 All right, and we should be live now. Hello, everyone, and welcome back to our third installment of Bitcoin for Everybody, where we go through Sailor Academy's course of Bitcoin for Everyone. I'll make sure that I put the links to that in the description. I'll put the discourse there as well, if you guys would like to continue the conversation. Obviously, if you have questions watching live, leave them in the chat. If you have questions later, you can put them down in the comments, and we'll try and get back to them at a later time, if that's okay. Before I do that, I just wanna again tell everyone, if you haven't caught up, you can catch up on our other two videos we've done in the course that we're doing. So that's all I have to say, and I'll just hand it over to Mrs. Fonda to like take it away here. Awesome, well, thanks very much, Mike. So for the listeners out there, hopefully you are enjoying your progress through the course on Bitcoin for Everybody. And so today, we are talking through some of the material from Unit 3, which is about essentially Bitcoin history and philosophy and some of the things that have happened, some of the things that happened before Bitcoin, as well as some of the things that have happened during Bitcoin's life, and a few key events. Now joining me today is Aaron VanWidem. He is a very well-known journalist in the Bitcoin space. He is the technical editor for Bitcoin Magazine. And so for those of you, if you're new coming into the space and you're trying to learn about Bitcoin and sometimes you're looking for articles and you're not sure if it's a good article or not, a good guy you can follow and you can read some of his stuff is Aaron's stuff. So make sure you go and check out some of his work. Obviously, we're gonna be looking through and talking through some of that stuff now anyway. But Aaron, welcome and why don't you tell the viewers and listeners a little bit about yourself and where you came from and what you're doing in this Bitcoin space. Hey, Stefan, yeah, thanks for having me. Yeah, so I'm the technical editor at Bitcoin Magazine. I also, I do a couple of podcasts. Well, one of them is in Dutch. So you'd have to be able to speak Dutch, which is called the Bitcoin Show. I also have a more technical podcast with Shor's Provost, who's a Bitcoin Core Developer, which is called the VanWidem Shor's NATO. Yeah. Awesome. Well, yeah, so look, I think this is one of the things now in some of the early material, we talked a little bit more about Bitcoin economics, Bitcoin investment. So today we're gonna focus a little more on this idea of Bitcoin history and philosophy. So I think an important point that a lot of people don't really grasp is when they're first, when they're new, they just think Bitcoin was just like, it was like this holy, it just kind of came out of nowhere and it was the one-time invention that just did it all. Is that true, Aaron? Or is there actually more to this story? What's going on here? What is that? Yeah, yeah, there's a lot more to the story. So there was this group of privacy-activist, technologists, cryptographers, throughout the 90s called the cyberpunks. And they were sort of on a mission to bring the tools of cryptography to the people. Like cryptography was invented already, it existed today, started in the 70s with, well, that's probably a key cryptography, cryptography. Sorry, we could go back even further, but that was a major breakthrough. But it wasn't really being applied in the real world yet. It wasn't in the hands of real people in order to be able to communicate privately or anything like that. Well, the internet was slowly becoming a thing. So then this group mostly centered in the Bay Area in California, they wanted to bring these tools to the people. So that was public key cryptography, which we're all using now in our chat apps if they're encrypted, for example. But they were also working on things like re-mailers, which were sort of the predecessor of Tor. It works in a similar way. So it was a way to email anonymously, email without letting the recipient know who you were. Or without potential snoops on the network, knowing who you were. They were working on these kinds of tools. And one of the things they were also, they wanted to realize was a digital cash system, a digital form of cash. Now cash in this context meant something you can use privately. You know, if you have a cash, if you have a dollar bill and you wanna buy something from someone, you hand that person the dollar bill, you get the product in return, no one in the world needs to know that you actually handed over that dollar. While if we're switching to a digital payment system, people were talking about that sort of stuff in the 90s, then all of a sudden you can have a PayPal, for example, or a payment processor, which is keeping track exactly of who's paying, who, when, potentially, how much everyone owns and these kinds of things. So the CypherPunks wanted to create a digital cash system. Now there was already a digital cash system in development in Amsterdam, actually, by David Schaum. He was an early cryptographer and he used some of the tools of publicly cryptography to come up with a centralized digital cash system. And then the CypherPunks, well, at first they were very hopeful about that, but it wasn't really getting off the ground and Schaum, there were issues with patents and that it wasn't really working out. So the CypherPunks started to think of alternative ways of doing digital cash. Excellent. And so if we were to dive a little further into who these people were and what their motivations were, I think it's probably fair to say there was a, obviously there was a range of ideologies and thought around this, like they weren't all just the same kind of person, but it's probably fair to say, generally speaking, they saw technology as a liberating force and they saw it as a way to give people back some privacy, but also enable them to do things like to communicate or to trade. So Aaron, do you wanna just spell out some of your, research and your thinking on who these people were? What was their motivation? What were they interested in? What were they trying to achieve? Yeah, so I would say there were, there were sort of the more radical CypherPunks and the more moderate CypherPunks in a way. So the more moderate CypherPunks, they care about privacy more in a human rights type of perspective. You know, you require privacy to be yourself in all sorts of ways and that's how you can live in a free society. There's also, you know, good reasons that elections are done in an anonymous way without needing to reveal who you voted for. You could argue, for example, if you wanna donate to a political party, you might not want the world to know that you donated to that political party, for example, because an alternative party might win and if that's the fastest party, then you could get in trouble 10 years later. I'm just giving an example from the top of my head, but there are all sorts of very good, very reasonable reasons to have privacy. Now, there was also a more radical branch of the CypherPunks, which was led by Tim A, for example, and he saw privacy tools as something that could enable a bigger vision for the future of the world, namely something he calls crypto-anarchy. Crypto-anarchy meant, in that vision of the world, people would basically free themselves from government control over their lives more or less entirely. One obvious way he envisioned was if we have digital cash, and we can hide our incomes, we can hide our money, we never need to tell the government any of that, and that means the government can't tax us. Another example would be, he envisaged this idea called blacknet. I think I'm saying, I hope I'm saying it right. I think it was called blacknet. I'm pretty sure it was blacknet. This was an information market. So keep in mind, this is like early 90s. This was way before eBay. We ate before any sort of market existed on the internet at all, and he came up, well, so a friend of his came up with the idea of an information market. His name was George Sougin. Am I saying that right? I've trouble with the name. Yeah, yeah. That was the end, right? Yeah. So he came up with that idea for information market so people could buy and sell any type of information. So, and he saw that as a sort of solution to the cost of transactions and the cost of transactions in that context meant in the broad sense of the word. So for example, if you're buying a car, then the cost of transaction isn't just the cost of sending the money to the car dealer, but it's also, for example, doing the research or finding out where you get the best deal. It's also maybe the time it costs you to get to that dealership and all these kinds of things. Now, he saw an information market as a solution for these kinds of problems because you could, for example, ask someone online, where do I get the best deal for this type of car I want? And then someone else would actually go and look that up. You'd pay that person $5 over the internet and you'd save yourself a bunch of money and cost, you'd have researching and all that. Now, Tim May thought that idea was very interesting, but he came up with a more radical version of that, which was selling mainly secret information, for example. So you could have leagues within a government agency selling secrets information to another government or within a company, company secrets, someone who'd leak that information in return for money to competing companies. And Tim May saw this as something that could really undermine governments, militaries, huge big corporations, everything. So evading tax, destroying secrets in this way, and that's how he saw the internet and cryptography and these kinds of tools really changed the world. He called that crypto energy. Yeah, it's really fascinating. I think, yeah, there you go. I have, yeah. He wrote the crypto anarchist manifesto. I have a poster of that behind me. The printed version of the crypto anarchist manifesto. Yeah, that's really cool. Yeah, the crypto anarchist manifesto is an interesting read. And I think part of the reason some of this material is here in the course is just to give people an awareness of where did this come from? And also just an understanding of who these people were and what they were trying to achieve. How did the cypherpunks collaborate and go about things? I know there was a mailing list, for example. Yeah, so they started out in the Bay Area mostly. So, the internet was upcoming and hacker culture was a thing there as well. And Tim May and Eric Hughes and a couple of other people, they knew each other from other subcultures. I already mentioned the hacker subculture, but also Dextropiens, for example, which was very futurist subculture. And they came together and the first time they met in someone's apartment, in Eric Hughes' apartment, from there it started growing. So at some point they established a mailing list. For what, again, this wasn't a very common thing in the early 90s, a mailing list. There was new stuff. They started a mailing list for one, to coordinate meetings and then also to sort of continue the discussion after the meetings or to keep in contact with each other. And that mailing list actually became somewhat of an early internet phenomenon. At some point it was covered by Wired and that attracted a whole new bunch of attention and people from all around the world started to read the mailing list and contribute. And at one point there were Silicon Valley CEOs on there. And so that became a small phenomenon. That became something that early internet users could find and learn about these ideas and these concepts and these technologies that these people were building. And the cypher punks have a saying and this is even the title of the series. It's called cypher punks write code. So what does that mean, Aaron? Yeah, so that kind of comes from the hacker subculture, I guess. It means that to enact change in the world you don't go and lobby politicians. You don't go and ask for permission. What you do is you actually write the code and distribute it to people in people's hands for them to use. In general, they used, you know, it was free software in general, which was also, you know, another sort of subculture technologies movements where nowadays it's better known as the open source movements that they're slightly different things but it's a bit off topic to maybe get into all of that. But yeah, the idea was writing code, distributing it. That's how you make change in the world. Yeah, so it's interesting that there was that focus and if you will, it strikes me as a bit more, it's a group of people who are trying to be, look, some of them are being academic and theoretical about what might exist in the future. But then on the other hand, some of them are very pragmatic. They're just thinking, hey, I've come up with this idea and here's some code that will achieve this idea. And that also I think reflects through into the way there's a famous quote by Satoshi, something like, I had to write all the code to make sure that I could do it before I released the white paper. And that's also, you can sort of see that from Satoshi's writings, right? Oh yeah, yeah, sure. Yeah, absolutely, yeah. I will note, it's not necessarily confirms that Satoshi was himself, in fact, a cypherpunk. Although there's, you know, there's a good reason to believe that he was. He obviously knew why something like pseudonymity was important. And, you know, it was clearly familiar, at least with some of these technologies that cypherpunks were also working on. But it's not obvious that it was necessarily a cypherpunk, but, you know, that's up to the speculators. That's up to the, that's part of the guessing game of who's at the wheel. Yeah, it's, I think it's sort of looking at what were his likely influences, maybe, maybe that's the way to put it. And there's also another interesting topic which is that whole crypto wars, right? So in the 90s, there was this whole debacle around, you know, clipper technology and what was the government going to do about it and what were, and should cryptography be viewed as this munitions grade technology? What were the crypto wars? Yeah, so cryptography, I just mentioned public key cryptography which was invented in the 70s, in the 90s. And this started when Bill Clinton came into office. The crypto, they basically started the crypto wars, you could say. Now, the thing is cryptography used to be a thing which was a military tool, basically. It were military people that were using these kinds of things. It wasn't something that the regular Joe would use for anything, usually. It was something for the military. So therefore, I assume it's because of that, it was also classified, no, not classified. I'm trying to think of the right word seen as ammunition, yeah. So it was illegal to export it, for example. That was the most important one. And that became very iffy because now you have the internet and Phil Zimmerman who was working on PGP which was an implementation of public key cryptography. He was now being targeted by the government because he put his software online and that was seen as a form of exporting it. You also mentioned the clipper chip. Yeah, that was a chip that the government wanted phone providers to put into phones. It was supposed to offer encrypted communication with whomever you were calling, but it was also wiretappable by the government whenever they felt like it. So yeah, the cyberpunks really didn't like this idea. In their minds, privacy was not only a human right, but it was also important that you actually have that right in the worst case scenarios, which is that scenario where the government itself becomes corrupted. That's where you needed the most. So you can't have backdoors in cryptography because at the time you'd needed the most, then it could still be abused. So they start to basically fight back. It wasn't just the cyberpunks. It was also more regular human rights groups and journalists were covering it. And it was a broader topic than just the cyberpunks, but the cyberpunks considered themselves the activist wing of this movement. So yeah, they were holding contests to break cryptography, for example. They were coming up with innovative new solutions to make it more obvious why these export regulations were so ridiculous. For example, Adam Beck, he had the cryptographic particles printed on a t-shirt. So that meant you couldn't cross the border with that t-shirt on because now you'd be a weapons or a munitions export officially. The same, the PGP was also printed in a book to make it obvious that this is just information. This is just data. And if we are free to publish books, then why aren't we free to publish software? It's basically the same thing. What else? They were doing all these kinds of activist stunts and also real breakthroughs. One of the cyberpunks broke the security of the clipper chip. So I think it was the clipper chip he broke, I'm pretty sure. Yeah, so that was a big media blowout and that sort of stopped the clipper chip in a way. And so yeah, they were sort of the activist group of the crypto wars. Yeah, it's really interesting to look back at that. And so listeners, when you go and watch the cypherpunks write code documentary series by Jim Epstein of Reason, you'll see some of that material presented. And I think it's also interesting as well because I believe there's also an interview with the late Tim May and I think he gets asked this question of, hey, what if this technology is used for bad things, right? Because and look, and I think his answer on that point was more like, look, I understand that some people might use technology for bad things, but this technology is out there and fundamentally it's about liberation and using it for good. And despite knowing that, yes, sometimes you have to just bite the bullet and there will be some bad people out there. So I think that might be an interesting perspective for listeners on this show just to understand where they were coming from that, look, sometimes technology can be used for bad things, but on net, if it's doing a good thing, it's a tool, it's a neutral tool and that's maybe that's the way to think about it. Yeah, Tim May was very blunt even, I would say about that, honest. He wasn't pretending that these tools of cryptography would only bring nice rainbowy, flowery things into the world. It would also help extortionists and it would also, there would be downsides and that is true. And yeah, it was always more than anyone else probably. It was very direct and straightforward about that and not trying to mince words or trying to hide the more negative aspects of it. Yeah, excellent. And so moving on to Bitcoin and some of the predecessor technologies of Bitcoin, I think this is another one where people think, and so the common analogy I'm sure a lot of people have heard is they say, oh, but what if Bitcoin is the Myspace and there's some new thing coming and that's gonna be the Facebook. And I think it's important to recognize that Bitcoin itself was not the Myspace, if you will, that they were all these preceding technologies. It's 30 or 40 years of other technologies and some of the three or three or four in particular that are very, if you will, influential on Bitcoin or have it, it's very clear that Bitcoin either drew some influence from those or even if it was coincidental, it had very similar technologies around that. So Aaron, do you wanna just talk a little bit to that point that there were some of these other technologies preceding Bitcoin? Yeah, so I already mentioned eCash, although I didn't mention that it was called eCash, I think, but that was David Chalm's thing that he was working on in Amsterdam, the digital cash system that was centralized that had patent issues and the cyberpunks started to look for something else. Now, the big breakthrough, I would say, was when Adam Beck came up with the idea of hash cash. Hash cash was originally designed as a sort of a postage scheme. So I mentioned remailers, that was the tools you used to be able to email anonymously. Cyberpunks were running these kinds of remailers servers and they were dealing with a lot of spam. People were abusing these systems. So there were thinking of some sort of solution to counter that and Adam Beck came up with the idea of hash cash. And the idea was that you'd basically take the email and then hash it, well, yeah, so you take the email and you hash it, which is a cryptographic algorithm that parses the data into just a string of numbers, essentially. It looks random, but every time you hash the same email, it's the same exact string of numbers. But you can't predict what it's gonna be. Now, by adding some random data to these emails, you get a different string of numbers each time a different hash. And the idea behind hash cash was that only a very small subset of all potential hashes would be considered valid. So the only way to get a valid hash was through trial and error, trial and error. Just try hashing the email with some new random data until you get a valid hash. When you get a valid hash, you send it to the recipient and the recipient could very easily tell that the hash was valid. Now, the reason this worked as a postage system was because the sender of an email had to invest a little bit of energy to do the hashing, just a little bit of computing power in order to find the valid hash. For an individual user, this is negligible. Maybe it's a second of your computer's CPU or something. But if you're a spammer and you're only profitable if you're able to send millions of emails, then it's gonna add up and it's probably not gonna be profitable anymore because now you gotta make millions of hashes and just a lot of energy and computing power. Now, the interesting thing about hash cash, even though it was intended as a postage scheme, like I just described, was that now for the first time, you tied something, scars in the real world into something digital that you can send over the internet. The scars thing being energy and the digital thing in that case, obviously being the proof of work. That's what it's called, the proof of work. Other side of, and I'm back in other side points, I realized that this is maybe very interesting to also use as sort of the basis for digital cash system. So in that case, the logic becomes a little bit like gold. In the same way that the only way to get gold is to actually invest energy. In gold's case, you have to invest the energy to get it out of the ground. So the set point started to think of hash cash as a potential basis for digital cash system, as a digital goals type of system. And that's how Nixabo came up with the system called BitGolts. And BitGolts used the hash cash in the way I just described and now tied it to accounts. So you could earn some hash cash, well, not a hash cash, so you could earn some BitGolts by investing proof of work. And at that point, you sort of own that BitGolts and you can send it to other people. At that point, okay, so it gets far more complicated, it gets much more complicated very fast because now you're dealing with all sorts of other problems. For example, who's keeping track of who owns which piece of BitGolts? That's one problem. Zabo suggested a system where users would keep, am I saying that right? Yeah, Zabo had sort of a layered system where there would be like banks that would collect, well, they would keep track of who owns what, I think individuals could do it as well. Another problem is that it gets cheaper and cheaper each year. Computers get faster each year, right? So each year that goes by, it becomes easier to generate a valid piece of whether it's hash cash or BitGolts gets cheaper each year. So if you use that as the base for money system, they're gonna have to deal with a lot of inflation eventually, which is not a good property for money. So that was a problem they were dealing with. What else? Well, let me elaborate a little bit more on the ownership part of it. This is actually, okay, let me address something else because this is also interesting. So this is not a digital cash system but it is mentioned in the Bitcoin White Paper. And I think it's a relevant technology which is time stamping. So two guys also in the 90s, they weren't really cypherpunks but as Scott Tornetta and Stuart Haber, they were trying, they wanted to invent some solution to create digital timestamps which is meant to say that they wanted people to prove that a particular document existed at a particular time. But that turned out to actually be a fairly difficult problem to solve because first of all, digital documents, you can very easily edit them always. You can never tell how old they are. So how are you actually gonna be able to tell how old the document is? Now, an obvious solution is to use sort of a timestamp server, but at that point, you're trusting the server not to lie. If you ask the server, hey, how old is this document? The server could potentially lie to you. So it had a centralized point of failure, central point of failure. The solution they eventually came up with was, okay, we're gonna use this timestamp server to timestamp documents, but we're all gonna keep track of which documents were timestamped when in order, for example. That way, the timestamp server can never lie because we're all keeping track of it. So that was, it sounds very simple now, but it was actually a pretty big insight that in order to not have to trust anyone, we need to all verify it ourselves. We need to all partake in this process of keeping track, which what came before the other thing. And that was eventually used in digital cash systems, including Bitcoin, but also something like White Eyes, Be Money, which also used this logic of everyone's just gonna keep track of everything that's happening, everyone's gonna keep track of everything that everyone owns. I forgot what your question was at this point. Yeah, no, that's totally fine. I think that was really good background and information on some of the preceding technologies behind Bitcoin. And I think it might also be worthwhile pointing out as well that these are from a technological point of view, some of the predecessors, but arguably as well, some of the other even businesses and ideas, things like PayPal and Liberty Reserve and Liberty Dollar and some of these other ideas that were around. And then eventually those got shut down because ultimately they weren't, and that sort of brings us back to the same theme of having to have a money that's actually decentralized in order for it to be resilient. And I think that also comes through. E-gold is the best example of that. E-gold was a solution also by sort of a libertarian guy. I think he was in Florida. Douglas Jackson, I think his name was. I could be getting the name wrong, but I think that's what his name was. Yeah, he was running sort of a gold, gold backed digital currency. So people could own gold and then all the gold would be in his fault. He'd have to go in his fault, but people could get this gold through this digital currency. They could exchange the currency for the gold. It was backed by gold. And this digital currency could then be used to send it to anyone on the internet, easy like an email. And that system was eventually shut down and Douglas Jackson was put on house arrest. He had like an ankle brace and he couldn't, so yeah, the feds got to him. And I think E-gold's users eventually got their money back, their gold, but yeah, the company was shut down and it made it obvious that centralized systems are vulnerable in that sense. Yeah, of course. And then so if we now move forward to Satoshi, right? So in 2008, Satoshi releases the white paper. And I guess at that time, it was, what was the reception amongst people at that time of Satoshi's Bitcoin white paper? It was pretty mixed. There was a lot of skepticism and I think that was in large part because there were, had been all these dissacrass projects before it that never really got off the ground. And a lot of, well, I don't know about a lot, but several of the cypherpunks had grown dissolutions altogether. They fought the movement, hadn't achieved what it set out to do, although they had some successes. But one of the things they never achieved was a digital cash system. So then all of a sudden this totally unknown name appears on the mailing list and he comes up with yet another digital cash system that sort of resembles some stuff that's been out there already. And it probably makes sense that if you've been around that long and you've seen so many failures, you're not immediately gonna be excited about some unknown guy coming up, presenting something that you kind of have seen before and never really worked out. So yeah, most of the, most of the people I'd say on the, by then it was the cryptography mailing list, the cypherpunk mailing list that basically, I think it was technically still online, but everyone had left and that becomes spammy and flame worry. And so the cypherpunks that were still serious about getting these kinds of tools into the world, they sort of switched to the cryptography mailing list and that's where Satoshi Nakamoto published the white paper. So yeah, most of them were skeptical. Now of course, I think what you're getting at, that was one obvious exception to that rule, which was Hal Vinny. Hal Vinny was also a digital cash pioneer. He'd also been working on other stuff since the early nineties, thinking of all sorts of, always helping out with digital cash schemes, always trying to brainstorm of how they could be improved or trying to explain to other cypherpunks on the mailing list how particular schemes worked or what the potential trade-offs were. He was very involved with all of that. Also in 2005, four or five, I think it was 2005, he published, he launched his own digital cash scheme, which was a sort of simplified version of Nick Sabo's Bitgolds, very simplified. It was called reusable proof of work, which was a hash cash system, but more based on a central server that kept track of ownership of the money. He had some extra tools to minimize trust in him, but Hal Vinny, he hadn't given up clearly. He was still interested and excited about digital cash stuff. So when Satoshi came to the mailing list, made his proposal, Hal Vinny was one of the few that actually seemed excited about it, and he started to help Satoshi out in the months that followed until Satoshi released Bitcoin on January 9th. Yeah, so January 2009, and then I think Hal Vinny was the next person to join Satoshi on the network, and I think famously the first transaction was from Satoshi to Hal Vinny. Yeah, I don't think we can be sure that he was the first next person, although it's plausible, but it was definitely the first recipient of a transaction. Right, I see. And the first contributor to code besides Satoshi, so yeah. So yeah, I think in those early days, and this is before both you and I were around, we only kind of get around into this scene later, and so I think it's also maybe an interesting point just to talk about how Bitcoin in the early days is far more centralized, and it's kind of decentralized over time, right, wouldn't you say? Well, when Bitcoin launched, it was probably one person running it, one person mining, one person developing, well, two I guess, so that's pretty centralized. Yeah, I think maybe what you're getting at more specifically is centralization of protocol development in a way. Yeah, I think in the first couple of years, Satoshi was still around, and he was considered the project leader, and most people all accepted him as the project leader, so when it was time for some sort of upgrades, then that was just Satoshi deciding, we're gonna update the protocol in this way or another, and please, everyone, download this new version, and that was basically it. It was kind of the dictator in that sense. That started to crumble a little bit, I would say towards Satoshi's later days, so that's like late 2010-ish. He was starting to receive a little bit of pushback on some aspects, so yeah. And so yeah, you could see that as a, you know, that's when Bitcoin started to decentralize, I think you could see it that way. Yeah, and at least in that sense, I mean, to be clear, there's all sorts of ways you can measure decentralization, whether it's, you know, are people able to run nodes, are they able to mine, how many people are mining, but when it comes to protocol developments, at first it was just Satoshi, and that evolved later on. Yeah, yeah, and it's also, I guess, important to note that in terms of ownership, it's still a different, another story altogether, right, like people can still own it even if, you know, it's somebody else developing it, right, so that was at least some of the, if you will, the guarantees that Bitcoin gives to people, that if they hold their private keys, they still hold the Bitcoins, that kind of thing. So I wanted to move forward now to some of the, I guess, instructional moments in Bitcoin's history, right, so I think probably the big one, it's probably the Segwit, UASF, and then the Segwit 2x kind of saga, if you will. So it might be a good time to just talk through a little bit of the history now in terms of what happened with that, you know, everything coming to a head in 2017. What were some of the, I guess, preceding historical factors there? Well, where would you like to start, Stefan? Yeah, so let's start with... We both know it's a long story. Yeah, of course, yeah, yeah, so maybe if we spoke a little bit about maybe how the network had been growing and being adopted at that time, I think maybe I'll start with a little bit. So it was, I think Bitcoin in 2013 was really crazy, right? Like it was like really out there and at the time, there was this whole idea of merchant adoption, right? So it was all about trying to get people to some merchant to accept payment in Bitcoin. And so there was very much this idea that, you know, and yes, there were Bitcoin exchanges and various software brokers and things like that. And so there were a lot of transactions on the chain. And now there was, I guess, competing visions about how Bitcoin should develop. And there were some people who had a business model based on doing day-to-day transactions in Bitcoin. And then from a competing point of view, there was more like this view that, see, the network needs to be resilient and robust against attacks and it needs to be easy for anyone to be able to run Bitcoin software. Whereas maybe people in that other camp were more thinking, hey, we need to be able to, anyone needs to be able to send cheaply and quickly. And don't worry so much about running a Bitcoin node. You don't need to do that anyway. So I guess that was probably some of the initial tension. What do you have anything to add there on that? Yeah, no, I think that's a pretty good description. And that's also, I agree, that's also a good place to start. Is that at some point Bitcoin was small enough that everyone was sort of on the same page or if they weren't, it wasn't obvious yet. But there were sort of two different visions of what people wanted Bitcoin to be or what they thought Bitcoin was or what Bitcoin's value proposition was. And these can be roughly divided into people who saw Bitcoin as, or maybe still see Bitcoin more as a payment system first and people who see it more as a digital gold and as a robust thing first that should be able to withstand even government attacks and that people need to be able to feel secure when they store their value into that system. So these were two sort of differing visions and while these existed side by side for a while it started to crack a little bit. Again, it depends where you want to start. You could argue even in 2010. Satoshi didn't really leave a clear, one clear vision behind. It was sort of both there and you can look through all of his comments and quotes and cherry pick here and there and then you'll find something that suggests he agreed with you but my general impression is that he was just, he hadn't really fought it through to that extent. And so yeah, the cracks sort of started happening. There was a discussion, a short discussion in 2010 when one of the Bitcoin developers at that time was to, so yeah, it comes down to the block size limit, right? We haven't mentioned that I think, but yeah. So the Bitcoin protocol has a limit on the size of blocks. So I think people by now will know that a block is found every 10 minutes and at some point Satoshi limited the size of blocks to one megabyte. Now, one of the big advantages of that is for example, that by limiting the size of blocks that ensures that everyone can, or at least that it's relatively easy to run a full node. If you're running a full node, you're validating all of the protocol rules. So for example, you're validating that there are in fact only 21 million Bitcoins. If you can't validate all the protocol rules, then you're not really sure what's actually going on. So that that's one of the big advantages of this block size limit. There are others, but you know, fee pressure is another one and mining decentralization, but yeah, so it helps the robustness of the network, I would say. Now, it's not very good though, if you see Bitcoin as a payment processor first, because now all of a sudden you can only have like a handful of transactions every second. And if you compare that to successful payment systems, they're probably doing, you know, thousands, 10,000, if you look at FISA or PayPal or these kinds of systems. So if you want to compete with that, you definitely need to increase the block size limit. So these different visions sort of clashed on this one protocol limit, which was the block size limit, the protocol rule called the block size limit. Now throughout, so it started sort of in 2010, I guess people started to discuss it. Then there was an upsurge in the discussion in 2013 as well. And at that point it became clear that there were actually people in the community in the Bitcoin world with very different visions. This lingered for a little while longer until in 2015, the previous Bitcoin Core lead developer, Kevin Andreessen decided that it was actually really time to increase the block size limits. Now this reveals another very interesting problem. So we just discussed these two visions. Now the new interesting problem that people were starting to consider very seriously at this point is, okay, if there are different visions, then how are we moving forward? Who's in charge here? Kevin Andreessen, he believes that miners were in charge, that miners could effectively change the rules by producing a longer blockchain that enforced these new rules and then Bitcoin users would sort of have to follow that blockchain now because that was now Bitcoin. While other people figured, no, that doesn't make any sense, the rules are what's being enforced locally and then miners are just following these rules. So if miners would produce a blockchain, even if it has more hashpower, but it's breaking the rules, then they're just producing something that's not Bitcoin because the rules are forced locally by users. This became, and I'm not even getting into the role of developers, which some people would consider that maybe developers are designing the rules. Now, this led to what is called the block size war, essentially. So people were, it became a big fight in the Bitcoin community. Kevin Andreessen and Mike Kern, they at some point launched a client that was supposed to increase the block size limit through what is called a hard fork. So they would split the chain and then they would assume that if miners mined the longer chain, then users will just switch to it. Miners never did that, so that never happened and there were a couple of other attempts. Now in the meantime, the Bitcoin core developers, they came up with a pretty clever protocol upgrade that was intended as a compromise. So that was called SegWits. Now SegWits would increase the block size a bit, but would do it in a way without necessarily splitting the chain. So they figured out a way to keep the network together and increase the block size a bit. As a very, well, actually as the main benefit, the block size limit was sort of an additional benefit. As the main benefit, it also fixed a flaw in the Bitcoin protocol. You could call it a flaw, at least. It's a bit technical, but by fixing this flaw, the Bitcoin protocol would be able to support the lightning network. The lightning network would be able to allow users to transact off-chain. So they could still use Bitcoin as a payment system, cheap and fast transactions without requiring all their transactions to be included in the block, so the block size limit wouldn't have to be increased, at least not in the near term, so to say. So the Bitcoin core developers came up with this idea, but even that didn't please both sides, the side that wanted bigger blocks still wanted a hard fork. I don't know why, that that was something they were very committed to, to do it through a hard fork. And this ultimately led to a stalemate where... So this new protocol rule I just mentioned, SegWit, since Satoshi left, the way new protocol rules were activated was through hash power coordination. By having a majority of hash power miners enforce the new rules, you would guarantee that the chain wouldn't split. I just mentioned that great benefit. So that's a great benefit. It does require that miners activate the new rule. So they were starting to use hash power activation for upgrades, and they wanted to use that for SegWit as well. Miners, however, or at least some big miners, they wanted to hard fork. They wanted the other way of upgrading protocol. So because of that, they refused to deploy and activate, they refused to activate SegWit, and they were sort of using it as a, you know, something to bargain with. They wanted to hard, you know, they were trying to leverage their influence, so to say, on protocol development. So this caused a stalemate. Now that led to a very, so the stalemate lasted for a while, and at that point we get to the USF, which you just mentioned, Sevan. So yeah, so the USF was a very interesting idea, and it was the idea that it was sort of, it was users reminding themselves, remembering that miners were ultimately just activating the new rules. They weren't actually making the rules, they were just activating the new rules. So if miners, sorry, if users could figure out an alternative way to activate the new rules, these would just be the new rules. When they are the new rules, miners will definitely have to follow, because that's how they make money. Now there is a pretty easy alternative way to activate rules, namely just pick a date and you agree this is the day the new rules are going to be enforced. Okay, what happens next is to this day contentious. There's still a lot of disagreements on how SecWords ultimately was activated. Do we want to get into that, Severa? Maybe we just sort of talk through a high level. I think probably the important point is more just that it's like just to explain that there are different parties in this ecosystem, right? You've got developers who can write code, but they can't force anyone to run that code. That's an important thing, because ultimately it means developers aren't this kind of dictator person, because if nobody likes that code, nobody will run that code. On the other hand, you've got miners and they help secure the network, but they fundamentally do not determine what Bitcoin is. And then you have businesses in the space and some of them at that time were purporting to represent the interests of their users. But in reality, that was not necessarily true, that there may be a lot of users who did not agree with the position that that business was taking, and then fundamentally you have users, the ones who are actually running a Bitcoin node. And those are the ones who arguably have, at the end of the day, they have the most sway, they have the most power at the end of the day. It's not 100% all in their favor, because they still need, they're still, you know, miners still are securing the chain for the users. But in terms of, I would explain it like the users are the ones who determine where the value is. Because if you are a miner, a big risk for you is that you end up mining on a chain that has no value. And that's a big problem for you, because you've invested a lot in terms of capital expenditure and operating expenditure to maintain your operations, that you're very reliant on what the user wants. And so I think, for me, the important lesson that perhaps new people to Bitcoin should understand is that despite, you know, a lot of businesses despite stated there being a lot of hash power that wanted a certain thing, it didn't necessarily go that way, did it? It didn't, yeah. And I agree with your assessment there. I think that's exactly right. It's ultimately users and by users I would say, the people that are willing to accept Bitcoin, you know, in trades, whether it's for payment or whether it's, you know, they're just selling their dollars, so to say, and buying Bitcoin in that sense and willing to hold on to it. That's ultimately what, you know, what gives Bitcoin value and therefore it's ultimately what determines what Bitcoin is. It's a bit, you know, it gets a bit weird, but I think the best analogy I would give for that is language. You know, who determines the English language? What's people using it? That's, you know, that's also how it evolves. So I would sort of describe, that's how I sort of think of Bitcoin. And in Bitcoin, there's more economic incentives at play and it's, you know, if you're accepting a lot of payments, then you're a bit more important in that sense. But yeah, it's a network effect and it's sort of an organic thing there. So yeah, it's, developers are offering codes, but people can always, users can always just not run the code, so I don't think they're in power. Miners, you know, they can hash all they want, but if they're not hashing into something that users consider to be Bitcoin, then they're just wasting their hash power. So miners are clearly not in charge in that sense, although they can order transactions. That's what they're doing. And I don't think business are ultimately that important either. You know, if you, if you, because sometimes people think exchanges are very important when it comes to dividing Bitcoin or value on Bitcoin, but I don't really see it that way. You know, if you, if you go, if you go out and, you know, you want to buy a Tesla and you get to the car dealership and you ask for Tesla and they say, yeah, we only have Hondas. You're not going to go home with a Honda. You're just going to look for another car dealership. So, you know, it's ultimately users. It's the markets that decide these things. Yeah, that's a really good way to put it. I think the language one is a good analogy. You know, similar in other spheres, I've heard it's put this way. It's sort of like, imagine, Merriam-Webster dictionary came out and defined up as down. Would that mean up has now changed? Well, no. We as users of the English language would be like, that's the wrong definition. That's just not right. You know, it would be kind of like if the developers or if the miners tried to redefine things in a way that the users did not agree with, we'd be saying, hang on, that's just the wrong definition. That's not what we believe is Bitcoin. So, maybe that's an easy way to kind of summarize some of these pieces together. And of course, listeners who are going, if you're going through the course material, you'll see some of Aaron's work on this. So, he wrote an article and there was also a really good YouTube video by the Bitcoin magazine team, which you guys can find. You can find the material there on the site and basically that's Aaron's kind of walking through of the story of Segret and UAO there. So, let me actually finish that because we haven't mentioned how it actually ended. So, how it actually ended is that at some point, they started really as a grassroots movement. You know, it started with an idea on the mailing list. Then some people gathered on an open Slack system, a Slack chat, and they started to think of this idea called the USF. And the idea was that, hey, you know what? We're the users. We decide the rules. So, what we're going to do to break this impasse because the miners weren't activating Segret and we all want Segret. You know what we're going to do? We're going to activate Segret ourselves and we're going to pick a date. The date is going to be August 1st. That was the date. Now, the way the USF worked. So, like I said, it's just picking a date. On this date, these are the new protocol rules. This is now on that date. That's what we're going to be considering to be Bitcoin. At that point, miners are going to have to mine these rules or else they're not mining Bitcoin in our view. And we're the users. And they're not going to get paid if they don't do that. So, they don't really have a choice. They're just going to have to follow along and mine these new rules. And then we've switched to the new protocol rules. We've upgraded the protocol rules. So, that was the plan. The tricky thing is, and that's where the contention still comes from today, is that how do you know for sure that all users are going to switch or that enough users are going to switch because we don't have a good way of measuring that. Or I would argue we actually have a pretty good way of... We figured out a pretty good way later and I'll get to that in a minute. But we didn't really have a good way of measuring that back then. It was just people first on the main list and then on Slack and later it became a big thing on social media and everyone was anticipating this day and claiming that they would use these new rules and it was everyone on Twitter and everyone on Reddit. But then the contention still today is how many people are actually on Twitter and Reddit. What kind of fraction is this of the greater Bitcoin user base? That's sort of an unknown. So maybe it was a very small group of people and maybe they would have essentially just forked themselves off the network or maybe it was really what it looked like was a lot of people and a lot of people were engaged with this and they wanted to do it. In retrospect we can't know for sure and one of the reasons we can't know for sure is that basically miners fold it, they concede it. A week before the actual date was about to happen they ultimately upgraded the protocol through HashPower themselves. One thing I have left out so far is that there was also the business faction. They were at that point also pushing for SegWit and they also struck a deal with the miners to activate SegWit. So all of this happened very last minute just ahead of the USF and therefore SegWit activated arguably without the USF really coming into play although you might just well say it happened because the USF was just about to get into play and it worked perfectly. So these are sort of different perspectives. Now the reason companies and miners ultimately conceded apart from the USF itself was that businesses struck a deal with miners that if they would activate SegWit they would also get a hard fork three months later. Now that was a deal between businesses and miners and we just mentioned four groups essentially which was miners, businesses, developers and users. So the developers and users weren't part of that deal at all. So that basically got us into a whole new phase of the war last phase of the war I would say where miners and companies were still expecting to do this hard fork where users, at least the users you could see on Twitter and Reddit overall and developers they had no appetite for the hard fork. They had SegWit, they had Lightning, they were happy they didn't want this hard fork. They didn't care about this deal that miners made with businesses. So this got us into a new interesting situation where who's in power here? On the one hand we have all of the highest power in the world basically, all of these miners, all of their equipment and the largest Bitcoin companies in the world. The Coinbase, the WebRels they were surely if these two power groups are coming together to make a deal surely they're going to be able to change the protocol. What are a handful of developers and users got to do? Well, it turned out a lot. One of the interesting things that happened in that phase is that some exchanges start to recognize that there could actually be a chain split if that happened like I explained before hard fork can lead to a chain split in that way and they started to offer fork futures. So people could actually speculate on both coins they could essentially buy the coins that would start to exist after the split would happen even though the split hadn't happened yet and now people could put their money where their mouth is and start to trade these coins with each other. While this fork futures thing, the market was going on it became abundantly clear that the market favored and I would say the market are the users they favored the non-hard fork version of Bitcoin just the protocol. Yeah, the Node 2x, right? Exactly. So while all of these companies and all of these miners wanted to go another way it now became clear that users did not want that and as the date came closer and closer of the hard fork and the price wasn't moving the futures market were being very clear the developers weren't about to concede at all and at some point the miners and companies just had to fold so that gets me back to what I mentioned of the Tesla dealer and the Honda dealer you know, ultimately it's the market it's the users that are in power of this thing that are in control of this thing. So it was a very interesting and I would say empowering moment for users it was really the realization of a lot of users that yes, they really do decide the rules here they really it really does matter what they're running on their computers and what they're willing to pay for or what they're willing to accept for payments that that is really what it is about in the end it's not companies, it's not miners it's not developers making these decisions oh and it's not developers either because we haven't really mentioned that because most developers were against the USF so developers didn't get their way in the USF part of the story and then companies and miners didn't get their way in the No2x part of the story it's really users that sort of you know showed and proved they were in control there's still contention about how effective the USF was my personal opinion given everything that happened and you know I was paying a lot of attention is that it had a lot of effect really miners and companies were scrambling to sort of meet the deadline in absurd ways there was no reason for them to scramble in that way if they didn't think the USF was going to be a meaningful thing that they you know had to false to had to concede to so my personal opinion is that the USF was very effective but that's still something that's not necessarily agreed on by everyone I think yeah I think that's a very fair summary of what happened and you could potentially say it's like even if USF itself didn't activate as you were saying it's almost maybe this is a bad way to characterize it or some people would agree with it they might say it was almost like playing a game of chicken and essentially the users had sort of forced the other side to to swerve right so maybe that's one way to characterize it or just like no the users are just the ones who changed their view of the network and everyone else needs to adapt to what those users view it as but I think importantly looking back on those events now I think it's important to take the lesson from that which is ultimately that businesses and miners and developers do not control Bitcoin and that was actually quite informative and instructive in the view of other people who then looked at that as as an example of how Bitcoin is difficult to change and that's ultimately an important lesson that we have to take going forward because that you know helped show people that it's not that there's this kind of dictator or it's not it is genuinely a decentralized ecosystem and I think that's probably an important lesson to draw from that you know as we speak now about it in 2021 and in the years to come so look I think it's anything to add there? I mean Bitcoin did change we got second I think it's very difficult to change Bitcoin in ways that users don't want of course yeah exactly I should have put it that way so I think that's probably a good point to wrap up here but Aaron we've got to let all the listeners and the viewers know about any projects you've got coming up and you've got some work on this and of course where can they follow you online yeah so easiest would be Twitter right that's whatever one uses nowadays so I'm at Aaron van W yeah I'm working on a book on this stuff especially the prehistory part of it so the cypherpunk stuff it's gonna have a bunch of Austrian economics in there and how these things were interwoven previous digital cash projects I hope to have that a little bit later this year should be finished Excellent so listeners I would encourage you to follow Aaron and check out some of his work he's got a lot of cool articles and now he's got a podcast as well so you guys can follow him there and like you mentioned on Bitcoin magazine of course although because I'm busy with my book I don't write as much there but still Bitcoin magazine I'm still on the team there yeah of course and so listeners and viewers if you haven't already make sure you go to Sailor Academy and search in the course search Bitcoin you'll see the course it's called Bitcoin for everybody and there's all the material there it's free you can go through whenever you like and of course you guys can find me online search Stefan Lavera or StefanLavera.com and I'll hand it back over to Mike thank you Alright well Aaron and Stefan thank you very much thank you everyone for listening as always to finally take all of my plugs I got no plugs but definitely check out the Bitcoin for everybody course on Sailor.org you can go to Sailor Academy, YouTube and find the videos we've done before we've done two more videos and you can come back here in two weeks April 7th at 5 p.m. I guess daylight savings time which means that it's April 8th 8 a.m. for you there Stefan which will update on everything we have in this communication there and yeah so I think Michael Sailor is going to be joining us on that one so people come around I'm sure I put both of their links in the description below as well as links to the course and everything and again thank you everyone for joining us