[00:00:00] Ray Salmond: Crypto is for everyone, not just rocket scientists, venture capitalists, and high-IQ developers. Welcome to The Agenda, a Cointelegraph podcast that explores the promises of crypto, blockchain and Web3, and how regular-ass people level up with technology.
[00:00:24] Jonathan DeYoung: When it comes to Bitcoin, there are a variety of different camps of ideology. There’s the store of value and hedge against dollar devaluation crew, the medium of exchange cohort, the hedge against tyranny and financial censorship activists, and the maximalist crew, where it’s Bitcoin or nothing at all. There’s even a group that believes Bitcoin will become the global reserve asset one day, and that everything will be denominated in satoshis at some point in the future.
[00:00:51] Ray Salmond: Now, one of the lovely things that we’ve discovered over the years is that there’s plenty of space for all of these camps to exist, whether it be some degree of overlap or in isolation. As a neutral technology, Bitcoin is magically able to accommodate the views and goals of all of its advocates. Bitcoin’s community, its use case, and levels of adoption have all seen dramatic changes since Satoshi Nakamoto first mined the first block in 2009. But today’s guest, Jeff Garzik, has been there for just about all of it.
[00:01:25] Jonathan DeYoung: Jeff was an early Bitcoin developer who also spent 10 years at the open-source software development company Red Hat and helped develop the Linux kernel that is used in Android phones today. Now, he’s the co-founder and CEO of Bloq and the leader of the Hemi network, which sits in the camp of wanting to bring more utility to the Bitcoin network. So, Jeff, welcome to The Agenda. We’re looking forward to unpacking your deep knowledge and experience around Bitcoin, mass adoption, and your current work bridging the Ethereum and Bitcoin ecosystems together. So, thank you for joining us.
[00:01:59] Jeff Garzik: Thanks for having me, Ray and Jonathan. Excited to be here.
[00:02:03] Jonathan DeYoung: All right. Well, I thought kind of a fun first question would be... I know you have a very deep knowledge and experience with Bitcoin. I think you discovered it in 2010. Is that correct?
[00:02:13] Jeff Garzik: July of 2010. I call it the Great Slashdotting because myself, a number of Bitcoin developers, Jed McCaleb of Mt. Gox fame, we all discovered it in early July from the same web post on slashdot.org. Bitcoin: A decentralized currency. So, I’ve definitely been in the space for a while.
[00:02:33] Jonathan DeYoung: So, I thought it’d be fun to first ask you, as somebody who’s been in this space for a while, what are some of the funnest, most exciting memories you have from the early days of Bitcoin? And then, the space has obviously evolved considerably over the last 14 years. So, what are your thoughts on where Bitcoin sits today versus when you first discovered it?
[00:02:57] Jeff Garzik: Some of the early fun memories: giving away over 15,000 Bitcoin for developer adoption. I gave away 10,000 Bitcoin to one developer to integrate Bitcoin into a shopping cart in the early days of 2010, in the Web2 days. We wanted Bitcoin to be a real currency. In those days, it literally had no value. When I got involved, Bitcoin had not been traded for anything. Soon thereafter, famously, there’s Bitcoin Pizza Day, where Bitcoin was traded for two pizzas, and that was the first public spot market Bitcoin transaction. Gave it some value. We had a party when Bitcoin hit $1, and we called it a dollar parity party. And that was many, many years ago. And I think August, September of 2010. Perhaps a little bit later.
There’s just so many fun memories from the early days. This was before the good, the bad and the ugly of token scams and wallet thefts and all of the bad fish that you see today. It was innovation. It was ideas. It was what can we do with this brand-new decentralized currency that has never existed before? It was just magic’d into existence by Satoshi in kind of a quasi-religious moment of immaculate conception. And as, you know, the early crypto-anarchists, the early cyberpunks and cypherpunks, it was a new paradigm. Everyone was excited to just keep this thing going, make sure that we could use it for payments, make sure it was legal, make sure that it was safe to hold in wallets. All of the accouterment that we have today, the hardware wallets, the multisignature processes, etc., all of that came later.
And so, in the early days, we had to figure out what makes sense, what projects make sense, what security makes sense, where does it make sense to spend your digital currency versus holding it for years and years and years. Because if everyone holds it, then nobody transacts it, and it doesn’t have any value. So, you’ve got to transact as well as hodl in order for it to be a viable currency. So, I was, among many other things, one of those nerds who would try to convince my residential housing contractor to take Bitcoin as payment for remodeling a bathroom, or my lawn guy to take Bitcoin as payment for mowing my lawn. It was very grassroots. It was very low level. It was very intellectual. It wasn’t at all about let’s pump this price. It was very fundamental-focused, and it was honestly a joy to be in that idea environment.
[00:06:04] Jonathan DeYoung: Were you somebody who, right from the jump, as soon as you saw that white paper, or you came across it on the message board, were you immediately convinced, like, this is going to change the world? This is it?
[00:06:16] Jeff Garzik: I was. I was. No hesitation. I was asked by an audience member in one of my speaking engagements of when I first thought about Bitcoin, and my answer was the year 1996. Huh? What are you talking about? That’s way before Bitcoin was created. Well, I’m a science fiction lover. I love all things science fiction. I love futurism, autonomous robots, the Jetsons, AI agent type of future, and one of the many books on science fiction that I read was a series of books called Shadowrun. It was a very cyberpunk, futuristic type sci-fi, and some of the characters, fictional characters, in this book would transact using something called a credstick. And in this book, it was a decentralized currency that you didn’t have a middleman, you didn’t have an intermediating party, you could just directly transfer credits from yourself to someone else, or get paid using one of these credsticks. And it basically, it looks like what we call a USB flash drive today. And as a result, I was waiting for Bitcoin.
I knew that a decentralized currency was coming because, from my computer science background, I knew that decentralization, eliminating single points of failure, creating a global internet currency, all these things were possible. It was realistic. I knew there would be demand. And so, ultimately, I concluded it was an inevitable creation. And so, it was only a question of what form would that decentralized currency take? And so, in July of 2010, as I mentioned, the Great Slashdotting, when that web post was posted, I could download it. It was open source. And since I’m an open-source engineer, I can read the source code and metaphorically open the car hood and look inside at the engine and convince myself that Bitcoin was real, and convince myself that it wasn’t just, for example, five servers in a data center somewhere. It was really, truly decentralized at the technical level in a shockingly unique sort of way.
Satoshi took well-known algorithms — for example, the SHA-256 hash algorithm, the ECDSA digital signature algorithm, and similar technologies. He took those off the shelf — those were very well studied, very trusted — and put that into a so unique ball of wax known as blockchain, known as the first blockchain in the world, the Bitcoin blockchain. And studying that, studying the open-source code, it was immediately clear that it fit that mold that I had first read about in science fiction novels. So, I knew it was here. I knew it would have staying power. I knew that as long as the government, the regulatory state, would not arrest all the developers and shut it down in its earliest days of infancy, then it would be the one.
I think I’m proven right. Here in, as we record this, in 2024, if we’re at a high school senior prom and voting most likely blockchain to succeed, the answer is clearly Bitcoin, 14 years on. It’s the most secure. It’s bomb-proof. Bulletproof. It’s got the strongest network, the strongest technical chops. And what you don’t see is at the edges, all the Bitcoin businesses, the institutions that help custody, secure, hold, process Bitcoin along the way. It’s got the widest human network at the edge, once you go beyond just the simple fact of a Bitcoin node and the nodes and the network and the mining and all the low-level details that I know and love, it’s the people, the network effect, that give Bitcoin its momentum and secure its staying power.
[00:10:40] Jonathan DeYoung: So, I think a big focus of this conversation is going to be around adoption, expanding use cases. So, in our intro, we mentioned the gazillion different ways that people understand Bitcoin. And to some, adoption means the US government is going to have a strategic stockhold of Bitcoin. Sorry, stockpile of Bitcoin. To some, it means that I’m going to be able to go out to dinner with my friend, we split the bill, and my friend pays me in satoshis instead of PayPal. So, from your perspective, what does mass adoption mean, and what would that look like for you?
[00:11:19] Jeff Garzik: Well, I think that we’re already headed in that direction. And the project that I’m working on right now, Hemi, is associated with that upward trajectory. Where we are in Bitcoin’s life and Bitcoin’s evolution is that the basic, using a network term, basic backbone, the settlement layer... Fundamentally, the way all blockchains, including Bitcoin, work at a pricing level, it auctions block space to the highest bidder, and you’re bidding or paying with network fees. That’s where network fees come from. So, just like on the highway, you’ve got congestion pricing in some highways. If the highway is really congested, then the congestion pricing fee is very high. If the highway is pretty empty of cars, then the congestion fee is very low or even free. And Bitcoin works the same way, Ethereum works the same way, etc., and as a result, we have, when it gets busy, ancillary networks, secondary networks, rollup networks, layer 2 or L2 networks where traffic spills over to. It’s kind of like having a second road that you can drive on when the primary highway gets really, really full. And so, this is the next stage of evolution for Bitcoin writ large.
I draw the analogy with the champagne waterfall that you sometimes see at wedding receptions or hotels. The very first glass in that champagne pyramid fills up with champagne. What happens when it’s full? It spills over to the next level of champagne glasses. And that’s what’s happening today with Bitcoin, is that you literally cannot put the world’s coffees, all the world’s coffees, on the layer-1 Bitcoin blockchain. You just can’t. It doesn’t have that bandwidth, that capacity. We have the Lightning Network, which I’m very excited for some specific use cases. But organically, Bitcoin is now growing into the ability to scale across multiple dimensions, meaning multiple layer 2s, and users will benefit from that additional programmability, the lower fees. But they’re still building on Bitcoin. They’re still extending Bitcoin. They’re still using Bitcoin, the token. And so, it’s a new permutation. It’s a new evolution of Bitcoin, the organism, as I like to call it. But at the end of the day, users benefit.
And so, after several years looking at the crypto space from a 50,000-foot view, users and developers have been toying with other networks, Ethereum-derived networks and Solana and other blockchains. I think the world is coming back to Bitcoin, and it’s a very powerful trend, being able to build on Bitcoin without having to pay those very high layer-1 fees.
[00:14:37] Ray Salmond: Okay, so with that view in mind, that the world’s coming back to Bitcoin, what is the ultimate goal of Hemi?
[00:14:44] Jeff Garzik: Well, Hemi is a layer-2 blockchain that I and Hemi Labs, the company I co-founded, is working on. We like to say that we bring the best of both worlds to crypto, meaning the king and queen of crypto, Bitcoin and Ethereum. Bitcoin, in our view, is the root of the crypto tree. It is the strongest, most bulletproof, bomb-proof blockchain. If you’re at a high school prom and voting most likely to succeed, most likely to exist in another 10 years, the top of that list has got to be Bitcoin. And then, where does Ethereum fit in that picture? I describe it as Grand Central Station, which maybe Jonathan will appreciate being in Brooklyn. If you’re going through a blockchain moving digital assets, you’re probably going to go through one of the Ethereum-based, EVM-based networks, because it’s just simply easier to program the Solidity. The EVM development layer is far more powerful, but on balance, speaking as a Bitcoin developer, Bitcoin script, Bitcoin smart contracts, they’re less powerful, but they’re more secure. And so, that’s the trade-off. It’s far more difficult to build on Bitcoin than it is building a smart contract with Ethereum.
So, I’m a chess player. I don’t claim to be a grandmaster or anything like that, but I like to think, what are five chess moves ahead? 10,20 chess moves ahead. For Bitcoin, for Bitcoin users, for crypto users in general, it’s got to be the best of both worlds. Connecting to Bitcoin, that, again, the root of the crypto tree. The base blockchain of all blockchains. But at the same time, connecting to that Grand Central Station of crypto so that you have fluidity, the ability to easily move digital assets on and off various blockchains.
So, Hemi is a layer-2 blockchain which features both non-custodial transfers from Bitcoin to Hemi and back again, and similarly, at the same time, non-custodial transfers from the Ethereum L1 to Hemi and back again. And why that’s unique is every other layer-2 blockchain, they’re picking a side. They’re saying, okay, we’re a Bitcoin L2, and they are literally over 55, five zero, other Bitcoin L2s that I’m aware of. Similarly, on the Ethereum side, they are Ethereum L2s, and they only connect to one network, Ethereum. And to me, that’s just shortsighted. You really want the best of both worlds, and that’s what we built with Hemi.
[00:17:41] Ray Salmond: Okay, so you kind of knocked out one of my questions, which is, you know, the crypto space is always populated with more solutions than problems. So, I think you explained well how Hemi differs in that regard. But what do I do? What’s the purpose of uploading, let’s say, is it WBTC, wrapped Bitcoin? Or am I uploading stablecoins? Am I searching for yield? What can I do once I enter into the Hemi?
[00:18:06] Jeff Garzik: Sure. Well, we have a couple unique features that other blockchains, other layer 2s, etc., don’t have. The first is our anchoring system. It’s called proof-of-proof, or PoP, or “pop.” The PoP protocol uses normal Bitcoin transactions to anchor Hemi into the Bitcoin blockchain. We’re an EVM-based blockchain, and we’re using Bitcoin for finality and security. So, to provide a comparable, the Optimism set of EVM blockchains takes seven days for fraud proofs to work their way through the system, and then you can get your digital asset withdrawn. So, you got to wait seven days to get assets off an Optimism blockchain unless you’re using a third-party service, etc. Ours, we’re directly using the Bitcoin L1 chain for security and Bitcoin finality, and it takes 12 confirmations or about two hours to confirm our finality in our blockchain. So, going from seven days to two hours with, I’d argue, better security is a real improvement for users.
Point two, and this is a little bit more speaking for developers. Our competition does, they just photocopy Geth, the EVM, and call it a day. They staple-gun it onto either Ethereum or the Bitcoin blockchain and call it a day. We extended the EVM by embedding a Bitcoin node inside our Ethereum node. Okay, what does that mean? This is a little bit technical, but we added several instructions or bytecodes to our EVM to extend smart contracts with the ability to directly talk to the Bitcoin blockchain. And this is what’s totally new. For developers writing smart contracts, you have, on Hemi, all the power of the usual Ethereum smart contracts. And then, in addition, your smart contracts directly talk to the Bitcoin L1 main chain. You can send Bitcoin payments from EVM and Solidity. You can receive Bitcoin payments, look at utxos, open Lightning channels, send Lightning payments directly from Ethereum, EVM-style smart contracts while you’re on Hemi.
And so, for me, as a Bitcoin developer, flashing back over 10 years ago, Bitcoin script, again, very difficult to build on. It doesn’t have all of the capabilities that enable what we know today as DeFi on Ethereum. And again, that’s intentional. Bitcoin script is very secure. But what Hemi allows is, Hemi allows the EVM programmability, the self-sovereign contract addresses, self-actuating, DeFi-style contracts to act directly on Bitcoin L1 objects. So, that’s not only BTC the token but Ordinals, Runes, inscription, BRC-20, etc. You can program that from the EVM, from the Solidity smart contract language. So, that’s unique across, as far as we’re aware, all of the layer-2 blockchains. All the other layer-2 blockchains that, say, very clunky I’ve got to move my digital assets here, then here, then here type of experience. Well, once you’re on Hemi, you don’t have to move your digital assets around if you want to do things on the Bitcoin blockchain or on Hemi or on Ethereum L1. All of that’s possible in a single place now, the Hemi L2.
So, we’re very excited about the technicals of it. There’s also a non-custodial Bitcoin bridge, bridging your Bitcoin onto Hemi. There’s a similar non-custodial bridge for any ETH mainnet Erc20 token. Moving that on to Hemi. And then, once it’s on Hemi, it’s the familiar smart contract capabilities of DeFi, yield, added programmability for Bitcoin developers. And then, ultimately, and this is getting back to the science fiction side of things that I mentioned earlier... I love all things AI. I love autonomous robots. I wrote in 2013 about a project, S-T-O-R-J, StorJ. Not related to the storage decentralized network, but narrow AI agents which autonomously spend Bitcoin to operate on your behalf. Now, today, in 2024, with LLM technology and AI agents, that’s finally possible. The thing that I dreamed in 2013 is finally becoming real in 2024, and that’s why I get up in the morning, is for those really exciting build AI robots on Bitcoin type of projects.
[00:23:32] Ray Salmond: Yeah, it is amazing how the dreams are turning into reality at a fast clip. With security in mind, what is superfinality, and how will this strengthen DeFi as a whole and perhaps lead to fewer news headlines at Cointelegraph that detail how North Korea stole $200 million from such and such protocol? I mean, those are pretty frequent. So, what is superfinality? How might it help make DeFi as a whole more secure?
[00:24:00] Jeff Garzik: It’s definitely going to do that. Absolutely. For a comparable, many crypto projects, not ours, are essentially just a ring of multiparty signatures, or a multisig. And we’ve seen many of the compromises in the past are ultimately, they, you know, if it’s a two of three multisignature transaction that secures a $100 million bridge called Wormhole, and two out of those three keys are compromised, then your entire network and all those hundreds of millions in assets are compromised as well. Superfinality is the way that we secure the Hemi chain into the Bitcoin blockchain, using the proof-of-proof protocol that my CTO and co-founder, Max Sanchez, invented. And superfinality, again, is leveraging Bitcoin’s security and Bitcoin’s proof-of-work to secure the Hemi chain and the Hemi history into the Bitcoin main chain. That essentially allows us to ride on Bitcoin rails or lean on Bitcoin security for our own security. The other competitors, they just lean on, for example, Ethereum security itself. And with very low block times, that’s not necessarily the best idea. So, we wanted to embed our security or ride on our security on top of the most secure blockchain in the world. And that’s got to be Bitcoin and only Bitcoin. So, super finality is where a block is confirmed in our chain, number one, and then step two, it’s confirmed in the Bitcoin blockchain. And then and only then is your transfer considered superfinal, completely secure.
[00:26:02] Jonathan DeYoung: Yeah, it’s interesting hearing you talk about all the sci-fi. I also, I’m like a big sci-fi person. I just read, quote-unquote, Ender’s Game again, which is like one of my favorite sci-fi books.
[00:26:13] Jeff Garzik: Oh, that’s a good book.
[00:26:14] Jonathan DeYoung: But when I first started at Cointelegraph in 2020, which I didn’t really know anything about crypto before then, I just thought it sounded kind of cool and sci-fi-esque, so I definitely can relate to you on that one. Speaking of what Ray was talking about with the cypherpunk roots, I was not there in 2010. And I was, I think, a sophomore in college. But my understanding is that there was a lot of focus on escaping government financial surveillance and censorship, privacy, and not your keys, not your coins. Whereas today, the big narrative around Bitcoin is ETFs and institutional adoption and Wall Street getting involved. So, do you think that Bitcoin has lost some of its roots in a way, and if so, is that a bad thing? Or is it just a natural evolution of where maybe the progress of technology and where we maybe even need to go if we want to see mass adoption?
[00:27:15] Jeff Garzik: Yeah, it’s definitely the latter. There’s a little bit of wistful sadness for the early cyberpunk, cyberpunk days of Bitcoin. I think the narratives around censorship resistance, that was ever present, I think that’s still present. That’s one of the value drivers of Bitcoin, in my opinion, to this day. Privacy was… I view it as a little bit of an unfortunate narrative. I’m a very strong believer in privacy, but at the same time, I’ve been one of those old salts in the corner saying to people, Bitcoin is not private. Bitcoin is not private. You’ve got to add additional Bitcoin technologies, such as mixing or zero-knowledge proofs or some of these other technologies, to really be fully anonymous, have full privacy, etc. So, there was a bit of early wistfulness and longing in Bitcoin users for privacy, and I absolutely support that and am very aligned with that, but the technology by default is pseudo-anonymous, not anonymous. And that’s a very distinct and important difference.
So, that, I think, is still something that Bitcoin needs to work on. But you got to make a choice. You can either go mainstream or stay cypherpunk and small, and it’s either one or the other. For me, as a young developer in the year 2010, I didn’t know if I was going to get arrested for simply working on a new currency that was not the US dollar. I didn’t know if I was going to get arrested for violating the Stamp Act, which is one of many laws in the United States that might have, we theorized, covered Bitcoin. Thankfully, it’s not, and we got some more regulatory clarity. And so, the process marches forward towards the mainstream. And now we have Bitcoin ETFs, Ethereum ETFs, etc., some institutional adoption. And I no longer fear getting arrested for simply working on Bitcoin.
So, there’s absolutely progress, but you got to give up something when you go mainstream. And ultimately, what that is, very specifically and very technically, is not everyone is going to custody their own crypto. I fully believe that people should, and they should educate themselves, learn how to be self-sovereign. I think being self-sovereign is a key to personal freedom as well as societal freedom. And that’s a very important aspect of owning crypto, is educating yourself and knowing how to crypto without the help of others. But being pragmatic, being realistic, not every Uncle Joe and Aunt Jane are going to be able to handle a hardware wallet and some of the other more esoteric aspects of storing crypto. Even some crypto long-time users, they recently got, in a specific example, recently got hit because they were storing their seed phrases for their crypto wallets in a Google Drive, and hackers found out how to access even a fully private Google Drive. And that led to a number of crypto thefts.
The power is in your hands, and that’s a good thing. And that’s also you are responsible for your own mistakes. That level of computer knowledge, computer security, is not going to be available to everybody. And so, going mainstream ultimately means you got to compromise and let people store their crypto on websites like Coinbase or in ETFs like Bitcoin. And coming back full circle, echoing your comments, Jonathan, is a natural evolution. Is if we go mainstream, and I’m dating myself here, you got to let the AOL users on the internet.
[00:31:38] Jonathan DeYoung: I used to love getting those, I think like Pizza Hut would give out the trials. Maybe it was PlayStation demos. I had like 15 or 20, probably, AOL trial demo disks just lying around at any given time.
[00:31:52] Jeff Garzik: Oh yeah, they make great coasters.
[00:31:55] Jonathan DeYoung: So, I agree with you, and I think that there will always be a place for people who want to take the extra step of being as private and secure as humanly possible. Most people just use the internet. They get a Gmail account, they have a Coinbase account, and maybe they have 2FA that sends a text to their phone or whatever. But there’s always the option to pay for a VPN with crypto so you’re kinda anonymous. You have the option to buy your Bitcoin with cash in a dark alleyway, if you really want to. You can set up a Proton Mail account. Like you can take any extreme measures, and those options have not gone away. The convenience factor, there are so many other hyper-convenient ways to use those same, access the same internet technologies without needing to take any sort of extra technical or hyper-privacy-focused steps.
[00:32:49] Jeff Garzik: Yeah, that’s exactly right. And if we want adoption, we have to accept those other options. Fundamentally, it’s a binary choice. It’s an A or B. If you want adoption, you have to accept the Coinbases of the world, the ETFs of the world. Or you can close yourself off to a much smaller community. And I love the Zcash guys, but you see that with like a Zcash or a Monero, is it’s a much, much smaller community, a smaller adoption curve because it’s harder to use. The UI/UX is full of rough edges, and it’s just a little bit more difficult for the average person to use.
[00:33:32] Jonathan DeYoung: Which is like a perfect pivot into my next question. So, you were previously a board member of the Linux Foundation. I know you were involved as well in the development of Linux and the Linux kernel that’s used in Android phones. So, obviously, you’re a proponent, I would assume, of open-source technologies.
[00:33:49] Jeff Garzik: Very much so.
[00:33:51] Jonathan DeYoung: So, open-source technology, it’s in a similar position, I feel like, as to the Bitcoin self-custody example that I gave earlier, where most people don’t even know what open source is, let alone are they going to seek out an open-source technology. So, do you think that, as somebody who’s a big proponent of open source, that there will be a day where everybody’s going to be using open-source technology and Big Tech is defeated? Or is it kind of just a natural symbiosis or natural relationship where there will be Big Tech and centralized technology and there will be open source as the alternative that you can use if you want a different experience? Similar to the way that you might view Bitcoin adoption or crypto adoption, where you, there is the, quote-unquote, Big Tech of crypto — those are my words, not yours, obviously — which would, might be the Coinbase, the Binance, etc., and there’s the open source of crypto in terms of there being a smaller community of like passionate people who are really into the self-custody and hiding their hardware wallets in their backyard with a treasure map to find them that they embed in their skin so that when they die, their loved ones know where to cut the skin to get the map out or whatever. Kind of a rambling question, but what are your thoughts on open source, I guess, versus Big Tech?
[00:35:10] Jeff Garzik: Well, it’s definitely a give-and-take. Over the course of my lifetime, I’ve seen open source more and more and more used, even in Big Tech. I see it on the back end. I see it in data centers everywhere. I see it in Android phones. I see it in iPhones, Mac OS, etc. All of these have thousands upon thousands of open-source components. And so, from one perspective, open source has won. It’s invisible, but it’s all around us. It absolutely powers the overwhelming majority, like 98% of data centers out there are powered by open source. And that’s a big, big win. Most phones, Android and iPhone, they’re powered by open source, and that’s billions of phones around the planet. All major smartphones have open-source core and open-source components.
And so, there’s, from my perspective, if you get in a time machine and roll back to the early 1990s, there was vastly more proprietary software than there is today. And so, open source has been winning. And I’m obviously a big proponent of open source and also open networks, permissionless networks, which is what blockchain is. Fundamentally, whether you’re a programmer developing open source or whether you’re a user, the ability of anyone, no matter their background, rich or poor, any culture, any country, you just show up and contribute, and your contributions are valued and potentially integrated into that software. That’s just a beautiful thing. It’s not about who you are, it’s about what you do. And that’s so fundamental reasoning from first principles and one of the reasons why I like open source. Again, very self-sovereign nature of the technology.
So, on the other side of open source, there’s a give and take whereby Big Tech, Little Tech, other businesses, they need to make a buck at the end of the day. So, there’s usually some closed-source components, and it’s a matter of, like you just highlighted, if you want to take a lot of effort, you can have your own open-source phone. There’s one that I was just playing with the other day, the WiPhone. W-I-phone. And this is a phone that has no cellular modem in it. It’s a phone that has WiFi only. It uses voice over IP. But there’s no carrier surveillance. Every single phone carrier on the planet has a backdoor in it. And this is for law enforcement, wiretaps. You get a court order for a murderer or a drug dealer or something like that, and that court order, in technical terms, you give the police access to your phone through a web portal at AT&T or Verizon or T-Mobile or whatever the provider is. Chinese hackers, in the past couple of weeks, were discovered to have access to these law enforcement backdoors. And so, therefore, illicit actors had access to your phone, my phone, everybody’s phone on these major networks. In contrast, this WiPhone was not impacted at all. It was fully open source. It had no coded backdoors in it, and it was completely protected from these hacker intrusions.
So, open source is still defending users. It’s still providing a superior experience. I must admit, it’s kind of a nerd phone. It’s a little bit harder to use. You got to be in an area with WiFi to use it. You can’t just be out and about like a normal phone. There are some limitations. There are some rough edges. That kind of felt like an analogy with open source versus closed source. There are still rough edges if you want to go the purist route. Or you can go the better user experience route and give up some of your privacy. So, there’s always going to be that kind of choice. But I think that… What is The Washington Post motto? Democracy dies in darkness? I think if we don’t have open source, if we don’t have end-to-end encryption, if we don’t have cryptocurrency, then you really don’t have free speech. You really don’t have freedom and self-sovereignty. And so, all of these are very much intertwined with the freedoms that we enjoy.
[00:40:12] Jonathan DeYoung: Very well said.
[00:40:13] Ray Salmond: Yeah, I agree. Fantastic response. It’s been a really rough go for DeFi and all things not Bitcoin for the last few years. And you know, there was just a presidential election, and Donald Trump is going to be the next US president. He’s expressed his views on cryptocurrency, and they have evolved drastically over the years.
[00:40:36] Jeff Garzik: He went from I hate Bitcoin to I love Bitcoin and all things crypto.
[00:40:40] Ray Salmond: Pretty much, yeah. Which for some people, they love it. For others, they hate it. What are your visions for how DeFi grows and perhaps integrates into daily finance and more retail investor and consumer-focused offerings now that the United States might have a crypto-friendly approach to regulating the space?
[00:41:01] Jeff Garzik: Yeah, not to get too deep into politics, but I do think the regulatory environment is going to change quite radically under Trump. The Biden administration, sadly, has been going through this regulation-by-enforcement type of scenario, which is, in my personal opinion, is unconstitutional. The Biden administration just issued by executive fiat, literally an executive order. Go chase after crypto. And that’s not how America is supposed to work. Congress is supposed to pass laws, and the executive branch executes those laws, and the judicial branch helps adjudicate those laws. Are three separate, co-equal branches of government self-balanced against each other.
In contrast, what the Biden administration has been doing, and I don’t think this is a Democrat or Republican thing, I think it’s specific to this administration. They just decided by executive fiat, no due process, no transparency, no congressional mandate, to stamp out crypto. And that is incredibly sad because it’s stamping out innovation. It’s been chasing and costing millions of dollars in legal fees for law-abiding American citizens, law-abiding American businesses. That’s just fundamentally not how I think America is built to function and should be functioning. And a new administration is bringing in a breath of fresh air. It looks likely to turn away from kind of the making up the rules as it goes along, regulation by enforcement. And so, that’s incredibly positive for crypto, that’s positive for DeFi, positive for Bitcoin, Ethereum and innovation in general.
The policy has been pushing actors offshore, ironically away from the law enforcement actors that are still needed to catch people like Sam Bankman-Fried at FTX. He was offshore in the Bahamas. And had he been onshore, I’d argue that he wouldn’t have been able to pull off one of the biggest scams and frauds in history. So, the old regulatory approach was obviously broken. It was obviously leading to criminality. And so, I think the opposite is happening. Nature is healing. And we’re bringing more innovation back onshore, back to America, which can only be a positive.
[00:43:51] Jonathan DeYoung: Well, thank you, Jeff. We appreciate you taking the time out of your day to chat with us, to have somebody who is such a storied person, quite literally in terms of your stories that you’ve shared about the early days of Bitcoin. So, many questions that it just was going to be impossible to get to all of them. Like I was curious about the story behind Dunvegan Space Systems, so we’ll save that for the next time we chat with you.
[00:44:14] Jeff Garzik: Yeah, let’s do it again. This will be great. Folks can find me on Twitter, hemi.xyz, or @hemi_xyz. They can follow me on Twitter, but I have a pretty varied Twitter. It goes into geopolitics and military and technology, and it’s not your average Crypto Twitter. But @jgarzik, you can find me there as well. I had a lot of fun with these questions, and I’d love to continue the conversation at a later date as well.
[00:44:44] Jonathan DeYoung: Looking forward to it then.
[00:44:45] Ray Salmond: Likewise. That was fantastic. Thank you, Jeff.
[00:44:49] Jeff Garzik: Thank you.
[00:44:55] Ray Salmond: The Agenda is hosted and produced by me, Ray Salmond.
[00:44:59] Jonathan DeYoung: And by me, Jonathan DeYoung. You can listen and subscribe to The Agenda at Cointelegraph.com/podcasts or on Spotify, Apple Podcasts, and wherever else podcasts are found.
[00:45:11] Ray Salmond: If you enjoyed what you heard, rate us and leave a review. You can find me on Twitter at @horushughes. H-O-R-U-S-H-U-G-H-E-S.
[00:45:21] Jonathan DeYoung: And I’m on Twitter, Instagram, and just about everywhere else at @maddopemadic. That’s M-A-D-D-O-P-E-M-A-D-I-C.
[00:45:30] Ray Salmond: Be sure to follow Cointelegraph on Twitter and Instagram at @Cointelegraph.
