Today we have a very special episode which has a slightly different format than our other interviews. Typically we have a discussion on entrepreneurship and the freedom it can bring to your personal life. Today’s episode is an in-depth conversation the Bitcoin Block Size Debate with TWO of it’s earliest pioneers, Roger Ver and Erik Voorhees.
For anyone who is familiar with Bitcoin, the names Roger Ver and Erik Voorhees should be very familiar. They are two early and vocal Bitcoin pioneers who have been instrumental in its success.
Don’t worry if you don’t know Erik and Roger; you will soon. They have incredible insights on the importance of Bitcoin as well as how it will continue to revolutionize both Money and the Financial System. I think we can all agree that the current banking model is broken, takes advantage of us and needs re-worked. This is exactly what Erik, Roger and Bitcoin are doing.
Erik Voorhees currently runs www.ShapeShift.io which is the safest, easiest and most private way to exchange almost any crypto-currency. Within minutes (or possibly seconds) you can exchange between Bitcoin, Litecoin, Dogecoin, Ether, Dash, DAO and many more. They don’t store your personal information, therefore it cannot be stolen (like we are seeing in the big banks and credit card companies recently). He also founded and ran SatoshiDice which at its prime accounted for 50% (yes, that’s half) of ALL the Bitcoin traffic. Impressive, I know.
Roger Ver was the first Bitcoin startup investor. Seriously, he was the first. His company MemoryDealers.com was the first store of size to accept Bitcoin as a payment option. He also created www.BitcoinStore.com which allowed Bitcoin users to purchase over 100,000 products with their new, digital-cash. This was long before the large retails jump on board, specifically Newegg.com, Tigerdirect.com, Dell.com, etc.
Erik and Roger met at the FIRST Bitcoin conference in New York. Erik was involved in the Free State Project and told Roger that they should meet and chat. After handing Roger his business card that read “I am friends with Satoshi” (the presumed creator of Bitcoin) it was an obvious friendship.
Bitcoin Scaling: The Future of Bitcoin
Some brief background first. Every Bitcoin transaction needs to be included in the blockchain. Think of this as a large, decentralized, permanently recorded ledger of transactions. In order for the transaction to be included, it must be placed in a “block”. There’s a limited number of blocks available every hour and only so much Bitcoin information that can be stored in each block, which currently stands at 1MB. Not very large for 2016.
The current debate is if the size of the Bitcoin blocks should be increased so that more Bitcoin transactions (information) can be added. This will allow MORE people to use Bitcoin and benefit from its security, privacy and convenience; otherwise Bitcoin may not be able to scale so that everyone can use it. As a comparison, email wouldn’t have been nearly as popular if only a small subset of the global population can use it.
Roger and Erik discuss the current scaling proposals and how they foresee the future of Bitcoin. Big Blocks vs Small Blocks…how will we come to a consensus without a centralized organization making the rules? This is a grand experiment of market-based regulation and governance.
“Today unfortunately it is much more polemic and the block-size debate has turned people into two distinct camps, or that’s the perception at least. When there is two distinct camps, there is always a tendency to vilify the other. That’s just a human nature situation.”
“What is a bigger risk to Bitcoin? That a lack of “fee market” will cause hash power to decrease several decades from now, or if Ethereum keeps growing and people start using that for transactions instead of Bitcoin and Bitcoin falls to zero and becomes just part of the crypto-currency history books?”
-Erik Voorhees Alt-Coins – Bitcoin’s Possible Replacements?
Later in the show, we discuss what may happen if Bitcoin isn’t allowed to scale. Will other crypto-currencies (like Ethereum, Dash, etc) replace Bitcoin as the go-to digital currency? If Bitcoin cannot continue to satisfy the needs of the users, they will explore alternatives and possibly switch to another coin which does.
We continue with discussion regarding the recent alt-coin price surge and why Erik and Roger believe it’s happening.
“Bitcoin is not only competing with other crypto-currencies, but against the legacy financial system as well.”
“The whole Bitcoin experiment is pointless if it doesn’t replace the entire financial system.”
Roger Ver’s Disappointment the Bitcoin Community
As the owner of www.Bitcoin.com, what does Roger think about the recent alt-coin interest and price surge?
“I think the recent interest in the alt-coins is a direct result of people worrying that Bitcoin is not going to be allowed to scale. That’s why we are seeing all of the traditional Bitcoin businesses starting to support alt-coins. I think it’s a bit of a shame and I feel betrayed after having spend this much time and money supporting the original vision of Bitcoin. It’s now being used as a settlement layer instead of as digital cash as it was originally intended [in the whitepaper].”
If we don’t increase the Bitcoin block size, then Bitcoin will remain a “little club” which, according to Roger, isn’t the original vision by Satoshi (the assumed creator of Bitcoin).
The Magic of Bitcoin…is it gone?
Does Bitcoin still have the same magic that it used to? When you saw your first Bitcoin transaction, and it was between two phones which occurred nearly instantly, didn’t it feel like magic? Do you remember thinking “wow, I can control my own money and send it to anyone in the world for free?”.
Do you think new Bitcoiners experience the same “magical” feeling?
We also discuss if Bitcoin has a customer service problem. Can it be easier and more convenient than banks? Will users one day question why we ever had to rely on banks and their terrible customer service? What does the Bitcoin ecosystem need in regards to Customer Support in order to gain traction as an alternative money and payment system?
During the discussion, Roger and Erik chat about the first time they saw a Bitcoin transaction, how it affected them and what we can do to make sure the convenience, speed and magic remains.
“It takes a lot to pull someone out of their habits and everyone is used to their normal payments systems. So when you are going to them and making the case to “use Bitcoin because it’s better” most of the world isn’t going to care about the ideological reasons for it. They should, but they just won’t. They need to have some sort of emotional experience and get excited about it. If that experience sucks then they are not going to use it.”
Old School Stories – Erik’s and Roger’s Reflections
Back in the day, you could buy alpaca socks and that was about it. Bitcoiners were seen as “tin foil hat guys” and a bunch of crazies. A couple years later Microsoft and Dell are accepting Bitcoin and you can get pretty much anything you need with Bitcoin at this point.
Not only that, but every major financial institution in the world is now researching the blockchain technology (the decentralized ledger technology that supports Bitcoin). Only a few years ago, mentioning “blockchain” would get you laughed at in the major financial conferences and press.
“Bitcoin has gone very quickly from a joke of people online, to the way finance is going to be done. And everyone is jostling over the details, not whether it will happen or not.”
“It used to be that once a month or so Bitcoin would be mentioned on the media and everyone on the forums would go crazy and get all excited! Now it’s nearly daily.”
Conclusion – How to Heal the Bitcoin Community
“It’s bad because some people have looked and found the wrong enemy. It’s almost like religion where they don’t see Bitcoin in exactly the same way. They (Bitcoiners) demonize each other because they have a slightly different view. It’s ridiculous because Bitcoin has the entire world to conquer. It has this horrible fiat banking system that has enslaved humanity. You can’t ask for a better villain, sitting out there waiting for you to fight it, but you are sitting here censoring and in-fighting other Bitcoiners who want a different size block. I can’t understand what would lead someone to come to that opinion. It’s not seeing the forest for the trees.”
“I’m more frustrated by the censorship than the slowness of scaling in the Bitcoin community.”
“The censorship is bad, but equally as bad is the vilification of people and the assuming of bad intentions. This has happened on all sides of the debate. There have been people who want larger blocks who have vilified the Core Developers, but I believe that all sides of the debate have good intentions.”
Erik believes that “Step 1” for healing the community is to become friendly again. He re-iterates that none of us are trying to kill Bitcoin. None of us really knows what’s best, but we need open communication to discuss what we think is best. Assuming the worst about people who disagree with you limits the conversation and ultimately hurts the Bitcoin ecosystem.
Whether you think the blocks should be larger or smaller, that’s not the point of this conversation. These topics need to be discussed as adults and extend courtesy to your fellow Bitcoiners. Erik politely asks us all to treat each other with respect so that we can keep moving forward.
Erik Voorhees Twitter: https://twitter.com/ErikVoorhees
Roger Ver Twitter: https://twitter.com/rogerkver
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