Coin Perspective — J.R. Willett:

“If Satoshi had stayed with the project and been the tiebreaker when people disagreed about stuff, Bitcoin could’ve done a lot more.”

J.R. Willett proposed MasterCoin protocol in 2013 and raised funds to develop it in what was the 1st ICO in history. MasterCoin built a layer on top of Bitcoin that allowed for more complex transaction logic and was used for issuing tokens on top of it. It later on rebranded to Omni and it still being used by various projects. In the interview, we cover his views on the crypto space and its evolution. You can follow J.R. Willet on LinkedIn.

Let’s start from the beginning. You’ve been in the space for a pretty long time, I guess from the very beginning. How did you hear about Bitcoin for the first time and how did you get involved?

Yeah, I was researching payment methods back in 2010, so pretty shortly after Bitcoin came out. I ran across Bitcoin and I got very interested in it very quickly.

In January 2012 you published what you named the second Bitcoin white paper. It seems quite bold to call it the second Bitcoin white paper. What was the reaction of the community back then?

Yeah. There was definitely a little bit of pushback on that. I was actually going for a bit of controversy there. I wanted people to react to it and maybe there would be some push back and controversy, and the controversy itself would maybe make more people pay attention.

Well, it was a little bit of a publicity stunt, to call it the second Bitcoin white paper. But I really wanted to focus on what was next for cryptocurrency after the basic Bitcoin protocol. And I thought I had some ideas that would be helpful.

What led you to start the Mastercoin project in 2013? When was the moment you realized that we could do with Bitcoin than just regular bitcoin transactions?

Mastercoin was the first, what they call an initial coin offering that ever happened. Basically, it happened because I was too lazy and too busy to go around trying to raise venture capital in the traditional way. So instead I was looking for a shortcut.

The problem also with raising venture capital was — I was pretty sure — that most of the venture capitalists viewed cryptocurrencies at that time as something kind of out there, and most of them didn’t seem to understand it. Within a few years, they started getting really into it, but at that time I thought the only people that understood what I was doing were the people on the Bitcoin forum. Those people seemed to get it. And I realized that my best chance of raising funds to work on my project was to raise it from the people on the Bitcoin forum.

And so that initial coin offering idea was designed to solve that problem: how do I raise money from my friends on the Bitcoin forum instead of going to Silicon Valley and trying to convince somebody what cryptocurrency is and that more advanced cryptocurrencies are a good idea when they are not even sold on Bitcoin.

Can you describe what was it like to run the first ICO and what was the response of the community? Was there some media coverage maybe? How did it look?

There wasn’t any media coverage — at least at first there wasn’t. People really started taking notice after a bunch of money was raised. It was kind of surprising.

The whole initial coin offering was a white paper plus a post on a Bitcoin forum, and the post just said: ‘here is me, here is my paper, here is a video of me talking at a conference about my paper, here’s a Bitcoin address and anybody who sends Bitcoin to that address will own a piece of what I’m building.’

I wasn’t sure what would happen, but within the course of a month, I ran the token sale for the rest of it. And by the end of it, half a million dollars worth of Bitcoin had come in. So we started creating bounties and things like that. And very shortly after that, we had a run-up in Bitcoin prices, tenfold run-up. So that half a million dollars became like 5 million dollars.

What would you say were the biggest challenges that you’ve run into during the first ICO?

I’ve always had a lot of fun. I would say the biggest challenge was that it didn’t take long for other projects to recognize the value of the ideas we were pursuing.

So basically, there was a whole bunch of projects that launched. Some of them did very similar things, some of them were run by people who were smarter than me and got a lot of attention. I am thinking specifically about Ethereum. They took a lot of their ideas from the MasterCoin protocol and improved on them or expanded them.

I was happy to see my ideas getting traction — so that was fun. But actually, the biggest challenge was that it wasn’t very long that we were the only game in town. There were a bunch of other projects that launched doing similar things.

Did you anticipate that you may launch such a wave of ICO craziness?

Oh, I didn’t anticipate that it would become a thing, no. For me, it was just a shortcut and it was a little bit of a crazy shortcut.

I think of how, if I weren’t so naive, I would have been more cautious. If I had talked to a lawyer, they would have said ‘under no circumstances should you do this’. But I didn’t talk to a lawyer, I just went and did it. And thankfully I didn’t go to jail.

What was your vision for MasterCoin in the beginning and how would you evaluate whether you succeeded in fulfilling it from the current standpoint?

The original vision was to take Bitcoin and build on top of it. People who I know who do computer science would recognize the analogy of building protocols on top of each other. For instance, we have ethernet, which is a pretty low-level communication protocol and on top of that we run TCP/IP and on top of that, we run HTTP.

And you know, these protocols stack on top of each other, each one relies on the one underneath for a certain level of functionality and each layer adds functionality to the function, to what’s underneath. And on top of HTTP then we have various JavaScript rest APIs, and it just continues to stack up more and more abstraction from the various layers.

The idea then with MasterCoin was to create a new layer on top of Bitcoin. That would take advantage of all the hashing power and solving the computer science problem of which transaction happened first, which is really the main thing that Bitcoin solved. Other people call it other things, but I call it the ‘what-happened-first’ problem.

Once you have that problem solved, there’s a tremendous number of other financial issues, basically what we think of now as smart-contracts. The ability to have two people interact in a conditional way based on the price of a good or a commodity — for example, I can bet that gold’s gonna go up tomorrow, you can bet that gold is going to go down tomorrow and the protocol settles that bet automatically.

Those were the sort of things I was really interested in. It turned out that the general public was more interested in releasing their own tokens. And so if you look at what actually happened with the MasterCoin protocol, which is now called Omni, it ended up being sort of a token creation platform and the other features of the protocol don’t get nearly as much usage as just the ability to create a token or float it on top of Bitcoin.

So are you satisfied with the overall development of the project?

Oh yeah, the people that worked on that project and continue to work on that project are brilliant and nice people, I am very happy to have worked with them. There were other projects which got bigger, and which figured out some better ways to reach the public, more streamlined ways to do the things you’re trying to do and so we didn’t become the biggest project from that sort-of era, but it became a very useful project and a lot of people still use it and I’m hopeful that someday, I’ll be a footnote in a history book. And that would make me very happy.

What about the lessons you learned? Is there something that you would do differently?

There were a lot of lessons. One of the sets of lessons is around the legal landscape — at that time, the government and the regulators were just not even paying attention to the kind of stuff we were playing with. They are paying way more attention now, but there was sort of a window there, where you could do whatever you wanted and nobody really noticed or cared.

Once it got big enough, the government started trying to step in and make some changes. So I would say with any nascent new technology, there’s kind of a window of opportunity where a lot of things are in flux, and the lesson is, you need to decide. If you want to be a part of something, there’s a window and if you’re coming too late, or if you are not bold enough, or if you’re too worried about getting into some sort of a problem — you won’t act soon enough or boldly enough and you’ll miss the boat.

So that was one of the lessons. And the other lesson is that distributed teams are hard, they have their own set of challenges. When you have people in every time zone, just things like scheduling a meeting for the whole group can be really challenging, because it’s always somebody’s middle of the night. There were some challenges with that, but nothing insurmountable.

Another lesson was that it really pays off when you’re looking for people to find. What we would do in our project is we would wait for people to start, really anybody who was working on the project and contributing good code and passionate about what we were doing, when the time came to hire people, we just came and hired the people that were already working on the project.

If you’re an open-source project and you get funding, those are the best people to hire — the people who are already working on your project. But not every project has that luxury of having a community of interested people that are already working on it, but if you can foster that, it is very resilient.

Are you still personally involved with Omni?

Oh yeah, I follow along. They don’t ask for my permission to do things; I let the developers set their own goals and milestones and even the direction they want the project to go because they own a lot of Omni tokens.

I’ve given them a lot over the years, and I kind of want the people working on it to have the biggest stake in its success, and I think that’s true. So I follow along affectionately and I am happy to answer their questions, but they are steering the ship at this point. The developers that work on it are steering it.

What is the current roadmap for Omni?

I’m actually not even the right person to answer that question — the developers are always working on different potential new features and brainstorming things, so… I would refer you to them for the complete picture. But I know that they are actively working, and also I am not sure what I can talk about, because not everything is public. They are still very active though, the developers on the project.

Do you consider projects like RSK to be an active threat to Omni protocol?

Anything could be an active threat I suppose, eventually. I try not to think about things in terms of threats anymore. I used to think a little bit that way but everybody is sort of in a giant Petri dish and running experiments. I would rather think of it as if the whole cryptocurrency experiment succeeds, we all win.

So, it doesn’t need to be Omni. And I like seeing the experimentation and what people are trying. And there’s a lot of cross-pollination between projects as they see what works in other projects and try it themselves and maybe put a little twist on it. That’s how you eventually end up with a really compelling cryptocurrency ecosystem, that could be the cause of great societal changes someday.

During your first few years, MasterCoin was sort of competing with CounterParty — can you describe maybe how was the relationship between the two projects?

Oh yes, CounterParty. So, this was an interesting little story. I remember we were creating bounties for working on MasterCoin. And the guys who ended up starting CounterParty, they first came to us and said: ‘Hey, can we have this many dollars to do a core implementation of MasterCoin? Sort of what the Bitcoin core is’. But the amount of money they wanted, I think, was roughly half of the money we had and so they were asking a lot and we ended up telling them no. And so what they did then, I think they must’ve already started on it because they basically forked the MasterCoin protocol down to the byte level.

CounterParty started out as an exact clone of MasterCoin with a different fundraising model, so then they went and did their own thing and they’ve had their own projects, their own tokens and their own level of success.

It’s kind of indicative of their mindset that later they ended up trying to clone the entire Ethereum project into CounterParty. And so I kind of get the impression — and I’ve never met these guys — that they look around and see what interesting things are happening and then try to clone it and do it faster, or in some way try and steal some of the attention away from those things. I have not seen a lot of innovation from them, but maybe they will someday.

In 2017 you did another ICO — how was it different compared to the one in 2013?

Yeah, I really enjoyed working on that. So, the ‘crypto ATMs’ is how I think of that. CoinMe is the name of the company, the brand of the ICO, and they asked me to help them. And it was amazing to be a part of that.

They went from having just a handful cryptocurrency ATMs and after the ICO they made a partnership with Coinstar, and Coinstar has like 20 thousand kiosks. And so they worked very quickly to become the biggest cryptocurrency ATM company in the world by orders of magnitude. Way more than anyone else.

So I feel like it was a good example of how an ICO can really help a cryptocurrency company, particularly to take off, if it’s got the right combination of variables. And of course, I bought a lot of Uptoken, and I’m still holding it.

I’m kind of surprised that the market has not recognized the huge growth Coinme has had and the number of ATMs and everything. But you know, the model is still sound and I am still excited to be a part of it.

How have your views on ICOs in general, as a phenomenon, evolved over time?

Well, I’ve learned that you have to be more careful these days because there are more regulators paying attention. The way I view the ICOs is that the lawyers kind of come in and ruin the fun for everybody. And of course, there’s a tremendous number of scams going on in the ICO arena.

But on the other hand, when you lower the barrier of entry to anything, you create both opportunities for good and for evil. I’m more on the side of just letting the people do what they want and do their own due diligence, not try to protect people from their own stupidity.

Do you think the ICOs will remain as a viable funding option for start-ups in the future or was it just a hype thing that is already gone and it’s not coming back again?

I don’t know. A lot of it depends on how harsh the regulators are. There has been a big drop in the number of people trying to do things like ICOs over the past couple of years, they sort of peaked in 2017, I guess and dropped off. And that’s largely because the government has been going after people who’ve been trying to do ICOs.

The nice thing about it is though, that even today you don’t have to ask for someone’s permission to release a token. They might write you a nasty letter later if they know your address, but there are all sorts of interesting dynamics that come about when you have anonymous or pseudo-anonymous money transfers, and you can create your own tokens and things like that. You can kind of just ask for forgiveness, rather than permission.

And there are ways of building up trust without ever using your real-world identity. But to the degree, the people are able to do that, it’d be pretty tough to crack down in ICOs if they’re run by people who are trusted, but their real-world identities are not known.

So, what about your views on Bitcoin? How have they evolved over time?

I used to be what they called a ‘Bitcoin-maximalist’, meaning that I thought that all the other chains were not going to amount to anything. However, that was more from a technical viewpoint and I would still say that that could be true because there’s nothing that Bitcoin can’t do.

However, Bitcoin got bound up in what I would consider a leadership problem — if Satoshi had stayed with the project and been the tiebreaker when people disagreed about stuff, Bitcoin could’ve done a lot more.

However, with his departure, or her departure, or its departure, the fact that Satoshi left the project meant that people had to decide things by consensus, and we had a group of extremely smart people, who all thought they were ten times smarter than they were. And they would all argue about minutia and a lot of stuff, that should’ve happened, or at least decisions that should’ve been made, just simply didn’t happen.

And so, that left room for other protocols to step in, better-led protocols. And I know a theory I would consider an example of a much better-led protocol, and I know that Vitalik (Buterin, founder of Ethereum) doesn’t like to be considered the leader, but his presence in that project provides that sort of a tiebreaker thing, which prevents things from getting bound up in indecision.

What do you think will be the role of Bitcoin protocol in our society 10 years from now?

I think Bitcoin will never die. There will always be people that are interested in Bitcoin. And in fact, most of these cryptocurrency protocols will be pretty hard to kill completely, because there is always some guy who will buy all the tokens for a dollar, so there’s always a price. They can crash pretty low, but they can never quite go to zero.

And I think Bitcoin will probably be around for a tremendous amount of time. Whether it is around the biggest protocol, I’m dubious about that. I think it’ll eventually be surpassed. Largely because there is nothing wrong with Bitcoin technically, because it can be changed to do anything we want, but it’ll be because of the leadership deficit and the lack of agreement, and difficulty making decisions. I think better-led protocols will probably replace it eventually.

You mentioned there’s a lack in leadership and consensus and there I guess you’re also referring to the block-size debate, so what is your stand on that issue?

I have strong feelings of not caring. I really don’t care. It’s much better to make a decision and stick with it and to have everybody on the same page.

I mean, if the block sizes are small, that then forces transactions on the sidechains and the miners get more money per transaction — there are good things that happen from that.

When you make the block size larger, that makes it easier for average users to use Bitcoin as it is now. There are advantages on both sides, and I have tremendous apathy for which way they go, but I think it’s a great example of them not being able to decide or at least taking a really long time to make a decision.

Bitcoin has been here for almost 10 years. Are you satisfied with the level of adoption we have now and what is a thing we should do as a community to raise the adoption even more?

I thought the adoption would be much more rapid. When I first found out about Bitcoin, I thought to myself — the government money, what we call fiat currency, had only a few years left and it was just going to die. I was wrong at least with how fast that would happen. I thought it would happen very quickly. And it has not happened that quickly. Although, I still feel like we are on our way to that end result.

So yes, adoption has been much slower than I would’ve thought, however, it has been good for the society, that the adoption has been much slower. If it had been a rapid takeover and rapid destruction of fiat currency, a lot of people would have been hurt. The longer it takes and the slower the transition, the less economic bloodshed there’ll be from the death of government money.

I thought it would happen quickly, I’m relieved it has not happened quickly. Now, what to do to increase adoption? I think there are a number of interesting and promising applications of cryptocurrency that are being explored, and one or more of those will end up becoming such a compelling and interesting and useful technology, that that’ll be what drives adoption.

It was kind of like that with the internet — what did we do to drive internet adoption? Well — email, websites — those things are so compelling and useful, that people adopted it.

So how do you drive cryptocurrency adoption? You create compelling and useful things.

What about blockchain in general? What are the use cases that you see to be fit for the utilization of blockchain?

I’ve seen a number of terrible ideas about ways to use blockchain. And I think it comes from misunderstanding or in some cases cynicism about blockchain. By cynicism, I mean that some people are cynically trying to add the word blockchain to where it doesn’t fit, in order to raise more money. So that’s one thing that happens.

The fundamental use of blockchain is to go around roadblocks. So for example, if I want to send money to Venezuela, there may be a roadblock that the government of Venezuela would rather I not do that. Blockchain allows me to go around the roadblock, so I can send money to Venezuela to anybody who has an internet connection, using cryptocurrency.

Another way blockchain goes around roadblocks is an ICO. There are a huge number of barriers to someone who wants to raise money and blockchain just kind of goes around them. If you are brave enough to do it. Blockchain is for going around roadblocks.

A use case for blockchain when there’s no roadblock… Then you’re basically creating an extremely inefficient database. And you can make public databases without blockchain — some people talk about transparency and things like that. I think there are much simpler ways to get those goals like transparency and auditability and things like that.

If you’re using blockchain, there better be a roadblock of some sort that you’re getting around, otherwise, you are using the wrong technology.

So, I guess you are not such a big fan of using blockchain in enterprise and in the public sector?

Ok, let’s say I am an enterprise company or the public sector, let’s say the government. Now, it could be useful to the company. Let’s say that I’m a company that wants to do business with another company in a country with an oppressive regime.

Well, blockchain might allow me to set up contracts with that company, that is enforceable, even though the government that the other company is under is completely corrupt. The blockchain will give me a completely trustworthy way to create a contract with them. So again, we are going around a roadblock.

For the public sector, let’s say I’m a little third world country and I want my own currency and I want to assure the world that I’m not going to inflate that currency. So I can write the math into the blockchain and release my own, third world island-nation currency, and the whole world can audit the math and be assured that the inflation rules are what I say they are and that I’m not just going to run my printing presses around the clock and cause hyperinflation. Those are a couple of examples.

There is lots of stuff going on in the crypto space in general. What other projects do you follow and consider really interesting in terms of technology?

I am fascinated by stable coins — algorithmically stabilized coins.

The original white paper I wrote had an attempt at creating an algorithmically stabilized coin and I’ve seen some of the ones that are being released that are doing very similar things. I’m fascinated by what you might consider commodity trading and derivatives.

If you look at the size of the amount of money floating around in various ways, the amount that’s in bank accounts and the amount that’s in the stock market and the amount that’s in derivatives — the amounts that are in derivatives dwarfs every other kind of money.

And so if you have a lot of derivatives trading moving in into blockchain, that would do more to increase the value of blockchain than any other thing I can think of.

What is your main occupation now? What are you working on now these days?

I’m involved peripherally with Omni and with Uptoken, those are spearheaded by other people but I’m available to them and answer their questions and follow their progress. And I follow a lot of projects that I find interesting. Regarding the projects that I’m working on myself — I don’t have any that I’m ready to talk about at this time.

You wrote about the idea of reversible transactions on top of Bitcoin. And it’s 2020, why do you think we still don’t have this feature on top of Bitcoin protocol?

Yeah, I haven’t seen anybody do anything with that.

All the things in that white paper we basically implemented in the order that there was demand, that people were saying ‘hey, I really want to use this feature’ and so that would be the ones we would work on first. Not a lot of people were interested in the reversible transactions, but it was an attempt to make holding cryptocurrency safer — to give someone a recourse if their money was stolen.

But the problem with that is — if you make transaction reversible with like a one month or one-week window, then anybody that you pay from that account that has been locked down, they have to wait a week or a month, before it’s final.

So, I think that wasn’t a lot of demand for reversible transactions because of the time delay that had to be added.

What are your views on the Lightning Network, do you think it will really help the Bitcoin network to scale to the desired degree?

I’m not an expert on the Lightning network, but my understanding is that they were able to do the Lightning protocol with very few or any changes to the Bitcoin protocol.

And I think it’s an example of the leadership problems in Bitcoin, I think lightning is a great idea, but the fact the only sort of interesting things we can do like that, are the ones that don’t require much of change to the base layer protocol.

It just shows you how inefficient the leadership of Bitcoin is, that basically the only innovations we can have are the ones that don’t mess with the base of Bitcoin.

Thank you!

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