Transcript of Joannes Vermorel's presentation during the 2020 BCH Fork Day Celebration

(What follows is what I considered to be the best presentation during the 2020 BCH Fork Day Celebration Livestream. I wanted to transcribe this so it can be translated into Chinese for the Chinese BCH community. The video of the actual presentation has been embedded at the bottom of this article.)

I am Joannes Vermorel. I am the CEO of an enterprise software company called Lokad that I founded 12 years ago. We have about 50 employees, we are growing, we are profitable, so we barely qualify for a start-up anymore.

As my day job, I am the CEO of Lokad, but my night job is as a tech auditor. Basically one decade ago I started to take money from venture capitalists/investors, except that instead of selling shares of my own company to earn this money, I decided that it was actually easy to sell something else, which was actually tech audits.

The idea is very simple. Investors are about to invest in a company, the valuation is usually very large, and one of the key reasons for this valuation is usually the technology. The very odd thing is that although investors put a lot of money on start-ups that are supposed to have good technologies, the reality is that usually people don't pay any attention to that. They are going to do a financial audit, but performing a financial audit on a start-up is not going to teach you anything. First, the start up doesn't have any money, so that part is kind of easy, and then when it comes to what sort of things they do with this money, well they do very simple things like paying salaries, which is near trivial to audit.

But on the other hand, auditing the tech is completely critical, and if you don't do that, and I would say there has been an ongoing trend for investors to invest without looking at the tech, you end up with things like Theranos or Magic Leap where if anybody had done a technical due diligence they would not have invested.

Anyway, bottom line a decade later with something like one audit per month or so as a night job, I've audited dozens and dozens and dozens of start-ups by doing tech audit, and when I say technological audit I really mean looking at the code, not just talking to people and getting their opinion.

So usually the way I audit is (and I will apply this exact set of skills to Bitcoin Cash), first assess whether the tech roadmap makes sense and whether everything that is being done at the company on the technical level is making sense according to this road map. That's what a tech audit is and whether a company justifies a high valuation or not. That's typically the question that is being asked of me. And then the next thing is what sort of recommendation can you have and usually the recommendations are not technical because it's not the right level. It could be just a detail. I mean you can have a technical recommendation, but usually if there is any recommendation it's a more high level recommendation. It's about people. The team you have gathered, is it a suitable team? What is the dynamic of the team? Is it a good one? A bad one? And again, I'm looking at that from the perspective of is the team's dynamic going to fulfill the roadmap?

So my conclusions-and again I've been doing dozens and dozens of similar audits-my conclusions are very varied, and it ranges from basically don't invest, it's a trap, to basically this thing is a jewel. I've had a chance to meet CTOs and CEOs that are much more brilliant than myself, having fantastic growth that is way beyond what I have personally achieved with my own company.

So let's apply this experience of tech audits to the case of Bitcoin. And so I had a good look at all the code bases that are around. We have different projects, and I had a chance to engage and talk and discuss with many of the prominent tech contributors. So if we look at Bitcoin (and when I say Bitcoin I mean Bitcoin Cash but I will just use Bitcoin for short), if we look at Bitcoin as one large company, I would say it's not a completely dysfunctional company. You just have a relatively atomized IT department. This happens not typically in start-ups but in larger companies. It frequently happens you have large IT companies where the right hand doesn't know what the left hand is doing and what not. This sort of thing happens but this thing is not a dysfunctional perspective because in this community everybody is in the same boat. If bitcoin sinks, then basically all those people involved are sinking with it. On the other hand, obviously if there's a big success it doesn't mean that everybody is going to be a winner. Some teams may be much bigger winners than others. And who is the CEO? The CEO is the market. It's you, whoever, it's literally all the things that are driving the market. It's a loose analogy but bear with me.

Now what do we have as a starting point? The starting point is that we have a legacy implementation for this currency project which is basically the Satoshi client. Realistically the Satoshi client is very very difficult to remove for this community because the whole ecosystem has been built around it. You can fork it, yes, but to replace it entirely is very difficult, and although the original Bitcoin has been forked now many times, one of them being the present interest of Bitcoin Cash, the Satoshi client has remained central. The key reason is that the ecosystem is built around this thing, so it's very hard to remove it, or you replace it for something that is completely different, but that is another discussion entirely so I'm going to stick with things that have been built around the legacy Satoshi client.

So now we have a product and we can audit that, and when I first dived in, I encountered bitcoin back in 2011, but I didn't really pay attention at the time to the code. I was one of those very lucky early investors in Bitcoin, and for years I didn't really pay any attention to what was going on technically. I had read the white paper and thought it was a great idea so let's invest some money and it worked out well.

But when years later I started to have a look at the code, I realized a few things that were really immense surprises for me. I am a trained software engineer in addition to being a CEO. The thing is, the Satoshi client, security wise it's immensely battle tested, so when you look at the code there is no obvious flaws of security that you can exploit. The thing is tremendously battle tested, but if you look at the code base of the Satoshi client from any other perspective like maintainability, scalability, etc., it's kind of a nightmare. And actually when you look at the contribution of Satoshi himself, herself, whoever, I was kind of shocked to see that it was software-wise incredibly bad code. I mean like amateur level. So I've developed my own pet theory that in order to have the genius to have the breakthrough of Bitcoin you had to be completely ignorant of software engineering, and that was because this person or those persons were so ignorant of all these things that they kind of managed to do what was thought of as impossible. If you want to do the impossible, you have to first not know what's impossible.

But nonetheless doing the impossible is incredible, that was like the spark of genius, but mostly it was very bad software engineering. And it went from there with contribution from Bitcoin Core and things improved a little, but not that much. And then I'm going to revisit when I said something is a nightmare. Obviously a technological contribution, a product, is only a nightmare with regard to a roadmap. It's not something that is completely absolute. It depends on what's your intent with this piece of tech, this piece of software.

So let's go back to what is the roadmap of Bitcoin?

So if we said the roadmap is to make Bitcoin the cash of the world, and by the way, here we have a shocking element in this space, which is that basically there's only one team that I'm aware of that has an actual, digestible, to the point roadmap, and that's Bitcoin ABC.

So what is the roadmap? In addition to the invention of Bitcoin, it was basically a certain set of properties that were in addition to the original Bitcoin. The fees must remain super low forever, security should be instant, not hours but instant, privacy should be absolute, and I would say security is paramount. And I will get to those elements, but basically you can have a look online for the fine print of the roadmap, but the first thing is that there is plenty of teams in this ecosystem, but the first thing is that there is only one team to my knowledge that has a very sharp, to the point, roadmap. So I will use that as my reference for an analysis just because there is no alternative, there is no other roadmap.

So first, I'm taking that as a criterion of what do we want to achieve, and then you can look at the code and ask is it going to bring me there? And if you look at the code of the Satoshi client, you would say it's a starting point. You cannot remove it due to ecosystem effect, at least not in a short time frame, but the reality is that this code base is mostly a nightmare. And I was really shocked with the level of maintainability. There are plenty of things that are done in ways that are truly bad, where literally you could see that these were people lacking experience. So now if I look at this road map, and again we had one team that has a roadmap, including the team of Bitcoin Core. The team of Bitcoin Core they don't have any roadmap. If you look at what they're planning ahead for Bitcoin, there is no roadmap at all. They have a tiny few technical things, but literally this is not a roadmap. Those things that they are planning are not going to make any difference in the grand scheme of things about Bitcoin the currency. And if you look at other teams, I would say your Bitcoin Unlimited, your BCHN, and again I've had a close look at what they are stating, what their roadmap is, and I would say it's very thin, and there is clearly a lack of vision of what do they want to do ten years down the road.

Now we've had one team with a roadmap, so what about the accomplishments? And again if i look at the accomplishments over the last few years, one team has literally delivered all the accomplishments.

Let's revisit those elements that are taken from the roadmap. Fees low forever, you needed bigger blocks, that has been done. You wanted to have instant security. Instant security, first you had to do things so that it would not get worse, so obviously you had things like replace by fee, and there were plenty of technical details that were actually having a negative effect for instant security, and basically ABC delivered a series of small tweaks that at least prevented the situation from getting worse. So to maintain, I would say a status quo that was a reasonable behavior for what is called zero conf like instant security.

Then you want privacy. The problem with Bitcoin is that all the transactions are public, and what was not a problem in the early days of Bitcoin is now becoming a problem. Companies have the technology to basically analyze a graph of transactions and identify to a large extent what is going on. So I would say that is an emerging threat to Bitcoin that was not thoroughly analyzed in the early early days. In order to do that you need to have certain mechanisms to have more privacy, and again ABC, with basically Schnorr signatures delivered elements that are key ingredients in letting the community at large achieve more privacy.

And then security. One of the things people don't realize with the Bitcoin Core network is that you have plenty of problems. The security is kind of weak because you cannot really delegate your trust when you have a wallet to a hardware wallet in a way that is completely safe. I'm not going to go into the technical details, but bottom line, one of the first things that was done by the initial fork of Bitcoin Cash was to make sure that end users could actually delegate the trust to a hardware device in a way that is completely secure end to end, if they trust their hardware device. It's still not possible on Bitcoin Core. It is very much possible on the Bitcoin Cash side of the fork.

Now you see there are plenty of other very valuable projects. Don't get me wrong. Be.cash is a fantastic project, Electron Cash is another fantastic project, but if I look as an auditor at the added value, I'm talking to the CEO, the CEO is you the market, and say where in your company what is the core asset that really justifies the valuation that you have for your company. And I would say literally it boils down to pretty much 90%+ of that is basically the work done by one team: Bitcoin ABC.

Now we can get to that but first we have to acknowledge that literally the value and accomplishments come from one place. I'm not diminishing the other accomplishments, they are great, but in terms of order of magnitude it's just that there are some stuff that they are not on the same level. And that's the problem when you have people who have really achieved a lot. That even if you do very well, it might be humbling. I'm the CEO of a 50-person company. When I audit a company and they are 500 and the CEO is immensely more successful than I am, it's humbling. Even if I consider myself to be reasonably successful, I'm not Bill Gates, I'm not Zuckerberg, there are people that are fantastically more successful. For me, it doesn't mean what I'm doing is bad, but that there are just people who are absolute geniuses and much better at what they are doing than I am.

Anyway, so you have to let go of the ego and try to focus in a core fashion of where the value comes from even if it doesn't play well with your personal ego.

I say Bitcoin ABC, Bitcoin ABC, but actually Bitcoin ABC has one very obvious leader, and that's Amaury Sechet. So if you read about Amaury Sechet on Reddit, you will learn two things. First that he's the worst tyrant ever, and the second thing is that he's obviously there to sabotage Bitcoin, and it's obvious that he's planted by the CCP, a spy planted to sabotage Bitcoin. That's what you can learn from Reddit. It's very consistent. If you read Reddit you will see a few posts every single day that will bring you this narrative or something along those lines.

But when I look at the code contribution, again as a tech auditor I don't look only at what people say, I look at what they do, what they code, what they deliver, what sort of features there is in their product, and what they've done and what sort of technical decisions that they have when facing sophisticated problems. It's very nice, with modern code bases you can actually look at the history of commits and look at the discussion that happened at the time. So you can learn a lot just by looking at the code bases. And literally my diagnosis as a tech auditor who has been auditing dozens and dozens and dozens of start ups is literally that Amaury Sechet is the CTO you can almost never afford. I've met dozens and dozens of CTOs. We're are talking about the highest percentile of most talented people. Talented on two fronts. Basically smart, and gets things done. It's very rare to have the combination of both.

You have people that are very smart, but they don't get anything done. And by the way that's probably the most dangerous sort of people because they are very smart, so you can discuss a lot with them, they look intelligent, they have plenty of good ideas, but they can be a complete distraction, and they wont' deliver anything of value. So it's dangerous to have a smart CTO for your company but doesn't deliver anything. And to get things done is very important, but again Bitcoin is very fragile. If you break the currency, it can be completely toast, so you want to make sure to get things done, but in a highly prudent manner where you don't blow up the whole thing while doing so.

So that requires a specific attitude. You should be very prudent but you need to get things done nonetheless. You shouldn't be so prudent that nothing is happening anymore because you have a roadmap that you want to achieve, which is low fees forever, instant security, absolute privacy, and perfect security. You need to deliver those things and they are not there yet, not quite, so there is still work to be done.

So if I'm talking to the COO and I was auditing this loose pentacular Bitcoin company where there is this IT division with many CTOs, one of them being more permanent, the worst mistake that you can do at this point in time is fire your CTO. Literally nothing good would come out of it, and quite the opposite, if you look at the fact that all the accomplishments come from one place, I would say the worst mistake is fire the CTO, and I would say with very high probability the team Bitcoin ABC would dissolve one way or another and then you would be left with only a tiny fraction of what you have.

So retaining your CTO is probably one of the first survival objectives that you would have, and by the way, that is also one conclusion that is not too infrequent when you have very good teams. I tell investors to make sure that you preserve this CTO and this team otherwise you're going to break the magic that is making the value of the company you're investing in. If you make an early stage investment in Facebook and you remove Zuckerberg, chances are you end up at the end of the road with a second MySpace, not Facebook that has a lot of value but MySpace. So you can disagree, you can think Zuckerberg has plenty of flaws, and sure he has plenty of flaws, as a person you may not like it, but if you want to think as an investor was Zuckerberg a key ingredient in making Facebook valuable? Absolutely. Flaws and all. Same thing you could say about Bill gates, or Steve Jobs, those sort of exceedingly talented tech leaders. They were not nice people. They are tough, they are ruthless, they have plenty of flaws, they are not I would say your best buddy. They will not be your beer buddy, but nonetheless, don't confuse what you perceive as the capacity to execute something and create value. Now in terms of if I've done the technical assessment for the community, what sort of recommendation could I give to the CEO? Again we're assuming Bitcoin the community as a whole is the company, and the general audience is the distributed CEO of the company Bitcoin.

First, I would say give a break to this team Bitcoin ABC, and right now I see a dysfunctional situation where whenever this tech team does anything, the marketing team, or some elements in the marketing team, goes completely ballistic against the tech team. That's very counter productive, and there is no positive outcome of that. You have just proven that this tech team is incredibly resilient in terms of harassment, but besides proving their resilience to harassment, it doesn't prove much. So I would say the first thing is give those people a break. That would already be a massive improvement.

The second thing I would say is give them the credit of authority. I know we are living in a period where people think authority is a bad word. Because if you have an authority you have people that are oppressed. But no, this is just an authority in the sense of having more competence to deliver what you want as part of the roadmap. And when you have people who have earned the credits of authority over a long period of time, I'm talking multiple years, repeatedly delivering improvements according to a very clear vision that is the roadmap that hasn't changed much since the inception, I would say you need to give them the credit of authority because chances are if what they are doing seems to contradict what you think is good, chances are they are right, not you.

And again, that is the big danger of designing things through consensus. It's that when you design things, especially when it comes to technological consensus, you end up with pure garbage. And by the way, as a tech auditor, one of the things that I pay a lot of attention to is to make sure that my own belief doesn't taint my judgement. Because I've seen CTOs doing things that seem nonsensical to me, but maybe they were right, and they had achieved a lot of successes in doing things that strike me as odd, but again, my own experience is I'm running a company, Lokad, that is about predictive supply chain optimizations, so I tend to look at things from this perspective. Is this technology kind of making sense compared to what I know, but if it's a completely different problem like a biotech, it may not. So I would say be very skeptical about your own judgement when you see something that comes from a team that has routinely delivered very reasonable things, things that have turned out to be excellent time and again.

The track record of Bitcoin ABC has been excellent so far, especially considering they have very little funding. I would say give them the credit of authority. Obviously you would say it's completely irrational, we should be able to challenge everything. I would say yes you should be able to challenge everything, but beware of the Dunning-Kruger effect, where you know just a little about something and then you learn a few things and then you think you're entitled to challenge people who have spent a decade of their lives to become a master of the game. Chances are if you only spent one year learning about those things, you know nothing, or almost nothing, and your ideas are worthless. I would say from personal experience, I got involved in Bitcoin in 2011 as an investor, and then it took me ages to realize when I started to go in the code that I knew almost nothing about the project. I thought I had a lot of knowledge, but when I went into all the technicalities and I discussed with many of the people that have earned my respect, I learned that it's very difficult, it's a field of its own, and it takes years of intense thinking to even see the problem the right way.

So give them the credit of authority, and I would say the last thing is that due to that, understand that what this community needs is strong technical leadership, and strong technical leadership is not people who's going to make people happy. In the media you might see strong leaders, charismatic leaders, where everybody loves them, and if you look at the history of Apple and Steve Jobs, Steve Jobs was hated by a lot of people around him. Strong leadership means you will deal with malcontents all the time. Unfortunately, that's the price of greatness. If you are great, you will have a lot of people who are not able to see as far as you and they will be dissatisfied and they will complain loudly all the time.

Bitcoin Cash needs strong leadership. And my message to the community is don't pay too much attention to all those people who complain loudly, who complain about any sort of authority. You need this authority, you need this leadership, and yes you might have a risk of having a tyrant, but frankly you are very very far from that situation. If you say that power corrupts and absolute power corrupts absolutely, Bitcoin ABC has so little means, so little funding that they are very very far from any situation where they could become corrupt because they have so much power, because they actually have exceedingly little power and exceedingly little funding as well.

Which brings me to my conclusion point. If there's one thing as the CEO you can do is to invest more in what is making the core value of your product. Right now it's coming dominantly from one team, Bitcoin ABC, so my message to the CEO would be to donate to ABC, let them do what they've done but just more. That's what I would say is the single thing that you can do to make the product better. Because make no mistake, you can think it's just a marketing game, that it's just about advocating, evangelizing to the world, but if I go back to the road map, the product is nowhere near finished. It still has plenty of loose ends that needs to be resolved and Bitcoin ABC has a roadmap on how to execute that. Technically it's very sound, but it's not there yet, and so if you really believe in this thing, believe in this company, in the sense that it's other people that you're close to, a body of people, then giving to the company that has delivered the most achievement so far, the means to keep doing that is probably the single one best thing that you can do today. And that would conclude this talk.

Question from chat: How would you resolve governance in Bitcoin Cash?

Joannes: People are under the illusion that there is an alternative to just have one leader for governance. I don't believe in that. Especially when it comes to innovation. I've seen dozens and dozens and dozens of companies. I've never seen any successful company where in the end it didn't boil down to one man or one woman. Oh you would say, "You have such a bus factor. If this person dies, it's dead." I would say yeah, if Steve Jobs died as a teenager, Apple would have never existed. So when you think of governance I would say pick your tyrant and stick with it. It may not be the answer that you like but I have never seen any others that work. And if you look at things that are managed with governance, with a body of people, with a committee and what not, they literally give you abysmal results and usually cost insane amounts of money to get almost nothing, so I would say yes, having a tyrant is kind of bad, but Bitcoin is not a democracy, this is not a political system. What we're engineering is a currency, a currency that has at its core engineering principles. A currency that instead of being like something that was done out of luck, it's something that in the first time in history, it's a currency that's engineered. And you need to have a lead engineer, and that's the good governor, and if this tyrant becomes corrupt, at some point there will be a revolution and they will be overthrown. I'm not overly concerned with that, but first you need the tyrant or otherwise you will not get the very fast paced innovation that you need.

(If the video doesn't start where it should, go to 2:46:13)