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David Bailey, CEO of Bitcoin Inc., took time out of running the Bitcoin Asia Conference in Hong Kong to sit down with Bitcoin.com’s COO, Jason Sheman. The conversation delved into the lessons learned from past mistakes, the strategic pivot to Bitcoin, the Bitcoin Conference, Bitcoin Layer twos, and stablecoins on Bitcoin.
Bitcoin Asia Conference Highlights: David Bailey Discusses All Things Bitcoin
It’s not about how many bad decisions you make. It’s about making the good decision at the right moment when it needs to be made. And that’s the transformational decision.
Painful Lessons and Transformational Decisions
Jason Sheman: You’ve said that you’ve learned a lot of painful lessons in order for Bitcoin Inc. to be successful. Would you mind sharing one or two of those to illustrate how you got to where you are today?
David Bailey: Don’t make me have to live through my greatest failures! I started in Bitcoin when I was 22 years old. I had no real world professional experience. I had never had a real job beyond an internship. I went straight from college into creating a media company. I was 22 years old. You don’t know anything about anything. So I’ve just basically made every mistake that there is to make.
But because I’m too hard headed to give up, that’s how I got my education in how to run a business. By just having to fix all the bad decisions that I’ve made. I made way too many mistakes. I don’t want to go over all those specifics, but I could write a book about all the different bad decisions I’ve made. But it’s not about how many bad decisions you make. It’s about making the good decision at the right moment when it needs to be made. And that’s the transformational decision.
The transformational decision for us was in 2018 to walk away from all crypto. To divest all the business interests that we had that were, blockchain, crypto, whatever, and go 100% all in on Bitcoin. And so we made that decision in 2018. That was the decision that had to be made for our business to have a product market fit in the world.
Sheman: How did you know to make that decision at that time?
Bailey: First, honestly, it wasn’t that tough. I’ll tell the story, but the reason why I was in the spot to make the decision is it was almost made for me. We had built a big company. In 2017 we made tons of money. And in 2018, we lost all the money. At the time, I was 27 years old or something. I was like, “wow, I just burned around half a billion in crypto betting on stuff I didn’t even believe in.” What was I doing? There was a lot of regret that came from those bad decisions.
Then I thought, “you know, if I’m going to go bankrupt, I should go bankrupt on something that I actually believe in.” That way, when I’m thinking about regret, I can at least feel like it was worth it. The only thing in all of the crypto world that I actually truly had conviction in was Bitcoin.
Then we had an employee at the time, Aaron Van Wirdum, who is a fantastic Bitcoin journalist, who sat me down and was like, “hey, you know, we’re trying to do conferences, we’re trying to do everything. And when you’re trying to do everything, you’re not going to [unclear]. In reality, the only thing that matters is Bitcoin. All other crypto is downstream from Bitcoin. If something happens to Bitcoin, all the other cryptos have the same problem. If Bitcoin has a scaling problem, all other crypto has scaling problems. If Bitcoin has a privacy problem, all other crypto has a privacy problem. So rather than us trying to win in all these things, let’s just go to the source of the river and win at Bitcoin. And if we can be the most influential media company in Bitcoin, then we’re the most influential media company in all of crypto.”
When he said that it just clicked. That is the play. From that meeting it was like, okay, start liquidating everything that’s not Bitcoin. At the end of the year, we wrote a blog post called ‘Make Bitcoin fun again.’ We announced the Bitcoin Conference going Bitcoin only.
People thought it would never work. They were like, “dude, you are committing suicide doing this.”
The Essence of the Bitcoin Conference
Bailey: At this time [2018], it was a weird time in Bitcoin because the block size wars happened in 2017. But they had been going on for a year before that. There was so much animosity and anger and people pissed at each other and all this stuff. Bitcoin used to be a lot of fun, let’s bring back OG Bitcoin. That was the genesis of this event. That is what made this event really so successful. We planned the first one in San Francisco and it was like, “okay what was OG Bitcoin like?” Then we made the event like that. People thought it would never work. They were like, “dude, you are committing suicide doing this.” And then they came to the first Bitcoin Conference, and they were like, “Holy shit, this is a vibe.”
People realized there was a big market of people who wanted Bitcoin stuff. That was the birth of this whole business.
Sheman: Do you think we’re experiencing the essence of OG Bitcoin at this conference?
Bailey: Oh yeah. I would say, not to the same degree that what we did with the original Bitcoin Conference because we had the whole team focused on the original Bitcoin Conference. So we were able to get more granular details. It was the first conference in the world to accept lightning for everything. At the conference, we had pinball machines with lightning enabled coin operated machines. We had to find a developer who would build this in his free time. We hosted it in a garage, like a car garage or whatever. So it was very kind of grungy too, which is cool.
At this event, we don’t have a team here in Hong Kong. It was a little bit more of a challenge. It came together in like four months. But what is OG Bitcoin about this event is the content decision that we made. We’ve invited and welcomed and celebrated Ordinals, Runes, Layer twos on Bitcoin, things that are highly experimental. Many of these things will not work out, but we want to bring as much energy and excitement and attention and interest to Bitcoin as possible.
That was what early Bitcoin was all about. Like how do we scale Bitcoin to every person on the planet, get 100% of all transactions in the world to happen on Bitcoin and get rid of fiat currency? That was the original goal we were striving for. All of these projects downstairs, all the things that people are building, I don’t know which will be successful, if any will be successful, but at least they’re aligned with that mission. And the developers that we have here are ones that are wanting to build more soft forks for Bitcoin, make Bitcoin more useful in every way possible. More private, more decentralized, more secure.
There’s a contingent of people that want Bitcoin to ossify. They’re okay with a couple hundred million people owning it. They’re okay if you only can own it in the ETF. And to me that’s ridiculous. So yeah, the content here is OG Bitcoin. We have a lot of OG bitcoin miners. We have a lot of the OG Bitcoin scene from China. But a lot of the activations that we had and a lot of the fun stuff we didn’t bring because we didn’t have time. But we will have it for next year.
People are afraid of conflict. Okay, but at the end of the day we have a system for determining consensus in Bitcoin. We need to rely on that system.
Challenges and Future Prospects
Sheman: Just quickly on that. Why do you think they want to ossify it?
Bailey: Because they’re afraid. For the early people in Bitcoin, the idea of ossification was absurd because Bitcoin was so fragile and immature that if you ossified bitcoin in 2012, Bitcoin would’ve 100% failed, guaranteed. It was always known from the very beginning that we’re building this ship as we go, and it’s really a never ending journey. The people who want to ossify, the vast majority of them, got into Bitcoin in 2020 when the price was already much higher. All they care about is that their bags are going up. They’re afraid that if you change Bitcoin you could break it, you could destroy their bags. They don’t have the confidence that Bitcoin’s an antifragile system. I think in time they’ll learn not to be afraid that Bitcoin doesn’t need kid gloves. Bitcoin is a beast. The more it’s tested and stressed the stronger it becomes.
Sheman: What do you see as the immediate challenges for Bitcoin over the next few years?
Bailey: Oh my gosh, that’s a huge question! I think the first biggest challenge is we need to activate a soft fork. It doesn’t even really matter what it is: OP-Cat, CTV, something that gives the community and users confidence that a good enough idea can be brought to Bitcoin and that it’s worth working on really good ideas because they can eventually happen.
It’s very demotivating when developers work on a really interesting idea for years and years and years, and many people want it and nothing happens. So I think the big thing that’s coming in the short term is activating the next soft fork since taproot. And I think that it’s going to be very controversial, but that once it happens, it’s going to create a path for how soft forks will be handled in the future. And I think it’s going to dramatically improve the environment for Bitcoin. So that’s one challenge.
Sheman: Things are proposed [for Bitcoin], but it just kind of slows down and doesn’t happen.
Bailey: Correct. People are afraid of conflict. Okay, but at the end of the day we have a system for determining consensus in Bitcoin. We need to rely on that system. The miners are going to have to really take on what their role is in the system. The developers working on this stuff are going to need to not back down and relent. It’s gonna happen, but there are competing visions of Bitcoin. Is Bitcoin just digital gold or is Bitcoin the future of all money. That’s the split, but there’s crossover between those ideas
We need to align the community on what direction we are going. I know which direction we’re going because capitalism needs Bitcoin to be money for the world, not money for a few.
Our layer two policy wasn’t about excluding things or whatever. It was about how do we have a specific conversation about what’s happening.
Layer Twos and Editorial Policies
Sheman: Recently, Bitcoin Magazine’s editorial policy on what constitutes a layer two was updated. Were you the driving force behind this? The reason I ask is because within the Bitcoin community, maybe not such a huge group of people, but Layer twos are a little bit controversial.
Bailey: People got so mad at us! The people who got the maddest were a lot of the Layer two projects that said, “oh that’s too restrictive.” Terminology is losing meaning in Bitcoin because everything’s calling themselves a Layer two, or a sidechain, or a roll up, or blah, blah, blah. There’s no common meaning for these terms. A lot of these terms come from Ethereum, or maybe there is a meaning in Ethereum, but we’ve never talked about roll ups in Bitcoin. So we need to provide clear definitions. That way when we have a conversation about these things, we’re talking about the same thing. And it can be nuanced.
Our layer two policy wasn’t about excluding things or whatever. It was about how do we have a specific conversation about what’s happening. When you also provide that framework, what it means is, as people are building things they strive for meeting those kinds of expectations. That way they can actually call themselves a proper Layer two.
[Our definition] is a high bar, but it should be a high bar. And there’s nothing wrong with sidechains. There’s nothing wrong with federated sidechains or multi-sig or whatever, but let’s just call them the right thing, not call them a true Layer two. Those things can change in the future as we get new outcomes.
So anyway, I did not set the policy. I’m really not involved in Bitcoin Magazine editorial in any way. But Pete Rizzo, who runs content for us, our technical editor Shinobi, and our Editor in Chief Mark Goodwin, spent a lot of time being intentional about what should be the definition. Then they put it out there and maybe in the future it changes or whatever, but I think it’s a good one. We’re going to try to keep getting more precise with our language for how we describe these things.
Bitcoin is at a very important point in time where it’s reached a certain size that the next level up we go is where Bitcoin starts to meaningfully transform the world.
Stablecoins on Bitcoin
Sheman: What are your thoughts on stablecoins on Bitcoin?
Bailey: I hate stablecoins. The whole mission of Bitcoin is to implode fiat. But it’s a permissionless system. If it creates value for people, then they should be able to build whatever they want on Bitcoin and use it however they want and let the market decide.
I think stablecoins and Bitcoin are set for a massive collision. You asked earlier, what are the big risks in the future? Bitcoin is at a very important point in time where it’s reached a certain size that the next level up we go is where Bitcoin starts to meaningfully transform the world. A bull market in Bitcoin will be a bull market in the real world. A bear market in Bitcoin will be a recession in the real world, and it’s starting to affect monetary policy.
There is a geopolitical conflict brewing between US dollar stablecoins that are infiltrating places like China. What that means for their currency and Bitcoin as an alternative to combat the weaponization of digital dollars. There’s a big picture thing that’s about to play out. It’s going to be crazy.
What do you think about David Bailey’s views on Bitcoin Layer twos, stablecoins on Bitcoin, or anything else he talked about? Share your thoughts and opinions about this subject in the comments section below.