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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

also competing for the scarce resource that is the system.

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

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

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

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

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

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

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

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

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

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

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

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

everywhere where people are rugging, hurting other people, starting

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

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

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

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

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

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

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

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

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

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

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

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

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

grow. They don't necessarily intend to be

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

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

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

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

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

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

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

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

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

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

nuanced conversation where you could talk about CVEs and to

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

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

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

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

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

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

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

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

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

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

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

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

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

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

carefully manage expectations and there are probably some challenges

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the right changes to the base layer.

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

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

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

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

You're the ossification guy, James.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

change their minds on something they believe in past because Bitcoin

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

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

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

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

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

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

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

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

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

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

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

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

manipulated, safety only comes by manipulating it because people always

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

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

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

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

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

absolutely taken over, regular transaction fees are no longer getting

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

say that we should stop exploring possibilities because we might do

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

other book exit voice and loyalty these are like famous books

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

consensus cleanup like there are known ways that adversarial entities could

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Alex Charles Jameson give it up for them thank you