Too high Appreciation of Bitcoin? : Interview with Tadge Dryja from MIT DCI (All Interviews)

Thaddeus Dryja (Tadge) is the creator and the co-author of the Lightning Network who is leading research on scaling and interoperability of cryptocurrencies and Smart contracts at DCI (Digital Currency Initiative) as an open-source developer and research scientist. Tadge is also working with students and other researchers at Massachusetts Institute of Technology (MIT). He studied computer engineering at Carnegie Mellon University and taught at Mie University in Japan before discovering Bitcoin and Blockchain technology, and working to improve the Bitcoin Network. Before co-founding Lightning Labs, he was CTO of a Bitcoin smart contract startup named Mirror based in San Francisco, where he led exploration of the limitations and possibilities of new decentralized financial systems.

Tadge Dryja

Interview Date :9th June 2020

Tadge Dryja from MIT DCI (All Interviews)

A very early encounter in Japan

I moved to Tokyo in 2009 and had a job there briefly. After a while, friends asked about if I would like a job at Mie University. I first learned about Bitcoin in 2011 and I was living in Mie Prefecture in Japan. I thought it was really cool, I became involved with Bitcoin technology, and I got a computer where I installed a Bitcoin core on it and used that for my Bitcoins storage since 2011. To me, that is the most secure way to store it.

Tadge Dryja

I also was scared of it at the same time. I didn’t tell anyone about it because I thought it may be illegal. I remember I read a lot about in 2011-12 and decided I wanted to pursue a career in this, so I went back to America in 2013 to do a Ph.D. in cryptography. I only stayed 1 year in the Ph.D. program before I moved to San Francisco, and started working on the Lightning network, and digital currency development.

In 2017, I discovered Digital Garage in Ebisu where they have a Bitcoin research group and started working a lot with. They are working on Bitcoin software as well as making smart contracts. In Tokyo, that is the only company sponsoring Bitcoin-related work and events. There are a lot of good people there, and I enjoy working with them when I can.

Foundation of Digital Currency Initiative

Before the DCI, there was a foundation named the Bitcoin Foundation that was funding development of Bitcoin core. However, it fell apart, but many of the people from the Bitcoin Foundation such as Joi Ito, Jeremy Rubin, and many others decided to make a place that would fund the development of Bitcoin technology. Thus, the DCI was born from there. A little while after that, Neha Narula got her Ph.D. at MIT and when she finished, she joined the DCI. The main mission initially was to fund Bitcoin developers, but after a while that mission became bigger and also became more integrated with MIT (Massachusetts Institute of Technology). By the time I started there, they were working with students as well. We have something called the UROP (Undergraduate Research Opportunity Program) different undergraduate students come and do research projects with us, and they would help out with research software.

Through my research, I knew about the Digital Currency Initiative. I have been working on Bitcoin, and it might come as a surprise but there are not that many people who work on Bitcoin. I knew many people who work in Blockstream, and I talked to people who also worked at MIT (Massachusetts Institute of Technology) DCI for a few years before officially joining the DCI. How I ended up here was a coincidence. I was visiting my parents who lived close to Boston at that time in late 2016, and during my visit, I had quite some spare time so I decided to visit the MIT. I met Neha Narula, Director of the DCI, and the DCI group, and asked them if I could go to MIT and work with them just to see what they were doing for a day or two. Neha she said sure, and so I brought my laptop and hung out there for a couple of days. During that time, I talked to students and explained what research I was working on. It was really cool to see people talk about Bitcoin and listen to what they were working on. After my second day there, Neha asked me if I would like to work there. I got a little surprised but was very flattered and said “Actually, maybe”. So, I moved from San Francisco to Boston to work at MIT.

An Open University

MIT is one of the premier research universities in America where a lot of research and new technology is a major part of their education system. Even before I officially started working there, I had already started going to the DCI every day. I thought I maybe could sit in the back of a class, and hopefully I would be allowed to join.  Some classes are quite open and are fine with people sitting in and learning. Even when I taught a class, there were a good number of people who participated, and you could tell they were not students. They were just interested and they just came in for the lectures. I did not think anything was wrong with that. So, it is pretty open and there are a lot of top students that are experts on cryptography and technology. All the MIT courses with Video and Audio are on MIT’s homepage, and everyone is welcome to watch and learn from it.

There is a lot of interest from young people. I know some professors who are cryptography professors, and in their classes, they will deliberately talk about Bitcoin because all the students are interested in it. That way they get many more students to take cryptography classes as well. So, there is a lot of interest in the students, and we don’t really have to tell them why they have to learn about blockchain technology or a decentralized system. It is very interesting to see there is not so much enthusiasm form the faculty as there is from the students. Even at events, we have a lot of high school students coming in with a lot of high spirits.

Intimacy of Bitcoin communities

If you are in the Bitcoin community, you already know people, and that can be both a good and a bad thing. The idea behind Bitcoin is that it is supposed to be trustless and decentralized. In reality, people know each other and hang out. We try to not make it like that, but rather be accepting of totally anonymous people. However, the communities meet up and know each other and that it is just how humans function. If you know people and you are friends with them, you work with them more and you trust them. So, there are both good sides and bad sides with that.

Wide Range of Research

2 years ago, I taught a class about cryptocurrencies and blockchain with Neha and all the videos are online for free. So, working on Bitcoin core development as well as on other technologies and papers is one thing, but we also are a part of MIT in that we teach classes and work with students. Our work is range wider than that. Some students work on Ethereum and other researchers at DCI for example work on cryptography related to Zcash with the Zcash team. There are also people who work with regulators looking at decentralized digital bank currencies. Today, we can definitely say that the community has grown and is looking into different fields of study. 

Current Bitcoin UTXO – Utreexo

I am working on Utreexo at the moment. The paper is completed and up on e-print, and the code is on Github. Initially, it was only me working on it, but now there is a number of people working on it and I am leading it, organizing it, and working on it with them. Utreexo is a way to make things a lot more efficient on Bitcoin. It is not a hard fork or a soft fork, and it is totally compatible with how Bitcoin works today. But what it does is that it drastically reduces the size of storage you need to run Bitcoin. Right now, when you run Bitcoin, it takes many gigabytes of space. The idea with Utreexo is that it will take only a few kilobytes, so that would make it much lighter and much faster, and you still get the same security.

Bitcoin Core Developers Political Standpoint

If you look on Twitter or Reddit and other such platforms, you get the impression that Bitcoin people have guns or they only eat meats, and that all are only libertarians. Maybe there are people like that, but I have not met them. The developers who I work with do not fit that description at all, and quite honestly, we don’t really talk about politics or ideologies. The IRC channels are all about the Bitcoin core development, and if you talk about politics and ideologies, they will just kick out from there.

Sometimes things get a little heated, and some developers get into arguments that lead to rethinking what the priorities are to make Bitcoin better. This can stir up some feelings about political ideologies. It gets interesting when we talk about the privacy part of it because most people would say we need to have very good privacy for the currency. Nevertheless, there always are those people who comment “with stronger privacy, we will end the federal reserve”. However, generally it is pretty business-like and most people agree that we want Bitcoin to be secure, and easy to use.

Too high Appreciation of Bitcoin?

In my opinion, the current monetary system sort of works. People complain about inflation, but inflation is not really that high. I don’t think that it is a huge problem at the moment. Other people say that it is not fair, and I can understand it because I experienced it first-hand. Before moving back from Japan to America, and I had saved quite an amount of money. However, sending money between countries is very hard and pretty expensive. So, I thought that I would do that as the last thing right before moving back to America. But in 2013, the head of the Bank of Japan wanted to change the exchange rate because there was a very high appreciation of the yen in 2012. For me the appreciation of the yen was good, I liked it everything was cheaper and my salary is worth more and I was happy, but I people didn’t like the high appreciation of Yen in Japan. So, the exchange rate went from 80 yen to 100 yen to 1 dollar, and it happened very fast. That was like the loss of thousands of dollars and that made me realize that only a couple of people get to decide how much our money is going to be worth. That did make me think about Bitcoin. We all know that Bitcoin has very high volatility and goes up and down way more than the fiat currencies in countries the USA or Japan, but at least it is not one guy who gets to decide that would be the argument here.

Will Cash or Bitcoin survive?

Especially working at the DCI, most of the people there are very nice people and they are trying to make the system work for people. I don’t think that Bitcoin is going to take over the world and destroy the cash system, but I do think that it is a cool thing to have for a backup and somewhat could be compromised. You are not sure if the monetary system will continue to work, but you don’t know if Bitcoin will work either. Maybe the bank will die so you should have some Bitcoin, or maybe Bitcoin will die so you should have some money in the bank. 

Cash is pretty cool if you think about that 100-dollar bill is worth something and has value, but I think many people who like Bitcoin tend to think that the FED is bad because there is all this inflation, or because they are printing money with nothing backing up its value. That is true and there is inflation, so you don’t want to hold a lot of cash as it can go down in value. However, it’s not like it’s hurting people and the inflation rate is a few percent a year.

If Bitcoin ends up working, the transactions are going to be much better, but will it be cheaper? The goal of Bitcoin is to make things more efficient. Bitcoin works well and maybe we can get rid of the dollar and just say “we don’t need the financial banks and their old technology”. We could use all this new technology and make things much more efficient and that will end up being cheaper one day. But we are not there yet and Bitcoin is still pretty hard to use compared to physical cash.

I can understand if you would be in Argentina where the currency is completely mismanaged. You may have experienced a huge loss of value in the currency of that country thinking that you strived and worked for years for money that is worth nothing. I can understand why people get really angry. However, that is not the case in for example Japan or America. It has not been that extreme.

Difference between Developers and Enthusiasts

Bitcoin is not perfect. I have Bitcoin, and I have seen exchange rates fluctuate. You have to think about “what if Bitcoin stops working?”. That is possible, and this is exactly the difference between many people who are enthusiastic about Bitcoin and the ones who are developing and working on it every day. For us who do this every day, we see how many problems there are with Bitcoin and think “how are we going to make sure that this works?!” If you are working on Bitcoin, it is because you enjoy it. You are working every day and your life is your work on Bitcoin. At the same time, there is a lot of issues and difficult problems with it as well. What if it breaks or something bad happens? It’s not 100% that and that is the reality of it. Cory Fields is someone I work with, and he did a talk a few months ago where he states that “Everything is broken! The compilers and the computers, and you cannot trust anything anymore” etc. So, how do we make Bitcoin secure is what we need to think about, improve, and work on and make it work.

No Industrial Change over the Years

The industry may have become a billion-dollar industry, but the industry in itself has not changed in that you don’t get to make a ton of money working on it. It still is an open-source project, and there are still people volunteering. Fortunately, there are several sources of funding for researchers who are working on Bitcoin core development. For example, Chain Code labs in New York funds several Bitcoin core developers. Blockstream, MIT DCI, Square Crypto who has most people working on the lightning networks, Digital garage in Tokyo, and so many other companies are contributing to engineering resources and funding. BITMEX has been great as well and there are many more. In 2011 I never thought that you can work for MIT Digital Currency Initiative and you will get a good salary for working on this open-source project. It is very rare to get a good job like this where you can work on open-source software as open source is generally hard to fund.

Developers Earnings

You might think that there are companies that fund developers but it’s not connected to billions of dollars. However, they are not making millions of dollars but rather they are making generally below market rates. For example, Michael Ford who is more famously known as “Fanquake” from Australia got a contract with BITMEX to develop and work on Bitcoin core development for 100 000 dollars a year, and that’s amazing. Nevertheless, just to be fair, Fanquake would probably make more if he would work at a tech company. If you work a little harder you can definitely make more.

 What did happen was the ICOs making millions and millions of dollars, but that is disconnected from core developers and their work. We were watching the ICO movement and where like “what is this?! what does that have anything to do with digital currency”

You look at it and for us developers, it does not look like it has much to do with Bitcoin.

What about the Altcoins?

It’s true that the new coins coming up in the market, are not standing out or have much potential but there are some that I think are interesting. For example, Zcash was one altcoin that was created after Bitcoin. Even if you don’t think Zcash is a good idea, they are funding research, writing papers, and they are advancing the art of cryptography. So, even if Zcash completely disappears or collapses, we still have the software and the papers they have researched and created along with the new mathematics they have discovered, and so it’s hard to complain about that. MimbleWimble coin or Monero are other examples that we don’t know about specifically and there is a lot of speculation around it, but there are new ideas. 

It’s great to see these new ideas working. I am not following them very closely but there is research happening in those areas. I think a lot of Bitcoin developers disagree with a lot of the choices Ethereum developers are doing, but I still pay attention to it. I still read and look at the problems Ethereum developers have with their system. So, it makes us think about “how can we avoid those kinds of problems”. It sometimes becomes a tribal rivalry dispute, but I don’t think it needs to become like that. It does make sense that we take a look at their issues and developments. Nevertheless, one has to be careful and check as there are plenty of coins out there where there is no research happening.

Decrease in Bitcoin Interest

Japan is one of the countries where we see a decrease in interest in Bitcoin. There are other countries where there is an increase in interest in Bitcoin. It is hard to know why, but most of the time people use Bitcoin or other types of technology when their current system is not working. It’s interesting because I don’t think America really needs Bitcoin that badly. America has a pretty functional financial system, and there are credit cards, bank transfers, and cheques that are systems that do work. The same is true for the situation in Japan. Thus, I believe that it is probably more needed in other countries.

Another reason why Bitcoin is not so popular in Japan could be that there has not been much of interesting new technology in the market since 2017. Suddenly, there were so many ICOs projects in the market, the media wouldn’t leave the industry alone. Because it was so popular, we didn’t get any work done. Even at MIT, all these people were being interviewed, there were so many television covers on the industry, and everyone wanted to know about it due to that. For all of these billions of dollars that were sent into those ICOs, there is not much that came out of that either. What prompted it was that everyone wanted to get on to the next Bitcoin but that didn’t happen. In comparison to 2017, the interest may have decreased, but I don’t know if that was the best or most sustainable interest, to begin with as it was just a fad bubble. In my perspective, we can expect a lot of cool stuff coming out from the students working on new technology and do papers today more so than 2017.

A Potential Country for Unleashing Bitcoin

Concerning where Bitcoin could improve the payment system, I would say India is a place that could benefit from it. I have been to India a few times, and I have noticed that lots of Indian people like gold. The first time I went to India, I noticed very quickly gold was a thing there, and the nicest store that I went to in India was a gold store. When I asked the people about it, the said “we don’t trust the currency and the government”. And there is potential and technology in India. If you go to places like Bengaluru, there are so many tech startups creating a massive workforce. It seems like it would be a very good ecosystem for Bitcoin to be a part of for further development and stability of the country.

How to not Choose another Mt. Gox

I left Japan a little before the Mt. Gox crash. I felt bad because a lot of people lost huge amounts of money, but at the same time, you have to be aware of what you are putting your money into, when it was obvious they were incompetent right from the start. There was a transaction where Mt. Gox destroyed 2608 Bitcoins. Moreover, people were talking about this online. The head of Mt. Gox came out and states that they will “make it up to the users”. There were lots of signs beforehand indicating that this exchange was not a good place to invest your money.

When I was in Japan in 2011 and mining Bitcoin in my apartment and after I while “this is crazy why am I mining in my apartment when electricity is so expensive in Japan”. But I didn’t because I looked at Mt. Gox and thought to myself “I am not going to send my money there”. Early summer 2013, people started complaining about they couldn’t get their money out, they wouldn’t let the people withdraw their Bitcoins and money. There were many months of excuses by Mt. Gox for why they wouldn’t let the people withdraw their money. This was also at the time when Bitcoin became quite valuable; from a couple of 100 dollars to 1000 dollars and everyone was interested in it. I tried to tell everyone not to use Mt. Gox, but a lot of these things, if you are careful and take it from a technical standpoint, so you can see the risky as well.

Professionalism is Key for Credibility

I visited Gemini once and looked at the staff. They were wearing ties and suits, and the atmosphere made me feel like they are taking their job seriously. They are taking care of other people’s money and know that “if they screw up, they screw it up for millions of people” so they are taking responsibility. Plenty of scammers and bad exchanges can wear ties, but being in the office there seemed very different from many startups, and it didn’t feel like they were a “move fast and break things” type of company. Most people cannot physically go to the exchange though, so it’s hard to know and people need to do research, and even then, not just leave money on exchanges. So, when my friends ask me what exchange they should use, I would just reply with “use Gemini” as it seems like they know what they are doing.

However, to validate a company’s credibility, check for a company’s location, and what country it is in and if they are updated and active on the internet. It is also a good idea to look at their staff. Sometimes you don’t have any choice either. For example, if you want to buy a certain altcoin, but it is only available on a sketchy exchange. So, what are you going to do? Just be careful to not invest too much in it. Be careful and use an exchange with credibility, a place where some professionals and lawyers are a part of their team, and where they are taking their job seriously.

Even if the Creator Would Come Back

As much as I want to know, no one knows about Satoshi Nakamoto or how he was able to disappear so well. Developers don’t look into it or care about who he is or where he is. It’s really easy to prove who he is if he wanted to do that, and he can do it with just a couple of messages online, but he is not and is also gone now. At this point, it’s been so long so even if he would come back again and claim that Bitcoin is his invention, make it official by signs some papers, no one will listen to him or follow him. If he would say “let’s change Bitcoin this way”, everyone will say “no”. It’s like the Lightning Network I wrote and development together with Joseph Poon, and now no one listens to me. Even if I suggest something to be done in a certain way, there are so many others who are working on it now, and much more than me that it doesn’t matter who invented it or developed it in the beginning. The same goes for Satoshi and Bitcoin.

Lightning Network and Lightning Lab Establishment

I was in San Francisco in 2014, and I moved there because I just wanted to work on Bitcoin and smart contracts. There were many Bitcoin meetups, so we would hang out, eat pizza, and talk about technology. There I met Joseph Poon and we started talking about micropayments and Bitcoin. Joseph had an idea about the HDLCs, and I thought it was cool, and so we worked on it together. I came up with the idea of channels that would be persistent, and that could be updated which is better known is the lightning network today. So, we wrote that together in late 2014〜early 2015 and presented it at the San Francisco Bitcoin event. The audience seemed very interested, and they were talking about it. Then Elizabeth Stark came to us and said: “We need to make a start-up, I don’t want this to be only a paper, you need to make this happen”. So, we started making a company around it and developed the software. Today, there are so many lightning network companies and apps, and many people are working on it.

Interviewer , Editor : Lina Kamada



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