Taken from the Tim Ferris Podcast interview with Nick Szabo and Naval Ravikant.
Audio Version
Transcript
Tim Ferris: Nick, what are the biggest misconceptions or common misunderstandings related to cryptocurrency or Bitcoin? If there's anything where you're like "God, this drives me nuts. If I hear one more person who should know better."
Nick Szabo: We could get into the whole block size issue because there is a parameter. We shouldn't but I probably will talk about it a little bit. There's a technical security parameter called the block size. How the general public glommed onto this I do not know. But there's an obsessive group of people who think of this as some kind of artificial barrier to more transactions per second on Bitcoin. Really it's job is that it's a fence preventing people from overwhelmingly flooding the network with lots of transactions that the full nodes I talked about can't handle, that transaction history keeps building and building.
Naval Ravikant: At very simple level if if every computer is throwing a copy of every transaction then you can't have an infinite number of transactions because the computer will explode. And so what you do is if you keep increasing the number of transactions to too quickly then you only allow a smaller and smaller shrinking set of computers to run the code which reduces who's actually in charge of security. Before you might have had a million then you're down to a hundred thousand big computers. Then there's only a few thousand large players then down to 5 people who can store the entire history. Then you're basically back to central banks.
So the debate is should we keep allowing more and more transactions. Because what if everyone wants to buy a Starbucks using Bitcoin. Or should be only limited to very high value transactions and instead preserve the diversity of people who can who can run the code.
Nick Szabo: Yeah I mean this shouldn't even be a public debate. It's like the public debating and voting on the graphite reactors that prevent a nuclear reactor from overheating and melting down. There are certain things you should let the engineers decide. And this is one of them. And for some reason there's just a whole group of people who want to pull out those graphite moderator rods and have it going full steam.
Naval Ravikant: Yeah. One of the problems with Bitcoin is that because a lot of people hold a little bit of Bitcoin. Everyone has a financial incentive and they're all talking their own book and they get really emotional about it. Nick had this great tweet that I liked the best way to destroy your investment in Bitcoin is to gather an Internet mob to go and redesign Bitcoin. Right. And that's a little bit of what's happening right now.
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