(1:36) Bitcoin core developer John Newbery joined host Nicholas Gregory, CEO at CommeceBlock, to discuss the state of the Bitcoin network. John first got interested in bitcoin in 2013 when he was living in Australia. He first heard about it on a podcast, but like most people, it took a few exposures before he started to take it seriously.
Before long John started looking into Bitcoin and became completely obsessed. Eventually, he quit his 9-5 job in hopes of finding a way to work full time on Bitcoin. As fate would have it, he scored a residency in New York and got to do just that after being offered a full-time position. He came back to the UK last year.
(2:54) Since John has been involved in Bitcoin, the market has grown from meetups with a dozen people and their dogs to a trillion-dollar market cap. That makes it more distracting for developers. The common view, of course, is that devs like bear markets because they can keep their noses down and focus on the technology. But the growth has been good and is necessary for bitcoin to succeed.
(3:23) “But in terms of the actual work, maybe there is more pressure, right? There’s a trillion dollars riding on this thing now rather than USD 100 billion or USD 10 billion,” said John.
(3:56) There are four benefits to the combination of Schnorr and Taproot on the Bitcoin network:
It becomes more scalable.
It becomes more fungible because outputs end up looking the same.
You get a privacy benefit.
You can have more features and functionality on top of these constructs.
(5:09) “In sum, it’s good all around. There’s not really a downside to it,” said John.
In addition, Taproot makes things like multi-sig easier and more economically attractive, which is good for security. Currently, there’s a tradeoff. If you want to use multi-sig and be more secure, it will cost you more. But with Schnorr/Taproot, there are constructions where a multi-sig would just be one public key and one signature. And so sending to a multi-sig is the exact same cost as sending to a single public key. So the tradeoff doesn’t exist and you get the best of both worlds — security and lower fees.
(7:13) People are wary of Taproot, however, because of 2017, when there was a battle of activity over activating the soft fork. Schnorr/Taproot is a change to the consensus and it is changing the fundamental rules of Bitcoin.
(7:57) “The rules of the game shouldn’t change. But a soft fork is changing the rules of the game a little bit. And in this case, we think it’s beneficial for everyone. There haven’t been any technical objections to the change itself. The question is all about how you activate that change, how you make that change and how you coordinate across a decentralized network to make that change,” said John.
(9:35) As Bitcoin grows, and there are more market participants, the hope is that it becomes more decentralized in terms of ‘hodlers’, miners, exchanges, developers. You get to the point where it’s just more difficult to coordinate. That’s the problem — how do we coordinate and get a decentralized network to upgrade on the fly?
(10:3) At some point, Bitcoin might become ossified and it will become impossible to change the protocol. Hopefully, we’re not there yet, said John, because there are really cool things that can be done with this change.
It is also very important to remember that miners don’t make the rules of Bitcoin. So the debate is not ‘can we convince 95% of miners.’ It’s more philosophical than that, explained John, adding that people are generally in favor of reducing that 95% threshold to 90%.
There’s no need for a block size increase right now, he noted. Right now, fees are moderately high but there is still a lot of room for using the blockchain more efficiently. That’s what the incentives should be. If you merely expand the block space, then there’s really no incentive to be efficient, John explained.
Bitcoin Core Funding
As far as open-source projects go, Bitcoin is extreme in terms of its decentralization. There are many successful open-source projects where development is directed by a centralized body of some kind, such as a foundation.
(15:37) Bitcoin protocol development and Bitcoin core development happens in a decentralized manner and funding comes from various sources.
A handful of developers who were once funded by a foundation went on to be funded by a group within MIT. Other organizations that have funded Bitcoin protocol development include Blockstream, Chaincode, which John previously worked for, Square Crypto and exchanges like OKCoin, Kraken and Coinbase, to name a few. That is the state of funding through the end of last year.
(17:17) “I’d say we’re in a better place than we’ve ever been. There are more diverse sources of funding, which is exactly what we want for a decentralized project,” said John.
John also serves as founder and director of London-based Brink Technology, which is a 501(c) non-profit organization that he set up to support Bitcoin core developers. It was inspired in part by filling a gap in the Bitcoin core funding world as well as to mentor and onboard new contributors. People can donate to Brink and write off that donation as a tax deduction. Brink runs a grant program and a fellowship for onboarding new contributors, where the first fellow has already joined.
(20:03) “Our mission is to support Bitcoin protocol developers and we have those two programs and we are unique in our funding that we are funded entirely by donations by members of the public and from Bitcoin businesses and organizations,” said John.
Jack Dorsey, the head of Square, gave 1 BTC to Brink as a donation. Brink hasn’t offered the type of model where grants are directed toward a specific project yet. But they would be open to that. The current model is 100% of the funds that come in go directly to the grants and fellowships.
(23:45) John spends much of his time these days on administration and operations. Mike Schmidt is the other co-founder. They just hired a new director of operations, and she is based in the U.S.
(25:23) “It’s very important to me personally and I think to the organization that I am deeply involved in the technical part of Bitcoin and also deeply involved in the learning and mentoring of the fellows,” said John, adding that he spends a lot of his time on that.
To donate, go to Brink.dev and click on “Donate.” They accept fiat as well as Bitcoin and Lightning payments.