This episode of TFTC with Marty and guest Aaron van Wirdum delves into the prehistory of Bitcoin, discussing the genesis of the ideas, technologies, and economic theories that paved the way for the emergence of the first successful decentralized digital currency.
This episode of TFTC with Marty and guest Aaron van Wirdum delves into the prehistory of Bitcoin, discussing the genesis of the ideas, technologies, and economic theories that paved the way for the emergence of the first successful decentralized digital currency. The episode covers a range of topics from the significance of River and Crowdhealth as sponsors, to the rich history of the cypherpunk movement, the milestones in digital cash development, and the pivotal role played by various figures in shaping what ultimately became Bitcoin.
Aaron's new book, "The Genesis Book," is highlighted as an essential read for understanding the narrative and the people behind the inspirations that led to Bitcoin. The conversation takes a deep dive into the intricacies of the technology and economics of digital cash, tracing back to the hacker culture at MIT, the birth of public key cryptography, and the ideological underpinnings from figures like Friedrich Hayek. Aaron recounts the frustrations of early cypherpunks with centralized digital cash systems like David Chaum's eCash and how innovations like Adam Back's Hashcash contributed to the concept of digital scarcity, a key element in Bitcoin's design.
The discussion also touches on Bitcoin's unique value proposition that got the incentives right, ensuring its adoption and success, unlike its predecessors. It reflects on the initial skepticism towards Bitcoin within the cypherpunk community and how Hal Finney's enthusiasm and contributions were instrumental in the early days following Satoshi Nakamoto's announcement of Bitcoin on the cryptography mailing list.
Aaron on Twitter
The Genesis Book
The podcast episode with Aaron van Wirdum provides a fascinating exploration of the roots of Bitcoin, shedding light on the collective efforts and revolutionary ideas that culminated in the creation of a decentralized digital currency. Aaron's insights and historical accounts offer a compelling narrative that is not only educational but also deeply inspiring, revealing the dedication and vision of the individuals who played a role in Bitcoin's inception.
The overarching message is clear: Bitcoin is not merely a technological marvel; it is the result of a philosophical and economic evolution that has been brewing for decades. The potential implications for future discussions include a deeper appreciation of the historical context of Bitcoin and an understanding that its success was not accidental but the outcome of getting the incentives right.
By engaging with this history, listeners and readers are invited to reflect on the importance of remembering and learning from the past to better appreciate the present and influence the future – a future that may very well be shaped by Bitcoin and the principles it stands for.
0:00 - Intro
6:32 - Storytime with Marty
13:00 - Genesis book
16:15 - Where does Bitcoin’s history begin?
19:43 - Cypherpunk history
27:50 - Who are the OGs?
31:05 - Precursor projects and culture
35:53 - Hashcash, BitGold, B-Money
43:11 - Demand for privacy tech
52:18 - Whitepaper and genesis block
1:00:06 - Cypherpunks today
1:03:52 - Timing and Chaum
1:09:51 - Free banking, extropians, AI
1:20:01 - Pitching the book
00:00:02:28 - 00:00:07:27
Marty
Aaron, It's a long time coming. Is your first time on taxi, which is embarrassing on my part.
00:00:08:00 - 00:00:15:25
Aaron
It is. Yeah. We came close. One time in New York, I think, but I wasn't close enough to actually come on the show. Yeah.
00:00:15:27 - 00:00:16:15
Marty
Now, I think.
00:00:16:15 - 00:00:27:04
Aaron
David was on. David Bailey was on. And I think you're DMS me, but I was like, not actually the physical building or something. I recall something. But yeah, this the first time.
00:00:27:04 - 00:00:32:21
Marty
Around that was a consensus. 2019, I think maybe 2018.
00:00:32:23 - 00:00:35:02
Aaron
One of these, Yeah. Yes.
00:00:35:04 - 00:01:00:21
Marty
I think it was really it's for 2017 because they're still somewhat bull vibes. So I think it was 2018. But I'm happy we're doing this now. We're here to talk about your new book, The Genesis book, The Story of the People and projects inspired Bitcoin. But before we get to that, I wanted to walk you through a pivotal point of my Bitcoin story that you were involved in, which revolves around the Bitcoins.
00:01:00:24 - 00:01:22:06
Marty
Moby Dick research that Laurent did into the spamming attack on the Bitcoin network went on 2015 2016. I don't know if you recall, but we put together a Slack channel and at one point it was me, you and him trying to dissect the chain data of the spam attack, and I had no idea what I was looking at.
00:01:22:06 - 00:01:29:28
Marty
But you and Laurent were were conversing back and forth, and I was just observing from afar of you guys diving into this data.
00:01:30:00 - 00:01:39:25
Aaron
I do remember this. I definitely remember the term. You mentioned the Moby Dick spammer. And I remember did I write an article about it in the end? Probably right?
00:01:39:27 - 00:01:43:15
Marty
I think so. I think Laurent wrote a series on it as well.
00:01:43:17 - 00:01:57:01
Aaron
Yeah, I don't remember the actual details, but I just remember that this happened. Yeah, but I couldn't tell you anything about it anymore. I just. The name rings a bell and I know I was sort of there for. It's. Yeah.
00:01:57:04 - 00:02:24:21
Marty
Yeah. From right, from what I recall leading up to the fork wars, obviously the fourth wars revolved around the fact that Bitcoin fees were high. When you to increase blocs. One faction thought in Laurent and basically identified that somebody was spamming the mempool with 564 set transactions and he was using. Alex taught me to visualize that we were in the Slack channel.
00:02:24:24 - 00:02:34:09
Marty
And for me that was pivotal in my point, really like diving into chain data and better understanding like the nuances of suitcases and how they can affect the free market.
00:02:34:11 - 00:02:57:09
Aaron
Yeah, yeah. I mean, there was a lot of shenanigans going on around that time, including these spam attacks, to sort of make the blocks look for, even though they weren't really at the time. I definitely remember all that kind of stuff going on, which ironically kind of proved the point of why you need a block size limit because otherwise just spam blocks to infinite sizes.
00:02:57:09 - 00:03:04:04
Aaron
So yeah, yeah. At least with the block size limits, it's expensive to do it like.
00:03:04:06 - 00:03:27:03
Marty
Yeah. And at this time I think it was 27 or 28 I thought was so cool and I was in the Slack channel with you. Yeah, I think I've been following you for almost a decade now in what you've been doing, writing about Bitcoin, everything you've done in Bitcoin magazine. And I was just like, Oh my God, I mean, this selection with an Aaron Venn weirdo and Laurent, like, digging to this chain there that I've no idea what what is what it's saying to me.
00:03:27:05 - 00:03:28:18
Aaron
Mm hmm.
00:03:28:21 - 00:03:36:02
Marty
Um, in a pivotal part of my Bitcoin's strategy is being in that Slack channel with you and observing.
00:03:36:04 - 00:03:37:09
Aaron
Cool.
00:03:37:11 - 00:03:38:13
Marty
Yeah.
00:03:38:15 - 00:03:49:09
Aaron
So, yeah, I. Like I said, you have a better memory of those events that I, if I remember, it happens. But that's, that's pretty much, um.
00:03:49:11 - 00:04:13:18
Marty
Yeah, I mean, you've probably forgotten more than people have ever known about Bitcoin and most people on the planet, with all the research that you've done, all the writings that you've done, all the research that you've done, not only into Bitcoin itself, but with this book, the Genesis book, Digging into the History of the Precursors Technologies, an economic theory that led to Bitcoin.
00:04:13:20 - 00:04:16:16
Marty
What what's it been like? I have a space.
00:04:16:18 - 00:04:30:05
Aaron
I have forgotten more than most people know about Bitcoin. That's which is that I mean, that's probably true because most people don't know a lot about Bitcoin. Plus I have a bad memory, so it has to be true, but you just know it.
00:04:30:08 - 00:04:40:15
Marty
Uh, so what's it been like covering the space for you in general? Yeah. What's it been like? Why do you cover it?
00:04:40:17 - 00:05:17:07
Aaron
Like, why did I even start covering this? Yeah, I mean, I think Bitcoin, let's say money is an important tool for humanity. You're right. Arguably the most important tool. So I. I actually studied, like, political history. It's there's a longer name to it, but I was also sort of I was always interested in sort of how do people organize so how do society organize, you know, what political systems have been tried, economic theories like it was sort of always something I found interesting.
00:05:17:10 - 00:05:45:22
Aaron
And even before Bitcoin, I had gotten interested in both finance, like the whole financial crisis had been happening, of course. So that sort of attracted my attention. But then also the free and open source software movement, which had its own kind of ideals, the old way of cooperating, which I also describe in my book for a part and with Bitcoin, these two really came together.
00:05:45:22 - 00:06:21:00
Aaron
It's an open source forum of money, and that just blew my mind. Like while everyone was talking about either forming banks or especially in the United States, maybe ending the feds and Bitcoin just sort of did it. And for me that feels like a very interesting and potentially incredibly important breakthrough that I at first I wanted to just write a couple of articles or started with one, but then, you know, the more I learned, the more I realized that this is just got to be my career.
00:06:21:00 - 00:06:30:02
Aaron
Now, I started that blog at first and then a new site and started freelancing for Bitcoin Publications. And I'm still here now. I wrote a book. Yeah.
00:06:30:04 - 00:06:53:29
Marty
Yeah. Well, it's a good lay up too, to talk about the book. I think that's one of the misconceptions around Bitcoin from people who aren't really involved and are looking at it from the outside in. They see it as this technology that came out of nowhere and many have equated it to the MySpace of the cryptocurrency space. But what you're diving into here in the Genesis book is that's not true.
00:06:53:29 - 00:07:25:15
Marty
Bitcoin is really the culmination of almost a century of advances and in political theory, economic theory and then computer science as well. Many, many tried and failed to release digital currencies over the last three decades. And it wasn't until Satoshi gifted the world with the way paper and the protocol that we actually found a a digital currency that that seems to be working.
00:07:25:17 - 00:07:49:22
Aaron
Yeah, for me personally, I knew about some of these earlier projects in the same way. I think many Bitcoiners especially these days will sort of note that there were these other projects, although when I started writing, I think that was still kind of a mystery for many people. There was still sort of this idea that Bitcoin really came out of nothing and like you just explained, it really didn't.
00:07:49:24 - 00:08:07:03
Aaron
But even if, you know, it didn't like for me personally, a couple of years ago, I knew there was this thing called Bit Gold that Nick Szabo worked on and there was this hash cache and B money, which is mentioned in the white paper. But for me that was sort of it. There were like footnotes in the white paper.
00:08:07:03 - 00:08:40:07
Aaron
There were there was this one page in a Bitcoin book that mentions decipher Pong two that mentions that there was this thing going on, these people before Bitcoin that were interested in this stuff, but that, that was sort of it. And for me at that point, I'd been writing about Bitcoin for multiple years. I've been exploring it through my articles myself, understanding how it all works, and also especially during the Blocksize wars, which you mentioned, kind of being in the middle of this debate about the future of Bitcoin.
00:08:40:09 - 00:09:02:18
Aaron
So I was really covering it intensely for years and at some point I felt like I want to know more about what is actually came from. I want to know more about what is this actual prehistory that that's sort of alluded to in this one page in the chapter, one of this other Bitcoin book. Like what? What are they actually talking about?
00:09:02:18 - 00:09:27:28
Aaron
What are what is the story here? What did drive these people? So that's what I set out to do. For the past couple of years. I've been working on this book for a couple of years. In the meantime, I also published several articles, sort of standalone articles on the specific digital cash projects that came before Bitcoin. These were called the Genesis Files, and now we had the Genesis book really kind of tries to wrap it all in.
00:09:27:28 - 00:09:42:12
Aaron
One big story also includes a lot more of the economic foundations of Bitcoin and how that all sort of interplays and ultimately led to Bitcoin. That's, that's the goal anyway. So that's what I set out to do.
00:09:42:15 - 00:09:54:28
Marty
Yeah. So how far back does this go? Where do you draw the line of like, all right, here's the first step toward bitcoin. What part of history?
00:09:55:00 - 00:10:05:22
Aaron
Yeah. So it starts with the Arabs inventing zero. No, that's, that's actually that's actually a Dilbert comic joke. You know this?
00:10:05:24 - 00:10:06:25
Marty
No.
00:10:06:27 - 00:10:31:27
Aaron
It's his Dilbert comic where someone asks, Okay, explain blockchain to me. And then that's where he starts with the invention of zero. Explain it to me, but don't give me the I don't remember the exact joke. Anyways, so actually, I start my book. So there's two starting points in my book. Essentially, it starts with two legs, if you will.
00:10:31:29 - 00:10:58:22
Aaron
Two There's two storylines in the book. One of them is really the economic part. So the book opens with Hayek, while not counting the introduction to the book opens with Hayek, and then in the first part of the book, I explore Hayek's thinking about money. And I choose high specifically because I think in different parts of his life it's ideas that are very relevant to Bitcoin.
00:10:58:24 - 00:11:29:16
Aaron
Like early in his career, he was sort of musing about this neutral money, which would be a currency with a limited supply that could be used internationally, borderless, and so very much resembles Bitcoin later in his career, he proposes that money should be left to the free markets, and then even later in his career, he sees the only way to enable that is to create something that governments can stop.
00:11:29:16 - 00:12:01:16
Aaron
There's this famous Hayek quote that many Bitcoiners will have heard. So Hayek sort of has this recurring role in my book, and that's one side of the story. And then the other side of the story starts with the emergence of the hacker culture. So starts with at MIT, essentially where, you know, the first computers are brought on campus and hacker culture emerges, which is really based on this idea of sharing that code and free software and open source software comes from that.
00:12:01:18 - 00:12:24:28
Aaron
And this storyline proceeds with the invention of public key cryptography, and it all sort of starts to merge with the Cypherpunk. So in the cypherpunk tried to create digital cash. Some of them, you know, I already briefly mentioned like Nick Szabo's Bitcoin and there was health benefits. ARPA y would be money, which is referenced in the white paper.
00:12:25:00 - 00:12:49:02
Aaron
So this at this point the cyber punks want to create digital cash and they're really inspired, I would say, by this to different kind of ideological movements that sort of become one at that point. Also in the book, at that points in the book, it sort of becomes a more singular storyline with these different projects sort of following each other up.
00:12:49:05 - 00:13:13:27
Aaron
Yeah, and that's to give you a specific like beginning date. The like the Hayek storyline starts basically in the twenties, 1920s, although even there they're sort of like this flashback, which goes a bit further into history, like where Austrian economics sort of emerges. So that's 19th century. And then the tech track that sort of starts in the late fifties, early sixties.
00:13:13:29 - 00:13:41:03
Marty
And it's fascinating because it seems having been in Bitcoin for ten years and looking back, it seems like I mean, I personally believe that we've been going astray as a society for the greater part of 100 years due to fiat money and central banks. And the implications of that are pretty massive as we talk about day in and day out within the Bitcoin community and more people are starting to talk about it more broadly.
00:13:41:05 - 00:14:14:17
Marty
But the fact that it took sort of individuals and the economic theory realm and then individuals in the software development cryptography realm to really take it upon themselves to fix this problem is extremely inspiring, especially when you consider honing in on the Cypherpunk particularly they were working on this for decades and failing over and over again by failing forward with things like BGP and other cryptographic primitives and hash cache leading to Bitcoin eventually.
00:14:14:17 - 00:14:33:19
Marty
And so how do you think the cypherpunk like how quickly do you think the cypherpunk when they initially set out on this journey to create a digital currency, how quickly do you think they believed it would take initially compared to how long it actually took leading up to Bitcoin's launch?
00:14:33:21 - 00:15:01:13
Aaron
Well, first to remark on what you said, like it is an insanely inspiring story. And Detroit's especially let's just assume that Bitcoin sort of succeeds and we're not there yet. But if it does, it's such a major accomplishment of this small group of people. And it was a small group of people like it was, you know, in the hundreds, maybe at its very peak, there were like 2000 people on the Cypherpunk mailing list, but then most of them were just readers.
00:15:01:20 - 00:15:25:25
Aaron
Like the people that were really driving it forward was such a small group. Like, if Bitcoin succeeds, then I would really expect future historians to look back on these guys, like Americans in particular, sort of look back on the Founding fathers. Right? It's it's it's a it's a small group that actually achieved something really massive, which is super interesting.
00:15:25:27 - 00:15:30:21
Aaron
Now, I forgot your question. What was your actual question before I riffed on what what.
00:15:30:21 - 00:15:39:01
Marty
Do you think their expectations were when they initially set out to launch a digital currency compared to how long it actually took?
00:15:39:03 - 00:16:13:16
Aaron
Right. Well, keep in mind, so when the CYPHERPUNK started working on digital cash, digital cash kind of already existed, I want to say existed, even though that's a little bit of a shortcut. So yeah. David Chao. David Chao, cryptographer. He essentially invented digital cash in the eighties. And when I say digital cash in this context, I very specifically mean or he's very specifically meant a form of currency for the Internet that can be used anonymously.
00:16:13:18 - 00:16:40:19
Aaron
So the strong emphasis for time in particular was on privacy and anonymity. He wasn't trying to like reinvent money or he wasn't a, you know, a gold GOLDBERG or none of that. He was just trying to achieve privacy. And this is also initially what attracted the first cypherpunk to digital cash technology. Now, it was in development at that time.
00:16:40:19 - 00:17:07:00
Aaron
So Cypherpunk Swarm launched sort of 1992. At that point, David Gilmour already had his startup called Digital Cash in Amsterdam, which started in 1990. So when the Cypherpunk first thought about digital cash, they kind of thought about the thing David Gilmour's was building. That's, that's what inspired them and that's what they were trying to achieve, you could say.
00:17:07:03 - 00:17:41:15
Aaron
So this was just centralized. It was a technology for banks, so banks could use it, offer it to their customers, and then the digital cash you had was basically, you know, had a one on one value backed by whatever fiat currency the bank had. So this existed. But. David Chapman, let's take some design decisions or his company was going in a certain direction or was making certain trade offs that not all the cypherpunk were very happy with.
00:17:41:18 - 00:18:09:20
Aaron
So one of them was digital Cash was really sort of focusing on hardware modules. There was a strong focus on making payments in real life rather than over the internet, which sort of makes sense if you think back to the era, right, like early 1990s, most people didn't even have Internet yet. So the focus was on making, you know, in-person digital payments and making these anonymous.
00:18:09:20 - 00:18:43:25
Aaron
So that was one of the focus that not all the cypherpunk were happy with default. You should just focus on, you know, Internet currency and focus on the crypto protocols. And then there was also an even bigger trade off which had to do with privacy, like in In Chumps model, the recipient of a transaction wasn't necessarily private to the sender because if the sender would collude with the bank, then they could sort of work together to, you know, anonymize the recipients.
00:18:43:27 - 00:19:04:18
Aaron
And charm for it was probably a good trade off because that way extortion would be, you know, kind of impossible or, you know, other bad things would be harder to do if the recipient could be anonymized in the worst case scenario. So for banks had a more radical idea, they thought privacy is human rights should be much more absolute.
00:19:04:20 - 00:19:29:16
Aaron
And whatever downsides come with that. That's just a tradeoff we have to make as society. Yes, it will be abused by, you know, terrorists or pedophiles. Yes, they will also abused this privacy in the same way that they're already abusing curtains. You can close your curtains and endorse. You can do whatever you want, and there's no, you know, police that can just come in.
00:19:29:16 - 00:20:07:16
Aaron
They need a warrant like that. These are tradeoffs we make as a society. And so the cypherpunk to destroy data we should be making similar tradeoffs and we'll start to frustrate them. It's that they couldn't actually freely use the technology that Shome had developed. So there's this sort of irony that Chapman is electoral cash. Technology was a big inspiration for sci fi punks, but at the same time, the cyber punks also saw him as sort of holding up these developments because they couldn't create new forms of digital cash based on this same technology.
00:20:07:18 - 00:20:30:24
Aaron
So really, for a couple of years, it was a very for a safe but very frustrating time where it seemed that this technology was sort of within reach, but they couldn't quite use it. They were trying to find ways around it, like they had this small kind of play currencies that were based on the same technology and they figured if it's not used, you know, commercially, then we won't get in too much trouble.
00:20:30:27 - 00:20:53:20
Aaron
And then there were some cryptographers that were trying to make slightly different versions of charms, electronic cash, and figuring that maybe that way they could get around the patents. But for a couple of years it really sort of stalled and it wasn't going nowhere. And you could really see some of these guys like Adam Beck, like the the frustration was really growing for them.
00:20:53:20 - 00:21:12:15
Aaron
I quote that in my book as well as how it wasn't really going anywhere. They were discussing if they should play ball, which I'll get is get his license. But yeah, it was stalling and it really the breakthrough happened with hash cash. So that was like between founding the site function 9 to 2 at creating hash cash. That was five years.
00:21:12:15 - 00:21:21:00
Aaron
So there was five years of kind of frustration and stalling before there was this new insight of how it could actually potentially be done.
00:21:21:02 - 00:21:46:23
Marty
Yeah. Before we dive in the hash cash, I think you stoked an idea in my mind, which is like laying the the groundwork for anybody listening to identify who you deem to be the equivalent of the Founding Fathers in the Cypherpunk movement specifically, and maybe a big ask to make your list of all out but in your mind, like the small group of people who were the most pivotal.
00:21:46:28 - 00:21:48:27
Marty
Pivotal? Excuse me.
00:21:48:29 - 00:22:17:15
Aaron
Oh, yeah, good question. I mean, Tim has to be on that list for sure. Tim, a super interesting guy, passed away a couple of years ago right before I could interview him. Unfortunately, I contacted him, but then he passed away. But he was very active. He was kind of the facto intellectual leader. MODERATOR Kind of very influential person on that list.
00:22:17:16 - 00:22:40:05
Aaron
Not not certainly not the only one and definitely not some sort of official leader, because the cypherpunk sort of by design were just decentralized group or no one was in charge. There were no hierarchies. It was just this group of like minded people that shared a goal that met either in real life or on a mailing list to discuss their ideas or strategies.
00:22:40:07 - 00:23:16:28
Aaron
But Tim was very pivotal. He was one of the founders and he was also the most active contributor to the mailing list where he would consistently share his ideas and what he expected cryptography to be able to achieve. And he in particular had a very radical interpretation of the potential of cryptography he saw. So he he wrote a crypto anarchist manifesto and which I have behind me on the poster, by the way, print printed out.
00:23:17:01 - 00:23:52:18
Aaron
And he saw cryptography and digital cash in particular as tools to really undermine the state. It would allow people to not pay taxes, which would in turn lead to a tax revolt. And all of that also like secrets, it would be impossible to keep secrets. So including government secrets or big corporations, you couldn't keep secrets. And if you can't keep secrets, it's really hard to run a large corporation like that.
00:23:52:21 - 00:24:22:02
Aaron
So he had these very radical ideas, but there were also moderates or more moderate cypherpunk out. Eric Use, for example, was a lot more moderate by each another co-founder John Gilmore and other co-founder. And then some of the more well-known guys in the individual space would, for example, be, you know, Nick Szabo, Salvini y di. They were all quite active on there as well.
00:24:22:05 - 00:24:34:03
Aaron
But yeah, there were a whole bunch of people that were discussing these kinds of ideas and digital cache tools and also just general privacy technologies, of course.
00:24:34:06 - 00:24:59:22
Marty
Yeah. And yes, yeah. And you have to imagine like a distributed workforce working on a combination of open source and closed source technologies aiming for this ideal. Like was there any similar type of software projects or movements like this before that Few if any. I imagine it's like Internet protocol stack, But.
00:24:59:24 - 00:25:29:12
Aaron
Yeah, well as Phil Zimmermann, he was building PDP and he did start building that before the Cypherpunk existed. And then of course David Chown was building electronic cache as well before like he was the inspiration for Daft Punk's or one of the inspirations. So he was also building that before Cypherpunk. But in general, not really, or at least the types of tools that Cipher punks were developing.
00:25:29:14 - 00:26:02:12
Aaron
So privacy tools essentially that didn't really exist yet before this idea. In fact, that's why the Cypherpunk were founded. That's why Tim May and Eric Fuchs and John Gilmore, why they wanted to founded Decipher Punks because there was this revolution in cryptography that had been happening since the seventies, 1970s. But to actually turn these crypto protocols into tools that people could use, that hadn't really happened yet.
00:26:02:12 - 00:26:15:05
Aaron
So that's what I try to achieve and that's why they gathered this groups of hackers and friends and computer scientists to start building this and start realizing this.
00:26:15:07 - 00:26:36:28
Marty
And in your research, going back and reading the mailing list and all the papers that were put out, what was I'm trying to get at is like, what was the what was it like the coordination efforts, like in the beginning? Did you see like the coordination of these projects evolve? So you imagine these people are doing this for the first time.
00:26:36:28 - 00:26:59:04
Marty
It's never been done before. Outside of a few projects before the CYPHERPUNK is launched, like what was. And then you compare it to a project like Bitcoin Court today or Linux and all these other open source projects, like how, how much of a rough path that they have trying to learn how to coordinate and work on this together in a distributed fashion.
00:26:59:06 - 00:27:30:21
Aaron
Well, at the very beginning they started to meet like at someone's apartment, right at Eric Lucas's apartment. And they were actually sort of roleplaying how electronic cash, for example, could operate or how like the precursor to Tor, like remodelers, how that would actually work. So they were sort of playing this out with physical envelopes and, you know, pieces of paper and monopoly money or whatever they were using to sort of play these actual games.
00:27:30:23 - 00:27:40:26
Aaron
Yeah. On the mailing list I did. And good question. Like you mean the actual tech developments, right.
00:27:40:28 - 00:27:55:18
Marty
Yeah. What I'm trying is like the culture like, like how did it sort of form and evolve around building these tools via mailing list and the combination of that meeting in person actually writing and testing code.
00:27:55:20 - 00:28:32:23
Aaron
Yeah. Well I think it was around this same time. So around the cypherpunk era that Linux was also introduced and that really sort of reshaped the culture of how to cooperate on building software, open source software, specifically in general. Like before that there was still like free software exists, which is Stallman had been working on free software, but there was still this ethos of you need this sort of small group of experts to to build this and to fit it in to make sure it's bug free.
00:28:32:23 - 00:29:09:19
Aaron
And this tended to happen in like computer environments, like computer labs at universities. And it was really with Linux that this kind of got flipped and it became just this collaborative model across the Internet where everyone could contribute. I would say the Cypherpunk mailing list specifically was more a place to sort of discuss designs and discuss ideas and discuss potential rather than a place where the actual developments happened.
00:29:09:20 - 00:29:21:13
Aaron
It was more a place to sort of find each other and they did share software or they did share code, but it's not like it happened on the list itself. That was more a discussion forum type of situation.
00:29:21:16 - 00:29:41:17
Marty
Yeah. And then bringing this back to the timeline of charms e cache, sort of frustrating people and then atom back releasing hash cache. Why was hash cache so pivotal on this journey towards Bitcoin in your opinion?
00:29:41:20 - 00:30:12:12
Aaron
Yeah. So Adam Beck designed hash cache initially as postage, so it was meant to be postage and the reason so postage for the internet, for email essentially, and the reason that was very necessary at that time was because a, I mentioned that cypherpunk for using mailers. So this was a way to email someone anonymously, email someone without that person knowing that it was you who emailed them.
00:30:12:15 - 00:30:44:22
Aaron
So these were cypherpunk tools that Cypherpunk were running, like they were running remodelers servers, but servers were increasingly being spammed. So there were, you know, basically some sort of denial of service attack seemed to be going on where, you know, thousands of emails were just being sent through the servers consisting of gibberish, it seemed like. And these servers became too expensive for some to actually operate.
00:30:44:24 - 00:31:13:05
Aaron
So this is why the Cypherpunk specifically wanted to create something akin to digital postage is something that would come at a cost. So sorry, something that would make sending an email cost something. And they did think about using electronic cash for this like jobs. Electronic cash. Just put a little bit of cash in an email and only if it has this e cache in the email would you accept it or would the remainder accept it.
00:31:13:07 - 00:31:38:03
Aaron
But ecos was not quite ready for this. It was not quite designed in such a way that it could be used for this. So then Adam Beck came up with this idea for hash cash, which in order to send an email, the sender would have to perform a little bit of proof of work. So, you know, your computer does a bunch of computational cycles to prove that you actually spent energy.
00:31:38:05 - 00:32:12:06
Aaron
And then only if this proof of work was included in an email what the remainder accepted or what the recipient acceptance, what is really introduced. So this was the original intent for it for for cash. Cash. But what it introduced was digital scarcity, essentially, right? So some way to create something that's digital, but that proves some sort of expense of real world resources, real energy, real computing power.
00:32:12:09 - 00:32:41:20
Aaron
And this really inspired a number of the cyber punks to take their thinking about electronic cash in a new direction. So where previously the idea was we're going to create this or cash is sort of operated by a bank and it's backed by fiat currency. Now, they really started to think more in this way of digital gold kind of thing, like maybe we can have a digital cash that's not backed by something else.
00:32:41:20 - 00:33:11:10
Aaron
So they were having these discussions on the Cypherpunk mailing list, some of which I detail in my book about whether digital cash actually needs to be backed, whether it just needs to be limited to it, or whether it should be considered cash if it's not backed or evidence backed or so there were starting to really consider this. And when hash cash was introduced a year later, you see these other digital cash protocols being proposed.
00:33:11:10 - 00:33:43:25
Aaron
So the most notable ones are the examples Bitcoin TED White eyes B money, which both both used is scarcity. There's provable scarcity, there's proof of work as sort of the foundation, the fundaments for that digital cash projects. Now these digital cash frauds have other problems, but you can really see this thinking to be embraced and sort of taking the whole concept of electronic cash in a in a new direction from that point out.
00:33:43:27 - 00:33:49:11
Marty
And did I forget typical old or B money never leave the idea phase or they.
00:33:49:14 - 00:34:14:10
Aaron
No, no they were both just proposals. They were they were proposed very briefly after one another. I was only like a month in between them, but yet both had, Wolf, fundamental problems. And maybe that's why they weren't like they couldn't have been implemented, basically. Or, you know, you could have sort of tried, but there were very real problems that were unsolved still.
00:34:14:12 - 00:34:39:06
Aaron
So, yeah, they were only ever ideas, proposals where Bitcoin is is a pretty, I would say relatively detailed proposal B money is a little bit more had to wavy like that. B money is an even rougher idea that bit goals. But yeah, both of them were not implemented.
00:34:39:09 - 00:35:03:09
Marty
Yeah, I discuss B money with Drew Bansal from Unchained probably about a month, month and a half ago. Now at this point we were he was explaining how the auction to create B money really doomed it from the beginning because you didn't really have this fixed supply that people could anchor to sort of had figured out a way to coordinate these auctions, to birth the supply into existence, Right?
00:35:03:09 - 00:35:46:06
Aaron
Yeah, I would say b b money was it was an interesting idea. It was sort of almost why I kind of thinking out loud is how I sort of read it. He by the time he published B Money, he had grown sort of disillusioned with the whole digital cash movement, actually, or with the whole Cypherpunk movement, even because he, he felt that all these tools, that cipher banks were developing and all the ways they were thinking about improving privacy, it turned out that no one was interested, Right?
00:35:46:06 - 00:36:08:11
Aaron
The Internet's had by this time started to become a real thing, and no one was using any of these privacy tools to the cypherpunk, you know, were putting their heart and soul in. No, no, no one gave a damn. So he also expected that even if they could realize digital cash, probably no one would even use it because.
00:36:08:11 - 00:36:32:09
Aaron
People are perfectly, perfectly comfortable using credit cards or PayPal or whatever, you know, privacy infringing technologies are out there. So what's the point? Sort of. So my reading of the situation is that y I had been thinking about it for a while and at some point he kind of grew disillusioned and he just sort of said, All right, here's what I got so far.
00:36:32:12 - 00:36:42:12
Aaron
If someone wants to take this ball and run with it, go ahead. But it was still far from a finished protocol, but it had some interesting ideas for sure.
00:36:42:15 - 00:37:08:15
Marty
Yeah. And how much do you think that disillusionment on the part of way DI, was, the fact that he was so close to everything going on, almost following this for years it didn't seem like there was mainstream adoption or even appetite to adopt like how much of that was just a product of how nation the internet was and consumers access to the Internet was at that time?
00:37:08:17 - 00:37:41:01
Aaron
Well, I would say that in recent years we've seen a bit of a resurgence of, you know, sort of the cypherpunk ethos. Right. And Part of this is Bitcoin itself. But you also see you see it in other domains as well. You know, we we have signaled these days WhatsApp like implement cryptography. So clearly people at least pretends to care, companies at least pretends to care, which probably means there's at least some market demand for it like people.
00:37:41:08 - 00:38:16:13
Aaron
Also, the Snowden revelations, of course, were big part of that, think it's it's re-inspired thinking about privacy technologies or the lack thereof. But yeah if you recall definitely like the late nineties early 2000s when the Internet was still pretty new, privacy was just not a topic that anyone really seemed to care about or mind. And so I can certainly see, you know, the cypherpunk that was there very early to the to the Internet.
00:38:16:13 - 00:38:32:18
Aaron
And then when the masses sort of come and no one cares about what they thought everyone would care about that, that must be a very disappointing realization. And it was for many of them. So yeah, the Cypherpunk movement sort of dissolved around that time.
00:38:32:21 - 00:38:55:15
Marty
Yeah. So this was like 1998 when B money was released. I'm sure there's a bunch of where the idea was released. There was probably discussion for some amount of time and then obviously there's a ten year gap between that and Bitcoin. The Bitcoin white paper appearing on the on the mailing list in October of 2008 and what happened between that ten year period that.
00:38:55:17 - 00:38:55:27
Aaron
Yeah, well.
00:38:55:27 - 00:38:58:13
Marty
Their disillusionment if you will.
00:38:58:15 - 00:39:30:12
Aaron
Yeah, well there's one more interesting digital cash project in between these which I highlight in my book. I will also say there were a lot of sort of electronic cash systems in name only during that time. So there were a lot of start ups and yeah, technology companies that were selling or introducing something which they called cash the Internet in some way or another.
00:39:30:15 - 00:39:57:00
Aaron
But it, it didn't have any privacy future stuff for sure. So in whatever way, whatever they associated with cash, probably something like fast and cheap transactions. But privacy was just not part of any of these designs. But the interesting sort of cypherpunk technology late, very late cypherpunk technology that still came out in between B money and Bitcoin was ARPA.
00:39:57:05 - 00:40:25:29
Aaron
So how very, very telling for his character probably he sort of kept his hand to shut them up. He, he was always very interested in new digital cash projects that were introduced on the Cypherpunk mailing list. It was very often sort of the first to jump on it, try to understand it, and came back to the mailing list, sort of try to explain it in his own words to other people on that list.
00:40:26:02 - 00:40:57:23
Aaron
So he was a very prominent figure there, especially in this electronic cash sort of subsegment of the Cypherpunk community. And he he deeply he was still motivated and it was almost certainly one of the very few like, I think Nick Szabo when I spoke with him, he said his estimation were that there were maybe like three or four people so interested in this, like by The Smiths through thousands, but Delphine was definitely one of them.
00:40:57:26 - 00:41:41:00
Aaron
He was still interested in specifically kind of realizing bits gold and B money type of ideas. Now what he actually built was what he called a very simplified version of Bitcoin, at which it had to be because Bitcoin was quite complex. There's like different layers to that design. So ARPA was a very simplified white version, but it was kind of interesting that it leveraged sort of the transparency of free software so that you even have any couldn't cheat because it was a centralized system.
00:41:41:03 - 00:42:02:13
Aaron
So it sort of went back from decentralized proposals like B money and Bitcoin sort of for and then it went back to our power, which was centralized. But how many used a remote attestation technology, which was a special IBM chip in combination with free software to sort of prove that the protocol did exactly what it had to do.
00:42:02:20 - 00:42:29:05
Aaron
Very relevant idea for Bitcoin as well. Of course. So so this technology came somewhere in between and interestingly, it was also actually implemented. So it did work. It was really a thing people could use. A kind of interesting. Is that correct? Maxwell was also one of the contributors to this project because developers, of course, but it never really caught on.
00:42:29:07 - 00:42:57:16
Aaron
This is probably in large part because ARPA didn't have a solution for the inflation problem. So the currency was created with proof of work. But as computers become faster over time, it becomes easier to create proof of work. So you sort of have this intrinsic inflation because of that. And, you know, if you know that your money is going to inflate, it's not very strong incentive to want to accept it, of course.
00:42:57:16 - 00:43:09:06
Aaron
So that's probably a big reason why ARPA didn't take off, or at least that's what I think that's what Maxwell thinks as well. But it it's operated work for a while.
00:43:09:09 - 00:43:46:20
Marty
So that gets to the question of what is the core innovation of Bitcoin And that's again, go back to the conversation with Dhruv. He wrote a piece recently that really puts the case forward that digital scarcity and fixed supply 21 million with a predetermined supply schedule. Release schedule is the key innovation. Obviously with the combination of proof of work, with the difficulty adjustment in leveraging EDSA to create private public key pairs, all that combined really allowed Bitcoin to succeed in the way that it has over the first 15 years.
00:43:46:20 - 00:43:54:09
Marty
But it was really that last piece of the puzzle figuring out like, Hey, we need a fixed supply out of the gate that's predetermined.
00:43:54:11 - 00:44:18:09
Aaron
Yeah, I think the big thing Bitcoin did was getting the incentives right. And as I mentioned, ARPA basically works like if you just wanted to use digital cash on our POW, it works or even e cash, you know, the technology works, but also your cash was not adopted probably for the same reason. Like there's no strong incentive to adopt e cash like some people care about privacy.
00:44:18:09 - 00:44:59:12
Aaron
Sure. But a lot of people don't care about privacy. While, you know, if there's a monetary or if there's a financial incentive to adopt that currency, well, now all of a sudden, a lot more people will care. So I also think that's that's a big piece of the puzzle that Satoshi sort of got. Right. If you look at these different electronic cash projects that preceded Bitcoin, then almost all different parts of the puzzle are there in one of them, like Bitcoin is already very much has something that starts to resemble a blockchain with like this chain of hashes essentially.
00:44:59:14 - 00:45:33:26
Aaron
B Money already introduced this idea that everyone should run their own node in a way that everyone should keep track of. Everyone else's balances are powerful leverage is this free software idea that anyone can check the code. Of course, hash guys is proof of work like a lot of these tools. Or were there a lot of the parts of the puzzle were there and Satoshi definitely, in my view, was all he put it together in a way that's not just very elegant, but also the incentives.
00:45:33:26 - 00:45:50:07
Aaron
Now, for the first time aligned, there was actually a reason for people to want to get some of these coins because the value might go up. And that's that's a big motivator to get digital cash, even if you don't care about the privacy aspect of it. Yeah.
00:45:50:10 - 00:46:14:20
Marty
And when Satoshi hit the mailing list with the white paper in October of oh eight, in your mind, how did this what reaction that this cause the greater cypherpunk movement to have? Obviously how funny was in early I was way I was highly skeptical in the beginning. What was the reemergence of this idea of digital cash in the way that Satoshi brought it back?
00:46:14:22 - 00:46:18:05
Marty
How did it sort of disrupts that that community?
00:46:18:08 - 00:46:49:29
Aaron
Right. Well, you mentioned wide I he was emailed before it even hit the mailing list. So both at back and wide, I were reached out to privately but by Satoshi and both of them weren't were weren't buying it so to say which to a large extent has to do with the dissolution meant that I already mentioned and also there had been so many digital cash products that just went nowhere.
00:46:50:02 - 00:47:18:00
Aaron
So it's very understandable. I would say, you know, someone you've never heard of reaches out, says I've, you know, I fixed the problem. It's very natural to be skeptical. I would say that that's totally normal, I think. And that's also what you saw on the Cypherpunk mailing list for the most part. So yeah, the initial responses were definitely either indifferent.
00:47:18:01 - 00:47:44:23
Aaron
And I should mention, by the way, at this point, the Cypherpunk mailing list had, for all practical reasons, been dissolved and now the sort of more serious cryptography mailing list have taken over. Like a lot of the same people started to discuss their ideas and strategies there. So it was very similar, but it was, it was a bit more moderated to limit the amount of flame wars and spam and that sort of stuff.
00:47:44:25 - 00:48:09:00
Aaron
But yeah, for the most part I would say was indifference. And then those that did pay attention to the email either didn't believe in it or just didn't understand it. I caught some of these emails in my book, or at least some of the subparts of It's like I forgot who it actually was. I forgot the name of the person that sent this email.
00:48:09:00 - 00:48:39:27
Aaron
But someone, funnily enough, suggests that Bitcoin seems like a pretty good idea, but it should have a difficulty adjustment algorithm, which it did. So clearly you didn't understand the proposal very well, which I should also say also very understandable. You know, we live in the 2020 for now, and now if you get into Bitcoin and you type it into YouTube, there's like a million colorful explainer videos and everyone wrote an article or a book like me about how Bitcoin works.
00:48:39:27 - 00:49:17:13
Aaron
And but if, if it's 2028 and you've never heard of this and there's just this white paper from this one guy you don't know and you're sort of just reading through it. Yeah, obviously most people wouldn't understand it perfectly the first time around. So I'm not like judging these people just noticeable that they didn't quite get it. But yeah, again, the noticeable exception is of course how Vinny So he'll Vinnie still still at it just like on the Cypherpunk mailing list often sort of defers to take an interest, try to understand it, ask questions, try to explain it to other people.
00:49:17:21 - 00:49:34:22
Aaron
And you still see this in 2008 when Bitcoin is first introduced by Satoshi that Hal is still this guy. That sort of adjusts what's in research. And just like that's not the English word. What's the English word mati for?
00:49:34:22 - 00:49:36:16
Marty
Or there's the Aztec.
00:49:36:18 - 00:49:38:11
Aaron
Is that just an English word.
00:49:38:13 - 00:49:45:01
Marty
Enthusiastic? I don't know. I don't know. The etymology definitely is an English word.
00:49:45:03 - 00:50:23:15
Aaron
Okay, I think we're good then. Yeah, but so how? Vinnie is definitely still one of these guys. Pretty much the only one who still And to Shostak about this new idea and sort of and he starts to help Satoshi as well for the monster follow with some bug fixes that kind of stuff yeah but but but pretty quickly like if you read it's back now like within like a couple of maybe like a couple dozen emails, maybe not even a couple dozen.
00:50:23:17 - 00:50:51:07
Aaron
The the discussion about Bitcoin is sort of cut short by the moderator of the cryptography mailing list, Perry Metzger. It in this way of, you know, let's see code first pick up before we continue discussing this which Rector retrospectively it's kind of funny. It's like you know me I'm like a you know, I'm digging through this archives, kind of like as a historian doing my research.
00:50:51:07 - 00:51:07:07
Aaron
And then this super revolutionary idea was invented. And then you've got this guy cutting down the discussion like, no, want to read what is what everyone want had to say about it? And this is like a goldmine and now it's over. So, yeah.
00:51:07:09 - 00:51:15:01
Marty
Was that even correct? Because Satoshi say that he wrote the code before he wrote the paper because he wanted to make sure it worked.
00:51:15:03 - 00:51:33:11
Aaron
He started writing the code before the paper. Yeah, that's right. But he published the paper before the code. So there were still a couple of months between paper and code, of course. But yeah, he said he'd been working on it for like two years before publishing the white paper. That's right. That's true.
00:51:33:13 - 00:51:45:15
Marty
Yeah. So obviously, January 3rd, 2009, when the protocol, or at least on the Genesis block, was behind January 1st.
00:51:45:18 - 00:51:53:21
Aaron
They referred us to Genesis block and then January 8th it was actually announced, shared on the on the cryptography mailing list. Mm hmm.
00:51:53:23 - 00:51:57:25
Marty
And at that point, it was still just the genesis block or, you know, other blocks have been mined.
00:51:57:26 - 00:52:34:19
Aaron
Yeah, yeah. Yes, yeah, yeah, yeah. It was just the genesis block embedded in the code. Of course, there had been no or at least, you know, we can't be completely 100% sure in retrospect, but at least according to the timestamps in the blocks, these were all found after the code was released on the mailing list. Now, you know, if you want to get conspiratorial or whatever, it's of course, possible that Satoshi would have sort of mined these before releasing the codes and embedding fake timestamps in the blocks.
00:52:34:19 - 00:52:43:24
Aaron
But there's no indication that he actually did that. I don't think he did that. But we can't be 100% sure based on blockchain alone.
00:52:43:26 - 00:52:45:21
Marty
Well.
00:52:45:24 - 00:52:52:27
Aaron
We can't be 100% sure, of course, that the Genesis block was not mined before January 1st because it had this headline in the Genesis.
00:52:52:27 - 00:53:16:00
Marty
BLOCK Yeah. And for anybody out there listening the beauty of the Genesis block, not only with the headline in the Coinbase transaction, but it can't be spent. So that was sort of an interesting decision that Satoshi made, like, Hey, I'm going to mine this first block just to get the start up, but I'm going be able to spend any of the Bitcoin that's officially mined.
00:53:16:03 - 00:53:26:23
Aaron
Yeah, very cool touch. I think like even Satoshi himself had to earn his coins just like everyone else. That's true.
00:53:26:25 - 00:53:48:12
Marty
And so what do you think, having done all this deep dives into the history of the economic theory and the Cypherpunk movement that led to Bitcoin, what was the emergence of Satoshi in the Bitcoin projects like? What impact did that have on the Cypherpunk movement overall, particularly over the last 15 years? Like, would you say the movement's stronger than ever?
00:53:48:13 - 00:53:56:18
Marty
Has it gone astray at all? Was Toshi a figure that breathed life back into it?
00:53:56:21 - 00:54:35:04
Aaron
I mean, I think the ideas and the ideals of the cypherpunk live on, but the movement itself is not really in so far. It's still a movement. It's definitely not what it used to be like. It used to be, as I mentioned, both the sort of in-person thing in California, where at the beginning maybe like 50 people showed up and then it became this early Internet phenomenon with the mailing list, which, as I mentioned at its peak had like 2000 people on there, although most of these people were just reading.
00:54:35:06 - 00:55:13:11
Aaron
And yeah, I mean, today there's still people that call themselves cipher punks, obviously. And some of the technologies live on Bitcoin being an obvious one, but you could also count, you know, something like Tor or even something like Signal. I think that's perfectly fair to consider. Cypherpunk Technologies. WikiLeaks, of course, was also a very cypherpunk thing. Assange himself was on the Cypherpunk mailing list, so these ideas live on, but you have to really consider it's still a cypherpunk movement, not in the way it was anyway.
00:55:13:14 - 00:55:47:00
Aaron
There's no central mailing lists like that anymore. They're still the cryptography mailing lists, which is still going on. So that's still living on. But I think, you know, someone like Tim May was such a sort of central figure and his ideas and his contributions that that really sort of attracted a lot of attention. And it sets the tone to a large extent for the Cypherpunk community, I would say.
00:55:47:03 - 00:55:57:25
Aaron
And so with him gone and with the mailing list gone and I think it's a bit of a stretch to say that there's still a cypherpunk community, but the idea is live on.
00:55:57:28 - 00:56:18:21
Marty
Yeah, maybe these are communities movements, if you will, that need to be somewhat ephemeral. People take their ideas or take them somewhere else. But another community, maybe that's like the the whack a mole that's necessary to actually get these technologies into the hands of the mainstream users.
00:56:18:23 - 00:56:47:08
Aaron
Yeah, that's a good point. I mean, even the mailing list, like if if the philosophy of the cypherpunk is sort of this decentralized movement that has no structure and no no one, you know, dictating where it goes, then it's kind of natural, of course, that it just goes wherever and the mailing list, for example, itself was hosted for a long time by John Gilmore.
00:56:47:11 - 00:57:22:12
Aaron
He at some point didn't want to do it. So then kind of the big migration happened. It migrated to Usenet for a while and then there were different servers sort of hosting that. And as I mentioned, the cryptography mailing list took it over. But yeah, I would I think that's probably a pretty good assessment that almost by its very nature of being this decentralized, leaderless structure of this thing, it just kind of spreads to wherever it goes, wherever and it becomes hard to sort of pin down in any central place or point.
00:57:22:15 - 00:57:48:12
Marty
Yeah, and one thing going through this history, I can't help but think of how important timing is in the timing of when Satoshi released the white paper that eventually launched the protocol was so beautifully perfect in the midst of the great financial crisis. Obviously with the message in the Genesis block, he was certainly making somewhat of a political statement when he launched the protocol.
00:57:48:14 - 00:58:04:09
Marty
And I think it's clear to me at least it was an idea digital cache more broadly whose time had come and Satoshi, luckily for us, figured out the perfect ingredients to get something together that that actually works.
00:58:04:11 - 00:58:49:18
Aaron
Yeah, that's that's still an incredible part of the story, right. How perfect the timing was. And also, again, like if you imagine let's, you know, imagine that Bitcoin does become this big success. You know, hyper Bitcoin inflation happens like future historians must be so incredibly astonished by the timing of it all. And just a the the sort of bottom up nature of it's like there's this big financial crisis going on and the solution that somehow found on this niche mailing list with this paper by this anonymous guy, it's it's it's kind of mind blowing if.
00:58:49:18 - 00:58:54:10
Marty
You had something as biblical and think about it and you're exactly right.
00:58:54:11 - 00:58:56:29
Aaron
Yeah. Yeah. It's really incredible.
00:58:57:01 - 00:59:20:13
Marty
Yeah. And then speaking to timing to other I like charm. Great idea with mints. Like, maybe he just needed to wait until bitcoin was launched. And you can build more. You can build mints. The correct way, leveraging something like the Fadiman protocol. There was a talk that Hal Finney gave back in the nineties about, uh, zero knowledge proofs and how they could be implemented.
00:59:20:13 - 00:59:42:04
Marty
And now people are figuring out ways to leverage the zeek piece to help with initial block download and bitcoin like these ideas that were brought into existence decades ago. Maybe the timing wasn't right, like it just took bitcoin to be released and then you could implement the correct way, which is also fascinating to think about.
00:59:42:06 - 01:00:01:19
Aaron
Yeah, it's really cool to see some of these technologies, ICOs being the most obvious example, I would say. Yeah, really cool to see that being rediscovered. Like when I started my research that wasn't the case, that also this really sort of happens during that I was writing about this stuff. I'm not saying it has anything to do with me.
01:00:01:26 - 01:00:22:22
Aaron
That's not the claim at all. I'm just saying it's interesting to see how like as I was sort of discovering these things, it's also been rediscovered in a Bitcoin context and people now actually start to bill built these technologies on Bitcoin, which seems like, yeah, a very good match to me. Anyways, David Shoham is not really a Bitcoin or is.
01:00:22:25 - 01:00:25:02
Marty
He started his own privacy coin then he.
01:00:25:05 - 01:00:46:29
Aaron
Yeah, he was involved with like Elixir for a little while. I have no idea what happened with that, although I think Elixir was supposed to also support bitcoin like it was supposed to also be a mixer for bitcoin. But I'm, I'm going off my suboptimal memory at this point and I don't know for sure what the idea was there.
01:00:47:02 - 01:00:49:07
Aaron
I don't think it went anywhere, right?
01:00:49:09 - 01:01:18:04
Marty
I don't think so. But it is interesting, right? Because I imagine Trump did that because he's looking at Bitcoin in the tradeoffs. It's a totally made particularly as they pertain to privacy, not what he probably would have wanted as a privacy idealist. Um, and it's interesting now that Jimmy events are being launched on top of bitcoin, which give Bitcoin users their privacy within these 30 minutes, or just his signal mints like cashew.
01:01:18:06 - 01:01:19:29
Aaron
Um, yeah, well, he's.
01:01:19:29 - 01:01:41:08
Marty
Kicking himself in the butt like, oh, I mean, I, this patient thought creatively about this. Like, you can't have it. It's just going to take time. And in my mind, like, I think the tradeoffs that were made as a pretense of privacy, while they're hard to stomach for a lot, I do think they're worthwhile at the protocol level and you can just push that up to other layers.
01:01:41:11 - 01:02:09:10
Aaron
Yeah, it also it's interesting, I mentioned Bitcoin, for example, this idea and how that was pretty complex. I mean, it's not it's kind of complex, but the reason it's complex for the reason I say that is because it actually also had it different layers essentially. So it also had like sort of this base layer idea which can be, you know, that was textual bit gold, so to say.
01:02:09:10 - 01:02:55:10
Aaron
There was sort of this digital scarcity, this proof of work type of currency. But then he imagines a sort of free banking layer on top of it, which would be more suited to make the actual payments and to make the actual transactions on. So there's also, you know, there's very similar to the direction that even today sort of the prominence Bitcoin developers or, you know, Bitcoin thinkers are kind of thinking about scaling like this seems like a plausible way that Bitcoin might actually scales, you know, through layers and through some sort of whether it's sediment or whether it's different types of, you know, whether you want to call them banks or what different trust models
01:02:55:10 - 01:03:21:14
Aaron
and how these are then sort of conducted over a lightning network like it really resembles something that an example was speculating Bitcoins should be designed as. So you see these echoes and you see these lessons from the past sort of being either rediscovered to reinvent it. And it's definitely the lineage is clearly there with the whole digital cash project and Bitcoin.
01:03:21:17 - 01:03:47:13
Marty
Yeah, speaking of the free banking conversation and Bitcoin and how much that big old project influence how Finney it's funny, in the early days in December 2010 when he took to the Bitcoin Talk Talk forum to basically lay out the case like, Hey, we're going to scale in a free banking model where where Bitcoin will be a reserve asset, these private banks and they'll issue, he said, their own currencies.
01:03:47:13 - 01:03:59:10
Marty
I don't think he could have foresaw something like the settlement protocol or lightning materializing at that time, but you could see he was directionally right. If you believe this is the optimal scaling path.
01:03:59:13 - 01:04:28:22
Aaron
Well, you could argue that Fetterman in particular does sort of issue its own currency, right? They're tokens that are backed by Bitcoin. So in that sense, it's actually very similar. Now, I don't think Betterment is using fractional reserve or at least that's not the plan, right? While this sort of Seldon type of idea to use fractional reserve explicitly, those actually in earlier and earlier drafts of my book explored this whole part of free banking and George Sergeant's ideas.
01:04:28:23 - 01:05:00:14
Aaron
But I ended up not using most of that because it was kind of speculating about the future of Bitcoin. While I really wanted my book to be grounded in the history and just sort of, you know, what we know rather than what might be in the future. But George Seldon still makes a couple of appearances for the book here and there, like he was on the same mailing list as example and White Eye and a couple of these people said it was the Cypherpunk mailing list.
01:05:00:17 - 01:05:27:24
Aaron
And then there was also the Lipsyte mailing list, which was a more focused mailing list on digital cash. And that also had some of these free banking types on there. And they were sort of sharing their their ideas with, you know, some of the cipher banks on there. So these include George Selden and Lawrence White. So so that makes a couple of appearances in my book, like Hayek's idea of free banking, as I mentioned earlier, is sort of a big frat from my book.
01:05:27:24 - 01:05:37:17
Aaron
And there you can see the limits to how this idea started to inspire some of the cypherpunk as well, specifically through this all their mailing list. For example.
01:05:37:19 - 01:06:07:21
Marty
Yeah, that's fast is again, going back to the beauty of like the economic side of things, like the economic theorists really recognizing that the cryptographers were on to something that if they were going to if they were going to put their economic theory into practice, they're going to leverage something that the cipher punks were building and sort of combining their their minds to to really push this forward.
01:06:07:24 - 01:06:12:12
Marty
It's just incredibly fascinating. All right. Still.
01:06:12:14 - 01:06:42:02
Aaron
Yes. And this idea also emerged within the ASTROBEE in the community. So this was this sort of futuristic community that had all of these ideas about life extension, cloning, space colonization, like all kinds of wild ideas. But there were serious about it. And the way they believed it could be achieved was by eliminating the role of government in society.
01:06:42:02 - 01:07:31:20
Aaron
Essentially, they saw government as sort of a leech on economic activity, and they believed if you just let the government sorry, if you let the people experiment, and if you let the free market reign, we can achieve all of these interesting technologies that would reshape society and even transform humanity itself. And a number of the Cypherpunk and Bitcoin sort of followers or, you know, pre prehistory godfathers like Salvini, they were also on this X Shopian list and it was how many that introduced digital cash to this list as a way to sort of get governments out of your life, specifically sort of get government out of your finances like the privacy angle and then some
01:07:31:20 - 01:08:16:24
Aaron
of the extra openness like the founder was called Max Moore. He's still around, by the way. He he he really saw this potential, which you just mentioned, of leveraging this electronic cash technology not just for privacy, but also for monetary reform to sort of realize Hayek's ideas about, money, that that's that's really something he started pushing for any ideas he started to spread, including to some of these other cypherpunk that were that were there, which as I mentioned, included not just health any, but widening the tsavo to me like a bunch of these guys were there and getting these ideas and sharing these ideas.
01:08:16:27 - 01:08:45:07
Marty
It's interesting now that you mention that go to that story, I think we're at the beginning of a similar story with this, um, uh, effective acceleration movement and Bitcoin. I think there's a lot of people in Bitcoin particularly looking at what's going on in the HCC movement, which is predominantly being driven by people working on artificial intelligence. I mean like, hey, I think we should, we should talk.
01:08:45:07 - 01:09:08:07
Marty
I think there's some way Bitcoin can play into this. And I think our philosophical ideas of where society should be going are pretty aligned. And you could see the sort of intermingling of the Bitcoin culture and this ekyc culture beginning to collide and really work with each other to to take us to the next step forward.
01:09:08:09 - 01:09:11:26
Aaron
So I don't know what is this easy. Can you explain?
01:09:11:29 - 01:09:35:26
Marty
Uh, so it's a play on effective altruism, which Sam Bankman-fried was a big advocate of. It's effective Accelerationism, which is there's two competing forces in the world right now, those who want to accelerate and those who want to decelerate these. So acceleration is aligning more with the was a utopian mailing list that you described.
01:09:36:02 - 01:09:41:02
Aaron
It's shopian. Yeah, it was a community. They had a magazine and a mailing list as well. Yeah.
01:09:41:04 - 01:10:07:01
Marty
Yeah. So they're probably the extra peons of the modern day really saying, Hey government, get out of the way. We shouldn't create regulatory moats around artificial intelligence. You should let people experiment with this and create their own models, and they're ardently juxtaposing themselves versus those who would like to see regulatory boats and the deceleration of the proliferation of these technologies.
01:10:07:04 - 01:10:12:21
Aaron
Right. Interesting. Yeah, that sounds pretty similar. That sounds like shopian. They're basically shopian. It sounds like.
01:10:12:23 - 01:10:36:03
Marty
Yeah. And so, like, it does seem like particularly when you think of things like L for a too and all the lessons that the Bitcoin minus mining industry has learned with the energy sector, I think A.I. is very controversial these days, but I use it myself. It is certainly useful in many contexts. It can be harmful too, but all technologies can be used for good or bad.
01:10:36:05 - 01:10:38:10
Marty
You can make the argument at the end of the day.
01:10:38:13 - 01:10:42:00
Aaron
What do you use it for? Like text, text.
01:10:42:00 - 01:10:49:15
Marty
Image generation that we're using it to help curate content on the site and then create thumbnails?
01:10:49:17 - 01:10:50:14
Aaron
Right, Right.
01:10:50:16 - 01:11:32:13
Marty
Like this will be put through a transcription Artificial intelligence while the transcript of this episode within minutes after we plug it in and then other things, but like the conversions of Bitcoin and I, I think it's symbiotic. I think there's ways you can leverage artificial intelligence to have something like more efficient channel management on the Lightning Network, more efficient fee estimation softwares than I think Bitcoin, particularly over the Lightning Network, can make the air products more efficient, where if you want to get rid of your chargeback, risk you're spending a lot of money on the compute.
01:11:32:13 - 01:12:03:24
Marty
Just put a lightning network enabled pay wall for for compute in front of it. And then again go back to mining. The mining industry has learned a lot about the energy sector and air is obviously going to be energy intensive too. And due to the nature of the need for 100% uptime of these GPU data centers in the artificial intelligence arena, I do think there's going to be co-location of Bitcoin eh6 that can participate in demand response and these GPU farms that are looking for low cost energy.
01:12:03:24 - 01:12:27:14
Marty
And the only way to get that low cost energy is to participate in demand response and you need the Bitcoin miners for that. So I think a bunch of synergies and right now the to the X trophy and sphere and the Cypherpunk digital cash Bitcoin sphere are like a little bit disconnected, but you can see them sort of beginning to recognize, okay, maybe you ought to help each other out here.
01:12:27:17 - 01:12:58:01
Aaron
Yeah. I mean, they're very they, they share a history not just in the extra open domain I mentioned, but you could argue even the very early history, like I mentioned, I start my book with sort of the emergence of the hacker culture. And that actually was at the lab of of MIT. So just when computers, you know, were first around, you got the the first experimentations and the first idea of creating it.
01:12:58:03 - 01:13:25:00
Aaron
I was, you know, at the very beginning was like creating chess, computers and that kind of stuff. But it happened at the same place where, you know, like our culture emerged from there. Public key cryptography was invented. So, so it has a common ancestor and it's not a it's not surprising to see that they would find each other again now or in the future.
01:13:25:02 - 01:13:46:07
Marty
Yeah, it's like they converge, diverge, reemerge, right. It's a beautiful thing and it's important to know the history, I guess is a good point. Circle pitch the book. Like why do you think people should understand the context of everything that came before Bitcoin?
01:13:46:09 - 01:14:08:10
Aaron
Yeah, well, I mean, I am a historian technically, and the reason for that is that just in general, I believe if you want to understand why things are the way they are, if you want to understand why society is the way it is, why we have the institutions, we have it, it helps or to understand where it all came from.
01:14:08:13 - 01:14:37:08
Aaron
And I think the same is true for Bitcoin. If you want to understand why Bitcoin is designed the way it is, why it was invented, it really helps. Or maybe it's even necessary to sort of understand where it came from. I mentioned that, you know, Bitcoin sort of consists of all these building blocks that kind of pre-dates Bitcoin and also the economic ideas that that are sort of embedded in Bitcoin.
01:14:37:08 - 01:15:02:19
Aaron
Like it all predates Bitcoin and it was all brought together at some point. And I do think yeah I sort of had two goals with my book. You could say there's sort of two layers to it. One layer is if you already know a lot about Bitcoin, then it's hopefully, you know, interesting to learn where it all came from.
01:15:02:22 - 01:15:20:29
Aaron
But also if you don't know a lot about Bitcoin, I hope that it's a good way to actually understand Bitcoin and the sort of this sort of step by step way where one step at a time, you know, public key cryptography is explain that work and then why these guys wanted to create this and where the economic ideas come from.
01:15:20:29 - 01:15:28:03
Aaron
So it's a good way to understand Bitcoin itself. Well, I hope that that's the goal anyways. One of the goals.
01:15:28:06 - 01:16:00:25
Marty
Now, well, we're going to learn from anybody in the space. I can speak from experience, having learned a ton throughout my time in Bitcoin from Aaron, you should go pick up the book because I completely agree to know where we are and where we may be. You have to understand where we came from and diving into the history of the Cypherpunk movement and all the iterations on digital cash that led to Bitcoin is extremely important, particularly if you're one of those individuals is new to Bitcoin out there, is convinced that it's the MySpace, that it's the first ever digital currency.
01:16:00:25 - 01:16:06:06
Marty
It's wrong on its face. There was a lot of pre-history that led to.
01:16:06:06 - 01:16:24:17
Aaron
Bitcoin, right? Yeah, yeah, yeah. The Bitcoin is the first one that actually works. It's not the first one. It's the first one that got it right. You could say, Yeah. And I do think if you that becomes maybe more clear, if you read my book, I'm done selling my book, but.
01:16:24:19 - 01:16:26:27
Marty
You're not done yet. Where can we find the book? That's the next.
01:16:26:27 - 01:16:55:03
Aaron
Question. Oh, well, me first finish this point like, yeah, there's, that is a very common, you know, critique of Bitcoin that it's just a first of its kind and something better will come along and I do think that you know, if you read this prehistory then it's clear that no Bitcoin actually wasn't the first. There were other digital currency projects before it, including some that actually existed that some people used, you know, like MySpace actually existed and some people use it.
01:16:55:06 - 01:17:12:15
Aaron
But Bitcoin is the first one that's actually succeeding that. That's that's one of the insights you could take away. Where can people find it? Well, it's on Amazon, It's on the Bitcoin magazine store. You can also go to Genesis book dot com and you'll find what you need there.
01:17:12:15 - 01:17:19:22
Marty
Hopefully not only is it on Amazon, it's a bestseller on Amazon. I checked this.
01:17:19:22 - 01:17:40:27
Aaron
Morning, it was for a brief moment in the Netherlands for like a day in the Netherlands. It was the number one bestselling book like on Amazon in the country that was a that was pretty ace. I didn't expect that like out of all books, not just subcategory, but just the bestselling book in the Netherlands, just for a day.
01:17:40:27 - 01:17:43:03
Aaron
But still, that was pretty cool.
01:17:43:06 - 01:17:47:10
Marty
We've got it. I'm going to take the screenshot, put the Logan number one new release.
01:17:47:12 - 01:17:48:02
Aaron
Hmm. Hmm.
01:17:48:04 - 01:17:54:23
Marty
According to my Amazon account here in the U.S., so it's still going to open just on the screen so people know what the.
01:17:54:26 - 01:18:00:07
Aaron
That's probably in some cases, it must be in some category, right?
01:18:00:10 - 01:18:05:21
Marty
Development and growth economics. That's a good that's a good.
01:18:05:23 - 01:18:06:25
Aaron
I'll take it.
01:18:06:28 - 01:18:10:22
Marty
That's a good one to be in.
01:18:10:25 - 01:18:12:05
Aaron
The, uh.
01:18:12:08 - 01:18:25:13
Marty
While this is uploading. Anything else I wouldn't touch on You think people should be aware of? Are you optimistic about where Bitcoin is and where it's going right now?
01:18:25:16 - 01:18:47:22
Aaron
Yes. I mean, I think it's going pretty well. I would say I've been kind of zoned out of to sort of daily. Yeah. You know, during the Blocksize war, I was very involved with everything that was going every week. I was tuned in and I was in every chat group everywhere and sort of keeping a pulse on everything I could.
01:18:47:22 - 01:19:06:22
Aaron
And it was during the writing of my book, I've sort of, you know, zoomed out a bit. So I'm not I'm not very involved in like the JPAC war or whatever the kids are fighting over these days. But in general, it seems to be doing pretty well to me. I Don't see anything wrong with you. What do you think?
01:19:06:24 - 01:19:18:00
Marty
Yeah, I've been I mean, I've been keeping my pulse on the space for the the JPEG wars, as you, as you call them. I've been. Yeah. It seems like noise to me. It'll come and go.
01:19:18:00 - 01:19:35:22
Aaron
I mean to me, like, isn't this what the Blocksize wars were kind of like. We have a blocksize limit so blocks can't be too big. And now if you want to stuff them with nonsense into, you got to pay for it. That's sort of the point of the block size limits for a large extent, so I'm not too worried about.
01:19:35:22 - 01:19:53:09
Aaron
That's as far as I can tell. Bitcoin is still working, a block is still mined 10 minutes. There's now even ETFs. There's that the price is still pretty well I'm happy camper Marty.
01:19:53:12 - 01:20:02:29
Marty
I am as well and I think maybe most importantly the outside world seems to be getting crazier and crazier. So that plays to our benefit as well.
01:20:03:01 - 01:20:14:23
Aaron
Right? Bitcoin is still Bitcoin is sort of the central point of sanity in a in a in a crazy world it does feel like that sometimes to me. Anyways.
01:20:14:25 - 01:20:24:22
Marty
That's the way I like to visualize bitcoin in my own mind. It's just this like beam of light in the center of a town that we can all access like anchor into and it's just always going to be beaming at the same.
01:20:24:25 - 01:20:28:17
Aaron
Yeah, pretty much, Yes, exactly.
01:20:28:19 - 01:20:32:06
Marty
Well, Aaron, I can't believe it took this long, but I'm happy.
01:20:32:08 - 01:20:34:03
Aaron
Yeah, it was fun to finally be on.
01:20:34:06 - 01:20:39:24
Marty
Yeah, we'll have to do it again if you're ever stateside. Let me now come to town.
01:20:39:26 - 01:20:42:13
Aaron
Texas, with a person. Where are you, Austin?
01:20:42:16 - 01:20:43:24
Marty
Yeah.
01:20:43:26 - 01:20:47:01
Aaron
I've never been to Austin, so I should. At some point, you've got.
01:20:47:01 - 01:20:51:26
Marty
To count those people working on charm events right behind me. Literally. Nice. Behind this. Well.
01:20:51:28 - 01:20:54:00
Aaron
Next time, I'm Darrell helping you.
01:20:54:02 - 01:20:59:19
Marty
All right, you go enjoy your night. Thank you for thank you for doing this And keep crocheted.
01:20:59:22 - 01:21:01:24
Aaron
Yes. Thanks for having me.
01:21:01:26 - 01:21:03:08
Marty
Peace, love, freaks. Okay.
