“Okay. So
Can you hear me?
The microphone is good, yeah?
Ok, so after that introduction, I’m going
to do the only thing that I can do now, which
is disappoint you, because well, that was
quite something.
So usually I’m at technical talks and this
time it’s going to be a bit different.
I’m going to talk about culture in the Bitcoin
Cash ecosystem.
So first let’s talk about culture, like
what is it?
It’s ‘the social behaviors and norms found
in human society.’
So we as the Bitcoin Cash community, we are a human society, or at least we look like
You’re all humans as far as I know, and
we have social behaviors and norms, and those
social behaviors and norms have a huge impact
on the project.
And the reason why I want to focus on that
point very specifically is because we have
better fundamentals and we have a better product
and we are more useful than most other cryptos
out there.
And I think that’s a true statement, and
I think this is a testimony of the success
of BCH.
But also, we are only just 3% of BTC’s value.
So clearly there is something that we are
not doing right, and clearly it’s not fundamental,
it’s not product, it’s not usefulness.
It’s something else, and I think this can
be found somewhat in our culture.
So I have this book here, from Naval Ravikant.
I don’t know if you guys know him but he’s
a fairly well known speaker and thinker, and
he said, “Never trust anyone who does not
annoy you from time to time, because it means
that they are only telling you what you want
to hear.”
And so today I am going to annoy you a bit,
in addition to disappointing you, so yeah,
it’s going to be very bad, but I feel like
we kind of need to do it.
So there are two points, mainly, that I think
our culture is not doing the right thing.
And those are gonna be infrastructure and
game theory.
And so I’m going to talk a little bit about
infrastructure and game theory.
Right, so, I think there are a few misconceptions
by people that are not used to working in
software infrastructure in general, but basically,
it works like any other kind of infrastructure.
So basically all kinds of infrastructure decay,
and we are under the assumption that technology
always gets better and better and better and
never decays.
But in terms of that, it actually decays all
the time, and we have just a bunch of engineers
working at many many companies that keep working
at making it better and fighting that decay.
I’m going to take a few examples, alright.
Right now if you want to buy a cathode ray
tube television or monitor for your computer
(I’m not sure why you want to do that because
we have better stuff now), but if you want
to buy that, it’s actually very difficult
There are very little manufacturers that even
know how to build them.
We almost forgot as a human society how to
build those stuff.
Because, well, there was not as high of a
demand for them as there was before, and therefore
nobody really worked on maintaining the knowledge
or the know how, and the factories, none of
that which are required to build those stuff,
and therefore we don’t build them.
And this is the same for vinyl discs, right?
You can buy vinyl disk today if you want,
but it’s actually more expensive than it
used to be twenty years ago.
We used to have space shuttles.
Both Russia and US used to have space shuttles.
And now only the US have space shuttles, and
now nobody has space shuttles anymore.
And there is an even better counter example
to that.
It’s that the US, right now, is refining
Uranium for nuclear weapons.
Like on a regular basis there are people working
on that problem.
Except that the US doesn’t need any new
uranium to make nuclear weapons because they
are decommissioning the weapons that are too
old and can reuse that uranium to build the
new weapon that they are building.
The demand for that is actually zero, and
still there are people making it and they
are just basically making it and storing it
forever, and it’s never used.
So why is the US spending money on that?
Well you would say governments are usually
pretty good at spending money on stuff that
are not very useful, but in that case there
is a very good reason.
And the good reason is that they don’t want
to forget how it’s done.
Because maybe one day it’s going to be useful.
And acquiring the whole knowledge of working
with uranium and making enriched uranium,
refining uranium, it’s not obvious.
It’s a very complicated process.
It involves very advanced engineering and
physics, a lot of that, and keeping people
working on that problem ensures that knowledge
is kept through time.
If you don’t do that, those people are going
to retire and nobody will know how to do it.
So in addition to decaying infrastructure
from time to time, we can have zero days in
software, meaning problems in the software
that are not now exploited live on the network.
We can have denial of service attack, we can
have various failures on the network, or whatever
else, so just like any other infrastructure
we need people that essentially take care
of the problem and fight the decay constantly
doing maintenance and also be ready to intervene
whenever there is some issue.
And that means that even if there is no new
work to be done, you want to have a large
enough group of people that are working on
that everyday just making it all nice and
shiny so that when something bad happens,
you have people that understand how the system
So even if for nothing else, you want a large
enough set of people working on infrastructure
for that to be possible.
So we’re not quite there yet, and we’re
very reliant on BTC.
Because the software that we’re relying
on to run the network is actually a fork to
the BTC codebase.
And this is not specific to Bitcoin Cash.
This is also true for Litecoin, and Dash,
and Zcash and whatever.
There are many many crypotos that are just
a fork of the Bitcoin codebase.
And all those crypos they actually are reliant
on BTC to do some maintenance work because
they have smaller teams working on the infrastructure.
And as a result any rational market cannot
price those other currencies higher than BTC.
It would just not make sense anymore.
If BTC were to disappear, or were to fail
on the market, and this problem is not addressed,
then all those other currencies are going
to fail with it.
And you know that may not be what we want,
but that’s kind of like where we are right
So if we want to go to the next level, maybe
become number one in that market, we need
to fix that problem because it’s not going
to happen without it.
So I was mentioning the 3% number before,
and it’s always very difficult to know what
all the parameters are that goes into that
number, but one of them is that.
Just that alone, I’m sure that we are going
to have a lower value than BTC always as long
as we don’t fix that problem.
Okay, how do we fix that problem?
What are the elements we have that prevent
us from fixing that problem?
Well, first we need people with very specific
skill sets.
And the people that have experience in those
skill sets, there are not that many of them
because there are not that many places where
you can work on systems involving hundreds
of millions, if not billions of users, that
do like millions of transactions per second,
that have systems that have hundreds of gigabytes
per second of throughput, this kind of stuff.
There are just not that many companies in
the world that operate on that scale.
And as a result, the number of people that
have the experience of working on that scale
is also pretty much limited to the people
coming out of those companies.
So we need to make sure that we are able to
attract those people.
And we have another problem that I talked
about with Justin Bons a bit yesterday, that
we don’t want to leave all that to be fixed
by a third party.
It may seem nice, you know, so okay, I have
a big company making good money, I’m gonna
pay people working on the infrastructure for
I’m gonna hire some old-time cypherpunk
that became famous because he made a t-shirt
about ERISA and i’m going to use that to
promote my company and hire a bunch of developers
and take care of the infrastructure for everybody.
It’s all good people, we are very competent.
And indeed they are very competent, but they
don’t have your best interest in mind, they
have their best interest in mind.
And so they should, right?
It’s not evil to have your own interest
in mind, but you’ve got to remember that
if you delegate that to others, they have
their best interest in mind, they don’t
have yours.
So it’s very important that you have different
actors that have different interests that
get involved into that game of maintaining
the infrastructure.
So they can keep each other in check.
And if you don’t quite understand the value
proposition for you as a business who builds
on top of BCH, the best way to explain that
to whoever is doing the financials of your
company is as an insurance policy.
The point of the insurance on the building
where your company is, or on the servers,
is so that if everything burns down, you can
get money to get your business started and
don’t go under.
Well this is the same thing.
Your business relies on some infrastructure,
and if this infrastructure ends up going down,
disappearing, or being taken in a direction
that doesn’t fit your business, your business
is toast.
And so you want to have an insurance policy
there that insures that the pieces that you’re
relying on are going to be there for you when
you need them.
Alright let’s take an example.
In this example, I purposefully did not put
any name because I don’t want to blame people.
I want to use this as an example of a mistake
that were made.
I want you to understand that many other people
have done many similar mistakes in that space,
and so if all you take from what I’m saying
here is like those people are bad and you
should blame them, this is like completely
the wrong stuff.
But I also think it’s useful to have a real
life example.
So on September 1st, at the beginning of the
week, we had a wave of spam that was broadcasted
on the network.
Someone made like a bunch of transactions,
and those were very visibly transactions that
were not there to actually do transactions,
they were there just to create a bunch of
load on the network and try to disturb its
good behavior.
And it turned out that most miners were producing
blocks from 2 to 8 megabytes, while typical
market demand is below half a megabyte, typically,
and everything else above that was just spam,
And if you ask any people that have experience
in capacity planning, they are going to tell
you that those limits are appropriate.
The reason why, and the alternative to raising
those limits that you can use to mitigate
those side effects are a bit complicated and
they would require a talk in and of itself
to go into, so I’m going to just use an
argument from authority here, but trust me,
I know what I’m talking about here, and
this is just like raising those limits is
just not the solution.
But some pool decided to increase that soft
cap to 32 megs.
And this has two main consequences that I
want to dig in to explain what is not the
right solution.
And the first one is that we have businesses
that are building on BCH today.
And those businesses are the ones that are
providing value, they are the ones making
our network valuable.
So we need to treat those people as first
class citizens.
We need to attract and value them as much
as we can.
And those people, they find themselves in
the position where they can either dedicate
their resources and their attention and their
time to make their service better and more
valuable for users, or maybe expand their
service to more countries, to more markets,
to whatever, they can do a lot of stuff, or
they can spend their time and resources to
make sure the system works not when you have
like 10x the usual load, but also 100x the
usual load.
And this is something that is not providing
value to them, this is something that is not
providing value to us, and I would even argue
that this is something that is providing negative
Because if those people don’t improve their
service, or build new services, or expand
their service to new markets, what’s going
to happen is that we’re not going to do
100x. 100x happens because people provide
useful services and people start using it.
And if we distract those people so that they
need to do random stuff that has nothing to
do with their business, then we’re never
going to do 100x.
And so having a soft cap that is way way way
above what is the usual market demand (32
megs is almost a hundred times what is the
market demand for it), it’s actually a denial
of service attack that you open for anyone
that is building on the chain.
We were talking before, like yesterday we
were asking about how do we attract developers,
and one of the important stuff is that we
need to value that over valuing something
And when we take this kind of move, the signal
that we send to the community, to the people
working on that, is that people yelling very
loudly on social media, their opinion is more
valued than your work to make a useful service
building on BCH.
This is an extremely bad signal to send.
So we don’t want to send those kind of signals
That’s the first order effect, but there’s
a second order effect, and the second order
effect is to scale we need people with experience
in capacity planning.
And as it turns out big companies like Google,
and Facebook, and Amazon pay good money, they
pay several 100k a year to people to do that
work of capacity planning.
And they wouldn’t be doing that if they
just had to listen to people yelling on social
media to find the answer.
It’s much cheaper to do the simple option,
except the simple option is not very good
because this is a very complex engineering
And not everybody is like a very competent
engineer in that domain specifically.
So put yourself in the shoes of some engineers
who have skills in that particular area.
They see that happening, and what do they
The first thing that they see is that if they
join that space, they’re going to have some
level of competence, some level of skill,
and it’s going to be ignored by the leaders
in that space, and ignoring their skills is
not the best way to value it as it turns out.
And so because of that, they are less likely
to join it.
But there is a certain thing that they’re
going to see.
And that is that because they are ignored,
some shit is going to happen, some stuff are
going to break, some attacks are going to
be made, and who is going to be called to
deal with that?
Well, it’s them.
So not only are they going to be not valued
for their stuff, the fact that they are not
valued for their stuff is going to put them
in a situation where they have to put out
a bunch of fires that they would have known
to avoid in the first place.
So that’s an extremely bad value proposition
for them to go work for us.
And if we’re going to be a world scale currency,
then we need to attract those kinds of people.
And so we need to have a better value proposition
and a better signaling that we send to them.
Alright, so that’s the end of the first
infrastructure stuff.
Now I want to talk about game theory a bit,
and specifically, Schelling points.
So what is a Schelling point?
A Schelling point is something that we can
agree on without especially talking together.
And there are a bunch of Schelling points
that exist already in the Bitcoin space.
For instance we all follow the longest chain
that have certain rules, right?
And we don’t need to talk to each other.
If I’m getting my wallet and I have some
amount of money and I go to any one of you
here and you check your wallet and you have
that amount of money and those two amounts
We never talk to each other to come to any
kind of agreement about how much each of us
have in terms of money.
We just know.
Because we have a Schelling point.
We have a way to decide that without really
So that’s the longest chain, but also all
the consensus rules we have are Schelling
So for instance, we accept blocks up to a
certain size, and we reject blocks that are
bigger than that.
We don’t constantly talk to each other like,
‘Oh by the way do you accept 2 mb blocks?’
‘Yeah I do.’
‘Do you accept like 3 mb blocks?
And tomorrow will you do that?’
We’re not doing this as different actors
in the space, constantly worrying each other.
We just know there is a block size that is
a consensus rule that is agreed upon by almost
everybody, and that’s a consensus rule.
And all the other consensus rules are effectively
changing Schelling points.
And our role as a community is to create valuable
Schelling points.
You want to have a set of rules that provide
as much value as possible for different actors
in the ecosystem.
Because this is how we win.
And there are two parts to that.
Even though sometimes we look and it’s just
one thing, but there are actually two things.
The first one is that we need to decide what
is a valuable Schelling point.
And I think we are pretty good at this.
And this is why we have a lot of utility and
we have a very strong fundamental development.
We are very good at choosing what is a good
Schelling point.
We are very bad at actually creating it and
making it strong.
So I’m going to talk about that.
How do you create a new Schelling point.
For instance, there was a block size, and
we wanted a new block size.
So we need to create a new Schelling point.
How do you create a new Schelling point that
is very strong?
You need a commitment strategy.
That’s what it boils down to.
And the typical example that is used when
discussing Schelling points is nuclear warfare.
So think about that a bit.
You have two countries that both have nuclear
And one country sends a nuke on the other
Destroys some city, whatever, it’s bad.
When you look at it from a purely rational
perspective, you will assume that people are
very angry, and that they want to retaliate,
But if you put that aside, there is actually
no benefit to retaliating.
It’s not going to rebuild the city, it’s
not going to make them money, it’s not going
to give them resources to rebuild it, it’s
not going to make new friends.
Usually not.
It’s just going to destroy some stuff in
the other guy that would otherwise not change
anything because the other guys already did
the damage to us.
So if you want nuclear warfare to actually
prevent war like we’ve seen mostly happening
in the past few decades with the mutually
assured destruction theory, you need each
of those countries to have a very credible
commitment strategy, which is if you nuke
me, I will nuke you, and I’m committing
to that decision no matter what.
I don’t care if it’s good or bad for me,
if you nuke me, I will nuke you.
And if you can commit to that strongly enough
so that it’s credible for other people,
it’s most likely that they are not going
to nuke you in the first place because they
don’t want to be nuked.
And it’s capital to understand that this
commitment strategy, it’s actually the most
important part of it.
It’s not the nuke, it’s not any of it,
it’s the commitment strategy.
You have the right commitment strategy, you
can have all the nuke that you want, it’s
completely useless, because you are not deterring
anyone from attacking you.
There are many other examples, like private
It’s something usually you’re going to
be willing to put a little bit of effort to
defend, and the effort is usually way higher
than the value of the property itself.
Because this is your house, this is your car,
this is your whatever, and you’re pretty
committed to it, and therefore you create
a Schelling point over the fact that this
is your house, this is your car, this is your
People are willing to use violence and whatever
to defend their property.
This is effectively, even if you don’t do
it yourself, this is what happens when you
call the cops, right?
The cops are like you stop violating that
property or we’re going to use violence
against you.
So people are willing to use a very disproportionate
response even in comparison to the value of
the property.
And this is what is creating the Schelling
point that allows private property to exist.
This is the commitment strategy.
And so the longest chain is a very simple
You have miners and what miners do when they
create a new block, essentially they move
from one Schelling point when a bunch of people
have some amount of money, to a new Schelling
point where some money has moved, and we need
to agree to the new Schelling point.
And what they do is that they commit a certain
amount of resources to it via proof of work.
And this is how they get us to pay attention
to the new Schelling point.
And so UASF is also a very good example of
that where people were like we activate segwit
no matter what, like, if it doesn’t pan
out, we just like busted our whole chain and
we are dead.
This is like the ultimate commitment strategy,
as far as computer stuff is involved.
It’s not like they actually died or anything,
but as far as you can go in the computer space,
this is very strong commitment strategy.
So let me take an example that is fairly inconsequential
in its consequences, but I think explains
very well.
The initial BCH ticker was BCC.
I don’t know if people remember that.
Personally I remember reading about it.
It was probably when we created it with Jonald
and a few other people.
And so I personally was for XBC, but I went
with BCC, and most people wanted BCC right?
It doesn’t matter.
But it turned out that Bitfinex had some Ponzi
scheme already listed as BCC.
It was Bitconnect, if you remember.
Carlos Matos, you know, great guy, but Bitconnect
was not exactly the best stuff ever, it was
a Ponzi scheme.
And so as a result Bitifnex decided to list
Bitcoin Cash as BCH instead of BCC, and then
the ball started rolling and now everybody
uses BCH instead of BCC.
So it’s not all that bad.
The consequences are not that very bad.
And I know that many of you are thinking that
right now.
Why is this guy bugging us about this?
We don’t care if it’s BCC or BCH.
And if you’re doing that, you are exactly
proving my point.
Because … there are people working for Bitcoin.com
here right?
Yeah, so Bitcoin.com is launching an exchange,
or just has launched, it’s either out right
now or it’s going to be out very soon.
Well think about that.
Make this thought experiment for yourself.
Imagine that Bitcoin.com lists some Ponzi
scheme as BTC, and then they decide to list
Bitcoin as BTN.
What do you think would be the reaction of
the Bitcoin Core supporter?
Would they be like, you know what? we don’t
want to be confused with some Ponzi scheme
so we’re going to change everything for
No, they would torch down Roger Ver even more
than they do now, they would torch down Bitcoin.com.
They would insult anyone that would suggest
that this was a good idea to go there.
They would say that everyone that uses the
stuff that is BTC that it’s a ponzi scheme,
and that it’s garbage, and that if you even
talk about it you are the scum of the earth.
They would be extremely committed to whatever
they have.
And I think this is a lesson that we need
to learn from them.
Because even though it’s a ticker, it’s
not that important, it’s that attitude that
you need to be committed to that stuff if
you want to create a strong Schelling point,
that allows them to have a strong Schelling
point, and that does not allow us to have
that strong of a Schelling point.
Okay, so yesterday we had the talk by Justin
Bons from Cyber Capital, and one of the first
things he said in his talk, is that his company
has a very strong position in BCH.
And so that changed the whole tone of the
You gotta take him seriously because his money
is where his mouth is.
You know that he is not coming on the stage
and telling you random stuff that comes from
his mind or tries to get you to do something
that he doesn’t try himself.
That doesn’t mean he’s right.
Maybe he’s wrong, but if he’s wrong, he’s
going bankrupt.
And you know just for that reason, maybe it’s
worth it to listen to it a bit more than some
random person saying random stuff when they
have no skin in the game.
And it makes him more of a leader in the space.
Okay we have some perception in this space
that we have a bunch of leaders, but many
of them don’t have skin in the game.
And it is very important that they do.
So when there is some perceived weakness from
BCH, if you act as an investor, you are going
to diversify.
If you act as a leader, you are going to fix
that weakness.
And so, leaders, it’s not like you can come
here and decide well, I’m a leader now.
Leaders are leaders because people follow
It seems fairly obvious, but … and you are
the people following the leaders, and I am
as well.
We decide to follow the opinion of some people
more than the opinion of others.
And those are the defacto leaders of our community.
And we need to make sure that those leaders
that we have like Justin Bons, and make sure
that they have a strong commitment to whatever
they are leading you to, because otherwise
you end up in this situation:
Where you got a leader, he’s getting you
to go somewhere, he has some goal, he has
some whatever.
In this case he is not that happy with the
British people.
But he’s like give me freedom or give me
death, and he’s going to fight the British,
but at the same time he’s like you know
Maybe this shit isn’t gonna pan out, you
gotta make sure you have your backup plan
together, you have your stash of British pound
You know, many of us are going to die, but
that’s a sacrifice I’m willing to make.
That’s not the leader that you want.
I’m going to go to two more examples and
then we’re going to be done with it.
So one of them is Segwit 2x.
Segwit 2x came with a time where some people
wanted to do UASF.
And UASF was essentially people that set up
a modified version of their Bitcoin node that
would activate segwit on August 1, no matter
No matter what miners do, no matter what other
people do, it’s going to activate segwit.
And either I’m going to be on the other
fork, or I’m going to be alone and bust.
Well, the alternative proposal was segwit
Where people would activate segwit and then
increase the size of the block.
And what happened was that one of the sides
had a very strong commitment strategy, and
the other side, instead of choosing a proportional
commitment strategy, what they did was that
they modified the activation of segwit 2x
to be compatible with UASF.
And in doing so they both validate the commitment
strategy done by the opposite side, and they
weaken their own commitment strategy.
So if you look at that, and you understand
game theory a bit, you know what’s going
to happen.
Like the fight hasn’t even started and UASF
has already won.
And when I saw that happening, it was a very
important development to me, because I have
some experience in game theory, a lot of that,
so I understood what was happening, and this
is what led me to commit to BCH, which was
BCC at the time, 100%.
Because I knew segwit 2x was toast, even though
it had not even started, because even though
they had very strong cards, they are not playing
their cards right, and if you don’t play
your cards right, it doesn’t matter how
strong your cards are.
Okay, the second one is emergent consensus.
And the reason I wanted to put those two examples
here is because I think those are the two
main examples that lead to the fact that BTC
have small blocks and we have big blocks and
we’re a minority chain.
Those are like the two biggest opportunities
we had to have big blocks on BTC and we blew
both of them for the exact same reason.
So emergent consensus is like an interesting
technology that allows you to trade your bigger
block without splitting the network.
Essentially, if someone starts producing blocks
that are bigger than … (video skips) ,,, The
network seems to be following the chain that
has larger blocks, eventually they’re going
to fall back on that chain, and that’s a
very clevery mechanism that allows you to
make the consensus rules softer in a way,
When everybody has the same consensus rules,
it still remains enforced, but if a majority
of people want to move to a new point, they
can do so by bringing others with them without
creating a fork.
That is a very good activation mechanism for
changing the block size, for instance, or
it can be used to activate other stuff.
There is a problem, though.
This mechanism isn’t able to set a new point.
It’s a way to activate a new Schelling point
when you have one, but it provides no way
to decide when and where or to what value
or to anything to where we are going.
So this whole strategy lacks the commitment
aspect of it.
And because it lacks the commitment aspect
of it, it was unable to activate properly.
It was good, but it was not sufficient in
It needs to be combined with a commitment
And especially on that one there are some
researchers that wrote a whole paper (https://eprint.iacr.org/2017/686.pdf)
unpacking the whole game theory that essentially
come to that conclusion that it’s not going
to set a new size limit because it lacked
the commitment aspect of it.
But they go on like they model all the mathematics
of it, they give you all the numbers, the
probability, and the different scenarios that
are possible.
It’s a very interesting paper.
If you want to see, like, because I’m kind
of explaining the game theory from a hundred
mile perspective, but actually you can deep
dive into it and if you want to know the details,
they are in there.
People are doing that.
This is an actual branch of mathematics.
Alright, okay so conclusion.
We must avoid to weaken our commitment strategy.
And that means that we need to work in a way
where first there is decentralization happening.
Everybody has ideas, and we fight over them,
we decide where we want to go, we put them
on the roadmap, and once it’s on the roadmap,
we need to commit to it.
Because when people want to go like, ‘Oh
this is decentralized’ and we do random
stuff after that, we actually end up with
decentralization, not decentralization in
a cooperative manner, but like in an atomization
You get like all the atoms everywhere, we
explode, we destroy ourself.
And we must require a leader to have skin
in the game, so that we make sure we have
good leaders.
I have a little schema to explain that.
We need to have negotiations between different
parties, and because there are no bugs, the
negotiation can last for a long time and be
tumultuous and everything, and that’s fine,
that’s what decentralization is looking
like at that stage, and that’s great and
that makes the system strong.
But then once we made a decision, we got to
commit to it to create a new Schelling point.
Because if we don’t, the new Schelling point
is very weak, and we get decentralization
in the form of disintegration.
And I think we have not been very good to
balance the two.
Essentially what I would like for us to do
going forward is encouraging as much as possible
decentralization in the first form.
But consider people who participate in the
second form, as hostile to BCH, because their
behavior is damaging to whatever we are doing.
And they are often gonna tell you why we can’t
do that because it’s permissionless and
decentralized, and they are right, this is
permissionless and decentralized, and they
can do that.
We don’t have to take it seriously.
We can show them the door.
And not a single person can do that by themself,
but as a group, we can develop a culture where
it’s the norm to do that.
And we have to do that.”