In his exclusive interview with Crypto Insider’s Vlad Costea, Italian Bitcoin maximalist Giacomo Zucco has been very talkative and open about his beliefs. He took his time to explain his vision for The B Foundation, he provided precious details about his personal definition of Bitcoin maximalism, and was even kind enough to rank the top 20 cryptocurrency projects on CoinMarketCap.
In between, Mr. Zucco has also expressed his view on the cryptocurrency community at large and how the libertarian ideals were never dissolved by greed.
The interview itself is 97 minutes long and does exactly what Giacomo Zucco suggests: it lays down the ideas that he never seems to find the time to write down in articles. It’s a collection of fascinating opinions on the current state of the cryptocurrency market and community, and it’s very likely that some moments will become a point of reference in the future. Enjoy watching this charismatic Italian deliver an entire marathon of arguments for Bitcoin maximalism!
Attached you will find a complete transcript:
Vlad: Hello this is Vlad and welcome to the Interview of Crypto Insider! Today I’m going to be talking with Giacomo Zucco who is a well known Bitcoin maximalist and one of the few people who embraced the label of being a maximalist despite all the bad meanings that it might have. And that’s something that we’ll be discussing today, so hello Giacomo!
Giacomo Zucco: Hi everybody! We’re not so few, I mean there are a lot of people that are self labelling maximalist but, yeah.
Vlad: It seems to me like a derogatory term on Twitter, and some people appropriate the idea and say “you know I’m also a maximalist but at the same time I also believe in Monero or in Litecoin or whatever”. And I remember the last episode of Magical Crypto Friends which is with Charlie Lee and Fluffy Pony, Whale Panda, and Samson Mow, and at some point they all said “you know we are all bitcoin maximalists in the sense that we want bitcoin to succeed and we want it to be the best coin but we don’t want it to be the only one, or not necessarily”. So do you think there are layers to being a maximalist?
Giacomo Zucco: There certainly are because the term itself was created in a derogatory form from Vitalik Buterin and others in order to represent these approaches as wrong. So it was some kind of blockchain slang and some of us adopted that in order to diffuse their rhetorical attempt. So now everybody is using the term in different ways. I tried to give a presentation about a very very scary street definition of maximalist with a lot of bad connotation in order to try to prove that even that very very scary cult like definition of maximalist is actually very very close to what a cautious approach would be to this ecosystem.
So yeah there are Fluffy Pony and Charlie Lee are people who are contributing somehow to bitcoin so in a way I would say they are defintiely bitcoiners. I tend to use the term maximalist in order to imply that I really do not think that altcoins can succeed in general. So while I’m not sure that Bitcoin will succeed, I’m kind of sure, as sure as I am as other things like that small private internet that you create in your garage is not going to take over the internet very very soon. In that same way I’m sure that altcoins cannot be sustainable and deliver what they promise. While bitcoin could very well fail itself. From a destitute point of view, I am like a fifth morning maximalistmeaning that I recognize right now that the USD unfortunately is the kind of money that people is using. It sucks because it’s manipulated and inflated and difficult to transmit over the internet without third parties and third parties can sensor you and spy on you and track you they can enforce KYC/AML mafias. So it’s a bad situation but that’s the reality.
Bitcoin could, maybe overthrow that. I hope that it will. And I think there are very very good chances it will. While altcoins by definition I think they cannot succeed.
Vlad: I remembered last week I had an interview with Jimmy Song and he had a controversial statement that it’s a good idea to spend with you credit card and then pay with bitcoin that you have. Do you think that up to this point it’s a better idea to actually use fiat for your purchases and save your bitcoin just for emergency spending?
Giacomo Zucco: Yea I completely agree. Actually in the presentation of Riga about maximalism I included also this part. So I argued these points in a satirical and sarcastic way but also serious in a way with some nuances, I argued first my position about altcoins and that they cannot succeed. Basically, altcoins are a scam in very loose definition of the term for some, and a very strict definition of the term for others. The second point was that any important change to the base rules of bitcoin is also something that we should reject and we should basically not accept. And the third point was about spending. I simplified version of what I said is that pushing people to spend bitcoin is a scam. The nuanced version would be if we think that bitcoin can be a better form of money, during the process of monetization of bitcoin, in which bitcoin chooses to just be a digital collectible and start to become a store of value and that medium of exchange, then eventually even a unit of account so it become really money, in this phase it’s reasonable to expect and appreciation of bitcoin compared to fiat money. And even if bitcoin doesn’t appreciate which is something it has to do if it’s going to succeed, fiat money is by definition always depreciating as far as purchasing power is concerned. So fiat money is always debased and deflated and depreciated over time.
So if you have two kinds of money, both kind of accepted…let’s assume first that you have two kinds of money accepted at the same rate at the market around you. And one money is going to be depreciated over time, and the other money is that some of it cannot be inflated, it’s very resistant to production, so you have hard money and easy money. And the market around you accept both at the same rate, which one would you spend first? Of course, you’d spend the easy money first. That’s called the Gresham Law,but Gresham law is actually referring more specifically to legal tender and denominations. But we could call it, maybe tier’s law which is probably more proper. Tier’s law says that the good money in store of value terms, drives off the bad money. While Grecian law simplified says that bad money in every day purchases, drives out the good money which is instead hoarded and HODLed and stored. So I agree with what Jimmy said may be tricking because we spend a lot of time in early bitcoin narrative about how we should always use bitcoin in the sense of spending bitcoin and we should hope for merchant adoption. But, actually that will kind of all fade.
Every time we celebrated merchant adoption of bitcoin, we’re actually celebrating some guy joining Bitpay in order to receive bitcoin from HODLers , from people believing in bitcoin, and immediately sell bitcoin at market price on the open market, actually depressing the price. It’s not real adoption. While using bitcoin to store your wealth, that’s adoption. That’s an actual use of bitcoin. So I was saying before, assuming that they market is accepting both forms of money. The shitty valuated money and the hard money, you should spend the former first. But, we are not even in that situation. We are in a situation in which the market usually do not even accept the hard money. So we have a strong hard money which is not even very widely accepted and fiat money which is accepted everywhere basically and it sucks by definition in storing wealth. So it’s a no brainer, you should spend first the shitty kind of money which is depreciated which everybody already accepts. Of course there are some caveats here if we want to be super pedantic. If you only receive bitcoin, if you are one of the lucky dudes who managed to be completely unbanked and post-bank, and you receive your wage in bitcoin only, and you have 100% of your wealth in bitcoin only. In that situation you will spend bitcoin only.
Or if you want to spend in one of those use cases that require by definition bitcoin because fiat money systems won’t let you spend money that way. For example, you want to donate to WikiLeaks and you cannot use a credit card. Or you want to buy certain substances on the silk road that are maybe legal in some countries but not other countries, you cannot use credit card or apple pay for that. So in that case you spend bitcoin because you don’t have anything else to spend or because that specific purchase cannot be performed using fiat money. And that’s all the point of bitcoin in the first place. So I think that the general statement by Jimmy is absolutely correct. I don’t know why it triggers so many people. I mean, I know why, because we accepted the narrative that using bitcoin is spending while using money sometimes is above spending but sometimes is about storing. And we accepted the narrative that people accepting bitcoin with payment processor dumping on the marketing is a good thing, while it isn’t. And we accepted that and we forgot the point of Gresham’s Law that says that you spend the shitty money first and the good money after.
Vlad: So you’re basically saying that you should be spending your Bitcoin Cash? *smiles*
Giacomo Zucco: (laughs) Yea, well I did take a while to split my bitcoin cash from my actual bitcoin UTXO so it’s a nightmare time. I took a while to claim my bitcoin cash airdrop from using my bitcoin UTXO, but because of privacy concerns and security concerns many people gave up their privacy completely with these airdrops. For example, constantly dating all their UTXO set into one address of an exchange with name and surname and KYC, so many people did terrible things for their privacy with these airdrops. I took a while to collect it, but when I did I spent it in order to buy bitcoin first thing so yes, if you have bitcoin cash you should use that way before bitcoin I completely agree.
Vlad: OK, I’m going to ask you to comment on another comment which I read on twitter, because you know it’s the most active place where people debate ideas which are not always profound or meaningful in any way but I think Jackson Palmer has at some point said that if you have the term maximalist in your description somewhere on twitter then you should replace it with “close minded”.
Giacomo Zucco: No I think that’s makes completely no sense. I mean the term maximalist was created in order to represent people using basic logic and common sense about bitcoin and altcoins as some kind of close minded, childish, intolerant sect. So that was the original design of the word, and we self-ironically adopted the word. Right now people using the term in the description are mostly just signaling that they are using some kind of healthy skepticism and that they want extraordinary proofs in order to sustain extraordinary claims. Bitcoin itself was an extraordinary claim, and many people required a lot of evidence and a lot of explaining in order to accept that there was something, possibly capable of overthrowing the fiat money system worldwide.
So that was a very extraordinary claim, well, we are still should doubt this claim to a certain degree because nothing is certain. Bitcoin could still fail. But if you adopt a rational mindset and if you adopt any kind of healthy skepticism, then you know that full approach should be that something extraordinary usually too good be true is usually too good to be true. So having thousands of different coins, each one serving the market as money, is an inconsistent scenario. Because one point of money is that it is the most saleable good on the market. And the most saleable good is one. And in every kind of local market that you can imagine, there’s one form of money that usually gets to include, or gets to represent, the best money and usually cannibalizes the others.
Sometimes you don’t see that because you have external interferences, for example nation states that monopolize money and they impose political money with legal tender, so you could see one form of money in the older times which one the gold standard Gold, now you can can see different forms of money but that’s because politically imposition between nation states. But if you go to the free market, so if you also go to the black markets of many nation states, for example Venezuela, or Cuba, or the USSR before the Berlin wall crashes down, then you could find only one basically strong currency that was the USD being actually used instead of the depreciated alternatives. So maximalists in this regard is just being realistic and expecting economical typical behaviors to still be in place and to not expect extraordinary suspensions of laws of logic and economics. Also there is a point about technological revolutions. Like there is a very good essay by Andrew Poustre about altcoin, which was posted about three years ago, and was describing all the subtitle, very small mistakes that people creating the first altcoins because creating a new crypto system is not easy and it is kind of a miracle that we have one that actually works and miracles tend not to replicate very very often so I completely disagree with a statement that if you don’t want to use the label maximalist because you don’t want to basically concede this kind of “negative” depiction then don’t use that term but people using that term to describe themselves are mostly just signaling that they are logical and reasonable.
Vlad: Ok, so I will ask you one last question which revolved around commenting on somebody else’s comments. So I saw that Roger Ver was very critical of your PowerPoint presentation. And he precisely picked that slide which was the most controversial about it. I think it was the one in which you said that bitcoin is the only legit cryptocurrency everything else is a scam, don’t trust anyone who tells you to sell your bitcoin, don’t trade your bitcoin, just hodl it. And how did you feel when that went viral on twitter?
Giacomo Zucco: Actually not very happy because the narrative in my presentation was started I would say, and I’m probably overstating because I created that the night before as I do always, and I was thinking about the presentation I was going to give and there was a path in my mind. I will describe why I will talk about Bitcoin maximalist. I will put here the most possible triggering and scary and counter intuitive set of “maximalist rules” in order to trigger you, people of the audience, which by the way were people inside of the conference of Baltic Honey Badger so they were already bitcoin maximalist so it was some kind of inside joke. So I want to represent what we would believe in the most possibly triggering kind of way and then I will explain some logical assumption and I will show you that the consequences of these logical assumptions, if they are not triggering sentences that are written down, they are anyway counterintuitively paradoxically very very similar to these general prima facie heuristics.
The rules in the slide were basically ‘everything besides bitcoin is a scam’. So actually, let’s start with the title of the slide. The title of the slide was “the Four universal truths about bitcoin”. Which is itself mocking the Buddhist four universal truth. So the title itself was already an attempt at self irony in order to present maximalism as a religious thing. You would not call something the four universal truths if it was not already somehow sarcastic. The first thing was that everything which is not bitcoin is a scam. Of course that cannot be taken literally. I mean Linux is not bitcoin and it isn’t a scam. Git is not bitcoin it isn’t a scam. Bit Torrent is not bitcoin. Physical gold is not bitcoin; it isn’t a scam. My car, even if it’s not a Lambo, it’s working very well it’s not a scam. So it’s not literally everything.
But everything which pretends to be something like Bitcoin or something like the next Bitcoin using Bitcoin technology in improper ways in order to replicate the same kind of effect reaching the creators, is prima facie as general heuristic a scam until proven otherwise. That would be the nuanced definition. Of course the simple definition is that “everything that is not bitcoin’s a scam”. And the second one was every attempt to change bitcoin is a scam. Of course neither these can be taken literally. Like Segregated Witness, or Schnorr,they are changes to bitcoin but even when you implement Lightning Network even if you’re not changingBitcoin layer one, you’rechanging Bitcoin as a global experience, as a global set of protocols. So of course we will change bitcoin as a general experience for all the times being and we will probably even change some more the base consensus with I hope very very few and very very slow last modification before reaching stability. So the scope or the goal of that second point was you should think that every attempt at modifying bitcoin is itself problematic and potentially dangerous and potentially an attack vector and so that we should also always prefer to protect status quo over any change until we get proven that they change is necessary and uncontentious and safe to deploy and tested and so on and so on.
So your mindset should be until proven otherwise, every attempt to fundamentally change the bitcoin is something wrong. Even because if bitcoin can change too much, then the sound money characteristic is gone. Because if you change the total supply, you don’t have harmony anymore. If you can change or maybe enforce a black list, a white list, or KYC, the permissionless side of bitcoin is gone. So there are some changes that will destroy bitcoins value proposition completely.
Then there was the third truth which was the one we discussed before about Jimmy Song’s triggering tweet which was everybody’s trying to push you to spend bitcoin is scamming you. There was a very good article by Michael Goldstein “everyone is a scammer”. This is a great article on the Nakamoto Institute about the fact that when you have something like harmony, everybody wants you to spend and they want to hold. It’s a normal thing to try to trick others into spending a very valuable asset and of course that’s a usual “scam” which is the worst scam if you lose improperly.
And the last truth is that we should not be nice with scammers. Even this can not be taken literally. I’m personally kind of nice with people who I consider doing very very scammy things. For example, I meet Zooko at a conference and he’s a very nice guy and I tend to be nice with him but I think that Zcash is very very unethical on different points of view and it’s very scammy in a way that it has been promoted for many many reasons. So that’s not literally either, but what I try to convey with the last sentence was that we should append some social costs into social attacks on bitcoin. Because otherwise social attacks on bitcoin, they carry zero technical cost. So there should be some kind of social protocol that makes it expensive for the attacker to try to manipulate or distort or corrupt bitcoin somehow. And especially because sometimes people think that if I call something scam it means that I want the government to step in banning that thing. It’s the other way around.
It’s precisely because we don’t want the government to step in whatsoever, that we need to create a self-regulating culture and attitude in which we enforce a very very strict set of rules and we keep ourselves to very high standard of ethics and technical precision and we basically bash and mock and ridicule most of the scammy marketing which is so common in other sectors so in any sector which is not bitcoin, I don’t care very much if some marketing or advertising is pushing some forced narrative. But if bitcoin, it’s very very important, it’s more important, to bash and mock and expose and debunk fake narratives exactly because we don’t want a regulator or a consumer protection or any kind of legal restriction of liability. So the last sentence was basically in the cypherpunk crypto-anarchy model you don’t want a state to regulate stuff. But you do want people calling out lies or misconception or dishonest marketing. So to answer, I spoke a lot, your question was simple, how did I feel about that slide. That slide was not intended to go viral on twitter as it was a completely serious slide. That said, I think it’s kind of like this. It’s kind of like a filter, people incapable of looking for the context of the slide and incapable to understand the irony of the title itself, and incapable to understand that these sentences even if clearly exaggerate and hyperbolic, they are actually very very close to a good prima facie in order to navigate this world. They are basically filtering themselves out of the conversation. So if you feel so much trigger by this slide, then it’s a good signal from me that I should probably not engage with you in conversation. So it’s a timesaving anti-spam mechanism so, thank you Roger, I am ok with it! (thumbs up)
Vlad: That’s a good answer! I actually wrote and article about this that a few weeks ago, the Bitcoin community was consisting of some of the smartest people who are actually aware of the financial system and they saw what happened in 2008 / 2009 when the banks collapsed and they had all of these ideals of turning bitcoin into the next big financial instrument of the world. But we have seen in the last two or three years how all of this spirit has vanished and we have people who actually expect the SEC to give an approval to the ETF for bitcoin and open trading desks and that’s so much against the spirit and ethos of the early bitcoin adopters who actually wanted to distance themselves from the banks. So what do you think happened in the process? Do we have too many greedy investors like the Forex guys who just stepped in and wanted to make as much money as they could and they ended up holding bags?
Giacomo Zucco: So first of all I don’t completely agree with you that the original narrative was especially was against banks. It was especially against bailouts to banks like the genesis block newspaper title was about the chancellor Darling of the second bailout of banks. So the problem was not that we have this business called bank which is a business consisting of people on the market proposing to other people to store their value for them or to invest their wealth giving out loans so managing credit and debit and matching the demand and supply of credit. So that’s not the evil thing itself. The problem with banks, just like many other fields of the market like the military the self defense or in many cases the healthcare, it has been completely hijacked by government monopolies that started to use this monopoly in order to promote exclusions and control, Orwellian surveillance, and of course taxation in the form of inflation. And manipulation in the form of management of interest rates.
So I think that the regional narrative, even if probably we intercepted as a Bitcoin community, we did intercept some kind of anti-banks meaning, anti-rich rhetoric. So like some kind of Occupy Wall Street rhetoric, like „You are a banker, you are rich, so you are evil”. But the point was never actually that you cannot not have a guy managing credit. The point was that the sector of credit and money and banking in general has been completely hijacked by the government, so there are now rules that, for example, if you try to donate to WikiLeaks the government convinced or forced the banks to shut down your payment to WikiLeaks, or if you tried to save your wealth from inflation, the banks will help the government to inflate using fractional reserve, or if you are trying to compete with the government like with e-gold, the banks will have the government to shut you down. If you purchase goods and services, the banks will have the government to track you down, spy on you, and eventually punish you for your preferences. So especially the banks are betting financially – if they win, they get the profits; if they lose, the government will take money from other people in order to bail out the losers so they can never so that generates a lot of moral hazard. And so the banks and the financial sector in general, are getting even more and more risky and unsustainable over time because of moral hazard created by bailouts.
So Bitcoin wasn’t thought as a way to do that, but was intended to disintermediate banks directly because they were corrupted by the violence of the state. The fact that some bank could maybe serve some Bitcoin investor and not become user, but Bitcoin investor is actually not so bad. I don’t think that the SEC allowing a Bitcoin ETF or the Bitcoin future markets… they are not bad things per se because Bitcoin users, people that want to use Bitcoin to store wealth in an unconfiscatable way, they don’t care about ETF. They will get Bitcoin because an ETF can be confiscated, while real Bitcoin cannot be confiscate. People want to donate to WikiLeaks or move money out of China, they don’t need a Bitcoin EWF because you cannot move a BTC ETF out of China, and you cannot use a BTC ETF to donate to WIkiLeaks. People who really need Bitcoin as a tool will use Bitcoin, but if somebody just wants to bet on the price of Bitcoin, I think that’s good for us because more demand for synthetic Bitcoin can anyway bring up the price and I don’t expect an old legacy investor, a guy who is used to pick up the phone, call his banks and say „Let’s buy two Apple shares, three barrels of oil, and three bitcoins”. This guy will never become a cypherpunk managing his own full node and his own private keys. It doesn’t need it, this guy does not need persmisionless finance. He is okay with permissioned finance, he just wants to speculate on the price.
So I think there is nothing bad in permissioned finance allowing people to speculate on Bitcoin price. I think that’s okay. The problem is that people are expecting the SEC or other regulators to actually give a pass to all these ICO centralized and super easy to censor initiatives. So the government is telling you that you cannot issue securities without following some kind of stupid regulations, which is very bad for financial exclusion and everything. But the government is forcing you to follow these regulations. Now you create your centralized ICO or altcoin, and suddenly you hope that the government is not going to enforce the same regulations on your only because you pretend to use buzzwords like “blockchain” and “Bitcoin”. But you’re still completely centralized, completely censorable, but you hope that the government will not crack you down.
And I don’t know if think that this fairy tale exists in every culture, but in Italy we have it. It’s called the three little pigs: so you have one pig that’s building his home with straws, the second one uses wood, and the third one uses bricks. So the third one takes a lot of time, it’s like he’s the boring pig who will have to study architecture, spend a lot of energy and money and time slowly building the brick house. The straw house pig will just do something quick, dirty, super effective, and then dance all the time mocking the brick house pig because he was faster and more effective. Altcoins and ICO tokens are like that.
Bitcoin has been built in order to resist the regulator wolf when it comes. So Bitcoin has been created in a way that when the wolf comes, he cannot bring the house down. While altcoins are just like the straw house, they have been built very quickly, very easily, and you don’t have all the hard things that you can find in Bitcoin so you can profit more and buy your Lamborghini. But when the wolf comes, just like Ethereum, they are trying to keep the wolf calm using lobbyism or asking “Please, do not censor us!”, which is completely nonsense.
Vlad: You just gave me an idea for a little game that we can play. But if you don’t want to, I’ll just cut this from the final video. So I was thinking I can read to you the names of the top 20 coins on CoinMarketCap, and you can tell me on a scale from 1 to 10 if they’re scams or if they have some potential.
Giacomo Zucco: Absolutely!
Vlad: Okay, so 1 means that it’s very bad, and 10 means that it has very high potential. So Ethereum!
Giacomo Zucco: I will say 2, very very bad. It’s especially because the thing that we call Ethereum is actually the bailout version of Ethereum after the DAO fuck-up. So I am very, very, very, very, very skeptical about Ethereum.
Giacomo Zucco: I will say 3, because even if the token itself is a lot worse than Ether (it’s not even scarce, they are controlling all the supply), at least the platform of Ripple itself, even if it has been sold dishonestly as something else, it is like a new version of SWIFT. Banks can use a new version of SWIFT, there is just no use for the XRP token. So while the Ethereum infrastructure is completely useless, the Ripple infrastructure is centralized, legacy, but may be useful. So we’ll say 3.
Vlad: Okay, Bitcoin Cash.
Giacomo Zucco: That will be 1, because this is an explicit attack on Bitcoin, generated by an entity that tried to take over Bitcoin, the Bitmain company, and sold on a scam website which tries to basically defraud Bitcoin newcomers by selling this altcoin which they call “Bitcoin”. So there are actually people who are at the center of this attempt to defraud people. Also, most important people in the ecosystem of this coin are a con artist (Craig Wright, a literal con artist who, at this point, is funny to be seen. No offense to Craig Wright, but he is literally a con artist); the others are like Roger Ver the guy who tries to sell an altcoin as Bitcoin, so he’s a really dishonest guy; the other guy is Jihan Wu, the guy who tried to control and hijacked Bitcoin and failed. And after you see all this, my rating is 1.
Vlad: Okay. EOS?
Giacomo Zucco: EOS is bad because it’s like the third scam in a row from Daniel Larimer. First, he scammed people with Bitshares. Then he went on to scam people with Steem, and then he moved on to scam people with EOS. It’s like a serial scam, but this is actually better. So I’m not sure about the numbers I’m giving, but in a way the fact that this is the third one also makes it kind of honest. If you are so dumb to think that Daniel Larimer is going to create something of value after two scams in a row, you probably deserve to be scammed. So Larimer is just a professional, he does what he does and scams people. At this point, if you’re getting rekt because you believe the EOS tokens will be the new Bitcoin, you probably deserve to get rekt. Also, EOS architecture is mostly and centralized and, unlike Ripple or Ethereum guys, they don’t pretend to be much more decentralized than they are. So I would give them a 4. It’s completely useless because everything you can do with EOS can eventually be done with PayPal or with a noJS central site. So it’s probably useless. There is this federation thing that is mostly useless in my opinion, but they are trying less hard to pretend to be decentralized than Ripple or Ethereum, so 4.
Giacomo Zucco: Stellar is still useless, so I can’t give it a 6, which would be like a good enough mark, so let’s say 5. Unlike EOS, it is not a product of a serial scammer. Unlike Ripple, they admitted centralization while one of the explicit differences between Stellar and the original Stellar Fort (which was Ripple) was a more honest approach to their centralization. I don’t think that you can use Stellar to do anything that you couldn’t do on a centralized web server, but at least you’re not wasting time and money on fake mining like in the cases of Ethereum and Bcash. So I will give them a 5. I didn’t like that there was a post of a very good service called KeyBase… that post was pumping Stellar because Stellar gave a lot of money to the KeyBase guys, and they were pumping Stellar with FUD and lies about Bitcoin, energetic consumption and stuff like that. So I don’t think their approach is completely honest, but I will give them a 5.
Giacomo Zucco: Many of my maximalist friends do not agree with me about this, but I will give Litecoin even a 7. Litecoin is useless as money, I don’t think that you can use Litecoin instead of Bitcoin to do cheaper transaction – that doesn’t make any sense because you have to assume that you are a storing your wealth in sound money like Bitcoin, and the other part is also storing their wealth in sound money like Bitcoin. So if you have to move Bitcoin from your cold storage in order to buy Litecoin on a market, then transmit Litecoin and your counterparty has to sell Litecoin for Bitcoin on a market and transmit back Bitcoin in cold storage, you’re basically having two on-chain Bitcoin transactions, plus market fees, plus market transactions. So the idea that you can use Litecoin together with Bitcoin to do fast and cheap transactions is bullshit. The promotion of Litecoin as a silver to Bitcoin’s gold doesn’t make any sense. The reason people use the physical silver together with physical gold was because there was a trade-off between transferability and divisibility. Because gold is very very bad for division, you cannot buy bread with gold powder, so it cannot be divided but is very good to store you wealth in a compact way and to move it. Silver, on the other hand, was very bad for storing wealth and transporting wealth, but it was good for divisibility. So if people started to use both for a certain time because there was a trade-off, when people moved from physical gold to representative gold (banknotes), silver as money disappeared from the market because you don’t need it anymore. Bitcoin is completely divisible, so you don’t need silver to Bitcoin gold.
That being said, Litecoin was one of the first altcoins and that’s a good thing because eventually you can imagine in year 2030, when altcoins are not promoted as real money alternatives anymore, but maybe some altcoins can survive as collectibles because it has some historical value. So I can think that there can be Namecoin and Litecoin, as the very first altcoins, potentially remaining for historical value because they were the first scam coins. And if the collective value is enough to make some miner mine some Litecoins sometimes (like a block every few weeks), then maybe the network can survive as a collectible.
Also, the people promoting Litecoin are not doing it by attacking Bitcoin or lying about it. They’re not diminishing Bitcoin and they’re not trying to put obstacles in the mission of Bitcoin in order to promit, mostly. Charlie Lee is a good guy. I don’t agree when he says that Litecoin is silver to Bitcoin’s gold, I don’t agree when he says that Litecoin a sidechains to Bitcoin because that doesn’t make any sense at all. However, they are not aggressively lying against Bitcoin, the are among the first so you give them the benefit of the doubt, and maybe it will be a collective and some people think that LTC has a good value because it was used as a test bed for Bitcoin.
And that is a good argument: if you think that there was some FUD about SegWit being dangerous because the miners could just take money out of your SegWit address… and that FUD was debunked on Litecoin because Litecoin basically adopted SegWit before and nobody had used SegWit in that way, so it was an empirical dismissal of that concern. So yeah, Litecoin has been used as a testnet for Bitcoin, so let’s give it a 7 not as money, but as a future collectible of an ancient past.
Vlad: What about Tether? Should we discuss USDT, or do you think it makes sense?
Giacomo Zucco: It does, and I will give it an 8 as long as the Tether company can resist and it doesn’t get censored down, or it doesn’t explode, or it doesn’t fail because of using a full-reserve bank. However, in this full-reserve I don’t think they’re storing full reserve cash. So probably, they are storing it for reserved liability of the local central bank of that state. There could be some fractional reserve problems there, there could also be a legal breakdown on Tether because they are basically creating a very useful service in order to avoid KYC and AML restrictions. So you can buy Tether from the company applying to a complete KYC and AML, but then you can move these USDT on the secondary market. It could be a good way to buy Bitcoin, for example, from an exchange that cannot have a bank account. So Tether is a good strategy for regulatory arbitrage. It’s probably not sustainable, but at least it’s a centralized initiative which doesn’t claim to be decentralized. So it’s not like Ethereum or other stable coins. They admit what they are, and as long as they can exist without the government taking them down, they could be useful for traders or for buyers. So 8!
Giacomo Zucco: Cardano… let’s say I will give it a 7 like Litecoin. I’m being too generous here and I don’t know why. I wanted to express so much opposition to the first one you named, that I’m being very good right now. Cardano is a research project with a lot of academic effort. I don’t think it will ever work in production, I don’t think that Proof of Stake can work at scale in a secure way, I think there are logical problems with that. I think that the token Cardano was sold by taking advantage of a crazy bubble market, so many people will get rekt with the ADA token and that said, the technological part is… I mean, there is less bullshit in the Cardano technological development than in the Ethereum one. Charlkes Hoskinson is a little more serious about this stuff, I think, than people like Vitalik Buterin. So maybe seven is too much, let’s give it a 6. That’s too much, sorry five! Five it is!
Vlad: Okay, so we settled with 5! What about Monero?
Giacomo Zucco: Monero, I would probably give it a 9. Together with Namecoin, I would probably give it an 8… also to Siacoin and Namecoin, which are interesting experiments doing something worthy. There was no point to create new money to do that, they should do projects using the money which already exist (which is Bitcoin), but at least the project themselves are good and people working on these projects are not trying to antagonize or damage Bitcoin directly – they are not attacking Bitcoin. Most of the people working on Monero or Namecoin or Siacoin are actually active Bitcoin developers. So I will give Namecoin and Siacoin 7, and Monero an 8. Although they are similar so Siacoin and Namecoin in being a legit research experiment, even if the coin part is a scam because you shouldn’t create a new monetary base to launch your experiment, you can create a two-way pegged sidechain of Bitcoin when that technology is ready. When that’s not ready, you can just create a Proof of Burn, so people burn Bitcoin in order to create these tokens, so it’s one way. At least you are not inflating the supply and you are not scamming people by launching “the new Bitcoin”. Also, if you cannot do that, an UTXO airdrop like Bitcoin Cash and Bitcoin Gold, that itself… I mean, Bitcoin Cash has a lot of scammy parts, but that thing itself is not as scammy and better than creating a new altcoin. Then there is the new altcoin created from scratch, and then the worst possible things are the premine and the ICO.
So there peoject, I would give them 7. Monero, actually 8 because it has all the characteristics of all these other projects that I’ve mentioned and maybe in the future green or Chia… plus people can actually use Monero in real life with an use case right now. So I said before that it doesn’t make sense to have Bitcoin, move it to a market, sell it for Litecoin, transact, pay fees, and then have the merchant buy back Bitcoin… but it could make some sense to send Bitcoin to market, sell it for Monero, send it with a confidential transaction, bulletproof and ring signature, and then the merchant will eventually change it back because maybe there are some configutations in which you are spending more as of time of fees, but at least you are purchasing privacy. I am not 100% sure that these privacy features of Monero are completely sound because, for example, you have ring signatures and confidential transactions, but you also have smaller liquidity and a smaller anonymity set. So there are less people using Monero, so it’s easier even from a very obfuscated blockchain to analyze behaviors with metadata and time linking, than it is on Bitcoin with a very clear blockchain but a lot of users and a lot of plausible deniability. Especially with things like JoinMarket, CoinJoin, Tumblebit, and centralized mixers or all the Samurai Wallet privacy tricks and so on. So I’m not telling people Monero to be anonymous because that can actually be counterproductive, but I know that some people who are taking responsibility for these are trying to use Monero as a privacy coin. And that could make some sense. So let’s give these guys an 8.
Vlad: Earlier you said that BitTorrent is actually a legitimate technology. Do you think that TRON has become a better project after it bought BitTorrent?
Giacomo Zucco: Well, TRON didn’t buy the BitTorrent protocol. They bought the BitTorrent company, which is just one random company creating a BitTorrent client. So BitTorrent the company is not BitTorrent the protocol more than Bitcoin.com is Bitcoin the protocol. Actually, it’s not that bad because at least the BitTorrent company is giving you a client for BitTorrent and not for a scammy alternative. While Bitcoin.com is trying to sell you a scammy alternative.
But you have to imagine that the name of the company doesn’t mean that TRON acquired the protocol. They acquired the company which created and sold or distributed a client for BitTorrent. Why? Probably just because of marketing effort, I don’t think that there is something more serious around that so no, I don’t think TRON is less scammy because it bought that company.
Vlad: So, what’s your grade for TRON?
Giacomo Zucco: (laughs) Let’s say 3 because just like later altcoins, they didn’t have time to try to promote and to spread all the technical misconceptions and bullshit that Ripple or Ethereum guys did try to spread around. TRON is useless, of course. But I think it made less damage. So let’s put it this way: people maybe bought TRON in order to make profit as traders. Some of them did make profits, some of them eventually will get rekt. It’s okay, it’s betting, it’s basically gambling. While there are people and companies actually convinced that the Ethereum blockchain makes any sense, and I think that’s a wider and deeper damage than just some traders buying the TRON token and selling it… so that’s why I am a little bit more open to that.
Vlad: What about IOTA?
Giacomo Zucco: IOTA… Yeah, unfortunately it’s like Ethereum. Maybe give those guys a 3. IOTA doesn’t have anything to do with IoT, so they’re basically matching two buzzwords: cryptocurrency and IoT. However, there is nothing in IOTA that makes any sense for IoT. They sold their tokens mostly leveraging fake or ambiguous or overblow announcements and partnerships with this and that. So that’s very very scammy. They have made the worst possible mistake trying to ship out their own cryptographic promitives that they made from scratch. It’s something you don’t do, and theirs was broken. And when people started to talk around and say that it was broken, the IOTA folks acted in a very arrogant way. Also, there was some part where they claimed that there was an anti-open source cloning feature. There was some mistake, and the creators claimed that the bug was put there intentionally in order to prevent people from cloning IOTA. So that’s so much for the open source approach, putting intentional bugs in the source code. Very very trustless! It’s bullshit!
Let’s say that some of the ideas of IOTA are cool. Like, I don’t think that realistically balanced ternanty number systems and calculations in computing will take over binary, but balanced ternary is cool and I like it. And also, transaction graphs instead of blockchains is something that has been studied in Bitcoin as well under the name of braiding or Dagger coins and stuff like that since 2013, actually. There is a very good presentation in scaling Bitcoin by David Vorick, the creator of Siacoin, about braiding. Braiding is interesting as an experiment and as a concept, but it doesn’t work in practice. In IOTA, it doesn’t work. It works only because it’s centralized and they have a coordinator, and if they get rid of the centralized coordinator, they graph will just diverge as it happened anyway. So it doesn’t work, it’s scammy, but at leasy they didn’t do a bailout to their friends like the Ethereum guys did. So maybe it’s better than Ethereum, let’s give them a 3.
Vlad: This is going to get so long, but I like it actually. I think I’m going to split this into parts just so it’s easier to watch. But let’s go on, what about DASH?
Giacomo Zucco: DASH… let’s give it a 4. I would put it in the same zone as things like TRON, as they are actually practically useless. It didn’t shock me with super scammy things like the Ethereum bailout, or the IOTA fake bug. So they didn’t do anything explicitly scammy. I mean, maybe I’d give them a 3 because one of the things I hate when people are bullshitting about is privacy. Because if you’re bullshitting about the price, then people will buy and they will get rekt they will complain, but it’s their fault. But when you are bullshitting about privacy, people could get killed if they try to use, for example ZCash or DASH or any other fake privacy coins in order to avoid the surveillance of some kind of autocratic regime. So people could suffer serious consequences if they use a fake privacy coin. I think that for people it’s interesting to understand DASH a little bit better. There’s a good comparison of “privacy coins” by Aaron van Wirdum of Bitcoin Magazine. It compares Monero, ZCash, DASH, so you can take a look at that. But DASH would probably stay at 3.
Vlad: Do you think Binance Coin has any relevance whatsoever? It’s just a metric which shows us that Binance is a successful exchange and they have managed to push a token which enables us to make cheaper transactions within their system. Do you think that outside it that it has any use or purpose?
Giacomo Zucco: So this is a a debate like Tether, even though it’s a little bit worse. But the point is that I don’t think that utility coins or tokens make any sense because their utility cannot grow in value in most of the cases when the business grows in value. For example, let’s assume we are creating a telephone company. And before you launch it, you presell on the market some air time as tokens. These are utility tokens, but the problem is that it makes sense to use these tokens instead of Bitcoin because it’s not money and you are not trying to recreate money. You are just representing air time. But if your business is of telephone company, then who says that one minute of airtime with your company should be more valued by the market? If anything, it will be valued less because you will be able to save costs and give discounts because of basic economies of scale.
So utility tokens don’t make any sense as an investment. What is called “security tokens”, they could be like tokens that give you a right for dividends or royalties from some kind of business. So to get this token, when you get back, you can basically claim voting rights, royalties or dividends, or stuff like that. There are two things here: the bottom line is that this kind of thing is illegal because securities are regulated in most markets by evil regulators that will want to prevent you from doing what you want with your money and with your other pals and investors. So there is a regulator trying to control security to create better “anti-money laundering laws” in order to tax you better. Everything is disguised as customer protection. So the government doesn’t want you to trade securities freely on the secondary market. So point is that you’re either using a Bitcoin-like technology to provide illegal securities which are censorship-resistant – so I’m Binance, I cannot just issue on my website a centralized security because they can shut me down, but magically if I issue a token on the blockchain, I will be able to do some kind of regulatory arbitrage just like Tether in order to maybe tell the regulator “I will sell this security only to KYC people, but since it’s a blockchain token, this security can be sold on the secondary market to anonymous people without any kind of regulation”. So if that’s the goal, it makes sense.
I don’t think that the Binance token is really giving any strict guarantee of returns from a security point of view, and I don’t think it is engineered in a way that is particularly censorship-resistant. If regulators want to shut down the Binance token as a security, they probably can. So, it’s a 6 from me. At least it’s not an attempt to replicate money, just like Tether is not. If you want to use money for your system, use Bitcoin. But if you want to represent something which is not money but may be rights to some kind of money nominated in Bitcoin, maybe you could do a token to do that.
Vlad: What do you think about NEO? It was one of the first coins which were promoted as the “Ethereum Killer” and the “Chinese Ethereum”. And to some people it looked promising because you could get some revenue from Gas and it had some dapps… but do you think it’s any good?
Giacomo Zucco: No, I don’t think so. Maybe I would give it a 3 instead of a 2 just because Ethereum is really, really, really scammy. At the beginning, NEO was an open-source repository on Github, and it was just a Bitcoin fork without any modifications. So basically, the Chinese Ethereum Killer was just a fork of Bitcoin without modifications for months. And people were already paying a lot of money to buy this token without anything, so it’s a clear pet.com-style bubble where people are paying for nothing because they think they are getting rich. And NEO is a typical situation like that: Chinese Ethereum Killer? No, it’s a 3!
Vlad: Okay. Ethereum Classic: you mentioned that it’s the better version of Ethereum or the original vision?
Giacomo Zucco: I agree, I agree. And I will give it a 4. So Ethereum is a collection of the worst ideas that people were considering about Bitcoin back in 2012-2013. Like having computation on chain instead of just a replication is a bad idea because it’s not scalable and it lacks privacy completely. Having very very fast block time is a bad idea because it produces many orphan rates, and orpah rates centralize the mining, so they introduced uncle rewards in order to compensate for that, but that created an unpredictable issue with schedule. So having an unpredictable schedule instead of a fixed schedule is a bad idea. So basically, every single bad idea discussed in Bitcoin or proposed for Bitcoin… I mean, if you are producing the software and the cockpit for a plane, you don’t want the software to be able to do everything. Since it’s a security critical application, you want the software of the cockpit to do exactly the very very well-defined set of things that maybe you can build on in complex ways. But the primitives should be very easy to audit, to predict, and to control.
Ethereum basically took all the bad ideas out there and they launched as a product with a huge premine, and with a huge ICO. Then they spent most of the money of the ICO in marketing, but then at least the original Ethereum chain didn’t explicitly change the rules of the system in order to bail out the financial losses of some insiders including Vitalik Buterin with something that people forget. But after the DAO, there was actually this white hat team that took the money on the forked chain and it tried to sell it on the market on Bitfinex in order to profit directly. It was a very very big scandal, but people forget everything in this market. So Ethereum as a concept is very bad in my opinion. But before the DAO fork, it was not incredibly scammy. After the DAO bailout, I think it became very very scammy. So I will give Ethereum Classic even a 5 because they started to detach from Ethereum bailout edition because of this bailout because it was absolutely stupid, and also a precedent for future censorship and manipulation, so it was a very stupid idea. But when they separating from Ethereum because of that, they started to consider other things like “Maybe we should have a limited supply”, or “Maybe we should not be having Turing completeness, and should have something more predictable”… there were a lot of things that recreate Bitcoin gradually. They started to get closer and closer to the Bitcoin original and reasonable assumptions that were completely distorted by ETH. So let’s give the guys a 5.
Vlad: The next one is NEM.
Giacomo Zucco: NEM… So I think that under this point, the game is very nice… but under this point I think that I am losing any kind of serious distinction. So I would probably go on with… they all sound like TRON to me, like nobody’s seriously following the technology of NEM. Though there is not a huge debate with engineers or developers folled into thinking something because of NEM marketing, just like there’s the case with other high market cap altcoins. NEM is something that some speculators and traders tried to make money out of. So basically, NEM or TRON or all the other altcoins from this point over are mostly just like gambling on a roulette. So they are going to disappear eventually, I’m quite confident and I don’t think that Litecoin will ever disappear. I think that NEM will probably disappear in less than 2 years. If you look at the historical chart of altcoins from 2013, you see that there is a huge turnover. These things come and then go and disappear. Maybe they remain as a collectible in very very low liquidity markets like maybe in 2020 somebody will try to collect all the 200 most famous altcoins of the years 2013-2020, so maybe somebody will give some market praise to NEM. But it’s not going to be anything relevant in a very very short time, and I think that I will stop here just because I think that below this point I don’t see a lot of important distinctions.
Vlad: Okay, because I was about to ask you about Tezos and Zcash, which are even more relevant.
Giacomo Zucco: Let’s go there, then. Tezos is a 3 because it was not just a shitcoin for traders, they also tried to represent some kind of governance solution, and then they started to fight with each other about the governance of money, and they went to court is Switzerland. So very very funny situation. So let’s say 3.
Zcash, unlike Ethereum which is in my opinion a very bad idea in general, is putting some cryptographic obfuscation in the blockchain in order to have better privacy like Monero does. It’s an interesting idea. I don’t say that it’s a good idea because you are trading basically more privacy in exchange for less scalability because cryptographically-obfuscated transactions are bigger and slower to produce and verify and to broadcast. So you are giving up scalability, but you are getting some privacy which is very important. You are also giving up some security, because usually when you are doing cryptography, and that’s a very generic sentence which isn’t very precise, but you have to choose between binding and hiding. So you cannot have perfect binding or hiding. So when you are hiding stuff, you could actually lose some security in binding by creating inflation problems. Also, in privacy coins, if you have an inflation bug, then the detection is an issue because it’s a privacy coin. So you’re having a trade-off between security and privacy. So the idea of using Zk-snarks to hide the transactions in the public blockchain, in the global consensus blockchain, is not necessarily a very viable idea. But it’s interesting.
Of course the way that Zcash was implemented was, in my opinion, terrible. From many, many points of view. For example, first they did optional privacy so you can choose a Z or a T transaction. And the Z transaction is incredibly expensive to create, sign, and validate, so nobody is actually using Z transactions. But since the marketing is all about “privacy coins” and Edward Snowden told everybody that Zcash is more private than Bitcoin, you now basically have hundreds and hundreds of people… so you have the people just betting and gambling on the price and that’s okay, but you have people using Zcash as if it was private, but everybody is using T transactions. So if you want liquidity and anonymity, Zcash is already trivially small compared to Bitcoin. So probably, even with zk-snarks and Z transactions, you are easier to identify and track with Zcash than on Bitcoin. But then people using Z transactions are such a small set for obvious reason than the global set of users, that basically if you’re using Z transactions you’re alone with an anonymity set of a bunch of few people. So there is no privacy at all in Zcash: not when you’re using the T transactions, and even the Z transactions have a small anonymity set. That was promoted and overpromoted in terms of privacy in a manner that I think is irresponsible.
Then there was the security and trust setup with people involved in this security circus, with Peter Todd going in the middle of the desert to do the trust setup, to check the entropy generation from the airplane… crazy stuff like radioactive sources. And then the software… I mean that there is no guarantee that the system that these people ran was an actual image of the software. There is no guarantee that the stuff these people have been using during the trust setup was actually the one used to launch Zcash. So you basically created a huge security circus to do some stuff, but the things you are giving them to do their stuff is not verified in the first place or verifiable. Peter Todd is still asking for some kind of proofs that somebody should give him eventually, and then there is the trademark: like Zooko telling around that it’s an open permisionless cryptocurrency, but if you use the Zcash symbol, they are going to sue you. That’s typically a decentralized, open-source and permisionless system, where there is a legal entity that can sue you. But above all these, the fact that you even think to create a privacy-oriented cryptocurrency which should be anonymous using a centralized US for-profit company, that screams “honeypot”. E-gold was shut down and their creator was put in jail because they created some kind of alternative currency. Bitcoin was done this way precisely because Bitcoin creators would have been put in jail just like the e-gold creators. And now these guys with their faces, names and surnames are creating a coin like Bitcoin, but even more anonymous, using and directing everything from a centralized US company. That’s very very fishy! And then there was the very ugly reward model: instead of just mining, they created the developer fee embedded in the protocol. What happens if they lose the private keys? They have to update the protocol in order to change the address of the money. That’s super ugly as a solution.
So probably, Zcash is… I’m undecided between 2 and 3. Is it like Ethereum or a little bit better? I will go with 2.
Vlad: So I think you said 4 before, but after presenting all the arguments, it makes sense I guess to give it a 2.
Giacomo Zucco: Yeah, probably I basically pumped myself into lowering the grades. So I started with 4, but then I gave a very good speech and I convinced myself.
Vlad: But would you say that Bitcoin is a 10?
Giacomo Zucco: In this scale, yes. If this scale is about something that could work… we’re using Bitcoin as a benchmark in this scale. Otherwise, if we are talking about money in general, then I will have to understand better the criteria we are using. Because, for example, for adoption the US dollar is better than Bitcoin. For Lindy effect, physical gold is better than Bitcoin. But for future outlook for now, I think Bitcoin looks better than USD and physical gold. So it really depends and it’s more tricky if you put all the kinds of money together. So if we are just considering cryptocurrencies and we’re using Bitcoin as a benchmark, then Bitcoin is a 10 by definition.
Vlad: Okay, this was incredible and I think I’m gonna ask somebody from the news department to actually write down all this classification that you’ve made. Maybe use less clickbaity headlines, so it doesn’t sound like something sensationalist. But you have made one of the most comprehensive and I didn’t expect this, actually. I expected you to say “Okay, Ethereum, that’s a 2. XRP, that’s a 3. Bitcoin Cash, that’s a 1”. But you actually explained every details and you gave an argument for everything, and that’s something that I really appreciate. And you really took your time with it. And I just have two more questions and that’s it, because we have been talking for over an hour and I have one from Twitter a guy named MyLegacyKit asks “Does Giacomo believe that Bitcoin one day will cover all use cases in the Exter pyramid? And then how? And how could we avoid that spy agencies and other nefarious parties create private blockchains?”. And I’m not sure if you have an image of the Exter pyramid…
Giacomo Zucco: Yeah, I do. So, first question is very good: I don’t think Bitcoin will cover all these use cases. I think that Bitcoin could probably, if it really succeeded in the hyper bitcoinization scenario, I think that it could cover probably the gold market pretty well. Maybe not all, because gold could be like a edge… it could be like diversification against technological apocalypse. Gold is something which has been used as money since the ancient times, so maybe it could take a very optimistic view if 80% of the market for jewelry would be invested in gold. So investment gold yes, it could probably take most of the part.
Base money? Well yes, especially if it’s going to bring out of the business the fiat money and central bank because of Tier’s law. Basically, Bitcoin could serve as money instead of base money.
Bank money? This is trickier because yes, in a way, if we have an economy based on Bitcoin, then you can also have people lending out Bitcoin even with fractional reserve in theory. But that’s not very… I mean, I think that much of this part of the pyramid has been created by the structure of the state –controlled and state-manipulated money supply and banking system. So if Bitcoin could displace government control on money and on finance, I don’t think that 50 trillion of fractional reserve bank money would exist anymore. So my answer would be no, I don’t think Bitcoin would cover this part, because this part won’t disappear, but be seriously reduced. It could be nominated, and we could have a fractional reserve that’s based on Bitcoin. But it’s very hard for bank clients to check the reserves of a bank, while it’s it’s very easy for exchange clients to check the Proof of Work server cryptographically.
The same goes for government bonds, so if Bitcoin succeeds, I think that the government bonds part of the pyramid is going to be seriously reduced. So it’s not that Bitcoin is going to take it over, it’s more that it’s gonna basically disappear or be seriously reduced. So it’s not that Bitcoin is taking over the entire pyramid, but it takes only a part of it while making part of it disappear.
Then we have corporate bonds, let’s just say “corporate”. Which is basically credit. This could still exist in Bitcoin and can be used in the post-bitcoinization world. In this world you can use Bitcoin to borrow or to lend, but that doesn’t mean that the wealth should be counted inside the market cap of Bitcoin. Same goes with non-monetary commodities: I don’t think that no-monetary commodities will be somehow included in Bitcoin. Maybe the Bitcoin blockchain will serve as a platform to trade around crypto securities or crypto collectibles, or crypto derivatives. But I don’t think that will enter the Bitcoin market cap itself.
And then the derivatives: just like the bank money and the government bonds, I think that the explosion of derivative markets is in part a consequence of the manipulation of the economy by governments and their bailouts. They have no skin in the game and externalities. A Bitcoin world will probably make derivative explosion much more difficult because when you lose you lose, and the government cannot pay you out. If the government can no longer tax people with inflation, and if collecting money with normal taxation gets more difficult because of financial privacy. So, for many many reasons, it could get more difficult to bail out failed banks, and that will probably reduce heavily government bonds, bank money with fractional reserve, and derivatives.
So my answer would be no.
Second question: how could be avoided the involvement of spy agencies and nefarious actors? It cannot, but I don’t see what a private blockchain could achieve. So let them play with private blockchains, but they cannot do anything with them. If you mean “How can you avoid that they are going to create something competing with Bitcoin?”. They can, because if they want to compete with hard and dark money which is Bitcoin – so money that cannot be inflated or manipulated as a supply and cannot be easily censored and spied upon, then you have to create something like Bitcoin. If you want to create something different from Bitcoin, which can be manipulated and is easy to censor, then you are not competing with Bitcoin. So I don’t really see any problem. Let them play with private blockchains. I think that right now, already private blockchains are perceived like a joke by many people in the fintech industry. It was a buzzword until last year, now people understand that it’s just a joke. So let’s build private blockchains, they’re not a problem.
Vlad: I feel sorry that this is the last topic that we discuss because it should have been earlier in the interview. But I really liked your presentation with the B Foundation, even though it’s not supposed to be called a “Foundation” and it’s going to be “The B”. And I had an interview with Jameson Lopp and he had very kind words to say about you and your involvement in Europe, and he said that he wanted to do the same in the USA, but didn’t have the same legislative framework to work with. What do you have to say about this project? Do you think that if it will grow in time, the next generation of blockchain developers will get educated through The B? Do you think that at one point you will actually lobby for Bitcoin in countries, or are you trying to stay away as a purpose?
Giacomo Zucco: So we will stay away on purpose from lobbying. That was not the… so I appreciate that you liked the presentation. Many people in Riga liked it, but many people abroad, just like in the case of the maximalist presentation, the partial information was very easy to misunderstand. So many people didn’t perceive the jokes and sarcasm in some of the choices of the name and some of the slides, so they started to assume that we are going to create something to officially represent Bitcoin (which is not the case), or to lobby for Bitcoin to the governments (which is also not the case). But we want to create a way to match demand and offer for open-source development donations. That’s all I’ve done for the last 3 years. I mean, outside my for-profit job. For profit, I was consulting and teaching, and non-profit I was basically donating to Bitcoin projects, no strings attached. So hopefully, the B will continue what I’ve done for 3 years with a bigger set of people, with a bigger reach and a more sound legal structure that Alena and I talked about.
So I’m super happy that Jameson chose to be part of it, I think I will use Jameson mostly as what we call a “reviewed”. So the idea of the B is that there will be a hierarchical tree of projects, and then there will be donors donating to some node of the tree, and there will be developers claiming the donation like a bounty because of the world of some developers. So we need people, so that the donor itself doesn’t have to directly manage a project or directly assess the code or pass it. They want to donate. Often times, they are not even technical people.
We need to get people to get the money operating as an escrow, and when the developers submit a proposal, they can evaluate the proposal and release the bounty or not (or ask for modifications). Jameson Lopp will be one of these guys in my expectations, and so far he accepted. There were a lot of misconceptions about the roles of the famous people I called on stage. It doesn’t mean that we’ll have everybody in the same company centralizing, with Blockstream or Casa HODL. Everybody will keep their normal job, Jameson will work for Casa HODL which is a very cool company by the way, Alena will work in Casa HODL as well, I will work on my for-profit business, Adam Back will work on Blockstream, and everybody they will work on their project. And there will also be requests to evaluate bounty claims inside The B website.
So we discussed The B with a lot of people in interviews and podcasts, and they started to feel a little uncomfortable because I’m talking a lot, and I’m not delivering anything yet. I will feel much more comfortable to talk about The B when we finally have the legal entity in Lichtenstein incorporated, and the software of the donation flow out up and running. I look forward to that, I hope we can do that before November, but I’m not committing myself because these things are always unpredictable. When we start to see the first donation flows, I think it will be clear to everybody what the hell we are doing with the B: not lobbying, not representing Bitcoin, but going out to fund development efforts and some efforts in marketing to debunk myths and misconceptions and lied. Which is basically what I’ve tried to do during this interview as well.
Vlad: That’s great and I’m happy that we had this interview. Grazie, Giacomo!
Giacomo Zucco: Prego, optimi italiano!
Vlad: Parlo un po d’itaiano.
Giacomo Zucco: Perfetto.
Vlad: You wrote for Crypto Insider a while ago?
Giacomo Zucco: Just once, unfortunately, a few months ago. I’ve wanted to do more, but I’m good at giving talks. But when I try to write, I rewrite every sentence 100 times. I’m so slow and perfectionist, so I wrote something which I think was a good article about UASF and all the stuff, I like the article that came out of that, but I promised to Crypto Insider a lot of other articles that were never delivered. So hopefully I will start writing again, but I’m so slow at it. I will need like a ghost writer recording me talking all the time, and writing it down.
Vlad: It’s okay, because this interview will be transcribed, so everything that you said will appear in text. You can get, you can use it for articles, do whatever you want with it.
Giacomo Zucco: Great, thank you very much.
Vlad: Okay, so have a great rest of your day and thank you for this interview!
Giacomo Zucco: Have a great day too, and thank you! Goodbye!