BITCOIN CORE VS KNOTS, SPAM VS FILTERS, QUANTUM THREATS, & SOCIAL ENGINEERING | Jameson Lopp

Summary

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THE Bitcoin Podcast — Jameson Lopp: Bitcoin Core vs Knots, Spam vs Filters, Quantum Threats, & Social Engineering

Date: September 9, 2025
Host: Walker America
Guest: Jameson Lopp

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Episode Overview

This episode features Bitcoin technologist and security expert Jameson Lopp in a deep discussion on the most pressing technical and security challenges facing Bitcoin today. The conversation spans controversial topics like the Core vs. Knots software debate, mempool spam and filtering, digital and physical security threats, and the looming question of quantum computing’s impact on Bitcoin. Lopp also offers practical advice for improving your Bitcoin security and navigating ongoing social and political dynamics.

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Key Discussion Points & Insights

1. The Culture Wars: Bitcoin Core vs. Knots and Filtering Debates

• Persistent Debate Is Healthy:
  Lopp emphasizes that ongoing debate over what Bitcoin is is both inevitable and healthy, reflecting a dynamic, living project rather than a stagnant one.

  “If we ever get to the point where nobody's arguing about bitcoin, I would be afraid that that's because nobody cares anymore and bitcoin is actually dead or dying.” — Jameson Lopp (12:47)

• Technical vs. Ideological Viewpoints:

  • Technical participants: Focus on what the protocol allows.
  • Non-technical (ideological): Tend to advocate for what they want Bitcoin to be, often pushing for money-use only.
  • There’s overlap and empathy, but ultimately, attempts to restrict non-monetary uses often lead to endless, unresolvable loops ("whack a mole" game).

• Filtering/Spam Debate:

  • Spam is inherently subjective—akin to the "I know it when I see it" legal test for obscenity/pornography.
  • Efforts to filter out non-monetary data are generally seen as futile at the protocol level and risk breaking more than they fix.

  “Even if you can come to a rough human consensus of which Bitcoin transactions are spammy...it becomes difficult to objectively, at a technical code level, come up with a way to encode that as consensus…” — Jameson Lopp (23:41)

  • Trying to suppress “spam” or NFTs via policy is costly, technically challenging, and does not offer a sustainable solution due to creative adversaries who will always find new vectors.

• Forks Are Unlikely:

  • The friction between camps (Core vs. Knots or other policy-desiring factions) is unlikely to produce a successful, economically relevant fork.

  “I don't think that the group of people who would need to do the forking are sufficiently motivated and economically relevant enough to pull that off.” — Jameson Lopp (21:44)

Timestamps:

• What’s the most important debate? (06:46)
• Filtering/spam debate and perspectives (09:03, 12:47, 15:47, 17:12, 21:44, 23:41)
• The futility of filtering and developer reluctance (27:12)
• Social media magnifies perceived division (28:32)

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2. Digital & Physical Security: Wrench Attacks, Social Engineering, and Self-Custody

• Wrench Attacks: Overblown, yet Rising for Whales

  • Absolute numbers are low (estimated ~1,000 successful global attacks), but the risks rise dramatically for high-net-worth, public-facing individuals.
  • Most holders are not targets; whales and those with poor OPSEC or strong public identities are at elevated risk.
  • Physical attacks require much more risk on the attacker's part; hence, most threats have shifted elsewhere.

• Social Engineering: The Dominant Threat

  • Social engineering "hacks" now surpass physical attacks, especially for older and/or less technically savvy users.
  • Attackers use data leaks to craft credible scenarios, cycling through various exchange and wallet impersonations to incite fear and trick targets into revealing private keys or authorizing transfers.

  “Social engineering seems to be one of the top attacks, most lucrative attacks and most common attacks that are happening right now.” — Jameson Lopp (32:12)

  • Even extremely wealthy bitcoiners have lost hundreds of millions to these tactics, often due to single-signature setups and outdated wallet practices. (Recent examples: $250M hot wallet theft, $94M Trezor scam.)

• Self-Custody: Not for Everyone

  • Lopp stresses that self-custody needs to evolve, especially for families or the elderly.
  • Multisig/family custody setups (e.g., CASA) vastly improve safety by requiring multiple approvals and providing checks against social engineering exploits.

  “No single person should be able to click one button and send the entirety of your net worth in a few seconds. That's just insane.” — Jameson Lopp (44:58)

  • The real goal: reduce single points of failure both digitally (hardware wallets, multisig) and physically (distributed key storage, secure environments).

• Physical Security Best Practices

  • Move as much of your security as possible into the physical realm. Digital attackers face none of the risks or friction of in-person attacks.

  “The best way that you can strengthen digital security is by turning a cybersecurity problem into a physical security problem.” — Jameson Lopp (51:50)

  • Country-by-country differences: More attacks reported in US, but per capita, Dubai (especially OTC traders) is riskiest; surveillance and law enforcement influence attacker success rates.

Timestamps:

• Physical vs. digital attack trends (30:01, 32:12, 39:34, 41:04, 44:58, 48:37)
• Multisig/family security tips (44:58, 51:50)
• Regional attack differences, Dubai stats (56:00)
• Social engineering stories and recommendations (41:04, 47:09)

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3. The Quantum Threat: A Long-term Existential Security Challenge

• Quantum Computing is not Immediate, but Looms

  • Not a 2025 problem, but plausible within 5-20 years, and thus increasingly demands protocol-level planning.
  • The unique risk with quantum is that, if not addressed, it could expose millions of dormant bitcoin to theft and subsequent rapid sale, destabilizing confidence and price.

• Game Theory & Mitigation Pathways

  • Unlike previous soft forks, a quantum fix may require forcing users to upgrade, as voluntary opt-in is insufficient if dormant/stale addresses (vulnerable to quantum) are not moved.
  • This introduces moral and practical challenges: Do you “burn” undisclosed coins? What if coins are lost but not abandoned?

  “Assuming that a cryptographically relevant quantum computer is created, someone is going to be upset because some inviolable property of Bitcoin is going to be violated. And that's regardless of if we do something or if we do nothing.” — Jameson Lopp (65:41)

  • Lopp proposes a phased approach anchored in technical objectivity—restrict spending from quantum-vulnerable scripts (ECDSA/Schnorr signatures), ideally allowing for years of migration.

• Consensus & Coordination Issues

  • Traditional systems (fiat, governments) can be upgraded in a weekend; Bitcoin, being decentralized, faces coordination and timeline challenges if a quantum crisis hits fast.
  • Social and political resistance to “burning” or restricting coins will exist; Lopp argues game theory—not moral purity—will ultimately shape community response.

• Fungibility & Fork Risks

  • Any restriction introduces fungibility challenges (different classes of BTC?), and could—if done poorly—lend itself to blacklisting (mimicking OFAC lists).
  • Lopp notes that even soft forks can be resisted if there’s will and coordination among dissenters, but it's technically and organizationally daunting.

  “Are the people who are sufficiently concerned with what you said about fungibility and the sort of, the moral aspects of, you know, freezing funds, are they motivated enough and have the technical ability to coordinate that level of... rejecting?” — Jameson Lopp (71:10)

• AI & Crypto Acceleration

  • Quantum hardware progress is linear now, but could turn exponential. AI is already accelerating breakthroughs in mathematics, and could do the same for quantum development, making forecasting exceedingly difficult.

Timestamps:

• Quantum threat overview and technical context (61:25)
• Lopp's BIP proposal and moral dilemmas (65:41)
• Migration, burning, recovery options (65:41, 70:03)
• Fungibility discussion, fork game theory (71:10)
• Timeline and AI’s role (77:31, 78:02)

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4. Bitcoin and Politics: Partisanship, Power, and Bitcoin’s Place

• Bitcoin Remains Fundamentally Anti-State

  • Lopp finds it ironic and “silly” that both left and right political camps now attempt to claim or demonize Bitcoin given its anti-state, anti-central-bank ethos.

  “The fact that now we have different sects of statists arguing over whether or not it's good or bad is just kind of silly.” — Jameson Lopp (82:53)

  • He laments the shift of "anti-big bank" politics from left to right, resulting in bipartisan tribalism rather than clear-purposed resistance to centralized control.
  • The bipartisan duopoly (D vs. R) encourages a ratcheting up of centralized power; no incentive for power reduction.

• Third Party Movements?

  • Lopp sees no real prospect for a successful independent third party due to entrenched barriers. Instead, new movements (e.g., MAGA) succeed by capturing and reshaping an existing party from within, rather than starting from scratch.

• Bitcoin Is For Enemies

  • The technology ultimately empowers both sides—and cannot be "unclaimed" or centrally controlled, which is its enduring strength.

Timestamps:

• Cultural/political risks (80:59, 82:53)
• Party realignment, MAGA as de facto third party (87:48)
• Bitcoin transcends left/right - money for enemies (90:20)

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Notable Quotes & Memorable Moments

• On Filtering/Spam:

  “Spam, it's in the eye of the receiver, that's a subjective value judgment. Or can one objectively define spam?” — Host Walker America (22:50)

  “This is not just about taproot...people have been putting arbitrary data in Bitcoin for a decade. Peter Todd...encoded the entire Bitcoin white paper into the blockchain many years ago.” — Jameson Lopp (23:41)

• On Social Engineering:

  “We have made so much progress on the security side of things over the past 15 years...the weak point for a lot of people actually becomes their own head.” — Jameson Lopp (32:12)

  “There was one a year ago where they got $250 million from one guy... keeping $250 million on a Bitcoin core, you know, laptop, like single hot wallet.” — Jameson Lopp (41:04)

• On Physical Attacks:

  “The best way that you can strengthen digital security is by turning a cybersecurity problem into a physical security problem.” — Jameson Lopp (51:50)

• On Quantum Threat:

  “Assuming that a cryptographically relevant quantum computer is created, someone is going to be upset because some inviolable property of Bitcoin is going to be violated.” — Jameson Lopp (65:41)

• On Cultural Risk:

  “It is a risk because, you know, the liberals in America really started demonizing and cracking down on crypto...And so now we have a few years of respite and...we have to ask, okay, what happens?...the system is set up to keep flip flopping back and forth.” — Jameson Lopp (82:53)

• On Bitcoin’s Core Nature:

  “Bitcoin is for enemies...it's money for enemies. That's the great thing. You can be as far left as you want or as far right as you want, and bitcoin can still benefit you and there's nothing your enemy can do about it.” — Host Walker America (90:20)

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Practical Security Tips

• Physical Security Trumps Cyber for Large Amounts: Use hardware devices, distribute keys in physically secure places, avoid single-signature setups for large balances.
• Upgrade Your Setup: Don’t rest on success. Multisig/family custody makes successful social engineering much less likely.
• Stay Wary of Social Engineering: No reputable service will ever call and request your seed phrase or private keys. Use unique emails, don’t answer suspicious calls, and stay abreast of known scam tactics.
• Don’t Accept Physical Gifts from Strangers at Conferences: Multiple reports of male conference-goers being drugged for theft.

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Closing & Further Resources

• Jameson Lopp:
  • Casa for multisig security
  • Lopp.net - Bitcoin Resources ("2,000+ educational links")

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For Listeners

If you want a comprehensive, forward-leaning breakdown of the most critical technical, social, and security challenges facing Bitcoin, as well as actionable security advice — this episode is a must-listen. Jameson Lopp brings both clear-eyed realism and optimism for Bitcoin’s continued growth and resiliency, but reminds us all that "complacency and apathy" are the real threats we should watch out for.

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[End of summary]

Transcript

[Jameson Lopp]

I don't think that the group of people who would need to do the forking are sufficiently motivated and economically relevant enough to pull that off. That's the shorter version, I believe. We'll always be persistently debating what Bitcoin is. And you can get into some really big disconnects when you have one group of people, usually like the technical autistic people who are like, this is what bitcoin is like, this is what the protocol allows. And then you have another set of people who are more like, well, this is what Bitcoin is. In my head, when they say this is Bitcoin, what they mean is, this is what I want Bitcoin to be in my perfect utopistic world. Funny thing is that especially within this debate, I would say there's a lot of overlap in the sense that a lot of the technical autistic people who are talking about what, well, this is what the protocol allows. They tend to share a lot of these sentiments and can empathize with the people who say, I don't want to see JPEGs on Bitcoin. Like they understand that and they want to see bitcoin as money, not as art or arbitrary data storage or whatever. But they know that it's an uphill, never ending battle that they don't really want to fight. That is what then makes you a target, yes, for wrench attacks, but more likely for social engineering attacks. And so I would say other than like hacks of third party custodians and hacks of your own hot wallets, social engineering seems to be one of the top attacks, most lucrative attacks and most common attacks that are happening right now. I find the like, political polarization, the partisanship around bitcoin to be retarded because obviously bitcoin is anti state in the first place. It's like we reject central banks, we reject state control of money. So the fact that now we have different sects of statists arguing over whether or not it's good or bad is just kind of silly. So I actually think it's a lot like porn 100 years ago or so. I think there was some judge who basically said, I know porn when I see it, right? I know if something is pornographic when I see it. But it's hard to specifically, specifically define the demarcation between like art and porn and so on and so forth. And I think it's a similar type of problem with this. Who knows how long it would take to like stamp out all non monetary use of the blockchain. But I think in order to do so, you would really have to cripple a lot of the more advanced functionality that is useful for like actually securing the money. Bitcoin. So, you know, I don't think that that really high level aspect of the fact that people are always going to be arguing about bitcoin is a bad thing. I think it's a very good thing and in some ways it's very healthy. Because if we ever get to the point where nobody's arguing about bitcoin, I would be afraid that that's because nobody cares anymore and bitcoin is actually dead or dying.

[Walker]

Greetings and salutations, my fellow plebs. My name is Walker and this is the Bitcoin Podcast. Bitcoin continues to create new blocks every 10 minutes. The value of one bitcoin is still one bitcoin. And if you're listening to this right now, remember you are still early. If you're not already, go ahead and subscribe to this show wherever you're watching or listening and share it with your friends, family and strangers on the Internet. If you want to follow me in the show on nostr and X, just head to the Show Notes to grab the links. If you're enjoying the bitcoin podcast and want to support it by becoming a paid subscriber, you can download the Fountain app, search for the Bitcoin podcast and subscribe by paying with bitcoin via Lightning or Fiat via card. You'll get access to ad free episodes and early releases of select content. Plus you'll help support this show. Head to the Show Notes for product discount links. Go to walkeramerica.substack.com to get episodes emailed to you. And head to bitcoin podcast.net for everything else. Without further ado, let's get into this bitcoin talk.

[Host (Bitcoin Podcast Host)]

Jameson, welcome back. It's been, it's been a while. You were, you were actually pretty early on. I think you were one of maybe like first 10 or 15 people max I had on the show. So. Welcome back.

[Jameson Lopp]

Yeah, I'm an early adopter. I think I was the third interview of Peter McCormick back in like 2018.

[Host (Bitcoin Podcast Host)]

So yeah, I, I, Peter always talks about that. That's where he like you took him out shooting guns and stuff, right? Like, I feel like that, that was like you planted some deep, deep spark in him that kind of smoldered for a while. And now like, I just, like, I love seeing what this transformation he's gone on and how he's just like now like I mean Mayor of Bedford then, then I don't know. Yeah, the bitcoin Batman and then maybe, you know, maybe Prime Minister one day I think the UK would be in, in much better hands under a Peter McCormack standard.

[Jameson Lopp]

Absolutely.

[Host (Bitcoin Podcast Host)]

And well, it's good to have you. I wanted a chance to talk to you about a bunch of things. We talked about some of them kind of pre show, but just with the general theme of like filtering signal from noise in the bitcoin discussion. I think we're at an interesting time right now. We've got nation state adoption is on the tip of everyone's tongues as we wait to see whether the US government will actually buy bitcoin in budget neutral ways or if they'll just continue confiscating it from the criminals and shadowy supercoders out there. You've got bitcoin treasury companies popping up all over the place. At the same time you've got a lot of technical debates in bitcoin which some technical, some ideological and a mix of the two. So it's hard for people to know, and this is as people who are in the space even, it's hard to know, okay, how do you actually filter that signal from the noise? And for newcomers I imagine now would be a very confusing time to just be kind of going down the bitcoin rabbit hole. So I'm just like, as a starting point maybe what do you think is the, we're just going to go fucking right into it. What do you think is the most important thing, like the most important debate in bitcoin right now and is it actually the one that is getting the most airtime?

[Jameson Lopp]

I mean, I think the most important debate should always be how do we continue moving forward and improving bitcoin? How do we not remain complacent with what we have? Because I think that complacency and apathy are ultimately some of the biggest threats to the long term viability of this ecosystem. So kind of related to that when the debates that are loudest and most popular are not really forward looking but seem more regressive of, like how do we stop things? I think that sucks up a lot of energy and I know for a fact that, you know, a lot of respected smart people in this space kind of get sucked in to these debates that can go in endless loops and are probably never going to be resolved, at least in a way that some people are hoping. So, you know, if you're, if you're talking about things like, you know, the filtering or spam or you know, what types of transactions should be happening on Bitcoin? You've. You've got one camp that is, I think, much more in the economic side of things of like. Well, protocol is complicated. Information theory itself dictates that you can hide information in like an infinite number of ways. And so we could try to stop types of information that we don't like on bitcoin, but we'd probably rather work on other more interesting things that are pushing us forward rather than playing the whack a mole game. And then there's another side that is just very upset with what's happening right now and feels like, can't devs do something that meme and the devs are like, well, we could, but we don't think it's a very good use of our time. And so then you have interesting disconnects between different sort of subgroups of people in the ecosystem.

[Host (Bitcoin Podcast Host)]

Yeah, it's. It's funny. I, first of all, I was talking to you like a little bit before this and just saying when I, When I posted the, the fact that you were coming on the show here, there was a lot of talk of, of you being a, A, a shitcoiner for this and a spam apologist. I've been called a spam apologist myself for had the heinous crime of making a meme about filters not working. Apparently people forgot that I am literally in this space as a court jester. And if we can't laugh at ourselves, what are we even doing here? Apparently I'm now taken very seriously as a podcast or. And influencer and things. I don't take myself seriously, though. Perhaps that's everyone else's problem.

[Jameson Lopp]

The most serious titcoin podcast. Yeah, like, come on.

[Host (Bitcoin Podcast Host)]

The name of. The name of the podcast has tit in it. Like, Jesus, guys, you should know that I'm trolling, like half the time, maybe more. 69% of the time conservatively. But. Okay, so. And let's like, maybe we get through this part so we can get to some other questions, but if we don't address this, it's gonna, you know, it'll be awkward after the fact, so let's just get through it. So. Okay, I don't have a hard camp. Like, I'm not like team core or team Knots on this. And apparently being even like a fence sitter on this is now capital crime. I believe that the economics and the game theory of bitcoin are such that they will work themselves out in terms of transactions that you like, if you think a transaction is invalid, but somebody is paying a lot for it. Like, okay, you know, you might need to pay more for your transactions for a little while. That was the initial like fear that was thrown around at this, right? Was that, look at how expensive everything's getting. These monkey butt JPEGs are pricing out people in third world countries from using bitcoin on chain. Like I heard that argument made like over and over and over again.

[Jameson Lopp]

Yep.

[Host (Bitcoin Podcast Host)]

Obviously now that argument has gone away because we've had like, you know, the mempool's been pretty empty and there's been incredibly cheap transactions. Like what pun intended. But what do you think is actually like at the core of this debate? Is it, is it actually just like. Because I think bitcoin is money. Like I use it as money every single day. I think bitcoin is also a network and it's a protocol and it's a ledger like that that is it. It exists in multiple states at once. I didn't know that that was like that controversial, but apparently it is. Where do you, I mean, I kind of know where you sit on this, but like, do you view this as an actual, like on either side, an existential threat in any way to Bitcoin?

[Walker]

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[Host (Bitcoin Podcast Host)]

Your first time setting up a hardware.

[Walker]

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[Jameson Lopp]

No. So I think that this is actually a fundamental aspect of Bitcoin as like an ecosystem or call it a community. A lot of people hate that word. We'll just call it the set of people who care about Bitcoin, I believe will always be persistently debating what bitcoin is. And you can get into some really big disconnects when you have one group of people, you know, usually like the technical autistic people who are like, this is what bitcoin is. Like, this is what the protocol allows. And then you have another set of people who are more like, well, this is what Bitcoin is. In my head, when they say this is Bitcoin, what they mean is this is what I want Bitcoin to be in my perfect utopistic world. And the, I mean the funny thing is that especially within this debate, I would say there's a lot of overlap in the sense that a lot of the technical autistic people who are talking about, well, this is what the protocol allows. They tend to share a lot of these sentiments and can empathize with the people who say I don't want to see JPEGs on Bitcoin. Like they understand that and they want to see bitcoin as money, not as art or arbitrary data storage or whatever. But they know that it's, it's a, an uphill, never ending battle that they don't really want to fight. Just because if you have a, a programming language and a way to manipulate a database, which at its fundamental level that's what the Bitcoin protocol supports, a very, very limited programming language and it is a store of data, there's always going to be some ingenuity that people can figure out of ways of stuffing data in there in ways that were not originally intended. So we could fight that battle. And who knows how long it would take to like stamp out all non monetary use of the blockchain. But I think in order to do so you would really have to cripple a lot of the more advanced functionality that is useful for like actually securing the money of Bitcoin. So you know, I don't think that that really high level aspect of the fact that people are always going to be arguing about Bitcoin is a bad thing. I think it's a very good thing and in some ways it's very healthy. Because if we ever get to the point where nobody's arguing about bitcoin, I would be afraid that that's because nobody cares anymore and bitcoin is actually dead or dying.

[Host (Bitcoin Podcast Host)]

If bitcoiners aren't calling each other retards then we've probably like, the Bitcoin experiment has failed basically at that point. I think that's perhaps fair to say no. And I appreciate that because it seems that this also like, it really feels like it ties in with the general ossification debate. And I've always appreciated your perspective on this. We talked about the last time you're on the show. It's one of the key things we talked about and you've given numerous presentations on it and kind of relating it to the death or the ossification of email protocols and like how this thing sort of happens. It's not like you make a decision and snap your fingers and it feels like that's kind of like this. The underlying subcurrent of this filtering discussion is like, how much should you keep making changes to things or not to things to Bitcoin in order to achieve what you believe is the ideal state of the network, of the protocol versus, like, I don't know, maybe you don't need to make too many changes. I guess the irony to me is that it's like a lot of the people who are in the camp of like, we should basically, you know, quote, ossify Bitcoin so that bitcoin can just be, you know, money and pristine capital, are advocating for like other changes to Bitcoin. But perhaps a lot of this is a, is just a misunderstanding of policy versus consensus. Would that be a fair characterization?

[Jameson Lopp]

Yeah, that's what I thought early on, but at this point there seems to be almost a level of delusion to it. So part of the problem is that you can't specifically say, you know, a quantitative level at which policy effectively becomes consensus. It seems to be like 98, 99, close to 100% if you really want policy to be effective. And even then, because we're talking about what, what are the dynamics of gossip protocols and how data propagates over a gossip protocol peer to peer network. And if you're trying to stop data from propagating, you really have to have, I would think, at least 95%, if not more of, of all the connections that just refuse to block it. Because if you think about it, each node has around 10 connections to other nodes by default. And then if it's accepting inbound, it has like 130 max, which can create a pretty dense network mesh. And so, you know, if, if only one of those 10 peers of a given node is accepting and relaying it on to others, then you would set, you would expect that that level of Propagation would eventually get through most of the network and make it its way to miners. But of course even then miners can always accept transactions directly through their own private APIs, which we've seen happen more and more because people have built tools to do that and make it. And so ultimately I think one of the big disconnects in the, the filter and policy debate is it's the effectiveness and I think that, that you know, standardness, which is another way of saying like what transactions are allowed to be relayed. Standardness rules only really stop someone from creating, propagating and getting specific types of transactions confirmed if they have no real economic motivation to figure out how to get around the standardness rules. Which as we've seen is fairly easy. I think that the sub1 sat per V byte summer is just more hard evidence that that is the case that we've seen more and more transactions that are non standard in the sense that they're paying under the default policy fee rate. They're getting mined. And from what I've seen, a number of them are actually just being propagated over the peer to peer network just because there is a small enough percentage of nodes that are accepting and relaying them on. So it's, I think that trying to play that game is opting into a losing war. You really, really have the odds stacked against you. It's, it's, it's very difficult to imagine a situation in which you could convince like 95, 96, 97, 98% of people to all switch to your chosen implementation because of that. And then of course there's other reasons why I would argue that Knots is not the, the greatest implementation to run. But that's more from a like software development, life cycle, quality assurance practices, you know, techie engineering perspective.

[Host (Bitcoin Podcast Host)]

Yeah. You know, I've got to say the incredibly cheap fees right now making me feel like an idiot for making a bunch of transactions earlier this summer when fees were not cheap. Just leaving sats on the table. But, but that's a, that's a different story. You know, I think, I'm curious what you, what you think I guess about like is, is this going to ultimately will this type of fracture, does it have the potential to lead to actually a fork, do you think? Or, or do you think that's just posturing? It's not actually going to get that far because there's not actually a. And there's no reason for a fork because this is more of a policy versus, I mean again, how do you define policy versus consensus? That's like a, you know, a spectrum, I guess. But, like, does this eventually lead to something? Does the fracture get deep enough? Or is it just like we're just going to have these multiple implementations, maybe more spin up and that just kind of is what it is.

[Jameson Lopp]

I don't think that the group of people who would need to do the forking are sufficiently motivated and economically relevant enough to pull that off. That's the shorter version. I'd love to see them try. No one can stop them, Right? Anyone can do whatever they want. People can band together and create a fork and they can get hash rates put together and, you know, tweak their client implementation as needed. But, you know, if you go back, you look at the bitcoin cash fork, which was by far the most controversial and had the greatest amount of economic powers on both sides vying for the. The, you know, the real bitcoin crown. I think, like, compared to that, the sort of. The weight and the power of the two sides are nowhere near as evenly matched. And I think that people involved understand that and they don't even want to try to go down that path. I don't think it would end well.

[Host (Bitcoin Podcast Host)]

Yeah. It also just feels like at this time, with bitcoin being a much more mature asset than it was at that point, there's just a lot more inertia. You have to have a pretty darn good reason. And I just don't think we get there. I mean, without getting into the deep kind of technicals of this, just at a qualitative level, are you of the opinion that basically, I mean, spam, it's in the eye of the receiver, that's a subjective value judgment. Or can one objectively define spam from, like, in this instance? I mean, because, like, I've heard both people on both sides say that spam is in the eye of the receiver. And it's subjective, but they've used it to make completely different arguments. And so I'm just curious where you fall on that.

[Jameson Lopp]

So I actually think it's a lot like porn. Are you familiar with. I think this was like a hundred years ago or so. I think there was some judge who basically said, I know porn when I see it, right? I know if something's pornographic when I see it. But it's hard to specifically define the demarcation between, like, art and porn and so on and so forth. And I think it's a similar type of problem with this. And, and that's why even if you can come to a, like, rough human consensus of Which Bitcoin transactions are spammy? Like obviously if it's a jpeg, I think pretty much everyone would argue like this is not a monetary transaction. It becomes difficult to objectively, you know, at a technical code level come up with a way to encode that as consensus, to sort of automate the blocking of it. Now there, obviously it is possible in the sense that like you can look for the specific fingerprint essentially of the way that people are doing taproot inscriptions and you can say like, if they're putting data that we don't understand in this part of the transaction, then we just consider it invalid. But this is where it turns into that whack a mole game of, you know, you create rule to stop data from being here. Well, the spammers are then just going to find somewhere else to put that data. And this is not, you know, this is not just about taproot. For example, people have been putting arbitrary data in Bitcoin for a decade. Peter Todd, I think, was one of the first people to do this as a proof of concept in which he actually wrote a Python tool for encoding arbitrary data into P2SH inputs. And I think that that's how someone encoded the entire Bitcoin white paper into the blockchain many years ago. So, you know, it doesn't require taproot. Taproot made it a little bit easier from a coding standpoint, but there are many places where you can put data and there's almost infinite number of ways that you can encode data to try to hide it and you know, make it less obvious. And so, you know, how, how far down the rabbit hole do we go playing that game? I think that a lot of the people who are more long term deep thinkers have already played that out and basically decided, I don't really like what the expected ROI of us grinding away on this problem for years and years and years. Because also you have to remember that there's, there's a sort of velocity mismatch between how quickly you can code up new rules, whether that's policy rules, consensus rules, so on, so forth, get them pushed out to the network, get them adopted by a sufficient threshold of the network to actually, actually work to do what you want versus the adversary side of them coming up with new places to shove data. They don't have to get consensus from anybody, they just start building writing tools and pushing it out there. So I think that it would be a constantly like losing cat and mouse game as well. It would be really frustrating. And that's why A lot of developers don't want to spend their time on that type of frustrating game.

[Host (Bitcoin Podcast Host)]

Yeah, Kali had a post the other day that I thought was pretty spot on. And again, this is. I am a non dev. Right. I'm not technical in any meaningful way compared to somebody like Callie, and somehow I find myself just kind of in the middle of this in the debate. But Kali's somebody who I respect very much as a dev. Love the stuff he's building with Kashir. I mean, just released the. The Bitchat implementation on Android as well. Like, the guy's hardcore, but he said use whatever mempool filter you want. Your mempool, your rules. It doesn't change anything. It doesn't affect me at all. I couldn't care less. The only thing that's concerning is the artificial LARP instigated by podcasters. I'd like to say, Callie, I don't appreciate the digit podcasters there, but yeah, okay, I'll let it slide. And marketing people without any technical background or competence divides our community. It isn't a problem yet, but it will become one when bitcoin is attacked by serious adversaries that threaten to fork it. NFTs are not serious adversaries. They're not even in the room with us right now. We've seen this play out before in 2017, and it will happen again. It's a classic divide and conquer. We are currently divided. Conquer is next. Strap on. There is only one bitcoin. Safe to say that you're in agreement with that general consensus.

[Jameson Lopp]

Yeah. Though like I said, I mean, I think the actual level of the divide is magnified if you're on social media. I think that actually, like the vast majority of bitcoiners don't even know that this debate is happening. Most of them aren't even on bitcoin, Twitter or any or Noster or any other bitcoin specific social media. And then even amongst the ones who are, they mostly find it just boring. It's like the, from. From I think the average user's perspective, they're like, you know, bitcoin's working for me. I don't see what you people are so upset about.

[Host (Bitcoin Podcast Host)]

And you know what, that's a, that's a perfect way to transition out of that conversation. But I appreciate you addressing it because again, I think it's like a lot of assumptions are made about what people think and, and what their position on things are. And it's like you can. That's why podcasters are so important to this because we can just ask those questions. I appreciate you providing that. And I'm going to have to forgive Callie for taking the shot of the hip of the podcasters. Okay, so other side of things that I wanted to talk about was more in the meat space versus the digital space, and that relates to just generally wrench attacks. We're over $100,000 per bitcoin. I know it's crashed down to whatever it is today. 112,000 range. My God.

[Jameson Lopp]

Oh, no.

[Host (Bitcoin Podcast Host)]

It's over. It's all done. But, okay, we can all agree that's a ridiculously high fiat number. It's going to go ridiculously higher in fiat terms there. We're also at this point in our evolution as humans where there's a lot of cycles of change kind of concluding at the same time. And that time is like, now. And in the next 10, 15 years, it feels like things are going to get really messy and things can get really dangerous for people who are holders of bitcoin and crypto assets. I'm curious if. So you're obviously co founder, chief security officer at casa. I'm a CASA customer. Full disclosure, CASA is not a sponsor of this podcast. I just genuinely think CASA is a great solution, and I use it myself. And now it is impossible for somebody to take or they cannot. Nobody can force me, me to send them any bitcoin, even if they come into my house. And if they come into my house, they will be met with a great deal of violence. So I wouldn't recommend it. But the point is, like, I literally don't have the ability now, like, the amount. And that is awesome. That has allowed me and Carlo to sleep better at night. So thank you for building that. But this trend is obviously accelerating. It seems like a lot of it's happening in France and places where you don't have the ability to have firearms. Do you see this continuing to get worse before it gets better? Do you see, you know, do you see this as something. Where does education fix this? Where it's like, hey, I'll put a. You know, like Peter McCormick suggested in an episode a long time ago with you say, I just want to put a. Like, a sign, like an ADT sign in the front of my house. Like, look, you can't get it. Like, I don't know. This is the one thing I worried about. It's like, even though, like, I cannot send somebody bitcoin, but if they come into my house and they've got a gang of a bunch of people and manage to, you know, subdue me, it's going to be very difficult. But if they do, like, what if they're just too dumb to know that? Like that I can't do that.

[Jameson Lopp]

Yeah, what if they don't believe you?

[Host (Bitcoin Podcast Host)]

Yeah, what if they don't believe me? They think I'm bullshit. How do you think about this? How do you address this? How should people approach this situation? Because it's something people should be thinking about.

[Jameson Lopp]

Yeah, well, that's a lot of questions. Let's see. So, you know, hopefully we do eventually get to the point where Casa is such a household name that a sign would actually work. But right now I think if anything it would draw more attention than it would necessarily deter someone. So the first thing, and I know that one of the questions that came in on social media was like, why does Jameson always FUD wrench attacks? And it's a fair question because it is a self serving thing. It is one of the many security aspects that we claim to help people with at casa. And so I referred them actually to my wrench attack talk at bitcoin Vegas this year, which I started off by saying, look, I'm not here to fud. I want to put this into very specific context and that is on an absolute value attack number perspective, it's really small. Like, yeah, the 99.9% of Bitcoiners are not going to get wrenched attack. There's probably several other nines after that. Right. We're aware of 240 attacks. We, I would estimate there's probably around a thousand attacks because we don't know about the vast majority of them. They tend to go unreported or under reported for various reasons. But even if there's a thousand, you know, out of the total number of bitcoin holders, that's quite small. However, within the context of CASA and our clients, our target market, we're going after helping whales and people who have a life changing amount of bitcoin that they want to protect. Those people are in a much higher risk bracket than the average pleb who, you know, bought a few hundred or a few thousand dollars on Coinbase and doesn't, doesn't talk about it on social media. They haven't made it a part of their like, public identity. You know, they're not leaking a whole bunch of data left and right that they're associated with this stuff. So for the people who are more high profile, the people who have been in the space for long enough time that, you know, there's data floating around out there that you know, this person got into Bitcoin when it was $1,000 or $500 or 10 doll. You know, that's, that's the risk profile that we're trying to help people and, you know, mitigate this edge case. So to answer the question about getting better or worse, it's roughly correlated with the exchange rate. And as we were both saying, we expect the exchange rate will go a lot higher over the long term. So I expect that from a relative perspective that the wrench attacks will also go higher. I, I predicted that we would have an all time high in wrench attacks at the end of last year. I said 2025 is going to be an all time high just based upon the trajectory that I'm seeing. And we're well on our way to average, I think at least one per week, which will be by far an all time high. So yes, it's, it's going to keep getting worse before it gets better. It's, I think it's still going to remain fairly niche and in the sense that, you know, this type of crime is an edge case. You know, there's like, you know, homicide and then there's like aggravated assault slash robbery. You know, these are the more violent crimes. Thankfully they tend to be more rare though. You know, that really depends on where you're living and a number of different variables in play. But you know, related to, relative to all of the other types of things. Like the average person needs to be more worried about custodial risk if they aren't taking self custody. That is a much bigger risk for people. They need to be worried about inheritance loss. I think that's a risk that not many people think about. Regardless of if you're using third party custody or self custody. There's self custody is even trickier because you have to put more effort into it upfront and just like general cybersecurity privacy stuff like trying to prevent information from being leaked about you in the first place, because that is what then makes you a target, yes for wrench attacks, but more likely for social engineering attacks. And so I would say, you know, other than like hacks of third party custodians and hacks of your own hot wallets. Social engineering seems to be one of the top attacks, most lucrative attacks and most common attacks that are happening right now. And that's a result of the fact that we have made so much progress on the security side of things over the past 15 years. Then now especially people who are doing self custody, you probably at least have a Cold storage key management device. Regardless of whether or not you're using multisig, you're probably not keeping millions of dollars in a hot wallet. So like you're probably safe from the average hacker getting on your computer and stealing everything. And so what does that mean? Well, it means that the weak point for a lot of people actually becomes their own head. It becomes easier for someone to hack your brain to get you to then bypass and you know, authenticate whatever security protocols you have in place. Regardless of if it's your exchange account or your self custody setup. We're seeing more and more sophisticated social engineering attacks where these, these guys are getting better and better at kind of staying on their feet. And you know, they'll, they'll use any number of ways of like trying to get someone on the phone. And then once they get them on the phone, they might, they might start off saying, yeah, we're from Coinbase. And then the person's like, oh, I don't have a Coinbase account. And they're like, oh, never mind. They hang up and then they call back and like, oh, we're from Kraken or we're from Trezor, we're from Ledger, or whatever. And it's worked. Like I've talked to people who have actually had that happen to them. Like, didn't you think it was kind of weird that you were getting called by multiple different crypto companies who've never called you before within the span of an hour or two? But that's the thing is that the tactics that they use, they've obviously honed them over the years where they know the right set of words and phrases to incite fear and doubt into someone that makes them want to implicitly trust that whoever is on the other end of the phone with them is actually trying to help them secure their money. But of course what they're really doing is they're getting tricked into sending all their money to an adversarial threat actor.

[Host (Bitcoin Podcast Host)]

It's crazy too, because I mean, all of these different data leaks that have happened recently, I mean, and not just recently for, for years, that's the one of the horrible things about the massive data net, data capture net that is taking place with all of these exchanges through a lot of it forced because of AML KYC compliance. It's like you are forced to give them so much information and like they're going to at some point have a leak. Like pretty much all of them have. Like Coinbase had that massive leak just recently and hey, like that's just like, that sucks because if you have your bitcoin in cold storage and you're, you know, if, or if you're, you know, like me and you just don't pick up any phone call ever and you know, just refuse to check the emails and maybe use a burner email specifically for a different thing, like, yep, you just, like, it's, it's, they're never going to get you. But for a lot of people, especially like, I get it if you're newer to bitcoin or honestly, like, like, and I don't mean this in a derogatory way, just in a reality way, if you're a little bit older and like you somehow like got into bitcoin too, like, you tend to be a little bit more susceptible to digital social engineering because like, a lot of it's just more unfamiliar to you. But that's not to say that younger people aren't taken in as well, but I mean, for that it's like, I don't know how you like, protect against that beyond just trying to tell people, like, look, all these companies, they're way too big to actually have good customer service. They're never going to call you. Like, it's just, it's just not going to happen. Like, just don't pick up the phone.

[Walker]

But, but they do.

[Jameson Lopp]

The, I mean the, the elderly issue is definitely a big one. And so like, what we've seen some of the bigger social engineering attacks, like the ones where the attacker is getting tens of millions, if not hundreds of millions of dollars. You know, there was one a year ago or they got $250 million from one guy. And now just a few hours ago, Zach XBT posted one that just happened where they got $94 million. And if you look at these things, you know, well, first of all, these people are keeping in single signature wallets. We did learn that the, the one, a year ago, they were keeping $250 million on a Bitcoin core, you know, laptop, like single hot wallet. And so, and, and I can understand that, right, is that people tend to keep using whatever has been working for them. It's, it's very difficult. I've been doing this for a decade. It's been very difficult to get someone to upgrade their security because the default thing is it, it's worked so far. Don't touch it. You know, I don't want to break anything. And, and so that can lead someone to continuing to have serious vulnerabilities and they feel like they're safe until the vulnerability gets exploited. So I suspect that the one that just happened for $94 million. It's, it sounded like it was one of those multi hop social engineering scams again where they initially said we're from Coinbase. And then the person was like, oh, I have all my money on the Trezor. And so they called them back and they're like, we're with Trezor. And they did something to probably give, get them to leak their seed phrase or something and they swiped everything. So yeah, I mean it's tough because sort of geriatric targeted scams are not a new thing. It's just that bitcoin has amplified that, it's made it a lot worse. You know, there's a lot of elderly scams that happen in bitcoin that are just like ATM based, right? So there's scareware scams of like, we're from the IRS and you need to pay a penalty and you have to do it at this bitcoin ATM and people do it and they feed tens of thousands of dollars in the bitcoin ATM or other similar things of people claiming to be law enforcement, like we're going to arrest you if you don't give us, or we have arrested your nephew. And then they have a deep fake audio of the nephew. And you know, it's just getting, getting crazier and crazier and it's, I think, difficult to expect anyone to maintain a high level of, you know, adversarial thinking. That's just, it's not a normal way that the normal people operate. And, and then it gets even worse, you know, as you get older and you know, perhaps tend to be like more trusting, let your guard down, so on and so forth, especially around high tech type of things that you don't fully understand how it works in the first place.

[Host (Bitcoin Podcast Host)]

God, I mean I, I worry about, about the boomers when it comes to AI like videos because they like, they'll see a video of like a, you know, you know, Jesus riding a rainbow unicorn and be like, can you, where.

[Walker]

Where was this photo taken?

[Host (Bitcoin Podcast Host)]

You know, like obviously that's a little bit of an exaggeration hopefully, but maybe not like it's, it's gonna get really messy I feel in these, these next couple of years. I mean, the other thing is though, that it's, it's tough because like, like I feel that, and this may not be a popular thing to say, but like maybe self custody, like is not for everyone.

[Jameson Lopp]

I'll actually somewhat agree with you there in the sense that I think that there are ways that you can improve the self custody situation. So first of all, the problem in pretty much all of these cases is that there's only one key and it's only this one person who is dealing with a single point of failure that's protecting millions and millions of doll. In I would think in pretty much all of these geriatric cases they would have been far better off if they actually had expanded their custody setup to be a family based setup. And this is where multisig shines once again. But basically think of it as checks and balances. No single person should be able to click one button and send the entirety of your net worth in a few seconds. That's just insane. I mean it's great that bitcoin gives you the power to send 100 million doll anywhere in the world in a few minutes, but it comes with a really, really high level of responsibility that you have enough safeguards to prevent that from happening when you don't want it to happen. So you know, I think that it would make sense to have a family setup where you have multiple key holders and you basically, yeah, sure, you know, grandpa who has stacked his generational wealth for the past 30 years, has the sort of main access to the account and can initiate transactions. But if you want to actually be able to send a large amount of money, you need to get like the wife, the son, the daughter, you know, other people to co sign on that. And so it's not going to happen automatically without any sort of peer review of the process. And that's where I think in pretty much all of the social engineering cases. I've never heard of a social engineering case where there were multiple people on the victim end of the line. It's always one person that's getting social engineered. I think that if you had multiple people then it's much more likely that one of them is going to be like wait a minute, this doesn't all add up.

[Host (Bitcoin Podcast Host)]

I think that's, that's totally fair and like the idea that, that self custody is kind of like a scary thing, right? And that's like, you know, even I, I did not have a knock on wood here, but I did not have any issues with my single sig setups before. I also didn't have like, I spread sats out across like a couple of different, you know, hardware signing devices, a few different vendors, you know, try to reduce the risk there prior to getting a multi sig setup with you guys. But like it is, it is kind of scary. Like, you know, I still would get like a little bit nervous every time I like even though I'd sent a lot of bitcoin transactions, like you get a little bit nervous every time you do it. It's like you're just copying and pasting it but you're like, well, what if my computer changed it in the middle? You think of all these crazy things, what if I accidentally just fat fingered and put something else? They're like, what if I screwed something up? And so I get that worry for people. I mean, I guess also the other side of this is that a lot of people are just going to end up getting exposure through things like the Bitcoin ETFs. Right? And if they have capital that's trapped in a 401k or whatever that makes makes a lot of sense to do. But yeah, it's hard. Social engineering scams are never going to go away. We're not going to solve for that. Physical attacks aren't going to go away. I'd be curious though, you don't happen to have any data on the relative value of social engineering bitcoin or in crypto scams versus physical attack scams? It's got to be orders and orders of magnitude, right?

[Jameson Lopp]

It's definitely a lot higher. I'm not aware of any site that is tracking social engineering thefts. But like I already mentioned, $350 million in just two thefts in the past year. And that blows away, you know, all of the wrench attacks that we're aware of.

[Host (Bitcoin Podcast Host)]

So yeah, I can't imagine having, having $250 million in Bitcoin. First of all, that's just an insane amount. But if I did have that much, I cannot imagine just keeping that like in having one single point of failure for that. Like it's all in one stack. Like that is terrifying. And like, and you, you assume that somebody who's got that much, it's like, well, they must have better security practices in place because like why of course you would.

[Walker]

Right?

[Host (Bitcoin Podcast Host)]

You've got. But I guess not. Like that's, I think that's the kind of, the mind blowing thing for me is like you'd think people if they had that much money would know better, but it's like, no, it's, you know, it's a, it affects people across the board. I guess it's wild.

[Jameson Lopp]

Yeah, well, I mean, look, a lot of people aren't security experts. I'm sure you're well aware of what happened with Luke a few years ago. You Know, even. Even being an extreme OG bitcoin wizard doesn't make you not susceptible to having a flaw in your setup. And so he's a really good example because we've already said there's a lot of OGs out there who they. They got their stack many years ago, possibly before hardware wallets even existed, and they got their setup and it's worked. Why change it? And they're probably some of the biggest, most vulnerable targets now.

[Host (Bitcoin Podcast Host)]

Yeah, I remember as that was unfolding and all of a sudden the FBI is getting tagged and things, and I believe that led to the doxing of pretty much all of core. Right?

[Jameson Lopp]

Yeah, it was one of the core contributor meetups I think, that they had several years ago. Everybody got put on a list.

[Host (Bitcoin Podcast Host)]

That's wonderful. Great. We love lists now. That's quite messed up, but yeah, it's a great example. You can be a very smart person and still make dumb mistakes, but okay, I appreciate the context on that. Do you have any. Just like, obviously without giving anything away by. About your personal, exact setup for different things, but do you have any tips just as far as how you think about the mesh between physical and digital security and how people should best approach that? I know you've written a ton on this, but if you had to distill that down for people who don't know how to read, how do you break that down? What do you think are kind of some of the most important things people should look at? Okay, okay. Say, like, multisig is a really great place to start in the digital side, but how do you blend that with the physical side? If that makes sense?

[Jameson Lopp]

Yeah, well, so I think that the. The best way that you can strengthen digital security is by turning a cybersecurity problem into a physical security problem. And the reason for that is physical security is a lot less complicated and is a lot better understood because we've been doing it for all of human civilization. So. So this is why one of the reasons that CASA is built on having a bunch of keys that are on hardware devices that CASA has no input into whatsoever, we don't control, like the actual development process or the supply chain or anything about those, because we don't want to have even the slightest ability to corrupt or introduce some sort of vulnerability is that A, it's a lot easier to think about the security of a key when it has a physical instantiation. Like, you can say, I physically took this and I put this in this physical location. It has these physical security safeguards around it. And B, of course is that it's by, by taking your, your very sensitive data off of the Internet, you're automatically shutting out the 8 billion potential hackers that you're literally connected to at all times. It's like, you know, when you put a device on the Internet, you're putting a door there that 8 billion people can start knocking on. And so that just greatly limits the number of people that are going to even try. Because in order for someone, this is like one of the reasons why wrench attacks are so rare is because the risk is so much higher. Someone has to put themselves in physical danger in order to attempt a wrench attack or attempt a physical robbery or theft as opposed to a purely digital type of attack. So the, you know, the, the ROI for, for digital attacks is just a lot higher because you can try them over and over and over again. And like the worst thing that usually happens to, if you fail is nothing. You just try something else. You know, maybe eventually if you're successful, then you'll have law enforcement coming after you and then a lot of other sort of OPSEC issues will come into play as to whether or not you get away with it. But the actual risk to you while you're performing the attacks is practically zero. So, you know, pulling things into meatspace, I think it simplifies them and it raises the cost of an attack substantially in a variety of different ways.

[Host (Bitcoin Podcast Host)]

I think that's a really kind of important point to stress. It's like there's a very asymmetric advantage that an online, a digital attacker has because again, every time they attack, they're not risking getting, you know, getting shot in the head by the person you're trying to attack in the meat space. It's like you could do that attack once and it could be the last thing you ever do. And especially in America where I'm very glad we have the ability or the right that our right is protected, I should say, to carry and bear arms. That's a very dangerous attack. And I mean, I have to imagine that's why even though the total number of wrench attacks is low, it's like the majority of these seem to be happening in places with very restrictive laws about self defense. Fair, fair to say, like it feels like a lot of France, a lot of, like Thailand. Those, those seem to be the ones that I see pop up the most. I don't know if that's just like a, you know, random happenstance, but is that kind of what you've seen as well? I mean, it just, it it makes logical sense to me that if you got a country with a bunch of people who, anyone could be armed, that raises that bar for wanting to subject yourself to potential violence as an attacker even more.

[Jameson Lopp]

Yeah, I think, you know, on a relative perspective. So with my physical attack archive, America has the highest absolute number of attacks. But that is probably biased for a number of reasons. A, because if an attack happens and it's published somewhere and never translated into English, I'm a lot less likely to learn about it. You know, my news alerts probably won't pick up up on it. B, just differences in media and what they may be interested in reporting on can affect that. And also America is a fairly large country and diverse. And so, you know, we tend to have higher crime in general than a lot of places, a lot of first world countries at least. But from a per capita standpoint, the, the, the country or the, the area with the highest per capita is actually Dubai. Really? And you know, on one hand that shouldn't surprise people because obviously the Dubai crypto scene is a thing. There have been nine attacks there that I've cataloged and if I recall correctly, some interesting facts is that 100% of them were high value OTC trades. They weren't like home invasions or people getting targeted because they were flaunting their wealth or whatever. It was literally like. I think the thing about the traders is you don't have to do a lot of rooting around to find them. They're literally advertising their services on various websites. So you just, you go sign up for OTC trading site or peer to peer, join their telegram group. Yeah, yeah. And you're like, hey, can we swap a few hundred thousand dollars for Bitcoin or whatever. And so then they'll literally meet you wherever you tell them to, which in pretty much all of these cases tends to be a hotel room. And so once they show up at the hotel room, of course they just get grabbed and thrown in and tied up until they, they hand over whatever they brought with them. But also To Dubai's credit, 100% of those attackers were caught within a few days. And I think that that's probably because I think Dubai is one of the most highly surveilled cities. You know, they've got cameras everywhere. And so they'll just sort of trace back the attackers until they, they find out like who they are, where they came from and then go pick them up. But it's, it's hard to say. I think at a very high geographic level that one place is Necessarily riskier than an other. There's, there's general rule of law and what is law enforcement like and how much crime is there at a really high level. But I think a lot of it just comes down to people's privacy practices and, you know, how they, they go about living their life and who they choose to interact with. It's like a number of these situations, the victims, in a sense, put themselves into the, the high risk situation.

[Host (Bitcoin Podcast Host)]

Yeah. I guess it's a good reminder for, especially if you're a single guy at a, a, at a bitcoin conference to, you know, to watch yourself.

[Jameson Lopp]

Yeah. And look, there have been multiple cases where guys have been drugged.

[Walker]

Yeah.

[Jameson Lopp]

So it shouldn't just be. It's. It's no longer just like women worrying about, you know, something getting put in their drinks. The guys have to be worried about that too. And I think one guy believes he was given a laced cigarette. So you never know. Don't, don't ingest or don't accept things that you're going to ingest from people that you don't trust with your life. Essentially.

[Host (Bitcoin Podcast Host)]

That'S just a good policy all around. I think that's definitely. I appreciate those perspectives, though. I wanted to ask you as well. This is taking kind of a different angle on potential threats, and that is the quantum threat, broadly. So I know there's kind of a debate, and this obviously isn't. I mean, depending on who you talk to or which company is promoting their recent advances and that they're just on the brink of quantum whatever. This doesn't seem like something that's a really immediate thing, but it's something that bitcoiners are obviously talking about in advance. And that's a good thing because there is this question of what do you do with the coins that are basically thought to be lost that may be in addresses that are quantum vulnerable. And I'm curious if you can give a little bit more context on this debate from kind of the technical point of view. And then just how do you think about that in terms of what should be done or how much of a legitimate threat is that that needs to be acted on like now? Or is this, hey, we've got plenty of time. Let's take our time. Let's think through this and figure out what to do.

[Jameson Lopp]

So one of the reasons why I started talking about quantum stuff a year ago, it was kind of a natural evolution and step from the previous year of me talking about ossification. And that's because this is a problem that is not going to happen in the next year or two, but you know, 5, 10, 15, 20 years, it becomes more and more likely. And so the fact that bitcoin is getting harder and harder to coordinate changes around, in addition to the fact that this is a very novel problem where we've never had a bitcoin upgrade before where people needed to move their funds, it's always been opt in. Oh, you can move your funds if you want to, but if you don't care about the new features, then whatever. But because this, this is a unique game theoretic situation with regard to like what could happen with the liquidation of massive amounts of Bitcoin suddenly coming back into circulation and how that affects all bitcoin holders and everyone who's operating within the Bitcoin ecosystem, mainly as a result of confidence and the purchasing power of the bitcoin and what the demand for it and all of the related services would be. I think that, you know, this is potentially an existential crisis that is out there on the horizon and it makes sense for us to start planning for contingencies as early as possible. So you know, I have a bit that is, is not focused on the actual quantum cryptography at all because I'm not a quantum cryptographer. But I found the game theory of what to do afterwards to be much more interesting. And so that BIP is basically saying that I think that it would be best for us to have a multi year, multi phased approach where we start restricting what is possible to, to push people to fix their security. Because I don't think an opt in quantum security solution is going to suffice. Like it's not going to prevent massive harm from occurring even to all the people who have opted in to quantum secure bitcoin scripts. Because all your bitcoin can be in a quantum secure locking script. But then if 5 million bitcoin get dumped on the market, you're still probably going to be upset about that.

[Host (Bitcoin Podcast Host)]

Now that's. So is that bip360 or is that.

[Jameson Lopp]

My BIP does not have a number yet. It's still in the draft pull request phase. But the way that it's set up is that it assumes BIP 360 or similar BIP gets consensus and gets activated. And then my BIP is like what do we do once that activation occurs?

[Host (Bitcoin Podcast Host)]

Okay. And so I mean, so part of it is like having these quantum resistant addresses, right, that people need to move over to. But again, like the other part of the debate, which is perhaps more like, like again I think it's like ideological, I don't know, not necessarily ideological. It's a different sort of question, like what should be done with these coins? Because on the one hand, as I think through this, it's like, well, I wouldn't support burning these, basically taking these coins and burning them because what if somebody, they actually are still belonging to somebody and somebody hasn't lost?

[Jameson Lopp]

There's no way of knowing.

[Host (Bitcoin Podcast Host)]

We can't know. And so like, and if you do that, does that not kind of invalidate in many ways, you know, bitcoin's, Bitcoin's whole reason for existing. And like, like that's a really, it's a difficult balance to strike. I mean where have you, have you come to a formal like opinion on that yet? Like that you're like, yep, this is, this is kind of what we got to do. Or do you think this again still like kind of needs to be teased out in this like multi year, multi approach process, like depending on the timeline of quantum as well.

[Jameson Lopp]

Yeah, yeah. So, you know, this is why I found this to be a fascinating issue to think deeply about, is because that assuming that a cryptographically relevant quantum computer is created, someone is going to be upset because some inviolable property of Bitcoin is going to be violated. And that's regardless of if we do something or if we do nothing. And so there are moral quandaries at play. I have a lengthy essay that I think I published back in like February or March where I was thinking through all of the, the pros and cons and the objections and, and ultimately I think that all of the moral questions essentially become moot in the sense that what you need to focus on is the game theory of the economically relevant actors who are holding Bitcoin and who are powering that bitcoin ecosystem and what they can do. And so I think that from a game theory perspective, the interesting thing about this issue of freezing or burning quantum vulnerable coins is that it's a soft fork. Like you don't have to get everybody to agree at a, in a sort of worst case catastrophe situation, if a, if a quantum computer appeared and we had reason to believe that it was scooping up coins, we could just tell all the miners, you know, stop confirming transactions and, and they could keep creating blocks and keep getting the block rewards and just stop confirming transactions until we figure out what the hell is going on and what we can do about it. And so I think that while like the bit that I've been working on has Mostly been focused on the, the happy long term path under a scenario where quantum computing continues to progress steadily and slowly enough that we can reach a point where there's general agreement that it will become a threat and that we do something about it. And, and then what is the happy path for us trying to create a migration path for all of the Bitcoin users and then some way of protecting the economic value from just falling into the hands of an attacker. Now the, the, the easy, simple thing is just you burn the coins, you don't allow quantum vulnerable scripts to be spent from. I think that there, there's still room for research and development to come up with alternative ways of doing a quantum safe recovery. And so the BIP currently says we, we believe that it is, it should be theoretically possible to come up with some sort of zero knowledge proof scheme which would work for hierarchical deterministic wallets because a quantum attacker would not presumably have any information other than the single private key that they reverse engineered based upon the public key that's on the blockchain. They wouldn't know like your X pub and your xpriv and your derivation path and stuff. And so it should theoretically be possible to encode a zero knowledge circuit where you're providing these other pieces of data that can prove that hey, I actually have a bitcoin wallet that controls this address and I have other data that proves that I, I deterministically generated the key and that I didn't just randomly reverse engineer it with a quantum computer. But that's going to require a fair amount more engineering work and I think it's preferable if we didn't have to have that. I think it's going to be clunky to try to implement that. And who knows if consensus can be gained for implementing any sort of zero knowledge verification system into Bitcoin, that'll have plenty of trade offs. I mean I think the preferable thing is that we can get everybody migrated and the incentives are there to get them migrated so that we don't need to have any sort of crazy recovery scheme option.

[Host (Bitcoin Podcast Host)]

But who knows, I mean is there, is there a risk to, to fungibility there? Like in any of these, these pathways where it's like okay, you're essentially, you know, you're saying like these coins are no longer Bitcoins or like maybe if you go the non technical route of it's just like, okay, you're basically creating like an OFAC compliant list in a certain way of like these coins are now like, these are the Quantum threat coins so like, you know, don't interact. Like, is that another potential pathway or do you think it's just going to be like, it is going to have to be some sort of a technical solution and like a really hard decision is going to be made. I'm just like, again, I feel like it's the game theory. To me, if you have a lot of economic value in Bitcoin and you see, okay, people have the ability to arbitrarily freeze these Quantum vulnerable Bitcoin, oh boy, I don't know if I want to. I want a forked version of that. Do you think this is potential hard fork? You mentioned the soft, but is there a hard fork potentially?

[Jameson Lopp]

Well, yeah, that's. Once again, that's why I said I think you have to focus on the game theory and so, you know, burning or restricting the spending of quantum vulnerable coins. And first of all, it would absolutely have to be a purely objective technical thing where we are literally looking at the opcodes that are being used in the redeem scripts. And if it's using an opcode that is using, you know, ECDSA or Schnorr signature, then we consider that quantum vulnerable and we just abort and do not validate the transaction. Rather than something where like early on I was hearing people say, oh, are you saying that we need to create a list of all of Satoshi's coins and you know, create a black list? I'm like, no, nobody wants to like create actual lists. It has to be technically about how the coins are spent and whether or not they can be spent securely. But I think that the game theoretical problem with resisting a soft fork, first of all, it's never been done before. There, there are, there, there is a theoretical idea around a, I believe it was coined a user resistant soft fork. It's kind of like the opposite of a user activated soft fork is basically saying, okay, the miners have activated a soft fork that we disagree with. How do we essentially reject their blocks? And it gets, it's, it's tricky because in order to, in order to reject a block you disagree with, then preferably there needs to be some data, some aspect of that block that you can encode into your node to say reject blocks with this. So then it actually turns into a question of well, well how if at all is the, the soft fork to restrict spending activated? If it's done via putting some sort of flag in the like bip nine bits for activating forks. If there's like a flag in there that indicates that the Miners have activated this, then yes, you could then encode a rule that says we're rejecting all blocks that have that flag. But if it's, if it's not done that way, if it's just done at like a block height or something, I think you would have to basically like hard code the hash of the block that showed up then and said do not accept, you know, anything in the blockchain that, that has a hash with a parent of this specific hash. Like it gets pretty gnarly. Anything is possible to. But the question becomes, are the people who are sufficiently concerned with what you said about fungibility and the sort of, the moral aspects of, you know, freezing funds are, are they motivated enough and have the technical ability to coordinate that level of, you know, rejecting? Because if there, if there isn't specific data that you can just encode into a rejection logic, then it becomes a lot more human consensus based. And that's where things get nasty, even.

[Host (Bitcoin Podcast Host)]

Messier than general rough node consensus. I mean what I'm really concerned about is what if the quantum attacker starts posting monkey butt jpegs? I mean then we're, then we're really in danger. I mean, so in the larger context of the quantum threat, I'm curious people. It's honestly a meme that oh yeah, you're worried about Bitcoin. Well, what about the nuclear codes and everyone's bank account and everything else? Do you think that the fiat system in the military industrial complex is going to upgrade sufficiently to be quantum resistant? And does that, is that just something that like, military wise they're for sure going to do that or you know, can this thing kind of come out of nowhere and like nobody's ready for it? And then it's like, well it doesn't matter if you know, if Bitcoin is quantum resistant because somebody just got access to every military's nuclear codes and you know, like it's you know, end game.

[Jameson Lopp]

I mean I think that all the traditional and centralized systems are going to upgrade. They've, they've already been directed to, to upgrade. Like there's multiple standards institutes that have been issuing notices saying, you know, all Internet facing services need to upgrade. By, they're generally saying like 2030 to 2035, you know, in the next five to 10 years. But it's also, it's so much easier for them to upgrade, right? Is like if, if a quantum computer suddenly appeared, then they could just turn off their systems for a few days and, and implement the upgrade and then bring them back online. We can't do that in Bitcoin. I mean, we could, like I said, we could tell all the miners to stop confirming transactions and then the developers could, could work on actually implementing and rolling out quantum resistant locking scripts. But then you're still in just a really nasty situation where it's going to take anywhere from six months to who knows how many years for people to actually voluntarily upgrade for the entire ecosystem. For, for those changes to matriculate throughout all the software and the hardware in the ecosystem to eventually get to the end users to then tell them, hey, you really need to move your funds. And all the while that that's happening, people are going to be getting jacked by the quantum attackers or by social engineers.

[Host (Bitcoin Podcast Host)]

That sounds like if I was going to do some social engineering, it would for sure be around a quantum.

[Jameson Lopp]

Oh yeah, and there's already been some social engineering of like fake ledger and Trezor emails saying we need you to upgrade your firmware to make it quantum safe. And then of course they send you to a website that says, oh, you just need to put your seed phrase in here and we'll upgrade your firmware.

[Host (Bitcoin Podcast Host)]

God, people. Yeah, putting their seed phrases into, into websites will never cease to amaze me. But it's a, it's a reality. I mean, so this long, like the TLDR is, it's going to be really, really messy again. There's kind of just like.

[Jameson Lopp]

Yeah, I mean it, it just depends on the, the time frame that's the biggest unknown. And everybody's like, oh, quantum has always been 20 years away. And that's true. But there we're seeing acceleration along a number of vectors, not just the hardware. You know, there, there are, there's like new types of, of actual like quantum CPUs that are using different methods to actually build the hardware that don't require crazy super cooling and stuff. And we're, we're expecting those. Like there's this one company called Psi Quantum that just raised a billion dollars and they, a huge data center somewhere I think around Chicago. And they're expecting that to come online in 2028. And so, you know, we'll see if their technology theoretically can scale at levels that the others can't. Where like they have these photonic chips that they're literally stacking on top of each other, just vertically scale up. So if, if they can achieve like a linear scalability where you just throw more money at the problem and it makes, makes the quantum computer that much faster. And of course they deal with the error correction issue which is one of the bigger outlying problems. But we've seen advances on the error correction front as well. Algorithms that have vastly improved error correction, which makes the like, effective quantum computing power higher. Because right, right now you lose a lot of like real computing power to error correction just due to the tricky nature of qubits. But I'm not a quantum expert, so I only really know what I've ingested from several meetings that I've had with the quantum cryptographers and quantum like hardware builders. Nobody really knows. But there's, there's that and then there's also, I think the AI effect that, you know, AI is also improving progress in certain things. Like we've actually, I think seen AI make several like mathematics breakthroughs recently. And so, you know, if, if AI can be applied to some of these quantum problems, who knows if it might find some breakthroughs as well. So, you know, we are orders of magnitude away from a cryptographically relevant quantum computer. The only question nobody knows is does progress continue accelerating linearly or does it start to go exponential? And of course, if it goes exponential, that's when we need to be more worried that it could run away and become a problem that basically catches us unprepared.

[Host (Bitcoin Podcast Host)]

I hope that is not the case, but I'm glad there are folks, folks thinking about it already, already, because again, it's like, you know, gosh, if the, if this, the filtering debate is, is this heated, imagine the, the quantum debate, once we get there, it's going to be, it's, it's gonna, it's gonna get nasty. But again, like to your earlier point, it's a good thing that we have these debates like this is what, you know, like things are gonna be messy. But it's good that there is that we have the capability to debate these things then that the free market can ultimately decide and people can make individual subjective value judgments and decide what the fuck they want to do for themselves. Like, it's cool, it's at least, you know, may not be quite as efficient from a decision making perspective as a centralized system, but at least it does offer us quite a bit more freedom. So I'm here for that. Now I want to be conscious of your time here, Jameson, but maybe just like kind of one more general topic before we wrap up is just like where you think we're at kind of, let's say politically and culturally, obviously. And do you see any sort of cultural risks from that perspective? It's become clear that a lot of folks in the left are trying to paint Bitcoin now as like a right wing thing. A lot of folks on the right are very much like, yeah, we're pro. It's a conservative thing. Like, I view bitcoin as fundamentally conservative and liberal and just as a mirror. And it is just like it is conservative literally. And it's also liberal, literally, surely. But everybody wants to paint it as their own thing. Do you view this at all as a cultural risk to bitcoin? Or is this just like bitcoin doesn't care? People are going to do what they're going to do. They're only hurting themselves and their, their followers, their constituents, whatever. Or does the pendulum swing back really hard if we get a, you know, another unfriendly administration? And does it get even, you know, worse?

[Jameson Lopp]

Well, yeah, I mean, I find the, like, political polarization, the, the, the partisanship around bitcoin to be. Because obviously bitcoin is anti state in the first place. It's like we reject central banks, we reject state control of money. So the, the fact that now we have different sects of statists arguing over whether or not it's good or bad is just kind of silly. But obviously it is a risk because, you know, the liberals in America really started demonizing and cracking down on crypto a number of years ago. And it was, it was sad because I remember a time when sort of Democratic platform was anti big bank. Like I, I seem to recall this little thing called Occupy Wall street back right around the time when bitcoin was launching. And that was totally, you know, Democrat platform type of ideal. And, and somehow the Democrat platform seems to have gotten more in bed with the big banks and, and, and regulation and so on and so forth. And so that ended up creating a rift where they saw anything that's working outside of that system of control is the threat that needs to be quashed. And so they waited too late to do that, though. And the industry had already become a trillion dollar industry. And so when the industry saw itself being threatened, it did the most logical thing, which is like, oh, you're going to bully me. I'm going to go to the other bully and pay them a lot of money to say, hey, can you make this bully go away? And it worked. And so now we have a few years of respite and, and we have to ask, okay, what happens? Because it's only a matter of time until Democrats get back into power, whether it's next cycle or the one after. That's just, that's the way the system is set up. To keep flip flopping back and forth. And of course, the crazy thing is that due to game theory, really, it gets more and more polarized each time because you're incentivizing each side to continue to push the boundaries. And that's what Trump has done, right, is that he has pushed the boundaries to explore, like, how much power do I actually have? He's exploring how the rules of the United States federal government actually work, not just what's written down on paper. Like, what are the real rules that may not be written down down. And so obviously a lot of people hate that because it's not a very presidential thing to do overtly. They tended to do it more covertly. But I think that we should expect that whoever gets in office is going to continue that same line of thinking, perhaps not as overtly, but they're all going to keep pushing to see how much power or can they grab, because that is, that's the incentive for any sort of system of centralized control as you continue amassing more and more power. Nobody ever gives up power unless something, you know, very drastic happens, right?

[Host (Bitcoin Podcast Host)]

Yeah, that is really kind of the. The sad thing is it's like you, you just. The trend towards centralization feels like that just has so much inertia. Russia. And as you pointed out, like, neither side is incentivized. Like when you're in a duopoly like Coca Cola, Pepsi Cola democracy, neither side is game theoretically incentivized to shrink their power because they know the other side won't. And if they do, they just make themselves weaker. Then the other side gets in power again, which is the last thing that they want. And so I'm curious if you see an emergence of a meaningful third party as a realistic kind of short timeframe thing. I mean, Elon was talking about it for a while. American Hodl and Eric Cason may be running for president and vp. Who knows? Not on Elon's party, but a different orange party. But do you think that we have a meaningful chance at that in the United States of America? Or does it just happen that we stay in our Coca Cola, Pepsi Cola, but this kind of the group of independents in the middle who are the swing vote gets larger and larger and larger. And so you have at least more competition for votes versus just pander to your base.

[Jameson Lopp]

I don't think a distinct third party is likely or even really feasible because the two major parties have entrenched themselves so much that in order to even get your foot in the door is very difficult. You know, they have all of these rules and procedures, hoops that you have to get through, even to get, to get funding, to get invited to various speaking events, you know, to get the publicity. You can look at, at previous independence. I mean, look at like Ross Perot. Okay, so let's, let's take the theoretical idea that, okay, bitcoin is going to meant plenty of billionaires who have the ability to go out and run for, without having to beg for money and essentially hand over a lot of IOUs to all types of special interests. Even if you're able to do that independently, you still end up getting locked out of a lot of things that make it difficult for you to actually accrue much votes. And I think the average voter is pretty stuck in, in with their platform. You know, they're going to vote D or R regardless. And so I would also argue that we have, we have a third party, and it's actually maga. And, and so, you know, what Trump did is he created his own party, but instead of trying to create an independent party, he went in and he took over the Republican Party and he basically pushed a lot of the traditional conservatives off to the. And he got enough support that the traditional conservatives who hate his guts had to bend the knee. And so the question is, what longevity does MAGA have? Because, you know, Tea Party was a thing for a little while, but I don't think it ever really got to the level of maga. It died off. Who knows? I mean, this is really almost more of a sociological phenomenon, a question of, like, you know, how long can this particular group with their ideology, remain cohesive and not get torn apart by the traditional Republicans who would like to take their party back?

[Host (Bitcoin Podcast Host)]

Yeah, that is interesting to think of. The whole mega movement is basically creating a new party, but within the existing duopoly and then forcing part of that duopoly out. I think that's a fair characterization. It's pretty. I mean, Trump is probably one of the most powerful mimetic figures in recent history. Like, it's incredible to see. Like, no matter what you think of the guy, it's like, man, what a story. You know, what a meme. Like, it's one of the most recognizable outlines there ever was. Like, you see the outline of the man in his hair. It's like, you know, that's Donald Trump. But yeah, I hope, regardless, I genuinely hope that the leftists and the Democrats come around to bitcoin more and realize that this is something that actually, actually aligns with their purported principles, even if those principles have shifted and like, you know, it's, it's money for enemies. That's the great thing. You can, you can be as far left as you want or as far right as you want, and bitcoin can still benefit you and there's nothing your enemy can do about it. So let's hope they come around to it. But Jameson, thank you for your time. Where do you want to send people? Shill them wherever you want. You guys do not sponsor the show again. So I want to be clear that I'm genuinely talking about Cosmic from a customer perspective. And I appreciate the product, but folks should check out. It has genuinely helped Carl and I sleep a lot better. So I appreciate that.

[Jameson Lopp]

Well, yeah, you can check out Casa at Casa IO C A S A I O. You can check out my website and everything that I have ever written said. It's a lot of stuff posted and all of my bitcoin educational resources that I maintain. There's, there's like at least 2,000 links on there, all at Bitcoin page.

[Host (Bitcoin Podcast Host)]

It's a really impressive resource. Honestly. It's wild. Yeah. Well, hey, appreciate your time. Keep on fighting the wrench attacks and the other attacks because I think it's good for people to keep in mind and honestly, if you come across any social engineering data. Now I'm, now I'm going to dig a little myself and see what the scale of this is because now I've got a little curiosity. But appreciate your time, Jameson. Always great talking to you and hope to see you around the conference circuit soon.

[Jameson Lopp]

You bet. Catch you later.

[Walker]

And that's a wrap on this Bitcoin talk episode of the Bitcoin Podcast Podcast. Remember to subscribe to this podcast wherever you're watching or listening and share it with your friends, family and strangers on the Internet. Find me on [e-mail] walker and this [e-mail] on X, YouTube and Rumble. Just search at Walker America and find this podcast on X and Instagram at tcoin Podcast. Head to the Show Notes to grab sponsor links. Head to substack.com walkeramerica to get episodes emailed to you and head to bitcoinpodcast.net for everything else. Bitcoin is scarce, but podcasts are abundant. So thank you for spending your scarce time listening to the Bitcoin podcast. Until next time, stay free.