Reflections on Bitcoin’s Epochs with Andreas M. Antonopoulos

Christie Harkin (Bitcoin Magazine), Andreas M. Antonopoulos (Mastering Bitcoin)

Reflections on Bitcoin's Epochs With Andreas M. Antonopoulos

[00:00:00] Christie Harkin: Hi, I'm Christie Harkin, I've been Bitcoin Magazine's managing editor for the past four years. With me is Andreas Antonopoulos, a longstanding Bitcoin evangelist and educator and author and speaker. Andreas, welcome to the Bitcoin magazine halving event. So great to have you here, couldn't do it without you.

Andreas Antonopoulos: Thank you so much, Christie. It's a real pleasure. I've been a huge fan of Bitcoin magazine ever since. The first couple of, editions. In fact, I remember, one of the first editions was, sold to me at a conference by, a very nice young man, by the name of Vitalik Buterin.

Christie Harkin: Right? Yeah. He, he started it all off and running and we've taken it in lots of different directions since.

So this is your third halving, and, so we're going to be getting your perspective on the state of Bitcoin for each of those separate epochs and get some ideas of what you see coming in the next one because goodness [00:01:00] knows there's a lot of exciting stuff coming down the pipe.

Andreas Antonopoulos: Absolutely. Yes. I was lucky to just about catch the first halving in 2012 so lots of excitement.

Christie Harkin: I came in halfway between number one and number two, so this is my second. So yeah, wasn't much of a big deal when we did the second one. I think, in fact, Aaron van Wirdum had an article saying we had the Halving and not much happened, but it's always in the weeks and months and years that follow that things get interesting.

So, if you were to look at the first three and a half years or so of Bitcoin, four years, leading up to the 2012 halving, how would you characterize that period? what would your impression of that be?

Andreas Antonopoulos: I think those were the, obscure

years. Bitcoin was very much in obscurity. And very, very few people had even heard of it and, had any idea what it [00:02:00] was, so the user base was tiny. the community was extremely small. I remember going to the first conference in San Jose and meeting basically everyone, the entire Bitcoin community, almost at the time that was, in the U.S. Was there, and you, you could fit everybody in a room.

it was quite, quite tiny.

Christie Harkin: There were a few interesting areas, little pockets of development. by 2012, there was a London conference happening. there were some, meetup groups all sort of springing up in lots of different places. Were you involved in the meetup scene back then?

Andreas Antonopoulos: I had just started getting involved in the meetup scene, yes. I co-founded two meetups in, the San Francisco area, which is where I lived at the time.

Christie Harkin: Yeah. And I think that now in terms of say, development of things being built at the time, what were some of the more striking things from pre [00:03:00] halving number one that really stood out as markers for you that showed that we were going to actually go somewhere with this.

Andreas Antonopoulos: I was really excited at the time with a, a very interesting new technology called, P2SH or pay 2 script hash, with the emergence of a new form of address, which started with a three instead of a one, something that's very familiar to us now but, in 2012, that was new. Until then, the

types of scripts that you could put into Bitcoin transactions were severely restricted. So, there was a fundamental test that occurred in the system, for standard scripts. There were a few standard scripts that were, let's say, approved by the consensus rules. So, after the initial launch of Bitcoin, developers went in and they identified a few bugs

that Satoshi had, overlooked. Some edge cases, some, difficult scenarios that could emerge [00:04:00] and in order to protect against, certain types of bugs, the code was changed and the Bitcoin script was restricted with, a lot of the kind of more exotic capabilities disabled and the number of scripts allowed limited.

And so, by 2012, that started opening up and things like multisig, really started, to expand at that point. So, you could, you could do some really interesting things with multisig as well as more complex scripts started becoming possible.

Christie Harkin: And when you say that those kinds of developments really opened up things like multi-sig, why was that important?

Why did that make Bitcoin more usable and have more potential?

Andreas Antonopoulos: Well, because, when the, the primitive building blocks that are in the script language are expanded, it starts, kind of tickling the, creative brains of people who are thinking about these things. [00:05:00] And they gradually come out with

some really, strange, radical and exotic ideas that then take years to come to fruition, but eventually, become, very important innovations. So, for example, the use of the op return parameter to, be able to embed small amounts of data, which created the possibility of the first, second layer capabilities, colored coins, counterparty, Omni or master coin, as it was called at the time, which then, Gave people like Vitalik Buterin the idea of making more expressive scripts that led to Ethereum -- a lot of people don't know that Vitalik started trying to build Ethereum as a layer on top of Bitcoin, using the master coin layer. All of those capabilities opened up, with the opening of the script types in 2012.

So, the door opened then, and then the innovations continued to trickle out, SegWit and its a possibility of being [00:06:00] implemented as a soft fork in 2017 was based upon, some of the peculiarities of the script language. the lightning network, which appeared as a fully-fledged idea with an implementation, designed effectively, two years, three years later, was based on the capabilities of complex scripts and multisig at that time.

So, it takes a while for primitives to become fully fledged ideas and for people to build interesting things with these, building blocks. And then for those ideas to become workable code and then deploy to networks and then finally features in user wallets. but those of us who were paying attention and, and kind of can see where things are going when we see these doors opening at the primitive layers of the protocol can kind of see where that might lead and so start imagining new things.

Christie Harkin: When I was thinking about the first epoch, I started [00:07:00] thinking like if I had to sort of put a chapter heading on it or something, I was thinking something along the lines of: "What is this?" "Bitcoin: what is this and what can we do with it?"

And when we look at sort of the, the timeline of things that did happen, you know, we're getting first experimentations with exchanges. We get our first couple of bubbles. We get, Experimentation with different forms of wallets and you get the HD wallet starting to come in and how that opens everything up.

so, if there was a lot of the whole, like you've just got a brand-new toy, but you don't know what to do with it yet.

in a way the halvings are kind of arbitrary benchmarks, if you like. It's all coded in and one thing doesn't necessarily lead to the other, but it's a useful parameter, I think for us

to think of these discrete sections

as milestones and what can we say about the periods in between. so the second one I was thinking of in terms of from 2012 to 2016 sort of as an experiment, build and [00:08:00] break section, there was a lot of experimentation, a lot of building and a lot of breaking, a lot of, a lot of stuff went down in those four years.

there was a lot of regulation, started coming in. People Outside started looking at Bitcoin and going, what is this and what do we have to do about it? In fact, the first encounter I had with you, followed your speech to the Canadian Senate on what was Bitcoin and whether or not Canada should be regulating it.

so how would you look at that, second period of Bitcoin?

Andreas Antonopoulos: Well, the, the second period of Bitcoin I think is, when people outside of the very, very small community started taking notice and, a lot of things good and bad happened. I remember 2013 as being this absolute tornado of a year where so many things happened in one year, that, it was a transformational year for my personal [00:09:00] involvements in Bitcoin but also a lot of really, shocking and exciting things happening.

Christie Harkin: what comes to mind specifically? what's the one thing that really stood out for you then?

Andreas Antonopoulos: Well, a for me, it was a back to back the appearances on the Canadian Senate floor as a witness, as well as, shortly thereafter at the Joe Rogan experience podcast, which has an enormous audience.

It kind of catapulted me into, recognition in a way that I wasn't really ready for or anticipating. it was the beginning of my work on Mastering Bitcoin, the book. it was, the first big rally where people suddenly got, very excited. Some people got quite rich and some people got quite greedy.

And, that led to, a slight change in the perspective of outsiders who were now more attracted to the possibility [00:10:00] of, quick riches. it was the beginning of the first, altcoin and ICO, fever. And just an overall crazy yea. I also remember it was the first time we saw some real cracks in, the ability of Mt.

Gox which at the time was an anchor, kind of bedrock exchange, the only really big exchange that existed, and it really creaked under the strain. And threatened to fall over, which kind of presaged what was going to come next, which was the biggest, collapse of a custodial system in the history of Bitcoin.

Christie Harkin: I think another kind of biggish event that happened right after the, the first halving was the takedown of silk road as well, which was one of the first big, big use cases for Bitcoin.

Andreas Antonopoulos: Yes, absolutely and the shockwaves that sent through the community and, forced people to, reckon [00:11:00] with the moral, ethical implications of this technology on both sides.

Christie Harkin: Those were two narratives that Bitcoin really had to handle and deal with was the, the silk road side and the collapse of Mt. Gox so you had the whole sort of "Bitcoin is for criminals" and "it's not safe," which I think that, took several years, really for Bitcoin to really recover from and change the narrative and, and prove it's, it's actual value.

Andreas Antonopoulos: Yeah, so it was a big setback, which I think set back the whole narrative by probably a couple of years. then again, what it also did was it took the steam out of, the speculation and the anticipation of riches, which again, allowed, the community to refocus. but I find those periods, the busts, the follow, the booms to be, periods when

there's a clear out in the community and [00:12:00] a lot of the, opportunists, who have kind of flooded in, in order to take advantage of the rapid rise in price and to stake a claim and things like that, they get washed out. and what stays behind is people who may have entered the space looking for, some kind of financial gain, but then are attracted to some of the principles and then stay and want to learn more about why it matters.

Why, it's not about the price, why it's about, openness and freedom and, the lack of control and intervention and censorship of the traditional financial system. And so, we have some very good conversations. It's also a great time for those of us who are doing work in the space, to be able to tone down the noise and really focus on what matters and get down to work.

because when the craziness is happening [00:13:00] during the boom cycles, there's too much noise and too much distraction. and it's very difficult to get any real productive work done. So, I ended up finishing my book, during the next two years and, got a lot of work done, building kind of education,

and we, we did some of our best work and I think the same thing, applied with the core developers who were working, on a lot of different things. A lot of people produce some excellent work. The lightning network paper was published at that time. Ethereum launched and started a whole new, interesting chapter in this saga., and you know, everybody got ready for the next boom cycle, the next halving, and it didn't take that long.

Christie Harkin: And that's what I would have probably be labeling the third epoch, the 2016 to 2020 was boom and bust. and also, sort of the boom of the new financial products that started coming out.

All of that initial interest that [00:14:00] started in the second epoch, really exploded in the third one, and we got a lot of the institutional interest in Bitcoin.

Andreas Antonopoulos: Yes. and it's more than just the institutional interest in Bitcoin. I think one, one of the things that happened that was really interesting is the second altcoin and ICO season, because everybody remembers the altcoin and ICO season in 2016, 2017 but most people forget that the first one happened in '13 and '14.

we had ICOs then that's when the term was coined, no pun intended. and then, in, in 2016, 2017, what happened however, was that, Ethereum proved, one of its fundamental propositions, which was that it made it so easy for anyone to tokenize anything, and with that came the double edged sword that it made it so easy for anyone to tokenize anything that, everyone tokenized everything, including things that shouldn't have [00:15:00] been tokenized.

and outright scams and we have a much bigger, second round of altcoins, tokens and ICOs. and when, the space exploded, in financial terms in 2017, that's when every shark in a suit piled on. you know, some people like to call that the institutional interest in Bitcoin. I think of it as sharks in suits, circling at the smell of blood in the water and hoping to get a piece of chum for themselves.

Because the most of it wasn't serious institutional interest. It was a very, very opportunistic. We didn't get the creme de La creme of the financial services industry. what we got is the bottom feeders of the financial services industry, and they flooded,

Christie Harkin: But they've since -- a lot have been shaken out and now

Andreas Antonopoulos: we're entering...

exactly as soon as the boom turns to bust, all of those [00:16:00] opportunists get wiped out and, make grand pronouncements about how they never really believed in, Bitcoin.

They're much more interested in blockchain, the technology behind Bitcoin, which is kind of a sour grapes response to failing to Lambo. it's, it's really funny, but again, that gives us an opportunity then to, batten down the hatches, focus on the important work, educate the people who are willing to stay and learn about the principles,

get prepared for the next wave of newbies. and really start differentiating the signal from the noise. and again, it's a very productive period, for those of us working in this space. that's when the lightning network was actually built, was after the boom. that's when, I finished my second book, "mastering Ethereum," I published a couple of books about, the internet of money in the meantime.

But the second big technical book happened then and here we are again.

Christie Harkin: So, where are we going to go? one thing that you were [00:17:00] excited to see coming in the next epoch?

Andreas Antonopoulos: Well, first of all, I think that the same prediction that I made the previous two, halvings applies again, which is that, a whole lot of nothing is going to happen.

Christie Harkin: for now.

Andreas Antonopoulos: For now, yeah. because the monetary effects, if any, and I'm not an economist, so that's not my primary area of interest. The monetary effects take quite a while, to make themselves felt in the markets more than the speculative enthusiasm that kind of races ahead of any real fundamental change.

So, what we're seeing now is this kind of frothy excitement that doesn't have much substance to it, but that is overwhelming any possibility of getting some kind of signal from the market fundamentals. It's going to take a long time before the signal from the, from the fundamental change in the inflation rates of Bitcoin's issuance

[00:18:00] breaks through all of that noise and becomes the dominant signal that really is felt in the market.

Christie Harkin: But markets aside, what is exciting to you about what's going to be coming in the next couple of years?

Andreas Antonopoulos: Well, I think, the most exciting, two developments in this space are, the changes to the underlying scripting language that are almost ready to deploy

and I hope they'll be deployed faster than our previous change with SegWit. And those are Schnorr signatures, taproot and tapscript that come as a package of changes. those open up, again, it's, as I mentioned before, us in the first era, they open the door, they create new building blocks on top of which a lot of exciting things can be built.

There's a couple of other potential changes to the scripting language that are being proposed that massively increase the flexibility of the scripting language without making it turing complete, and those are very interesting. the other area of development is the maturation [00:19:00] of the lightning network.

To me, the lightning network until now has been primarily a fairly raw and kludgy, a protocol implementation, a prototype, that is gradually getting polished, but the rough edges have mostly been polished off. And we're getting to a point where the user interfaces in the lightning wallets, the infrastructure, the reliability of the system, the consistency of the experience, et cetera, are beginning to, shine through.

All of the efforts that have gone into the last, two years of running production networks are bearing fruits. And., I think that's going to monumentally impact how Bitcoin is used, how it's perceived, and, really transform the environment. until now, lots of what we are doing with Bitcoin, at least on the surface,

was stuff that you could also do with traditional financial services. [00:20:00] Lightning opens up a whole new dimension of time and space. In terms of time, we're talking about transactions that take, less than a second, to be fully cleared, irreversible and trusted, and, where you can do thousands of transactions per second, potentially.

And in addition to that. the, opening up of the dimension of space where until now, the minimum transaction you could do viably on Bitcoin was about a dollar to $10. and we're going way below that to sub cent transactions, true micropayments and even nano payments below that, that open up a whole range of applications.

What's interesting is that now we're talking about applications that are unprecedented, that simply do not have an equivalent in the traditional financial and payments industry, and once we start exploring those, that's when this technology really [00:21:00] comes into fruition.

Christie Harkin: That'll be really exciting to see in the next couple of years and, and beyond even.

But it would be good to resume this conversation again in another four years and see where we are and what else has popped up as a really promising, development. Everything moves exponentially quickly as well from where things were every four years. Who knows where we're going to be in another four?

Andreas Antonopoulos: yeah, I think though, a lot of people are anticipating something momentous happening at the moments of the halving, because it’s been pumped up by all of the reports. And we talked earlier about milestones, you know, milestones, you know, the word comes from markers that were put up. every mile on Roman roads.

and just like when you pass a mile marker, not much changes in the scenery. the halving as a milestone will be completely uneventful. In fact, we hope it will be completely uneventful. From a technical [00:22:00] perspective, the difference between block 629,999 and 630,000, is going to be nothing.

it's going to come across as a somewhat anticlimactic experience because within that experience, we will see the fundamental experience of Bitcoin and the fundamental experience of Bitcoin is tick tock, new block. That's it. it just keeps doing that. " it's dead." "It's about to die,"

"it's for criminals," "it's not for criminals," "it should be regulated," "it shouldn't be regulated." All of that noise. And in the meantime, what Bitcoin does in the background is tick tock, new block, and continues to chug along 24 hours a day, 365 days a year. completely unstoppable

Christie Harkin: that's the remarkable thing about it.

Andreas Antonopoulos: Exactly. And that's what's going to happen during the halving. Nothing's going to happen because by design, nothing is supposed to happen. and then, once it's worked, [00:23:00] then people can go back to, "Oh, it didn't die" and now we can see what the economic impact might be or other things that will come as a side effect of that.

Everyone will breathe a big sigh of relief, except for those of us who are kind of grizzled veterans who've been through this before. And, we'll continue and everybody will forget all about the halving in three and a half years from now, I'm going to be explaining it all over again to journalists that are going to be asking me about the possibility of a death spiral, imminently, which happens so often when new people come across this technology and misunderstand it, quite dramatically.

Christie Harkin: That pretty much sums up, I guess all of the good stuff. Thank you so much, Andreas, for doing this again and we'll see you in another four years.

Andreas Antonopoulos: Absolutely.