← THE Bitcoin Podcast
THE Bitcoin Podcast
CAN THE GOVERNMENT CAPTURE BITCOIN? | John Carvalho (THE Bitcoin Podcast)
01:48:13
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- [00:00]
John Carvalho
I think white market bitcoin is untenable. I think this is all just a temporary state that any amount of kind of appeal or evangelism or intentional involvement of getting bitcoin, getting government involved in bitcoin will be regrettable. I have much more dire, serious view about involving government in bitcoin because while a lot of the things you said are perfectly reasonable, I think that what people need to realize is that bitcoin's biggest enemy is the government. And so inviting them in is giving them power. And so we want, we want them to be as ignorant and as blunt and primitive about how they deal with bitcoin as possible. Even if it hurts sometimes. Banning bitcoin, things like this, those are the things that are actually good for bitcoin in the, you know, this is good for bitcoin meme sense, not the strategic bitcoin reserve. Because basically what we don't want is bitcoin captured. And it can be captured.
- [01:00]
Walker
Greetings and salutations, my fellow plebs. My name is Walker and this is the bitcoin podcast. The bitcoin time chain is 884388 and the value of one bitcoin is still one bitcoin. Today my guest is John Carvalho, CEO at Synonym. I've known John for a few years now, and I always appreciate the fact that he is a hardcore bitcoiner who has worked in bitcoin for years and has built a bitcoin company, but is also extremely realist, honest about his critiques of bitcoin. This was a great conversation with John.
- [01:37]
Unknown
With a lot of playing devil's advocate on both sides.
- [01:40]
Walker
And I encourage you to check your preconceived notions at the door. Put your emotions aside and use this as an opportunity to learn and think. Before we dive in, do me a favor and subscribe to the bitcoin podcast wherever you're listening and make sure to subscribe on YouTube and rumble as well. Just search at Walker America and if you find this show valuable, consider giving.
- [02:04]
Unknown
Value back by giving it a zap.
- [02:05]
Walker
On Noster or a boost on Fountain. You can find me on Noer@primal.net Walker and this podcast@primal.netcoin without further ado, let's get into this bitcoin talk with John Carvalho.
- [02:27]
Unknown
I've had like multiple people come up and say, like, you know, I like, you know, I want to share your stuff with like my friends and family, but I'm trying to teach them about, you know, how serious bitcoin is. And then they see titcoin and it, like, I'm worried it might put them off. And it's like, you know what? I view that as a filtering mechanism. Like, if you can't take a nice tit choke, then I just. I don't know, maybe bitcoin's not for you. Or maybe it is and I'm being just a bit immature, but only time will tell. But.
- [02:54]
John Carvalho
Well, we were talking a little bit about live streaming a minute ago, and you were talking about how there were some hiccups with setting it up. And I wanted to mention that, like, that was one of the first kind of projects I did in bitcoin was deal with video and live streaming. And that was what brought me to Romania as well.
- [03:09]
Walker
Oh.
- [03:10]
John Carvalho
So my business partner was Romanian. And so we were doing a live video chat website that. Where you could only tip in bitcoin. And that was called Exotica. And that's. That was one of my first bitcoin.
- [03:22]
Unknown
Projects, if I had to guess with a name like Exotica, like is my. Is my assumption about what sort of video chatting that was.
- [03:31]
John Carvalho
You got Exotica, you've got Romania. Yeah, you.
- [03:36]
Unknown
So you guys. You guys were. You guys were in the game before the. Before the Tate brothers, then.
- [03:41]
John Carvalho
Oh, yeah, definitely. I left by the time they arrived.
- [03:45]
Unknown
Yeah, that's maybe for the best. I think that, you know, they were trying to muscle in on that territory and we were.
- [03:51]
John Carvalho
We weren't so much trying to manage the models so much as inform the studios that they could use this, which is a little bit different, but still, you know, interesting, man.
- [04:03]
Unknown
It's pretty sweet. I mean, so you've. You've done a lot in the bitcoin space. And like, I actually, I was thinking today, I was like, I don't know if I kind of know your. Your full journey through this space because you've done a lot. You're working on Synonym now and a bunch of stuff within that, which I definitely want to get into. But can we. Can we start out, like, at the beginning? When did you actually get into bitcoin? What first attracted you to this and has now clearly infected you with this mind virus where this is all you want to focus on.
- [04:39]
John Carvalho
I'll attempt a summary. I'm sure I'll miss things and I'm sure it will also be a little too long. But I started in late 2012, basically because I heard about Silk Road and I was like, people are buying drugs online with bitcoin. What. What's going on? How is this Possible. So I bought my first bitcoins for about $10 each, sent them immediately to Silk Road, and bought some weed. At the time where I was living, it wasn't very easy to get anything really, as far as, you know, drugs go. Legalization was not quite, you know, where it is today either. And I thought I'd try it. And after a couple times, I got really paranoid and stopped doing it. And then a month later, it got shut down. So my timing was pretty lucky in that regard as, as far as discovering Silk Road pretty early in bitcoin and then not getting, you know, wrecked when it got shut down and this kind of thing. In the first few years of bitcoin, I actually operated under a different identity, Two different identities, one and then another. I haven't really revealed either of those publicly. I was very active in the bitcoin world in that time, and maybe someday I'll tell that story, but not today. And at some point, I realized that it was impossible for me to be how I am and not get some attention. In other words, the reason why I burned my first handle was because I felt like too many people knew I existed. And back then it was a little more scary. You know, we thought maybe, you know, the government was going to paul bitcoiners on a list and go after us. And it was a little more uncertain than today, a little less accepted than today. And so I became paranoid and I burnt that handle and started another one. And then I got even more, you know, well known with that one. And I was like, shit, like, I have to stop doing this. You know what I mean? Like, maybe what? And then I also felt bad from burning the first one because it was a waste of time, you know what I mean? Because I still became relatively known again. And I thought, okay, well, I'm just going to burn both of these and just use my real name. And around then was when, as I mentioned to you earlier, was when Bitcoin Uncensored was a really popular podcast. And they were basically kind of like Howard Stern for bitcoin. You know, like shock jocks and interviewing, like, gay prostitutes that accepted bitcoin and things like this, people that sold drugs and, you know, all kinds of crazy people crazy back then. Like, they liked making fun of the early shitcoiners because they were just really dumb and ridiculous.
- [07:18]
Unknown
Has, has that much changed to now, though, with the dumb and ridiculous?
- [07:21]
John Carvalho
I mean, I, I, I can't stress enough that I think if you ask around, you can get your hands on a torrent file of Most of the old bitcoin uncensored episodes. And everybody should watch. It should be required watching. Honestly, you don't really have an understanding of bitcoin culture if you missed that. It did get a little bit crazy towards the end. One of the hosts split off and did his own podcast, became a B casher, and kind of got a little crazy, but now he's not doing anything in crypto at all. So it's. It's a story of the past, but I definitely recommend it. And during that, they started streaming, as a joke, they started live streaming their show on a porn chat website, a video chat website. And I was like, what the hell? Like, it was just hilarious, you know what I mean?
- [08:09]
Unknown
And.
- [08:10]
John Carvalho
And for them, it was perfect. And they did it for a while. And I, at the time, I was going through a divorce, and I was like, I want to do a bitcoin project. I was already doing bitcoin full time since the very beginning in one way or another. Eventually I had a business. I closed and wound that down. Marketing and design, branding. And I was doing pretty well. And I just. All I cared about was bitcoin. And then I decided to take on the guy who was making that website that they were streaming on. I became business partners with him. And after I got divorced, I didn't like where I was living. That was one of the reasons I was unhappy. And so I just decided to travel for a few months. I went and visited the business partner in Romania and ended up staying there for, I don't know, four or five years. And during that time, we tried to run exotica. Ended up pretty much getting scammed by the business partner, and I was funding it myself. And I ran out of money and decided to get a job and. Or at least a joke. I made a tweet, you know, with a little butterfly meme, and had a picture of the Twitter link, the Twitter icon. And it said, is this a job? And Sergey from Bitrefill asked me if I was serious or if I was joking. And I said, well, it depends. Are you serious? And we had a conversation and I joined Bitrefill as their, what was it, Chief Communications officer. And I was doing a lot of marketing. I was getting their marketing off the ground, getting their paid advertising off the ground, and doing a lot of bitcoin related business development. We ended up convincing Bitfinex to be the first major exchange to run a lightning node. They ended up, I think they still are, the biggest set of lightning nodes on the network. And eventually my ideas Started getting more ambitious. I tried to fit those ideas into Bitrefill. And Bitrefill said no, which was totally reasonable because it would have been changing Bitrefill to a notable amount. But through the, the reason why I bring up Bitfinex is because through that business development relationship specifically, I ended up getting to know Apollo a little bit better. And I essentially asked him, I said, hey, if Sergey doesn't want to do this, will you fund it? And I put together a more formal kind of deck explaining the initial vision of the company. And he said yes. And so we ended up, you know, coming to a deal to where we, we didn't, I didn't want it to be a normal startup. I didn't want to have to fundraise every couple years and this kind of thing. I don't like VCs for the most part. And so we made an arrangement to become a subsidiary of Tether. So we're kind of like their bitcoin and peer to peer web research company, but we also make products. Sorry, I've been talking for a while now, but I'm sure I missed some things. There's a bunch of things I missed in there. But yeah, that's kind of leads us close to where we are now been doing synonym for roughly almost five years now. First two years we're totally in stealth. We didn't tell anybody anything we were doing and this year is probably find the year where I think we're going to finally have one full loop of an example of everything that we're trying to build.
- [11:24]
Unknown
And first of all, there is no need to ever apologize for going too long on this show. It does not exist.
- [11:31]
John Carvalho
I do that because everybody thinks I'm arrogant. So I have to like disclaim everything I do, you know.
- [11:35]
Unknown
John, John, I know so that there, there are no disclaimers necessary on this show. Just, just, just let it flow. But I appreciate the background and honestly I'm, I'm still just kind of, I'm working through the idea that coiners at in the early days were like even more shitcoiny than they are today. Just because the, the amount of like, like the sheer number of these scams of these shitcoins that are proliferating now is like mind boggling. Like this new like pump dot fun thing if you see like it's maybe.
- [12:09]
John Carvalho
A better way to put it was less sophisticated. We kind of went through a cycle like it was like less sophisticated, more naive and just more ignorant to highly skilled and highly divisive and Toxic methods. And now we've kind of come back down, you know, the curve again to things like Pump Fun was just explicitly like Turbo Ponzi's, you know, it.
- [12:32]
Unknown
Okay, that, that's. I think that's a fair characterization because that's. That's the wild thing now is I feel like it also. I was talking with.
- [12:39]
John Carvalho
We had those back then too, by the way. They were called gems. Oh, okay. Yeah, we had these websites that basically where you deposited the bitcoin and now you owned the gem. It was just a picture of a gem and you tried to sell the bitcoin to the next person and you just had. You just kept passing it to see, like a hot potato, how high the price would go until somebody kept the gem.
- [13:02]
Unknown
Wow. I mean, like, that's the mind blowing thing though, is that I feel like right now especially because, like, in the early days, like you said, you needed to. You needed to use bitcoin to basically enter in to this, to this market. Right now there's a lot of different. You know, you don't need to sell bitcoin in order to get access to these shitcoin scams. You can go in, you know, there's all sorts of like, fiat conversion on ramps that you can use now. But I feel like that means that, like, the capital is no longer rotating out of bitcoin and into these shitcoin scams. It's just kind of one big, just like, I don't know, vortex of, you know. Well, it's a shit vortex, essentially, where all of this money is just circulating. Everybody's looking for the next big thing. But it feels like, I don't know about the vibe that you're sensing. It feels like there's sort of a growing realization, like, shockingly, finally, I haven't been around as long as you, but even in my few short years here, it feels like now there's this realization that, like, okay, yeah, this stuff is just all a scam. We're just admitting it's all a scam. Yes. Bitcoin is like, if you actually want to be able to preserve any wealth, Bitcoin is there. But we're just going to call all of this stuff. We're just going to be honest about it. Like, Dave Portnoy basically being like, hey, you know, I'm going to. I'm tweeting about this shitcoin. I'm going to rug this shitcoin in like a few hours. But, hey, you might be able to make some money in the meantime. But I warned you so it's okay. And like, I mean you've got Javier Milei like retweeting that Libra shitcoin. Like, it's just.
- [14:31]
Walker
It's all so in your face now.
- [14:33]
Unknown
Like, there's no, there's no shame. There's no, like hiding to some degree.
- [14:37]
John Carvalho
Was probably scammed too.
- [14:38]
Unknown
Probably.
- [14:39]
John Carvalho
There's a lot of ignorance. Like, it's mostly ignorance in the whole industry. On some level, one way or another, there are people speaking about what they don't know what they're talking about. Almost everybody. So like I. I'm not saying he should be forgiven so much as this is a very predatory behavior. This is a very exploitative behavior. And that's what you're identifying. It wasn't all. And maybe that's another way to look at the past, is they weren't. The whole like mega exploitative aspect of shitcoinery didn't really enter until like people like a 16Z entered people like what was the. The CoinDesk company? Coin people. Like coin shares, which actually is invested in by Jack as well. You know, we started having serious people trying to create coins for selling as products. That was when the exploitation really began. But in the earlier days it was kind of like, oh, I made another bitcoin, but this one has a shorter block time. Oh, cool. You know, it was like just innocent experimentation. And then once people saw how much you could make off of this, we started having some real schemes go on. There were like some real pump and dumps going on back in the day, but it was more like bitcoin stocks. Like we had these like fake stock markets with like, like fake shares of fake mining companies. Well, they were quote unquote real. Sort of like a mix between Kickstarter and the. In Wall street, you know what I mean? But just, you know, informal. And then eventually the SEC shot all that down too. So. Yeah.
- [16:12]
Unknown
Yeah. I guess it turns out Gary Gensler was in fact standing in front of just a tidal wave of. Of shit trying. Maybe he. Maybe he was well intentioned.
- [16:22]
John Carvalho
Yeah, I can't. I never made a verdict on him. Sometimes it just seemed like, like when you really look at his face when he's saying things like he just. He just has this look on his face like, all right guys, I get it. Leave me alone. But I got to say this, you know, Like, I got to do. This is my job. Like, he just seems so like unconcerned when you look at his face, you know?
- [16:42]
Unknown
Yeah. I think he had a lot of pressure to Like, I'm not trying to absolve him of any potential sins, but I'm also realizing that there was certainly a lot of external pressure from within, you know, forces within the, you know, last administration. If we're talking about, like, operation choke point 2.0, like, there. There were a lot of external factors, and I don't really think that Gary was very much in control.
- [17:06]
John Carvalho
I mean, I'm not totally sold in that narrative, by the way, the Choke okay thing. Okay, I think that maybe there was some of that there, but that probably most of it was just natural hesitation and natural, you know, being timid about the situation and unsure and that the other half of it was actually just really exploitative shitcoiny people trying to do things that normally they shouldn't be able to get away with. And sometimes they did. And then when they were. When Walls were put up, they called it choke point 2.0. Now, I know that there are probably some legitimate efforts that also got choked. I just don't think it was necessarily a huge, you know, conspiracy to, you know, to chill the industry or such. I think that there were a lot of people in the industry trying to legitimize illegitimate things, and the industry was a little bit immune to it.
- [17:58]
Unknown
I think that there's, like, it would be impossible to deny that there was a shitload of just tomfoolery.
- [18:05]
John Carvalho
Look at the complaints. Like, it's like all like, you know, look. Look at the people that have spearheaded the idea of Choke Point. It's not people that are, like, doing freedom technology for Bitcoin cypherpunks. It's people that have, like, these investment companies and VCs and people like, I don't know, Eric Wall and these kinds of guys, like, these really toxic people.
- [18:27]
Unknown
And there's also, like, there's very obvious things like the. The treatment of Silvergate versus Silicon Valley Bank. Like, there's certain things where, like, okay, there are some pretty obvious cases where there were different rules applied, but I would also very much concede that, like, yeah, there's just a. There's a lot of.
- [18:45]
John Carvalho
Some of those people are taking really abnormal risks. Like, yeah, I, I know that. Like, for example, like, Bifinex didn't get taken down by any of this as an example. In other words, when FTX collapse and, and Terra Luna collapse and all these things, it was all those people that, that were complaining about Chokepoint that got taken down by those collapses and ended up being insolvent. And so I think there's just more to the story and I would never really be all that sympathetic to people that are doing exploitative things.
- [19:15]
Walker
It really blows my mind that there are bitcoiners out there who are not yet on Nostr. Seriously, what are you doing? Just like you shouldn't need to ask permission to use your money, you shouldn't need to ask permission to speak freely, but that is exactly what you are doing if you are still stuck only using centralized social media platforms. On Nostr, you can't be censored, you can't be banned, and you can't be deboosted for saying words that Elon Musk or Mark Zuckerberg don't like. Nostr also has bitcoin payments built in. So when you post a meme, a spicy hot take, or just a photo of a really nice steak, people can zap you bitcoin to show you they like what you posted and find it valuable. So if you want to stop larping, you can find me on Nostr by going to primal.netwalker and you can find this podcast on Nostr by going to primal.net titcoin Primal has a built in bitcoin wallet so you can literally get zapped by people for your posts, then use those sats to buy a coffee or do whatever you want all from the same app. Search for Primal in the app store, go to primal.net or check out any of the hundreds of other Nostr apps that are out there because you can freely switch between them anytime you want. So come join the largest circular bitcoin community in the world and start zapping sats on Nostr. Shitcoining is bad for you.
- [20:46]
Unknown
And you know what else is bad for you?
- [20:48]
Walker
Trusting a centralized exchange to keep your bitcoin safe. So go to Bitbox Swiss Slash Walker and use the promo code walker for 5% off the easy to use Bitcoin only fully open source Bitbox 02 hardware wallet. Then get your bitcoin off the exchange and into your own self custody. Bitcoin is chopsolidating around $0.1 million and companies are buying, nation states are buying. And unless you have your head stuck in the sand, you realize that your stack is going to be worth a heck of a lot more later than it is today, at least in fiat value. Because we all know one bitcoin equals one bitcoin, right? So now is the perfect time to make sure you have your security locked down tight with Bitbox Plus.
- [21:35]
Unknown
And I cannot emphasize this enough, the.
- [21:37]
Walker
Bitbox 02 is just super easy to use whether you're brand new to Bitcoin. It's your first time setting up a hardware wallet so you're a little bit nervous. That's okay. Or you are a well seasoned psychopath. Again, it's bitcoin only and again fully open source. Head to their GitHub and verify that for yourself. Don't trust me or bitbox when you go to bitbox Swiss Slash Walker and use the promo code Walker, not only do you get 5% off a great piece of bitcoin only open source hardware, but you also help support this podcast. So thank you.
- [22:11]
Unknown
Yeah, I would. I'm much more sympathetic open source devs. Yeah, yeah, no, I was just gonna say I'm much more sympathetic to open source devs who are, you know, taken out and punished for writing code than I am for people trying to run obvious schemes and pass themselves off as legitimate and dump on retail. But yeah, well, okay, shitcoins aside, let's we, we've given them too much air already, but they are fun to talk about. Let's, let's, let's talk about Bitcoin because John, I always appreciate your perspective on things because, and I think oftentimes you may rub people the wrong way because you come off as like very direct and sometimes oftentimes do not buy into usual Hopium type NGU narratives and are sometimes, you know, a cool refreshing breeze to chill people out a little bit. But a lot of people don't like that and they view it as naysaying and whatever else. Personally I do because I think that if we don't stay grounded in fact and reality, then like, what the fuck are we doing? We're just kind of blowing smoke up each other's asses and that doesn't get us anywhere meaningful. And so one of the I kind of big themes I wanted to talk to you about today is generally misconceptions about what bitcoin is, what bitcoin isn't, what bitcoin can do, what bitcoin can't do on kind of a, let's say, societal level. Because I know one of the things that you've said that's really sparked the ire of a lot of folks on, on X formerly known as Twitter. You said something the effect of like.
- [23:46]
Walker
Bitcoin is not money.
- [23:49]
Unknown
Can we talk about that a little bit as a jumping off point and just where that reasoning comes from? Because a lot of people like myself included would say like, well, if you use it as money, it's money. You know, if we're talking lowercase B. Bitcoin. Like bitcoin the network. Uppercase B is the network, right? It's the protocol. Lowercase B is money. I use it as money. So where does that kind of reasoning come from on your side?
- [24:14]
John Carvalho
There's a lot of nuance here, which is probably going to make it not as fun for listeners, but nuance is good. First of all, I'll disclaim that like, I just hate the topic of what is money? I think it's just riddled with so much bullshit. It's hard to find a good conversation, in my opinion, by normal people, especially about what money is. I think it's mostly just people like kind of circumnavigating all of the ideas that they've heard about money and trying to do this associative thing where they can maybe connect some of the things and they make this really, like, ugly mental model that is just rickety and awkward and they share it with each other and everybody. And then they. People hold on to the aspects that they feel are good narratives for making them rich or making them feel more comfortable with their investment or speculation, this kind of thing. So my just. My disclaimer is that I'm not going to pretend that I have some sort of magical better definition than money. I think the whole topic is bullshit. Because my definition of money is simply how you use the most popular goods. And so that's my only qualification for money is it's the most popular good in a marketplace, and what it's made out of is not really very important. It's just how you use it. And so to call bitcoin money, or for me to say that it's not money, is probably more related to a specific context. In other words, money is something you use to buy things, right? But bitcoin doesn't scale. Bitcoin blocks get full and fees go really high. Layer twos become unreliable when blocks are full, and the security models totally fall apart. And so calling bitcoin money, while most of the bitcoin community is more Interested in Bitcoin ETFs, Bitcoin strategic Bitcoin strategic Bitcoin reserves, you know, getting rich off of the speculation of bitcoin. The Ponzi aspect of Bitcoin, for lack of a better term, because there is no term that is something that is like a Ponzi but not having a leader. You know, there is this aspect to it. And so I think that calling bitcoin money if you want to be sincere, means that you have a philosophy about trying to get as many people to use Bitcoin as possible for commerce. I don't think there's a very big constituency of that right now in bitcoin. There used to be a little bit of a movement, especially back when I was at bitrefill. It felt like it was really going places. But right now I would say that maybe people that use bitrefill are the only ones, some of the few ones actually trying to live on bitcoin and using it as money. And the use case of actual active users that are using bitcoin as money or even lightning network at all is pretty insignificant in the grand scheme of things. And so to call bitcoin not money. I would say I probably was mentioning it in a context, but just also all of these other things I don't like about the topic of money because there's all these weird little like arguments and nuances you get into that benefit no one. Like I could tell you that. I think you know from reading Eric Voskill's work, his book Crypto Economics, that he has a pretty good theory for just calling bitcoin market issued fiat. And there's a whole kind of way of looking at bitcoin from an economic standpoint that way that it's all fiat when it's meant to be purely money and it's just a matter of who issues it. Right. And so there's a lot of, a lot of different ways to look at it. None of them are terribly useful in your life.
- [27:46]
Unknown
And so from your perspective, like it's not even worth the debate of okay, well you know, money can also fulfill the role as a store of value. Even if people are using it as a store of value. That you know, you're just, okay, you're just trying to classify this thing, but these classifications are ultimately irrelevant. Is kind of your.
- [28:06]
John Carvalho
They make a checklist of things that, that, that bitcoin meets as requirements and then they reverse engineer that being the requirements for money and they say, oh, it must be the hardest money, it must be the most portable and blah blah, blah, blah. No, it only needs to be the most popular good in a specific marketplace. That's my definition of doesn't really matter what it's made out of, whether it's fiat or credit or cryptocurrency, it's just not that important unless you're using the specific facets of that thing. For example, Bitcoin is specifically going to be best at censorship, resistance for the most part. Again, there's context to this as well. So if what you care about is censorship, resistance, if what you care about is, you know, having free markets, then you care about using Bitcoin itself as money. Not using, putting bitcoin in an account, like a strike account, and then paying in a custodial way over lightning. That's not really, it's all a larp, right? Like, we don't need lightning if we're going to trust businesses to run it for us. Only businesses need it. And so there's. I don't know. I could go on and on. Sorry.
- [29:12]
Unknown
No, no, I appreciate that perspective because I think it's one of those things that it's like, it is important to talk about what, what you think the purpose of Bitcoin is. I mean, you, in the general sense here, like, you know, all of you people, like, what is the purpose of Bitcoin? Because I, I think there's kind of an ongoing debate, like, and I'm sure it has been for, since much longer than I've been around obviously, about the whole, okay, store of value versus medium of exchange. Does bitcoin need to be actually used as, you know, as a medium of exchange in order to be successful, to continue, you know, doing what it does, or is it enough that we have protection against monetary debasement by governments and central banks? It works as a store of value. Okay, maybe it doesn't need to be the medium of exchange we thought it did. But I mean, you know, to your point about, you know, okay, Bitcoin base layer doesn't scale. Like. Yes, you know, that's, that's, that's fair, right? It, it is what it is. The blocks are, well, they're, they're capped, hopefully will remain capped. But do you see?
- [30:20]
John Carvalho
I think they should be raised, by the way.
- [30:21]
Unknown
But I would. Well, that's what I was gonna, that's what I was gonna ask because you, you were also. You, I mean, you go back to that interview with debate you had with Roger Ver. You guys were basically, you know, debating this. I, I haven't watched the full thing. I've watched a good amount of it. But I'm curious, what, what is your.
- [30:37]
Walker
Reasoning for saying that the base layer.
- [30:39]
Unknown
Block size, that, that needs to be raised.
- [30:42]
John Carvalho
Well, it doesn't need to be so much as if you're going to establish what your goals are or what you define Bitcoin as. There are, for many definitions that people claim to have for it. There are these requirements where you would need to have people using Bitcoin to make payments. You need to Be using Bitcoin in the base layer and not trusting. Sorry, where were we? I'm thinking.
- [31:09]
Unknown
No, no, no, no. Yeah, Just wonder, like, okay, so you're saying it doesn't necessarily need to be raised the block size, but you're saying there's a conditional if there. As in, if you want Bitcoin to be something at the base layer, then you need to have a block size increase. Right? Am I getting that right?
- [31:26]
John Carvalho
Bitcoin literally does not scale. This is an objective statement. This is not like me being an asshole. It's just the design of it. It literally just as a definition as you. As you explain it to other people or other engineers or such. It does not scale. But the only thing close we have to scaling it is to require each node to allocate more resources to it. Every node which would be increasing the block size or, you know, increasing the size of the chain in general, the disk space required, et cetera. And so when people talk about scaling Bitcoin, what I say is, well, you only have a few options. You can either, you know, try to somehow soft fork in more block space, you know, in a. In a kind of incremental, safe way. In other words, only do it when it's clear that it's needed. Like blocks have been full for six months or a year or years, whatever threshold people want to agree on. But one that's very, you know, obvious once we find a safe way to do that, because there's not a lot of research in the area anymore, or you could invest in, like, making disk space cheaper, making networks faster. This is how you have any hope of scaling Bitcoin. But you're always going to hit ultimately the limit of the speed of light. That's going to be your ultimate limit. And so you have distance across the earth of trying to send Bitcoin. And once you have. Once you hit a size where people can't stay in sync and you start having more orphans and fragmentation of the network, then that's it. You reach the limit. You know what I mean? There's. There's nothing more. And, you know, unless we discover something faster than the speed of light and we have quantum Bitcoin and whatever that, but for our current understanding, that's it. And even then, we're not going to fit everybody. And so this idea that we can fit everybody, that Bitcoin is for everybody, is just, you know, factually untrue. And so, you know, if how you think about Bitcoin depends on what your philosophy is for what you want it to be and how you use it. And so a lot of people don't think that much about it because they just think it's something that they want to get rich from. But if you actually want like a censorship free society and you know, open free markets where people have, you know, this freedom of association and freedom to, you know, organize however they want, you need a lot more tools and you need a lot more open mindedness about scaling Bitcoin because I don't think that things like UTXO sharing or basically how we, how we make the lightning network layer have proven to be scale well themselves. Even Lightning itself is trending towards being very centralized over time and less and less people using it self custodially that could change. But in the end there's all these limits in place and all these kind of trade offs. So you have to be more realistic and more down to earth when you're talking about these things. And that's what I find the most difficult is just getting someone to just accept what I'm saying at a literal value instead of attaching all their emotions to it and reacting.
- [34:23]
Unknown
I agree with that and sympathize with the sentiment greatly. One thing that I would ask in the interest of realism though is that is it at all realistic for, and I'm not saying possible like let's assume technical feasibility of bitcoin base layer scaling through whatever mechanism, maybe it's through a block size increase scaling to be able to encompass all the, you know, 8 plus billion people of the world or however many 10 billion that'll be at that point. Is it realistic to assume that everybody.
- [34:54]
Walker
In the world needs to use Bitcoin at the base layer or wants to.
- [34:57]
Unknown
Use Bitcoin at the base layer?
- [34:59]
John Carvalho
No, I mean, I think that those are all reasonable questions. This is again, you have to choose your goal when you're discussing the design. Like a lot of times people, what people are discussing with bitcoin is about its design and altering its design. And this is like something that's for engineers to discuss, for architects to discuss. This is not like something to just toy around with. And people take it very unseriously. But yeah, it really depends on what you're going for. Do I think what I'm, what I would recommend going for is basically that let's figure out where the sweet spot is and see if we're happy with it. Let's figure out how much we could actually reasonably scale bitcoin safely by increasing block sizes through layers, through whatever else and see how many People even care to use Bitcoin this way because it might be that most people for the next hundred years only care about having bitcoin in an ETF, you know, and then there's 20% of people that care about the rest. And if that's true, Bitcoin only needs to scale that much. Now you're always going to wonder if it could take more scale, if more people would use it that way. Because ultimately all the fees are exclusive, right? So the higher, the more it costs to run a node, the less people are going to run nodes at some, you know, some function. The more it costs to send a bitcoin transaction, the less people will buy bitcoin, the less people will spend bitcoin. It's exclusive in every way when fees go up, and it doesn't matter where the fees go up, it just starts excluding people once they go up.
- [36:32]
Unknown
Yeah, I mean it's, it's definitely true. But also, isn't that competition what adds another layer of, you know, another layer of security to Bitcoin itself? Knowing that there is some finite, you know, not only is these total supply capped, but that the, you know, ability to transact on chain is not just a, you know, it's not free or near free. There is a real world material cost to it which, you know, prevents people from just using it for whatever they want or for not having very much economic incentive to actually pay the fees that will then support the miners who are, you know, hashing the blocks.
- [37:14]
John Carvalho
I'd say I generally agree, but there's nuance there. Like for example, if the culture of the engineer designing it and the culture of the people using it is such that we say we give up on commerce, we give up on small transactions, we give up on, you know, point of sale bitcoin purchases because it's just not going to scale. It's just too expensive and there's just too many people that want Bitcoin and the fees and the speed are just never going to meet it. Well, then that changes the whole culture of what people work on, what people expect from bitcoin. And so now you don't design for that anymore and you lose what you had of it because it's no longer supported. I'll give you an example. Like, I've always been very much into the idea of using bitcoin as money to spend it for freedom, et cetera. But this one, one thing that we learned at Bitrefill is that our concept of zero confirmation transactions was something that a business could actually limit Their exposure to. In other words, we know that they aren't safe until they're confirmed and back then even till they have more than one confirmation. But we also know that we can exactly limit our exposure and basically provide zero confirmation transactions as a service to customers. So basically, if the customer could either establish a reputation with Bitrefill somehow, or Bitrefill could allocate a certain amount of money they're willing to lose to double spends per time period, per day, per week, per year, whatever, then they could always just shut it off when that limit was hit and they could say, okay, well we'll resume again the next time. And they could just, we could spend our time mitigating these problems, but because the culture is just so far from that. They actually killed zero confirmation transactions intentionally and made them literally impossible to do safely, whereas before we could do them safely, now the culture made that impossible. So now you lose a whole use case within using Bitcoin as money that previously was there and that businesses could rely on then, now they can no longer do that. They can't provide that convenience for users. So these little decisions and culture, these, these things affect things in ways that people don't really think about.
- [39:26]
Unknown
I think it was not this past time, just in January when we saw each other in El Salvador, but the prior time back in 2022, we had a long conversation about full RBF and, and zero conf transactions.
- [39:41]
John Carvalho
Exactly when the war was happening with.
- [39:43]
Unknown
Yeah, yeah, I remember, I remember it well. Well, I'm curious too. So on the. Because I do want to get into kind of the layered approach as well, because I think that relates directly to a lot of the stuff that you are building with synonym and bitkit. But I do want to ask, as far as one of the other debates that's ever present, it seems again from my short experience here is the, you know, to ossify or not to ossify. Which I think the debate also gets a little bit clouded because a lot of people who talk about it have never worked in any sort of software business whatsoever and don't necessarily even understand that like regular maintenance and upgrades need to be done and that those don't constitute soft forks or hard forks or, you know, definitely not hard forks, but maybe they don't constitute soft forks either. But regular maintenance needs to be done to keep software in line with the environment in the real world in which it is being used because things are upgraded constantly. A lot of people confuse that and think, no, you can just like if everybody just took their Hands off Bitcoin right now. It would be fine. It's not the case. They conflate that with changing Bitcoin. Meaning, okay, we want to bring about fundamental changes. We want to, you know, change the consensus rules, whatever, whatever it may be. And so I'm curious where you stand on that. You know, that there's the other thesis that, okay, ossification is not like a decision you make, it's a natural process. And I'm just kind of curious what your thoughts are on it. You know, obviously you think full RBF shouldn't have gone into effect, but in a grander sense, where do you stand on this? How do you look at it? How do you think through the question of ossifying, or is that even the.
- [41:26]
Walker
Right question to ask?
- [41:28]
John Carvalho
That last question is a good question. I think ossification is a meme. I think that both sides use concepts related to it to be manipulative and disingenuous, the engineers and non engineers. Ossification, I think, is when people stop using Bitcoin. So like, if it's ossified, it's dead. I don't think that bitcoin ever truly ossifies in the extremist definition of that. In other words, the definition that engineers want to use. They want to make normal people seem crazy for suggesting that they should stop changing Bitcoin because it's all. Because software always needs maintenance. These are. They're not having the same conversation. They're conflating each other's conversations on purpose. And that's what's shitty about the whole exchange in that. So engineers say these things, but then they behave in ways that the normal people are worried about. They say, I do want to change Bitcoin, I do want to add features and complexity and softworks. I do want to speculate on the design and take risks on the design of this, you know, multi billion trillion dollar network that's live and affecting millions of people. And they definitely downplay and pretty much have blinders on about the consequence and the gravity of their desire to change Bitcoin and willingness to do so, even willingness to change even smaller things like Bitcoin Core governance is very oppressive to normal users because they basically are their own consensus mechanism. And the changes to Bitcoin Core, because it's a default implementation that everybody uses and it must be compatible with what people use, eventually you are forced to take whatever changes Bitcoin Core makes because they deprecate old versions. And so if they find some sort of vulnerability in an old version, they're not going to patch it in the old version, they're going to patch it in the new version. And the new version has all the new soft forks. So there's not really a good claim of sort of autonomy or user, you know, some sort of stability of the code in the sense that the user is asking for when they discuss ossification. Yes, of course, you get like Twitter assholes that just take things to extremes and speak wildly, ignorantly, and they just call, they just call for ossification. Freeze the code. Now it's over. Get rid of these people. But the opposite is true as well, where they say, the people, you know, whenever anybody's telling us to be careful, they're just telling us to ossify, which is ridiculous. It's all nonsense. And everybody is. Nobody's being very reasonable in all these things because the reasonable take is just to be extremely conservative to say we need to discover and agree on what is extremely high, much higher threshold than ever that we've seen before. Threshold for determining that a change to Bitcoin has overwhelming support from its users and its engineers. Mostly all we get is like, this Covenants proposal has been around for three years and nobody has any major issues with it and the world has had enough time to review it. We have consensus. No, no. Consensus is what we already have on chain. You're out of consensus and you want to change bitcoin? Yeah. So, no, I don't believe in us vacation as a concept. I think that it's like trying to predict the future. Right. Like, how do you know if bitcoin is going to change? I don't know. You know, even if I do everything in my power to stop it, it still could change. So how do you know it's going to, you know, I don't know.
- [45:05]
Unknown
And I think that's a fair way of looking at it. And you're absolutely right that so much, so much, so much of these debates is like people. There's a lot of, let's say, dishonest, creative interpretation of what the other side is saying. And a lot of, you know. Well, yeah, there's a lot of talking down involved too. Especially when it's like, well, clearly you don't understand why this change is so necessary. And then the other people are like, well, you literally haven't proven that you could. That it's necessary for anyone right now, so why are we even talking about this? And then around and around in circles we go. I. I'm curious too though. So, I mean, you earlier, as we Were speaking about scaling Bitcoin at the base layer. You know, you mentioned some of the shortcomings with lightning. I'm curious because you guys are also at synonym. So you're building out or have already built out BitKit. It is obviously using lightning. What are your thoughts on kind of the current state of lightning? Does lightning itself need to be done in a quote sovereign way, in a non custodial way in order for it to be successful? Or are there some trade offs there that are acceptable for convenience? And also how do you approach that at synonym?
- [46:23]
John Carvalho
So first I'll explain, you know, our involvement in lightning and why, despite my, you know, trying to bring expectations down to earth that we still include it in our products. On one hand I'll just say it's the best option we have despite it having flaws. I don't think there's a better speculative thing to be working on on Bitcoin without changing Bitcoin, of course. In other words, stuff that non protocol devs can work on other than lightning. Ark is okay, but I just feel like it's lightning rearranged to some degree and there's, there's other things that people bring up. Liquid I think is just a shitcoin. I don't think it's a layer at all. And so we include Lightning in our products because my original, you know, one of my motivations going all the way back to bit refill, was using bitcoin as payments and Lightning was, you know, there to save us. And I was, you know, definitely, you know, all gung ho and supportive of that and trying to do my best to accelerate everything to do with lightning. But now that we've been in the weeds with it and gotten our hands dirty and seen it for, you know, six or seven years now, I think it's time to reassess and be realistic about what we have accomplished and what we have not accomplished. I think that lightning is extremely fragile, extremely complex, and the culture seems to want to make it more fragile and complex by adding things like stablecoins on Lightning, for example, with, with Taproot assets, by layering it with things like liquid and trying to use Lightning as rails. These are all, in my opinion, very naive ventures and this kind of thing. And so we're just sticking. We think that Lightning is enough risk for the moment and speculative enough. I think to answer the rest of your question, it was. Sorry, it was. Oh. So as far as whether it would be a success using itself custodially as a user, we're pretty close to Having refuted that as a possibility, most companies other than ours and a few others have kind of given up on self custodial lightning in any pure sense. Some have kind of pivoted a bit to like server based, you know, lightning keys on the phone kind of thing. Some of them have pivoted to mostly using liquid and just having liquid make lightning payments for you and do swaps over over that, which is another trusted kind of censorable solution, probably likely illegal as far as money transmission, transmission regulations go as well. So I think that what we've learned is that lightning will definitely always be useful to people who frequently transact. If you need to send many transactions in Bitcoin to a specific peer, you'll always have the utility of opening a channel directly to that peer and not having to have every single transaction on chain. That's and there is a relatively good assurance that you could defend your channel on chain if your counterparty were to, you know, behave poorly or try to steal from you. Granted that totally changes if blocks remain full and you can't afford a transaction. But assuming you're a business and this kind of thing, you should be able to see that coming and or afford that transaction and thus be much less risky than your average person. But as far as the individual, I think hobbyists, people that you know, really feel some sort of need for either the privacy trade offs or censorship resistant trade offs of lightning and Bitcoin may still do it and they'll always be able to do it, but I think they're going to be less and less supported over time and they're, it's going to be harder and harder to do it for yourself and more of a enterprise sort of business thing. Bitkit is still there to try to make it as easy as possible. And we don't plan on getting rid of lightning or anything like that, at least not anytime soon. But if people stop using it, we will. And so right now Bitkit, bitkit's kind of core purpose in our own roadmap and our own vision and plan is not simply to be a great mobile Bitcoin and lightning wallet. It's to be a demonstration of what a Bitcoin wallet or a wallet that supports multiple payment types, in our case on chain, Bitcoin and off chain with lightning, what that looks like integrated with the rest of our system. So in other words, in order to demonstrate the atomic economy, which we'll probably talk about more, I need to have a wallet that works within that ecosystem and a wallet that supports Bitcoin and lightning. Those are the best two examples of more than one payment method to demonstrate what we want to do with ability to do payment method matching and the ability to do peer to peer E commerce, which is also something we want to deliver.
- [51:26]
Unknown
I want to get into the atomic economy because I think that that's just super fascinating. I loved your keynote at Plan B in El Salvador. Before we do that, I do want to ask you said liquids are shitcoin and I do want to ask about that. Okay. Now it's a trade off, right? And I'm going to play devil's advocate here too because I have personally used liquid like quite a lot. I do, I would say far more than average numbers of transactions on lightning and on liquid. A little bit on ecash. Now, far less, just more experimenting because a lot of this is still very new on the. Well, it's old, but it's new again on the ecash side. But what is the big are the trade offs for you for liquid not worth it just because there's the federation thing in others.
- [52:20]
John Carvalho
If we want to think clearly and discuss clearly designs of bitcoin and how blockchains fit into the world and this kind of thing, you have to properly identify things. And so whether or not you want to also attribute that using a shitcoin makes you a bad person or whatever, that's your own problem. I don't care about that. In my opinion, there's no harm. And getting utility out of a shitcoin, I don't do it, I don't need to do it. But people that do it, I'm not going to deny that they got utility out of it. They did use it for a reason. Now people using shitcoins to scam people and gamble and whatever, I don't really care about. But that doesn't mean there's zero utility there. So, you know, this is nuance. And so as far as classifying liquid as a shitcoin, it's just an objective, literal classification. In other words, it is a separate blockchain than bitcoin. It uses a separate consensus mechanism from bitcoin. It has no actual relationship with the bitcoin network. The transactions of liquid are not made out of bitcoin transactions like say the lightning network is. It's made out of liquid transactions for the liquid blockchain. The liquid blockchain has its own base unit, the liquid coins. And the only thing that makes those coins somehow have this kind of ooh, it's bitcoin to it is that they, the federation A cartel of businesses pegs the price of the liquid shitcoin to one Bitcoin and so, or the base unit to the base unit of Bitcoin, however you want to look at it. And so the only thing that's making this seem like a bitcoin layer is that this federation is promising not to do anything with your Bitcoin and hold your Bitcoin for you while you convert it into their shitcoin. And so as far as any of the judgments about using a shitcoin, other than using the word shit, which is obviously disparaging, I don't care about that just so much as if you want to have an honest conversation about it, you have to think about it this way, because there's a bunch of important little distinctions that come when you organize it this way. Like, for example, liquid doesn't scale bitcoin, it competes with bitcoin, right? And so because it's a separate money, it's a separate network, and any transaction that happens on liquid will never happen on Bitcoin. And so it basically offloads. And people think this is scaling, but is, is, are, are wrapped bitcoins on Ethereum scaling Bitcoin are centralized transactions and Coinbase to coinbase customers. Scaling Bitcoin. No, this is scaling bitcoin. I mean, scaling Coinbase and scaling these individual things. So you have to separate these ideas so you can have an intelligent conversation about what scaling bitcoin even is. Because if you call liquid a layer and don't recognize that it's a totally independent blockchain with its own currency, its own units, then you get everything all mixed up and you can even have a straight conversation and everybody gets emotional because you're telling them they're wrong all the time.
- [55:23]
Unknown
There are certainly always a lot of emotions involved. I want to ask another, another thing that we'll move on the atomic, but as it relates to you mentioned USDT Tether on Lightning and that. So that was just, I mean, it had been teased at, I think a while ago, but now was just announced in El Salvador. Are you're not a fan of that you said, or you think it's adding too much complexity? Can you elaborate on that a little bit? Because my first reaction when I heard that was, oh, I mean, that's like, that's a cool thing. Suck some of the liquidity out of, you know, the Trons and the Ethereums with that stablecoin volume and have it be done with these taproot assets. What's your reservation about that? As it relates to just lightning network fragility.
- [56:08]
John Carvalho
The intentions were good. And I have to say this because I don't know if saying I invented the idea is appropriate, but I was definitely the only person holding the tokens on Lightning Torch for years. This started at Bitrefill where I asked some engineers there. I was like, hey, do you think that it'd be possible to do tokens of lightning? And they were like, yeah, I don't see why not. And we did research ourselves at Synonym. For the first few years on, we helped get RGB funded, which was a separate project. We tried to get Lightning Labs to collaborate with the RGB team and support, you know, as minimally as we would need for L and D to be compatible with it. You know, ideas around RGB. Our team fully implemented OmniBolt, which was another lightning token technology based on the Omni layer, which is actually the first, I think first layer on Bitcoin, not lightning. And the more I learned about these designs, the more I came to the realization that most of these things were not good designs. Honestly, if you want to do tokens on Bitcoin, Omni probably had the best, the most sound design already, and Omni Bolt by extension. But the difference with those designs is that what they do is they create native channels to that token. And so in other words, you would open a tether channel to your counterparty and you would only be able to send tether. So what that results in is you have like many Lightning networks, each network having a different base currency, right? And then when you start getting into that, you start thinking, well, then why are we using Bitcoin? Is there, is there a way to do this without Bitcoin? And you just end up in this, like, research rabbit hole where when you come out, you learn what all was stupid about all the prior designs. And so when we were, you know, Lightning Labs was showing us the designs for what was then called CMYK as a joke, as a dig against rgb, we were looking at those designs before they released them publicly to give our feedback and these kinds of things. When they made their announcements, and I noticed that they had ignored most of my feedback was when I decided that I was going to give up on supporting OmniBolt and give up on supporting Taproot assets or what was then called Taro on the launch. And so getting away from the history and getting a little bit more to the technical aspect of why I think Taproot assets specifically doesn't work, is that what it does is it requires this concept of Edge nodes because they don't want to do a design where there are native channels because they don't like the idea of not using Bitcoin and they, they want it to be Bitcoin based. They want it to bring volume to Bitcoin. They want to use Lightning as Rails. And this is a more new, newer narrative problem is that these edge nodes are essentially going to have to be exchanges or very tightly integrated with exchanges, because what they do is they convert that token into Bitcoin and then send it on the Lightning network and then the edge node at the other end converts it back into the token that's been designated. Now the problem you have there is that conversion is an inefficiency just in general, as far as any. Any idea of wanting to have a circular economy or having something sustainable, you've lost. You know, you've got to strike against you now because you're, you're converting twice in order to do it. But the process of conversion requires agreeing on a price. Getting a price requires having an order book and having liquidity. And all of that means that you can't do anything except tether on, on Taproot assets because it's the only thing that has volume, it's the only thing that has order books, it's the only thing that has readily available exchanges that will take the counter. The closest thing you might see on taproot assets could be USDC because they really want to compete. But I would guess that they might not even bother because Lightning is a pain in the ass and they should probably just wait until tether sees success there before worrying about trying to compete there, because there's a chance that it just never really goes nowhere and it's just a novelty within the Bitcoin community. Worse than that is that when you have this situation where you're doing conversions at the edges and you're tightly integrated with exchanges, you're providing a money service. And this is heavily regulated in most countries. And so this is most likely going to require licensure from such nodes and KYC and regulatory attention to the Lightning Network in general. And the issue I have with this is if they pay close enough attention to Lightning Network, they could make some pretty good arguments for not liking how the design of Lightning Network works. And because Lightning is most likely going to be used mostly by businesses and not end users, it becomes much more censorable. And because they can just go after those businesses and say, if you want to use Lightning, you got to have this license and that license and blah Blah, blah. So a lot of all kinds of things go out the window when you start, you know, examining, you know, the likely outcomes and possible futures here. Of course, I can't predict the future and I could be wrong and everything could be fine. But when you compare these challenges to the alternatives, using Tron, which nobody has tried to regulate, using Ethereum, which nobody has tried to regulate, Sol, which nobody has tried to regulate, that these things are very cheap to send Tether, for the most part. I don't follow shitcoins that closely. So sorry if one of these is really expensive at the moment. I don't care.
- [61:54]
Unknown
Liquid as well for tether.
- [61:56]
John Carvalho
Sure. Right. Well, Liquid is. Doug. Liquid thing gives me the same concern because you have Boltz B Ol Boltz doing these integrations with Aqua and Lightning over Liquid and this kind of stuff. And what they're doing is likely a money service as well, or at least a payment processing service and also requiring regulation. And the fact that Liquid is made up of like almost literally a cartel of businesses performing as a bank, like if regulators want to start, you know, coming down on people, it's just going to be so easy for them. And that's why we use Bitcoin is because it's hard to censor. And that's why I'm being critical of all these things because we're just introducing more and more likelihood of censorship.
- [62:41]
Unknown
Honestly, John, this is why I appreciate your perspective because I think I've gotten to know you a little bit and I'm glad for that because it can be very easy for people, I think, to see or hear some of the things you say and think like you're just naysaying. But this comes. Your criticisms, your critiques, your, your worries come from a place of. I want like, like I, I want there to not be censorship. I want there to not be regulatory hammers that come down and we can. I think we would both probably agree that most of these regulations are bullshit. That doesn't change the fact that they exist and these regulators exist and when regulators exist, they will regulate. That's literally what they're there to do. And I may think that's complete garbage, but it's a reality and it's one that we have to genuinely look at. And I think that's kind of a perfect way for us to transition a little bit into this idea you have of the atomic economy. And I loved your presentation at Plan B and I thought you set up the problem statement there. Very well. I'll link your full talk as well. From the conference for anyone who wants to jump in and go on a.
- [63:48]
Walker
Even deeper dive into it.
- [63:49]
Unknown
But can you, can you set it up a little bit of, what is this? Excuse me, what is this idea of the atomic economy? And then like, why is this needed? What's the problem?
- [64:02]
John Carvalho
Sure. I'll disclaim to anyone that goes and watches that video that I was very sick and I was not very happy with my performance, but I did get all the ideas out there, I think. And so I have this problem like. Like I criticize a lot, right? And I have this problem with people that either won't, you know, counter, argue, you know, a criticism, they'll just kind of let it stand or make some kind of bullshit statement and leave it alone. And I also have a problem with people who make criticisms without advice. In other words, it's easy to complain. I could. You can find something to complain about about pretty much everything, but it's harder to say how things could be different and visualize and be creative and even then ship those things. And so as a transition to the atomic economy concept, the atomic economy and all the things we're building and all the things we research are my answer to these problems. It's the result of my being discerning about which problems are real problems, which narratives are bullshit, because I'm trying to get rid of all the noise so I can see what's left and work with it. I find that knowing where the walls are or, you know, what the limits are in design is very freeing. It's like, once I know where the walls are in the room, I know that this is the room that I can dance in, that I can perform in, that I can build in. But if I don't know where the walls are, then I'm just guessing and eventually I'm going to hit a wall and that's not what I want. And I think a lot of people are going to end up hitting walls in Bitcoin with their ideas, with their designs, with their startups, because they don't. They're. They're too emotional, they're too willing to go with, you know, cultural popularity, popular, you know, memes and things like this. So Atomic economy is basically partially inspired by the idea of hyperbitcoinization, which was, you know, this idea that eventually all of the gravity of Bitcoin would suck everything in and it would be the only money and all the other monies would be destroyed, all the bad governments would be destroyed, all of the big tech would be destroyed. We would all, all the people would be in control again and Bitcoin would fix everything. That's obviously a bit naive, a bit, you know, trying to predict to the future, a bit impossible to just state that simply and actually believe in it. If, if that's good enough for you, great. But it's not good enough for me. For me I need to be able to say, okay, what does that look like? What would the world actually be made out of if governments were smaller, if you know, tech providers were gone or smaller, if banks were gone or less relevant? Like what do we replace all of that with? And mostly Bitcoin has been this kind of iterative way of moving towards that without actually planning to move towards it. Everybody thinks Bitcoin is inevitable and it will happen and just do nothing, just hodl. I don't believe that. I believe that the success of Bitcoin comes thanks to the work of people. I think that Bitcoin is people. And if we want to have any future that's anything like that, we should at least be able to explain and describe it. And so the atomic economy is my attempt to describe it through protocols and products, software products, and say this is the minimum set of things that we would need to have in place to have to have any sort of chance of being respected for predicting this future. And that was the vision that I proposed to Paulo and Tether, you know, back when we first started the company. And I did my best to articulate it back then, and I've been doing my best to evolve that explanation. And this idea of atomic economy, I would say it's still under construction as a way of, to explain it, because it is sort of like a mental model for the future, almost like a theory of everything in kind of a way. And this is obviously a rabbit hole and something that can be meaningless if you aren't careful. But the way that we use the atomic economy to define our products, just simply we want the user in control. We want people to always have this kind of self sovereignty, digital autonomy, however you want to look at it. And we want to be able to have marketplaces that can self assemble and have this concept of mutual consensus where there's more than one consensus, more than one rule set for different things, and people meet where they agree and separate where they disagree. Sort of like a voluntarist ideal network and digital economy. And what we've decided that requires is some sort of decentralized money, some sort of wallet in place to hold and keep your keys safe, and some sort of new web protocol to be able to interface with all of this in a censorship resistant way that actually meets the needs of users. And so we have BitKit as the wallet, we have BlockTank as the server providing Lightning services, our LSP. And we have PubKey which is made out of PubKey Core and PubKey app and various other components within those to kind of, by the end of the year, fully demonstrate what it would be like to live in this atomic economy and use it. And so this spring we'll be releasing the Pub Key app beta so people can see the interface and how we propose people interact to do things like create their own algorithms together with people that, with the people they care about instead of finding some kind of feed or something like this, that an algorithm that you can trust. And we'll also plan to demonstrate a massively interoperable peer to peer e commerce solution. And then finally, I also believe that what you need for such a future is some form of credit. And so we have a research project we'll be beginning this year called Atomicity, which is our way of saying this is how we think you should do trust in money. Right now we have kind of these hybrid kind of research projects like fediment and Cashew and things like this that all kind of very Bitcoin oriented. We try to have a more agnostic approach to saying there will always be many payment protocols, whether they're Bitcoin payment protocols, Bitcoin payment protocols, credit cards, there's always going to be many that people will use. And we need to have some way of interfacing peer to peer to match those payment methods. Just like we would match people in a dating website or match people with data in a search engine. And trying to put all these powers ultimately in the individual's hands. Not my best explanation, but hopefully a good.
- [70:38]
Unknown
No, no, no, it's good. And you had a, you had a line in the, the speech that was to the effect of, I don't think that scaling Bitcoin through any trusted method or hybrid method is appropriate for Bitcoin. Because the purpose of Bitcoin is not need to, to not need to trust. And so this is kind of your, your answer for that as well, right? How do we get this technology into as many people's hands as possible without having to sacrifice what is at the core of Bitcoin, which is trustlessness?
- [71:12]
John Carvalho
Well, I guess what I'm trying to say is I think that Bitcoin is optimizing for trustlessness and that when you start trying to bring trust back into the Picture, you should optimize for trust, you shouldn't go in between. Because when you use Bitcoin in a trusted way, you're fucking up. You know, when you use trust and try to pretend that it's trustless, you're going to get fucked. Like these things are not supposed to be mixed. That's why they were made separately. And so atomicity is an idea of, okay, like how can we actually digitize trust? How can we say okay, when I want to trust, what matters, what matters the most is who I trust, with what do I trust them and to what degree do I trust them. And so we're trying to give people ways to use those parameters within, within their social graph to route credit payments through their social graph. Just like you might route payments through the lightning network through a channel graph, you would route it more through trust channels. So for example, say instead of me saying, oh, I promise that I have this wrapped token that's backed by Bitcoin, I say, I owe you one Bitcoin. You trust me or not? You know what I mean? If you trust me, you accept that credit as Bitcoin. If people trust you, they may accept you to pay on their behalf using that credit. And so you can have this kind of low level of payments, which might be all we need because it keeps looking like in order to have low level payments we have to keep using trust. Right? So why don't we just go all in and just take all of those transactions out of any sort of centralized system and just make them peer to peer and say iou x dollars and seven bananas and Y Bitcoin. And you owe, you know, Bob, some three other or ten other different types of currencies and things, but these are just entries in a ledger. And the advantage you get here is you don't have to do actual conversion, you just have to do conversion of the math. You don't actually have to provide anything until there is an ultimate settlement request. And so we want to separate requests for settlement from requests for payment and allow credit to be used as a form of payment in a peer to peer way. This is all stuff that doesn't exist yet, but if anybody wants to read about it, they can go to GitHub.org pubkey atomicity.
- [73:32]
Unknown
And all of this is, is open source, right? You guys are building fully in the open everything?
- [73:38]
John Carvalho
Well, we're not always building in the open, but everything. But by the time we have any.
- [73:42]
Unknown
Users, you're shipping in the open?
- [73:43]
John Carvalho
Yeah, anything we have that has users is open source. Okay. The only thing that we have right now that's not Open Source is PubKey app itself, because it's not done yet. We don't want to release something that is broken or pretend that people should try to be running it yet. We're trying to get to the point where we can complete an internal private beta with like 50 people or so, run that for a couple weeks if everything's fine, make some small adjustments, and go live with a public beta. We're not at that stage yet. We're very close.
- [74:12]
Unknown
The way that you're talking about trust too, I think is really interesting. And it's also so important because the great thing about Bitcoin is that you don't need to trust Bitcoin. You will always need to trust other humans in your life. Unless you are a hermit who literally never sees another person for the rest of your life.
- [74:32]
John Carvalho
Competitive without trust.
- [74:34]
Walker
Right?
- [74:34]
Unknown
Like you have to have trust. You trust your family, a close circle of friends. It doesn't mean that circle has to extend out far. But trust is what community is. That's what family is. Right. You know, it's what society is. Exactly. You have to have that. And I think it's really interesting. I'm curious what your kind of. How do you see this evolving in the future? I think I see these trends towards mega centralization, whether that be governments or extremely large corporations that are mining the shit out of your data, controlling what you see and what you read and what you can say. I see these trends towards centralization. I see other trends in these parallel silos or I should not say not in silos, outside parallel fields, open fields where people like yourself or people on Nostra, people building on Bitcoin, are building out alternative systems that are not centralized, that are decidedly the opposite of that. They are decentralized. Do you see a trend in the long term of do these centralized systems ever change from within? Or is the only way that you sort of quote beat these centralized systems is to introduce something in parallel outside of that system that then forces it to change or it dies? Or do some of these centralized systems have so much critical mass that they're just going to keep going? How do you see that a trend more towards centralization, or that's the pessimistic side, is obviously you're building stuff because you believe that there should be a more decentralized, less centralized future. But how do you think that we actually get there? And is there so much inertia in the current system that sometimes for some people that just becomes unreasonable to assume that they'll ever opt out into these other systems.
- [76:30]
John Carvalho
Well, a bit in the abstract, what I'll say is I think centralization is cyclical in that we see from empires to ashes, from ashes to empires. So on some scale, on some time scale, on some size, that everything gets as big as it can get and then starts getting smaller, we grow as humans and we start dying. And this kind of thing, everything has this cyclical aspect to it and nothing is immune from chaos eating away at it. And so centralization is order. And the universe trends to chaos, life is order, and life trends to death. And so thus, you know, centralization is not something that you should be trying to eliminate. It's something that you should try be trying to figure out where it belongs and how to use it. There is utility to centralization. That's why it keeps happening. It is efficient, the market demands it. It happens for a reason. It's not because people are stupid, it's because it's natural and organic and easy for it to happen. And so with pubkey, what we've done is we've set it up so it doesn't matter whether or not you want to trust and rely on a centralized provider or host it yourself, because the way you use keys at PubKey is to sign DNS records inside of a very large DHT network. And so I apologize if any of your users are not familiar with DNS records or this kind of thing. But basically when you buy a website, a website domain, you know, like you buy john.com or whatever and you're, you're thrilled because one day that's going to be a really cool project and you're going to get rich off of it and then you end up never doing anything with it like most people who buy domains. But when you buy these domains, you're buying them from an authority. What you're actually paying for is you being listed as the owner to an entry on a list owned by a company. And what they do with that entry is they say, we're going to let John decide where to point this domain. Which servers are John's website going to live on. And so when you buy a domain name, the first thing you have to do is either buy hosting from that domain company and then point the domain name to that hosting so people can see your web pages or provide it from some third party and then you still have to update what's called DNS records, the domain name system records to point to that other server. So all these things do is they ask an authority where to look for data. Well, what we did is we took mainline dht, which is the largest decentralized network on the planet, as far as I know, the largest and oldest decentralized network on the planet, aside from the Internet itself, I guess you could say. But the Internet itself isn't a cohesive thing, right? It's, it's a protocol and it has fragmentation, etc. Well, the mainline DHT is what powers torrents. You know, when you, when you download illegal movies and things like this, that's the network that organizes and helps people with discovery. So what we do is we use a key and we sign a message that has DNS records in it and we put it in that network. And because it's the most decentralized, most censorship resistant network that we have, more than Bitcoin, more than nostr, more than anything, it makes it the best candidate for doing this. And so what happens is if you point that DNS record to synonym servers, our home server as we would call it in PubKey, and we decide to censor you or delete you or ban you or whatever, all you have to do is update your DNS record in the DHT and say, okay, don't go to John's server anymore to look for my data, go to Joe's server or Harry's server or your own server so you could self host it if you wanted to. And so when people load information in PubKey app, what they're doing is they're compiling information from whatever home server and whatever indexer they want to. And so thus if we were to misbehave while you were trying to take advantage of our centralization, you could now say, okay, this centralization is no longer worth it to me because it comes at the price of censorship. So I'm going to go elsewhere and elsewhere. If you are a very popular person, you're going to need a scaled real solution. You're going to need another server, another cloud, whatever. But if you're, you know, somebody that can do that yourself, or somebody who has less data and less people you need to serve, you can oust it yourself. In the end, it's what we call a credible exit. And NOSTR does not offer this. Because when you have to put your key, your hotkey into every application and if you lose your key or key is stolen or whatever, people have to use some sort of out of band method to check what your new key is and you've got all the sort of after effects, like now all your old Messages were signed with your old key. And people, how do people know when the cutoff was? When it stopped being you? You have all these kind of weird continuity issues, whereas with pubkey and the way that we do identities, you don't. The URL always remains the same. It's just a question of which host is providing the data at that URL. I don't know if that fully answers your question or if you have more.
- [81:51]
Unknown
No, no, no, it does. And I know that there are. I'm not technologically gifted enough to be able to refute the claims about Nostr. More so than just saying. I know that there are a number of different solutions for being able to essentially sign into apps without actually exposing, like Alby, for instance, as the extension that you can use. There's also like NSEC bunker, I think, that Pablo F7Z developed as well, that give you some other options for that in terms of not needing to put that hot private key directly, you know, copy pasta into each new application you use. That said, I think what you're still describing here is at a, at the protocol level, having, not having that necessity, right, to not even need to put it into some sort of third party signing, signing program. Just being able to. Yeah, okay.
- [82:47]
John Carvalho
You could put your key cold. You don't even have to have it on a device.
- [82:50]
Unknown
Okay. Wow. I mean, it's, it's super cool. What, you know, what I, what I love is that there are, I think there are so many different approaches to giving people options to not be completely subservient to these massive centralized corporations that are, again, mistreating people. Where you are the product, where you are at the, you know, at the whims of their algorithms and at the whims of their content moderation boards. So, I mean, do you, I'm just kind of curious, how does this compare to, you know, you mentioned Nostr, but what about something like Blue sky to these, some of these other decentralized identity protocols that are out there? How does it line up?
- [83:36]
John Carvalho
I would say it's definitely more similar to bluesky than to Nostr. I guess one caveat or nuance I should mention is that Nostr could use this as well. In other words, what we've done with pubkey is try to evolve things and move past or solve some of the problems that Nostr did not address in its original design. NOSTR could use this, what we call Picard Public Key Addressable Resource records, or this DNA via PKDNs, however you want to call it. But the issue is that it would be a breaking change and they would have to admit that this was a good idea. Neither of those things are very likely. NOSTR is very prideful. There's a lot of tribalist kind of culture to it, and to get them to take on the ideas of an outside or even possibly competitive protocol is not very easy. These ideas were shared with Noster people more than a year ago and rejected. And they remain valid and they remain great solutions. So when I mention that we're more like bluesky, what I'll mention is that bluesky does not quite do the same thing we have yet, but they are considering it. BlueSky is considering having multiple methods, I think, of discovery right now. They're very centralized in how they implement it and thus very censorable. But they are aware of using DHT for these purposes and I think they're aware of what we're doing. I don't know if they're going to add this as a method or use it as a default method or anything like that. I have no idea. But this is also just one aspect of our design. This is how we handle key management and having actual delegation of keys, which is something that Nasser can't provide in his current form.
- [85:29]
Unknown
Did you submit a nip for this?
- [85:32]
John Carvalho
You know, everybody says that to me.
- [85:34]
Unknown
And I say, well, I have to ask.
- [85:36]
John Carvalho
We're pretty thoroughly rejected. A year ago, I've been pretty thoroughly rejected. Anytime I make some sort of suggestion about Nostr or how it could be better, I don't have a lot of incentive to go and play the Nostr governance game. And from what I've heard, it's not all that easy anymore anyway, that just random people don't get to change nostr. So I put it like this. If you want my bip, go to GitHub.com pubkey and everything in there is my NOSTR improvement proposal.
- [86:12]
Unknown
Okay, maybe I'll, maybe I'll just do a little copy pasting myself and just.
- [86:16]
Walker
Throw it out there.
- [86:17]
Unknown
Uh, just, just.
- [86:19]
John Carvalho
I know they have their explore. I know that they've explored a bit using dht, but they're, they're going through the same things we went through already. Like we, they're considering making their own new dht. We tried that. We tried using hyperswarm DHT from the hole punch guys. Um, there's just nothing that, if you want to be rational, there's just absolutely nothing that compares at all to using Mainline. And the size and the censorship resistance of Mainline, just everything else is just a joke. And if you try to bootstrap one, you're going to be very censorable. It's going to be LARPing and you're going to have to spend years dealing with that until you actually become bigger than mainline for some reason, which, if that's what you feel like you need to do, go for it. But you could just use mainline. There's no special reason not to.
- [87:08]
Unknown
I've got to say, every time you say mainline dht, I don't know why, it just, it sounds like somebody doing hardcore drugs. Like, I'm going to mainline this DHT right now. Yeah, that's that, that's an aside.
- [87:19]
John Carvalho
I don't know where I came with the name coming from. I wasn't around.
- [87:21]
Unknown
But yeah, yeah, no, I, I John, I really appreciate your time here and I want to be conscious of it. I do have a couple of more general questions, but before I do that, and these are, these are shorter questions, I promise, because I again want to be conscious of your scarce time. There are, you know, bitcoin podcasts are abundant, but you've shared your scarce time on this one, so I appreciate that. But is there anything.
- [87:43]
John Carvalho
Always happy to explain myself. So I appreciate you giving me the time.
- [87:46]
Unknown
Absolutely. And I, I mean, I know we could probably go for hours more on just what you're building at synonym alone, but I just want to say, was there anything else that you really wanted to make sure that we got out there and covered as it relates to what you're building at synonym, bitkey, pubkey, any of this other stuff that is, you know, that we didn't get a chance to go over yet?
- [88:07]
John Carvalho
No, I mean, I think we could go into the weeds more with PubKey and PubKey app. But no, I think that it's a good introduction for your audience and if they want to learn more or understand better some of the things I maybe spoke about too quickly? We have a pretty good Medium blog where we cover a lot of articles that are related to these things, including a whole article called the Next Web where we talk about the whole vision of pubkey and the different aspects of it. We have research about proving how decentralized Mainline DHT is and what, you know, a public key domain is and you know, these concepts that I've introduced. So I encourage anyone that's remotely interested, including Nostr people. I don't have any special desire to fight Nostr or kill Nostr or anything like that. I just, we've been working on this stuff since before Noster existed and we're Just trying to do what we think is the best design and the most sustainable that can help. Most people would love for Noster people to join in, but yeah, some of the design, some of our design requirements require breaking changes, but that's not impossible.
- [89:17]
Unknown
Well, luckily with, with Nostr, there's no, there's no, you know, it's not like bitcoin consensus, right? Like for example, you say nostr, I say Nostr. Like there's not even consensus about the name. I think I'm in the very small minority there though. I'm finding out I also say hodl instead of.
- [89:33]
John Carvalho
I just don't like saying no, you.
- [89:35]
Unknown
Know, like, yeah, change it to yesterday. Okay, so I, my two, two follow up questions are number one, again, you, you may be often regarded as a pessimist. I don't view that way. I view you as a realistic optimist. But I am curious if you were to say that the one thing, not just bitcoin, not any, it can be anything that you are most pessimistic about. What is that thing? What is the thing? You are like really, really black pilled on.
- [90:11]
John Carvalho
Everything, man. Like it's really, it's really, really hard for me because I really sincerely believe that like 80 to 95% of the information coming out of everything, every corner of bitcoin is garbage. It's just a lot of, a lot of associative, lazy metaphors and just all this kind of like noise talk, pumper talk, these kinds of things. So I'm pretty bearish on overall state of the culture and state of understanding, state of good intentions. I am pretty pessimistic if you want to be broad about things. So to narrow it down to one would be really difficult.
- [90:58]
Unknown
Okay.
- [90:58]
John Carvalho
You know, I talk about these things all the time in my Twitter account or sometimes I'm missing for a month or two. But when I come back I'm always happy to point out the misconceptions and things like this. Pretty bearish on, you know, the state of coding for bitcoin on chain, the state of lightning, the state of, you know, VC investment. There's just a lot, a lot, a lot of naivety. A lot of people just masking their own good, good intentions and hopes with ignorance. Sorry, I don't have a good hot, spicy single answer for you.
- [91:36]
Unknown
No, no, no, I, I, I, I don't need, don't need hot and spicy. I was genuinely just curious because the follow up question is what makes you optimistic and hopeful? What is your, what is your way?
- [91:46]
John Carvalho
That was Coming.
- [91:48]
Unknown
It was the pessimistic shot with the optimistic chaser.
- [91:52]
John Carvalho
I'll start with the obvious and maybe not fun one for people, which is just simply. I'm very optimistic about our own company and about how Tether has chosen to fund us and fund this crazy vision. I'm very optimistic about the team that I work with and how dedicated they are to helping realize this vision, despite it being very speculative and. And out there compared to what other people are doing.
- [92:18]
Unknown
Yeah.
- [92:19]
John Carvalho
And I'm extremely optimistic about how that my pessimism and my judgmental, whatever you want to call me, that all of that stuff has been worth it to narrow down the world into something that is actually interesting and useful for us to work on. I'm still optimistic about bitcoin in general. I still think there's more price upside. I still think that there's more utility to be gained from it. I am a bit worried about people being comfortable with inviting the government into our bitcoin home and things like strategic bitcoin reserve and caring about what Trump thinks about bitcoin. This is not a good path.
- [92:58]
Unknown
But anyway, I'm ranting, John, and here I asked you for the optimism and you still brought it back to a worry. But I still, like.
- [93:07]
John Carvalho
I have to say this is like where I just have to perfectly describe something as best I can.
- [93:12]
Unknown
I feel that. I feel that I'm also. As it relates to the strategic bitcoin reserve, I would say that I'm ambivalent. I. Because I don't think that, you know, bitcoin ultimately cares. It's just a. It's a protocol. Right. And from my perspective, do I think it would be Good for the U.S. yes. Do I think it would be good for bitcoin? I think that probably, yes. I think that generally this is also something that's. I don't want to use a cliche, but I think that this was inevitable. A bitcoin strategic reserve is inevitable in the US and in other countries. Companies adopting it is inevitable for their Treasuries. If bitcoin is winning, this is a symptom of bitcoin winning and a natural consequence of that process, in my opinion. Whether or not I think white or.
- [94:07]
John Carvalho
Bad at this point is untenable.
- [94:10]
Unknown
You think what now?
- [94:11]
John Carvalho
I think white market bitcoin is untenable. I think this is all just a temporary state that any amount of kind of appeal or evangelism or involved or intentional involvement of getting bitcoin, getting government involved in bitcoin, will be regrettable. I Have much more dire, serious view about involving government in bitcoin. Because while a lot of the things you said are perfectly reasonable, I think that what people need to realize is that bitcoin's biggest enemy is the government. And so inviting them in is giving them power. And so we want them to be as ignorant and as blunt and primitive about how they deal with bitcoin as possible, Even if it hurts sometimes. Banning bitcoin, things like this, those are the things that are actually good for bitcoin in the, in the, you know, this is good for bitcoin meme sense, not the strategic bitcoin reserve. Because basically what we don't want is bitcoin captured. And it can be captured. Maybe it could be uncaptured with some sort of revolution or fork or whatever. But the government is the only thing with the resources to cause bitcoin problems. Everything else we've surpassed with hash power, with design, whatever it may be, but not the government. The government with many, many guns. And they could go after all the large miners. They could go after. You know, they could make laws about requiring bitcoin to be white market. They could force there to be two bitcoin prices, A white market price and a black market price. They could make all black market usage seem illicit. If at that point there's a lot of risks. They could use money printing for as long as they can to gain hash power, to gain a hoard of bitcoin. All centralization of any aspect of bitcoin is dangerous. Ownership of coins, ownership of hash power, all of it.
- [96:17]
Unknown
I'm not going to disagree with that. But I will say we've already been far down that path before the strategic bitcoin reserve was even around. You already have OFAC compliance in certain. In certain areas, right? You already have. You already had.
- [96:31]
John Carvalho
I'm just saying there will be more. The more we embrace government, the more rules they're going to put on us. That's all like, of compliance, like miners censoring. Like people think that bitcoin is like perfectly censorship resistant. No, if the government wants to subsidize the censorship of transactions, they have a lot of resources to do that. And mining is not very decentralized. And so their ability to enforce that is pretty strong right now. And so, yeah, right now, you know, people like bitcoiners want to make like a little stink when they find out somebody does complies with OFAC or whatever. You can't run a business and not comply with OFAC in any country. You know what I mean, even though it's a US thing, if you are a European business, you're going to have your lawyers telling you to comply with OFAC if you can't get away from it. And so if they start expanding that, and OFAC is pretty not very transparent, like the process for getting on the list, the process for getting off the list, whether that is impossible, the degree of severity to why you're on the list, none of these things are known. There's no democratic process to it. There's no transparency to it. Like lightning nodes already have to do this. If you're, if you're an lsp, you're like Breeze Phoenix, everybody that you know, you have to be checking whether or not people are buying channels from you. With OFAC addresses, withdrawing to OFAC addresses, all exchanges have to do this. Any money service has to do this. So you shouldn't be getting mad at businesses that comply because they wouldn't be able to provide the service if they didn't. And so what you should be getting mad at is the government. Don't be happy about the government getting involved in bitcoin. Be mad at them. Be mad and say, why? Why are you talking about investing in Bitcoin and speculating on the bitcoin price when you should be talking about making everybody have a right to transact in bitcoin. Making buying things with bitcoin tax free. Like you want Bitcoin rights, that's what you fight for. Not, not bitcoin speculation by the government like this is just way off base.
- [98:37]
Unknown
Well, it's a great reminder that the government also can't give you rights. They can only take them away. Right. Which is the, well, the sad part.
- [98:47]
John Carvalho
So I have a. I'm trying to develop my view on what rights even are. It's not a topic I talk about a lot, but it's something I've thought about a fair amount, which is simply that, like I don't think that human rights exist. I think it's a nonsense. There's no way to define it in a sensible way. I think rights are, and I said this actually in the 21 realities tweet I made today, rights are just something that you can physically defend yourself. You enforce your own rights and whatever you can enforce is your right. And the difference with the only thing that rights get into as a group thing is basically governments exist to distribute violence. Society has decided that we need an organized way to control and limit what's okay with committing violence. And the only solution we keep coming up with is government. And so the government's job is to distribute violence. When they're doing anything else, they're going to do a bad job at it and they shouldn't be doing it. And so in the end, if violence is a factor, you have to consider this.
- [99:53]
Unknown
I'm in agreement with your characterization of governments. The only reason that they exist is to enforce the law. The only reason that the law should exist is to organize for the collective defense of private property, which is the.
- [100:05]
John Carvalho
Distribution of violence is a violence that the government will allow. Right. That's what. In other words. So you have your own rights, which in other words, not even the rights that are. You think are yours are fully yours. In other words, anything you can defend, because you can't defend yourself from the government. Not, not most of the time you can. And so what is, what are your rights exactly? It's what the government allows you to do. What violence that people agree on. And so when people agree on a method of violence or an example where violence is justified, then it becomes a right. Like you have the right to, I don't know, say somebody defamed you. And what that means is if you can prove it, then the government will enforce violence on your behalf and thus it becomes a government distributed rights. And that's the only rights. There are things that you can defend without consequence alone, and there are things that other people will commit violence for, for you that are accepted.
- [101:03]
Unknown
I think that that's fair. I would say the. The additional layer there that I would add is that a right is something that you, again to your point, that you can defend for yourself, that you have, or that you can do without needing to rely on the labor of others, the coercion of others, or violent coercion of others. And that's basically where, like that is as close as you could get to a human right.
- [101:25]
John Carvalho
Yeah, I think that gets more into like the libertarian way of looking at it.
- [101:28]
Unknown
And like, like health care is not like, I wouldn't argue health care is a human right, you know, like that. Because that requires label. Yeah, but like, apparently a lot of people are really.
- [101:37]
John Carvalho
Government doesn't even defend that one either. No violence on your behalf if somebody doesn't give you health care.
- [101:43]
Unknown
In most cases.
- [101:43]
John Carvalho
In some cases they would, but no, generally not. Yeah, I just speak of it the way I spoke of it because I need to understand like the dynamics of things and be able to have a mental model. I don't really care so much about the narratives or like political templates, so much as if I really try to think about the core primitives of what's going on with rights. It's just a matter of violence and whether you're committing the violence yourself or there's some group that's allowing other people to commit violence on your behalf. And that's how rights are determined. And yeah, I agree with your philosophy of, yeah, you shouldn't expect anything that you can't do for yourself because it means somebody else has to do it. But there is some nuance in there in that we have the superstructure of a violent government.
- [102:28]
Unknown
We do. And that might has right in the government's distribution of it. So that's not. Something will probably see change because again, we've seen that trend toward the centralization of power, centralization of violence over and over and over and over again, as you pointed out earlier.
- [102:47]
John Carvalho
It's probably because it's an efficiency and probably the best way to do it, you know, really efficient way. Like to talk about like, you know, having, you know, mercenaries and things like this, every time I try to think that through, I'm just like, this just ends in government. Like, there's just no way to avoid things of what, you know, going from ashes to empires. It's just always happening. I don't see why we should expect different.
- [103:12]
Unknown
It reminds me just an analogy to that is I always chuckle a little bit when bitcoiners are thinking through stuff and they're like, yeah, we're gonna screw the banks, we're done with the banks, we've got bitcoin. And then a little while later it's like, you know what, It'd be really nice though, if we had some credit, if we could have some credit within this bitcoin community and then just, okay, but like, we shouldn't like manage that independently. Like, maybe we could just like have a, I don't know, some like, group of people that manages how credit is given out and like keeps track of it all. And it's like, well, guys, we just fucking created banks again. Congratulations. Like, you know, the certain.
- [103:44]
John Carvalho
You really frustrated me for a while. Like maybe roughly a year ago, there was a real rash of excitement about ecash and, and, and Fediments. And that really frustrated me because I don't mind the idea of discussing credit systems. I mind the idea of using bitcoin as a credit system because that's the opposite of what we made it for. It's just so frustrating to say, oh, let's scale bitcoin with banks. And I'm like, oh, how do I like refute this. How do I deal with this? And VCs are loving it and I'm just like, I don't. It's just so obvious to me and this is how most of my days are, is I log into Twitter, I see something so obviously wrong like with any amount of thought put into it and I just get like depressed. I think, well the least I can do is share my insights and hope somebody else benefits from them.
- [104:34]
Unknown
You know John, we're going to have to do this again because we could get into a whole conversation about, about ecash and fetiments because I, I have, I have positive views on them now because I also believe optionality and free choice is key for anyone and trade offs exist within any system. And yeah, don't fall into the trap.
- [104:54]
John Carvalho
Of me trying to refuse something meaning I'm trying to stop people from doing it.
- [104:58]
Unknown
Oh no, no, trust me, I don't.
- [105:01]
John Carvalho
Like I said, I do. We have our own credit system design that we think is optimal and that we do intend on building. It just has nothing to do with bitcoin, that's all. That's the nuance for me is that I don't like people portraying credit as a scaling method. It's just not.
- [105:19]
Unknown
That's fair. Well John, I, you know, I've got to cut it off at some point because otherwise I'm.
- [105:24]
Walker
We'll.
- [105:24]
Unknown
We'll just have to keep firing. But I enjoyed the heck out of this man. Synonym 2 right for the website for.
- [105:33]
John Carvalho
The company if you want to get an overview PubKey app if you want a little sneak preview of the app pubkey.org if you want to learn more about the design of the protocol and code blocktank to if you want to buy some channels or learn about our lsp. But yeah, I really hope people at least research and look into what we're doing a little bit because I think it's really cool and a lot of discretion has been has led up to our designs and this is going to be a big year for us with shipping things. So bitkit is already usable and available if you want to start there. But the pub key stuff is just unraveling now.
- [106:13]
Unknown
I'm excited to play around with it and excited to see what you guys do and we are going to have to do this again because there's far too many things I want to dive into with you. But John, thank you so much. Appreciate your time man and hope to see you in the flesh again soon. Maybe it'll just be El Salvador again. Maybe that'll that's our, that seems to be the, the go to meeting.
- [106:32]
John Carvalho
No, you guys do more shows than that. It will be Lugano maybe, maybe Prague. We'll see.
- [106:37]
Unknown
We'll, we'll, we're going to try to make it to Prague, but we will.
- [106:40]
Walker
Be in Lugano for sure.
- [106:42]
Unknown
So stoked about that. It'll be good to be back. But man, thanks for your time. Appreciate it. And we'll talk soon. And thank you to everyone who jumped in on the live stream on nostr. And we'll see you guys again soon.
- [106:54]
John Carvalho
Thank you. All right.
- [107:02]
Walker
And that's a wrap on this Bitcoin Talk episode of the Bitcoin Podcast. If you are a Bitcoin only company interested in sponsoring the Bitcoin podcast, head to bitcoin podcast.net sponsor or send the an email to hello Bitcoin podcast.net if you are enjoying the Bitcoin podcast and find it valuable, give it a boost on Fountain, a five star review wherever you're listening. Or better yet, share this show with your network so more people can learn about bitcoin. Or don't. Bitcoin doesn't care, but I sure do appreciate it. You can grab links in the show Notes to watch or list this show wherever you get your podcasts. Or go to bitcoin podcast.net podcast and you'll also find the links to Follow me and the show on Noster and on X. Bitcoin is scarce. There will only ever be 21 million. But Bitcoin podcasts are abundant. So thank you for spending your scarce time to listen to the Bitcoin podcast. Until next time, stay free.
- [108:07]
Unknown
It.