I’m off to have a death match with the superintendent of our new apartment for not following up on why we had a live cockroach in our brand new and recently cleared-by-the-exterminator (or so we were told) apartment. What’s the opposite of “happy wife, happy life?” Tough start to the weekend. (Who wants to come to our housewarming party?!)
I know many of you didn’t actually comb through the Gavin AMA, so I’ve cleaned it up and made it more digestible. In addition, since this isn’t really a column today, I’d ask that if you are a regular reader that you introduce yourself and hit me up. I don’t sell ads, so this blog is worthless if it’s not producing relationships.
On that note, I’ll be at Money 20/20 in Vegas in a couple of weeks (including a panel on VCs in Bitcoin” where this Idiot is sitting with a few of the industry’s giants), and doing dinners with folks I love spending time with. If you are going, you should let me know.
Have a great weekend!
***
Gavin AMA
Q: Have you been in contact with the CIA at all since your famous meeting?
A: No, I haven’t talked with the CIA or InQTel since my infamous talk.
Q: What do you think of the concept/idea of having regularly scheduled hardforks (planned months in advance), to tackle items on the hardfork wishlist, and practice (as a community) all aspects of dealing with hardforks, taking advantage of Bitcoin’s still relatively small size?
A: I kind of like that idea. I might be the only one, though…. [Nope. I like it, too.]
Q: What needs to happen for you to switch from “Bitcoin is an experiment” to “Bitcoin is established”?
A: We need regulatory clarity, ease of use, and no-single-point-of-failure security. I think we’re very close on all of those things.
Q: What is the “single-point-of-failure” you refer to?
A: Private keys being compromised. Solutions being n of m keys, applied in interesting ways.
Q: The eight decimal spaces of Bitcoin stand in the way of the “ease of use” imho. Thoughts?
A: I think everybody should switch to talking in “bits” (millionths of a bitcoin)
Q: What are some of the most exciting code implementations/projects/companies that you’ve been keeping an eye on?
A: I’m excited about the Trezor (and hope the Mycelium people get their hardware wallet working soon). And watching the spread of Bitcoin ATMs, because getting BTC is still a bottleneck for ordinary people.
Q: Do you agree with Andreas that development on the Bitcoin protocol will eventually slow to a halt as more and more people begin to use it which makes it hard to actually change…similar to ipv4 vs ipv6? Does this concern you?
A: That’s a great question for somebody who has studied how other Internet protocols evolve (or not) over time. My guess is that protocol change will speed up again when some of the startups grow up a bit and have the time and resources to participate in a more formal standards-making, protocol-evolving process. And then a few years later it will slow down again. [SIDE CHAINS!]
Q: What are you currently most excited about w/ regards to bitcoin development? And, conversely, what are you currently most worried about?
A: I’m most excited about all of the non-currency uses of the blockchain’s ledger-ordering ability. I have no idea which ones will turn out to be successful, but I’m glad all of that experimenting is happening. I’m most worried about scalability. My concern is that a solution won’t get consensus before we bump into the 1MB block size. That won’t be a disaster, but I think it could hurt Bitcoin’s reputation as a low-transaction-fee way to transfer value around the world.
Q: A common reoccuring theme within anything related to computers seems to be: “Anything can be hacked”. Recent incidents like the heartbleed-bug and bash-bug amplify the relevancy. What do you think about possible bugs in Bitcoin?
A: Bugs in “Bitcoin” ? “Bitcoin” isn’t software, it is a protocol, so that’s like asking “what do you think about bugs in HTTP?” If there are serious problems with Bitcoin-the-protocol, then we’ll fix them. I’m pretty confident there are not any really serious, you-might-lose-your-bitcoins bugs in the protocol. There will always be bugs in Bitcoin implementations. The best way to mitigate those bugs is with multisignature transactions secured by two different “software stacks.”
Q: What are your thoughts on alternative “software stacks”, ie, implementations other than “Bitcoin Core”? What are the chances of the Bitcoin Foundation supporting such projects?
A: See https://www.youtube.com/watch?v=ZC-E9LVjzJo for my thoughts on alternative implementations. The Foundation has already indirectly supported those projects— I (and others) spent a lot of time last year creating testing infrastructure that is re-used across implementations. Supporting more directly is a question of financial resources and priorities; right now, the Foundation doesn’t have the financial resources to do more.
Q: What are your thoughts on non-financial transactions or uses of the bitcoin blockchain? (e.g counterparty, colored coins, proof of existence, etc.)
A: I’m excited about the possibilities. I think a lot of projects unnecessarily mix up the various services the blockchain provides, and try to make it do things it is not good at doing (like storing data). I think the best projects understand that they don’t need to invent a new currency. They don’t need to use the blockchain as their long-term data storage solution. And they don’t need to use the p2p network as their communication mechanism. They should use the blockchain as the world’s most secure distributed ledger.
Q: Do you think GHash.io’s voluntary decline in percentage of network hashrate is evidence that the current incentive structure for securing the blockchain is “good enough?”
A: Yes, “good enough for now.” Suggestions on making it better are welcome, but I haven’t seen any suggestions get traction and consensus.
Q: What do you think are the biggest misconceptions about bitcoin within the pro-bitcoin camp? (e.g. “bitcoin is completely anonymous!”) What are the more far-out, world-changing things you could see happening through bitcoin/blockchain-tech, that only few people seem talk about right now (if any)?
A: Biggest misconception: That Bitcoin will Topple Governments and the Powerful. Governments will do what they always do — they will adapt (well, the worst ones will fail, causing misery and suffering; maybe Bitcoin will speed that up a little, and mitigate the misery a little). Far-out things only a few people seem to talk about: nothing comes to mind. Lots of people like talking about the far-out things.
Q: Is it becoming increasingly difficult to say “Bitcoin is an experiment” knowing the massive amounts of Venture Capital and start-ups centered around Bitcoin? Are you considering enabling dynamically sized blocks versus a static limit based on actual end-user activity (like how difficulty changes based on hashrate, for example). Some companies have a phrase they leave in their EULA, that they remove when given a gag-order to comply with some government mandated activity - do we have something like this for Bitcoin?
A: I think in a year or so after the current influx of investment starts producing results it will be safe to stop saying “Bitcoin is an experiment.” Block sizes are already dynamic— miners decide how large to make the blocks. If you mean maximum block size: I haven’t heard a dynamic proposal that fixes the problem that people are worried about. No, there is no canary clause for Bitcoin.
Q: Are you worried about a powerful entity coming it to destroy bitcoin, by running a 51% attack? Someone (a rouge state, terrorists) with billions to just destroy it.
A: Kind of, but not really. I’m mostly worried in the same way I’m worried about the stuff described in Phil Plaith’s “Death from the Skies!” book. I think we could do more to make 51% attacks even less likely, but don’t have any concrete proposals right now.
Q: Satoshi said “…vote with their CPU power…” where votes can clearly be bought or the network manipulated by those with more money. Do you worry about people or corporations with a lot of money influencing the bitcoin network in a bad way or in their favor? As an example, consider scenario: Bitcoin becomes mainstream and “Big business(es)” controls many of the nodes. They use this power to influence what types of transactions are accepted and dropped from the network. They could presumably force higher transaction fees until we get something like what credit cards charge today.
A: I worry about that a little bit. I think the key is to make sure we keep ‘permissionless innovation.’ I think lots of people confuse natural concentrations of power or wealth that come from either being smarter or more savvy or luckier or starting with more power or wealth or reputation with systems that prevent newcomers from competing with entrenched interests.
Q: If a country were to “ban” Bitcoin, how could that be enforced? Is it possible for Bitcoin internet traffic be blocked at the ISP level (or any other)?
A: It would be enforced the same way banning any activity a government doesn’t like is enforced, with fines and jail sentences for anybody found doing the thing they don’t like. They would probably start by making it very difficult to exchange Bitcoin for the national currency via banks. Unencrypted Bitcoin traffic would be pretty easy to block at the ISP level, but it is also pretty easy to tunnel it through Tor, which is harder to block. But talk to the Tor folks about that, they know a whole lot more about blocking internet protocols than I do.
Q: Did Satoshi Nakamoto leave you with any advice when he handed over the project to you and disappeared?
A: Nope.
Q: If you could change 3 aspects of Bitcoin today, what would they be?
A: Change 3 aspects of Bitcoin… 1) Have transactions refer to previous outputs by a hash that omits the scriptSig. 2) Use Schnorr signatures instead of ECDSA. 3) Go back in time and have the Bitcoin-Qt wallet use hierarchical deterministic keys.
Q: How confident are you that Bitcoin will take the free-market approach to settings transaction fee’s and getting rid of block-size limits altogether? And is there a serious risk to more centralization if the block-size limit is eliminated?
A: I haven’t looked at Darkwallet’s code. I’m 95% confident that everything would be OK and nicely decentralized even with an infinite maximum block size. But that’s not good enough, so I’m not proposing that.
Q: Have you had time to look at proof of stake algorithms and what is your take on them? (Obviously I know that using proof of stake within Bitcoin is not going to happen any time soon)
A: https://download.wpsoftware.net/bitcoin/pos.pdf [Links to pdf titled “distributed consensus from proof of stake is impossible”]
Q: Do we really need to hard fork the chain to achieve scalability? When do you plan on making the fork?
A: Yes, I think we do. There is still at least a month or two of work before I’d be willing to write a patch to increase the maximum block size, and then probably a month or two more of arguing. So early next year at the earliest before even starting the hard-fork process (which must roll out to miners— they will control when the fork actually happens).
Q: What are your thoughts about /r/ethereum and is there any crossover with what you do and what they do?
A: Pieces of ethereum are interesting. I wrote about this on my tech blog a while ago: http://gavintech.blogspot.com/2014/06/bit-thereum.html
Q: Shouldn’t we consider the “bitcoin experiment” over only after mining revenue has successfully transitioned from block reward to transaction fees?
A: Good question! Maybe… but after another halving or three I think we’ll get a pretty good sense of what will happen.
Q: On a scale from one to ten, how important is it to implement better privacy safeguards into Bitcoin, and what technologies do you consider as having the greatest potential to enhance user privacy so far?
A:How important for me, or how important to everybody-on-average? Or how important will privacy be as a factor contributing to Bitcoin’s success? Me: 7 Everybody: I dunno— 3? (I’m cynical about most people’s willingness to tolerate a little extra cost or inconvenience for privacy) Success: 4
Q: What are your thoughts on mining centralization and do you have any possible solutions. I feel that economies of scale will produce ever larger mining operations that will eventually be easy regulation targets. Do you ever see Bitcoin implemented a hybrid proof of stake model to combat this?
A: I think once the mining sprint-to-11-nanometer race is over mining will be a commodity. And I don’t think it will be economies of scale that take over, I think it’ll get more distributed. After all, there should be economies of scale for CPU power, too, shouldn’t there? Why do we all run our own computers instead of just connecting to CPUs in some big data center somewhere?
Q: In a recent interview Mike Hearn said “Some people think Bitcoin is indestructible, when it is not. In fact, it is very fragile.”. Do you agree with that statement?
A: I think at the micro level it is fragile. A bug or vulnerability in the reference implementation could bring down the network for a little while. At the macro level I think it is very robust; bugs get fixed. And it is getting more robust all the time as there are more people able to fix the bugs, more implementations, etc….
Q: Gavin, important quick question: What would happen and what would Bitcoin do if next year transactions would skyrocket unrxpectedly past the 400 million mark?
A: Too many transactions to fit into 1MB blocks and you’ll see transactions never confirming and transaction fees required to go into blocks rise.
Q: Do you think bitcoin can be a good solution to micropayments without significant changes to the protocol? A) Under $5 B) Under $1
A: More than $1 : sure, the network should be able to eventually scale up to handle every more-than-$1-transaction on the planet. Less than that: I’m not so sure, we’ll probably need a solution built on top of Bitcoin (e.g. micropayment channels established in advance of a bunch of tiny transactions — Mike Hearn and Matt Corallo have that working already).
Q: You mention your concern of not having a ‘single-point-of-failure’. What are we to do if we lost you as the core developer? I almost see your potential loss as a single point of failure. In what way is Bitcoin set up to continue if we were to lose you tomorrow? Do you feel that the proposed Lighthouse ventures could fill in the void? In other words, how can we best decentralize your efforts?
A: Wladimir and Jeff and Pieter and Greg have everything they need to carry on without me. I’m really not a single point of failure.
Q: For how long will you stay on as chief scientist?
A: I dunno. I’m starting to get tired of the title, maybe it should become “Head Cheese (Technology)”
Q: Just wanna tell you: thanks a lot for your time and work. Thanks for helping us to get closer to freedom.
A: You’re welcome.
Upcoming Events
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Senior Folks: Check out HoneyBadgr, which introduces top talent to early stage and venture-backed Bitcoin startups. They are a team of ex-Googlers residing at Boost VC in Silicon Valley, with a mission to help grow the Bitcoin ecosystem on a global scale.
Student Bitcoiners: Circle, the Boston-based digital currency venture, is looking for campus reps across the country to participate in a social media marketing program this fall! Each rep will receive a Circle account with $250 in Bitcoin to spend over the course of the semester. Reps are required to post at least five stories about using Circle and Bitcoin to their Facebook accounts (and/or other blogging platforms like Tumblr) and to cross promote these via Twitter, Instagram, Snapchat, and other social channels. To apply, send your resume to reps@circle.com click on this link to be redirected to the brief application.
Today’s Tid Bits
CoinCorner Now Accepts Debit and Credit Card for Bitcoin Purchases
http://www.coindesk.com/coincorner-now-accepts-debit-credit-cards-bitcoin-purchases/
CoinCorner, a British bitcoin exchange, now allows clients to purchase bitcoin and some altcoins with debit and credit cards making it one of the few few places in the UK to do so. CoinCorner is the first cryptocurrency exchange on the Isle of Man, and was launched last July. Last month the British bitcoin exchange launched a mobile wallet, a merchant point-of-sale (POS) solution and a payment gateway.
Polish Hospital to Allow Patients to Settle Bills With Bitcoin
http://www.coindesk.com/patients-can-pay-surgery-polish-hospital-bitcoin/
A private hospital in Warsaw, Poland, operated by the Medicover Group, will soon let patients pay their bills in bitcoin. This hospital will be the first medical facility in the world to accept bitcoins for a wide range of healthcare services, including major surgery. Medicover operates 30 healthcare facilities throughout Poland, and the hospital in Warsaw, accepting bitcoin services, has 8,000 international patients from over 20 countries. A bitcoin ATM will also be placed in the hospital to help facilitate the process.
The Sidechains Bitcoin 2.0 Revolution – Highlights from Reddit AMA
https://www.cryptocoinsnews.com/sidechains-bitcoin-2-0-revolution-highlights-reddit-ama/
The authors of the new Bitcoin Sidechains Paper, which is published on the Blockstream website, hosted a Reddit AMA yesterday. The AMA answered technical questions about its whitepaper, the founder’s backgrounds, the potential impact of Sidechain, and the basis of Blocksteam.
Florida Law Firm Files Two Lawsuits against Cryptsy and Bitcoin Savings and Trust
https://www.cryptocoinsnews.com/sidechains-bitcoin-2-0-revolution-highlights-reddit-ama/
A Florida Law Firm, Silver Law, has filed lawsuits against the bitcoin companies, Cryptsy and the Bitcoin Savings & Trust, for negligence and intentional malice. The Bitcoin Savings & Trust ponzi scheme was revealed a while ago, while Cryptsy, the alt currency exchange, is being accused of exaggerating its security protocols and blames the exchange for its client’s (Skye Bono) loss of 140 BTC.
IdentityMind Global Partners with Lamassu to Beef Up ATM Compliance
http://newsbtc.com/2014/10/23/identitymind-global-partners-lamassu-beef-atm-compliance/
IdentityMind, a fraud prevention company, has partnered with Lamassu Bitcoin Venutres in order to integrate IdentityMind’s compliance platform with Lamassu bitcoin ATM’s. The integration is said to include built-in Know Your Customer (KYC), transaction monitoring, Sanctions Screening, automated SAR filing, and Anti-Fraud services. As of now, there are over 200 Lamassu ATMs in operation today. The compliance platform will be available immediately to all Lamassu clients.
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