Rejecting Bitcoin Fundamentalism | Dan Held

Hey Bankless Nation, welcome to another State of the Nation episode where we talk about something in depth that is going on in crypto. This is saying no to Bitcoin Fundamentalism. David, this has been a theme in crypto lately. Former Bitcoin maximalists turning against Bitcoin fundamentalism? Who do you have on the podcast? What are we going to cover today?

We had Dan Held on the show, and Dan Held has been a Bitcoin proponent, Bitcoin believer for a very long time. And I actually don't think, Ryan, that they're the Bitcoin maximalists are turning away from Bitcoin maximalists. They're turning away specifically from Bitcoin fundamentalists, which is a new term. And it's actually how Dan Held ended up on the show today when he tweeted out a tweet that said, say no to Bitcoin fundamentalism. And I and I, like you, caught that tweet a little bit by surprise, like, oh, Bitcoin fundamentalism, Dan Held saying no to Bitcoin fundamentalism. Don't know what Bitcoin fundamentalism is, but it's interesting that we're seeing a schism in the Bitcoin community. So this is what this episode is about. What is exactly Bitcoin fundamentalism and why are so many Bitcoin leaders rejecting it? And so we spend the first half of this episode uh defining terms and just like getting things, making things really, really clear so we can actually talk about what we need to talk about, which is this growing cultural divide in the Bitcoin community.

All right, David. Uh I know why we're talking about this, but what should folks pay attention to in this episode? And we are pre recording this because I know you're at uh Devcon this week, actually. And uh so we are pre recording this. I was not able to make it to this episode, so it's just you and Dan today. And what should listeners pay attention to?

Yeah.

One of my favorite lines out of Hazu actually is that Ethereum culture is downstream of Bitcoin culture, as in Bitcoin culture is like the source of all other parts of Ethereum culture. But also, I think that can extend to really the crypto world at large. Bitcoin's first. It is the most on the frontier. And we can use some of the goings-on in the Bitcoin community as like a microcosm. And so I think this is a lesson not just for the Bitcoin community and a hurdle that the Bitcoin community has to get over, but this also relates to your community as well, whether it's as large as the Bitcoin community or maybe perhaps as small as a very, very small, like, you know, token community. This is about groupthink. This is a story about groupthink. So while listeners are listening to this, I think they should pay attention to in what ways does this story, I do identify with this story with my part of crypto that I'm in. And Dan does a good job as he parts apart the good and bad parts of groupthink. Groupthink isn't inherently bad, but it can be if it gets out of control. But also, if you are just interested in building on Bitcoin, part of the non-fundamentalist camp, what Dan is calling the Bitcoin rationalists, they're all interested in restoking and kindling fires of Bitcoin building after that Bitcoin fundamentalists have kind of driven out of the Bitcoin culture. And so the Bitcoin rationalists want Bitcoin building back. And so Dan and what he's doing at uh trust machines and various other Bitcoin layers are working on how do we reincarnate a Bitcoin, uh builder culture in the Bitcoin world. And so uh, if this interests you and more, stay tuned for the episode.

Oh, this is kind of cool. For my part, I'll be looking at how this compares to our episode that we did a couple months ago with Nick Carter, who was so frustrated.

Specifically, yeah.

Oh, really? He was so frustrated with the Bitcoin Maximalist community, he just kind of rage quit. And this looks like a group that is not so much leaving the Bitcoiner community, but trying to reform it in a healthier, more pragmatic, more builder-centric way. So we are seeing a culture, a cultural reform maybe taking place with leaders like Dan Held. And I'm anxious to see how that plays out. And I'll be looking for what that reform might look like in this episode. The first time I think I've seen this in the crypto space. And uh hopefully it means healthier times for Bitcoin. Guys, we're going to get right to the episode with Dan, all about Bitcoin pragmatics and about saying no to Bitcoin fundamentalism. But before we do, we want to thank the sponsors that made this episode possible.

Dan Held is an educator in the Bitcoin universe, formerly director of growth marketing at the Kraken Exchange, and now an advisor to Trust Machines, a software studio, kind of like the consensus for Bitcoin. And overall, Dan has largely been fully committed to working on and promoting Bitcoin to the world and also has some thoughts about the current state of the Bitcoin community, which is going to be the topic of conversation today. Dan, welcome to Bankless.

Thanks for having me, David.

Dan, this whole conversation got inspired from a tweeter, uh, a tweet that you wrote, uh, that w that you said, say no to Bitcoin fundamentalism. Can you talk a little bit about that tweet? Like what is Bitcoin fundamentalism? Because this is a new term that I haven't heard before. And overall, what's going on in the Bitcoin space that inspired this tweet to come out?

Yeah, I think what's going on right now in the Bitcoin community is you've got like, if we use a religious example, which uh, you know, with all crypto L1s, I think uh religion is a really good way to think it through it. Um

if we think about it like a religion, you've got like Christianity, let's use that as an example. But then there are

sub, you know, groups within Christianity where you might have um you might have Catholic, you know, or not not Catholic, but you might have like Methodist or Presbyterian or some of those kind of like or Lutheran, uh, where it's basically they all believe in the same thing, but just different flavors of it or different styles of it.

Um, and so what's happening in the Bitcoin community now is there isn't really a good terminology to label these subgroups. And that's where I've been trying to do that of kind of like labeling what are what do these groups look like. And that's where I think the you know rationalist versus fundamentalist term, I think is a good way of kind of uh breaking, you know, taking these groups and identifying them with um kind of like a key, like a key labeling of what they are. Um, to pretend that everyone's going to agree with any sort of movement, whether it be religion, an L1 or something like that, I think is pretty silly. Um, I'm certainly not trying to be divisive, I'm mainly labeling these subgroups and trying to help people think through hey, what what group do I belong in, or what group is advocating for XYZ activity? Um so I put out a tweet the other day that said reject Bitcoin fundamentalism.

And the way that I define Bitcoin fundamentalism, because I don't think it's been well defined, nor is it like a common terminology.

Bitcoin fundamentalism would be,

I would say, cultural elements that are being brought into the Bitcoin community that don't represent what I think are the core values of the Bitcoin ethos.

For example, some of these values are, you know, taking, I would say, very subjective, very cultural things and inserting that and making that part of what Bitcoin is. And I just totally disagree. Um, examples of that would include, you know, people claiming that earning in a yield or earning interest is usury, or some sort of uh 1500s esque.

Uh, medieval sort of uh religious response to interest, uh, which earning an interest or earning yield is simply a free market activity. Uh, old Bitcoiners or OG Bitcoiners would have no qualms with that. They might have qualms with the way that the risk is represented, and I certainly do agree that we should call out the risks of these things. But to say that yield or lending or interest won't exist in a Bitcoin world and that it's evil is fundamentally anti free markets. And Bitcoin is absolutely for free markets. And we've got some other things as well, like for example, people will call out certain influencers for making money. Um, I'm not speaking about myself, I'm speaking about another individual in the space, making money, building a course on how to teach women to get into Bitcoin.

And uh they they said that making money from educational activities is you know sort of a perversion of um this pure ethos of of you know giving out all of your time and effort to help Bitcoin. And I think that's really silly because one, it's a free again, a free market activity. If people want to buy the course, they want to buy the course. If you want to give away a course, you can give away a course. You're you're free to price your services or products at zero. Um but to call out someone that is doing, I think, a fantastic job of educating people about Bitcoin and calling them out because they're making money, I think is just, you know,

kind of pure and simple, very like um

what's the uh it's sort of like a piety sort of thing of like, hey,

the the most

The most Bitcoiner of us don't take any money, and it's this like you know, the celibacy or or piety sort of thing going on, which I don't think is what Bitcoin is about at all. So these are a couple examples. I know we're gonna dive in further, but just for the audience, that that's kind of like where I'm coming from here.

Yeah, and and putting a name on these things, I think is super important. And I think why I want to spend uh even more time actually like defining out what what's going on here, what's going on in the Bitcoin community. Because once we can name something and then we can talk about it just a little bit more more clearly. And so peering over the fence, uh and also, by the way, I totally appreciate like the the uh some people some people don't really get it, but like the religion metaphors are just so apt sometimes in the crypto space, especially when we're so tribal. And so so peering over the fence at the Bitcoin land and and hearing what your answer was for what Bitcoin fundamentalism is, to me, it's a little bit like there's this cohort of Bitcoiners that have perhaps started to take things just a little too seriously, have taken things a little too far, and now are like perhaps a snake biting its own tail. Like they've taken some of the memes and really just

Twisted them beyond what they were really intended for. And so there's when you we say Bitcoin fundamentalists, perhaps perhaps you also might mean Bitcoin extremists. Would that be also a fair characterization or or would you push back on that?

It depends on everyone's definition of what an extremist versus fundamentalist might be. Um, you know, I would say like it certainly isn't maximalist. I think the term maximalism represents a pretty large group of Bitcoiners who don't really have any sort of sub identity to connect with, right? Like if you're a Bitcoiner, what other name do you take on?

Like moderate or rationalist or fundamentalist. None of these have really taken off. And I think that's somewhat troublesome because, like a lot of people in Bitcoin, they're not homogeneous. There's not a homogeneous sort of perspective of what Bitcoin should be or what is what is ethical or not. And so I think that,

you know, maximalism, I think is an overly broad term to identify a group of people. And I wouldn't say that many, I think many maximalists wouldn't even agree that they are maximalist. They're more, they would consider more moderate or rational. There just isn't a term for that. But I guess fundamentalists to me would represent

Not extreme ideology, but more of like

ideology that actually runs counter to what Bitcoin represents. Because in this scenario, it's not subjective of like, hey, I

do or don't like what you're thinking. It's more of like, if we look at the principles of Bitcoin and why Bitcoin is important and what it's setting out to do, are people adhering to those base principles of what Bitcoin represents? So by using their own sort of measurement stick of ethics, are they themselves using the correct measuring stick, is what I'm thinking about.

Sure, sure. And and how why would you to what would you accredit the reason why Bitcoin fundamentalism has come about? Like what what was the main reason as to why it exists?

Yeah, that's a good question. And it's super hard to pick apart. I don't think that there is one single sort of variable here. I think it's a culmination of the activities that occurred in 2016 and 17, where you had, you know, Bitcoin toxicity or Bitcoin's defense mechanism, Bitcoin's white blood cells attack companies and powerful individuals who wanted to change Bitcoin's protocol. These are the block size wars. The block size war is what I'm talking about here. And I think this was a good thing. Bitcoin stood up and the community uh stood up and said, we will not let powerful individuals.

Take Bitcoin and change it to their whim. I think there's a very powerful movement and a really, really cool movement to represent Bitcoin's decentralization and the and the ethics and the eco and the ethics and uh sort of the community.

Um after that event, you know, the sick with the successful, I'd say, absolute destruction of Bitcoin Cash, I don't think anyone would even consider Bitcoin Cash. I haven't heard that word even mentioned in almost a year now, two years.

The only t the only reason why I've heard of it is because Roger Vare got liquidated on going long on on Bitcoin Cash and some like obscure exchange a couple months ago. That's the last time I've heard of it.

He got margin called and then didn't pay up, right? He didn't post margin and and uh there's a whole there's a whole lawsuit with that. But anyways, um

Yeah, I think, you know, with Bitcoin Cash, you know, the market fundamentally rejecting Bitcoin Cash, it looked like the, you know, the regular people, the plebs were on the right side of history here. And I think that they for sure were. Um, you know, just arbitrarily changing block size versus more scaling solutions, which everyone nowadays talks about L2, L3s, uh, other layers on top of a base layer as the way to go about scaling. Of course, some scaling occurring on L1, but the Bitcoin community wanting to keep that as limited as possible. Um, after that successful event of Bitcoin's community rising up and rejecting this corporate and powerful individual influence over Bitcoin over the Bitcoin network, there was sort of this lull where you've got this intense, I would call it like an army that has no purpose.

Right? There's no real purpose for the army right now because there's no one trying to make changes to the Bitcoin protocol.

That would be what might be perceived as detrimental.

So with all these white blood cells going, you know, in the in the body going on, and that you get tons of white blood cells looking for something to attack, there's nothing external to attack, so they're focusing on something internal.

So right now you've got somewhat of an autoimmune issue where you've got the Bitcoin community attacking itself

and looking for impurities or or bacteria or some sort of you know um.

Coming in there and trying to attack it. And really, there's not much to attack. No one's advocating to make drastic changes to the Bitcoin protocol. I think a lot of people nowadays m much better understand scaling, what Bitcoin's all about. I think in the 2016 through 2017 era, you had a lot of misconceptions around why Bitcoin was useful or why or how blockchains worked. So I think what we're seeing now is you've got like individuals in this space like Nick Carter and others, and myself, who don't fit exactly these set of core fundamentalist parameters. And so people lash out and claim hey, they're not pure Bitcoiners, um, or hey, they're

They've got financial incentives, so they're they're impure, or there's all sorts of uh XYZ check mark they're looking for to either keep us in that in group or out group. But what's funny is is what I'm seeing now too is that most people actually identify as more of a moderate, and most of them are pretty tired of these purity tests.

Interesting. That's really, really interesting. I love the analogy of an autoimmune disorder. And it's just to recap what what you said is that there was there was this era in Bitcoin where we had the block size debates and block size wars. And some people were on one side, other people were on others. But also if you keep on like going down that history, it was actually very clear that there were like large-scale corporate influences on one side, and maybe some also some individuals that perhaps believed that the block the big blocks were good. But largely the Bitcoin community was uh mostly on the side of don't change Bitcoin, like keep keep small blocks. Uh and this was a big war. And this was like a scar in Bitcoin, the Bitcoin community's like history, like memory, like the shared collective memory of all Bitcoiners remembers like the block-sized civil war. Because it was like a it was a painful time in Bitcoin's history. And and markets, like even like the price of something on on like or the chart of something is something that like it's the aggregate of all the brains of all people participating in this thing. And so we can extrapolate like the market back into like the social community. And so what you're saying is that there was this like traumatic event that's in the Bitcoin community memory that the Bitcoin community has overcome that, right? Like we we grow stronger through traumatic events, and now we're we're on the other side, but a part of the Bitcoin community hasn't totally moved on from the um the vibe of people are coming to attack Bitcoin and we must defend it. And so what you're saying is that there's this part of this Bitcoin community that is in like this fight or flight mentality all the time, perhaps too much. And they are just hyper aware, hyper villigent, and like ready to attack anything coming after Bitcoin, and perhaps have gotten a little bit too sensitive in that realm and now have gone after just like.

Normal bitcoiners who aren't perhaps so like uh militant or aggressive about preserving some amount of Bitcoin's values, but now we've diverged. And so this this schism has created what we are now calling Bitcoin fundamentalism versus Bitcoin rationalism. Is that a fair summary of of the of the events?

I think that's an excellent summary. That's uh that's a really good synopsis over what I'm trying to say.

Yeah. And and uh listeners might remember we had Nick Carter on when he got like quote unquote canceled by the cyber hornets. Would you say that this is that that event was like a one to one correlate of what we are talking about right now? Was that like an adjacent kind of thing? Like how how relevant was that event to this whole story?

Yeah, I think that's it it's exactly on point for this story. There's a whole series of these. Uh Matt Carrallo recently had that happen to him. I've experienced this over the last two years, uh, you know, last two years in this space. And um, you know, with Nick, I'd like to kind of pick apart what happened to Nick a little bit. So

uh Nick, and then also interject if you think I'm I've uh haven't said it accurately because I'm pretty sure this is exactly what happened. Um Nick invested in a um either a like some sort of identity or some sort of like like digital identity company where

Through private keys and through blockchain tech, you can own your identity and use it to validate or log into different services.

The business model was like sign in with your private keys. Instead of sign in with Facebook or sign in with Google, it was sign in with your private keys. It was also an Ethereum wallet at the same time. And it wasn't it wasn't Nick, it was Castle Island Island Ventures his VC firm.

He's a GP of Castle Island, one of the founders. So people extrapolate, you know, Castle Island being synonymous with Nick Carter. Right. Yeah, it's Nick Carter, Nick Walsh, and uh those are the GPs, and there's a few. I forget if there's yeah, I forget if there's any other GPs. I know there's a couple uh couple other uh partners there. Um and so you know, Nick has been doing investments like this for a while. Like people forget that his first uh analytics company was uh focused on blockchain analytics, but it wasn't just Bitcoin analytics, it was across all blockchains. So parsing through blockchains, pulling out identifiable information in terms of like smart contracts or

Other information that uh corporates or company, you know, companies might be interested in. And so helping, you know, folks navigate blockchains, not just Bitcoin, but every blockchain. You know, people forget that that Coinmetrics was his first company that he started. Um

and also, like, you know, I've known Nick for years now. So I I've known Nick for almost three, four years now. And so like I've I knew him from a Coinmetrics Nick.

Where he was like this, I would I kind of view him as like this neutral,

impartial individual who just really likes Bitcoin and Bitcoin's proof of work. Um, but he by no means, I think, said, like, oh, I reject everything else because I'm just uh absolutist and I think that this is the only way to do it. He more of, I think, was very eloquent with saying, I believe in Bitcoin and I like it because of these reasons, and then defended Bitcoin because of those, those first, like a kind of a first principle stance, uh first principle stance.