Bitcoin core developer Eric Lombrozo and OB1 CEO Brian Hoffman debate whether SegWit2x is the best path forward, discuss who supported it and why, and whether the potential for a hard fork harms the price. They also discuss what happens to the power of core developers now that a change they didn’t support might get pushed through, what their ideal solutions for increasing transactions on the network are, and how much power miners should have.
Show notes
Why November will be the real test for bitcoinBack story referenced in this episode
The different sides in Bitcoin threatening to cut each other out New York agreement Economic activity moving to other blockchains Brian’s company Eric’s companyTranscript
Laura Shin:
Hi, everyone. Welcome to Unchained, a podcast engineered by Fractured Recording and produced by me, your host, Laura Shin, a senior editor at Forbes covering all things crypto. Thanks for tuning in. If you’ve been enjoying this podcast, please help get the word out about the show. Share it on Facebook, Twitter, LinkedIn, or in your secret Slack and Telegram channels. If you have a chance, give the show a rating or review on iTunes or wherever you listen to your podcasts. Big thanks to our sponsor On Ramp. If you’re having an ICO, a token sale, a token allocation event, a token generation event or whatever other phrase you come up with to try not to get on SEC radar, you need a website. Check out On Ramp. This full service creative and design agency provides its clients with attractive and persuasive branding, websites, and marketing materials. Spark interest in your project, generate buzz, check out Thinkonramp.com.
The topic of today’s episode is Bitcoin’s intense and incredibly expensive game of chicken, which is nearing at least the first cliff. With me today to discuss the upcoming events of this asset, this digital gold that has started all this crypto mania are Eric Lombrozo, a Bitcoin core developer, and Brian Hoffman, CEO of OB1, which runs the project Open Bazaar, the eBay of the decentralized web. Welcome Eric and Brian.
Brian Hoffman:
Thanks for having me, Laura.
Eric Lombrozo:
Yeah. Thank you for having me on.
Laura Shin:
Okay. So I’m going to start this discussion with a little framing for our listeners, particularly those who are new to the space, so that we can dive into the meat of the discussion. About three years ago, the Bitcoin community began to face the question of how to scale the network. Some of the early core developers that had been deeply involved in the project wanted to lift a cap of one megabyte that limits the amount of transactions that can be processed at any given moment. They wanted to lift that from one megabyte to different caps such as some of the different proposals were like eight megabytes, 20 megabytes, a flexible cap. But that cap at the moment or the new proposal that seems to have the most support from people is two megabytes. However, that framing of big blocks versus small blocks is only one way of looking at this question.
Another big issue that the question raises is whether or not to conduct a hard fork in order to scale the network since that is what would be required in order to change that cap. The core developers say that doing so runs the risk of splitting the chain, which could result in two versions of Bitcoin and that would have a deleterious effect on Bitcoin’s reputation as digital gold. A couple years ago, they began working on another scaling solution called Segregated witness that would essentially enable more data to be processed in blocks without requiring a hard fork. It also included a fix for a problem called transaction malleability.
The SegWit, as it became known, was also greatly anticipated because pushing it through would enable something called the lightning network and that would bring many more transactions to Bitcoin. Not necessarily all of the Bitcoin block chain but to be settled on it. At some point, the devs and the miners had a meeting in Hong Kong where the attendees signed a document agreeing to implement both SegWit and hard fork to two megabytes, but what actually happened in this meeting is a dispute because the attendees had different conceptions about how much authority this agreement had.
Regardless, once the work was done, to begin implementing SegWit, only about 30 to 40 percent of miners actually gave it support but the threshold necessary to implement it was 95 percent. One miner, in particular who owned the largest mining pool as well is a company called Bitmain, headed up by a man named Jihan Wu. Bitmain is also the largest mining chip manufacturer and they opposed SegWit unless a block size increase came along with it.
So a stalemate occurred. SegWit was sort of held hostage by Bitmain’s desire to see this one megabyte block size increase and as the divide deepened, each side began essentially threatening to cut the other side out of Bitcoin. I did write a few articles on this, which I can link to in the show notes. However, in May, Barry Silbert, who’s the head of Digital Currency Group, which is the biggest block chain VC firm brokered an agreement among the biggest economic actors in Bitcoin to push through something that they’re calling SegWit2X or it’s often called the New York Agreement as well, which basically says that SegWit will be implemented with 80 percent of mining power and then after that the network will upgrade to a two megabyte block size limited through a hard fork.
It’s essentially the Hong Kong agreement from a year-and-a-half ago just with some details that are different. The companies that signed this agreement include some of the biggest economic actors in this space just as Coinbase, Block Chain, .Zapo, Shape Shift, and of course Bitmain which is this company that is most reviled and blamed for holding SegWit hostage. So in response, there was more support began to build for something called a user-activated soft fork or UASF. That actually also risks causing a chain split. So the deadlines for both SegWit2X and for the UASF are nearing.
At the moment of recording, it’s actually Thursday afternoon. We’re very close for SegWit2X to be locked in.
Eric Lombrozo:
Bip 91.
Laura Shin:
It’s called Bip 91 for those of you who maybe don’t follow all the technical details. If it does go through then that should prevent the chain split that could have been caused by the UASF. But it doesn’t resolve the question of whether or not we will see a chain split in November, which is when the hard fork to move to the two megabyte block size will actually take place. So that’s everything. It’s a very long summary but we needed to get through that backstory in order to have a meaty discussion. So I actually want to start our talk with Brian. Brian, OB1 signed the New York agreement why?
Brian Hoffman:
So I think that was a pretty good summary of what’s happened at a pretty high level. I mean it’s been several years now and obviously there’s a lot of details left out between this, but I mean from our perspective, I’m not a core dev as Eric is or even work with the Bitcoin core code directly, but we built a business and an open source project on top of the protocol and our successful as well as a lot of other groups that are building on top of the Bitcoin’s network effect understand that the project has to scale in order obviously be able to support what these groups want to do. I think there’s this disagreement about how that happens, but ultimately the most important thing for us is that we try to move forward in some way that all parties that are pertinent to the discussion are not fighting with each other.
Laura Shin:
I’m wondering like when you were saying it’s necessarily to scale, as we mentioned earlier, SegWit actually would enable more transactions to occur on the network at any given moment. So why sign the agreement that would not only bring SegWit2X but also increase the block size limit?
Brian Hoffman:
Well, I mean I think first of all it’s important to understand that there was a time before SegWit existed and there were many discussions around how Bitcoin could scale before SegWit was even a thing. I think a lot of the people that feel this way about scaling that SegWit is not the optimal options are the ones that have been pushing back for the last few years and I think fair or not they feel that giving SegWit now is the compromise that moves the market forward without ruining too many things, but yet a hard fork later on would be the part that they would be most interested in. I think the conversation has been reframed where everybody agrees that SegWit is awesome and the hard fork is not great, but that’s not how these people feel.
Laura Shin:
So what is their objection to SegWit? Why do they feel it’s not the optimal solution?
Brian Hoffman:
I mean this conversation will probably get in the weeds and Eric could probably talk circles around me in terms of whether it’s technically accurate, but my understanding is that SegWit could be enabled through a hard fork method and there are several other defects in the protocol that we could also kind of package as part of that hard fork and clean up the code. Instead, many of them feel that SegWit in its current implementation as a soft fork is a little bit hacky and maybe not as clean as it could be. I think that choice was made in order to have backwards compatibility with other apps instead of breaking the network maybe with a chain split.
Laura Shin:
Oh, interesting. For them, and I’m assuming you, why is it that increasing the block size is the better way to go?
Brian Hoffman:
I mean obviously increasing the block size is only a temporary fix. I think everybody pretty much agrees that that’s true and I think there’s a lot of potential outcomes here. We could raise the block size and it could be immediately filled up with spam and be a problem once again, which is what some people speculate and maybe it holds us off for another year. For me, the most important aspect of this is that I don’t feel that this change is something that is going to long-term harm Bitcoin and the goodwill and positivity that comes out of actually moving all of the players in Bitcoin forward together is going to allow us to not have to go through these Mexican standoffs every time there’s a critical change to be made to the network.
Laura Shin:
But wait, do you think it is moving everyone forward together because I see that the core devs are not moving forward. They’re sort of being…
Eric Lombrozo:
They wrote Bip 91.
Laura Shin:
SegWit2X.
Eric Lombrozo:
But I mean Bip91 and everything that’s going on with making sure that the transition is going smooth. I mean there’s a lot of core developers working on making sure that SegWit actually activates and it’s smooth and there aren’t any market disruptions. So there are core developers that are actually actively working on trying to make this transition as smooth as possible.
Laura Shin:
Oh, okay.
Brian Hoffman:
I agree. That does not mean that everybody agrees with what’s happening, but I think we’re all trying to work together to make sure that this isn’t a disaster in some way because ultimately the market is deciding that SegWit is going to happen, right. We’re obviously seeing Bip 91 is probably going to be activated soon.
Laura Shin:
Not just SegWit but SegWit2X, which is a different thing.
Eric Lombrozo:
Well, we don’t know about that. That’s like several months farther on. I think right now we’re just concerning ourselves with the current activation and seeing what’s going to happen because a lot of things can happen between now and three months.
Laura Shin:
Okay. So I want to go back to, at this point, about whether or not the core devs are coming along because they wanted to or sort of because they realized that it’s happening anyway and so they need to jump aboard, which is it?
Eric Lombrozo:
Let me just clear up a few things. When you talk about core devs you’re really talking about a whole bunch of volunteers that work from all over the world. It’s not just this one homogenous group that agrees on everything. There’s a lot of internal disagreements and minor tiffs of different approaches of doing certain things. But for the most part, I think there’s a general agreement as to the general road map as far as the best way to move things forward. But let me just comment a few things, if I can, just to give a little bit of context of my current situation in this.
When I first started working on Bitcoin I saw it as a proof of concept. I did not see it as a completed product. It was only worth…there were barely any markets and it was worth just like a couple dollars or something like that.
Laura Shin:
When was that?
Eric Lombrozo:
This was like 2011. I expected it to become obsolete. For someone else to come up with a better cryptocurrency that would replace it eventually. That was kind of my expectation. Then I saw the rise of Ripple and Ethereum and several other projects, which I participated in, in the early stages hoping that we would be able to fix some of the issues with Bitcoin and create a better cryptocurrency. So it’s not like I was Bitcoin maximalist that thought it’s got to be Bitcoin and everyone’s got to do it this way.
I always thought that if someone came up with a better idea and wanted to have a better cryptocurrency that was fine. It would probably be called something other than Bitcoin so you have Ethereum or Ripple or whatever and eventually maybe users would migrate over to that because it would be a better platform at some point. But then I quickly saw that other projects made even worse mistakes than I think Bitcoin made and there was a huge breakthrough, which was the discovery how to be able to change consensus rules in a backwards compatible way. This was like the really big breakthrough that made me believe in the future.
Laura Shin:
Which is called a soft fork.
Eric Lombrozo:
Well, yeah. Soft fork plus a whole bunch of other things that go into it. It’s not…being a soft fork alone doesn’t make it backwards compatible, but it’s an important tool in the whole arsenal of making things backwards compatible. So for instance…
Laura Shin:
But just for people who don’t know what all this means, the reason that’s significant is because then you can prevent a chain split and therefore prevent two versions of Bitcoin being created. Is that it?
Eric Lombrozo:
That’s one of the big points and the other one is disenfranchising people. For instance, if you change compatibility then maybe people’s preferred programs are no longer going to work on the network anymore or maybe coins or contracts that they had before are no longer going to be honored by the new rules or stuff like that. That’s also an important factor that figures into the backwards compatibility and a soft fork alone is not enough to ensure that. For instance, a soft fork could be used to blacklist addresses and that’s something that’s a big no-no. That’s something I don’t think any of the developers would support, for instance, even if it could be done as a soft fork.
So it’s really the combination of no chain split plus making it an optional feature and the sense that people that don’t want to use the feature are not adversely affected by other people using the feature. So it was discovered that it was possible to extend Bitcoin in a lot of different ways by committing to extra data, to _____ 15.08 extra data in a block. Some people have made a big deal of whether it be easier to implement something like SegWit as a hard fork or not and the truth is, no, actually it’s really no different. It’s just where the commitment actually is placed. Obviously, with a hard fork if we have the full ability to change anything we want and we don’t care about compatibility we could start from scratch and with the lessons of the past we could fix a lot of other things if we wanted to.
But one of the big challenges and I think this is the biggest engineering challenge in Bitcoin it’s like when I design a lot of other systems I usually, especially if I get to start from the early stages, try to design it from the start the way that I want it to be. But Bitcoin is how it is right now and we’re bootstrapping this network that already has a lot of value, and the real engineering challenge isn’t how would I build it from scratch better but how can I take what exists right now and modify it in a way that isn’t going to break it that’s going to add the functionality that we want.
Laura Shin:
So for you it sounds like you feel like the number one priority at any point when you are making decisions about how to develop the protocol is whether or not you can make that change in a backwards compatible manner, which would therefore prevent a chain split. Is that what you’re saying?
Eric Lombrozo:
That’s a huge component, yes, and if it’s not possible to do that then I would probably consider doing something like Ethereum or Ripple, which is a separate block chain. So I mean if I wanted to really change Bitcoin drastically and do something that was very different that it was very hard to do in a backwards compatible way I would probably just start a new block chain.
Laura Shin:
I want to actually just take these thoughts and shift them over to SegWit2X. Here we are at this moment where it looks really likely that Bip 91, SegWit2X is going to go through, which means that SegWit will lock in and then in November there is likely to be this hard fork to a two megabyte limit. So what is your position on that? Do you think that it’s a good thing or a bad thing that this is probably going to happen?
Eric Lombrozo:
Well, first, let me clear something up. The whole miner signaling thing is actually an arbitrary mechanism that was added to the software to help coordination and to make the transition smoother.
Laura Shin:
And by miner signaling you mean this is how we come up with these percentages like 80 percent threshold and stuff?
Eric Lombrozo:
Exactly. That was actually something that was invented way after Bitcoin actually started. The first few soft forks did not use that mechanism at all.
Laura Shin:
How did those go through?
Eric Lombrozo:
They just had a flag date or block height and basically users would run the updated software and at some point blocks that did not conform to the new rules would just basically be rejected by those nodes. So it was a form of user-activated soft fork even if it wasn’t called that. The miner signaling was added later with a mechanism that’s called a super majority. I believe it was a Bip 30 something or other that was the first one that was deployed this way.
What this allowed was for miners to signal intent to start enforcing the rule which made it so that it was easier to transition the network more smoothly and give people time to make sure that they don’t end up mining orphan blocks or that they don’t end up accepting invalid confirmations and stuff like that.
Laura Shin:
So it’s a good thing that this is the way we do it now?
Eric Lombrozo:
Well, it was a coordination mechanism that expected cooperation and as long as there was cooperation between developers, industry miners, users, etcetera it was fine, but the problem is when you get this kind of adversarial scenario and in this kind of a situation it just does not work at all. I believe that it has been abused and has been given way more importance than it really has.
For instance, this whole 95 percent thing, that was an arbitrary choice that was made in the SegWit deployment. It could have been made as low as probably 60 or even lower and probably still would have been relatively safe but there probably would have been a few miners that would have mined a few bad blocks and there might have been a couple small chain splits just a few blocks deep and other issues like that. Ninety-five just makes it so that it’s like almost guaranteed that there’s going to be almost no chain split at all.
Laura Shin:
But Eric, you were saying we could have made it 60 percent and stuff but it only ever got 30 to 40 percent anyway, so it wouldn’t have gone through even if the threshold had been lower.
Eric Lombrozo:
But at this point it was all just political posturing. I mean really if you think about what happened with the signaling is people were just starting to stick random data into blocks and using it as a signaling mechanism that didn’t actually trigger anything in the software that people were actually using. So if I’m running a node and someone decides to stick something in their Coinbase transaction that says I support the New York agreement or whatever, okay, that’s a way to kind of demonstrate support from minors for something like that but it’s not going to change anything of my software. It’s not going to make some blocks suddenly become valid that weren’t valid before.
Laura Shin:
Okay. I guess what I’m trying to get at is I don’t know why this point is important to you. Is it because you feel like this is a bad way to go about doing things? Because I actually did want to ask you that later like what is the best way to make decisions like this, but is that why you’re telling me all this?
Eric Lombrozo:
The reason I bring this up is because I think there’s been a huge misconception by some of the community that there’s this kind of political process that’s established in Bitcoin that works by miner voting and that’s actually not the case at all. I know that the Sitoshi white paper talks about one CP, one vote, but I think that it’s very confusing in a lot of ways and people have tended to misinterpret that. Back when the white paper was written it was still something that was being prototyped. It wasn’t even released yet, but if you look at the original implementation of Bitcoin the software checks to make sure that blocks are valid.
So really what miners are choosing is which block chain to extend and which transactions to include in their blocks. They’re not actually getting to choose which rules the block chain that they’re choosing to follow will enforce. You see that in all these markets where you have a bunch of different block chains. For instance, look at Poloniex or something. You have all these different block chains and all these mining tools that actually shift their hashing power depending on what’s more profitable to mine at any given point in time.
So really miners are following whatever chain is the most profitable for them to be mining at that particular moment and they’re providing a service to users, which is to secure their transactions by making it expensive for someone to reverse it. That’s what the proof of work actually does. But it’s not actually a voting mechanism. It’s not actually a political decision-making process at all and it was never designed that way. I think this signaling mechanism that was used for soft forks kind of played into that whole misunderstanding. So now we have this kind of theater for all these different signaling of different proposals and this and that but that actually doesn’t change what the software does unless people choose to run software that actually enforces those new rules.
Laura Shin:
Eric, I just want to stop things for a second because I feel like we’re getting into the weeds here. I probably want to talk about this later like what is the best way to do this because I just need to give listeners a framework to also talk about for the rest of this podcast. I actually just want to hear from both of you what deadlines and events are you most worried about over the next few months? What are some of the deadlines that are coming up? What is going to happen at those moments? What should users be aware of and what are the risks that happen at each of those points?
Eric Lombrozo:
So right now we’re waiting for Bip 91 to activate. What Bip 91 does is it requires signaling of…the currently deployed versions of SegWit which is running on over 80 percent of nodes right now has a particular trigger for it to activate and one it triggers then at that point all blocks that use SegWit are going to have to enforce the SegWit rules.
Laura Shin:
So does that mean that immediately the chain has the segregated witness feature, which means that Lightning can be implemented after that?
Eric Lombrozo:
Not immediately. This is just a trigger for the next trigger. It’s kind of like a Rube Goldberg device. It triggers the next trigger, which is going to be a two-week lock-in period and then a two-week activation period. So we’re probably looking at activation. Actual SegWit activation sometime probably mid to late August.
Laura Shin:
So basically, if we reach that 80 percent threshold which it looks like it’ll be today I think. That means it kicks off a two-week period of what. Doesn’t it have to do with when the difficulty actually…
Eric Lombrozo:
Yes.
Laura Shin:
Can you explain that?
Eric Lombrozo:
The way that SegWit is currently deployed is sing what’s called Bip9, which is a signaling mechanism that operates on every retargeting interval, which is every 2,016 blocks. So every 2,016 blocks if 90 percent of those blocks signal for SegWit then at that point it locks in and then people are given two weeks to upgrade and then after two weeks the next retargeting interval after another 2,016 blocks. At that point, people can start using SegWit transactions.
Laura Shin:
And this retargeting interval, that has to do with the hashing difficulty on the network?
Eric Lombrozo:
Yes, and it was just chosen because it was a convenient interval that already existed as part of the protocol. So it was decided that that interval was going to also be used for the Bip9 activation mechanism.
Laura Shin:
Okay. But then you were saying after that first two weeks then what has to happen after that in the next two weeks?
Eric Lombrozo:
So after it’s locked in then two weeks after that all the nodes out there are going to start enforcing SegWit. So if miners mine blocks that do not enforce it, that include the transactions that are invalid according to the SegWit rules they’re going to get rejected by these nodes. So that means that miners, if they include SegWit transactions, they have to enforce the SegWit rules at that point. So that’s when you could consider the activation to actually have been completed.
Laura Shin:
Okay. So if I’m a miner and I don’t enforce that rule and I mine a block then I don’t get the block reward?
Eric Lombrozo:
Exactly.
Laura Shin:
So there’s an economic incentive for them to do this.
Eric Lombrozo:
Exactly.
Laura Shin:
And then at which point can the different actors in Bitcoin use the feature of Segregated Witness?
Eric Lombrozo:
As soon as it’s activated, which is going to be one retargeting interval after it’s locked in so it’s probably going to be somewhere in late August, like a month from now or something like that where people can actually start to use it.
Laura Shin:
Okay, so it’s like two intervals away.
Eric Lombrozo:
Yeah.
Laura Shin:
And if that happens then that means that the user-activated soft fork will not go through, which then means that the risk of a chain split from that will also not happen, is that correct?
Brian Hoffman:
That’s true.
Eric Lombrozo:
Basically what happens is if Bip91 activates and miners actually start enforcing it then that kind of makes Bip148 moot assuming that they do follow through with it. However, a lot of users still are running Bip148 just to make sure that miners follow through on that because most users are actually not running Bip91. Bip91 is for miners to enforce among each other. Bip148 is for users to check the miners and it’s kind of like checks and balances to make sure that the miners are actually following the rules.
Laura Shin:
So then it sounds like the next big deadline for people to focus on in particular to worry about whether or not the value of their Bitcoins will drop or whether or not they’ll suddenly have two different versions of Bitcoin or even more will take place in November. Can you describe what’s going to happen then? Brian, do you want to do that since Eric’s been talking a lot?
Brian Hoffman:
I mean the principle behind SegWit2X is that it’s roughly three months or 90 days past the activation of SegWit then would be the attempted hard fork. I think it’s important to realize that that’s not necessarily a sure thing, right. This is clearly going to be a massive, contentious time period I think. I don’t know if Eric agrees with that but I think there is speculation that a lot of these people that just want to get SegWit out are going to go along with this and then once SegWit activates the landscape could change in terms of support for a hard fork or any other perceived outcome and so I don’t know. I mean I’m holding my tongue for what will happen but certainly that’s the most important data I think in the near future is what happens within that 90 day period.
Laura Shin:
I actually earlier in this conversation I kind of had you both argue your own side but one question that I got from Twitter, which I think is a great one is I want to hear you guys describe for me what you think is the best argument for the other side.
Eric Lombrozo:
I don’t really think that there sides the way that people are painting it. I think people have kind of created these strawmen and tried to kind of pitch one side against the other. From the very beginning I’ve been a very strong supporter of increasing block size if there’s a way to do it safely and a way to do it that doesn’t cause a lot of other problems. A lot of other core developers have also been very supportive of this including Peter Willy, who’s one of the main authors of SegWit and actually was one of the big motivations to actually try to merge this into Bitcoin core was the fact that we could get a block size increase without all of the other issues including chain split risks and compatibility issues.
Laura Shin:
Peter Willy is a support over SegWit2X?
Eric Lombrozo:
No, he’s a supporter of bigger blocks also if done in a safe way and if done in a way that has peer review and is not going to split the network or is not going to coerce people. I think at least several of the major core contributors, since this whole issue was brought up in 2015, at least in the discussion forums that we generally use for our communications such as the mailing lists and the IRC chat channels and other places like that on GitHub, you know the general idea was okay, let’s see if we can find a way to increase block size that’s safe that’s not going to cause a chain split that avoids a lot of the political contentious issues, etcetera. SegWit was kind of the solution to all of these things that we found for the moment.
So I want to make it clear, first of all, that I’m fully in favor of being able to increase block size if it’s possible to do it in a safe way. I don’t think that we currently have a way to do it that’s safe given the current political circumstance and given the current technology.
Laura Shin:
So I asked you to argue what you think is the best argument for the other side, but it seems like you’re going back to saying a hard fork no matter when or how you do it is a bad idea.
Eric Lombrozo:
I’m not saying that at all. I think a hard fork would be fine under different circumstances if we had better research for it and if we actually were able to get market support for it. Right now, it just doesn’t look like the markets…
Laura Shin:
And you don’t feel like there’s market support for this?
Eric Lombrozo:
Every single time that any hard fork threat has been pushed hard the markets have dropped significantly. Every single time that SegWit has been pushed hard with signaling the markets have gone up. So the market signal almost unambiguously shows that hard forks are not popular in the market and SegWit is.
Brian Hoffman:
Eric, would you argue that…I mean we’re getting SegWit activated right now because of both the combination of the UASF threat and the SegWit2X threat. They’re both coming together and creating a scenario where people would rather not have to deal with whatever is worse and they’re going to do it and we’re seeing the market get pushed up. That New York agreement is SegWit plus a two megabyte hard fork. Now, I don’t know if people are just bluffing and saying we want the SegWit and we don’t want the two megabyte. We’ll just take this for now or not but it certainly seems like the market is saying we want both of those things and we want to move forward and the price is going up.
I mean we’re getting close to 28 hundred dollars now from last week when we were under two thousand because we’re about to activate Bip91. I don’t necessarily buy that the market is rejection the hard fork. I think hard fork has certainly got the connotation that it’s this horrible, awful thing that could possibly ever happen. I mean at some point in time Bitcoin is going to have to hard fork. Like you said, we’d like to do it in the most safe and responsible way and give everybody enough time to prepare for it, but we’ve been discussing this stuff for three years now and we keep saying that but there’s the hard fork research website you can go to and see about Spoonnet and all these other options, but at some point there has to be some progress made. I think you’re seeing frustration within core devs as well.
I mean you see Luke Junior and Greg Maxwell arguing around whether Bip148 is responsible or not, whether it’s too fast or this or that. I don’t think everybody agrees.
Eric Lombrozo:
It’s hard to get people to agree, period, and that’s a political problem. That’s not something that Bitcoin does not solve. I wish more people understood that. Bitcoin is not a political system. It’s just a protocol which defines a set of rules that if everyone follows it’s predictable that it’s going to behave a certain way assuming that it works correctly. Changing the rules now gets into the realm of politics. Sitoshi, unfortunately, did not give us a system for really being able to do that in a way that’s spelled out for us, so we’re kind of trying to create a way of doing that. Just as someone that’s had a lot of experience working with the protocol and trying to make changes I can tell you that it’s extremely difficult. Once there’s a certain moment and a certain amount of market value in stakeholders and all this it’s very hard to realign people and steer the ship and to get people to accept changes to it.
So those issues are way beyond just programming and coding or engineering. I mean we’re talking politics here. I think that people can write up all this code for hard forks and all these different scaling approaches but in the end it’s like people need to run the actually software. You need to convince people to run it and people need to make sure that you don’t get any kind of divergent interests that want to see any kind of situations where they can kind of exploit weaknesses. I mean because there’s a lot of things that can go wrong if there is a divergence of interests and you don’t get the right checks and balances. There could be a lot of potential hacks and attacks.
Brian Hoffman:
This is the whole issue that I have with the UASF movement is that we’re trying to get people to run the software. Like you’re saying, people have to use it, people have to put it out there into production, right. A couple thousand users running UASF is not going to do it necessarily either. We need the miners as well and this whole demonization about what they’re doing is the wrong way to go about it. That’s why we’re so supportive of trying to do something with SegWit2X.
Now, we didn’t know at the time we signed the agreement whether it would be accepted by core devs or not or any of these other people. We just thought that this is the most pragmatic approach to get everybody onboard. The problem is now we have this situation where the miners, it works out for them whether we get SegWit or not. I mean let’s be blunt. If SegWit doesn’t go through and the block stays small and the fees go up, they make money off the fees. If the blocks get bigger and everything works out and scales up they get more fees that way. They could play games with both sides.
Eric Lombrozo:
It upsets me a little bit that I feel that maybe interests between a lot of people especially in the DCG portfolio and say like Bitcoin core developers are more aligned than a lot of miner interests and DCG companies. I mean I’m not saying all miners. I think there’s a lot of great miners out there that are doing a great service for the network and they’re definitely doing their job of making sure that the network is hard to attack but there’s also interests there, as you point out, that conflict with other companies. Obviously, miners want to collect as much in fees as possible, businesses that want to use Bitcoin want to pay as little in fees as possible, right. So there’s a negotiation that occurs here.
I think definitely none of those fees are going to the developers. I mean miners are getting all this money so it just feels to me like industry maybe picked the wrong allies when it comes to actually figuring out where their interests lie and I understand. I’m not trying to demonize anyone in particular. I think everyone has their own interests and whatever. You have to expect people to be selfish and if you expect people to not be selfish and for this to work then obviously it’s not going to work.
Laura Shin:
Let’s hold that thought right there. We’re going to break now for an important word from our sponsor, On Ramp, and then we’ll go back to this really interesting topic.
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I’m talking with Bitcoin core developer Eric Lombrozo and CEO of OB1 Brian Hoffman. So we were talking about the politics of this whole thing and about governance in general. I wanted to ask you guys what you think is the best way for Bitcoin to make big decisions like this going forward.
Eric Lombrozo:
I mean there isn’t a process right now. I think a lot of people might not be very familiar with all the intricacies of it. I think that there’s a big kind of clash of cultures maybe between free open source software development and more corporate software development, but there is a process for submitting proposals, for getting them reviewed. There’s a big, open community out there for doing this stuff.
Laura Shin:
What’s the process then for deciding between those different proposals?
Eric Lombrozo:
I mean right now that’s a good question. Basically, people can run whatever software they want. I believe there’s a fundamental right and this is one of the things I believe was one of my biggest bones of contention with the Hong Kong agreement and also a problem with the New York agreement is that I do not believe in telling people that they need to run specific code. I believe that people should be able to run whatever code they want. If it happens to be code that’s buggy or that has problems or that splits them off the network or they end up losing money, well I mean caveat emptor. I think that’s just part of crypto.
If you want to really have control over your own funds then you’re also responsible for making sure that you’re running stuff that works.
Laura Shin:
So you support more like a laissez-faire style where it’s like not really making decisions? It’s sort of like anybody do what they want or?
Eric Lombrozo:
I believe that miners should be able to mine whatever block chain they want to mine and users should be able to use whatever block chain they want to use and merchants should be able to support whatever block chains they want to support and the exchanges should be able to list whatever block chains they want to list.
Laura Shin:
But then in this case where there’s this issue with the network where there’s more demand for transactions than the network is able to process, I totally get your philosophy here maybe for other things in life. But when it comes to this kind of network where everybody needs to be onboard in order for the whole thing to stay together what is the best way to make these decisions.
Eric Lombrozo:
But do they? I mean for instance, Ethereum has been going on without the need for Bitcoin. I mean obviously Bitcoin is used as reserve currency for all of crypto but besides that you have other block chains that are chugging along. If people want to create a cryptocurrency…
Laura Shin:
I don’t know what you mean by that? Are you talking about the fact that Ethereum had a fort and so people who disagree are not…
Eric Lombrozo:
No. I’m just saying that if you want to create a block chain that has features that are above and beyond Bitcoin nobody’s stopping you. You can create a block chain. It won’t be called Bitcoin but you can brand it and make it something big and if you do a better job than Bitcoin you should be able to win on the markets.
Laura Shin:
But people that have already invested in Bitcoin they want to retain the value of it.
Eric Lombrozo:
But that works both ways though because people that invested in Bitcoin also subscribed to a particular set of rules. You know, if you break compatibility with that then it becomes a question of whether or not it can really still call that Bitcoin because as soon as you start to break rules that some people accepted as part of the rules of Bitcoin…
Laura Shin:
Eric, I feel like you still haven’t answered this question. What is the best way to make decisions about how to change the network?
Eric Lombrozo:
First of all, anything that’s technical requires technical review, requires a lot of peer review. I mean this is a lot of cutting edge stuff that hasn’t been really fully field tested yet and we’re talking about a bounty of tens of billions of dollars. So there’s very little margin of error here. It needs to be really, really carefully reviewed and tested and made sure that it actually makes sense scientifically and technically. But then once we have a proposal that makes sense on all that getting everyone to actually agree to use it really is a matter of aligning incentives. There really is no…that’s one of the things about Bitcoin is that there’s no formal governance structure and I think a lot of people want to keep it that way.
There’s incentive structures and if you can get the incentives to align correctly with a particular idea that you have then the network might take you up on that and I think that certain things make it much more likely for the incentives to align, for instance not disenfranchising people or making features optional.
Laura Shin:
So from what you’re saying though then it sounds like what Bitmain and Jihan did was rational because their incentive is for the long term to have more fees come to them and to have more transactions processed on chain rather than off chain. So Jihan fully told me he’s not opposed to SegWit. What he’s opposed to is SegWit without also a block size increase. So then it sounds like what you’re saying here is if incentives are the way that they should be run then what he did was completely rational because therefore if this goes through he’s going to get what he wants, which is the block size to be bigger and for more transactions to be processed on chain and so then it worked
Brian Hoffman:
I think there’s a little bit more to it here that I think Eric alluded to in the beginning of this podcast which was that there’s some control issues here that are getting glossed over. I think for Jihan to say I support SegWit but I want a hard fork, I mean this is a temporary fix. Let’s not fool ourselves. Even if we move to 12 megabyte blocks, at some point that’s going to get surpassed and we’re going to be back to the same issue unless lightening network or something solves everybody’s problems but once again, it still requires on-chain transactions and so there’s a stalled problem.
I think it wouldn’t be developing the UAHF and these other BU and Bitcoin ABC and all these other things that change the governance model of Bitcoin if there wasn’t more of a power grab also here at play. That’s something that we shouldn’t ignore.
Laura Shin:
So you think that Jihan or Bitmain was basically doing this as a power grab against the core developers to be like I know you guys want this thing but you can’t have it unless you kind of go along with what I want, is that what you’re saying?
Brian Hoffman:
My hunch is that I think they felt like they had a lot of control when Bitcoin Classic and Bitcoin Unlimited came out. They thought they had enough power as miners to kind of force some of this governance stuff through and they realized that wasn’t going to happen. So now this is somewhat of a gracious capitulation to the market because users were rejecting them as well and no adopting unlimited or these others and they’re going to maybe make another run at it. I don’t know. This is my speculation.
Laura Shin:
Brian, I also want to ask you the same question about what do you think is the best way for the Bitcoin community to decide on decisions like this?
Brian Hoffman:
Well, I mean I certainly think that we need to reevaluate how much weight we put on miner signaling and influence. I mean I think it’s clear that they have too much control. We have to always fly to Hong Kong and talk with them every time there’s a problem or we want something done. I think that is not a tenable, long-term solution. I don’t necessarily know what the solution is but I mean I think we’re in this weird transition period where we had, like Eric said, a proof of concept block chain with a consensus model and a process for trying to figure out how we get new rules into the protocol, the bit process was created after the fact. All this stuff was kind of added on and we’re getting to the point where maybe it’s almost better that the protocol is like TCPIP. It’s not changing all the time. We’re not adding new rules TCPIP every six months. Everything is done another level up.
Laura Shin:
So then making it a settlement layer, which would happen if we kept the block size low?
Brian Hoffman:
I don’t know if that’s certainly the best solutions but I think at least if that was the plan and everybody understood that, that we could kind of use that as a foundation to build off of and then maybe more people would put effort into the next level up.
Laura Shin:
That’s interesting that you’re saying that because since you signed the New York agreement, which was something that was kind of against that philosophy of keeping Bitcoin more like a settlement layer but it’s weird that now it feels like you’re sort of arguing against yourself.
Brian Hoffman:
I’m not arguing against myself because I don’t personally consider myself on a side.
Eric Lombrozo:
I don’t think either of us do.
Brian Hoffman:
I think we’re two guys that don’t necessarily disagree as much as it seems like. I think we’re all very pragmatic about what we should do and I think most of the disagreements are around petty political arguments. I think what we agree that we need to be safe about are our scaling enhancements. Like I said before, the reason that we support the New York agreement is because we feel like this is the best chance that we can get SegWit, which I think most people agree is better than what we have right now and at least solve some of the problems for now and sets up lightning network.
Laura Shin:
So for you it’s just a pragmatic choice. It’s like this isn’t the best thing but it’s like the highest chance of ending this debate and just moving things forward?
Brian Hoffman:
I think so and a lot of people would argue that that’s not a great reason to support something because you should always do what’s technically the best thing, but that’s not the way the world works often. Sometimes you just have to accept it and move on and we build off of it because ultimately I think Bitcoin I stronger if we have miners, big businesses, small businesses, users, core devs, everybody moving in the right direction together. I mean I don’t think that we’re ever going to really do much. What we’re going to do is we’re going to encourage people to go off and do alt coin development and start these other projects. I mean we’re already seeing that and it’s sad that a lot of other garbage comes along with that.
The people that are true Bitcoin believers that have been here for many years before all that stuff kind of existed, they understand that the core devs that work on Bitcoin are probably some of the most devoted and most dedicated people in the space. They’re some of the brightest and they don’t give up on their principles and that’s why we’re seeing this battle because these guys are the guys you want behind that.
Laura Shin:
I want to ask about something that Eric brought up earlier, which is such an interesting question to me. So I tweeted something like I’m going to have a big blocker and a small blocker on my podcast what should I ask them? All these people took issue with the way I framed it. One that I loved was like it’s more like corporations versus cypher punks. So what do you think? I feel like there is this tension where Bitcoin started, the early community largely consisted of libertarians and then the people who more brought it to the masses were these corporate entities like Coinbase, Zapo, Block, BTCC. So what do you think about that idea that this is what’s really going on here that that is what really the battle is right now?
Brian Hoffman:
I mean personally I think it’s kind of a sad argument because first of all the core devs and developers in general and a lot of the supporters…Eric, call me out please if I’m getting to incendiary here but I think they’re very vocal and they try to explain their positions and I think a lot of the companies don’t say anything. Like I talked to many of the people that are leading these companies and they just kind of like we ignore that noise and they don’t defend themselves or their positions.
Laura Shin:
Well, I think some of them tried. I mean for them it’s like too risky. Coinbase tried to do that Bitcoin Classic thing. It failed miserably for them and I have personally asked some of the other CEOs in this space about this issue and they just will not touch it. They won’t say anything publicly. They definitely have opinions but they know if they say anything publicly that will be the death of them. They’ll get embroiled in these debates on Twitter. But I do feel like that is kind of what we’re seeing happening.
Eric Lombrozo:
Some of these CEOs I think kind of burn themselves in the whole block size debate because I think that they took very vocal positions when the environment might not have been very conducive towards that being successful. That’s not to say that CEOs should never go out on a limb. I mean I also have a company and I also am interested in making a successful business and I also want to see Bitcoin scale. Definitely I’m trying to be as pragmatic as possible. It’s not just about being ideological. I definitely did not come into this space thinking in terms of libertarianism or anarchy or anything like that.
For me, it was a really practical way to build a career and doing something that I like. Over time, it kind of grew on me and I’m like this whole concept of self-sovereignty is very, very powerful.
Laura Shin:
But do you feel like what’s important to make that happen is decentralized network?
Eric Lombrozo:
Well, what’s important to make that happen is to make sure that people are able to continue to validate things and to make sure that people don’t change rules from under them and to make sure that you cannot easily counterfeit stuff or create money out of thin air that is not part of the rules and stuff like that.
Laura Shin:
But Eric, what I really wanted to ask when I asked that was one of the concerns that I’ve heard about increasing the block size is that it will make it more difficult for smaller miners to support the network which will then increase miner centralization and so I feel like there’s this tension where a lot of the people that advocate keeping the block size small it’s because they want to keep Bitcoin as decentralized as possible and then you’ve got these startups and other companies running on the Bitcoin network who are like oh, my God, these transactions aren’t going through. It’s causing us all these problems. You’ve got these users who are really annoyed at us. For them, it’s kind of like this headache and then for you guys it’s this philosophical thing of like we need to keep the network decentralized because already it’s so centralized. Am I wrong in thinking that?
Brian Hoffman:
That’s why it’s not black and white.
Eric Lombrozo:
Yeah. It’s not black and white but there’s three points I want to address here. I think there’s three issues that you’re combining here. One is this backlog, part of it just has to do with wallet software and fee calculation software that was just not prepared for full blocks. I mean obviously if blocks are full it’s just an economics thing. If supply is low and demand is high obviously fees are going to get higher. But better fee calculation heuristics in wallet software will make it so that you don’t have to wait as long. I think a lot of the earlier situations with that were just wallets that were not calculating fees correctly.
Laura Shin:
That’s only going to take us so far. Five or ten years from now when hopefully there’s a lot more activity on the network then what?
Eric Lombrozo:
Even if you have correct or better pricing, some applications are going to get priced out given a certain level of supply no doubt. So the second issue is regarding validation costs. How expensive is it for you to check on your computer that the transactions you received are actually valid, and that’s where we get into issues of bigger blocks requiring a bigger download and more computation effort, more CPU to actually validate the transactions and blocks, etcetera.
Right now, the block chain is growing pretty quickly and it takes longer and longer to synchronize a node and to be able to actually full validate for yourself. Now, with better crypto it’s possible that we might be able to reduce this significantly. It’s possible that with better technology we’d be actually able to support much larger blocks without requiring as much computational effort in verification of the block. And with things like the lightning network or off chain protocols most people do not need to actually be validating most of other people’s transactions so you only validate a very small percentage of the total transactions that occur on the network.
So those are really good ways to avoid increasing validation costs, which makes it easier for you to actually make sure that Bitcoin hasn’t been coopted or someone isn’t just suddenly creating counterfeit Bitcoins out of nowhere or some state isn’t deciding to suddenly blacklist transactions or stuff like that. So the third issue, which I think is the most critical issue which I think also received the least amount of attention at first is really how do you actually guide the markets to adopt a particular and compatible change. If you’re going to introduce any kind of incompatible change to a bock chain you have to get all the markets to agree that now what we used to call Bitcoin is now no longer Bitcoin. This is the new Bitcoin which is basically a protocol replacement.
Laura Shin:
Isn’t that sort of what SegWit2X is? I mean all these companies that signed are like the big companies.
Eric Lombrozo:
Yeah. That’s what any hard fork would essentially entail. I’m not saying it’s impossible. I’m just saying it’s very difficult to do and it’s more than just writing code I mean I’ve been writing code forever and I can tell you that writing code is definitely not enough to make that happen. I mean you need to get people to agree to run that code and that’s really…
Laura Shin:
But it looks like that’s what this agreement did, right?
Brian Hoffman:
Yes. The thing is, is it’s forcing the issue. It’s forcing the issue. We all agree that hard fork is probably possible. Whether it’s smooth or not that’s debatable but it needs all this preparation but SegWit2X is saying this is not a super crazy leap to go from one megabyte block size to a two megabyte block size. Let’s do this.
Laura Shin:
So since this is actually such a small increase really that we’re getting, I am wondering kind of long-term what do you guys think is the best plan for scaling?
Eric Lombrozo:
It’s interesting what Brian just mentioned just going from one to two. Even if we were going from one to 1.1, the same exact issues with chain splits and incompatibility issues would arise. So it’s not a matter of how much bigger we make it and if we make it bigger then what are we getting for that? Is it really worth the disruptions and all the potential havoc that can be wreaked on the network?
Laura Shin:
So should we hard fork to four megabytes or eight or do Bitcoin Unlimited?
Eric Lombrozo:
I think we should be working on better technologies, better crypto, better ways to compress proofs to make compact proofs. There’s a lot of really interesting research that’s being done in cryptography right now.
Laura Shin:
But how long is that going to take?
Eric Lombrozo:
But going two X isn’t going to take us anywhere either really other than just maybe kicking the can down the road and getting a lot of people upset.
Laura Shin:
So kick the can down the road and maybe during that time we can do all this research on the better cryptography and stuff? Is that kind of what you think? Again, going back to my question, what’s your idea of the best way to scale long-term?
Eric Lombrozo:
First of all, if we’re going to do a block size increase I don’t believe we should just bump it up twice and then just leave it at that because then that sets a precedent that every single time blocks fill up we’re going to do another hard fork for that. That just seems totally silly, so first of all, if we’re going to do a hard fork in the worst of cases I would like to see at least an X percent increase per year or something of the block size. We don’t need to hard for every single time, first of all.
Second of all, I would love to see a more dynamic or more adaptive kind of system that responds to actually market dynamics and to have more a protocol that can support other functions besides just paying miners like paying relay nodes and paying validation, paying for proofs. There’s ways for cryptographically generating _____ 57.14 or stuff like that and paying people using payment channels to be able to do that kind of stuff.
Once you start to get those kinds of incentives now you’re talking being able to increase the capacity to much higher levels without significantly degrading security.
Laura Shin:
Those are things I haven’t heard much about them and I don’t really know much about them but it does sound to me like they’re probably farther off. Here we have this network that’s been congested for a while. So maybe it is not a bad idea to, as you put it, kick the can down the road and maybe let some of the other technology catch up so it can be implemented later.
Eric Lombrozo:
But at what price though? I mean if it splits the network and if it causes a lot of discord in the community and if it affects the markets, if the price is very adversely affected, is it really worth it just for a tiny factor increase?
Laura Shin:
What we were saying before, I don’t know about so much but a lot of economic activity is moving off Bitcoin. How many startups have I talked to where they’re moving from Bitcoin to Ethereum or Light Coin or whatever it is. But already the fact that there is this much congestion which maybe isn’t critical from your perspective it’s enough where businesses are making other choices and they’re not using the Bitcoin block chain.
Brian Hoffman:
That’s where the pragmatism comes in here and when we’re talking about going from a one megabyte to a two megabyte block I mean let’s be honest it’s really _____ 58.42 eight megabyte block with SegWit. So that’s a considerable amount. It’s not negligible but it’s certainly not going to last forever. It’s kind of what you were alluding to, Laura, is that if this does at least get everybody kind of like we’re not just dwelling. I mean how much time did we waste on the block size debate. There’s this silly block size debate right now. I mean really I know it’s more than that but still we can’t get passed it and people are leaving.
Eric Lombrozo:
Some people were actually working on code though and working on solutions and working on optimizing a whole bunch of other crap that makes it possible to hve bigger blocks though. For instance, Peter Willy worked on the Seg P256 library. This is a library that increase validation, reduces validation time considerably. It’s l like a factor of six or something just from the cost of validating signatures for a block. So this kind of stuff and then _____ 59.35 way before that also Peter Willy. All these things. Then Matt Coralow with the fiber networks so that miners are more able to easily rely blocks to each other and then…
Brian Hoffman:
Eric, those are brilliant technical solutions that the perception is not feeding out into the mainstream.
Eric Lombrozo:
All these things are necessary though.
Brian Hoffman:
_____ 59.55 businesses and expanding the ecosystem for Bitcoin that are making it more valuable. They’re not catching that so I don’t know. Maybe there is some kind of communication issue gap here.
Eric Lombrozo:
There’s definitely a communication gap. I mean all these things are necessary.
Brian Hoffman:
These are amazing innovations.
Eric Lombrozo:
They’re necessary. They’re prerequisites. Without this what will happen is that you’ll run a node and you’ll not be able to keep up with the block chain. It just will not sync. The block chain will be advancing more quickly than your computer can keep up with it without these advances. If we were to use Bitcoin Core from just a couple years ago it would not be able the keep up with today’s block chain. So all these advances are going on and all these are necessary in order to be able to do a block size increase.
Laura Shin:
We’re running out of time so I’m just going to ask you guys one last question, which is that as we go forward every single design decision that we make in Bitcoin is going to require some tradeoffs. So when you think about the different kinds of tradeoffs that you’re willing to make, what would you be willing to do to keep the network growing?
Eric Lombrozo:
I mean I think that obviously there’s risks involved in anything that we’re doing right now. It’s a huge project with a huge bounty. It’s one of the biggest socioeconomic experiments conducted in history probably. I think that there’s a certain risk tolerance that people are willing to take. I think that there’s a certain risk tolerance that different people are willing to take.
Laura Shin:
And what’s yours?
Eric Lombrozo:
Well, I personally would like to see good solutions to scaling. I think there’s some really great ideas but I would like to see more constructive dialogue first without people just jumping to specific solutions that they think.
Laura Shin:
Eric, what tradeoff are you willing to make?
Eric Lombrozo:
What tradeoff? I mean there’s millions of different tradeoffs depending on the situation. But definitely for sure I think the self-sovereignty aspect and the ability to validate transactions for myself is a huge part of what I value in Bitcoin more than anything else.
Laura Shin:
Which is more the decentralization philosophy?
Eric Lombrozo:
Yes, but I would definitely like to grow the network and make it support way more.
Laura Shin:
I just want to draw that out. If that’s your priority then the downside to that, the tradeoff that you’re willing to make… because if we keep it that way then one of the ways to do that would be to keep the block size low, which is something that will cause a lot of problem for some of the bigger economic actors and potentially also long-term for the miners.
Eric Lombrozo:
Not necessarily. I mean there could be ways to grow the block size that are actually smart, that make sense, that we can get a lot of support for and we do it. It’s just that the ways that have been called for so far are just really brute force, blunt things that a lot of people think is it really worth the risk. A lot of people are not going to get behind it. It’s probably going to cause a lot of contention and potential market disruptions and is it really worth if for getting a 2X increase for instance If it was a thousand X I’d be like maybe it is worth it.
Laura Shin:
But if it’s a thousand X then you lose your decentralization priority.
Eric Lombrozo:
No. You could still do a thousand times the number of transactions without sacrificing decentralization with better crypto and better protocol.
Laura Shin:
Brian, what about you? What tradeoffs are you willing to make?
Brian Hoffman:
I think I have tremendous respect for the fact that changing a protocol is very different and it’s not something you should take lightly. I certainly think that’s the case with the hard fork that’s looming over us. I also think that there is some value with trying to get all of the most important actors in the ecosystem together to go at this and be contributing because right now what you’re seeing is a lot of people that are trying to push against each other and we’ve seen several years of this back and forth.
Laura Shin:
So it sounds like for you, you want to move forward at the risk of perhaps having a chain split?
Brian Hoffman:
I think decentralization is this weird term that people throw out there but it’s a gradient. It’s not black or white. There’s different degrees of decentralization. Whether or not this hard fork to two megabytes is going to dramatically impact true decentralization of Bitcoin I personally don’t think that that’s going to impact it that much. There are others that do, that feel like it will kill Bitcoin, but I think the most important thing is we just kind of push through this, we get it, and we do what the market is asking for. Right now, we’re seeing that people are asking for SegWit and they’re asking for an increase in the block size.
Laura Shin:
Actually…
Eric Lombrozo:
We don’t know about the second part. We definitely know about SegWit but the second part I’m still not sure.
Laura Shin:
I have one last question for Eric, which is this change that’s happening was implemented even though many core developers opposed it. So after this, where does that leave the core developers in terms of their power over the protocol?
Eric Lombrozo:
Let me just clear up a little bit what happened there. I mean I feel that there’s a lot of communication problems. Communication has been pretty bad for a long time. For instance, most of the DCG portfolio companies I don’t think even met most of us until fairly recently. Back in 2015, basically they felt that they had…the Bitcoin core had spokespeople and a couple developers and they kind of represented Bitcoin core to the industry. Industry didn’t really come to talk to us about any of these concerns at all.
We kind of had to pick this up indirectly because other people were complaining. So first of all, it’d be really nice if people in the industry that actually have concerns about this would actually come and approach us and talk to us about these things before making decisions and doing full on campaigns trying to push particular agendas because if we can kind of work on these things and get more consensus beforehand it’ll go a lot smoother.
Laura Shin:
I think the main developers behind SegWit2X are Jeff Garsick and Mike Belshi, is that correct?
Brian Hoffman:
Well, Mike Belshi I don’t think is a developer. It’s mostly Jeff and some other contributors on the team.
Laura Shin:
Jeff is with Bloq and his cofounder Matt Rosack was on the podcast earlier. Then Mike Belshi is with Bitco. They’re kind of shepherding this massive change through. So after that were does that leave the core developers?
Eric Lombrozo:
To be completely honest with you it was a very small number of core developers, the ones that got advisory roles at companies a couple years ago and were kind of lobbying for this kind of push. For the vast majority of the protocol development community in Bitcoin I’m not just talking about core developers. I’m talking about all the people that work on a whole bunch of different other parts of Bitcoin or layers on top of Bitcoin. I think for the most part we’re in agreement that we need to find better, smarter ways to scale but unfortunately this particular point of view did not get represented very well to industry a couple years ago.
It’s kind of weird to see what happened with Jeff because Jeff Garsick, at the beginning of 2015, was actually very much aligned I think with what most of the protocol development community was looking for, but then towards the middle there was this very drastic change that occurred. Unfortunately I think that he kind of burnt a lot of bridges with a lot of the rest of the core development team.
Laura Shin:
Since he’s kind of behind this SegWit2X and he’s burnt bridges and you guys kind of opposed SegWit2X I just wonder where that leaves things afterward. Do you guys still have as much control over the protocol?
Eric Lombrozo:
It depends on what people are going to use. I mean it’s really up to the users in the end what they decide Bitcoin is. All we can do is release code and see if people want to use it or not and that’s what we’re going to continue to do. If people want to do a two megabyte hard fork and it seems like that’s what the markets want and there’s a huge demand for that I don’t think it’ll be that hard to make it happen but I just don’t see that right now.
Brian Hoffman:
It doesn’t seem like the market wants it. They want it. It’s hard to forget when block chain was announced as a company it had so many of the core devs and important people in Bitcoin that the market…everybody was so excited about side change. They thought that was the future. They thought block chain was this big company that was going to come and help us save it and for the last three years we just haven’t see the side change come to fruition and solve any problems.
Eric Lombrozo:
I wasn’t part of that at all. I thought the side change concept was interesting but I thought it had a lot of logistical complications and there needed to be a whole infrastructure in place in order to support that and I thought we were still several years away from that. When SegWit was first developed by Peter Willy he was working on it as a side change but when I really got excited about SegWit was when we realized that we could actually incorporate it as a soft fork and without needing to use a side change.
Laura Shin:
We’re really over time and side change is going to take us down a side path so I community just want to end it on this note about how excited we are that it looks like SegWit is going to go through. I think it will bring a lot of innovation with it. We will see what happens in November. It’s going to be really interesting to see what happens between now and then. Where can people learn more about your work and get in touch with you?
Eric Lombrozo:
I’m on Twitter, Eric_Lombrozo or you can go to my company’s website _____ 69.34.
Brian Hoffman:
I’m @BrianCHoffman on Twitter and you can find out everything that’s important about me at Openbazaar.org.
Laura Shin:
Thanks for joining us today.
Eric Lombrozo:
Thank you so much, Laura.
