Is Bitcoin Becoming Centralised? The Governance Problem

Added: 2026-06-01

[00:00:00]Welcome to Honest Money. [music] I'm your host Anya and today's episode is brought to you by Hard block.

[00:00:09]>> [music] >> Joining me today on Honest Money is Jimmy Song. Jimmy has written a lot of Bitcoin books and I'm very pleased to have his knowledge shared with the audience today. Thanks for coming on Jimmy.

[00:00:24]>> Thanks for having me.

[00:00:26]>> Um before we dive in, I would just love my audience to hear like a little bit of your background story. Um you are one of the more respected voices when it comes to talking about technical things in Bitcoin. So, yeah, would you like to give us a little bit of a TLDR?

[00:00:44]>> Well, so by trade I'm a programmer and I have been since I was 9 years old. I I got into computers very early. I was a programmer straight out of college working for various startups and I think I did something like 12 startups and like 10 years, something like that. And and after I learned about Bitcoin, I got into the Bitcoin industry starting in 2014.

[00:01:09]I did a few startups there as well and eventually went off on my own.

[00:01:13]I found through the Bitcoin community that I could do things other than just code for money including teaching other people about Bitcoin from a technical perspective, explaining things on YouTube videos and things like that. So, yeah, that's basically my story. That's the TLDR of it. I have a much longer one if you're if you care and they're all over YouTube at this point cuz I've been doing podcasts like this for like I don't know, 9 years now. So, yeah, there you go.

[00:01:47]>> Love it. Um so, what do you think the main risks to Bitcoin are? I think this is an interesting area to explore.

[00:01:55]>> Yeah, great question.

[00:01:57]And I I think um throughout my Bitcoin career the answer has always been a little bit different and um and uh the the weird thing is every time I think it's a certain thing and that thing happens, it isn't quite as bad as I thought it would be. Uh in fact, it tends to be uh much better than that actually. It ends up showing sort of like a different aspect of Bitcoin.

[00:02:26]Back in uh 2013 for example, I thought that um some sort of uh you know, the the that dark that Bitcoin was something like darknet money and that uh black markets were the main thing uh and that as soon as sort of like that digital marketplace went away that it would cause Bitcoin to suffer. And of course uh you know, when Ross Ulbricht was arrested for being uh Dread Pirate Roberts, um you know, that that was thought to be sort of like the death blow for Bitcoin and it turned out not to be. Um and you know, uh we went on one of the most amazing bull runs we've ever had in Bitcoin going from like $100 on the day of his arrest to 1,100 like six or seven weeks later. So, uh you know, things like that happen. Um at 2017 I thought uh you know, keeping a unified community was very important.

[00:03:24]Turned out not to be the case actually.

[00:03:26]Uh you know, we had Bitcoin Cash fork off and and things were fine. Uh and that that sort of thing is uh not something you would expect uh but it's uh you know, that that's uh that's sort of Bitcoin for you. Whenever uh things are not as uh well, things are not as bad as they um that people seem to think.

[00:03:52]And people, uh you know, they the vulnerabilities that people assess Bitcoin to have aren't necessarily vulnerabilities. So, currently my my thesis is that the biggest sort of vulnerability point in Bitcoin is development. And currently it it is a little bit centralized and there's a few there's one main project on GitHub. And, you know, I may or may not be right about this, but that's my current assessment because so much of what happens in Bitcoin goes through those people and if you understand the dangers of centralization, then this is one of the main ways in which this could happen.

[00:04:44]>> Yeah, okay. So, I would love to know a little bit more about this project in GitHub.

[00:04:51]>> Bitcoin Core, you mean?

[00:04:53]>> Yes.

[00:04:54]>> [laughter] >> Yeah.

[00:04:56]Bitcoin Core is the um is a software project for Bitcoin.

[00:05:03]You know, the software basically checks that the Bitcoin ledger is legitimate, right?

[00:05:11]It's it's sort of like auditing Bitcoin on a constant basis.

[00:05:15]We can't do that with fiat money. We can't even really do that with gold or any other commodity. There there's no way to know, for example, what the um you know, world supply of gold is. We we have estimates and we have guesses, but you know, if if Uncle Roger has you know, 100 lb of gold buried in his backyard, like no one's going to really know about it and there's no way to get aggregate statistics like that.

[00:05:44]What's interesting about Bitcoin being digital is that you can have an accounting of all possible Bitcoin and and that's auditable.

[00:05:57]You can also do that with other digital stuff like you know the fiat currencies like the dollar or the euro and many others. But generally those are not auditable by outside parties. If if there's any audit at all with any central bank it's done internally and not widely shared.

[00:06:18]Mostly because governments want to get away with you know doing whatever they want with the currency. Um The Bitcoin core software is a way to verify the supply and verify that none of the rules are getting broken particularly with respect to the supply of the money itself.

[00:06:39]The Bitcoin software enforces the the absolute limit of 21 million Bitcoins and you know you can't subvert that right?

[00:06:50]Like it's it's part of the Bitcoin value proposition that you know exactly how much it is. So that software ends up being fairly important and you know there are a bunch of other things related to the software like you know you can do software upgrades and things like that which which developers have a hand in and so on.

[00:07:14]So it's important for that reason cuz it lets you actually verify as a user that Bitcoin is what it says it is and not have to trust somebody with you know fiat currency or almost anything else you have to sort of trust people right? Like you have you have to trust that the Federal Reserve is doing what it says it's doing it's not doing like the opposite thing behind the scenes Uh, or something like that. Uh, so it's uh, it's that software and sort of like the process around it which uh, seems vulnerable to me uh, in this era.

[00:07:52]>> Yeah. So, I'm obviously a noob when it comes to Bitcoin. I've been around for 2 years and one of the more most kind of dominant conversations that have happened in the Bitcoin space since I've been in is the whole not versus core debate.

[00:08:08]>> Mhm.

[00:08:08]>> But that obviously predates it goes back a lot further. So, what what is the history of Bitcoin core and not?

[00:08:17]And when when did it all start?

[00:08:20]>> Yeah, Bitcoin knots is uh, is what you would call like a derivative of Bitcoin core. It's uh, the the technical term is it's a code fork. Uh, so basically it's uh, it's the same code that was changed a while back and this is one of the benefits of a open source software. Anyone can copy it and do whatever they want with it instead of following whatever uh, the the people that control that uh, software do. So, uh, a lot of open source software like uh, your your browser that you probably use uh, Chrome Google Chrome for example is open source.

[00:08:58]Um, and there are you know, dozens of chromium forks. Chromium is their open source one. Um, you know, Vivaldi for example is a chromium fork. Kiwi browser I think even Brave is to some degree like a fork of Chrome. Um, but you can change the software to whatever you like because the source code is there and you can you can do whatever you want. And that's what knots was originally and it was because uh, the developer that forked it um, Luke uh, dash junior he he uh, had some differences with what the core developers were doing particularly with respect to something called relay policy.

[00:09:39]Um and this was uh you know, many years ago. I think, if I'm not mistaken, over a decade ago.

[00:09:46]And he sort of maintained it so that people that agree with him can run that software. Uh now, what really supercharged this particular debate in the last couple years was what happened with op return. And that's uh again like a very old debate that came to the forefront.

[00:10:06]But basically, in any uh Bitcoin transaction, you have a designated field for adding what you would call metadata to that transaction.

[00:10:17]Uh so, adding a little more meaning to the transaction. Some some arbitrary data that you can put there to sort of mark it as something. So, um it's used for all kinds of things.

[00:10:30]Uh a lot of it is kind of spammy, but some of it can be considered legitimate.

[00:10:34]So, for example, there's uh something called BIP 47 or um extended pubkey privacy addresses and so on, where you can drop in uh your public key and somebody can figure out a way to send you coins on an address that's not published anywhere.

[00:10:57]Um and that that's kind of a cool like little use case. And and it it was originally put there, I think, in 2013.

[00:11:06]Um Uh what what happened more recently, uh I think it was about a year ago uh that a little over a year ago, when they proposed expanding that op return sort of uh field from that was by default 80 bytes to 100,000 bytes. Now, 100,000 is the largest transaction you can have. So, you can't go beyond that. So, it it effectively uncapped what was previously capped.

[00:11:41]And there there were reasons for this and so on, but the op return limit has been controversial for a very long time.

[00:11:49]It was originally 40 bytes in 2013. I think 6 months later it got bumped up to 80 and it stayed there and there have been discussions in the past about expanding that to something a little larger. I don't think too many people thought that it would suddenly be uncapped like it became about uh you know as a proposal a little over a year ago.

[00:12:15]And that's that was a large part of the controversy. And as a result of that controversy because Bitcoin Core was fairly insistent that this was something that they wanted to do.

[00:12:28]A lot of people decided to go over to Knots because they were specifically keeping that cap as a as a way for um people to lodge their protest if you will. And that's that's kind of what happened last year.

[00:12:46]Knots used to be you know maybe 3 to 5% of the network. It's currently around 20% of all the nodes on the network. So, it's grown significantly largely as a protest to Bitcoin Core.

[00:13:03]>> Quick one for the Aussies listening.

[00:13:05]Hard Block is offering a $10 sign up discount right now.

[00:13:10]And if you're with another exchange, ask yourself this. Are they Australia's longest running Bitcoin only exchange?

[00:13:17]Because if not, maybe it's time to switch.

[00:13:20]Head to hardblock.com.au/join/honestmoney and start stacking sats today.

[00:13:30]>> Yeah. So, why should the average user of Bitcoin actually care about the OP_RETURN?

[00:13:37]>> Um it depends on your point of view and both sides have have different arguments on it. For people that are on the not side, they're largely concerned with data that's not monetary. So, we know that Bitcoin's really good money and it's it's done fantastically well. Um but if you fill it with sort of arbitrary data, which is what the OP_RETURN field is supposed to be. It's like metadata about the transaction, but you know, people have put all kinds of junk into various transactions and various different techniques and this gives them one more technique. For them, it's just sort of sanctioning in some way the legitimacy of data transactions that aren't monetary. Um on the other hand, for a lot of people on the core side um there the OP_RETURN cap is only done at the policy level and not the consensus level. So, for them keeping those two things consistent was very important. Now, if you don't understand exactly what I just said about policy versus consensus it really gets down into the weeds, but they have a point there in the sense that um if you receive a new block, you might receive it a little slower if you if your policy is different than consensus and so on. So, um yeah, for them that's why they did it. And you know, there are arguments on both sides and depending on your point of view, you might find one to be more convincing than the other.

[00:15:17]I'm not exactly sure um uh you know, what the quote-unquote best thing for the network is or if there's even an objective answer to that. Uh but but that's that's the argument that we're currently that was in on the network while this debate was raging.

[00:15:37]>> Mhm, that's really interesting. But is it even possible to completely eradicate spam? Like technically it's possible and >> Um I I mean, there are ways to do something so that you can like like you know, it's only as the limits of what can be done are only restricted by human creativity, which is essentially infinite, right? Like so you can you completely eliminate stem spam?

[00:16:05]Yes, you make restrictive enough rules, you probably can't, right? Um like to in the sense that um your I mean, I guess you can make fake pup keys or something like that, but ultimately, there there are ways to limit it if you if you really care to do it.

[00:16:24]Um of course, that would maybe break a lot of other stuff and make a lot of other use cases sort of null and void.

[00:16:33]But if you're asking possibility questions, it's only really limited by human creative ingenuity and I'm um I'm not sure if it if if it can completely go away, but you can heavily restrict it if you if you wanted to. Uh now, that's a very different conversation than are you sort of inviting it in, right? What's permissible and legal uh are versus uh you know, what's moral and good are kind of two different questions and a lot of people conflate the two and that's kind of the a little bit of the confusion here is that um for a lot of people on the not side, this is a moral issue and they they they don't want to help the people that they think are abusing the network or acting immorally, even if it's sort of like legally allowed within the blockchain.

[00:17:27]They they don't like it, and they think it should be discouraged in an economic sense as much as possible. On the other side, I think there's more of a conflation saying, "Well, if it's legal and there's financial incentive, people are going to do it anyway." Um and not really recognizing that there's a moral aspect to it that that there's there's like a gap in their in their thinking. If you're if you're thinking from a pure materialist perspective, then that tends to be um sort of how you assess it. So, it's a lot of it is two sides sort of talking past each other a little bit and purposefully taking a particular philosophical viewpoint to discredit the other side in a sense. Um and honestly, it's a it's a little bit more of a cultural war than than people sort of want to admit to, but yeah, that's that's kind of kind of where we are.

[00:18:31]>> Yeah, it certainly feels that way. Um but what is the financial incentive to add spam? Because I thought the core argument against spam was that they financially disincentivized to to add it because of the fees.

[00:18:46]>> Yeah, so the there's this whole thing about SegWit that you have to understand to to understand that economic argument, that there's cheaper ways to put spam out there using you know, op if within segregated witness field and so on. And that's four times cheaper than putting it in top return and so on. Which is why um, the the debate has moved a little, uh, to a different arena with, uh, BIP 110 or RTDS or whatever. And that those are, uh, you know, that that's the move you know, the debate has moved there largely because of this argument that you you can put it somewhere else.

[00:19:34]Yes, you can, uh, but you still don't want to leave a hole, right? Like you might have an open front door, but that doesn't mean you should like leave the side door open. I mean, like it's it it like people might not might or might not use it. Depends on the use case. Again, that, uh, like how people use it is only really limited by human ingenuity and, you know, who who knows how people will use it. So, it's it's a little bit of, um, it's a it's a weird argument on both sides, uh, with respect to that, right?

[00:20:07]Because in a sense, it doesn't matter because there are other ways to do it.

[00:20:12]So, then what? On one side they're saying, well, then don't expand it. Why why expand it? You're not really gaining anything. On the other side, it's, well, it doesn't matter, so we should just uncap it. Like I'm not sure either of those things really e- either of those like leads to leads necessarily to that conclusion.

[00:20:33]It's almost like, uh, a side thing, um, but yeah, it's uh, it's ended up kind of in a weird debate place, uh, hence why we were now at like sort of fighting at a consensus level, uh, talking about BIP 110 or RTDS.

[00:20:53]>> Yeah, about BIP 110, what what is it?

[00:20:56]>> [laughter] >> Uh, it's a list of seven consensus rules, uh, that are being added, so it's a soft fork, um, that essentially, um reduce a par- particular flavors of spam. Um so, one of the biggest spam vectors in recent years is uh is something called inscriptions and uh and uh BRC-20 and things like that. And they're all using something called Taproot, and that was a soft fork uh from 2021. And what this uh what BIP 110 does is it makes the particular form that spammers have preferred um illegitimate on the network, illegal on the network, which means that it can no longer go into the blockchain. Now, there uh the main um argument for that is uh and they're doing it in a in a temporary way. So, it's illegal for a year, and hopefully that gets rid of the people that want to use the Bitcoin blockchain in this way, and uh you know, all the other use cases that depend on this can move uh you know, keep going as as they did before. Um the that that's what BIP 110 does. It's it's a it's a soft fork that's temporary to um with which makes particular forms of spam uh illegal. Uh of course, spammers could choose to go do some other method, uh but presumably that would have a cost, uh and that would be a deterrent because of the cost that they would have to pay.

[00:22:45]Like um if, for example, you're depending on inscriptions or something like that, and you you have a wallet that shows Bitcoin inscriptions by reading these very specific types of um uh uh of data data that's stored in a particular way, and suddenly that format has to change, well, you have to go and update the software and distribute it to all those people before and make it backwards compatible and all that stuff, which would presumably be a cost and maybe that's enough of a deterrent to get them out.

[00:23:19]Or maybe they have enough financial motive to pay that cost and keep going.

[00:23:25]Uh who knows? Uh but that that's the main idea behind Bitcoin 110. It's a a way to deter spam by making certain types of legal for a temporary amount.

[00:23:38]>> Hmm. This might sound like a strange question, but who are the spammers?

[00:23:43]>> Yeah, um they're uh largely venture-backed um people um that uh you know, ordinals, uh inscriptions, uh even something called stamps. Uh they're they're all um you know, sort of trying to do something else on Bitcoin that used to be done or are still being done on altcoins, so like meme coins and things like that.

[00:24:12]Um and that's always been possible and, you know, even back in 2013 there was something called color coins on top of Bitcoin to do a lot of that stuff. And in a sense, uh a lot of the uh spam on Bitcoin is of that variety, uh BRC-20 in particular. Um inscriptions are a little more uh ins- nefarious in that they just embed like uh uh like a JPEG straight into the Bitcoin blockchain. Um so uh instead of referring to some other token or something like that. So it's it's a very um uh it's a it's a large ecosystem of stuff that have built up for a while. I would say you know, color coins, you know, there's been protocols on top called like uh Mastercoin now called Omni, Counterparty you know, BRC-20 obviously inscriptions, ordinals, all those things are sort of protocols on top of Bitcoin that may or may not have value. Yeah, so and some of them get venture backing because you know, uh they they give great presentations, I guess, or venture capitalists have too much money and not enough money deployed or something, but yeah, there there's um there's a lot of different people with different motivations, but mostly they they want to make more money by printing their money out of nothing, which is the story that's been for all coins for a long time.

[00:25:55]>> Mhm.

[00:25:56]But are there any nefarious actors like people that are trying to attack the net network through spam?

[00:26:03]>> I would say at least a few are kind of like that. Uh There's there's no reason something like the Stamps protocol would exist except to infuriate Bitcoiners.

[00:26:17]And you know, if you're if you're from an altcoin or something like that, griefing Bitcoin has its own value, I suppose, um by saying "Haha, we can do this and troll you." Right? Like I mean, why do people troll on X or whatever?

[00:26:32]It's uh yeah, it's it's hard to tell what their financial motives might be, but they do it because they get some psychological satisfaction, I suppose, out of out of doing that or something.

[00:26:44]And that that's like I don't know, that's getting more into human psychology or whatever, but I I've definitely seen that sort of thing on Bitcoin.

[00:26:53]>> Yeah, it happens.

[00:26:55]Whether it's financially motivated or not, it's it's hard to tell because you you never know who's funding what, but I I have seen it.

[00:27:04]>> Now, my very oversimplified impression of the whole Knots versus Core debate I assume I'm not alone in this is that the Knots guys are the money people and Core are the tech people. Is Is that how most people who are not deep in the debate would perceive it?

[00:27:23]>> I mean that's probably accurate in terms of the current perception. I wouldn't say that's necessarily reality. There's plenty of very technical people on the Knots side and there are people that at least have some economics knowledge on the Core side as well. Um but I mean that's with any debate.

[00:27:46]People tend to characterize one side as one thing and the other side as another thing, which is kind of what happens in a debate. It's you want you want to sort of give a portrait of your enemies as um being out of touch in some way and this is this has been um a debate that's been going on a while and that's that's definitely happened.

[00:28:12]>> Yeah. Yeah. So, this leads us to production ready. What is production ready?

[00:28:18]>> Uh Production Ready is a 501c3 in the United States and that's that's a IRS designation for a nonprofit. So, we're a nonprofit organization trying to fund a uh an alternate implementation to Core and Knots. So, something that's different than both of those uh that is more representative of um maybe a certain group within the Bitcoin ecosystem that is that doesn't really agree with either one. That's whose focus is much more on stable software, Bitcoin as money, but you know, being very very conservative.

[00:29:05]And that's that's what I Yeah, that's how I would characterize it. But yeah, we're the funding organization for that implementation.

[00:29:14]>> Yeah, and and how did it it come about and how long has has like this conversation taken place?

[00:29:21]>> Yeah, we've been talking about it for almost a year now.

[00:29:26]We didn't sort of come out with an announcement until a few months ago, but you know, the the people involved on the board, me, Samson Mow, Parker Lewis, John Ratcliff, we've been talking for almost a year about okay, there there needs to be something else because the the people that are um, you know, the two camps are the the debate is getting particularly toxic and it doesn't represent a large majority of we what we think are the actual Bitcoin users, many of whom actually don't care too much about the debate and would rather have something that just works.

[00:30:13]And so we we wanted to make that available and and and we've been talking about it, but you know, bootstrapping a new implementation is not so easy. So it's it's taken a lot of twists and turns and you know, that's part of why we established this 501c3 entity and you know, we thought a lot about like uh how to design and those conversations are still going. Um and you know, how how we want what role we want in the ecosystem and so on.

[00:30:52]>> Need a way to sign, verify, and secure your Bitcoin? Australia's one-stop shop for Bitcoiners has you covered. From signing devices, nodes, and backup solutions to Bit Axis, Day Cole, and apparel. Visit shop.bitcoin.com.au.

[00:31:12]Yeah, like I I would love to know about more like obviously you said those conversations are still going, but what role do you want to play?

[00:31:20]>> Well, the the role I'm playing is I I I've been a Bitcoin educator for quite some time now.

[00:31:28]Um and one of the weaknesses I think of the current um developer ecosystem is that it's uh it's kind of limited. Uh the uh one of the observations that we made about core development is that it's largely in the hands of fairly young developers. Um and that wasn't the case say 7 years ago.

[00:31:55]Um but it has sort of gone out that way.

[00:31:57]And we we've asked ourselves, okay, what happened? How how did it get to be uh you know, so many young people?

[00:32:05]And uh you know, we we observed for example that there are um you know, uh several funding organizations, um but they want a particular type of developer. And the the ones that have the most influence within Bitcoin Core are the ones that are in these particular offices. And I would say the London Brink office, the New York Chaincode office, and the San Francisco Spiral office. and now maybe even uh the local host office in San Francisco as well. If you don't go into one of those offices and you're Bitcoin core contributor, it's very hard to move up. Whereas if you are in one of those offices and you're working with a lot of other core developers that have a lot of influence, then you're much more likely to get selected. Well, who's able to live in these very expensive cities and just sort of uproot their life and go go to those? Well, you you either have to live in have already been living there or you're you're young enough without too many attachments to be able to move to those places. And lo and behold, that's exactly what we've gotten. We've gotten a lot of younger developers that were able to completely uproot their life. So, for example, Michael Ford, who is one of the lead maintainers of Bitcoin Core, actually grew up in Australia and he uprooted his life and moved to London. And he now works out of the Brink office in London. Now, is that something he could have done if he was a 15 years older?

[00:33:50]Like and had a had a fam you know, a wife and four kids or something like that?

[00:33:57]I I highly doubt it. But because he was in the position that he was, that that wasn't that was something that he could do. And of course, he he's got significant influence within the Bitcoin community as a result of doing that. Now, that's that's just one guy, but there many other stories like that where the the kinds of developers that you get depend on sort of like the incentives of the particular structure. And the structure of core is such that you kind of have to be in one of these cities to become a maintainer, for example, or even like an influential core contributor. Um and we want to we want that's one of the things that we've diagnosed as a part as a part of you know, doing production ready. So, you know, we we want to expand the developer pool and and change the incentives a little bit. So, you don't have to come into the office, for example.

[00:35:00]There are lots of core devs that have been contributing contributing for many years, but they're not able to move up in the core hierarchy because they don't go into one of these offices. And that's a little bit of a shame because a lot of them are very good developers with a lot of experience and so on.

[00:35:18]Uh that would that would do very well if they were given more responsibility and would have sort of better instincts on what you know, how [snorts] how to run a software development project and so on.

[00:35:31]But, they're they're not really considered because they're remote and so on. Uh so, that that's like an example of of something that we've been thinking through how how to change things and make ours a little bit different.

[00:35:46]Um we would love to get more developers and stuff from you know, places that aren't so expensive like London, New York, and San Francisco.

[00:35:57]Uh and instead, uh you know, get more developers that are um closer to the uh use case of Bitcoin that we we think is important and that being used as money.

[00:36:12]So, you know, a lot of people in Nigeria, for example, use Bitcoin very often because you know, their currency is is real crap.

[00:36:25]Um if you could get a developer with that perspective, it's it's a lot more useful than, you know, somebody that gets paid, you know, $250,000, uh, you know, developing in San Francisco. That that's not the world.

[00:36:41]I mean, not to say that that perspective isn't useful, but if that's the only perspective you have, it's going to be very, um, one-sided, if you will. So, uh, we're Uh, so that that's part of it. Um, but yeah, my my role is, um, education and development. Uh, you know, there are other people within our board that are more, um, uh, more versed in, uh, fundraising and governance structures and uh, setting things up and stuff like that, which, uh, you know, we we all have our role, right? And so, that's Um, yeah, that's that's where we are.

[00:37:21]>> [laughter] >> Mhm. Sorry. Long-winded answer to a rather innocuous question, but hopefully that helps.

[00:37:27]>> loved it. I mean, no, no, it's it's it's very important because I think this is something that's going to be on a lot of people's mind, like those what are the incentive structures and how do you pay developers to do what it is they need to do without necessarily, um, kind of succumbing to these corporate interests.

[00:37:48]>> Yeah, there there's definitely a lot of, um, lot of different interests that go in that we're we're not entirely sure how they affect things. Uh, So, you know, I mean, it it if Jack Dorsey, for example, funds a significant amount of Bitcoin development, how do how does that affect things? That he might be just like an, uh, like a very generous guy and does that, but, you know, I mean, is that to say he'll stay that way forever? I mean, it it does sort of put some, um, pressure, and or vulnerability point or attack surface in case you know he does change his politics or his mind or whatever if if he starts like wielding around some of the influence that he already has I mean I and I like the guy right like I think he's great and and I'm thankful that he has contributed as much as he has but you know it like those kinds of things you have to think more adversarially about and not just sort of take the money and think that it's it's all just sort of like uh like benevolent donation um so yeah those those are those are things that were trying to figure out and work through and in particular with our organization how how do we like even on the fundraising side on the developer side on the education side all of these how do we make it so that we're different than some of these other organizations and how do we make sure that we're sustainable and that this is a long-term project you know that 15 years from now the there's not just three different implementations but maybe five six seven eight different implementations that people are running and you know done in a way that where um you know it gives like real decentralization from a development perspective with lots of different um on ramps for developers a lot of user choice a lot of user feedback that gets incorporated into various implementations and so on like that that's that's those are the conversations we're having and that's that's what we're aiming to do.

[00:40:21]>> Mhm. So, you it's been only recently that you guys have publicly announced this, but have you had any criticism yet or things that other people have raised in the community that you were like, "Mhm, this is something we need to think about and address."

[00:40:36]>> Well, I mean there there's certainly a lot of trolling.

[00:40:39]>> [laughter] >> And and that was to be expected. You know, some of it from people that I actually thought was was quite I was quite surprised by because I thought they were more mature than that, but yeah, they're taking potshots and saying, "Oh, these guys have proof of podcast or something like that and nothing else."

[00:41:01]I I think the main criticisms I think are around or at least advice that I've gotten that I found very useful is around being explicit about governance and things because if you are um you know, planning something out for decades or something like that.

[00:41:25]I think it was Warren Buffett who said like, "If you're going to invest in a company, make sure um it's it's a business that's so obvious that an idiot can run it because at some point an idiot will." Um and I think there's there's some truth to that. You want You want to be You don't want to be dependent on having a brilliant charismatic leader at the helm of an organization for it to survive. You want to create a structure that can survive um you know, bad leadership even and make sure that it can last through even that. And and creating something like that is not easy, right? Like there there've been lots of different attempts at at things where people weren't successful or they they were successful but then it failed almost immediately once once there was some sort of leadership transition and so on. And this is this is the this is the whole game. It's that that's that's what we're trying to solve for and it's um it was I think very good advice that we've gotten with respect to that. Like hey, you need you need to um figure out how the board transitions, how the software transitions, how you know, you pick certain people. Um you know, what what their responsibilities are and you know, you you need to set these things up uh up front so that you're not caught with your pants down when something happens and you you know, these things become important.

[00:43:04]>> Mhm. And have you started recruiting devs or had any expression of interest?

[00:43:09]>> Yeah, we we've uh we've definitely been recruiting uh developers. Um obviously we'd like um uh you know, people that are more senior and so on. But there there's been a significant number of people that have expressed interest and uh given my education background, I've actually come up with a few tools to um get a lot of people up to speed and hopefully contributing uh sooner rather than later. Uh And that's uh that's something that I've been working on and have been um testing with a bunch of people.

[00:43:44]And uh and there there's been significant interest in that. So I'll I'll I'll leave it there. There there's a bunch of developers that are interested and I am trying to give them a path to getting into the organization and being a useful contributor.

[00:44:00]>> Like I think this question is probably thinking about the core people. Um with these developers, do you guys have any initiatives where you'll be educating them on economics?

[00:44:14]>> Oh, good question.

[00:44:17]We don't have anything like that at the moment. Uh but I I do suspect uh sort of like the the implication of that question is correct in that it's uh the economic understanding of what's going on is probably as important to the developer that as the technical skills. Um and that this is part of I think where uh uh you know, Bitcoin Core has sort of like maybe missed the mark a little bit in that a lot of the economic analysis that I've seen coming out of the developers in the core versus knots debate, particularly around op return, think we're very simplistic economic um analyses. So, for example, when they they would say, "Well, then they're economically incentivized, so they'll do it every time." And it's like, "Okay, so the miner's going to make $5 um but risk getting orphaned." And I don't think you're taking the, you know, stale block risk um seriously enough or you know, even the bad will that they would engender in the community seriously enough. And for a lot of them, they they just they weren't thinking second-order effects. It was just, "Well, if a miner makes 5 more cents by doing this, then they're going to do it." And it's like, that's not how calculations are made in the real world. Uh you know, there's usually costs involved with changing any policy, right? Uh even if it's just like a couple of meetings, um you know, and and a few hours of development developer time, that's still a cost. And if you're getting five more cents per block and you mine a thousand blocks a year, yeah, that's like 50 $50.

[00:46:14]Uh, that's not worth it for a lot of these, um, uh, you know, these companies. And you're you're not really thinking in a in in a real, um, way about economics. It's just sort of like a justification for what you already want to do.

[00:46:32]So, I I think that's right that there does need to be some economics education about, you know, what the real costs are. And there's also been sort of like, um, a demonization of miners in many ways that they are sort of homo economicus that will do anything for even a little bit more profit. Um, but, you know, as soon as you suggest that developers might do the same, then they get all offended that, "Oh, no, developers are angels and they they only do what's best for the network." And, you know, there's no way that a little more money, like, you know, a hundred thousand dollar grant from this place would affect them in any way. Um, like, the truth's always in between, right? Like, you're you're there there's the ideal and there's what you're economically incentivized to do.

[00:47:26]And most people live in between somewhere. Uh, now, a lot of a lot of people like, uh, fall down to the level of their economic incentives and only sort of like do that. And a lot of other people are very idealistic and only do what's absolutely, uh, you know, living up to their ideals.

[00:47:48]And then we call those people moral. Um, but, you know, most people live in between. And I I don't think, uh, a lot of the economic analysis that I've seen really takes that into account at least from the core side um and sometimes from the not side as well.

[00:48:05]>> Mhm.

[00:48:06]I yeah. I I mean I I appreciate the challenge that is ahead of you guys and it one thing that keeps coming up for me is is you know obviously you're doing a lot of work to think of the governance and what your guiding principles are going to be as as you move forward with this and because there's always so much spotlight on Bitcoin and it's so important to people this is like a one chance in a in a millennia to do to do something um that matters and that's why people are so invested emotionally and and financially. Um I guess the question I have is how like if new information comes to light as you progress and you find that you guys change your mind on something that you previously had a strong stance on how do you think you might manage that because people tend to latch onto those things and like >> Yeah I I mean that's I you're you're asking us like how we would change our minds about something and and hopefully it's it's not like a sudden thing um and the that tends to be very bad if you're making decisions that way where it's you know you're doing a 180 on a very sudden thing. Um you know I my gut instinct is that it that sort of change would take years and maybe like one person at a time uh and slowly get convinced and then you know you make little pivots here little changes here and there and eventually change the trajectory and not do it in such a sudden and um crazy way. Um I I I would characterize like what happened with op return as more of that sudden thing which I I think um a lot of people didn't respond very well to. If they wanted to do something like that, I think the right move was to expand it slowly and see how the network reacted and so on and see see if it was enough rather than sort of doing it in a in a sort of sudden way.

[00:50:24]Um So, yeah, I I mean it's it's a hard conceptual question cuz it really does depend on the specific and the threat model and the attack um that that we can foresee and so on.

[00:50:38]Um but generally my uh my uh instinct is to stay conservative with the client and that's what we are billing it as and that means that major decisions like that should take a long time and are uh um uh and shouldn't be done sort of suddenly or willy-nilly.

[00:51:09]>> Not your keys, not your coins.

[00:51:11]If you're holding Bitcoin, your self-custody setup needs to be done right.

[00:51:17]paranoia-grade security so that you can sleep at night knowing that your money is protected.

[00:51:23]Take control and secure your money the honest way.

[00:51:27]Head to mineraex.com/honestmoney.

[00:51:32]>> That's actually a really good answer and the reason why this question came up for me is we've just recently had the Australian budget released and the two things that the the Australian government has promised they wouldn't touch they have touched and so Australians are very angry.

[00:51:49]Election promises were broken and yeah, it's a bit of a trending topic at the moment in Australia. There's AI memes all over the place.

[00:51:58]Yeah.

[00:51:59]>> Yeah, I mean that's kind of what happens when you put your trust in princes a little bit, right? And um and this is where you want a system where you don't have to trust them and that's kind of what Bitcoin is and hopefully for a lot of people that are um angry at the government for not keeping the promise that they gave them, well, that kind of shows you what their promises are worth, which is very little. Um whereas possession of something is much better, right? And that's that's kind of the idea behind Bitcoin. It's it's not a bunch of promises, which pensions and retirement and um even to some degree property like real estate and things like that. You don't actually possess it, right? It's it's it's you you have use of it at the pleasure of people that you're kind of forced to trust. Um this is what's unique about Bitcoin in that you don't have to trust anybody and it is in your possession and you don't have to rely on the goodwill of others and um and you know, the more of that you have, the more secure uh things are for you and that's the pitch that I I would give to the people that are angry about the policies of your particular government because uh like that Warren Buffett quote, you know, at some point there are going to be idiots at the top of whatever thing and if it doesn't survive that, then it's probably not a great system. Um and yeah, that's kind of where we are with a lot of this stuff.

[00:53:37]>> And I have a final question about the whole um not core and production ready is I guess this might sound silly, but I'm just going to go there anyway. If any of those three turn out to be completely wrong, is it terminal for Bitcoin?

[00:53:55]>> No, I I mean, that that's kind of the idea of having backups, right? And or or whatever.

[00:54:03]And we we've seen this a little bit in the mining world where you would have like a mining pool that would have more than uh, 45% um, maybe even over 50% of the hash rate.

[00:54:18]You know, things change and you know, the pools that were very popular 10 years ago, they're not popular now and so on.

[00:54:26]So, I think that's the natural way in which uh, which things tend to go and if we have more implementations, hopefully we sort of blaze that trail and make it easier for other implementations to come along.

[00:54:43]Then if you lose any one of them, then it becomes less fragile. Um, and that's generally a good thing. Uh, it's a it's a lot better to have 100 customers and if you lose one, you can you can sort of deal with it than to have only one customer. Um, which unfortunately most people have in this economy, right? You have one boss and that's your only customer and you get paid only by that person.

[00:55:09]Uh, which makes you extremely fragile.

[00:55:11]Whereas if you're running a business or something, you usually have many customers and you know, even if you have as few as like six or seven customers, if you lose any one of them, you're still okay and that's um, you know, your your day-to-day might be a little more volatile, but long-term you're actually much more steady uh, in that way and that's that's kind of the model that we would like to have for Bitcoin development as well in that you have multiple implementations so that you have this ability [snorts] to recover should one of them go down.

[00:55:49]>> Nice. Nice. Now, I'm going to pivot a little bit because I can't have Jimmy Song on and not ask this question. But is quantum a threat?

[00:55:58]>> [laughter] >> No, I really don't think so and and you know it's been talked about for many many years and as long as I can remember it's always like 15 years away or 20 years away.

[00:56:14]And 15 years later it's still it's for me it's a lot like climate change, right? Like people are always sort of urgently talking about it.

[00:56:25]But you know, I I still remember in the 80s you know, like people saying yeah, the island of Manhattan's going to be half underwater in 20 years.

[00:56:35]20 years later it wasn't water, right?

[00:56:37]In fact like very little changed.

[00:56:40]Yeah, I mean you might have had maybe record-breaking day on the summer in terms of temperature once in a while or something like that.

[00:56:48]But you know, that's that's kind of how I see quantum and really honestly like a lot of technology that I hear in the press.

[00:56:58]Um there's a lot of incentive on the part of the researchers and people working in a particular field to make their field out to be something much more important than it is and that's because they have to justify their salary and if you are the director of the quantum lab at Google, well, you have to justify the existence of the lab or else you're going to be out of a job. So you you know, put out press releases saying this is imminent and blah blah blah.

[00:57:33]If you make your living off of that, it's very difficult to be objective about it. And unsurprisingly, a lot of people that are in that industry aren't very much objective about it. Uh, even if it's just like an investment in one or two of these. And not going to name names, but a lot of the flood around quantum and Bitcoin come from people that have a direct financial incentive to stir up that flood. Um, so you know, I I discount a lot of it. Um, I mean, I'm sure there's like nuggets of interesting stuff there, but uh, you know, when I read the papers from physicists that actually know the, um, you know, quantum manipulable forms of matter and what properties they have, they don't think it's going to happen in their lifetime. And part of it is because the forms of matter are so fragile and become decoherence quickly and have lots of other properties that are very, very hard to capture in a quantum state.

[00:58:37]Um, and have all sorts of engineering problems that have uh, that haven't been solved and don't appear at all close to being solved.

[00:58:48]Uh, and very practically speaking, if if you're looking for verification instead of just sort of trusting in some media voice or something, well, why hasn't any quantum computer factored the number six using Shor's algorithm yet?

[00:59:06]That's the smallest possible number that you should be able to factor and a classical computer can do it in a nanosecond.

[00:59:19]Why hasn't a quantum computer done that?

[00:59:23]And and yeah, that that that's the real question. It's It's If there if it's actually imminent, you should see stuff like that happening.

[00:59:32]Instead, it's all pre-computed circuits, and you can point the computer at a random number generator, and it still gets the correct answer some percentage of the time, and they're touting that as something you know, like a breakthrough or something.

[00:59:49]This This is where you know, a lot of rent-seeking science like kind of comes into play, and a lot of um a lot of things sort of work like that, unfortunately, in a world where science is largely funded by fiat money.

[01:00:08]>> Mhm.

[01:00:09]Yep.

[01:00:10]And now, before we wrap up, I want to get a little bit philosophical.

[01:00:14]>> Uh-huh.

[01:00:15]>> Um I'm really keen to know, obviously, you've written Thank God for Bitcoin, and one topic that I've read about quite a bit, but haven't fully reconciled is usury, the concept of usury. So, the practice of lending money with interest.

[01:00:34]Um really various religious texts obviously against it. Um when I read about what it is in Austrian economics, it's more explained as not inherently bad. Um it's more to do with time preference, and as long as you are not putting interest that is unreasonable or predatory, um then there there can be a case for it.

[01:01:00]But, I'm keen to know what you think.

[01:01:02]>> Yeah, it's a it's a great question. And this is actually something that C. S.

[01:01:07]Lewis raised in Mere Christianity as sort of like a side note. He was saying you know, every every church father in the past 1,500 years has condemned usury, But, you know, there are modern economists that are saying like the entire economy wouldn't work without you know, payment of interest for borrowing money.

[01:01:34]And this is where we need Christian economists to actually evaluate that in a real way to figure out is this moral or not. And I think that's a this is this is where you actually do need um a moral perspective on the economic reality. Now, my personal belief with respect to usury and this is something that we put in the book is that usury itself is a method of enslaving another person, right? It's it's putting them into your debt perpetually so that they can't get out of it. And um I I used to donate to International Justice Mission a while back. And in one of the one of the presentations that they gave was about this particular form of loaning and and collecting that happened a lot in India where they would lend somebody some money, but the interest rate was so high that they would be forced to work for them and never be able to pay it off.

[01:02:47]Right? And that I think is at the heart of what usury is. It's a it's a way to enslave someone and capture them so that they belong to you perpetually when really like it it's it's it's a form of slavery, right? Um now what qualifies as that? Like it gets to be kind of a complicated question. Um Now under sound money, I think you can make the argument that maybe a 0% interest rate is like completely normal, right? Like that and that anything higher than that may be considered usury.

[01:03:27]Under fiat money, when it's constantly expanding, I think what the Catholic Church came up with is whatever that expansion rate is, that's a limit to what you the interest that you can charge because you're not actually losing otherwise you'd just be losing money.

[01:03:48]Now, I I think I have sympathy for that view.

[01:03:52]Um but I I think at the heart of it is that it's this attempt to use money as a way to enslave somebody else.

[01:04:02]Uh and I don't know where the line is between you know, getting somebody or loaning somebody money so that they can use it and it being sort of like a difference in high time in time between the two of you and some some sort of arbitrage between that. Um or some way of trying to capture that person's labor on a permanent basis of some kind. Um I I I tend to think it's it's something like that where you're trying to get another person's labor like permanently sort of in in almost like a slavery kind of thing. Um and that reminds me of like what company towns used to be, right?

[01:04:54]Like where they would pay you in the company currency, like a coal town or something, and you could only spend that money in the company store and that that was like a way to enslave you essentially to that company. It really wasn't any better than slavery in in way. Um so like that's not any there's no loans there, but I see that as closer to usury than say, you know, uh you lending somebody money and charging 5% interest or something like that.

[01:05:29]>> Mhm.

[01:05:30]>> It gets tricky though because of fiat money and uh at least from any bank's perspective, they can create money out of nothing through loans. So, for them I think it actually is usury. Um a lot of people take out long-term loans again for for a house.

[01:05:51]And because of that house, they're sort of enslaved to the bank. Uh and the bank didn't do anything, right? Like they they had no opportunity cost on the money that they lent. So, for them, it's it's a way of capturing your labor a lot of your future labor uh for essentially doing nothing. Um and that I think is kind of it does hit at the heart of usury, which is sort of enslaving not maybe the whole person, but a part of a person for the purposes of um with without really providing anything in return. Uh it's it's just you're you're stealing from everybody else to do it. So, I would say that that's closer to usury or that's my take on it. Um I'm I'm not sure if that really clarifies things that much. Um but for me, it's it's much more about um enslaving another person and less about the mechanics of what percentage interest is abusive versus not.

[01:07:00]>> Mhm. No, it it's interesting. It's helping me kind of narrow down where I I I might uh land on it cuz the other thing I was s- trying to reconcile in my mind is is if there's a difference between doing it, you know, personally versus through business. So, obviously, for me it would feel very morally wrong to lend money to my parents and expect interest on it. But, I'm not sure if I feel the same way if I was, you know, a small business owner and I'm looking to get a small business loan and the lender wants to charge me an interest because I need the money now.

[01:07:35]They have it now and I can repay it in in a an agreed amount of time. I agree completely with banking lending does definitely very cleanly um sit in in the usury camp, especially with fiat and fractional reserve banking. Like that money doesn't even exist yet. They're making money off of it. It It feels insidious insidious.

[01:07:58]But, yeah, I'm not sure if I Is there a difference morally if if it's done personally versus in a business context?

[01:08:05]>> Um I don't know if it's that would be the distinction. I mean, if there's any distinction, it would be money created out of nothing versus money that has opportunity cost. So, if you're if you're lending uh I don't know, your your family member some amount of money, that that money has opportunity cost cuz you're unless you're a banker, I guess. Uh you you know, it's coming out of your savings.

[01:08:29]And I think it you kind of hit on it a little bit with the small business.

[01:08:34]We're not used to saving to go get what we want and like that is sort of like uh default shortcut, almost like a mandatory shortcut that we're all forced to take uh where we're you know, giving up some of our future labor uh essentially to the bank uh so that we can we can get that. And that that's typically not how it used to work under sound money uh where you have to save up to, you know, start a small business or something like that instead of getting {quote} and {quote} small business loans or, you know, whatever.

[01:09:11]Uh the that's a modern fiat money phenomenon, and it's actually caused a significant amount of damage because a lot of these small businesses didn't work out. Like 90% of restaurants don't survive the first year or something.

[01:09:26]And that's horrible, like that that means that's a lot of wasted money, a lot of wasted labor that could have gone to something more productive, but because of, you know, the ability to print that out of nothing, this has caused essentially civilization to go stagnate or go backwards in many ways. So, um I would say that you know, real loans require opportunity cost.

[01:09:55]And too many too many of the loans that I I would say the vast majority of loans in this economy are ex nihilo and not don't have an opportunity cost ultimately speaking. I mean, I I know like VCs get LPs to pay in when they do capital calls and things like that.

[01:10:18]But vast majority of that money still comes from the bank because if you're an LP at a fund and you get a capital call for $100,000, I mean, you're you're not taking the $100,000 you have in the bank. Most most of them don't have $100,000 in the bank.

[01:10:32]Instead, they get a line of credit from somewhere based on the stock portfolio that they have and then they give that to the VC.

[01:10:42]And that that's how a lot of a lot of that stuff works is that uh you can monetize whatever capital whatever assets that you have and that's uh yeah, that's kind of how it is. You >> Mhm. Well, thank you very much for your time today, Jimmy. Do you have any final thoughts that you'd like to share with my audience?

[01:11:02]>> Uh I think things are um I don't know. I I I feel bad for the people of Australia, particularly post-COVID. Just uh you know, the draconian uh things that happened there and stuff like that. So, I feel like uh it's it's been kind of a depressing place in many ways cuz you're I I'm sure you're seeing a lot of migrants come into the country and things like that, which are are causing all sorts of chaos and stuff. Um this is where, you know, putting your trust in princes doesn't work. Um but, there is something that you can actually hold and possess that's digital and is very hard to take away from you, and that's Bitcoin. So, I would encourage all of you that are depressed about the current state of politics in Australia to actually look into what Bitcoin is cuz uh money is often at the root of almost everything.

[01:12:07]>> Perfect message to end the podcast with.

[01:12:08]Thanks for your time, Jimmy.

[01:12:10]>> Thank you.

[01:12:11]>> Still here? You're one of the good ones.

[01:12:14]We'll be back next week with a brand new episode. If you enjoy [music] how we cut through the noise, consider supporting us directly via the lightning QR code.

[01:12:23]Got a question or a thought to [music] share? Comments are wide open. We'd love to hear from you. For bonus content [music] and updates, follow us on socials @HonestMoneyShow.

[01:12:35]Until next week, [music] take care of yourself and your money, and stay decentralized.