In this exclusive interview, Adam Back, CEO of Blockstream and inventor of the Proof of Work consensus mechanism that powers Bitcoin, shares his unique insights into Bitcoin’s transformative role in reshaping global finance, the enduring ethos of Cypherpunks, and the future of decentralized technologies. From addressing Bitcoin’s challenges to exploring innovations like Lightning and Nostr, Adam Back explains why Bitcoin is not just a technology but a movement for personal and financial freedom. Watch the video below to hear from one of the most influential figures in the Bitcoin space.
The Legacy of Cypherpunks: Building Privacy and Freedom Through Technology
Interviewer: Could you tell us what the core principles are of Cypherpunks, how the movement started, and what’s left of it?
Adam Back: The Cypherpunks were interested in building technology to assert the kind of rights you have in the physical world in the offline world—freedom of association, privacy, and the ability to transact anonymously with paper cash. They were interested in electronic cash and in achieving privacy for communications through tools like Tor and remailers. Their viewpoint was more technological than political—not lobbying for politicians or regulations but simply building the technology and seeing if people would adopt it. It’s a “seek forgiveness rather than seek permission” approach.
Interviewer: Thinking about “seek forgiveness,” could you elaborate?
Adam Back: Some companies have followed this approach. If something exists in a gray area—where it’s not exactly legal but not clearly illegal—they just move ahead and deal with complaints later. For instance, Uber entered markets even where taxi regulations didn’t permit them, expanding fast and only addressing legal pushback afterward. Skype did something similar in its early days, creating software for free international calls without asking telecom regulators for permission. It reflects how society often evolves: individuals act first, and regulators catch up with what society wants as a trade-off after the fact.
Bitcoin’s Promise of Financial Independence and Self-Sovereignty
Interviewer: Do you think we’re still on the right path regarding privacy, resistance to surveillance, and individual empowerment?
Adam Back: Bitcoin has sparked a new wave of Cypherpunk ideas, with people rediscovering what Cypherpunks were doing. Bitcoin isn’t entirely neutral—when people get involved, whether through investment or friends, they often fall into the so-called “rabbit hole” and start thinking more deeply about its implications. It’s technology that changes people’s behavior and perspective, encouraging self-determination. Bitcoin serves as a savings vehicle and a way to opt out of the fiat monetary system, which relies heavily on central bank money printing and inflation. Some argue that inflation is a form of taxation driven by government actions rather than the economy itself. Bitcoin offers a self-help approach to opt out of the fiat system. It’s a self-help approach, right? Which is, well, I don’t know if anybody else is going to agree, but I can do this myself, and if other people choose to join in, that’s up to them.
Addressing Bitcoin’s Challenges: Scalability, Security, and Innovation
Interviewer: As a security expert, do you still see any potential flaws in Bitcoin, or is it as unbreakable as most Bitcoiners say?
Adam Back: It’s bumping up against certain technological limitations. In an ideal world, you would like it to do more things—be more private, more scalable, faster. There are a few things that aren’t perfect, but there are approaches to improve on those in higher layers. For example, Lightning is both cheaper and faster and more scalable. However, trying to implement those features directly in the base layer would make Bitcoin worse, reducing its censorship resistance and other core attributes.
That’s why improvements are implemented at higher layers. I think Bitcoin is pretty close to the bleeding edge of what computer science and human ingenuity can achieve. It’s incrementally improving all the time. Many talented and smart engineers have gravitated toward it, capturing the imagination of some of the best system programmers, network programmers, and cryptographers in the world. It’s likely the most robust and high-security software system ever created. So, yes, I think it’s a remarkably robust piece of software at this point.
Interviewer: The purchasing power of hyper-inflating fiat is far scarcer than that of Bitcoin. Is “scarcity,” a term often associated with Bitcoin, the best way to differentiate it from fiat?
Adam Back: I think so, in a way. If you look at why gold was historically used as hard money, it’s because of its properties: it was scarce and required significant industrial effort to extract and refine. Its scarcity increased over time due to its finite supply.
In contrast, in an online world, information is freely copyable, making it hard to prevent duplication. The content industry, for example, struggles with this. Bitcoin solves this problem by achieving digital scarcity, which is unprecedented. One of the key building blocks of this is proof of work, which I was involved with in earlier forms like Hashcash. Proof of work introduces an unavoidable cost to creating scarcity in the digital realm.
Michael Saylor describes it well: Bitcoin is like a portal from the physical world to cyberspace. Although Bitcoin is entirely digital, its scarcity is derived from a very physical activity—mining. Mining uses real resources like ASIC machines and significant power consumption. Unlike fiat money, which can be created arbitrarily by policy decisions like quantitative easing, Bitcoin’s supply is governed by a fixed mathematical schedule.
For example, you can assay gold to verify its authenticity, and Bitcoin offers a similar mechanism. Running a full node lets you verify transactions independently. In fact, Bitcoin’s supply is even more predictable than gold because gold production can increase when prices rise, as mining companies work overtime or reopen previously unprofitable mines. Bitcoin, however, is insensitive to profitability—the supply curve remains constant regardless of demand or price.
So, Bitcoin combines the scarcity of gold with the advantages of the digital realm: ease of storage, the ability to transact at a distance, and automation in software. These properties make it a superior form of hard money. However,
Interviewer: I think a more accurate term than “scarcity” might be “fixed supply,” as it’s a mathematical certainty. Scarcity can be somewhat elastic and dependent on external demand, whereas Bitcoin’s fixed supply is an inherent feature. If you look deeper, scarcity is a symptom of Bitcoin’s features, not the feature itself. To truly understand it, we should focus on Bitcoin’s fundamental characteristics—such as its fixed supply—rather than its symptoms.
For something to be scarce it needs exterior situations to make it happen. It always needs demand. And if you’re critical, it might stem from something like the Bitcoin bubble where you hear about scarcity as a kind of pressure to act. It’s like a FOMO term. So, I think “fixed supply” is maybe better—that’s what I think.
Adam Back: I mean, if you look at the fundamental invariants of Bitcoin, the things about it that nobody wants to change because they’re part of its technological promise, the maximum fixed supply is clearly one of those. Now, to answer people’s question, which often is, “Is it necessary for Bitcoin to use power?” my answer is that the reason gold is valuable is because there’s a limited amount of it—it’s scarce. For that scarcity to hold, there must be a cost to finding and extracting more.
I would argue that hard money needs an unavoidable production cost; otherwise, it’s not truly scarce. That’s the case with fiat money, which essentially has no production cost. For example, the cost of producing a €500 note is the same as producing a €5 note—almost nothing. I read recently it’s around 8 cents per note. So, for fiat, the cost is effectively fractional, and this issue is even more pronounced for electronic money, where most of it exists in bank databases. It’s purely a policy decision, and even well-intentioned policymakers can’t avoid being pressured by current events, which often makes things worse. Dependable money is critical to stabilizing an economy.
Interviewer: What are you most enthusiastic about in Bitcoin at the moment?
Adam Back: There are lots of areas in Bitcoin that are exciting because it’s a very fast-paced space with constant waves of innovation. For instance, there’s a lot of activity around Bitcoin Layer 2 solutions. ARC and Liquid, which is a sidechain for Bitcoin, are gaining traction. Many startups are now building wallets that integrate Liquid and Lightning. These hybrid wallets feel like Lightning wallets but include additional functionality through trustless swap APIs, like those from Bolt Exchange.
Liquid, in particular, adds extra capacity for Bitcoin transactions. Some projects are already experimenting with having Lightning operate on top of Liquid, creating an additional layer of scalability, especially useful when Bitcoin prices and fees spike during bull markets. Companies like Breeze are working ahead of time to prepare solutions for such scenarios.
There are also new Layer 2 ideas, like ARC, which resemble Lightning. Some implementations of ARC, such as those on Liquid, use extra opcodes that aren’t yet available on Bitcoin. They demonstrate how features like covenants might work once they are introduced to Bitcoin itself.
The Role of Decentralization in Bitcoin, Nostr, and Beyond
Interviewer: What do you think about Nostr?
Adam Back: Decentralization is an excellent foundational principle. While Bitcoin uses blockchain as its method of decentralization, Nostr is another example of decentralization done differently. It provides distinct advantages, such as reducing vulnerability to the whims and policy decisions of tech company management—a huge difference.
This is particularly relevant given the exposure of some large social media companies in recent years. They’ve engaged in non-Internet-like practices, becoming captured by political establishments or the ruling party of the day, even interfering in elections and censoring communications. This behavior, which is highly illegal, has caused significant backlash.
One response is the battle for control of these platforms, like Elon Musk’s controversial purchase of Twitter. Musk improved the platform by reducing political bias and interference in communication. However, the Cypherpunk perspective takes a different approach—developing decentralized technologies where no central party can interfere. Even if Musk is currently a good steward of Twitter, he or his successors could later pose risks or be forced to comply with external pressures. Decentralization eliminates this risk, making it a better long-term solution.
As more of society’s general conversations move online, it’s vital that these digital public spaces are free from sophisticated communication interference.
Interviewer: Last question: I’ve been exploring Nostr but realized there’s no secure way to use a private key yet. You still have to manage it directly, often storing it on your phone. Have you considered developing a hardware solution to sign profiles on Nostr with Blockstream?
Adam Back: There’s definitely interest. We’ve had feature requests to add Nostr key support to hardware wallets. These wallets are already paired with companion apps, and many Nostr clients now integrate Bitcoin features like Lightning for tipping or microtransactions. So, adding support to secure Nostr private keys in a hardware wallet is a logical next step.
This would protect users from identity theft since losing a Nostr private key means someone else could effectively take over their identity. Centralized platforms face similar issues, but in decentralized systems like Nostr, users must take full responsibility for securing their profiles. Hardware wallets could offer a dependable way to do this.
Interviewer: Thank you so much for your time.
Adam Back: Thank you. It was a great conversation.
