin a cat but um but if if if your idea is obviously dumb, don't do that. Right. So like on-chain scaling, if, if that's what we mean by just arbitrarily increasing the block size, that's so obviously dumb because it gives you a linear increase in throughput. Right. And so even if it wasn't a security issue, which it is because it causes centralization, which defeats the whole purpose of Bitcoin, because you could just have somebody show up with a gun to some office and now they run the show, right? How's that any different than a bank or, uh, or just a database in a closet somewhere?

Um, so it is a security issue, but let's say it wasn't, um, increasing the block size by, let's say, uh, 10 times that gives you a tenfold increase in throughput, but you have a tenfold increase in the amount of data that you have to slosh around. Um, nobody does that. That is not a good idea when you're talking about exponential networks, right? Like, when the Twitter guys or the Facebook guys get together and they have conversations about how to scale and how to increase the number of users, especially, you know, when they've only got, let's say, 10% market penetration, nobody is talking about trying to double the number of users that they could support, right? That would just be, you'd just be laughed out of the room. Like, what do you do here, right?

So, that is obviously off the table. And so, then you can just look at other proposals to solve the problem. And obviously something like Lightning is incredible because it gives you exponential scaling, right, with arguably better security, certainly better security for instant transactions. It gives you cheaper transactions. It's just, it's better all around. Why is the security better? Because you can do transactions and trust them instantly. So if you send me a lightning transaction, the moment that I receive it, I have a piece of data that if I want, I can convert into an on-chain transaction and I can be guaranteed that that will happen.

Whereas if you send me a Bitcoin transaction, I really should wait until it gets into the block and, you know, confirmed two or three times or, you know, or more if I really care to make sure I have it. Interesting. makes a lot of sense so you basically so so before lightning i could send you a hundred thousand dollars but you would want to wait roughly an hour after lightning i can send you a hundred thousand dollars but i can also send you an 18th of a penny and you can trust that instantly yeah i'm very excited to see uh the the emergence of the lightning network and sort of uh that getting that infrastructure getting built out this year it's definitely still in its nation stages but you've got people like elizabeth stark jack mahler's working on working on making the ux

better and uh it's a very exciting time and it could be the ultimate altcoin killer if if it uh scales the way people think it's going to yeah yeah i mean altcoins are kind of divided in my mind into maybe three different categories um with three different use cases one is sort of scale. Another is privacy. And then the third is smart contracts. Um, I think, uh, lightning is the first useful application of Bitcoin, right? Like it, it hasn't, there's been some niche cases where you could use it and you could argue the store of value thing, but for, uh, for a typical Westerner with a central bank that, that, um, only destroys their, their savings very slowly, almost imperceptibly slow. Um, certainly if you're, you know, less than 20 years old,

you haven't noticed that the value of money is dropping. For that person, there hasn't been a use case really for Bitcoin. There hasn't really been an application that is in software, but it is a problem that it solves for you, right? And Lightning really represents that for the very first time of any of these cryptocurrencies, there's actually an application problem that it actually solves and it solves it credibly, and that's micropayments. And our whole internet infrastructure is based on advertising. Um, and that's because micropayments weren't possible, right? The, the, the 15 cents that Google gets for a certain number of impressions is so painfully inefficient, but when the minimum transaction that you can do is $3, um, and you're going to have,

you know, 10 plus percent fraud built into that, um, cause that's how credit cards work, you know, that's the best that we could do. And so we've built an entire new world, right? Like all of cyberspace is built on this really kind of goofy inefficient thing that has all kinds of problems right like spam is related to that spam in your twitter feed spam in your inbox spam on your cell phone right all of this is related to the fact that we can't do micropayments and bitcoin has just solved that problem yeah so uh isn't there like a similar to a 404 error when they originally built the internet they want to have a native payments layer but It was never, like, argued that it was possible.

Yeah, I think there was some, yeah, there was probably some proposals to do some of that sort of stuff in TCP IP. I mean, hashcash was sort of an idea to deal with that problem also, where you'd have to do a certain amount of computation for somebody to receive an email from you. So you couldn't cheaply spam a bunch of people, right? It would actually cost you something. Um, so yeah, there, there's been, uh, there's, I mean, it's, it's a real central problem, right? Like, I think a lot of people look at Bitcoin and think that it's just kind of this goofy thing off to the side, but it's been a central problem, um, really for humanity, but certainly

for the internet for, uh, for quite a while. Yeah, no, that's why it was so interesting, uh, this winter, last fall, um, to see Peter Thiel come out and say, Hey, this is actually what we envisioned when we originally built PayPal. like this is this is the internet money that we envisioned back in the late 90s and um when you have somebody like that whose experience is peter saying saying that bitcoin is that legit like that's definitely where you perk up your ears and say all right maybe this is um maybe maybe there's something and um so one of the themes that that

i push on this podcast and sort of in conversations with with bitcoiners um is people just need to have more patience like it's crazy like the i feel like the all coin bubble has emerged in part because people are so impatient they want everything out of the box right away and they don't realize that these technologies take time and they're going to take they're going to take time decades to build out the infrastructure to make this vision practical Um, so just on a, if you were to ballpark how long it would take to, to build out the infrastructure of Bitcoin and the emerging layers above it to, to a point where it's practical for mass adoption, like how long do you think that would take?

Ah, man, it's, it's hard to say because like, I'll, I'll tell you what I would say if it wasn't Bitcoin, I would probably say 10 years. Um, cause you really don't get even a full cycle on a software release in less than 24 months and a typical sort of project, right? It takes, takes months to design. It takes months to code. Then you deploy it and you start to get user feedback and, you know, you can do things to accelerate that cycle, but not that much. Um, it's still, it's a, it's a very labor intensive process, uh, producing software. Um, Um, so I would normally like say like 10 years, but Bitcoin is weird. Uh, I wouldn't have expected, uh, a year ago, roughly when I really started looking at it,

I wouldn't have expected it to be half as far along than it is now. So I mean, it sounds crazy to say this, but, but if you take like my gut feel of 10 years and then you apply how much faster it's moved than I expect, I would have expected it to maybe five which just sounds totally psychotic i i realize that but but uh but you have to like there's so many things that don't make sense to me about bitcoin um it doesn't make sense to me that it is not at gold parity right now right like like nine years ago we stumbled across this digital rock right and this like the the this is something that uh satoshi uses an analogy so forget the forget anything's digital just we we're using gold we're using all these things for money

we're using paper you know primarily uh and entries in databases and then we stumble across this new element let's say right a meteor hits the earth and there's this new stuff that is scattered all over the place and we realize that this stuff we can pick it up it's not really useful for anything but you can pick it up nobody can take it out of your hand right it's got this weird property where unless you say a magic word, somebody can beat you to death and they can't steal it from you. Right. It's weird, but that could be useful in some way. Um, and if you speak the magic word to it, it can be instantly transferred from your hand to anybody else in the globe. Um, and it, uh, it can be invisible if you want it to be invisible. Um, and you can

also, uh, subdivide it into this, you know, infinitely small parts. Um, and there's something about it let's say that where you can just look at it and you instantly know whether it's counterfeit or not right there's as soon as that existed i would expect pretty rapid transformation of the world right um and we haven't we've seen it in a way but you know it's nine years yeah yeah and i you know one of the ways you could explain that is that we've we've been adding some of those elements right the confidentiality still isn't even there um but it is it is kind of weird it's very weird and i think part of the reason why people haven't uh had the reaction that you were expecting is because people don't really understand what money is most people don't always

if you have conversations with people there i've said this many times like that's one of my favorite questions i ask people when we start talking about bitcoin they're like how is it money i'm like all right and what is money like what do you think money is and then you pull out a dollar bill and you say what does this represent and five out of ten times at least in conversations that i've had people are like oh yeah that's backed by gold like no it's not backed by gold anymore like people don't understand what money is and uh because of that i don't think they can see the novelty in bitcoin and how big of a of the transformation it really is or how big of a upgrade it really is to to the current money that

we're using yep i i think that's fair and actually i should say that that was one of the things that kept me from i when i first heard about bitcoin i didn't understand economics enough to where it wouldn't have clicked for me probably anyway even if i got the technology i probably would have believed some fallacy about the velocity of money or the need to have uh you know a military behind it or something like that um because i really didn't get into economics until maybe 2011 and it took me about four years of pretty intensive study before it all kind of kind of gelled yeah it's um that's what i decided to study in college was economics and very lucky that i did because i just happened to happen to stumble upon the bitcoin white

paper while writing a paper on monetary policy that's how i basically um very happy to if anybody's interested in in uh learning more about economics i definitely recommend human action um by mises it's a it's a thick book but it's very understandable yeah i uh pierre rochard was one of my first guests on this podcast and he he was telling telling everybody how he how he sleeps with a copy of that book next to him i'll just wake up random passages yeah but one thing one thing you mentioned there is that money uh some people think money needs a government backing it um with the military but uh it's a good segue into two possible threats so a lot of questions that i get about bitcoin is like well there's a bitcoin it's cool and all

but like eventually the government's going to shut it down and create their own cryptocurrency and everybody's just going to use that so um i think this is a good opportunity to maybe talk about some some threats from governments uh yeah yeah written about um so what do you think the biggest threat via uh to bitcoin from a government would be well so let's uh let's play that out we could kind of uh i won't look at the threat model although i'm tempted to as far as to try to be systematic but you guys can make fun of me later when i forget stuff that uh that's in the threat model. But so let's kind of on the fly threat model this, right? So you have this digital currency or you have this thing called Bitcoin and the government wants to destroy it. One of

the ways that they could do that is they could create an alternative currency, right? They could say, all right, we're just going to make the dollar digital. Well, that doesn't make sense because the only reason people are adopting Bitcoin is that it works better than the dollar does right now. And the dollar's already digital. So in order for them to get people to adopt the dollar, let's say willingly first, they would have to make the dollar as useful or more useful than Bitcoin. And in order to do that and get people to be attracted to it and invest in it, one of the things they'd have to do is they'd have to stop increasing the supply of new dollars because as they do that, the, the value goes down. But the problem with that is that that's where they,

um, so what I'm doing is I'm kind of going through, okay, I want to kill this thing. I'm going to try this sword. Oh, that won't work for this reason. Right. That's basically what a threat model is. Um, so if they wanted to, uh, if they wanted to do that, they'd have to stop printing new dollars. Right. And, and some people believe that Bitcoin is going to cause central banks to do that but what they failed to remember is and you could see this play out actually it's interesting uh in the uk they were apparently you know the left hand didn't know what the right hand was doing and everybody got really excited about a digital pound um i believe it was a digital pound um and uh and they got pretty far along in development and then somebody said whoa whoa

we're not doing this and the reason is that it's it's like somebody walked in the room and said don't don't you guys would know what scam we're running here like we cannot do a digital you know we can't digitize this thing and be open and honest and transparent and have a fixed supply uh because that's not the business that we're in right if i can't print new dollars and steal everybody's savings uh why would i even show up to work so they could do it but um but why bother right why not just adopt bitcoin at that point and save yourself the trouble of trying to code this thing up. And so I think that's not much of a threat, right? Government's actually creating something that's useful. That's just not the business that they're in. They're not confident

enough for that. Yeah. And I mean, really the reason that governments, their business model is to be able to steal individuals' savings and assets through taxation and inflation. And so it's certainly not in their interest to create an untraceable digital cash with a fixed supply, because they should just retire at that point. So I would say that's not much of a threat. I think another one that people are concerned about is that governments will just use violence. Um, they won't actually create something that people would choose to use, uh, if they had a choice, but they'll, they'll use violence to force people. Um, and, and that's, that's not an unreasonable, uh, perspective because that's what they've done in the past with legal tender laws and other things that, um, that, that pump up certain assets. Um, so they could do that with Bitcoin. Um, they could outlaw it for example, but the problem is that it's, we, we sort of overestimate the amount of power that governments have a lot. Um, they're, they're kind of like a mafia and even a mafia was very concerned about their public relations, right? They, they even took the time to hand out turkeys at Thanksgiving and do things like that.

Um, because it's, it's far more cost effective than just killing people all the time. It's really hard to kill people all the time and, uh, and make money doing that. Um, and you can see that by, uh, you know, the governments that tend to do that more, uh, like in, in Africa and places like that, where they haven't quite dialed in the PR yet. Um, so if, uh, if they were to try to do that, you could ask like how, how successful would they be based on other things that they've tried to ban? And an obvious one, um, would be drugs, right? Um, the, the, the reality is that, uh, drugs in the United States, the drug war has been a massive spending effort. Um, there's been a ton of money put into that and trillion dollars or something like that at least. Right. Yeah. Oh,

I'm, I'm sure that over the lifetime of, uh, the war on drugs, it's far exceeded that, but we'll never know, uh, because they don't, they don't keep accounting records and things like that for a reason. Um, but, uh, but let's just use that as a baseline. Um, I'm not a young guy and I, it would have never been a challenge for me to get my hands on cocaine. Never in my entire lifetime. So if that's a reasonable sort of approximation and they've put all that effort into it, you could say you'll probably, even if they did ban it, never have a time where it's hard for you to get your hands on Bitcoin. But then you take that even further and you say, well, drugs are difficult to move around and certainly across borders. And you look at the stuff that's been

done, you know, the submarines, the tunnels that have been dug, all that sort of stuff. and they're also hard to pay for so there's two sides of that transaction and you look at like pallets of hundred dollar bills buried out in the hills of uh you know south america um and and trying to move that stuff through i mean people are swallowing it and carrying it in their stomachs right um uh somebody got stopped in the airport they made a fake butt and filled it with cocaine yeah yeah yeah yeah and the reason for that is that there's there's enough demand to overcome the amount of security that you can place on a border right it's it's a real simple equation how if we can raise the cost of moving cocaine into the country x number of dollars

that that will simply increase the price of cocaine in the u.s x number of dollars right so the the more difficult it is to get in the higher the street price of the the asset that people want to buy um and that won't go away until you probably cross some you know magical threshold where people are like oh it's just too expensive i'm not interested anymore um i i think that you know there's no question that that's getting touched right in our in our lifetime um regarding drugs uh and uh so at the end of the day that's just a much harder thing to move around it's much harder to smuggle it's much harder to transact in um and uh you know most of the time it requires face-to-face interaction right to hand these things off so i would say that bitcoin would

probably be, I don't know, a thousand times more expensive to ban than illegal drug use in the United States. I think that's probably a fair order of magnitude, right? Because I mean, imagine somebody sitting in Mexico with 10 million Bitcoin and saying, okay, there's, there's a demand for Bitcoin in the United States. It's selling for a premium of 10%. Is there any doubt in your mind that that stuff is showing up in here? And probably that premium is getting arbitraged away in a week, right um drug drugs are totally different right the amount of cocaine that you can buy in uh in columbia um for a thousand dollars is a lot more than the amount of cocaine that you can buy in new york city for a thousand dollars um and so i i think probably a thousand times is

is not an unreasonable comparison on the difficulty of moving that asset to the people that want it and it is probably a great underestimate really and um yeah so do you think it would never be feasible for for a government to go door to door and find node operators to and smash their hardware that's that's sort of the conclusion that i've come to like if you were governments were to shut down bitcoin they'd have to do it in one foul swoop and literally go door to door and crush crush these well it it'd even be harder than that because you'd have to go door-to-door globally because I can use a node that's in Mexico.

Really, what you'd have to do to pull this off is you'd have to get rid of encryption because if I can encrypt communication between the United States and Mexico, you don't know if it's running a node or not. There's things that can be done. We're not doing a lot of it right now, but as long as encryption is allowed to exist on the internet,

um, you're not going to be able to prevent people from exchanging digital information without your knowledge. Cause that's, that's what encryption does. Um, and that's why the cypherpunk movement really was born because they said it's, it's game over, right? The moment that encryption existed, oppressive, corrupt governments ceased to exist. And now it's just a matter of allowing, uh, the, the history to evolve. Right. And we want to be a part of that, right? We want to like, as a cypherpunk, I see myself as basically an abolitionist, right? And, uh, and it's just after the industrial revolution and you can look around and go, you know what human slave labor is no longer cost-effective. So it's going to end. Um, but can I help

accelerate that by 2% in my lifetime or 0.0002% of my lifetime? Yeah, it's fascinating. And so that's one one of the uh books one of the uh tales from the crypt book club books that uh that we talk about a lot as a sovereign individual and they talked about this and being born at an inflection point where this technology sort of emerges in our lifetime and sort of changes the whole paradigm and again going back to people not realizing the sort of the the magnitude and the gravity of this this technology um it really hasn't hit people in earnest yet but it's going to change our lives in ways that we can't even imagine right now and it's it's things are going to get weird that's what i was having a conversation yesterday i got grabbed coffee with somebody

talked about bitcoin and so my view is that if bitcoin becomes successful like people have to realize like things in in the world that we're used to like really go to shit to a certain extent do you think that's a fair assessment you know i i i don't think in the long run that that's that's true i don't know what the transition looks like so i i'll i'll admit that i that i got a little pansy when i saw it at 20 000 because i thought all right if this is the tipping point and we're really running at it like this um if it's 200 000 you know 2 million in the next year, then that, uh, that, that may be a little too fast for me to be comfortable with. But part of that is that I'm, I'm so spoiled, right? Like when I look at it from my perspective,

I have everything that I need, right? I have everything that I want. I've never, you know, growing up in the United States, I've never, um, had a day where I was like, I wonder if I'm going to eat or I'm hungry. And it's not within like, you know, 45 seconds, there's food in my mouth. So, so for me and, and, uh, and the people that I love and I'm most connected with, um, the possibility of the federal government getting defunded in the next 18 months is pretty scary. Um, on the other hand, if I'm in Yemen right now, um, or if I'm in Africa where my entire continent has been relegated to the dark ages, because it's not allowed to trade with the wealthy nations of the world. Um, it's, it's effectively, you know, we've all agreed to

go to war against Africa for some reason and just embargo them as an entire continent. If I'm there, then I probably have a different perspective on the empire and how it's provided for its citizens and those that aren't its citizens. But in the long run, so in the short run, there may be some weirdness. If you look at what happened in certain low-income neighborhoods when the welfare check slowed down, they got really, really bad and really, really dangerous, you know, in, in neighborhoods outside LA. Um, and if the federal government gets defunded, we, we have large populations of people, uh, that are not productive and have had a generation of more of not being productive. Um, and, uh, that's a scary situation, right? Like it usually takes

time for a community to transition into being able to provide for itself. And I don't know what that looks like for those folks in the short term. I'm hoping that there's going to be more than enough generosity and charity to make up for that, but it's questionable. It's a real kind of a scary thing, especially if it happens fast. But on the other hand, the amount of wealth and productivity that is stolen and just destroyed right now is staggering um the the economists talk about the seen and the unseen so we see things like the the government built a bridge or the government built a monument what we don't see is the amount of uh resources that had to be extracted away from productive people and put in the hands of unproductive um people uh in order to

to make that happen and uh you know i'll use the example of nasa right like we all get really excited that we went to the moon but we went to the moon before we had invented calculators that's probably not the way society would evolve and it's probably not the most efficient way for society to evolve um and so uh yeah we were using slide rules i mean there were some simple uh calculating machines that were being used and calculating machines go back to at least world war ii but but the average engineer that was trying to calculate a trajectory was using a slide rule when we put people on the moon now i i i can't say for sure that that's not the right way to do it but my guess is that we probably would have ended up with iphones before we were on the

moon um and we probably would have if that's true then we would have gone through that process more rapidly, right? So flying cars, having colonies on Mars, whatever it is that you're looking forward to us getting to, what government does is it takes things from people that are productive and are using those in the best interest of humanity. And that's evidenced by the fact that when there is, that there's honest profits, right? So I'm making 10 issues, people are buying my 10 issues. I'm making 15% margin. That means that I'm producing and I'm providing for humanity in a pretty optimal way with the resources that I have at my disposal. And what government does is it comes in and takes money from those people and then uses it for things that are

certainly less productive and often just absurdly unproductive. So if you multiply all of that wasted productivity and all of that lost human creativity and all of those resources taken out of the hands that are the people that are most effective at using it for our benefit it's really quite possible that that all of the fears that i have about people having to make a transition from being um being net beneficiaries of of the slave state uh into being you know uh break even or better it could be just a blip on the radar compared to the amount of waste uh that we have in the system right now. So it wouldn't surprise me if it was more like the, the fears that people had in the American South when they were looking at the destruction of slavery and they were

thinking, how are we going to provide for all of these people? How is this all going to work out? You know, these people have been in the case of the slaves and in the case of the slave, you know, political class down there, they've been very dependent on the system and it's going to be removed. Um, how are they going to be able to transition and not starve in the process? And looking back on it, that wasn't that big of a deal because it turned out that slavery was already so wasteful that there was just more productivity and more production for everybody once the beating ceased. um so it could be like that here i mean we we could be if we if we defunded the federal government uh by adopting bitcoin we could look back on it and go what were we worried about these guys were consuming 70 of everything we produced how is it possible we were worried we weren't going to be

better off that's what uh a lot of people are scared though a lot of people can't envision a world without a government yeah it's it's a big change i mean it's it's a really really really big change. Um, but a lot of people couldn't envision a world without, uh, without racial slavery in the South. Um, it's, if you've grown up under it, it's really hard to imagine a world without it. And we're also entering a phase of like human existence that it's probably more akin to if slavery was global, right. And everybody had been raised in some form of slavery for thousands of years, and then it went away. I think that's probably more on the order of magnitude. Yeah, yeah, exactly. Yep. Yep. So my definition of slavery, I also have a human threat model

up on my website. Those are the two things that I'm most proud of is the Bitcoin threat model and the human threat model. And the human threat model basically looks at humanity as if it's open source project and talk looks at all the different ways that you can attack humanity and prevent it from accomplishing its mission um and i i assume that humanity's mission is to make the world delightful right um and uh and so basically some form of slavery is the only way that you could do that because um because periodic raids are just not as cost effective and we've we've over time we've evolved to select things that are, that are really cost-effective. So racial slavery, not, not as cost-effective way for me to take your stuff from you on a regular basis. So again,

uh, let's assume my definition of slavery for the moment. And that is that, um, that I periodically take your stuff from you. Um, if you are, if you're Chinese and, uh, and I'm, uh, I'm white and I say, okay, you're going to be the slave class, right? And we're just going to oppress you and we're going to take your stuff periodically. That's not super cost effective because you're going to want to kill me and you're going to work really hard to do that. Given the opportunity, I'm a dead man. And in addition to that, you're going to work as little as possible. You're not motivated to produce. So there's all kinds of downsides to that. And really after the industrial revolution, that relationship no longer worked because I would have to put so much

resources into beating you into submission that you wouldn't produce that much. And once we have mechanical labor and factories, it's much better if I just don't treat you as badly and give you some tools, right? So that's why racial slavery ended. To bring that to kind of where we're at now, modern day slavery has evolved to where I take your stuff by just printing dollars, right? I force you through the threat of violence to, to use dollars or yen or whatever. Um, and then I either tax you periodically, right? I just make you write me a check. Um, but that's got some downsides, right? I mean, it works, it's still viable. Um, but if you know anything about it, like a cash business that operates in the United States or in France, those people don't pay taxes.

um and so that's that's kind of a downside right um it's it's a big cost for me as the slave owner to be able to just take to force you to write checks because i have to know how much you make as far as income if i'm taxing you based on that um and if i tax you based on the property that you own that gets a little dicey because then i end up having to take property from old people or sick people and so i got to keep that rate really low to where that doesn't happen too often or you get really pissed off and try to kill me. So the best way that we've found so far to maintain that relationship of slave and slave owner is I force you to use dollars. And within a couple of generations, you don't even notice. You don't know that it's not backed

by gold. You don't know if I'm taking gold out of the vault. You don't know that the Fed doesn't get audited and that they've told Congress if we ever got audited, the whole system would fall part, right? Like you're just not aware of these sort of random things that economists and anarcho-capitalist weirdos are into. All you know is that you have dollars and you can buy stuff with those dollars and they're pretty convenient and, you know, they more or less work and you more or less know that if you can buy a car this year with $10,000, you'll be able to buy a car next year with $10,000. And all I have to do is just increase the money supply, right? I just have to print more dollars and then I can keep those or I can give them to my buddies and, you

know, I can, I can benefit from that. And that essentially steals your savings, right? If you have $10,000 in savings and I double the money supply, now you have $5,000 in savings. And that's especially, that works especially well because, because humans are always building new tools. So if you can buy a pair of shoes for a hundred dollars this year, next year, you're still probably going to be able to buy a pair of shoes for a hundred dollars. You might even be able to buy a pair of shoes for 98 or $95. Meanwhile, those shoes should cost you $80, but you don't know that. So I've stolen from you in a way that you don't even realize that you're poor from because I've basically stolen the productivity of you and your peers, um, without anybody's

knowledge. So that's really cost effective. And especially if I can create a theory, economic theories, um, and teach those economic theories to you from, you know, five, six years old in school that I'm just looking out for you and I'm trying to stimulate the economy and I've got to keep your crazy animal spirits in check or whatever. That's another layer of really cost effective PR. So the name of the game when it comes to slavery is to do it in a way that the slaves are most happy. They notice that they're being fleeced the least. And at the end of the day, I'm able to take their stuff without them wanting to kill me. So that's where we're at right now. And that's a global thing, right? There's not a postage square piece of earth that you or I can

run to where we will not be forced to use a currency that's being inflated by a central bank. And so I would say that that's, you know, worldwide slavery, but it is coming to an end. And all of that, all of that productivity and chaos that that creates in the economy is coming to an end. So there may be a scary transition period, but I bet we probably overestimate it. Very interesting. Very interesting insight there. Wow. That's a touchy subject. People don't even like to say the word slavery. They get freaked out by it, to talk about it in this way. but I think it's important. And like you said, people are just sort of passive and sort of passive. They're really don't even understand what's happening to them. I mean, when when you talk about the nature of fiat money, and how it works, and how it's created, and what that means

is that, like you said, like people are just born into the system and don't realize what's happening so they just expect hey this is the way the world works but um that's why i've been drawn to bitcoin uh in particular is because hey this is this is going to change the way the world works and that's one thing that they talked about in the sovereign individual as soon as you have these these cyber monies that are that are cryptograph that are encrypted or excuse me that are secured with encryption uh that no government can confiscate it's going to completely flip the table and and mark the the death of the nation state and again going back to what i was saying earlier like people can't imagine a world without a government so sort of maybe this is something we

can dive into is what would a post-nation state world look like in which we have a monetary system built on something like bitcoin um yeah yeah i do kind of want to throw out a i don't know sort of a disclaimer and that is that when a lot of people hear me say I consider myself a slave they think what a selfish like self-absorbed person right like you're sitting there in uh in air conditioning and climate control and um you know the you've never had to be concerned about how much uh steak you can afford right um because it's like yeah uh it's not even it's not even a a stressor in your life, right? If you want to, um, if you want to go to the grocery store and grab, you know, five tomatoes and a steak, right. It's not, it's not going to even impact your

budget in a massive way. Right. Um, and that's all true that, and I'm, I'm super grateful for that. And I feel like, um, I do take that for granted and I think we all take that for granted. I can't imagine what it would be like to be in a world where, you know, a significant number of people die in childhood. Right. I know that exists in certain parts of the world, but still in a very small degree compared to what it was in the United States 150 years ago. So it's not that I'm not grateful. It's just that I'm grateful not to the state and not to the government for providing that because I don't believe that they have. I'm grateful to all of the creative people in the world that have created a world in which I could be born into like that. And all the people that

have worked hard and built tools and then handed those to their children over hundreds and hundreds of years that's resulted in this environment. And I'm not grateful to the state that has taken the tools out of those people's hands and used them in inefficient ways to cause things that are not as productive. So I think that's an important point. I would argue we've gotten to where we are in spite of the government. Yeah. Yeah, exactly. Yep. Yep. That's a good way to say it. And okay. So what does the world look like without a government? I think one of the things that I would say is that I'm not sure that what anarcho-capitalists Murray Rothbard is the guy that that's most at the forefront of this for living figures. You can look up Hans

Hermann Hoppe. A good book would be a democracy, the guy that failed. But what these guys are advocating is not the end of government in the sense that most people think of government, because we're not talking about the destruction of military. We're not talking about the destruction of security services. We're not talking about the end of law. We believe that the rule of law needs to continue and is absolutely necessary for human survival. We're not picturing a utopia where you don't have people trying to steal your stuff or kill you and you need to be able to organize and defend against that. And that is what most people think of as a government. And so I kind of hesitate to say that we're talking about the abolition of government or the destruction of

government. What we're really talking about is creating a government, if that's your definition of government, or a system of government that doesn't rely on slavery. And that's very possible and it's been done at various times and to various degrees throughout history. So let's look at Let's look at something like private security. Military, we'll put that all in one category. You need a service as a consumer to make sure that somebody doesn't steal your stuff or kill you. Right now, what we have is we have somebody that forcibly takes your stuff on a regular basis and then prevents other people from taking your stuff or killing you. that's suboptimal because you're, uh, what you want is you don't want your stuff taken in the first place. You don't want like one guy to take your stuff regularly and prevent others from doing that. That's, that's not really what we're looking for. So one way that that could be provided for, um, is, is the same way that we have food provided for food is just essential to your

and my survival, arguably more so than, uh, than security services and defense. Um, and that what's that yeah yeah exactly it's uh uh yeah it's it's higher on the hierarchy who's who is that this name slipped my mind as well yeah yeah exactly yeah so um and you know you can say uh water too right but we'll use food because it's it's most obviously provided for by the free market um you don't you don't need in order to be able to get tomatoes you don't need a single provider of tomatoes that shows up at your house and extracts money from you and then provides you tomatoes on a regular basis. Um, somehow inexplicably, inexplicably, um, a bunch of free people work really, really hard every day to find ways to provide you tomatoes as cheaply as

possible. Um, these things are imported from all kinds of different parts of the world when the temperature is right. Um, we've done with, you don't have to buy it, but people have done genetic engineering on tomatoes so that they're ripe and fresh when you want them. Um, and all of that happened without the government. Um, so there's no, there's no good argument to say that the government doesn't have to provide you food. And many people have argued that governments do have to provide food instantly, um, throughout history, but that that's, it's so patently absurd now that it's, it's really tried. Um, especially when our government, uh, designates pizza sauce as a vegetable right yeah yeah they're not good at really anything except for uh you know in a lot

of people's mind they're not good at anything except for providing defense um and there's not a good argument for why defense is this one magical special thing um that the market can't provide. And so if you look at something like security, there's more people in the United States that there's more money spent in the United States on private security than there is government security. So we're already, we're already experiencing the benefits of free market security. If you look at all of the security guards that are, that are operating, that keep people's property safe, all of the private security that keep people that are likely target safe, right? If, uh, if Beyonce has somebody break onto her property, she's not relying on

nine one one to respond. Right. Uh, so private security is already, uh, bigger than public security. Um, I think that's, that's worth knowing. Uh, would you measure that like private security forces or it's like a police force, a military combined or just like, uh, yeah, yeah, yep, exactly. Uh, I think, I think actually it's probably police. I don't think that it includes, I don't think it includes military, but, but I don't know. I'd have to look that up. It's, it's, it's a surprisingly large number though. And it may even be bigger than military, but man, we're, we're spending a lot on military now. So I'd have to go look it up to be sure that I believe that presently. But, but so we do, we do see that in play. What this

would practically look like just to give you guys a real quick overview is instead of somebody showing up and they're taking my money every month. I would hire, and this is the challenge of trying to say how things are going to work in a free market before they've been worked out, because these problems will be solved by tens of thousands of entrepreneurs competing together, finding solutions that work in the marketplace and being rewarded for it based on their creativity. And I am at best one entrepreneur trying to project into the future solutions to tens of thousands of problems, right? So it's going to, whatever it is, it's going to be far, far better than this. But Murray Rothbard's proposed that this is one of the ways, and he offers that caveat

as well, that this could work. So instead of paying taxes and having money stolen through inflation, I could pay for insurance. And my insurance, let's say, is $1,000 a month. And the insurance is that me and my family will not be attacked physically, um, by either anybody local or foreign nations or whatever else that money would then be used, uh, by the insurance company, because what they want to do is they want to minimize the likelihood that they have to pay out. So they would hire private security services, um, to either cover an area, uh, cover a specific place, maybe even, uh, build, um, anti-aircraft, uh, weapons and put them in various places,

right? So they're going to be financially incentivized to address that. That sounds completely absurd, but again, you got to imagine that you're, you're a slave or you're a slave owner in the American South. And I'm trying to explain to you how we're going to have cotton without slavery. Um, it's, it's, it's going to sound, uh, completely ridiculous. And again, that might not even be how it works, but, um, but the major principle is that there are, we can envision ways that it would work. And we know that the free market has solved every single problem we've ever put in front of it. And that if you try to point to an example of where the free market has failed, it's always actually an example of where government has intervened on the free market.

Um, so once you accept that and that that's true, and I can defend that a lot easier than I can try to imagine exactly how this is all going to play out. It's a lot less scary to say that these problems are going to be solved by cooperating individuals. Another random fact for you is that there's only maybe a dollar, I think it's $1.50 per person spent on police services in New York City. So if you spent say $100 a year, you and the neighborhood and the people around you are willing to part with $100 a year, you'd have 100 times more money to spend on defense that is being spent on your behalf right now if you're in New York. That's a big difference, right? We're talking about 100 times, like two magnitudes increase in budget. And then if you believe

that the market is more efficient at solving problems, let's say 10 times more efficient than government um and i think even like spacex uh even though that's a subcontractor people are saying wow this is obviously a whole lot more efficient than what we had going on in the past um but look at food production look at iphone production look at any of the things that you like and enjoy and imagine saying we're going to assign government to solve that problem now we're not going to let the market participate i think saying that those things are going to be 10 times crappier and 10 times more expensive is reasonable right so that's another hundredfold uh sort of efficiency gain right so if you buy that now you're reasonably uh i think it's reasonable to

assume that the average person is willing to spend a hundred times more on their private security and that there's going to be a hundredfold gain in efficiency um if if the free market's able to do that. So you're, you're looking at a, a significant, uh, improvement in a dollar for dollar, the, the quality of the security services that you should expect. And we haven't even talked about the fact that, um, I mean, Iraq was caused by the United States, right? Like we, we are, uh, the nine 11 was a result of the Saudis. Um, and the Saudis are one of our biggest allies. And, And we have never given more military hardware to any country in the history of the world than the Saudis.

That was one of the last things Obama did before he left was fund that huge weapons deal with the Saudis, right? Yeah, yeah, yeah. I believe there's been some more deals since then too. But so we're talking about maybe a 10,000-fold in improvement And we haven't even addressed the possibility, right? You may or may not agree with this, but the possibility that sometimes the US military actually makes our personal security more expensive through their actions than less. So, it's, it's not a real terribly hard argument to make when you try to look at very specific things, but as a day to day experience, you know, it's hard not to having been raised under a lot of propaganda, believe that it's impossible to be safe without, without somebody taking your stuff and using that to fund a military. Yeah. I think that's going to be the biggest hurdle for people to overcome is the notion that

government is essential. We need a military. We need all these protections. We need help. We need somebody to help save us from ourselves to an extent. Right. Yeah. I think the best thing to do is just to look into how much you're actually getting. I think it's really shocking to find out how little is being spent per person on uh on police um so even if that was really efficient um i think you could you could definitely imagine that you could do better than that um uh just just even being less efficient and just spending more money on it now the one um the one uh tale of government inefficiency which actually uh is actually the result of a contractor it was halliburton um during iraq one of the

stories that came out of halliburton that really astonished me was that when they would set up these these camps over in iraq for for the american soldiers and then they would do services for them by laundry being one of them and they would charge if i remember this correctly uh during the iraq war uh halliburton was charging members of the military like a hundred dollars to do their laundry and then they would return it and uh the people the these soldiers would get their their laundry back and it would either be dirtier than when they when they gave it to halliburton or it would just be like they weren't even doing laundry correct and they were forcing soldiers to pay a hundred dollars to do their laundry while they're at war and that was and

that's something that payers were paying halliburton to yep yeah what we're really looking for with uh through anarcho-capitalism or the cypherpunk movement is a system where uh everybody is incentivized um to do the right thing so we can look at somebody like um uh like somebody that's operating government. Let's say that you're a police chief of a small town and you know that the only way that you're going to be paid more is if you have more police officers reporting to you, you have more of a budget, right? And the only way your popularity is going to go up is if crime is a bigger issue than it is right now. So we can look at that guy and we can say, well, no, we're going to buy into the myth of the selfless public servant. We believe that this guy has no

interests in it for himself. Um, and that he is, he's Jesus incarnate again, and that all he's going to do is care for the needs of others. And he's going to make all of his day-to-day decisions based on that. Um, that's, that's maybe not the most absurd assumption. So we'll go with that for a minute. If he does that, he's going to do things that keep crime low, right? Little, little decisions throughout the day that nobody would even notice, um, that, that results in, you know, over, over 10,000 decisions in a year, a significant impact. Right. Um, but now let's assume that he has a family. Um, now we've gone even more absurd because we have to assume that this guy is not only going to make decisions for the community, for the better, betterment of the

community. Um, but he's okay with not being able to pay for his kid's college, right? He's okay with his wife having to go to work and, uh, and take his kids and put them in daycare. And he's okay with all of these things that maybe are not in his family's best interest. Um, so now what we're having to do is assume that this poor guy is not only going to sacrifice himself, but he's going to sacrifice his own loved ones for the benefit of strangers that he doesn't know that that's, let's just say that that's not nice, right? Like, even if that's true, even if that guy is willing to do that, we really should keep working towards a system where he gets rewarded for doing good, not punished for it. Um, even if we believe that he's going to only care about us.

Um, and that's, that would be, for example, if, uh, instead of having a police chief in the small town, if the town said, okay, we're just going to, we're going to allow citizens to keep their own money. Um, we're not going to tax it and we're going to allow people to buy insurance. And they couldn't do that currently, right? The, the it's, it's illegal to have the sort of insurance and it's illegal to have a law, a reasonable system of law that would allow for this to happen. But imagine that instead of a monopoly service, people buy insurance to keep themselves and their families safe. And the insurance companies contract out with various different security providers to keep the town safe. That doesn't require that anybody sacrifice

their own families for strangers benefits, right? That, that can just work. Uh, we've seen it work in multiple other cases and we have no reason to believe it wouldn't work if it was allowed to work now. Um, and so we should, we should think and we should work towards that. And that's what the cypherpunk movement's about. It's just allowing people to set up systems that work, but don't require, um, don't require ridiculous human behavior and don't require, uh, violence against innocent people yeah and it's i think it's an admirable goal uh in the long run again uh this is a controversial topic i mean people people really don't like to to dive into these topics and think in these ways to an extent um make it really defensive and um sort of fall back

to to what they know which is a life with the government um it's hard for a lot of people to imagine life without it and i'm sort of happy we dove down that rabbit hole i brought you on to talk about bitcoin threats we'll be happy into cypherpunks and anarcho-capitalism and i'll be honest i'm still on the fence i don't know i don't know a lot of people ask me like what are your political views i'm like i don't know i'm still trying to figure that out and play out all these these scenarios and and digest all these ideas and this is one that that really really uh sort of resonates with me um just thinking about the uh ways in which the world can be better i mean i think there's definitely uh definitely hope in in this sort of movement that like hey we can we

can make things better for everybody and and we can really unleash human ingenuity which um really uh again resonates with me um but i know you have to hop on your podcast in 15 minutes So if we could bring it back to Bitcoin and back to threats of Bitcoin, what would you consider is Bitcoin's biggest threat at the moment, or the biggest threat to Bitcoin at the moment? Yeah, I think I do feel like the altcoin attacks are coming to an end. Certainly the scaling-based altcoin attacks are sunsetting. sunsetting. I think Litecoin, even Charlie Lee is out of it. So that's probably a good indication that that story has probably run its course. I think Bitcoin Cash or Bcash, I think that's in the same boat. It was a scaling-based one. And with Lightning getting

more and more deployed, you're having to get more and more crazy to have faith in that that's a good way to go um and i think with ethereum having uh kind of run its course to a degree on the smart contract side i think that that's that's probably ending um we've got simplicity now being built on bitcoin and it's actually the way any computer scientist would approach the problem instead of uh you know some some clown that was previously trying to sell quantum computer simulators because that's easier to build than a quantum computer but has all the same benefits uh shout out to vitalik there um let's talk about ethereum all right let's do it so they their big marketing push more recently is is governance on the blockchain and

they're they're having a lot of issues with that especially this week there was a ethereum contributor he was uh maintaining the github he he actually resigned from that position because of the governance issues that Ethereum's having right now. So if we could sort of lay those out and sort of how Ethereum's sort of argument for governance on the blockchain, how that differs with Bitcoin.

Yeah, I just got hit up from the Block Digest guys that I've got another half an hour if you do. So we're good on time. Let's see. So gosh, governance on the blockchain. So, so one of the, one of the things that scammers do that, that's really brilliant. And I, I did some research on this so I can, I can claim some, I don't know, some authority on this, but the, I don't know if you guys remember the, it's probably still going around.

So you probably do, but the Nigerian Prince email. So the Nigerian Prince email, one of the things that, that my team and I was looking at at one point was why it's so effective. it was really, really shockingly effective. It had a really high rate of people opening the email and a surprisingly high rate of people responding to the email. And I want to say it was almost 1% open, 10% respond, which is way better at the time. I mean, way, way better than an email from AOL or an email from somebody trying to get you to buy shoes, right? I mean, it was just amazing. And so once we started looking at it, we realized something even more amazing. And that was that the response rate for some versions of the Nigerian Prince email was much higher than others. And that the ones that had the higher response rate didn't have spelling errors.

And we thought, okay, that kind of makes sense, but that's weird. Why is the spelling? Why do they both exist in the same time and space, right? Like, like even if you are some guy that does not speak English and you're just copying and pasting, you would think that within a relatively short period of time that the version without the spelling errors would be the one that was copied and pasted, right? Um, that somehow these guys would coordinate and realize which emails were most effective, which versions, even if you didn't know how to read this stuff, you'd be able to, cause these guys are AB testing, right? They're not, um, they're, you know, these guys are spending tens or hundreds of thousands of dollars on, on, uh, email. And what we figured out was that the reason that the, um, and I say, we, I'm definitely taking more credit than I deserve right now. But what was discovered was that it was intentional, that they were intentionally misspelling and poorly writing English because they wanted to, they wanted to decrease their

customer support costs. When somebody actually engaged with a real human, they wanted to make sure that that person on the other end was stupid enough to continue through the scam and end up giving over money. And if it was well-written, they would get more responses, but those responses tended to include people that were smarter and would end up wasting the time not going all the way through with the uh with the scam so that's how i feel about the altcoin market something like ethereum is so dumb to anybody that has been working in software security for any period of time why is it dumb uh it's it's dumb because i i if you go out to let's see if you go to jw weatherman.com um or or search for jw weatherman github i have a let's see where is that actually

you know hit me up on twitter if you're interested jw or uh weatherman i am um hit me up on twitter and i'll give you a link to it i've got a link of the top 10 cryptocurrencies and the claims that they make in the technical reality and every single one of them makes claims that don't take very long to see that they don't match up to the technical reality. So Ethereum, for example, it claims to be able to do smart contracts, right? That's kind of the whole thing. They took the one approach to smart contracts that you cannot take it to smart contracts to be successful. And that is to try to be Turing complete. That's the one weird decision that you can't make and you can never redo to end up in a good place right um and uh so that that's why ethereum is that's one of

the many reasons that ethereum is stupid why is turn completeness not not a good idea no it's a good okay so so the idea of turning complete is that you can write any you can basically do anything that's doable with it right and that sounds like a good thing but when you're talking about smart contracts on a blockchain one of the really important things that you have to be able to do is figure out how much computational power this thing is going to require by static analysis right you have to be able to just look at the code and say this is going to take you know five five units of computation and this other one's going to take 50 well if something's Turing complete you can't do that and you don't need Turing completeness for smart contracts because

you're not going to build Facebook on top of a blockchain that only gets registered every 10 minutes and is the most inefficient database that humanity has ever conceived of. So you can sacrifice that Turing completeness and you can come up with something that is simpler, easier, more understandable to humans, more predictable, but also something that can be subject to static analysis um and of course that's exactly what's happening on bitcoin right now right like that that that process from uh guys like nick zabo that came up with the concept and have continued to work on bitcoin didn't stop just because ethereum took some scraps of ideas and slapped them together in a way that doesn't make sense in order to sell um that simplicity was not as i don't know

month ago i think i was on the world's crypto network with uh with dr russell um so there's uh That's why it's stupid to me. It just doesn't make sense. But, you know, a lot of good marketing, a lot of good unicorns, a lot of good rainbows. And one of the best, probably the best cryptocurrency homepage I've ever seen was Ethereum when it launched. I mean, it was beautiful. They know how to spend money on design. They know how to spend money on marketing. They know how to put together a narrative, to your point. There's nothing as attractive to a lot of Americans as the boy genius Silicon Valley kid that just came out of the womb knowing how to code

and didn't have to spend four years working on the problem the way the cypherpunks did. Yeah, that's the one thing that makes me uber skeptical of Ethereum as a project at large is that it's a bunch of young kids. I mean, I'm 26. A lot of the people working on Ethereum are my age or younger, and I think they're showing a lot of hubris

to think that they can solve these problems um sort of at once on one blockchain sort of out of the box with as little experience as they have could be wrong maybe they are well let me let me take a different angle on why ethereum's dumb um forget all of the sort of theoretical that i just explained as of right now the simplest smart contract that i know of is a multi-signature uh transaction as of right now you cannot do do a multi-signature transaction on Ethereum. So even if I didn't know anything else, if I just knew that, I would say, not computing, right? It does not seem like a good investment. The only sort of killer app that Ethereum has right now, so that's a fact that I think if you

could fully internalize that reality, you'd say Ethereum's a joke. But let me give you another one. The only application that's really active right now is CryptoKitties, right? And CryptoKitties essentially pictures of cats that you can buy and sell. That in and of itself should throw up some red flags, but let's just say that it doesn't matter because it could be pictures of anything. It's a digital asset and it's being exchanged and that's interesting. The problem is that even the CryptoKitty folks do not use Ethereum to secure the CryptoKitties. There is no use of the security capabilities of ethereum to make sure that double spends and exchanges don't happen on crypto kitties that's all handled in a database that's completely unrelated so even the use of training

pictures of cats on ethereum is vaporware that's yeah because the uh the crypto kitties company that started it right there they held it on their servers right exactly yeah so i mean it really feels like the nigerian prince effect right like how many of these one random facts that just show complete absurdity um can exist while people are still excited about ethereum and i know i'm kind of insulting a lot of people right now and i don't mean to because um because all this stuff is so new and it's just this tidal wave of crazy concepts right like just this interview i i feel bad for anybody that just walked in and heard me talk about the end of the federal government bitcoin ethereum all this stuff like you don't have to be dumb to be overwhelmed um and i i think i think

they're definitely taking advantage of that moment in time. But again, it's just a moment of time. And I think you can see, I mean, the value of Ethereum is still high. Here's another random fact for you. In the year 2140, there will be 21 million Bitcoin because Bitcoin is every four years, the number of Bitcoins emitted or newly awarded per 10 minutes gets cut in half. Right now every 10 minutes we we give out 12 and a half as a reward to people uh running the supercomputers that are running parts of the supercomputer that secures bitcoin and its transactions in the year 2140 that stops uh there'll be 21 million bitcoins total and will be fully dependent on transaction fees to secure the bitcoin network how many ethereum uh do you

think will exist in the year 2140. If you get within an order of magnitude, I'll send you a Bitcoin. Don't search. Don't look. Don't go to my spreadsheet where I calculate it. Just throw that out there. Give me a guess. So Italic said like 103 million if they transition to POS, but that's going to be hard. So I don't know, a trillion? That's a reasonable guess. You're actually you're actually pretty close, but no, and you're not within the, or you're not within an order of magnitude. So I don't owe you a Bitcoin 11 quad with a Q 11 quadrillion. And the reason for that is that Ethereum produces a 10% inflation rate per year. So if there was a million this year, there'd be 1.1 million next year. And after that, there'd be 1.21 million, right? And it doesn't

sound like much after two years, because we've only gone up by 21%, something like that. But if you extrapolate that out 120 years, imagine that you could have a guaranteed 10% return on a bond and you held that for a hundred years. There's almost no way you couldn't be a rich man, right? So yeah, it ends up being 11 quadrillion at the current rate. Now that doesn't mean that they won't change it, but that's important to know. It's important to know that one, that they have to change it. So you're just dependent on Vitalik being generous to you and deciding that he doesn't want to do what the Fed has done for the last 150 plus years. And not that it was always the Fed, but central bankers have been doing for a long time and

that's continuing to inflate the money supply to the detriment of existing savers. But the fact that that's even possible tells you how much you are dependent on the goodness of Vitalik. Why not just be dependent on Janet Yellen or whoever is running the Fed? Because those guys have actually been a lot more generous to you than 10% per year. Those guys have only been inflating the money supply maybe 6% or 7% per year, if you're pessimistic like me. I mean, they claim it's 2% or 3%, but I don't think that's certainly not in the last few years. But on average, I don't think anybody assumes that the dollar has been inflating 10% per year, even the most hardcore gold bugs. I don't think throw out numbers like that.

and uh and that's the way ethereum works and you're right they they have said that if they switch to proof of stake they can change that um but proof of stake is is ridiculous also and there's a reason that there's not a single cryptocurrency running on proof of stake right now and there never will be why is uh why is proof of stake ridiculous why do you think there will never be one running on it it's a good question so the first question to ask is what problem does, what problem does proof of work solve? And the answer is that anybody can take a look at the Bitcoin blockchain and they can be confident beyond any doubt that billions of dollars have been spent in ordering transactions, billions of dollars in electricity and time and

effort. And based on the amount of resources that's been dedicated to ordering those transactions, you can be confident in all of the existing balances, right? And you can be confident that there's not more than 16 million coins at play right now, which is important when you're investing in a cryptocurrency. Shout out to Ethereum. When you buy something, you should figure out what percentage of the total supply you're buying, not just what the arbitrary unit value is. So that's important, right? It's important to know all of these things when you're a newcomer into the system. Proof of stake doesn't even attempt to solve that problem. So a newcomer coming into the system has to trust everybody that's in play right now. And that's silly

because that's not the problem that we were trying to set out to solve. If you want to trust people, you can, again, use the dollar. Just trust the central bank. So it's a sort of non-starter. Yeah. It doesn't even attempt to solve the problem that needs to be solved, which is, how do we believe that this is all legitimate um without trusting anybody or anything just trusting that we can multiply numbers together that's the only assumption that you have to make when you walk into bitcoin we can tr we can we can multiply numbers and we know how to do it and uh and it's good right um with ethereum you gotta you gotta trust or with a proof of stake system you would have to trust uh the existing players and there's a lot of reasons that

that you shouldn't trust the existing players and that's um it's interesting there are so many people fascinated with proof of stake and so focused on it so i mean i i agree with you i think i don't think you should have to trust anybody when it comes to cryptocurrencies like it should it's it's a non-starter for me like you shouldn't trust anybody you should be able to download the software and verify yourself right i i think the reason people are fascinated with it is that there's a, there's the ability to say, Hey, you know, Bitcoin's cool, but it's got its problems. And that gets people really excited about getting in on the next one. But that kind of goes back to just not understanding how open source software development works. Um, it's not

that, that sort of environment where there's a lot of secrets being kept and the next big thing is going to be something different. The next big thing is just the next push of Bitcoin, right? It's the next release. It's a Schnorr signatures. It's whatever, uh, creative thing anybody in the world has come up with that's the next big thing and it's going to appear in bitcoin um but that's that's foreign it's weird it's not the way that um that a lot of people are used to thinking about it yeah and that's sort of been my thesis and what i've been sort of shopping around telling people in this space that like i think the first two decades or almost through the first one uh By this time next year, we will be a decade into this experiment.

And I think for like the first two decades, maybe less, maybe it happens quicker, like you were saying earlier, like just people are sprinting out of the gate, hanging on the buzzwords, like and trying to make a quick buck and ruin their reputations, ruining reputations sort of by putting their necks out there and completely getting sort of the innovation of these technologies wrong out of the gate. sort of trying to apply them to old world structures that we're used to um and they're going to find out that just doesn't work that way like you're saying the nature of open source software is is a variable and in that thesis is like people are trying to apply um sort of an app building mentality or company building mentality to these cryptocurrencies it just doesn't make logical sense from from a design perspective again with like the design and then what Pierre and I were talking when he was on the podcast a few months ago

is like, just think about the company I work for, Barstool Sports, we're a blog, we're CMS, we're a content management system built on WordPress. It's hard enough to get that blog to work for millions of people and that's a centralized app that we build in-house and we

get to decide what gets pushed. And then when you throw in open source software and you have people, a distributed team coordinating around the world, it's magnitudes of order harder to to make these protocols and these systems work seamlessly and to think that you're going to be able to create like a world computer built on a blockchain with a distributed system and and do it in a way that that is successful out of the box just it logically doesn't matter the chances

of that happening are slim yeah and you're also going to uh you're going to do that without the participation of 98% of the open source community that's been working on that problem for 30 plus years. And, you know, I mean, at this point, part of the reason I feel like the Ethereum story is over is that even Vitalik has been tweeting out, like, you know, there's other interesting applications other than being like, I'll say government resistant, right? Or immutable, I think is the exact word that he used. So there's other interesting applications for blockchain that don't have to be immutable no there isn't because the whole point of blockchain is to be a new security technology that is um not cost effective to attack and doesn't require any

trust so if he's giving up on that that's great he can go compete with my sequel and all of the other technologies that solve the problem that he's interested in solving whatever that is um i think he's got some efficiency problems to deal with there but um but yeah i mean the narrative is just getting more and more ludicrous. So your original question was what's, what's next for attacks on Bitcoin, right? I feel like the, the altcoin, the altcoin attacks are kind of working their way out of the system. I think they've had their moment in the sun, but I think they're ending. One of the attacks that I think is interesting, and I was, I was pretty worried about it maybe three weeks ago is Paul Stork with Truthcoin and the, the attempt to create

drive chains. So drive chains has been touted as this great technology. And I have that in the Bitcoin threat model. It's actually the only new category of threat I think I've had to add since I wrote it a couple months ago, maybe six months ago now. And basically if an attacker wanted to create an insecure layer two protocol, right? So lightning is a layer two protocol. Federated side chains is a layer two protocol. If somebody wanted to create an insecure layer two protocol, what they could do is encourage people to move Bitcoin into that layer two protocol and then hack it themselves and take all the funds out of it. And that would be, you know, somewhat of a windfall, but they could make that attack even more profitable if they short Bitcoin.

So if they know they're about to, let's say, you know, there's $200 million in a side chain, they know they're, excuse me, they know they're about to drain the funds out of it. That's a great short opportunity. And you can make a whole lot more than $200 million if you can short Bitcoin before there's a big security issue with it. And so that was an attack that I was really concerned about. And I went back and forth with Paul Stork.

The initial engagement that I had with him was around, hey, I know a lot of people are giving you crap over this thing, but let's just do a threat model, man, because it sounds really cool. I'm really excited about side chains. From what I've heard, it sounds good. So I don't know why everybody's kind of throwing you garbage. Let's do a threat model

and we can go systematically through everybody's concerns like I did with Bitcoin and prove that it's fine. But really early into that process with Paul, it became obvious that it's not fine, that if 51% of the miners want to, they can take all of the money out of the side chain. And his security solutions for that are the safeguards that he envisions for that is one, we can do an Ethereum style soft work and overwrite that transaction because the funds that you can steal require that they be locked up for, say, 90 days. And during that period of time, everybody can see, oh, those funds are being stolen. Let's invalidate that transaction, which is essentially the idea of drive chains is that you create this really insecure situation.

And if somebody takes advantage of it, you soft fork. To me, that is the antithesis of a security solution right i mean if the solution is you just completely blow off a nuke right and you just give up on the whole concept of having an immutable blockchain and we just become ethereum now there is a little bit more subtlety to that because you could argue that that is the protocol right that bitcoin has now assumed a protocol whereby if somebody does this thing to try to steal money out of a side chain. It is, everybody knows upfront that in that one particular case, under those particular circumstances, we soft fork and eliminate it. Um, I don't like that argument, but I I'm trying to, I'm trying not to straw man the other side. I'm trying to strong

man the other, the other argument. Um, and the reason that I don't like that argument is that I don't think it, I don't think most people, even if I could get my head around that and say, okay, that's part part of the protocol is to rewrite the protocol like even if i could accept that sort of what i feel like is circular logic but it's it's not totally right like there there's a human element to to the bitcoin protocol and so um but even if i could get my head around that it still doesn't make it a less effective attack because i still believe that you could drain the funds or you could at least begin to drain the funds and i do believe that a lot of people would be um would be confused by that um and i also don't know that you could coordinate and this is the

whole point of bitcoin again i don't know you could coordinate everybody on the globe to upgrade their bitcoin software to ignore that transaction and it sets a terrible precedent right that so i have a lot of concerns with the design and i i don't know if it is stopped i feel like i have a good safeguard for that um which is essentially if somebody starts putting money into a side chain I'm going to throw up a webpage and I'm going to start getting people to support withdrawing all the funds publicly. Like we're just going to say, Hey, we're at 2% hash power and all that money's ours. Hey, we're at 5% hash power. I think that's the best thing we could do to reduce the chances that people put a lot of money into the side chain. Um, and that they're unaware of the risks.

Um, so I feel a lot better about it post that, but from what I can tell, they're still working on that code. And, uh, and so I'd say that's still something that I, I see on the horizon as an attack yeah that would that would be an interesting one paul's been talking about drive change for years now um admittedly i researched some things are interesting but again that yeah that uh sort of depending on miners not not being malicious um it's something i i don't know how comfortable i am with that either because you're really uh putting a lot of trust into the miners when you get into drive chips right right right now you trust miners to a degree. Um, but not really because the worst thing that can happen is a minor could either

deny if, if somebody has 51% of the hash power, um, they could either deny your transaction being executed. They could ignore it and thereby censor it. Um, or if they coordinated with somebody that was paying you a large amount, it would have to be a lot, right? So let's say you're selling your house for a million dollars. If they, if they wanted to go through the effort of coordinating they could allow you to receive a million dollars in bitcoin and then overwrite that transaction within some period of time and so maybe you wait the reasonable uh 60 minutes and then sign the deed and then at 80 minutes they overwrite the transaction which is something that could they could do um so note to everybody if we ever get really concerned about uh minor centralization

just wait much longer for your transactions to be confirmed um but that's pretty limited right That's kind of a goofy, difficult to execute attack. You got to wait for somebody that's about to do a transaction, know who they're going to do it with, know what's going to be, you know, and you got to get something fungible, right? A house isn't going to work because, you know, you could take that to court and say, hey, you know, I never got paid and, you know, at least tie it up. So it's not like the double spend attack is not all that awesome from the standpoint of

an attacker. And that's the worst thing that can happen right now with a 51% attack. Um, but if we have an insecure layer two technology that gives them a lot more ability to just absolutely drain existing funds, just, just, just do a big money grab. That's, that's definitely bad news. So, um, but again, I, I don't know if they're saying they're still working on it. Uh, I wouldn't be working on it if I was them, if I was the attacker, you know, it'd be like, ah, cat's out of the bag, right?

like uh if if we can now get 200 people to put 200 million dollars into an insecure side chain which is going to be a hard sell everybody knows how we're going to drain it and they're at least you know a couple people that are saying hey yeah i'll coordinate and i'll drain it before you get there so uh i'm not i wouldn't say i'm super worried about it now but i it's it's one that seems to be still on play yeah we'll definitely have to stay paying attention to that because um like i said that that does uh introduce a certain amount of risk and and i like paul though i like uh i like paul's twitter game huge fan i've been following him for years but um yeah it'd be interesting to see this in a while i mean it'd be scary to see it in the wild uh again going back to

how much trust do you have in them it seems like he might be pivoting i mean i like him i i like him to like he's very personable and again i was i mean i started this by just wanting to work on a project with them to threat model out side chains and or drive chains and prove to the world that it was awesome um but it seems like now he might be pivoting to uh to kind of the bcash strategy of just like saying oh my gosh the bitcoin developers are all part of this cabal and they're not gonna pay attention to my my goodness and uh so i may have to fork off and create an altcoin um so we may see that attack turn into an old coin uh attack but um yeah i mean the good news is that the only attacks that i'm aware of um and i i am pretty engaged in looking for stuff

that they don't seem to be any more interesting than the ones we've already been through that's um that's good to hear from a security expert but um that uh yeah that's one thing thing we learned last year 2017 was the year where we found out users are really in control of this network with uh no 2x and the user activated software um at least in my opinion i think last year was it was a huge year and proving that this system is truly decentralized to an extent it could definitely be more decentralized but it's decentralized enough that a couple of companies can if it weren't able to to overtake it and yeah absolutely it's pretty amazing but it's still it's a it's amazing that it works it's been

amazing but it's still amazing it's an it's an ongoing battle a never-ending battle and will never end um but one thing that does have to end is this podcast because you have to go to another to your own um jw i really appreciate your time today uh it's been a very enlightening and interesting conversation i think uh my audience is gonna gonna love it when i post it uh when i post it to itunes awesome awesome yeah thanks for having me man i've been uh i've been listening to your podcast for a while now and really enjoy it and uh keep up the good work if uh if anybody wants to hit me up uh to ask me any question uh or anything that we've talked about uh which has been a lot uh or just you know just call me out as a freak for uh for not loving the government

as much as i should uh it's uh you can hit me up at weatherman i am on twitter awesome and then you can find me at marty bent uh on twitter as well and then if you uh if you like this episode if you like this podcast subscribe uh leave a review um let me know how we're doing and i'll keep iterating on this and i'm sorry i haven't put out any episodes in a few weeks this is the first one in a few weeks but i'm trying to get more guests so if you have anybody in the new york area and actually this was the first time we did a we did a video conference i'm actually happy with how it went um so uh yeah that's all we have for today peace and love