Buying in and selling out

I figured “Someday we’ll find it: the Bitcoin connection; the coders, exchanges, and me” was too long for a title. Anyhoo, since very late February I’ve been gainfully employed in the cryptocurrency space, as a developer on Bitcoin Core at Xapo (it always sounds pretentious to shorten that to “bitcoin core developer” to me).

I mentioned this to Rusty, whose immediate response (after “Congratulations”) was “Xapo is weird”. I asked if he could name a Bitcoin company that’s not weird — turns out that’s still an open research problem. A lot of Bitcoin is my kind of weird: open source, individualism, maths, intense arguments, economics, political philosophies somewhere between techno-libertarianism and anarcho-capatalism (“ancap”, which shouldn’t be confused with the safety rating), and a general “we’re going to make the world a better place with more freedom and cleverer technology” vibe of the thing. Xapo in particular is also my kind of weird. For one, it’s founded by Argentinians who have experience with the downsides of inflation (currently sitting at 20% pa, down from 40% and up from 10%), even if that pales in comparison to Venezuela, the world’s current socialist basket case suffering from hyperinflation; and Xapo’s CEO makes what I think are pretty good points about Bitcoin improving global well-being by removing a lot of discretion from monetary policy — as opposed to doing blockchains to make finance more financey, or helping criminals and terrorists out, or just generally getting rich quick. Relatedly, Xapo (seems to me to be) much more of a global company than many cryptocurrency places, which often seem very Silicon Valley focussed (or perhaps NYC, or wherever their respective HQ is); it might be a bit self-indulgent, but I really like being surrounded by people with oddly different cultures, and at least my general impression of a lot of Silicon Valley style tech companies these days is more along the lines of “dysfunctional monoculture” than anything positive. Xapo’s tech choices also seem to be fairly good, or at least in line with my preferences (python! using bitcoin core! microservices!). Xapo is also one of pretty few companies that’s got a strong Bitcoin focus, rather than trying to support every crazy new cryptocurrency or subtoken out there: I tend to think Bitcoin’s the only cryptocurrency that really has good technical and economic fundamentals; so I like “Bitcoin maximilism” in principle, though I guess I’m hard pressed to argue it’s optimal at the business level.

For anyone who follow Bitcoin politics, Xapo might seem a strange choice — Xapo not long ago was on the losing side of the S2X conflict, and why team up with a loser instead of the winners? I don’t take that view for a couple of reasons: I didn’t ever really think doubling the blocksize (the 2X part) was a fundamentally bad idea (not least, because segwit (the S part) already does that and more under some circumstances), but rather the problem was the implementation plan of doing it in just a few months, against the advice of all the most knowledgeable developers, and having an absolutely terrible response when problems with the implementation were found. But although that was probably unavoidable considering the mandate to activate S2X within just a few months, I think the majority of the blame is rightly put on the developers doing the shoddy work, and the solution is for companies to work with developers who can say “no” convincingly, or, preferably, can say “yes, and this is how” long enough in advance that solving the problem well is actually possible. So working with any (or at least most) of the S2X companies just seems like being part of the solution to me. And in any event, I want to live in a world where different viewpoints are welcome and disagreement is okay, and finding out that you’re wrong just means you learned something new, not that you get punished and ostracised.

Likewise, you could argue that anyone who wants to really use Bitcoin should own their private keys, rather than use something like Xapo as a wallet or even a vault, and that working on Xapo is kind-of opposed to the “be your own bank” philosophy at the heart of Bitcoin. My belief is that there’s still a use for banks with Bitcoin: safely storing valuables is hard even when they’re protected by maths instead of (or as well as) locks or guns; so it still makes sense for many people to want to outsource the work of maintaining private keys, and unless you’re an IT professional, it’s probably more sensible to do that to a company that looks kind of like a bank (ie, a custodial wallet like Xapo) rather than one that looks like a software vendor (bitcoin core, electrum, etc) or a hardware vendor (ledger or trezor, eg). In that case, the key benefit that Bitcoin offers is protection from government monetary policy, and, hopefully better/cheaper access or storage of your wealth, which isn’t nothing, even if it’s not fully autonomous control over your wealth.

For the moment, there’s plenty of things to work on at Xapo: I’ve been delaying writing this until I could answer the obvious “when segwit?” question (“now!”), but there’s still more bits to do there, and obviously there are lots of neat things to do improving the app, and even more non-development things to do like dealing with other financial institutions, compliance concerns, and what not. Mostly that’s stuff I help with, but not my focus: instead, the things I’m lucky enough to get to work on are the ones that will make a difference in months/years to come, rather than the next few weeks, which gives me an excuse to keep up to date with things like lightning and Schnorr signatures and work on open source bitcoin stuff in general. It’s pretty fantastic. The biggest risk as I see it is I end up doing too much work on getting some awesome new feature or project prototyped for Xapo and end up having to maintain it, downgrading this from dream job to just a motherforking fantastic one. I mean, aside from the bigger risks like cryptocurrency turns out to be a fad, or we all die from nuclear annihilation or whatever.

I don’t really think disclosure posts are particularly necessary — it’s better to assume everyone has undisclosed interests and biases and judge what they say and do on its own merits. But in the event they are a good idea: financially, I’ve got as yet unvested stock options in Xapo which I plan on exercising and hope will be worth something someday, and some Bitcoin which I’m holding onto and hope will still be worth something some day. I expect those to be highly correlated, so anything good for one will be good for the other. Technically, I think Bitcoin is fascinating, and I’ve put a lot of work into understanding it: I’ve looked through the code, I’ve talked with a bunch of the developers, I’ve looked at a bunch of the crypto, and I’ve even done a graduate diploma in economics over the last couple of years to have some confidence in my ability to judge the economics of it (though to be fair, that wasn’t the reason I had for enrolling initially), and I think it all makes pretty good sense. I can’t say the same about other cryptocurrencies, eg Litecoin’s essentially the same software, but the economics of having a “digital silver” to Bitcoin’s “digital gold” doesn’t seem to make a lot of sense to me, and while Ethereum aims at a bunch of interesting problems and gets the attention it deserves as a result, I’m a long way from convinced it’s got the fundamentals right, and a lot of other cryptocurrency things seem to essentially be scams. Oh, perhaps I should also disclose that I don’t have access to private keys for $10 billion dollars worth of Bitcoin; I’m happily on the open source technology side of things, not on the access to money side.

Of course, my opinions on any of that might change, and my financial interests might change to reflect my changed opinions. I don’t expect to update this blog post, and may or may not post about any new opinions I might form. Which is to say that this isn’t financial advice, I’m not a financial advisor, and if I were, I’m certainly not your financial advisor. If you still want financial advice on crypto, I think Wences’s is reasonable: take 1% of what you’re investing, stick it in Bitcoin, and ignore it for a decade. If Bitcoin goes crazy, great, you’ve doubled your money and can brag about getting in before Bitcoin went up two orders of magnitude; if it goes terrible, you’ve lost next to nothing.

One interesting note: the press is generally reporting Bitcoin as doing terribly this year, maintaining a value of around $7000-$9000 USD after hitting highs of up to $19000 USD mid December. That’s not fake news, but it’s a pretty short term view: for comparison, Wences’s advice linked just above from less than 12 months ago (when the price was about $2500 USD) says “I have seen a number of friends buy at “expensive” prices (say, $300+ per bitcoin)” — but that level of “expensive” is still 20 or 30 times cheaper than today. As a result, in spite of the “bad” news, I think every cryptocurrency company that’s been around for more than a few months is feeling pretty positive at the moment, and most of them are hiring, including Xapo. So if you want to work with me on Xapo’s backend team we’re looking for Python devs. But like every Bitcoin company, expect it to be a bit weird.

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