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We're going to continue to move right through today's programming into the

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development side of the world and talking about building in terms of

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responsibility. That said, ladies and gentlemen, a big round of applause for our

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next panel and their moderator, Natalie of Coin Story Podcast and Bitcoin

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Educator. Ladies and gentlemen, round of applause for our panel.

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I'm so excited to be back at the Bitcoin Builders Conference. I'm one of the

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least techie people ever, so excited to have you guys explain it all to me.

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First of all, I want to introduce our panelists. We have Jamison Lopp from

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Casa, Charles Manke from Wolf Financial, Alex Miller from Hero Systems, and Paul

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Sztorc, LayerTwo Labs. They're not necessarily sitting in that order, but I

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want to first just really focus in on the title of this talk, Building on

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Bitcoin Responsibly. What does that mean to all of you? It's tricky. I mean,

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there's a number of ways you could look at it, but I think for me, the first

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thing that comes to mind is just the fact that what we have here is a

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shared resource. You could call it a platform, if you will, and of

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course, there's the permissionless aspect of it, is that anyone who is

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following the protocol can do whatever they want, even if it pisses other people

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off or maybe even prices them out of doing what they want. It's

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something you could even call coopetition in a way. It's like a lot of

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us are all working together in the sense that we're building on these

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ecosystems and making them more useful and more valuable, but we're

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also competing for the scarce resource that is the system.

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Coopetition. I like that. Okay. Yeah, I don't know. I guess I'll zoom out like a

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little bit. When it comes to building responsibly, one thing that's interesting,

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we host spaces all day and the conversations are various myriad of

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different topics across people who have failed, succeeded, rugged, and all these

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things. What's interesting is in Web 2, you get regulators that protect

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ignorance for the users, but Web 3 doesn't have that. You end up in this

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space where the moral compass is more important on the builder in Web 3 than

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it is in Web 2, because in Web 2, the moral is protected by the regulators.

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That's why I think if you're looking at a leader in Web 3, who they

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are is way more important than in Web 2. For me, I think the nature of

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the person is actually more important than necessarily how they're building,

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because there's a lot of ways to cut corners in crypto. You see it

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everywhere where people are rugging, hurting other people, starting

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new things. I think it goes down to the character of the person, not

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to make it a very deep thing, but it kind of ends up being that way.

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One thing people love about Bitcoin is it sort of returns accountability

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and personal responsibility. Maybe we'll dig into some of that,

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because anyone, like you said, can build on Bitcoin. In our current system, we

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do have this framework of regulators and gatekeepers, but if you're a freedom

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maximalist, you believe in free markets, then the free market is the best referee.

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Why do you think it's important to build on Bitcoin?

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I think it comes down to a combination of a couple of things of

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what do we owe to each other and what do we owe to our users. Obviously,

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crypto world in general has had plenty of scams and active scams.

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We can all agree that that is bad and you shouldn't be doing that,

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but we've also had plenty of people who just obfuscate things in an effort to

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grow. They don't necessarily intend to be

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stealing, but they do end up harming a lot of people intentionally or

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unintentionally. I think that's happened, to Jameson's point,

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sometimes it can happen between builders, depending on how resources are

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being used, or it can be happening to end-users. I think that's really

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the question. How do we take people who do have, let's say, pure

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intentions, they're not looking to scam or anything, but maybe not realizing what

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their larger responsibilities are to be building in an ethical way?

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In general, people want the Bitcoin protocol to resist change to some

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degree and they don't want to be beholden to a team of

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developers who have to decide something. This is a very interesting and

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nuanced conversation where you could talk about CVEs and to

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what extent are you unable to... If you wanted to just run an old

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version forever, would you actually be able to do that? Jameson has some

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great research on his blog where he tries to run old versions and things

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like that, which is fascinating. I think the overall picture is

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something like we don't want people to come and destroy Bitcoin. Gavin

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Andreessen had that metaphor about you're flying in an airplane and you

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want to swap out the engine while it's still in the air or something. I do

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think it's a conservative technical community and a conservative user

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base and it does want property rights over something. It wants to actually

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own something. So I think that would be part of it. Can you talk to me a

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little bit about the challenges of just building on Bitcoin in a way that

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provides the most opportunity but doesn't anger the people that are

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really passionate about the blockchain being what it was originally in 2009?

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I feel like you have to weave a little bit. You have to

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carefully manage expectations and there are probably some challenges

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technically that come up as well. Yeah, certainly. I think the soft fork was

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originally invented in 2012 because it was unable... You can look at

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comments that Gavin Andreessen made back then where it was like, we cannot

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reach every user and not everyone will upgrade, but if we do this other thing it

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won't matter that not everyone... We won't need everyone to upgrade the

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software, basically. This is a disputed point by some people, but you

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can talk... That was back in 2012, the idea of we will not force everyone to

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upgrade. We will allow people to just not upgrade and they'll still be on the same

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network. And then since then, the standards have been raised

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even higher of just not touching anything. Now we've gotten to

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the point... I mean, I think the soft fork is an ingenious way of actually

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protecting people's... Defending the users against developers, but even now the

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big phrase for most of last year was like, this is being built on Bitcoin

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without a soft fork or something. A BitVM where people are like zeroing out

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bytes. This is like how far we've come to not touch this. I think that's

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kind of an interesting point. It's almost an intractable problem though. I think it
really goes back

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to what Paul said about property rights. One of the fundamental, I

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think, values held by Bitcoiners, and of course this is very hand-wavy because

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we're not a homogenous group, but it is not disenfranchising people. But I

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think that if you look at it over a long period of time of history, you can

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realize that even if the protocol doesn't change, the rest of the world

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changes and how people use the protocol may change. And the free

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market, if you want to call it that, may disenfranchise people because certain

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attributes of these networks and how you can use them will change because new

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use cases come up. They may price out other use cases. And so now we're

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stuck in this really weird place where the narrative, of course, has gone to,

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okay, we build in layers. But even what Paul was talking about with soft forks

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of like, okay, we can change the protocol and do it without breaking people's

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money and disenfranchising them. Even the concept of soft forking has become

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somewhat controversial. We haven't had a soft fork in several years and even

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though there are a number of really good proposals out there, the developers have

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become very reticent to actually run the gauntlet of being a champion for a

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consensus change, even if it's a backwards compatible consensus change.

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And part of it, I think, is a lot of the vitriol that comes from certain

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segments of the user base that says, it's too dangerous to change anything,

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and then they'll point at different examples. And the main thing that I've

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been trying to get across is that if you look at how scaling is done with layers,

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even historically, we had to make changes to the base layer in order to make

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second layers possible. At least like with lightning, if you want to be able to

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have unilateral exit from some new set of game theory that requires some new

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rules to it, then you're probably going to need some new rules that you can

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enforce on the base layer. And I think that that's still true today. And I think

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a lot of people would agree that in some sense, lightning is one of the only pure

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unilateral exit layers that we have. And a lot of them, you can't necessarily get

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out of that layer without asking permission from someone. But there's a

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lot of possibility for us to build other layers with unilateral exit if we make

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the right changes to the base layer.

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Oh, really? So it's dependent on that? Can you help me, as a non-techie person, a

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non-developer, better understand this debate? Because I see it more frequently

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online now, the idea of whether Bitcoin's base layer should ossify or not. And what

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are the two sides, thoughtfully? The straw man, the steel man. Can you guys talk
about it?

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You're the ossification guy, James.

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Yeah, but actually, I was going to say that. I always think of James as that, but
you don't.

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But see, it's a very nuanced thing. I definitely don't think of you as the

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completely pro-ossification guy, because of course, it is kind of a

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bizarre thing. I mean, some things we should definitely mention are something

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like, maybe like, even something as extreme as software dependencies or

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something, where it's like, if you're going to build a house from scratch, you

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don't build the plywood from scratch or the screws from scratch. So

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there's all these people who have built how to multiply a matrix or

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something, these tiny sub-libraries that Bitcoin Core is using. And those

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people update those all the time. Those like Heartbleed, there was that famous

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thing where there was a cryptographic library that everyone was using, but it

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had a terrible bug in it, so it didn't work at all, actually. So that

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would be like, a bunch of people are building houses with these screws, and it

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turns out the screws didn't work. They're made out of glass or

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something. My favorite was the left trim on the node libraries, where

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someone just basically deletes a dependency that's at the top that has a

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thousand dependencies, which all have a thousand dependencies. And one

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deletion of one repo basically wipes out thousands of software programs. And I

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think what that kind of comes back to is like, we can get into the debates over

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ossification, what should, shouldn't happen. I think, again, when we come back

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to the idea of responsibility, it's about being transparent and honest in

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what you're doing. You're never going to get everyone to agree on a change.

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You're never going to be able to do anything or even not do anything without

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some people both disliking it and even potentially being harmed by it, or

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harmed in the sense of like ending up in a worse off place. The status quo is also

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not acceptable to everyone. And people get harmed by the status quo. So I

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think that's where it comes back to, like, are you being honest about what

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you're doing and transparent? I think there was a lot of, let's call it

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drama, around the Bitcoin testnet 3 earlier this year and with its

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performance based on, but like, since Jameson, you were involved in some of that,
but you said

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very clearly what you were doing and why and why it needed to happen. It caused a

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lot of pain for a lot of people, like myself included, my company, and like

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because of just stuff we were running on top of it. But like, if nobody does

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anything, you're never gonna get any progress. And so that's why I think it

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comes back to the, are you being honest and upfront about what you're doing and

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why, so that other people can make their choices and adapt to engage in it. And

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that's fundamentally kind of comes back to that core idea of property rights. So

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I also see it as a 10-year history now. Ten years ago we were given the

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promise of sidechains, of, you know, permissionless two-way peg sidechains.

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And the idea there was to have basically infinitely scalable and growable

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ecosystem where we don't have to do everything on the Bitcoin base chain

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because anyone who wants to can go create their own other network that you

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can send your Bitcoin over to, unilaterally permissionless, yada yada,

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like upholding all of the ideals of Bitcoin. And we never got that, and as a

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result we've had, call it, you know, shifts in narratives and sort of coping with
the

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fact that we don't have it. And so, you know, there are protocol

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changes that we can make that I think would enable us to finally start to

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achieve a future where the builders who want to go do crazy stuff can do that in

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a way that is actually, you know, cryptographically tied to the Bitcoin

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base chain without having to create like a multi-sig Federation that, of course,

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could potentially be corrupted and failed. Charles, did you want to weigh in? Yeah,
I mean

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this topic is so nuanced because, like, when we'll host a space of just Bitcoin

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OGs, Layer 2 companies will come in and market to those companies, but the

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tribalism that happens around those companies is so stark it's hard to

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change their minds on something they believe in past because Bitcoin

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represents more than just a technology, it represents like a freedom or an

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altruism. And when people stand for that it's really hard for you to start

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messing with it because you're not messing with a tech, you're messing

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with an ideology and people get weird about that. So I think like ultimately

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like going into runes, you know, runes with stuffing transactions and then what

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was happening is regular transaction would get stuck in the mempool for six

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and seven and eight blocks and they wouldn't come down for long periods of

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time. Now the miners get rewarded but what ends up happening is peer-to-peer

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regular transfer gets pushed out. So, and I'm not making a stark contrast that I

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believe in either way because I believe if something can be manipulated it

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should because just because you have a door to your house and it's unlocked

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doesn't mean that that's safety. And if there's opportunity for Bitcoin to be

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manipulated, safety only comes by manipulating it because people always

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change on the precipice of difficulty. Like ossification is the idea of like

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what could happen, but I think the ossification becomes way more at play

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when they break it. And unfortunately a Bitcoin is such a big beast at this

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point like if we break it it's like will something come out and replace it? If we

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end up in a position where there's no more peer-to-peer transfers, runes is

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absolutely taken over, regular transaction fees are no longer getting

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into the block, they're stuck in the mempool forever. I mean it's a stark

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thing but and I don't necessarily you know believe either way is like the

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right way. I just I think inherently you either have to ossify it or manipulate

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it until it breaks and then have another Bitcoin. Well yeah I think this is a good

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point of like similar to what I think Jameson you were saying earlier which is

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like how like the end-user has expectations and needs and like how

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ossified will Bitcoin be if it is ultimately replaced by something else?

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That's a that's very that's like negative 100% ossification you know I

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mean because you changed it out of existence by just the user not demanding

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it anymore. And we have seen quite a few you know changes over just a short

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amount of time you know I like I've been alive only so long but like there was a

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time before widespread internet access there was time before people had it was

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a time when there was only one computer in every house right there was a time

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when before a smartphone so I don't know it's the ossification strategy does seem

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like a big risk and I think this is part of the sidechains vision was that

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you could ossify L1 it's very safely and in a very sustainable way be precisely

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because it's kind of a paradox but really it's more of an inevitability

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which is like because you need to cater to different people and they won't

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always agree and some of them are early adopters and some of them are late

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adopters and so you would have the L1 should be the same and then you'd have

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all this other new these new L2 things that would all be blockchain so you'd

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explore the blockchain space. You know Bitcoin has made me think more

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profoundly about incentives and Alex you brought up the idea that has to be the

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ethics and the morals of the person but we've also seen controversy over even

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funding developers and have any of you ever worked at a corporation where

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you've had a mid-year review anybody yeah you remember those the thing that

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frustrated me about that is they have to tell you something they have to find

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something wrong for you to improve on you will never you could be the best

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employee in the world you'll never have a mid-year review that tells you there's

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nothing you can work on is there a component of that like if you're funded

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don't you have to start tinkering and almost find something wrong and then

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that is its own kind of corrupted incentive yeah I mean I think that is

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the reason that you know some folks who are for I'll just call it pro complete

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ossification let's say don't like it and you know yes if you have people looking

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at a problem they're gonna find something to work on at the same time I

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don't think reasonable people for the most part gonna say there's nothing

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about Bitcoin that needs attention paid to it even if you don't want substantial

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changes but going back to that idea of incentives which I think is exactly

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right people are not gonna stop trying to do more on top of Bitcoin I'd

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actually go so far as to say it's immoral not to because of how

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unbelievably tiny and concentrated the user base of Bitcoin is today like you

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cannot say that you believe in like the freedom and optionality and power that

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Bitcoin provide and say you're happy with where it's scaled out to oh yeah we

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have like a couple million wallet we have a million wallets that one Bitcoin

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on there are eight billion people on this world right and most of the people

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who hold a full Bitcoin live in the US which like again we can argue about the

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current state of our government and whatnot here but it's a hell of a lot

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better than a lot of other authoritarian regime and like the reason that I work

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on layer twos is because I really believe in scaling Bitcoin out to as

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many people as we possibly can and we just leave it locked up with a small

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group like that group has a lot of incentive to not break the chain and I'm

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to be clear do not want to break the L once but if you've already got ten

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million dollars in asset worth let's say on Bitcoin today yes you are gonna be a

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lot less interested in anything that potentially risks that but what about

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the person who only has ten dollars on Bitcoin and can't do anymore because the

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transaction fees are too high and that's not gonna change because people

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do want to do new and innovative things on it like if we don't do something to

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scale it and I think sidechains and is absolutely the way we need to go because

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it's the only thing that's viable on it we're just trapping it as a toy you know

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go back to the pet rock analogy and not actually bringing like that promise and

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the freedom that it provides to the people who actually need it that's that's

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why I think it's somewhat of an intractable problem and also because

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both of you have talked about you know breaking Bitcoin and that is subjective

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and and of itself dependent on what your use case is and your desired properties

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of Bitcoin are but I think if we're talking about responsibly building then

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we have to understand that we're still exploring the possibilities and so to

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say that we should stop exploring possibilities because we might do

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something wrong I believe that that is that is projecting from a position of

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fear and it's a loser mentality and in my view and and this may sound like

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overly bullish or optimistic but I don't think it's possible to break Bitcoin by

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which I mean I think it's possible to maybe temporarily screw with Bitcoin so

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that it doesn't work as people expect for a while but I believe that the

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reason Bitcoin works is the anti-fragility and why is it anti-fragile

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it's not because of any one particular aspect of the protocol or the way that

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the network works it's because of us it's because there are innumerable

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people out there who are either you know morally or ideologically or financially

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incentivized to make sure that this thing keeps running and so yeah I mean

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it's been a decade since we have broken the network in the sense that it wasn't

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working for a few hours but what happened everyone came together they

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said oh shit we broke it let's fix it so yes maybe we'll have another one of

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those things happen if we continue experimenting but the funny thing is

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that thing not to interrupt but that thing that was not like a soft fork

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that's the other thing is these are like unexpected emergency things that

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was like an optimization refactor type of switching the database or whatever so

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and the other thing the Mac Corrales thing that was also a refactor to shave

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off like 600 microseconds or something so the bugs are not the soft forks that

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people the ossified people want to like ossify now they want to like do like a

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campaign and stop the soft fork is definitely not the enemy of you know

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ossification I think but it's the those these weird outages were because of

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unexpected things so that that's a do you guys forecast potentially having

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another block war over something yeah eventually I think yes over what and why

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well I do think in general there is a complacency right now that is taking hold

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and so people think that it's Bitcoin it's for it's a foregone conclusion that

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Bitcoin will succeed and so these people just think it's inevitable and I think

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that's actually the kiss of death and see the normally when awesome people

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there are other people who talk about ossification long before Bitcoin and they

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talk about like there's this famous book the innovators dilemma and there's this

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other book exit voice and loyalty these are like famous books

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Balaji has brought these up at Bitcoin conferences so maybe people have heard

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of them but usually the story is like the organization ossifies and then it

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eventually has to be replaced like there's no there's really not that many

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stories where it's like it ossified and then it lived happily ever after that is

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actually very rare so the status quo is not going to be I mean you said

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something very good I thought about like so it reminded me of Satoshi you're

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talking about eight billion people we like we have to go eight billion people

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or or zero I think actually and Satoshi Nakamoto has this quote where he says

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he's talking on the forum and he says I'm sure that in 20 years there will

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either be a very large transaction volume or no transaction so that was

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obviously you can interpret it in various ways I don't want to get like

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into like anything about the block size because I think it's completely

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irrelevant because that we can have a small ossified l1 block size and still

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have a large transaction volume on the L2s but I think he was definitely right

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like either this idea will succeed and you're either growing or dying I think

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you know so it's like it's either gonna be like the intranet where it just takes

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over and becomes this thing or it will something else will do that and then

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this will just fade it and it will be nothing it would be Esperanto yeah so I

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mean there's going to be conflict and there's there's conflict because the

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developers who know what they're doing they know what all of the technical

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problems with Bitcoin are and for example Rusty Russell has his great

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consensus cleanup like there are known ways that adversarial entities could

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attack the network now and break it from pretty much everyone's perspective and

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we know how to fix those things and to throw up our hands and say no we

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shouldn't fix them because doing anything as dangerous as you know once

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again I think a very silly position to take you know from a really fear

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projection perspective you know you made me think of a Bitcoin core

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developer Gloria said it on stage that basically a military attack could bring

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down the Bitcoin network and we're not prepared yet and people think that we're

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in this very safe place and it did it terrifies people who are non-technical

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and don't understand the things you do so we're wrapping up now so give us

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something to look forward to with some hope here you guys obviously are working

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on Bitcoin because you think it will succeed right well yeah I mean my my

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optimistic take is that you know builders gonna build and you know you

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can you can hate the idea of changing Bitcoin as much as you want but you

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can't stop the builders from proposing changes the only tricky thing now is as

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I said it's kind of builders finding themselves stuck between a rock and a

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hard place of knowing that there are improvements that are you know highly

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desirable and knowing that there are factions of people who are gonna fight

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against those it's a really weird position to be in but I'll do whatever I

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can to support people and you know if I have to be a dick about it I'm happy to

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do so well you got to make your case right and then the free market should

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should decide right yeah yeah no I I think I'm relatively neutral you know I

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think without veto power in any central position you always end up with

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progression no matter what and I think that like what I mean is that if there's

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two people and they can manipulate a thing the one person that can't or won't

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is always gonna sit by the wayside and the other guy will if there's no central

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entity to stop it always ends up manipulated so I think it's a matter of

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time I think we end up manipulated and it'll get to that position where we're

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you know kind of figuring out what we want to do with it after the fact so

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yeah yeah I think as Paul kind of pointed out that Satoshi said even 12

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13 years ago like it bitcoins in an evolve or die place and and that doesn't

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necessarily mean you need drastic changes you need to try and you're never

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again you're never gonna do everything you need on the L1 and it's gonna be

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just as much of a fight to double capacity on the L1 as it is to introduce

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things that allow 10,000 X scaling on the L2s and so I think it's focusing on

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the if that end goal again is really and for me it's how do we provide an

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alternative like financial system globally it's we've got to focus on that

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that 10,000 X increased view all the way out there and just figure out cool how

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do we protect the L1 as best as we can we don't want to wreck it but we got to

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give the things that do that actually make it possible to scale it out that

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much it's who a billion yes I do have my own L2 proposal just VIP 300 and you can

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down there's test software you can download and play with for yourselves

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LayerTwoLabs.com slash downloads and have stuff there we have a Zcash level

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privacy and planetary scale I have a bunch of articles that I've also written

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about that so so you want a little bit of hope you could go and try this off

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for yourself a lot of people have like PowerPoint slides or whatever which is

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great I actually think the industry is is already moved past that and there are

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a lot of people who if you can code something it will exist and it has the

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software we've written is for all three operating systems and it has buttons you

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can click it as a GUI so so I would I would try that out and look at the

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point the proposal is the only thing it does on L1 is use the unused

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op-nop 5 to count to 13,000 over and over again it's a little bit more than

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that but that's basically all it does and it's a completely opt-in and also

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reversible really if you think about it I think the soft fork is a very we saw a

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little bit of time and so I'm gonna ramble about the soft fork in general

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which is that this whole reason the soft fork was invented in 2012 as I alluded

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to earlier is that before everything was like we changed to a new version but the

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soft fork was people did not need not everyone needed to only the people who

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wanted to use the new feature had to upgrade this included 51% of the miners

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so you could say maybe that's not true but it's the the miners want to collect

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the transaction fee so they're also using so the whole point of the soft

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fork is it was a change and not a change at the same time so even though it is a

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creative act of a change it's not really as much of a change as people might

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think and it's very underappreciated for that reason well thank you guys so much

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I think we've learned a lot and really appreciate being on stage with you Paul

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Alex Charles Jameson give it up for them thank you