In a world full of altcoins and thousands of ICOs, we sometimes forget where it all started from. Jimmy Song, the veteran Bitcoin Core developer, is considered a Bitcoin-pro and has contributed a lot to Bitcoin’s success and adoption.
Recently we had a great video interview with him. Of course, he was wearing his famous Cowboy hat (according to him, “We are in the Wild West!”). Jimmy talks with us about his new role at Blockchain Capital VC, about his major contribution to Bitcoin Core, Altcoins, Bitcoin Cash, Lightning and more. At the end, he answers the most interesting question – where are we going to be 15 years from now. Hit play and enjoy:
First of all, congratulations on Blockchain Capital. Can you tell us a little bit about that?
I'm a venture partner at Blockchain Capital. I'm there to be a bridge to the core community and help develop the infrastructure. We don't know exactly what that will look like yet, but we're going to work together to find out, we're going to do a lot of listening to the people in the space, that are working on a lot of this stuff and come up with good ideas and implement them and hopefully make Bitcoin even better.
When were you first exposed to Bitcoin?
I was reading this geeky website called Slashdot.org, their tagline was “news for nerds stuff that matters”, and I saw a story around January 2011 that said Bitcoin had broken one Dollar! And I was like Wow! What is this Bitcoin thing? And having gone through the financial crisis I think I was pretty primed to look at the banking sector a little more skeptically, so when I read about it and I saw it, and I heard about how it worked - I was just kind of blown away! I tried to get money into it, but it was pretty complicated at the time... you couldn't buy with PayPal, you’d have to transfer it to Dwolla and then to MT Gox and then get it off, so I didn't bother. One of the biggest regrets in my life. So, that was what happened.
What were some exciting aspects that brought you to the crypto world?
The most exciting aspect was the fact that there was a 21 million coin limit. When I first heard that, I think I had the same reaction that a lot of people have which is “Oh my, gosh! There's only 21 million, I’d better get something in there... and so yeah that was definitely one of the most interesting. I didn't really discover the rest of the exciting parts of Bitcoin until a couple years later when I started actually developing and that was the personal security aspect.
It's a bear instrument you can just keep it and you can hold it. Up until then I actually had all my coins on MT Gox. It was very fortuitous that, and I'm still thankful, a friend of mine told me "something's fishy with MT Gox, go get your own wallet", and I removed my coins from there. That was really good but that that was obviously the 21 million limit, the technology behind it, the fact that it's decentralized, that there's no single point of failure, and no central government.
I think between those two years I read a lot more on Austrian economics and Libertarian thinking so I was a lot more primed for that and certainly, that's become a larger part of my belief system today, and it's exciting because it's a way of becoming self-sovereign and that's an important aspect of it, as I think we need to make civilization work better.
What was your involvement in Bitcoin Core?
My contribution to Bitcoin Core in particular, actually didn't start till last year, and it was just playing around with some stuff and I started writing some functional tests within Python to test some RPC calls that hadn't been done yet and it was mostly just to learn how to do it. I refactored a few of the tasks, I reviewed a bunch of code that John Newbery had written and I think he had the most commits for the 0.15 release because he's really into it now.
Interestingly he didn't get into Bitcoin until a couple of years ago, so he's a relatively new developer, but he's obviously doing a lot of contributions. So, a lot of testing stuff I'm not quite bold enough to go into more of the main stuff. I do, have BIP176. Utilizing Bits instead of bitcoins, so there's a million Bits in a Bitcoin and removing unit buys for people and also allowing people to make less mathematical errors in orders of magnitude. That's fine as well, but most of my involvement before that came in open source projects like PiCoin and BTCD and colored coins and things like that, and Armory, of course, where I worked for a while.
How much does Bitcoin Core development affect Bitcoin?
Bitcoin Core certainly has some influence over Bitcoin development, but its influence is really interesting because in a sense, anyone can hard fork at any time or can soft fork at any time, and you can just do whatever you want. It's a decentralized system so influenced in the sense that you can’t make everybody do something like an authoritarian government would. Nobody can really do that; you can't make anybody do anything. You can't force people to upgrade, you can't force them to follow the fork that you want, you can't force miners to mine your blocks, so it's really a voluntary system that's like influence in the sense of getting the community to follow. I would say they have a tremendous amount of influence and that's well earned. It’s a meritocracy, it's something that they deserve because they have been good stewards of the Bitcoin code already. In that sense I'd say they have a lot of influence. But you know, it doesn't have to last forever. If Bitcoin core decided to lift the 21 million limit for example, I think there would be a lot of people that would go with another implementation or refuse that hard fork. So, it's interesting because Bitcoin really is a meritocracy and you're only as good as the community thinks you are at the moment. It really is a social experiment for everybody in many ways.
I see Bitcoin Core almost like the gamekeepers and that because it's decentralized. There's no central focus, there's no government but there are still people who keep everything somewhat in order, at least try to.
It's like this amorphous beast and anyone can propose anything at any time and you have to back it up with justifications and code, and you need to convince people. And obviously some people are better than others and there’s a lot of them and some with very esoteric technical questions that are very hard to decide on, or to learn. But it’s cool that you can come in and be a huge influencer, after earning your stripes.
How does Bitcoin's blockchain differ from other blockchains?
The technical aspect isn't all that different from Litecoin or something like that because they copied most of the code, so they’ve tweaked a few of the parameters a little and then it’s "okay, well we have the same blockchain". The real difference in my mind is the decentralized nature. A lot of altcoins have a single point of failure and it's usually because the original creator gets to decide where that project is going to go. They decide what they're going to do and how they're going to be. A classic example is Ethereum. Vitalik Buterin gets to decide if he wants to bail out the Decentralized Autonomous Organization (DAO), he gets to bail out the house if he wants to go to proof-of-stake, he gets to go to proof-of stake, and I mean I don't begrudge them that but part of what makes Bitcoin special is that Satoshi Nakamoto left. That is an underrated gift to the Bitcoin community because he left it decentralized and that has been good for the entire ecosystem.
There's currently a lot of talk about private and centralized blockchains. What do you think is the future of these blockchains, and how will they be used?
I think the minute you centralize the blockchain it's not really anything other than a database, maybe with permission ledgers or something like that. I don't find that terribly interesting and I'm not sure where the innovation is, other than perhaps the permission part, but you can already do that with a lot of systems. The only interesting thing comes when you can distribute that database and not give anyone the privilege of being the central one. That's when it becomes interesting, but that's not easy. People talk about stuff like "oh, we can put healthcare data on the blockchain", and then any doctor can go look it up. That is not an easy thing to set up.
We're talking about 250 byte transactions in Bitcoin and that's hard enough to sync. You're talking about two gigabyte MRIs on the blockchain and you're going to encrypt that, and have it accessible to everybody?
I don't think a lot of people know what they're talking about, or know what they're getting into when they're talking about blockchain. It happens to be a buzzword a lot of people like but we'll see. I'm sure there are applications, it’s just people don't really understand it yet, so they think it can do anything. Kind of reminds me of the early days of the Internet. "oh, the Internet will let me fly!" or something. People just don't know, it takes time and once they do then the real innovation can happen.
What are your feelings about the Bitcoin forks that recently happened back in August 2017?
There's been a lot of Bitcoin forks but the biggest one was the first one, that's the Bitcoin Cash hard fork. That proved bitcoins anti-fragility to me . I think a lot of developers, including myself, before that were living in fear of the hard fork. We were thinking that it would dilute the brand, that nobody would use it, and that it would absolutely crush Bitcoin. The opposite seems to happen. It proved that Bitcoin is anti-fragile, whenever there's a disordering event things get better, not worse. In particular, with Bitcoin Cash we saw the entire ecosystem having to react to the hard fork itself. There are a lot of exchanges that were down for a while, they had to figure out how to do replay protection and split their coins, and have their databases upgraded.
The entire ecosystem upgraded and for me that was a big value add in a way I think we have to thank Bitcoin Cash for making Bitcoin stronger because their disordering events forced everybody to upgrade and make their software better. I mean, I think the price is pretty indicative of what happened. Bitcoin was USD 2,700 before, and compared to the combination of Bitcoin, Bitcoin Cash and Bitcoin Gold and all those other ones by the end of the year was USD 20,000. I see that as a really good thing and I actually kind of hoped for more hard forks as a way to steel ourselves against different types of attacks that can happen on the network.
Speaking of Bitcoin Cash, do you feel that it's a worthy competitor to Bitcoin? If not, or if you do, what may other competitors be? For example is Litecoin a competitor to Bitcoin?
I don't see Bitcoin Cash as a competitor necessarily, nor do I consider most altcoins as competitors because none of them are decentralized. They all have a single development team and somebody that, more or less, calls the shots. Bitcoin Cash in particular has one developer that seems to be calling all the shots, Amarice O'Shea. He did a hard fork on Bitcoin Cash already. He's planning different hard forks every six months, or something like that. If you can hard fork like that it shows that you are centralized, because you're forcing everyone to upgrade.
Are they competitors in terms of like mindshare and things like that? Of course they are. People that are thinking about investing in Bitcoin may end up buying Litecoin because it's cheaper or something like that. And that is stupid in my mind, but we can't protect people from their own stupidity. That's just where madness lies, it just shows Bitcoin’s value proposition. And I think centralization will ultimately be the downfall of a lot of these other coins. But who knows, I could be wrong, it's possible that something else comes along and is an order of magnitude better than Bitcoin. Maybe there is some innovation that we haven't thought of at all, that comes in and becomes the killer app? But at least, at this point my feeling is that none of these seem to be orders of magnitude better so I stick with Bitcoin.
Do you think that altcoins have some sort of purpose? Do you think that there is a need for altcoins?
Certainly, altcoins definitely have some innovation behind them. For example Monero, utilizes confidential transactions and range proofs to hide who you're sending to, and how much you're sending to them. So that is pretty interesting in the sense that altcoins can be like an innovation lab for Bitcoin and you can try out things where people are actually risking money. But other than usefulness to Bitcoin I don't really see how they might be useful for some other purpose. Unless they find another niche or something like that maybe, but until those are proven I don't really see them as anything special.
What do you think about Z-Snarks technology? And will we see it on Bitcoin's network in the future?
I'm a fan of Zero Knowledge proofs in general and Z-Snarks technology in particular is very interesting.
I'm not so certain that it's viable right now, just because of the CPU cycles it takes up to do the actual signing. It's like 30-60 seconds, something like that, in the same way that I'm a little bit hesitant about Monero’s confidential transactions because they're UTXO and it just continues to grow and it's infinitely expanding. The best privacy one that I think might make it into Bitcoin is MimbleWimble as a side chain because it has a lot of the privacy aspects of ZCASH and Monero but done in a different way. I don't know the future, but they're all interesting technologies and I hope to see more privacy and Bitcoin transactions going forward.
Are we close to reaching a state where we'll have accessibility to Lighting technology?
A lot of people think smart contracts are the unique domain of Ethereum and they’re not. Bitcoin has its own smart contract language - it's called Script.
The funny thing is Ethereum's major innovation is ICOs, but it's not actually an innovation it's something that you could do in Bitcoin with colored coins. There wasn't a market for it and Vitalic and the Ethereum team, God bless them, have done great with their marketing and made ICOs a much bigger thing on Ethereum because the big difference between Solidity and Script is that Solidity is Turing complete but nobody actually wants to use the Turing completeness, because it's way more dangerous and there's a larger attack surface and things like that, and you can see it with the DAO. They had Turing complete contracts and somebody exploited it, and drained out of all of its money in the end. It ended up needing to do a bailout, but as far as smart contracts are concerned I think simplicity is something that Bitcoin is looking into, and that may be where we're going. I don't see Ethereum having sole domain over smart contracts at all or even like something like Rootstock where they're trying to do it as a Bitcoin sidechain. I don't know if there's necessarily that big a market for Turing complete smart contracts. As it stands it's already kind of air, and people make it out to be "Oh, Ethereum, it’s the smart contract platform...” But it's not if you're just using it for the basic stuff that Bitcoin can already do. So I don't know, I don't get the big deal.
Do you think that there is room for the altcoins, or do you think that Bitcoin is more than enough?
I don't know. There's always innovation that you can't see. After all futurists are notoriously bad at predicting the future. You ask a hundred years ago what people thought the future was, and they thought people would fly or something and nobody thought of the cell phone, which is ubiquitous today. So it's really hard to tell, maybe there is some coin that figures out a formula that works for them. I don't know. My suspicion is that Bitcoin is going to be the top end of the Pareto distribution curve so 80% of the value will be in Bitcoin and everything else will have 20% and will be fighting very hard for it.
The thing about altcoins is that they're really hard to kill. It's not like a company where you have payroll and things like that where you know companies will go bankrupt because they run out of money. Altcoins can more or less subsist on a single miner mining and even if that miner stops mining, you can raise them from the dead, by mining some more. So a lot of coins live this zombie-like existence where you kill them and then they come back to life. So, there is room in the ecosystem for them I guess. Are they going to really add anything? I don't know, I have doubts, but I'm not going to think that I know all possible altcoins that can possibly exist.
The million Dollar question - are we in a crypto bubble?
I think we are in a bubble in the sense for the short term. It's probably going up and down more than you'd expect, but that's to be expected as it's a volatile asset! A lot of people don't know what it is, a lot of people are coming in and it's not really a unit of account yet. But like I say to newbies that are asking me - "Hey, should I should I invest in Bitcoin?", my answer is always - "Well if you're going to keep it long-term ( 5 to 10 years), then it's probably worthwhile buying because over a long period of time I think Bitcoin has shown that it increases in value because there's a fixed supply, increasing demand. What happens to price? It’s pretty obvious, but short term it goes up and down because there are people that are trading it, there are people that thrive on the volatility. So, are we in a bubble? Probably, most likely, I don't know, but I don't worry too much about that because that's more of an economics question than a technical one, and I'm a technical back.
15 years from now, how do you think that Bitcoin and cryptocurrencies will be integrated into the future? Do you think that they'll still be around? Do you think that people will be using it more frequently? What's your opinion about the state of crypto in the next 15 years?
That's a really good question and I wish I knew the answer but I can't in good conscience predict the future that well. I will say that I think the price will go up because there's an increasing demand and a constant supply. But I suspect that Bitcoin in particular, and just society in general, will see a lot more liquidity of assets. In general if you can trade something really quickly for money that will give people a lot more freedom and flexibility. So I see society heading in a more “freedomish” direction, partly enabled by Bitcoin. And that's a good thing. I want people to have more freedom, I want people to be able to innovate more, I want people to build civilization instead of rent-seeking behavior that we see everywhere. It is kind of sad to me that rent-seeking is the dream that people have "I want to have a job at a corporation", and do nothing and draw a paycheck. That doesn't add anything. I want people to want to add something and I see that in Bitcoin. I don't really see that in other parts especially like government or a big business or something like that where you have tons of rent seeking behavior there.
This is part of what makes me so excited about Bitcoin and why I wear the cowboy hat. It's because it’s like the Wild West and there's a lot of room for innovation, a lot of room for new businesses and entrepreneurs to get in and provide value and build civilization and think long-term and make everything better and that's why I'm as passionate about Bitcoin as I am.
So thank you so much! This was an amazing interview! Could you maybe tell our audience where they can find you, what to look forward to in your future?
I'm on Twitter so I tweet every once in a while I also on Medium . I write a bunch of articles I'm on YouTube - my show is called Off Chain and I try to put out videos fairly frequently. I also have Github and Jimmysong is my username there. I have a bunch of code there if you want to take a look and I'm working on a book on programming Bitcoin for O'Reilly and that should be released later this year.