Why Open Source Bitcoin Terrifies Governments

Added: 2026-05-15

[00:00:00]Ultimately, because it was open-sourced at some point, because the project was done in the open, it means that it has been audited more than uh most code out there to make sure that there is no backdoor, that there is nobody being able to control this thing in some way like the CIA would want to with a digital currency. Uh they would want to have access to surveil, right? They're an intelligence organization. That would be their intention. There is many other places that they would uh that that like essentially what I'm alluding to here is like stablecoins, CBDCs, these are the types of instruments as far as digital currency that would be much more intriguing to an organization like the CIA. And since it's been open-sourced, if there is anything uh wrong with it, it can be modified.

[00:00:52]You could download Bitcoin the Bitcoin um uh reference implementation, modify it however you want, as long as as it's compliant with the network that still exists, you will join back onto that network with that uh slight modification. If you change it uh the consensus of it, you'll be running entirely different network, and many people have done that exact thing. But that is part of what open open-source makes it way more transparent than um than what he's implying, right? And the hardware is a lot less important than the software in this case, right?

[00:01:30]Like they they both need to exist for Bitcoin to run. There needs to be people running full nodes and using Bitcoin nodes. But the software is what allows them to do that. And the software exists in repositories, and anyone can download it. Anybody can audit it. Anybody can look at it. And so, you begin to see that if you have questions around the validity of it, the safety of it, those can be answered because it is open-source. If it was closed-source, nobody should trust it. If Bitcoin was closed a closed source project, I wouldn't be talking about it right now.

[00:02:03]It's the only reason it exists in in the the scale that it is, the interest that it has, the future potential that it has is because it's open source. It's all because it's open source. If it was closed another closed source project, it would be like Google creating a money that is going to revolutionize the world. I wouldn't believe it. I wouldn't buy it because it wouldn't be able to fulfill that um that goal.

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[00:05:14]I love that. I want to make a quick detour because I'm curious uh what your thoughts on open sources and then come in just briefly back to that because it's so interesting because the TCP/IP protocol, like the the the the very foundation all the internet is built on, we all know that it's open source. Like the also the email protocols is basically open source.

[00:05:41]But then the clients or how should I say the the applications on top of the internet, like Google, Gmail, uh Facebook, like StreamYard what we're using now, where we're streaming to YouTube, like all those things are closed sourced.

[00:05:56]And I'm thinking a lot if this will be ending up also like that on Bitcoin, where Bitcoin underlying protocol is open sourced, underlying network and asset is open sourced, but then we are using more and more like closed sourced things as products on top of that. I mean, like Strike is one thing that's that's a whole different level of closed sourced because it's it's an it's an IOU basically, but most people just like having an exchange don't do all the things that most YouTubers actually preach in Bitcoin, like self-custody, running your own node, and all of that. How do you actually look at open source in the Bitcoin community and this kind of we use an open source open source protocol, but then using a closed sourced application to use the open source protocol?

[00:06:49]It's a really good question, and I think that's one that people should seriously be asking and thinking about. Like, you can it's not an exact comparison, but you could think of like an exchange that you hold your Bitcoin on as a closed source um application of Bitcoin. Because you don't really know like it's an internal ledger. It's it's not exactly it's not software, so it's not Well, I mean, it is, but it's not it's not a perfect analogy, but you could you could think of it in that way. And people don't want to hold Bitcoin on exchange. I mean, many people do, but Bitcoiners that understand the risks of it end up not wanting to do that because there has been dozens and dozens of exchange failures. So, there's instability with closed source systems. And I think that's it's entirely a possibility. So, again, back to your sort of analogy of like the protocol of TCP/IP, email was built on top of that. You can host your own email service, but you're going to have a hard time getting your emails delivered to the systems like a Gmail. Like if you send from your own server to a Gmail account, it's going to end up in the spam folder or they might not even accept it at all because they because because of the open-source nature of it, because it's so easy to set up your own email server, and because it's so inexpensive to send emails from your own server, it was used by people trying to scam people. So, um it becomes this it it sort of closed down to protect itself and to make sure that um there's some sort of semblance of control and and continuity to the emails you receive, right? So, it is all open-source. It is still there, but like the garden is become walled out of necessity uh to some degree. Um so, you could think about that into Bitcoin, and you could think, "Okay, well, is there a potential where something like that could happen on some sort of layer of Bitcoin where there's some sort of necessity for it to be closed or or some sort of um incentive for it to be closed." And you could you could see that happen, um but I think it's it's part of like what is the use case, right? So, if the use case of this closed-source software on top of Bitcoin is so useful that you have to use it, right? We have to use email. It's so useful to use, so we have to use sort of the closed-in gardens of Gmail, Proton, whatever, right? Um it's so useful. But what could be built on top of Bitcoin that is so useful that you are restricted into a closed-source application? Not sure uh of it I I can't think of anything, right? Like Bitcoin the use case of of blockchain technology of a decentralized financial ledger is money.

[00:09:41]Right? And so like the things that have been built on top of Bitcoin are all to facilitate some aspect of money.

[00:09:48]So um, you know, on chain uh the technology of being able to have a seed phrase that's allowed people to be able to store their value better because they now have a way to protect their Bitcoin in a way. Uh the lightning network built on top of Bitcoin completely open source and allows the medium of exchange method to happen faster and easier through payment channels and a routing network more privately. It becomes more usable as a medium of exchange.

[00:10:15]So if Bitcoin is money and that's its use case we've already sort of established the way to use it in as money in those ways and there'll be things like Arc and Spark and other ways to speak lightning or to balance channels or to have ownership over the the contract of Bitcoin in these channels uh or however that ends up working.

[00:10:38]But if Bitcoin again if Bitcoin is money where is the necessity for something to become closed source?

[00:10:46]Where is the ease or use of something that's closed source? I think because Bitcoin is so I think because the people developing in Bitcoin working on Bitcoin working on layers two is they're they're fanatical.

[00:11:00]Like they're they're they're obsessed and I think that ethos of open source continues to propagate through there because it can only be trusted if it's open source in my opinion.

[00:11:10]And I think many others. And so I think that I think that continues to um evolve in that way. And I think actually that's why um a lot of other uh companies these massive companies these tech companies are really not that interested in Bitcoin because the reason to close source something is because then you can profit from it. Open source is really difficult to make money from.

[00:11:36]Um you sort of have to rely on grants, donations.

[00:11:41]There might be some sort of pricing mechanism you can have on open source software to offer some service for that to make it easier.

[00:11:48]Um but it it's pretty difficult. It's not really an endeavor that you should make as a company seeking profits for your shareholders.

[00:11:56]So I think again, if they try to develop something, it's going to be some centralized crypto rail thing.

[00:12:03]Uh there might be elements of it that are open source or took taken from open source projects, but then made closed. How useful those things end up being is kind of a unknown of the future, but to me the use case of Bitcoin is money and the open source layers and technology that we've built with Bitcoin continue to work and will continue to develop in an open source manner. But it's not it's not without its risks.

[00:12:29]That what you're suggesting or or what you're theorizing could be possible, but again, it's it's difficult to imagine it. Um but I'm sure people probably thought that about the about the internet, too.

[00:12:39]Like you know, we're going to have this sort of open source revolution. I mean, I wasn't there, so I don't know and and uh I'd be interesting to look back in the history of that more, but um you know, you could argue that the internet has been co-opted a lot, right? That there is a lot of surveillance. There is a lot of problems with internet usage uh now and it really probably did start or or a large part of it was sort of this um space of digital freedom. So I mean, my hope is that doesn't happen with Bitcoin and I think it's really important to be diligent about that and that's why I think that question you asked is is actually like one of the most important questions to ask.

[00:13:18]It's really about like what is the future of Bitcoin, right?

[00:13:22]It is.

[00:13:24]I I first time thought about that question when I had my oldest guest on my podcast ever on. He was at time of the recording around 75, 76 years old.

[00:13:36]And I asked him because he was not only alive during all the internet coming ups and stuff like that. He actually worked as a network engineer in that time from the very start. And so I asked him like what kind of similarities or differences do you see between the internet revolution and Bitcoin revolution?

[00:14:01]And one of his examples were in the beginning all the people that worked in networking and not net the networks and the the internet revolution we all thought in his small circle thought that we all will run some version of our email server ourselves.

[00:14:23]And he made the analogy of running your own node now with Bitcoin. Now we have that like we all will run our own nodes like we we should do that and it's of custody not like having your own keys, protecting them yourself, running your own node, protecting that yourself, not pros broadcasting just to to someone else that has the data and all of those things.

[00:14:48]And I found it so interesting and that kind of triggered for me to ask the question where do we go with Bitcoin because we have how many people do we have that have exposure to Bitcoin in some way, shape or form? 100 million, 500 million, I don't know. Somewhere in between is probably a correct number. Then how many people of those actually hold their own keys? It's a very small portion of them.

[00:15:13]And then how many of them hold their own keys and run their own node? Like a very small sub sub I'm sure a section of that.

[00:15:21]And so, if we already are in the early phases at like 1% adoption or whatever it is of self-custody and running your own node, whatever the real number is, it's probably under 1% even.

[00:15:34]How will it be in 20 years and 30 years if the apps and the ecosystem are even more developed in the Bitcoin ecosystem and people I I want to talk a little bit later also around stretch and strategy, but I I I said it probably on our BTC Mastermind live streams also at some point. When when I talked to my mom and my sister about stretch, they're like, "Oh, how can I buy it?"

[00:15:58]When I talked about Bitcoin, they still did it, but I think mostly just because I'm so annoying on it. They're like, "You have to have it. Like, do it."

[00:16:09]And so, with stretch, they were like, it really interested. Like, and like, their own interest came out. Like, "Oh, 11%.

[00:16:16]Like, that's that's really cool. Like, how can The The only question is always just like, how can I trust it?"

[00:16:21]But, that's kind of that's kind of where I'm getting at. You you have an amazing technology.

[00:16:31]You know, if you buy that, hold your own keys, run your own node, you will massively benefit just not only from a wealth perspective, but also from a freedom perspective over the next 10 years.

[00:16:45]But, then people don't do it because they're too lazy to set up their own node. They're afraid of the volatility and like like 100 other reasons.

[00:16:54]And this kind of I don't know.

[00:16:58]I don't know where I'm going with this, but it's it's just like an observation I have and an and an annoyance from myself because I see so many so few people actually taking advantage of what Bitcoin is and so many just wanting to do what everyone else is doing, which is usually the average, which is usually not that good.

[00:17:19]Yeah, and um I think this all kind of Well, this all made me think of the way that I look at the world, which is incentive driven. So, everything I think uh the way the world is shaped today, everything we all do as individuals is all incentive driven. It's mostly selfish.

[00:17:36]And uh a large part of it is financial.

[00:17:39]So, I think that could be I'm just going to sort of theorizing this now as as we're talking, but like looking back at the internet, there's not as much financial incentive to be running your own email server, to host your own emails. There's sort of a freedom aspect, a sovereignty aspect, and those could be incentives, for sure.

[00:17:58]But then, as it becomes more challenging to do so, those incentives could sort of not be as valuable, right? Then, there's the incentive to just sort of join what's easy, what works, and what will actually get your email through. Um Bitcoin is you know, people have called it like the internet of money, right?

[00:18:16]And there's no way to have actually bought into the TCP/IP protocol. And the email protocol, yes, you could set up your own server. That's as close as you could to buying into it, but there's no financial incentive really to have done that. So, I think that's what fundamentally makes it different and makes um makes it possible potentially into the future where there is going to be this constant financial incentive to get as close to real Bitcoin as possible, right? So, that you're um that you don't lose your Bitcoin in a hack, in a by having it in a a a vulnerable wallet that's online, right? Um being able to have it in uh these secure open-source systems protects you ultimately, right? So, I think that financial underlying of it, that that Bitcoin is money actually begins to shape the way it develops a lot differently than the internet. And I think that's actually one thing that's so interesting about Bitcoin is we always try to analogize it back to something that we already see in the world that we understand that we have some ability to comprehend. It's digital gold. Again, it's the internet of money.

[00:19:33]It's not. It's It's a decentralized financial ledger. Each one of those things needs to be understood and be on that, right? What does that mean to be decentralized? Well, that means that there's many copies of it. It's financial in nature. We've ascribed value to the units on there. It's uh uh a ledger, right? So, that's a database of history of transactions, of movement um that we all have a copy of.

[00:19:58]These things really just need to be like so understood and I think that comparing it to in the internet is the best analogy we have as far as like from a technical side.

[00:20:13]But, I think it falls apart because it is fundamentally different in the way that is it is incentivized by individuals.

[00:20:19]And I think that um I think that eventually people will like more and more people will wake up to that and it's from rug pulls, close source software failing, it's from exchange failures, it's from all of those kind of things, and it's from, you know, you and I and many others talking about these subjects and talking about self-custody and talking about the incentives. And And and some of the incentives aren't perfect, right? Like the, you know, I made a video not long ago was talking about why people should run their own node and the incentives are really for additional privacy and additional sovereignty. So, there's that could it's sort of a stretch to like push that into like a financial incentive. Uh privacy could be argued as privacy can like blend over to security really easily and then security can be a financial incentive so that you don't lose your Bitcoin. Um, but it's not as obvious. Like so many questions in my node videos, they'll oh, do you get paid for running a node? No, you don't. You don't get any Bitcoin for running a node. So it's like the incentives aren't fully aligned there and that's a challenge and that's why there's um, way more Bitcoin holders because there's a financial incentive to hold Bitcoin uh, and way less node runners because there's not a clear financial incentive to run nodes. So maybe I don't know. I don't know what the answer is to that, but I do see um, Bitcoin is as being comparable to to the internet, but um, fundamentally different because of the incentives that underlie it.

[00:21:55]Yeah, and and people are also more drawn to uh, like have a minor running and like if you run a minor like yourself, you have to run a node also like it like this is kind of uh, like You don't technically have to.

[00:22:14]Yeah, but like I don't know if you've not seen a lot of people that that don't do it. I don't like if you really run your own own minor like I've never done that actually like I don't run my own minor so I don't know about it, but don't you need like like isn't it if you go through the trouble in setting up your minor in your own home, like wouldn't you run your own node also?

[00:22:36]Many people don't. I mean, it's better to. There's there's uh, there actually is a financial incentive to do that to some degree. Um, so like you can you can just contribute your hash rate like you can set up a minor in in about 15 minutes and then just contribute your hash rate to a pool or to a solo pool and they'll just take a small fee for doing that. Um, you can get a node and then you can run your own data server and then connect to a uh, a pool and then essentially you when if you hit a a block you would actually construct your own block template and you could contribute to a pool or solo even with that setup.

[00:23:16]So, the the difference is that you can be a hasher without running your own node if you're a miner and you're contributing your hash rate to somebody else's node but you can't be a miner without running your own node if you're mining.

[00:23:31]Or if you're hashing. The that that would be the the difference there but technically you could and you would still get rewarded in Bitcoin for the amount of hash rate that you would contribute.

[00:23:41]Yeah, because I was thinking about the the reward like with mining you get a reward having a solo miner at home and node connected I think it's just like a a nice just a a learning experience if even if you don't get anything real out of it.

[00:24:00]Solo miner you probably won't get rich like you can have a lucky hit and we had a couple of instances already where solo miner actually mined just for himself and hit a block. I think we had like I think two three instances of of people posting it online and and and doing that. But otherwise it's more of a learning experience but yeah mining is a fun one it took me a while. I went I came into mining a little bit late last year it's it's a fun experience having some like natural Bitcoin income that's actually like in the Bitcoin ecosystem.

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