The Changelog: Software Development, Open Source - Bisq, the decentralized Bitcoin exchange (Interview)

Episode Date: November 3, 2017

Chris Beams joins the show to talk about Bisq, the P2P decentralized Bitcoin exchange and open-source desktop application that allows you to buy and sell bitcoins in exchange for national currencies, or alternative crypto currencies. We get some background on the issues faced by crypto exchanges like CoinBase, and the now defunkt Mt. Gox. We discuss whether or not Bitcoin is a censorship resistant payment system and what it means to have anonymous transaction currency options. Bisq also has an interesting white paper about its own DAO (Decentralized Autonomous Organization) to support its contributors and we discuss that in detail at the end of the episode.

Bandwidth for Changelog is provided by Fastly. Learn more at fastly.com. And we're hosted on Linode servers. Head to linode.com slash changelog. This episode is brought to you by Bugsnag. Bugsnag is mission control for software quality. And on this segment, I'm talking with James Smith, co-founder and CEO of Bugsnag, about the core problem they're solving for software teams

and why you should head to bugsnag.com slash changelog to test it out with your team. Let's start with, you mentioned you and Simon. So you guys obviously at one point didn't have this company, right? So as founders, as engineers, you got to a problem. What was that problem? Why does Bugsnag exist? Simon and I, my co-founder, I met in college. We went off to build software for other companies. I ended up in a startup. He ended up in enterprise software. And we had the same problem in both of these companies. When things break, it's really hard to figure out how badly they're broken, who's impacted and what to fix first. So we both had this problem ourselves. So we decided, hey, why is no one doing a good job of fixing this problem right now? So very much Bugsnag was born out of scratching our own itch,

as they say. One thing that we find all the time is that there's this tension in software teams or in product companies where you want to deliver new features to your customers, or you want to build cool new stuff. But at the same time, you've got to fix bugs because no matter how good a coder you are, you're going to introduce bugs. But there's no clear definition of where to set that slider. Should I be fixing bugs now, or should I be releasing features? And so this tension exists, I think, in all product teams, all software teams. If you don't have a tool like Bugsnag, it's very difficult for you to figure out where to spend time. And so that's the idea here is we're trying to help teams understand

whether they should be building or fixing because there's a bit of a delicate balance between both. Absolutely. I couldn't agree more. So if your team is unsure of how to spend their time building or fixing, give Bugsnag a try. It's free to get started with a 45-day extended trial exclusive to our listeners. Head to Bugsnag.com slash changelog. You're listening to the ChangeLog, a podcast featuring the hackers, leaders, and innovators of open source. I'm Adam Stachowiak, editor-in-chief of ChangeLog. On today's show, we're talking with Chris Beams about BISC, an open source desktop application that allows you to buy and sell bitcoins in exchange for national fiat currencies or also alternative cryptocurrencies. We get some background on the issues faced by cryptocurrency exchanges like Coinbase

and the now defunct Mt. Gox. We also discuss whether or not Bitcoin is a censorship-resistant payment system and what it means to have anonymous transaction currency options out there. BISC also has an interesting white paper about its own DA of support contributors. We discuss that in full detail at the end of this episode. Chris, we're talking about BISC, previously BitSquare. Why don't you tell us about the naming and why y'all decided to change it? Yeah, so the project has been around now for about three and a half years. And most of that time it had been under the name BitSquare, which people may have heard of if they've been around the Bitcoin space at all.

And the reason that it was called BitSquare in the beginning is because it was kind of a play on the idea of what's come to be known as Satoshi squares in the Bitcoin world. And what Satoshi Squares were, people might know the name Satoshi, like Satoshi Nakamoto, the founder of, you know, the creator of Bitcoin. And people would form Satoshi Squares, which were in-person opportunities to exchange Bitcoin for whatever their local currency was, dollars or euros or what have you.

And they were just informal things, right? And so that's where the name came from was BitSquare, a way of having Satoshi Square-like interactions, peer-to-peer exchange of Bitcoin for national or fiat currency, but not having to do it in actual physical meat space, right? You know, doing it online, doing it on a proper peer-to-peer network. And then earlier this year, we changed the name because BitSquare was a potential overlap with a certain trademark-holding financial services company that people might be able to guess the name of

because BitSquare's name kind of intersects with it. And they asked us nicely if we might change the name. And so we did. And we just shortened it down to B-I-S-Q BISC, which is kind of an abbreviation of the original BitSquare. And it's a relatively unusual and sort of Google friendly name and so on. So that's how we got there. When you rename something like that, you often lose some people in that. How, how long ago was this rename and what is the downfall, I guess, of a rename? Yeah, that was, of course, the process itself takes a while, but it was happening starting around April of this year. And I'm not sure that we've lost so many people per se, but it is something that

there's just a cost to it, right? Because you have to continually repeat the fact that it's been changed. And you're always in the business of saying BISC, parenthetically, formerly known as BitSquare, right? So just the introduction of the project, much like the conversation we're having right now, it takes a while, right? Because you want to make sure to bring people into the fold that like had heard of the project before under its previous name and so on. But in, as we speak. It's been live in production for about 16, 17 months now. So people who had actually been using the application to do live trading had only known it as BitSquare for just a handful of months at that point. So BISC is an open source desktop app. had only known it as BitSquare for just a handful of months at that point. So BISC is an open source desktop app. Not only that, but it's also an exchange network, but it's the formation around it,

at least based on your white paper, the motivation around it is essentially around the censorship, the different things around the current ways in which you trade Bitcoin, right? Can you kind of give us the background to some degree of the problem with crypto exchanges, like Coinbase, et cetera, different places where you can actually go and do these original squares, which is kind of interesting how that came about? Yeah, so I'll get to, I'll talk about, you know, quote unquote centralized exchanges in just a second like you talk about. But just to get to first principles, like you're asking, you know, why did we create it the way that we did? And that's, it's because it's really modeled after Bitcoin itself, right? So we wanted to build the exchange that the Bitcoin network needed in our minds.

And what does that mean? Well, Bitcoin itself is this remarkably censorship-resistant network. It's really designed as such, right? It's global. It's, at this point, by all accounts, unstoppable, right? It's definitely powered through different governments and different agencies, you know, considering ways to take it down or attack it and so on. We'll probably see lots and lots more of that over the years to come. But for, you know,

essentially zero downtime on the network since January of 2009, the Bitcoin blockchain has just been running along more or less smoothly, right? And we thought that that's exactly the kind of exchange that we wanted to build, was something that's just as permissionless, privacy respecting, and indeed censorship resistant as Bitcoin itself. And what we've seen emerge, right, since the, you know, since Bitcoin essentially first got a price, you know, around 2010, the network was running for, you know, many months before anybody ever actually exchanged Bitcoin for value. And pretty much the moment that began, the first exchanges started popping up. And if people know anything about this space,

they probably know at least the headlines that they read in 2013 about the Mt. Gox exchange, which was responsible for something like on the order of, you know, $700 million worth of Bitcoin being stolen. Of course, the reason that that was possible for Bitcoin to be stolen is because when you're dealing with a centralized exchange, meaning, by the way, a website, right, fundamentally a web app, where, you know, where three parties are involved, the person who wants to sell, the person who wants to buy, and the exchange itself. When things are designed that way, the exchange has to have custodial control over the user's Bitcoin for at least some period of time. And typically, just for reasons of convenience, people would keep their Bitcoin on the exchange for much longer than just the moment that was necessary to match a trade and then cash out.

So when Mt. Gox was hacked back then in 2013, something like the tune of $700 million worth of Bitcoin were under the control of Mt. Gox. And that fundamentally means the private keys that were capable of spending that Bitcoin were in the control of Mt. Gox. So that's basically a great big honeypot. It's like there's 700 million reasons that an exchange like Mt. Gox would get hacked. And it's utterly predictable that the beatings will continue, right? If the sort of architecture doesn't change. And of course, that's exactly what's happened, right? You know, over the years, there's been an almost predictable pace of exchanges getting hacked and various amounts getting stolen and so on.

It's just the nature of the beast, right? When there's enough value in a given system or location that can be hacked, it probably will be hacked. And so that's always been our motivation is that's the security side of BISC, right? Is the security of users' funds. We want to make sure that people can actually fulfill the promise of Bitcoin, which is, you know, people sometimes say, be your own bank, right, that you can actually keep custodial control of your own private keys, your own Bitcoin, and you can have as much security as you can manage, right? So, you know,

assuming you have well put together operational security practices, you're using things like hardware wallets or air-gapped computers or, you know, whatever it is that you deem appropriate to secure however many Bitcoin it is that you have, you have that full control, you have that full capability. And, you know, the BISC application never, never maintains control. It never has the capability. And, you know, the BISC application never, never maintains control. It never has the opportunity to steal your funds because it never holds your funds. It's just between you and your counterparty, essentially. Yeah. I have a couple of questions breaking off of this. The first one,

perhaps speculative a little bit with regards to exchanges being hacked. And the analogy between a cryptocurrency exchange having custodial control over your wallet or really your keys at that point in order to have access to trade that coin is very similar to banks, right? Like you said, be your own bank. Well, with a Coinbase or a Bitstamp or a Mt. Gox or whatever, you're allowing them to be your bank to a certain degree.

And that's problematic. And like you said, the more honey that's in the pot, the more attackers are going to come after those things. I guess my question would be, why don't we have more historical banks being hacked? Like our Bank of America and our First National. Now I'm, of course, putting this in an American context, but they are very literally banks and they have online presences and they have web apps.

And so why is everybody going after Bitcoin exchanges and not after places where you can get cold, hard cash? Is it because of, well, I'll just leave it there and see what you think. Yeah, I'm certainly not an expert in the space of traditional physical banks getting robbed. But just to hazard an answer at this, I think to some degree, banks do still get robbed. Literally people coming in and saying, put all the money in the bag. It doesn't sound like a physical hack. Yeah, I don't think that's a done deal.

And I think the reason that that still happens, however high risk that may be, I don't know how many people successfully get away with it. But, of course, the reason, as one famous bank robber was asked, you know, why do you rob banks? That's where the money is. Right. why do you rob banks? That's where the money is. And it is still where the money is, at least to the extent of cash bills in a cashier's drawer. So you actually can get the honey out of the pot. But I think when we, and this is where I'll quickly get out of my depth. So anybody who actually is working for a bank, my apologies ahead of time. But I imagine the reason that we don't see people hacking into Bank of America's servers and so on

and, quote, stealing all the money is because what they're stealing would be entries in a database representing… Transactions. Yeah, representing transactions, representing ultimately their kind of fractional reserves and so on. The money itself, the money itself is not a digital thing, a digital asset that can be taken away in a bag, if you will, in a digital bag, when what's there is actually private keys, like files, you know, it would also maybe entries in a database, but, you know, strings of numbers and letters representing a private key. You can actually take those and run away and spend the Bitcoin that they have access to. Right. That's just there's no correlate, I think, in the sort of today's world it's so hard to to see what you're saying there about traditional banking and that you're not actually stealing funds because so much what we

do is removed from actual cash you know we don't often there's some people out there who live by cash and spend only cash but the large majority of the world relies on some sort of market like you know visa mastercard american express some sort of credit card type system that ensures secure payments or some sort of digital way to to do a transaction so we're in we're so used to not actually spending real cash hand to hand and so it's hard to see that, that it's not digital. Yeah, it sure feels digital when you log into your online banking or swipe your card here or what have you. But in the end, it's not a natively digital money,

which is the big difference. So let's get back to the point about being your own bank and we'll branch off into here. And this is where I think BISC is interesting to me as I think that you guys are doing and hopefully it's successful. And what I think is providing the power to decide to more people. Because if you look at the trade-offs between centralized exchange and you say, why are people using these? And you even said it yourself, it's because of the convenience. It's because of the access.

And a lot of times that convenience isn't, this is simply easier for me to do, but it's actually accessible in terms of I don't know how to do it on my own. It's too difficult. And so this is not just convenient for me, it's actually enabling me to do something that I couldn't do on my own. We've seen a lot of hacks and we've seen a lot of, you know, even recently Ethereum, I think somebody drained 31 million from the, from some Ethereum wallets. You mentioned the big one with Mt. Gox, with Bitcoin. The other thing we see a lot is people losing their own coins, right? They lose their private keys and they've got them in three places and in the safety deposit box. And I just saw a Reddit thread the other day where a guy still managed to, you know,

basically lose his entire Bitcoin wallet, which I think was sizable, by the way. Even despite all of these different steps you've taken by doing something that I don't recall the details, but it's really hard. I mean, even for technical people, it's hard to get it right and to keep it right and not lose your stuff because you're personally a really bad bank, you know? So is BISC trying to make that easier for regular Joes?

Yeah, yeah. I think it's only going to get harder, by the way. I mean, especially for people who have growing amounts of value. I mean, it's actually a real challenge to fully, properly secure Bitcoin in any case. Real quick, Chris, can you break that down for us and just explain? I've assumed our listeners all understand the problem with the keys. Can you just lay it out? What would happen? How can I go about just losing Bitcoin that I have in a personal application. And I've sent you some Bitcoin, yeah, just to get you started. And so now you have, you know, 0.1 Bitcoin or something like that sitting in that wallet. And five minutes later, your machine melts down, right? And it's just unrecoverable disk failure. And your time machine hasn't had time to back it up or whatever.

You don't have any backup of it. That wallet on that computer was the only home of the private keys that can spend the Bitcoin that I transferred to you. I signed a transaction using my Bitcoin private keys that spent the Bitcoin to your address in that wallet, right? I sent it to your public address and only that wallet has the private key that can then subsequently sign again and send it to somebody else, right? And so if that private key is gone, your money is gone, gone, gone, gone, gone. Now, there's a little bit better news, right? These days, right? And for the last number of years, there's been really clever solutions that have come along.

When you set up a modern wallet today, if it's a good one, the first thing that's going to walk you through is this process of setting up so-called seed words, which are typically a 12 word sequence or sometimes even a 24 word sequence that those words, in addition, you know, of course, you have a password or whatever that unlocks the wallet. But these words are much more powerful than a password because those words alone can actually completely recreate a wallet, including essentially all of the private keys that are necessary to spend that Bitcoin. And that's a really clever piece of engineering and math that makes that possible. today is people set up a wallet, they get their seed words, and they must write down those seed words like pen and paper, never, ever, ever storing those words on a digital device of any kind, right? Store that piece of paper somewhere utterly secure, right? Whether it's your bank's

safe deposit box or whatever you know, whatever it is that you deem to be the most secure location that you can possibly imagine. Take a hole in your backyard. Right? Yeah. You know, hopefully not co-located with your, not co-located with your machine, you know, not in your, not in your same house and so on. Right. So, so, so that's, you know, that's getting a little bit closer to the state of the art with with security around around yeah that's interesting you know a multi-word sequence is it uh granted to the person or can they do select it yeah does somebody said you know select it or the quick brown fox jumped over the dog or whatever no it's generated it's generated. It's generated from a kind of a set of words that

has a particular kind of entropy profile that with 12 words, you have enough, you can capture enough entropy to essentially recreate those private keys. I don't fully understand how it all works. I just know that it works. But you definitely don't get to choose right because if you're choosing that's also generally poor security yeah i was thinking like someone will choose a famous quote from a movie and then hackers can just use a list of famous things that anybody can easily google and there's millions of results for for example what you said with uh that's where the money is if you know if you had a phrase like that that was actually 12 words versus five, that might be something that people can store in a text file

and just randomly parse it and brute force. Right. People will just have the word password 12 times. Password, password, password, password. People are generally a lot less clever than we think we are. When we're trying to make up a good password, we're far more predictable than we think we are. Is that technology in the wallet? Or where's that technology at?

That recreation of the wallet? Is that in the protocol of Bitcoin? Or where's that living at? That's a Bitcoin standard, right? You know, Bitcoin kind of has this so-called Bitcoin improvement process. So you see these proposals get put together about ways to enhance the overall Bitcoin ecosystem or Bitcoin protocol or certain things that wallet providers can standardize on like this seed words approach. So that's usually something that's proposed by people who are pretty close, you know, sort of core Bitcoin developers who understand what's possible with the technology. And they'll write it up, you know, maybe give a presentation on it or something like that.

And then often, you know, leave it to the community to kind of pick up the idea and really run with it and take it through to, you know, the state that that stuff is in now, which is, you know, like a completely accepted standard. And anybody, anybody, you know, downloading a wallet today should expect seed word support. It's basically a broken wallet if it doesn't support that. And just by the way, you know, so the kind of, you know, sort of one ideal profile or, you know, kind of state of the art for security is not just the seed words, but a hardware wallet as well. Um, so you might have the wallet that you, that you spend and, you know, maybe people have a wallet on their phone that they keep basically some pocket money. And if you will, you know, enough to whatever it is, is, buying your coffee or paying a friend back or something like that. And that those wallets will have seed words too,

right? So you can, you can protect those funds. But when it comes to storing any kind of larger amount, you know, what's Bitcoin as we, as we speak today, it's around, you know, $4,500 per, per coin, right? So if you have, you know, even two or three of these things, much less 10 or 20 or more, that's not anything that you want or need to be carrying around on your person probably, right? So what people do is store those coins, the larger amounts for sure in a hardware wallet, which take different forms, but generally they're devices that can plug in via USB. They have, you know, dedicated, very simple chipsets that are, you know, just exactly for signing Bitcoin transactions and storing private keys and so on. So they're, you know, they can be

designed in a very security conscious fashion to make them as to make them as impenetrable as possible. And so you see products like Trezor or NanoLedger or what have you. These are hardware wallets that have become quite popular. And when you combine seed words and hardware wallets and all of this, you can actually begin to fulfill this promise for yourself of being your own bank. It is possible, but back to what started this thread of the conversation, we're still in pretty rarefied air, right? This is not easy for grandma or what have you at this point still. And so also to answer the question you asked along the way, is BISC on a mission to make that easier?

Frankly, no. That's not at all our kind of core value proposition, if you will. Of course, it's in our interest to make it as easy as possible, right? I don't think so, yeah. And I'd like to think that we've done a pretty decent job of that, but given that we're actually adding quite a bit of complexity into the picture,

like you said, Coinbase or Bitstamp or any centralized exchange that people might choose to use today are extremely convenient by comparison to what they were a few years ago, and indeed by comparison to BISC. It's just a higher sort of profile of engagement that we have to ask the user to understand and comprehend and so on. There's a kind of essential complexity to doing this in a

peer-to-peer way that I don't think will ever be lower than the complexity, the essential complexity involved in interacting with a centralized exchange. And so we also don't think that's a fundamental problem, that there's that greater complexity complexity because what you're getting for it is greater privacy, indeed, much greater privacy with BISC. And that's really the core value proposition or sort of reason that BISC exists. We talked about security so far, right? Using BISC and using all those other things we were talking about is a great way to make sure that your funds don't get stolen and can't be stolen. You're eliminating a trusted third party. You're eliminating a security hole by taking the centralized exchange out of the loop. That's great. That's security, right? But then there's

privacy. And that's where we get back to the beginning with bitcoin and saying you know we have this this this amazing you know global blockchain etc etc it's all permissionless it it it does for money what the internet did for information right it at least has the potential to do for money what the the blockchain and bitcoin has a potential to do for money, what the blockchain and Bitcoin has a potential to do for money, what the internet did for information. If you think about pre-web, we had a select set of gatekeepers, media organizations, TV, radio, news outlets, et cetera. Post-web, I have an explosion of people becoming their own TV, radio, news, and consuming the TV and radio and news of other sort of self-producers and self-publishers. That dream of the internet and the web has been totally realized and continues to be realized to ever greater degrees today. And where we are now, certainly where we were in 2008, 2009, was very much like we were in the kind of media landscape pre-internet with regard to banks and money and finance and so on, right?

There's gatekeepers, there's a few banks, there's financial institutions, there's governments, there's regulatory bodies, et cetera. And they have a whole lot to say about what's possible with your money, with money in general, and so on. And that's why Bitcoin has been so deeply exciting to so many technologists, right? A glance at the news today is all about the price and all about an 18-year-old kid who got rich because he bought $1,000 worth of Bitcoin when he graduated high school or whatever it was five years ago. Those are fun stories and, of course, are sensational. And it's also true, right? People have made a lot of money. But why did all of these people get engaged? And why have all these people been in this space now for years and years? And it's because of what's possible, right? It's

because of that amazing promise of what happens when we have essentially the internet of money, if you will, or more broadly, the internet of value exchange, right? We now have the possibility to exchange value at a distance, right? With people who we don't have a high degree of trust with. And that was simply not possible prior to Bitcoin without having a trusted third party, some intermediary, a PayPal, if you will,

right, in the middle. So if that's what Bitcoin made possible, it starts to make sense why we thought BISC was so important because you want to have the ingress and egress from that system, right? Getting into Bitcoin from fiat, right? People call national currencies fiat in the space. If people aren't familiar with the term, right? So US dollars, yen, euros, whatever, that's all fiat money. Getting into Bitcoin from fiat, so buying Bitcoin for dollars, getting out of Bitcoin, selling your Bitcoin for dollars or euros, that's a really important part of the system. It's not Bitcoin itself. It's this kind of ancillary thing at

the edges. But it's incredibly important because as people exchange that money, and if they're doing it via, say, a centralized exchange, if they're doing it in anything other than a person to person or peer to peer over the internet way, then somebody else besides you and your counterparty knows about that transaction, has a record of that transaction. And centralized exchanges are, the vast majority of them, subject to regulations that say they have to know their customer, they have to get ID verifications. This isn't perfectly true, but in many, many cases, most cases, you're dealing with requirements where people have had to give their identities to these organizations. And that information can get out, right? And does get out. It can get out via hacks, right? You can get doxed. It can get out via government requests. It can get out in a number of ways. It's just as vulnerable as the Bitcoin that you're storing there, actually. When you couple that,

that privacy risk, with the fact that Bitcoin is itself a totally transparent system of value exchange, in that it's a perfectly trackable, perfectly traceable. You can follow the coin through every single transaction on the blockchain. Putting your name, having the possibility of putting your name and personal information on any one transaction, especially say the first transaction where you buy your first Bitcoin or any time you buy a new Bitcoin, that means that it's possible for entities that you might not want to be able to, to track that coin all the way through the Bitcoin blockchain. And that does happen.

That technology is getting more and more sophisticated as we speak. So-called chain analysis systems and companies, that's what they do. So BISC's raison d'etre here, like really why does it exist? It's for the protection of individual privacy, to give people who want it, people who need it, people who value it the ability to get in and out of bitcoin without ever you know putting their personal information on these transactions so in today's world right or i guess if we're not talking about cryptocurrency that kind of coin we're talking about dollars just to use this example my information is not held private right if i spend it on a credit card mx knows who i am they have a profile built around me that kind of thing if it's uh bitcoin spent through bisque it's

private right it was the point of privacy help me and the rest of the world understand i guess the downside of not being private. Aside from like doxing, like what is it the marketing profile? What are the concerns of privacy? Is it just anonymity? Is it doing shady things? Like what's the point of privacy? Yeah.

Yeah. It always bears digging into that because it's for better or for worse, it's not always so obvious today. You're saying a few minutes ago in the interview, a lot of people don't really use cash these days. Plenty of people just pay by credit card and so on. And in many places, there's a kind of war on cash. You see this with the demonetization, you know, policies have been being rolled out in India and so on. Many countries across the world are basically disincentivizing people to use cash. And there's a variety of reasons for that. But one of the effects of that is that increasingly in that environment, people's financial transactions are under surveillance, right? It's possible to know and indeed known, right, what you're spending your money on

at any given moment, right? You know, probably Visa isn't sharing that information with anyone, but they can, right? And again, things can be hacked and so on, right? And they certainly do, you know, given certain conditions, right? So, why does it matter? Well, the reason I was explaining that is that we've been in this environment for a long time, right? We've all been, you know, not because the US government has been demonetizing the dollar necessarily, but just by choice and convenience. People have just more or less happily moved to using credit cards. I use credit cards. You know, it's useful stuff.

There's nothing wrong with it, right? But the effect that that has is that we increasingly forget over time, well, what value did cash ever have, right? What is the value of a private financial transaction? And I think it's useful here to just jump outside of money for a moment and ask the question, what is the value of any private interaction at all, right? So when, you know, it's been a while probably since many people listening to this have sent a physical letter to a friend or a relative or something like that, but we've probably all done it a time or two. When you send a letter, you put it in an envelope and you seal that envelope. Doing that doesn't indicate that you're doing something nefarious or that you're breaking any laws, but it's rather the norm.

When it comes to sending physical mail, it's a norm. We've grown up in a culture of privacy in that situation where people would think it quite strange if they just took the whole letter, not an envelope, and just slapped a stamp on it, that would feel, hey, every postal handler from here to Poughkeepsie or wherever it's going can read my mail. I don't want to do that. That's the way postcards work, but mostly people don't write anything of great importance on a postcard. But people do bare their souls, talk about what's important to them or troubles that they're having, etc. in letters. If we take that world of communication and communication privacy to the online world, it's a very different world, right? Because it just happens to be that email, which of course we all use a whole lot, basically never had a good envelope, right? So we live in a culture of openness by default. And we don't think about

it that way. When we send an email, we have this kind of false sense that it's private, you know, because it's just going to the person that I send it to. But if we know anything from the revelations over the last years, you know, Snowden and all the rest, it's the writing couldn't be written larger on the wall that all your emails are belong to us, right? You know, it says, name an agency. So we live in a world, I wouldn't say for better or worse, I would say definitely for the worse, right? Where everything you do online,

certainly with email and in many other contexts, is per default, non-private, per default open. We see money no different than this. We see digital monies, virtual currencies, cryptocurrencies as no different than the kinds of transactions and interactions people have with speech, with written language, etc. The fact that I'm buying a coffee or sending some money to my brother to take care of his family was just in a... We were talking about Houston and Hurricane Harvey before the call started, right? Transferring money to my family to help them out in such a scenario or what have you. That's just nobody's business but my own and my family's. So there's actually one argument for privacy is that it's a right and there actually need be no argument for it. It need not be justified any further than no one has the right to force me or to force anyone to be open.

One ought to have the right to privacy, and that's actually enshrined in the United Nations statement on human rights and so on, and in a number of other contexts, including the U.S. Constitution and so on, the right to privacy is a long-held tradition. And it just happens to be that we've been trending and drifting in this direction, especially as the online world has come to prominence and things like email. We've sort of forgotten about it. We just happen not to be in that private by default environment that physical mail used to be. And there's no reason not to be private when it comes to Bitcoin. And there's actually every reason to be private because, well, do we really want, do we really trust, right? Whether it's the centralized exchanges, you know, generally they're just businesses trying to get along, keep customers,

keep people happy. Mostly, there's nothing nefarious going on with centralized exchanges. But those become information honeypots for other entities, other players, governments, or whomever they may be. People say, I have nothing to hide. Yeah, well, okay. Does that mean that we ought to just open everything up and give all of our data to anybody who might come along and want it for any reason in the future? Right? And that's a big argument for privacy, by the way, is that the environment that we live in today, especially very lucky people like ourselves, right? Living in the States. I'm from the States. I live in Europe now. But in general, we live, you know, people listening to this podcast will tend to be people who are living in reasonable enough jurisdictions, right? That probably the most draconian versions of, you know, crackdowns and so on don't happen to individuals.

That's not true of everybody else in the world. And it may or may not be true in the future for ourselves or for our families or for our children. So we can't predict the future. We don't know what's going to happen. And you don't need and value privacy sometimes until you absolutely wish that you had had it. Right. So those are those are a few reasons. Coming up, we talk about BISC, the software, what it is, how it works, and what it's built with. Chris breaks down the peer-to-peer aspect of BISC and how you get fiat currency into the network, altcoins, crypto fiat exchanges, and yes, they even support exchanging for Dogecoin. We'll be right back. This episode is brought to you by DigitalOcean, who just launched Spaces, a beautifully simple object storage service that's designed for those who want a simple way to store and serve a vast amount of data, such as hosting website assets, storing user-generated content like images and large media files, archiving backups in the cloud and storing logs. Just like you're using S3, you can use DigitalOcean Spaces. And in fact, you can use S3 and DigitalOcean Spaces at the same time

so you don't have a single point of failure. This is a standalone service. No droplet is needed and pricing is extremely competitive. To make it easy to try for both new and existing DigitalOcean customers, you can get started today with a free two-month trial of spaces by going to do.co slash changelog and by top towel top towel is the best place to work as a freelancer or hire the top three percent of freelance talent out there for developers designers and finance experts in this segment i talk with josh chapman a freelance finance

consultant at toptow about the work he does and how toptow helps him legitimize being a freelancer take a listen yeah in my arena within toptow i specialize in everything from market research to business plan creation to pitch decks to financial modeling, valuation, and then that leads very naturally into fundraising strategy, capital raising strategy, investor outreach, closing a deal, deal negotiation, how to value the company, how to negotiate that. And all those skill sets that I have continued to hone over on the TopTal side are ones that I actually deploy every single day in my own company. Freelancing can sometimes be seen as not legitimate or subpar work. Now, I would argue that when you work with a company like TopTal, they put so much vetting into not only the companies that you work with, but also

the talent that you work with, which I'm on the talent side, that it adds a level of legitimacy that isn't seen across other platforms. And that for me, as the talent side, is incredibly fruitful and awesome to be a part of, right? I enjoy the clients. I enjoy the other talent that I get to talk to. I enjoy the TopTal team. And that creates an overall positive experience, not only for TopTal, but for me as the talent and for the client as the company on the other side. And that is really not seen or is the experience across other platforms in the freelance market. So if you're looking to freelance or you're looking to gain access to a network of top industry experts in development, design, or finance, head to TopTal.com. That's T-O-P-T-A-L.com

and tell them Adam from the Change Law sent you. For those wanting a more personalC, the software, Chris. One thing you said earlier on was that BISC is inherently more complex than using an exchange because you're adding more bits that have to be peer-to-peer. Whereas with an exchange, you have a centralized authority. So tell us about the software itself, especially I think where I get to where I see the complexity as a developer is, oh, we have to actually move money between the banking world and this world somehow. We have to get fiat money in and out

of a system. That does sound like complexities to me. So tell us what you guys have been doing with BISC and how it works and all that. Yeah. So you could call it a hard problem. I think it's fair to call doing what we refer to as crypto fiat exchanges, trades, in a truly peer-to-peer way, a truly decentralized way, is like an official hard problem. And it's one that many thought basically can't be done. if you're willing to make the right concessions and the right compromises and know where the limits of the programmatic are and know where the human must enter the picture. So BISC really embraces the idea that when we're dealing with fiat currencies and bank accounts and the rest, there just has to be human interaction at some points. We can't automate everything. We might be able to automate more if banks were, say, much more modern than they are. If banks had APIs and standardized ways of debiting and crediting things.

If we didn't have to log into a web UI every time we wanted to do something, we might be able to do more in an automated fashion, but that's not the world we live in, right? So in BISC, you know, if you're, and one thing that we haven't mentioned yet is like, you know, like what actually is the application? So yeah, it's a desktop application.

It's a JavaFX application, meaning, you know, feels more or less like, you know, just any app. But it means that it's cross-platform and, you know, looks and behaves and so on. The same across Windows and Linux and Mac. Just by the way, that's the kind of nature of the beast is JavaFX desktop application. And when you're first setting it up, right, you're putting information into it like your bank account, right? If you want to ever sell a Bitcoin over a BISC, that means that you're going to receive somebody else's fiat money, right? So it's going to come into wherever you bank, Capital One or something like that. So you're going to need to put in the account number and just exactly however much information is necessary for that particular payment method to become possible.

So for example, there are other what are often called person-to-person payment systems like Clear Exchange, or it's now called Zelle, is a system that a number of banks, bigger banks especially in the U.S., have adopted that allows their customers to transfer direct – it's going through third parties, but directly in the loose sense of the word, I want to send a hundred bucks to this email address, right? And so if your bank supports Zelle and your counterparty's bank supports Zelle, then you can just send money via an email address or via a phone number, right? And all the right stuff will happen between your two banks. So for example, that's a supported payment method in BISC is Zelle, right? So what you would be putting into your bank account information when you're setting up BISC there is just enough information, your email address or your phone number, the name of your bank, your first and last name, exactly the information that, say, Zelle requires, right? Because that's what your counterparty is going to need in order to

actually complete the transaction and send money into that account that you own. So that's one of the, quote, complexities, right, is setting up a bank account. But as you can see, it's kind of essential information. You would never be able to get the money if you didn't do that. Sure. So you could get away with doing just one bank account if that's all you have. If you wanted to support more payment methods, you had bank accounts in multiple countries or something like that,

then you would set up as many as you needed. So I'm assuming there's a limit to the banks that are supported and potentially an opportunity there for contributions in terms of you guys have Zelle. Looks like there's like you can do money orders, which is interesting.

Cash deposits. I'm just looking through your different payment methods in the app. But it's a limited list. It's probably 12 or so. Does that cover, you know, 80% of people's setups

or where are we at with regards to how many people can actually get a fiat account hooked into this? Perhaps ironically, the US is one of the sort of less rich environments. There's fewer options that really work in the US and I'll explain why in a moment. But in Europe, for example, there's a pretty almost universal system here in Europe called the SEPA system, S-E-P-A. And pretty much every bank player interoperates with SEPA. And it's a, you know, reliable and sort of reasonably fast thing,

within a day or so. And so in Europe, pretty much people just, you know, need to put in their bank accounts. And it's a kind of given that they're going to do it over a SEPA transfer, again, just through their bank's web UI. They can initiate a SEPA transfer to anybody else's bank account in Europe, right? So when we're talking about Europe, it's pretty easy, right? People just do SEPA or in the UK, there's faster payments, right? That's another one that you might see in the list there. So it really depends on the sort of geographical region, what payment systems are widely used. In the US, yeah, we have like postal orders and we have Zelle, which I mentioned a moment ago. But the limiting factor here, the reason why we have added

the payment methods that we have and that we have not added or indeed sometimes removed payment methods, other payment methods, is because the critical concern for us is chargeback risk. So, for example, PayPal is not a supported payment method in BISC because it's just too easy to do chargebacks in PayPal. So this invites scammers into the picture, right? They can more or less easily initiate a chargeback. And of course, after they have your Bitcoin, they can take their money back one way or another through PayPal. And of course, after they have your Bitcoin, they can take their money back, right, one way or another through PayPal. And because that's a kind of inherent risk, it's just, it's too great a hazard. We won't support it in the application. Whereas, say, a system like Zelle, right, so far, we've had exactly one chargeback ever, right, in thousands of trades and so on.

We basically only ever had one incident, right? We had one chargeback through Zelle, a totally isolated incident so far. And, you know, if we had another, right, we might take it down, right? It is, like, extremely important to us that nobody ever gets a chargeback. That's the kind of – that's why fiat is such a hard problem, right? It's not irreversible, right? Bitcoin transactions are immutable, irreversible things. Fiat transfers are not.

So what we're counting on here, and this is again where I say like knowing where to make the right concessions and compromises and analyzing the human side of things is we look at these payment methods and we're basically asking, how hard is it for a chargeback to happen? Almost all payment systems can one way or another make a chargeback happen. Well, because there's a third party there and they can just do it, right? But the ones that we support have proven themselves to be very unlikely to just frivolously greenlight a chargeback. The person's going to have to go through an extreme amount of diligence and really prove their case. And of course, if it's somebody trying to perpetrate a scam, they're not going to hold up to that scrutiny. So, yeah. So that's why you see the

payment methods that you do. And people suggest new payment methods and we take it through the same kind of scrutiny on our side, which is actually quite a bit of diligence. We're really trying to figure out, hey, how likely is it that something bad could happen with this payment method? So that's why we tend to take a conservative approach there. Gotcha. So you get in here, and we're just looking at it from a user perspective. Obviously, there's a lot of complexities on the software side. I think even just interfacing with those different payment methods, there's probably loads of stories in the code there, not just on the process and the decision-making around which

ones to support, but also just the grueling work of getting all those to work the way they ought to. If I can jump in there, it's actually simpler than you might think, and it might be a useful point of departure for actually digging into how BISC works. And it's also a nice point, you know, because we just finished talking about privacy. And the next thing we talk about is putting your bank account information into this app. And then, you know, well, that's going to get shared with other people, your counterparty, who else can see that information? This might seem like some kind of contradiction of the privacy

stuff I was just talking about a moment ago. But as it turns out, the information that you put in about your bank account, your Zelle information or whatever it may have been, is never seen by anybody except you and the trading counterparty who takes your offer. If you were making an offer to sell or if you're taking their offer to sell or buy, that one person, right, that one counterparty, that trading party, will see that information at the right moment in the trade, so that of course, they can actually initiate payment and send you the money, right? It has to happen at some moment, but they're getting that information in a totally peer-to-peer way, right?

So it's your BISC node sending it directly to their BISC node. It's useful to mention here that all BISC nodes are Tor hidden services. So this is being routed through the Tor network, right? Which we know to be quite a privacy-friendly place, quite a secure place, generally speaking. So that's, you know, and the information itself is encrypted, you know, only able to be decrypted by your counterparty and so on. So, yep, that

information has to make it across at some point, but it's done with the least amount of exposure possible. And certainly nobody that develops BISC or any of the arbitrators say they can't see any of that information when a trade is just happening normally. So maybe we could return to your question. Also just worth pointing out, just to make sure that I'm following well, that it's also only sent in transactions that are trading bitcoin for fiat right it's not like if i'm sending you bitcoin or i'm assuming can you trade other altcoins like bitcoin for ether with this or is it bitcoin only yeah i'm glad you asked that uh because definitely if you if you're looking at the you'll see lots and lots of um so- altcoins, right, or just other tokens besides Bitcoin. And for people who aren't familiar with this, there's something on the order of a thousand of these tokens out there, coins, tokens that go by these different terms.

And they can all be traded in more or less the same way that Bitcoin can. They're all fundamentally similar technologies. So every trade in BISC, one side of that trade is going to be Bitcoin, but the other side of the trade might be fiat, it might be Ether from the Ethereum world, or Monero, or one of these other altcoins, so they're called. So it's into and out of the Bitcoin world. That's right. And for completeness, I should actually say, it tends to be in practice that one side of every trade in BISC is Bitcoin. We've actually recently added support for additional kinds of what we call base pairs, right? So in the situation that I just described,

Bitcoin is the base of the trading pair. But we also support Dash, right, which is another popular cryptocurrency. We support Litecoin. We even have support for Dogecoin, which you guys may know and other people may not know is a kind of a meme, a kind of joke on cryptocurrency. But people use it, and it's even possible to trade against it as a base pair. Does it still hold any value? I remember it spiked back in the day, but I haven't been tracking. Is it still? I think it's trading pretty low. I actually don't follow it so closely. And as it turns out, no one's.

In fact, I think we haven't had even one trade against Doge as a base pair. Your online charts don't show any activity for it. Yeah. Yeah. We added those alternative base pairs over the last six months or so because I don't know if you guys sort of caught this level of depth in the Bitcoin world, but we saw transaction fees in Bitcoin going up and up and up. It was actually getting pretty expensive to move Bitcoin on the Bitcoin blockchain. And that's a whole world of conversation and debate about why that was and so on. But it was getting to the point where it was becoming almost prohibitively expensive to use BISC

because a BISC trade actually has several Bitcoin transactions are in the mix, right? You actually move Bitcoin around several times between the two trading parties. And when transaction fees were getting up to, you know, two and three and four dollars and more per transaction, it was like, hey, that's no good, right? So that's why, that's one of the reasons why we introduced things like Litecoin and Dash and so on, because they weren't suffering from those high transaction fees. These days, thankfully, transaction fees have returned to reasonable levels. And so there isn't a whole lot of reason for people to switch to those other base pairs unless they really have a particular interest in those coins. Yeah.

So the default is Bitcoin as a base pair, but we're talking about the transaction of your connection details for the fiat account. And I was saying that that's only sent between you and the transacting party in the case that one part of the pair is to a fiat account, right? If it's BTC to Dash, there's no reason to send that information over the wire in that case. Is that correct? That's exactly right. And if you look at the, it's all stored in protobuffer files. So if you sort of grep the strings in the protobuffer file that's representing that trade, which is sort of stored on this database underneath BISC.

And you grab the strings in there, you know, you sort of, you know, looked at it in some sort of plain text view, you would see that the only thing that ever crossed the wire in a Bitcoin Dash trade was the Dash address to send the money to, right? Or to send the coins,

or the Bitcoin address to send the coins to, whichever the case may have been. So yeah, in these cases, it's maximally private. We don't just sprinkle in the bank accounts that you've added for good measure, right? Right. And in the other case, that information, yeah, just to make it clear. The other place where that information also lives would be locally inside of the BISC application. I assume that that's also encrypted on disk on your computer? Yeah, actually, the database, those protobuffer files are not encrypted on disk. It's actually an open request. And there's a couple of things for us to work out to do that.

But there's nothing fundamental about not doing it. If you add a password, your wallet, right? If you add a password to get into BISC, then your wallet is definitely encrypted, right? So the actual Bitcoin that you're holding inside of BISC is certainly encrypted on disk. The trades themselves are not. Generally speaking, we say the answer know, the answer to that is, you know, just whole disk encryption and so on. But, you know, as one user recently pointed out, that works for you. But what about the counterparty, right? If he doesn't have

whole disk encryption, then, you know, your information is on his side. So it's actually, it's important and it's on our roadmap basically. So then the other aspect of this, which is I think worth talking about, you mentioned the Tor network. When you launch the application, you connect to a certain number of peers on the Tor network. And then it also lists your Bitcoin network peers. Then you have a list of offers and, well, offers to buy offers and sell offers. And so I'm just looking at it right now with a launch. Maybe there's half a dozen or so offers to buy and there's zero offers to sell.

I'm assuming. Yeah, you're looking at USD? Yeah, BTC USD. I can look at it real quick. On the Euro side, it's maybe the same to buy, and there's an offer to sell on the Euro side. So when it comes to moving money between fiat and BTC inside of BISC, you are limited, I'm asking this as a question,

you are limited to the other people who are also using BISC? Or is it open to the wider Bitcoin community, anybody with a Bitcoin wallet or an exchange? Help me understand why there are so few. Yeah, it's the former, right? So you can see offers and you can place offers, but the only people that are able to place offers So you can see offers and you can place offers, but the only people that will, the only people that are able to place offers for you to see or that will see the offers that you placed are other people who are running BISC. So there's not, for example, a kind of gateway into

BISC where we have access to other order books, right, from other exchanges or what have you, which would perhaps be possible, but would be a whole can of worms with regard to maintaining the same privacy and security profile that we have. It seems about the decentralization of it versus the centralization of it. Because if you cross that, you've now broken your corner rule,

which is the motivation for the whole thing. Right. On the other side, you have now broken your card and rule, which is the motivation for the whole thing. Right. On the other side, you have network effects limiting BISC. With the current size, maybe I do want to. I'm ready to buy Bitcoin to USD, but there's just no offers to sell out there. And so as a community, this is something that BISC, the network, needs to overcome in terms of volume for it to be feasible, you know, which is a chicken and egg type of a thing, is it not? Yeah, certainly. I mean, if one were to ask, like, what's the, you know, key limitations or something like that, you know, what's the downside of BISC, right? Well, you know, one is, hey, we're asking you to do more and think more and care more, right? And the reward is privacy and security, right? And if that's of interest to you, then, you know, BISC is for you, right? And if not, then that's one thing, right? The second thing is liquidity, right? Volume, the likelihood at any given. You know, it's a consistent, you know,

kind of predictable number that's actually growing over time. But we're talking about orders of magnitude, in some cases, fewer trades per day, let's say, than an exchange like Coinbase or an exchange like Bitstamp or Bitfinex or really any popular centralized exchange, they're moving thousands of Bitcoin for every one that we do, that BISC does. Now, in practice, it seems to be the case that people can get into BISC. I mean, just from looking at the trade statistics and so on, it seems to be the case that people can arrive at BISC, place a trade, or take somebody else's offer and get what it is that they were looking for. But it comes at a premium, right? It comes at the premium of time.

You might have to wait a little while for something to show up or for someone to take your order. When you're on a centralized platform, I mean, back to the convenience thing, these are automated matching, automated order book matching, where just the mere act of saying, I want to sell at market price this much Bitcoin, it's instantaneously matched for you because basically the exchange itself is accepting the order

and it knows that there's going to be enough liquidity on the other side to make the right match. There's enough volume for them to buy it essentially. They're essentially buying it, holding it, and that's why they're the target we talked about earlier. It feels more like you're trading at a volume where it's almost like the stock market where you look at the current price and you say buy or sell and there's guaranteed because there is enough volume that they're going to match that um that's right in fractions of a penny or whatever that's right and so anybody who's uh who's you know anything like approaching a serious

trader right so you know they're they're you know they have a trading journal they're thinking about it all day they're watching charts they're doing analysis you know all of this, they're thinking about it all day, they're watching charts, they're doing analysis, you know, all of this stuff, they're basically not going to be able to function in BISC because they simply couldn't act quickly enough to the movements in the price and so on that they're paying such close attention to. So for such a user, right, just to take the extreme example, right, of somebody who would basically be crippled by BISC, right? You basically can't do a day traders or a swing traders or just a kind of active traders work in BISC. It's simply not designed for it. But that doesn't mean that there isn't a role for BISC for such people, right? For someone like that, my recommendation would be as you're getting into Bitcoin, use BISC. Then move that Bitcoin to the exchange of your choice.

And again, different exchanges can have different levels of requirements about how much they ask from you. You're still exposing yourself. It's still lower privacy, but you could still use BISC to get in and out fundamentally. Likewise, if you simply need, if the trading that you're doing is between sort of crypto token or crypto asset pairs, that first Bitcoin that you get would be through BISC. And then you could use a platform like Shapeshift or some of these other kind of crypto to crypto exchanges. And then you have a really great sort of privacy profile there because your coins were never tainted with your personal information. And now you're just trading and moving stuff around in crypto land. But yeah, so just to be to be clear right so for like a

super active trader that's not what bisque is designed for it's designed for you know sort of normal individuals who are saying hey you know i i understand bitcoin i believe in in bitcoin and in the sort of larger crypto sort of uh space and i want to i want to get in and i want to do that in a privacy protecting way, in a secure way. And maybe just one more point on that is just come back to the volume question. Yeah, it's definitely where BISC needs to go, right? Is to increase the amount of, you know, the sort of depth of the order book and all of that stuff. The good news is that

it's basically happening, right? These things take time. Like I said, we've been up for 16 months, 17 months now, and we actually see a really nice curve. Not just, you know, if you guys have the app open, right? And if you're looking at the market sort of top level, and you look at trades, you'll see, by default, you'll see the kind of volume in BTC that's moved through the exchange

on a daily basis or a weekly basis or a monthly basis or what have you. And if you're looking at it in terms of weeks, say, it can be deceiving, right? Because you see the number of Bitcoin was kind of growing and growing and growing through June, and then it drops off in July. And then it's kind of growing and growing and growing through June, and then it drops off in

July. And then it's kind of slowly growing back up. Yeah. What were you going to say? I was going to say, wasn't there a hard fork or something? There was some sort of split. That's right. There was maybe a kind of chilling effect on trading. That was one aspect, but that's not the most important one. The most important one is that right about that time in July, the price started going through the roof, right? So the amount of Bitcoin that moves through an exchange like this isn't, you could say it's not actually the most important metric. The most important metric is how much of the value that people denominate their lives in

is moving through the exchange. And when you do the math, if you're looking, you know, I realize people on the call can't see this chart, but the point is, is that even though the amount of Bitcoin dropped in July and has been now slowly growing back up, it dropped, but disproportionately with the amount of, of, of, of increase in the price. So, so if we had a sort of amount of kind of like the effective amounts of US dollars that were moved through the exchange over those last many weeks, you actually see that being a chart that just goes up and up and up. So we actually have, you might not see it when you

first look at the application or even at our own kind of market statistics website. But in actual fact, we've been doubling the amount of value that moves through about every 3.5 months lately. So we're on quite a healthy growth trend there. And that means that it's ever more likely day by day as we continue to grow that as people come in and say i'd like to trade this for that it's all the more likely that they're going to get that that trade uh matched quickly yeah absolutely it seems to be growing and yeah uh the chart that we would love to see would be like what you said it would be a volume times amount, right? Like it would be the total, the amount per Bitcoin times the volume would be like the total transactions

in the marketplace valued appropriately versus just transaction count. Exactly, right. And you can see that when you look at it through, like if you show in that trades tab, if you just show, say, Euro trades, then you can see the, you see two charts. You see the price next to the BTC volume,

and you can see the price going up at least. It's still not the complete picture, but it's just kind of funny. It's sort of this super, super useful thing to graph, and we don't really have it in the app, but we have it in some spreadsheets, right? Right. Pull request welcome, I guess. Indeed. really have it in the app but we have it you know in some spreadsheets right like right pull request

welcome i guess indeed in this last segment we talk about the software as it relates to the community and how we can help out bisque is open. It's peer-to-peer, decentralized, secure, private, and censorship resistant, which are all things hackers value. We talk about the idea of open source projects funding themselves through the concept of a DAO, a decentralized autonomous organization, or an ICO, an initial coin offering.

And Chris breaks down their plan to fund BISC through the BISC DAO. This is as bleeding edge as it gets for funding open source. Stay tuned. This episode is brought to you by GoCD. GoCD is an open source continuous delivery server built by ThoughtWorks. It provides continuous delivery out of the box with its built-in pipelines, advanced traceability, and value stream visualization. With GoCD, you can easily model, orchestrate, and visualize complex workflows from end to end. It supports modern infrastructure with Elastic On-Demand Agents and cloud deployments. And their plug-in ecosystem ensures GoCD will work well in your unique environment. To learn more about GoCD, visit gocd.org slash changelog. It's open

source and free to use, and there's also professional support and enterprise add-ons available from ThoughtWorks. Once again, gocd.org slash changelog. Let's talk about the software in the community because you have a network effects problem. You have a value proposition, which is privacy and security, which are things that are valued by hackers around the world. And so no doubt you're trying to get more people involved in BISC, both as, you know, I'm going to hook up my fiat currencies and play some trades. But also the software itself, it's open source. The whole thing is about peer-to-peer and open. And you have some calls to action on your website. I think I'm probably looking at an outdated version of it,

but it does say you're actively looking for highly skilled developers and designers and security experts who can pitch in and help out. And so give us that lay of the land. How can we get involved? How can we help out? Why would we want to? Yeah, well, that's where it starts to get really exciting for me. I mean, I'm obviously excited about BISC itself, the exchange. I think it's a wonderful thing. It's what we're now rolling out, which is what we call the DAO, the BISC DAO, which for those who don't know, that

stands for Decentralized Autonomous Organization, DAO. This concept has also been called DAC, Decentralized Autonomous Corporation or company. But the kind of term of art that's emerged and kind of got this rough consensus these days in the space is this idea of a DAO. Okay, so what does that mean and how does that relate to people participating and contributing? So the idea of a DAO, if you just break down those terms, decentralized autonomous organization, well, we've talked so far about the application itself, which is definitely decentralized. The application is definitely peer-to-peer. It's nothing more than the node

of networks talking to each other, right? So it's certainly decentralized in that sense. What's not decentralized is the organization itself, the human side of the organization. And to date, we've had contributors coming and going over the years. Indeed, for myself, I got deeply involved with BISC when it was beginning in 2014, and I spent five or six months with the team in a kind of dedicated way. And then I left and did some other things. I was working with the Gradle team for people who know Java build systems, right, for about a year. And then I decided to come back and I decided to come back actually in large part because of what BISC is doing with this DAO. And so what does it

mean to decentralize the management, the operations, the development, all the human sides of making a piece of software? in particular. It's now possible for people to, like I said before, to engage with each other at a distance with a minimum of trust. So somebody working all the way across the world who is a JavaFX expert and wants to help improve the UI and put that chart in that we were just talking about. So far in the world of open source, right, the ways that that contribution was going to happen was A, it's just an industrious, helpful person over there with his JavaFX expertise and says, I want to contribute, you know, for the goodness of it all. And of course, this isn't so altruistic per se, right? It's great reputationally for people when they contribute to open source projects, even if they're not paid and so on.

It's a virtuous thing all around. Everybody wins usually in these kinds of scenarios. But it doesn't scale very well, right? Relying on just really helpful contributors, contributing all the things that a project needs can be difficult, right? Certainly some projects do it, but, you know, I think when we look at the most successful, you know, really world-changing open source projects that have been out there, there's usually at some point an entity behind them, right? A company is sponsoring them or they form a company or what have you. And this is really kind of personally important to me

because I've been working in open source for quite a while now, you know, for the last, well, 10 years plus, right? Every job that I've had has been with some sort of open source organization, usually fairly prominent ones. And so I've sort of seen all of the different incarnations of business models that attempt to get basically bolted on to open source organizations. So, for example, I worked with the Spring Framework team. Again, for people in Java, they'll maybe know that name, Application Framework, pretty popular one. And, you know, in the beginning, that was just a great set of ideas, really well implemented in an open source project. You know, quickly, the team

around that said, okay, let's find ways to make money. And we did, you know, the training and consulting approach, right? And, you know, that works, doesn't scale very well, doesn't make much money. Eventually we were acquired, you know, eventually there, and so on and so forth. So you sort of move through these different models, but none of them feel like a native business model for open source. It's always something kind of ancillary that you're doing, training, consulting, or selling your documentation, or looking for someone to acquire you and kind of be a patron ultimately for the project. What becomes possible now with cryptocurrencies and entities like DAOs is that open source projects can just fund themselves directly in a variety of ways,

right? And there's a whole bunch of models that are being experimented with right now. And you guys have probably heard something about it. And many people on the call or listening to this will have heard about this ICOs, right? Initial coin offerings that are happening where, like I said, like a thousand of these tokens exist and are being traded and dozens more are being created every day as people come up with all kinds of different experiments about how to fund projects, right? Most of that stuff is people funding essentially good ideas with good teams, hopefully. Of course, some of them are trying to fund bad ideas with bad teams. Some people are calling them scammers.

Yeah, for sure. And some percentage are actually out-and-out scams, right? I think a lot of people are too quick to say, oh, it's just all scams or something like that. Mostly, the things that you run into, I think it's still safe to say, are actually well-intentioned people saying, hey, I've got a bright idea. I've got some sort of notion of a kind of economics that I can add into this application that I can tokenize it, right? And I can build a legitimate way to fund the development of this project and people will hold this token and pay for, you know, using the application with the token or whatever different kind of model, right? So there's hours and hours and hours that we could talk about on all of those models, right? But what BISC is doing is something, I think,

if not unique, very unusual by comparison to this kind of norm that we've been seeing in the space. And basically, one thing that makes it unusual is that BISC is working, running software, right? You know, we've actually built the system. It's out there. It works. People use it.

And people are happy to pay to use it, right? When people initiate a trade, both on the maker side and the taker side, both counterparties, they pay a fee, right? They pay a fee into BISC in Bitcoin, right? And that fee goes to the arbitrators today, right? You know, I'm one of those arbitrators, right? The founder of BISC is one of the arbitrators. So people are willing to pay to use this application and this network because it's valuable to them to be able to trade, right? Same reason that people pay a fee on, you know, a centralized exchange, right?

So that works to a degree in terms of, you know, kind of economically incentivizing the development of the application that can, you know, help pay the bills and so on, if you will. But it doesn't scale very well with regard to getting that JavaFX, you know, UI person to come and contribute that chart implementation or fix that bug or whatever it is. And that's where, again, this idea of a DAO comes in. So what we're up to here and what we're rolling out is a token. We added a token into the sort of larger BISC system. And that token is actually something based on Bitcoin. This is something that is not a new idea,

but not a lot of people do. It's called a colored coin. And what that means is that each BSQ token, we actually call the token BISC as well, but it's sort of ticker symbol would be BSQ, all caps, right? Each BSQ token is actually backed by a small fraction of a Bitcoin, just a thousand Satoshis, right? Where a Satoshi is one hundred millionth of a Bitcoin, right? So a thousand of those, which is very, very, very small amounts of Bitcoin, actually backs this coin. So what this means is that, and before I get too much into the details

of what BISC is, what can you, what BSQ is, what can you do with it? Well, we haven't launched it yet, right? And I can kind of get into the details in the roadmap later. But when it's fully functional, what people will be able to do is buy BSQ, trade for BSQ on the BISC exchange. So they might trade Bitcoin for it. And with that BSQ, they'll be able to pay their trading fees at a lower rate than they would pay for it in Bitcoin. So it'll be a cost savings to them. They'll be able to do more trades more cheaply when they pay for them in BSQ. Okay. So what, right? What good does that do? Well, on the other side, right? And getting back to the original question that asked is you know we want to bring people and have more people contribute want to fully decentralize the operation and maintenance and

development of the whole network and the application and so on so this is the second role now of the bsq token the first role is that you can use it you can pay to use the application with it right so it's kind of access token in that way the second utility that it has is that you can be paid in it for the work that you do for BISC or on BISC. So somebody comes along and implements the chart that we were just talking about. They would, at the end of that month period, issue what we call a compensation request. And fundamentally, that's going to be a document saying, hey, I did this work, right? Might be a link to a pull request or one or more pull requests or commits, something like that. It says, hey, I contributed to the chart and it's merged.

And that took me this much time. And this is my market rates, what I usually get paid. Again, just sort of thinking in the units of currency that we denominate our lives in, hey, this was $1,000 worth of work for me. And then they would look at what the market price of BSQ is, and they would issue a compensation request for that amount of BSQ. What happens is then the DAO, the Decentralized Autonomous Organization, votes on his compensation request and anybody else's requests that were issued during that period. And they're voting in the affirmative or negative, right? Yes, we're going to pay for that work. No, we're not.

And people don't have any guarantee, right? How do you vote? Yeah. How do you vote technically, right? I could get into the technical details, I'd be happy to. But conceptually, just imagine that there's a tab in the application, actually in the same BISC client's application, where you're now in kind of DAO mode, and you're in the voting tab, and you have a list of the compensation requests in front of you that you can review. And you've got a kind of a, you know, yes, no checkbox just to maybe oversimplify it a little bit. But conceptually, that is what you'll be doing, saying, yes, I vote to have this happen. And might be skeptical mind here will be saying like, oh, my, oh, my goodness, this will just turn into a political nightmare and so on i've seen a lot of yeah i've seen a lot of conceptual uh roadblocks or maybe

speed bumps that uh as you're explaining this but um yeah i can i can either uh anticipate them and and teach them already or you can ask either way you like. Yeah, just continue with your explanation, and maybe we'll just round them up at the end, because we probably can't cover. I mean, these are new concepts. These are, like you said, experimentations. The exact models that will flow out of this are yet to be known. I think the idea is interesting.

Maybe the way you're going about it may have its own bumps, as you just mentioned. Yeah, it's definitely worth digging into all of those skeptical questions, whether or not we have time to do it. So far, of course, the team that's putting all this together, we're reasonably satisfied that we've actually addressed, that we sort of have an economic system here that is actually at least potentially sound, right? That doesn't have any obvious glaring faults. Now, time will tell, of course. But just to flesh it out a little bit more, right?

So the people that are voting, what are they voting with? Well, it's not just a radio, you know, sort of button in a UI and, you know, some entry in a distributed database. What they're actually voting with is their BSQ. So this is the third function of this token, right? The first one is that you can pay trading fees with it. Second one is that you can be paid in it. And the third one is that you can vote with it. And voting with BSQ is actually a Bitcoin transaction. It is actually literally the creation and signing and sending of a Bitcoin transaction. If you remember, BSQ is actually backed by Bitcoin underneath these tiny fraction per token. So it's a Bitcoin transaction with all the virtues of it,

right? All the irreversibility and all the transparency and all the verifiability and so on and so forth. It's now representing a vote. And I won't go deeper into the technical side of that, but it's important to understand that people are actually voting with their stake in BSQ. So for someone who has, say, just 100 BSQ, maybe they've just done some very small tasks a few times, they can vote, but they can vote proportionally. They can only vote with the power of 100 BSQ, whereas somebody who's been contributing to the project for years and has thousands or tens or hundreds of thousands of BSQ

can also at least potentially vote with all of that proportion as well. And that can create its own problems, of course, because if people can buy BSQ and buy up a whole lot of BSQ and they can manipulate the project, right? And that's why also part of the plan and part of the roadmap and the design is that reputation, right? Another function of BSQ here is that it's actually a proxy for reputation. So in the end, people will not only vote just proportional to the stake of BSQ that they have, like literally the number that they have, but they'll also vote in proportion to the reputation that they've demonstrably earned. They've been paid, let's say, X number of times in BSQ. They've been paid this amount of times

in BSQ. We count that not just as holding the BSQ, but as having been someone who earned BSQ, earned reputation. People had to agree that the work that you did was valuable. That's a measure of how, how, how, how sort of useful and trustworthy you are as a person in the network. So in the end, the voting arrangement will actually be mostly reputation based and only partially stake based. This, this takes a while to, to bootstrap and make, and make happen, right? But that's the plan. So if you start to put all of these pieces together and you start to see this kind of larger crypto economic system forming, then what you have is the ability for us as the current team, right? The current, actually very centralized team. Centralized, not that we're co-located with each other, right? But centralized in the sense of, you know, I'm playing a dozen roles and Manfred, the founder, is playing a dozen roles and there's only a few of us, right? So what this, the

opportunity that this affords is we can now do things like bounties, right? Like that's not a new concept in open source. But these bounties can be for an amount of BSQ or for a range of BSQ, say. And the only thing standing between a potential contributor and actually the realization of that bounty is doing the work, right? And of course, doing it in a fashion that's acceptable and actually accepted. That's a radical lowering of the barriers that we a traditional organization or company structure and being compensated economically for it. That doesn't happen today by and large. The idea of, of DAOs is that it makes that possible in a rather dramatic way, right? So the biggest challenge for us is being able to articulate this stuff and, you know, make it really clear and absorbable for people and so on, as you can tell, right? How long have I been in a monologue here, right? That's a challenge.

So that actually gets to my role. You know, what am I actually doing on the team? Like I mentioned, I just recently sort of rejoined in a serious way just over the last few months. And we've landed on the rather tongue-in-cheek kind of ironic oxymoronic sounding title of director of decentralization. As silly as it sounds, it turns out that's exactly what I don't think just BISC needs, but any organization, any open source project who wants to take this idea of decentralization out to its logical end

and really decentralize, not just the code, not just the network, but the people, the operation, the management, all of it. That never starts decentralized. That's always going to start with one or just a few people and then have to become decentralized. So it's funny to say it, right? But it actually does require a kind of centralized, you know, directing that process of decentralization. And when, you know directing that process of decentralization and when uh you know when

people are listening to this and they you know take a look at at the bisque website right bisque dot network is the website when they see that they'll you know they'll they'll be able to see all the links that take them to you know the the the boards of github issues you know we're using github and zenhub and just all modern stuff for this, where people will be able to see all the bounties. And they'll be able to see beyond just individual bounties. They'll be able to see what we call the roles that make up the BISC network, the kind of persistent, often privileged roles that are necessary to make a network like this happen. Because while it's just peer-to-peer code and anybody can just download the client and run it, well, there is a website, right? However simple it may be, there's a website, there's a domain name. The domain name costs money, you know.

There's just any number of the services and products that a team needs to consume. Somebody needs to have owner rights in GitHub. Somebody needs to operate a Twitter account, et cetera, et cetera, right? And so what we've put together here is not just individual bounties, hey, implement that better chart, but also roles, right? Be the Twitter account operator, right? And those roles, because there's a risk involved, right? You if somebody goes rogue here uh it's not just about that they don't get compensated that month but if they start you know disparaging the project or something like that on twitter you know that that's a real damage to the overall network right or at least potentially is

so for this reason there's yet another function of the BSQ token, which is bonding. So for people to take on a role that has this kind of potential risk involved, it's of importance to the network and so on, they'll put up a bond in BSQ that's in proportion to the, you know, kind of amount of risk that's involved to the network with somebody having the keys to Twitter or having the keys to our domain name registrar or what have you. Or for being an arbitrator, by the way. In the future, arbitrators will be bonded to the tune of probably hundreds of thousands of BSQ because arbitrators can potentially wreak havoc if they were a rogue actor. When you put all of this together, uh, you know, we're really excited that we have a kind of

arrangement that can properly incentivize, uh, good people to come and, and, and work and get paid and, and build something fantastic. Right. And, uh, and, right? And just one last thing on that is that if you think about being able to get bonded for one of these roles, being able to become the operator of the Twitter handle or whatever it may be, well, you have to first have BSQ, right? You first have to have this tokens.

And while you could potentially trade for them, but actually in the early days, what we call phase zero, which we're just rolling out right now of the DAO, trading is not possible. It's only earning that's possible. So the only way people would ever be able to become bonded and take on a very important role in the network is that they would have had to do things like bounties or just individual tasks earning bsq bit by bit until they've naturally demonstrated their value to the project so in this way we actually also think that we have a way to to build up you know a team largely of developers largely of technologists this is a deeply technical project right uh that

that are that are people who have just demonstrated value all along the way and then start to take on greater and greater responsibility as opposed to just saying, hey, get yourself enough BSQ and you can just do whatever, right? That doesn't work.

People can just buy it up. In the beginning, people can only earn it. Or even certain functions that don't require BSQ that is held, but like you said, it's earned. You can only buy this function, so to speak, with earned BSQ. Yeah, indeed. You're still paying your own way, but it's through earning, and the earning is by proving value. That's right. And you actually are kind of

touching on here the power of, well, basically programmable money, right? That we can encode into the logic of ESQ itself, certain semantics, right? Like, for uh, this isn't the way that it's designed right now, but it easily could be. And it may turn to this as we, as we actually roll this stuff out. It could be that the only people who have the right to vote are people who have newly minted BSQ. Uh, when you issue a compensation request and it gets accepted that's the issuance of new bsq actually new bsq come into existence when you uh get the compensation request accepted like voted in the affirmative and that's because by the way remember bsq is ultimately backed by bitcoin it's this colored coin riding on top of bitcoin well what that means is that when you issue a compensation request saying, hey, I want 10,000 BSQ for this

work, that means that you must actually spend the equivalent in Bitcoin of 10,000 BSQ. You have to actually issue a Bitcoin transaction for a thousand Satoshis, you know, times 10,000 BSQ. It actually costs money for people to issue compensation requests. And the reason that we do that, one, anti-spam, right? So that, you know, we don't just have people throwing compensation requests at us because it's free. People actually have to pay for it, which means that they're going to want to have a reasonable degree of certainty that this is going to be accepted, which means that they have all the correct social incentives to be out there talking to other people in the network and saying, hey, do you think this is good work? What should I ask for it,

et cetera, et cetera, because they don't want to waste that compensation request transaction fee, right? Well, when they do that and their compensation request gets accepted, that Bitcoin that they spent on the compensation request becomes BSQ, gets colored as BSQ by the logic in the BSQ validation processing software that we've built. So when I say newly issued, newly minted BSQ, what I actually mean there is somebody who just earned it. And because it's a blockchain, we can see the movement of every coin for all of time. We can know that the BSQ that that person, that contributor earned, has not moved anywhere. It hasn't been transferred to anybody else, say. So we can know that's the BSQ of somebody who just earned it. Maybe only

those people should be able to vote, right? And that is just an example of what you can do. Really, there are constraints, right? Not anything is possible, but there's a remarkable degree of creativity. And it begins to become evident just how limiting our current monetary world is. We don't have programmable money. Look at what we've done with being able to program the rest of the world. Here it comes. Here comes programmable money, right? I think that's probably a great place to end. here comes programmable money right i think that's uh

probably a great place to end here comes programmable money uh chris we have lots of little questions but i feel like honestly most of those are probably because this is just brand new to us conceptually even and so um y'all have put put hours in probably debating and discussing all the particular details. So I think we probably do in the service asking perhaps the layman's questions at this point have not have like digested any movie, even read the white paper about your guys's Dow. So probably just save those. We are definitely hit up against our time buffer, but we'd love to have you back on, maybe in a year, maybe in six months, and kind of look at BISC's DAO and how it's going

and how it's shooken out and maybe dive into all the particular details. Because what we'd like to ultimately know, first of all, is this going to work for you guys? And then can we extrapolate that to open source projects around the world of all shapes and sizes?

I think we could speculate right now whether or not this would work in certain circumstances, but I think perhaps if we have you back on with a little bit more experience, since it's rolling out as we speak, or probably by the time the show ships, it will be out there. But with some time, we can tell if this is going to be a model that makes sense for BISC.

Does that sound like something you'd be willing to do? I'd love to come back. And just to echo your point, right, that's exactly, that's kind of our highest aspiration here is if we can prove this out, this kind of DAO model for decentralizing the governance and the funding of a trading application, right? That's where it begins. Well, then the question becomes, what else can you do this with, right? And of course, we don't think it's limited at all to doing it just for a trading application. So if we can set any kind of example for ways that other applications can do this. And again, we think after all this kind of madness and irrational exuberance and people, you know, it's all natural. People are out there exploring and

trying different things with all these ICOs and so on. What we hope will come out on the other side is this kind of sober realization and remembrance that, you know, working software matters, right? And there's a reason that we value people who have saved up money and spent their time and sweat, you know, building something and then tokenizing it, right? You know, we've proved the concept and all that stuff. So if we can demonstrate that with BISC and, any kind of an example for people, I mean, that's a very high goal. But it really is sort of what I'm up to here and why I'm excited. Because, again, I've just sort of been through all of the different incarnations of attempts to monetize open source. And I think they're all inelegant and inefficient by comparison to what we can do in the future.

Very good. Let's leave it there, man. I think that a future will tell certainly high hopes, certainly very interested in how this may roll out. And thank you so much for joining us. My pleasure. Thank you guys.

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