0:00 Hello and welcome to Drivechain Friday Conversations. 0:08 Today is July 7th, and we're excited for another weekly chat about Drivechain, which is Bitcoin 0:15 Improvement Proposal 300 and 301. 0:22 These are recorded spaces. 0:24 We do them once a week. 0:26 We are LayerTwo Labs, and we are advocates for BIP300/301, which we think is an 0:35 extraordinarily powerful upgrade for Bitcoin, bringing potentially immense value accrual 0:42 to Bitcoin, potentially immense increases in adoption of Bitcoin, as well as transaction 0:50 fee revenue for miners, potentially immensely growing. 0:57 Drivechain has solutions for all kinds of users and all kinds of interests. 1:03 Everyone who is interested in promoting Bitcoin and encouraging its use would benefit in many 1:09 different interesting ways from Drivechain adoption. 1:13 It's a very powerful idea, enabling people to get what they want, whether they want larger 1:18 blocks or more privacy or more programmability, oracles, DNS, all kinds of innovation and 1:25 experimentation could be built on Bitcoin in a way that enables Bitcoin's main chain to 1:33 be stable and conservative and small block, while sidechains exist in a very successful 1:39 and economically powerful way, contributing to the number go up of the token, because 1:49 all of the sidechains and the main chain share monetary policy and share hash rate. 1:57 So as Bitcoin grows, the sidechains would all be sharing the same monetary policy and 2:08 contributing to that growth. 2:11 Welcome to the stage, Paul. 2:14 Everyone's free to come on up and ask questions. 2:17 Welcome to those who've joined the audience. 2:20 You can come on up and ask questions, share comments and thoughts on drivechain. 2:26 Happy Friday, Paul. 2:30 Hello, happy Friday. 2:37 We've had a lot of really great discourse on Twitter and in the Telegram group. 2:40 Hello, Rheindahl. Thank you for joining. 2:42 Welcome to the stage. 2:47 We love it when you join and bring your questions and comments. 2:49 What's on your mind? 2:52 Hey, guys, happy Friday, Friday. 2:54 I had a question, Paul, for you about the the, you know, I'm required for hash rate 3:04 escrow for like a sidechain withdrawal. 3:06 I think I heard you say at one point that that the current proposal is something like 3:10 three months. 3:11 Is that right? 3:14 That is it's correct. 3:17 But the timing is kind of hard to understand sometimes because it's like three months of 3:22 consistent like yes votes. 3:24 Right. Right. 3:25 Yeah. And it's kind of like there's a train leaving, you know, like New York and going 3:31 to L.A. and it takes three months to get there. 3:33 And so if you miss train, it can be six months. 3:35 And then if both move half as slow, it can be theoretically be 12 months. 3:42 Yeah, sure. Yeah. 3:44 I was thinking about this the other day. 3:45 I was thinking about other pagan mechanisms and, you know, something that I realized 3:55 was even if you had like say that you have a really good like zero knowledge proof like 4:05 verification opcode, right, you could, you know, like like the original dream of the 4:12 sidechain paper with like SPV proofs was that that you would like get a lightweight SPV 4:20 verification that a withdrawal conformed to like the consensus rules of the sidechain 4:26 without actually having to like validate them on mainchain. 4:28 But then the problem there is that you don't know if that transaction is actually part 4:35 of like the longest sidechain or if somebody can forge a proof with like enough hash 4:41 power. And I was thinking that you might actually have a really similar problem, even if 4:46 we had like like some ZKP system. 4:48 And so you would need some way of letting the users of that sidechain like intervene in a 4:58 withdrawal that's gone bad. 5:00 And I realized that a kind of neat attribute of using Hashrate escrow for sidechain 5:06 withdrawals is that if you have a really popular sidechain, it's like super valuable. 5:13 You know, everybody in the world is using it for coffee payments. 5:16 There's a lot of economic value there. 5:18 And the current set of miners decide to collude and steal from that sidechain like a 5:24 thing that you could do is you could raise a bunch of money as those sidechain users and 5:30 go buy a bunch of ASICs and become part of the Hashrate and actually like fight back on 5:36 it. Right. 5:37 And really, you can either rent them or you could actually cut a deal with the other 5:41 miners. Like pay the miners more, say like, hey, you know, I'll bribe you to not do 5:46 this. Yeah, that's a very good game theoretic analysis. 5:51 In fact, there's a word for this, but I can't remember exactly what it is, but it's 5:54 strongly related to Tom Schelling's famous Schelling salience idea. 5:59 In particular, the the withdrawal destination has to be declared up front. 6:05 So you have to say, I'm withdrawing these coins. 6:07 I'm taking 14 to this address, 3 to this address, 12 to this address, 12 and a half to 6:13 this other address. So you have to declare that in advance. 6:16 And yet you don't. 6:18 No one really knows who will own what Hashrate or who will find which blocks over the 6:23 next three months. 6:25 So actually, the miners who want to steal face a weird little conundrum and their 6:31 coalition can collapse because it can be very easily melted down and reformed. 6:36 So the whole Drivechain idea is just that this is a very, very accurate measurement 6:44 of whether or not the miners as a group give the whole sidechain idea as a group the 6:49 thumbs up or not. And the reason why I built it like that is because my view is just 6:56 that the sidechain enabled Bitcoin will have a higher market price and more net present 7:02 value of fees total than one that does not. 7:06 And so then the miners will just be like, well, we really cannot. 7:08 They'll be in a position where they just really cannot. 7:11 They'll feel as though they cannot miss withdraw the coins ever because it'll be like 7:17 a nuclear war. And I put this in the original November 15 post, the guys with the 7:21 nuclear warheads who are shooting bows and arrows at each other and they're like, it's a 7:25 bridge too far. The retaliation would be too great. 7:28 So, yes, that's exactly the line of thinking that I used. 7:37 But you can see for yourself, I'm sure you've noticed it and I'm sure it's very 7:42 apparent to you now that people have this kind of obsession with the ZK proof thing is 7:49 like this obsession at the miners. 7:50 We want to keep the miners on a very short leash. 7:53 We want to make it impossible for them to ever even be able to steal. 7:57 But as you've pointed out, this is kind of a fool's errand because it's not even so 8:02 much breaking the rules of the sidechain. 8:04 It's like, which sidechain is the longest? 8:06 Was something hidden from me later? 8:08 So I have this emphasis on auditability instead. 8:11 That is very different. 8:12 It's very, very different. And in fact, me allowing the miners to steal, that's just the 8:16 loose coupling that gets us away from the criticism that like Drivechain is a block 8:23 size increase or something, because it is not a layer one block size increase in the 8:26 slightest. But it is it does solve the problem for people who wanted to opt into larger 8:32 blocks. So it's a long answer. 8:33 But yeah, I also wonder if you had like, let's just imagine a magical op code, call it 8:41 op magic. Right. 8:42 And like, I don't I don't know how it works. 8:44 It's magic. But it lets you do like a trustless peg out. 8:49 If if your threat model is that the miners are actively hostile, like a super majority of the 8:57 miners are actively hostile to your sidechain, then it seems that if they had enough power, 9:04 then they could like actively reorg blocks that used magic to process withdrawals from your side 9:11 chain. So either the miners are not actively attacking your block chain, your sidechain, or 9:20 they are. And if a super majority of miners are actively attacking your sidechain, then 9:24 you're kind of screwed no matter what. 9:27 Yeah, you're absolutely correct. 9:28 You have the you have the full expert level understanding of it. 9:34 I mean, when I was designing it, what I did is I literally I remember doing this. 9:38 I drew I had a blank piece of paper and I made I drew a line down the middle. 9:41 And on the left, I kind of put like, what would everyone want to be happy in the small blocker 9:46 camp? They don't want. 9:49 They don't want to have to audit a lot of data, so it has to be the case that they could ignore the 9:53 data, the large block, you know, the data of the large block sidechain has to be the case that 9:59 they could ignore that. And then I thought, well, what do the large blockers you know, what do the 10:04 large blockers want? 10:06 They want a different block chain with larger blocks. 10:09 And I thought, what are they willing to give up? 10:10 They are willing to give up SBV mode. 10:15 And they are willing to. 10:18 So I kind of thought, like, how do we bridge this gap? 10:21 And I was just kind of like literally writing things on each side of the page. 10:24 And I was like, well, the. 10:28 Already, the small blockers don't mine, no one mine, so mining is not in the left column. 10:34 And we can just have and then on the right, the right side of the column, I thought like, well, 10:40 what if 51 percent attacks the sidechain? 10:42 Won't those people, the large blockers feel bad about that? 10:45 But then on the right side, I had already written or something like if 51 percent turns against 10:52 these people already by they're already into believing that 51 percent of the hash rate is not 10:57 destroying Bitcoin. So it's kind of like more or less how I came up with the idea. 11:02 And the fact that it's easier for miners to steal from the BIP300 sidechain, which is the 11:09 truth, that's true. 11:11 And the critics point that out and they're right. 11:13 But what they don't really point out is that that's why it's three months. 11:17 And that's why it's all three, all the outstanding activity is pre compressed into just one 11:22 hash. So it's just one hash every three months. 11:25 So that's sort of supposed to offset the the fact that the it's like easier for them to just 11:32 kind of arbitrarily take the coins and to withdraw them to any destination they want. 11:37 But that the three months and what you just described about the strategic instability, they 11:41 have to organize this coalition in advance, this 51 percent coalition in advance. 11:46 If the coalition fails, they'll be at the very least sort of shamed and humiliated. 11:52 The mining pools, the only thing they own is their brand, the underlying clients, the 11:57 hashers, the people with the ASIC chips, they can they can switch all at any moment. 12:02 Now, would they switch because of this? 12:04 Like the pool could say, hey, I'm trying to get you more money. 12:06 Unclear. But the only thing the pools have is their brand. 12:10 And, you know, for people to even talk about doing this, I think would be itself 12:14 subversive. And even if they succeeded, they would just be. 12:17 So, yeah, so this is me rambling, but I think, you know, you have you have a very, you 12:23 know, a plus, basically understanding of of what I was thinking when I made it, which 12:29 was just this is something that will will help resolve the dispute of the block size 12:34 war that the small blockers will get what they want. 12:36 The large blockers will get what they want. 12:38 No one will get. 12:41 No one will be harmed at all. 12:42 Now, it turns out that was a little naive because actually a lot of people had made a 12:46 something of a career out of fighting the block size war. 12:49 And a lot of people had made a career out of like, you know, they're like professional 12:53 defenders of Bitcoin and people have worked on similar like maybe what you might call 12:59 competing ideas. 13:01 So there were still there was still this group of people who are harmed. 13:06 These are enemies of Bitcoin, enemies of Bitcoin success, in my view, who were harmed by 13:12 this idea. But it didn't ultimately didn't matter because the large blockers decided to 13:16 declare war and fork off first with the SegWit2x and then with BCH. 13:21 And as a result, no one became interested in like a win win solution to this problem. 13:25 And it sort of just languished. 13:27 And that's the history of the idea. 13:29 Yeah, another and the reason why. 13:32 You know, started by asking about the time limit was when I when I realized that a 13:38 strength of hashrate escrow is that you have a time window during which you can go 13:48 strike a deal with the miners or go rent hash power or go buy hash power or whatever. 13:53 It actually made me think, you know, maybe that period should be longer. 13:57 Right. Like I originally thought like six months was too long. 14:01 And now I'm wondering if three months is too short, you know, especially if you can do 14:05 like cross chain atomic swaps to like get liquidity out of the sidechain. 14:08 Right. Like like I imagine that, you know, the people who would actually be doing side 14:15 chain withdrawals might be like exchanges or service providers. 14:19 And you would just go buy your sidechain coins from them. 14:22 Right. It would be something like that. 14:24 Well, I can this is a this is an interesting point. 14:26 So what I was thinking when I first designed it, I made it two weeks and I thought this is 14:31 so long. And what I was thinking of was two events that had happened recently, relatively 14:36 recently in Bitcoin's history, recently from my point of view in 2015. 14:40 And one was the level DB lock database incident that had like just happened in July. 14:48 And that one was a total freak surprise that happened at like 2 a.m. 14:53 Eastern time or something. Maybe I'm not remembering that detail correctly. 14:56 But the point is, it was a complete surprise and no one no one knew. 14:59 Like Luke Dax Jr. was just like on the IRC chat saying like, lol, Bitcoin has forked and 15:04 like no one had noticed. 15:06 But even still, even despite this kind of emergency surprise attack, this issue was 15:12 resolved. This issue which we had to resolve, this was like a relatively complex 15:16 situation and it was resolved within five or six hours. 15:21 And then previously there was a value overflow or value underflow incident where like 15:27 two billion Bitcoin had been created. 15:28 That was a long time ago. 15:30 But that one also was a surprise and someone just posted a Bitcoin talk and then they had 15:35 to write, they wrote new code and shipped the thing and that was resolved within five 15:39 hours. So so I was thinking about that and I thought two weeks is a long time. 15:44 And then I went to Scaling 3 in October 2016 in Milan after having presented on Scaling 15:52 via sidechains. I did some presentations and then people were meeting and talking with 15:56 me, including, you know, people like Adam Back, Matt Corallo, people who are great 16:01 people. And they were talking about the idea and they asked why it was two weeks. 16:07 And I explained to him about what you were saying about how you could swap out 16:10 instantly. So it doesn't really matter. 16:11 So the more time is more security, but it's kind of free because time value of money. 16:17 And so they said, well, why not make it longer? 16:20 And that's when I decided to just make it three months because I was like, it doesn't 16:23 really make any difference. 16:24 And then what happened after that was as years went by, I realized that none of the 16:29 critics really knew anything about Drivechain at all. 16:35 So then I started to second guess myself. 16:37 I said, I made it three months just because someone made a comment, but none of these 16:40 people really get it. And I was kind of like, so I kind of the timing thing, I kind of go 16:45 a little bit back and forth on. 16:46 But I really do believe that there is no there's no actual cost. 16:52 So to address your last point, what I really think will happen or could happen is 16:59 that the people who when you swap out instantly, who's collecting those coins that 17:04 they're going to clump up on certain individuals. 17:07 And these are the individuals who are either they're the most patient and they think 17:11 the risk of the sidechain of BIP300 withdrawal failing is the lowest. 17:16 So these coins are going to be changing hands. 17:19 Some of those people could themselves be miners or mining pool operators. 17:23 So just in the very next instant, you know, over the next whatever it is, 12 hours or 17:28 so, as all the withdrawals will be piling up in the hands of whoever it is out there 17:35 that thinks that they can get them across BIP300 the honest way, across the 17:41 withdrawal, the honest way. 17:43 And so it's kind of like very quickly, they'll just be already that that idea you 17:48 expressed before about people negotiating a coalition, it's kind of like the 17:53 coalition will already be pre-made, the coalition of people who want to fight for 17:59 the honest BIP300 withdrawal. 18:02 They already have like kind of opted into it in exchange for a tiny yield. 18:07 And so it's kind of like. 18:11 I still now think like maybe I made it three months and maybe it was too long, 18:16 because remember, it's three months if 100 percent of the hash rate is is 18:20 participating in every withdrawal and then still you can miss that one. 18:25 You can they can be going like like, you know, a Mussolini fascism train on time. 18:31 They could be going every three months. 18:33 And if you just barely miss one, you really have to wait six months. 18:37 So I kind of thought it was pretty long. 18:38 But yeah, you're right. 18:40 A lot of people don't grasp that only specialists will be using the BIP300 18:46 withdrawal. A regular laypeople will just be swapping out. 18:53 Yeah, and another idea that I think is really interesting, it came up in a thread 18:58 that I was on, I believe you were on and then John Light was on, like one of my. 19:05 You know, kind of evergreen concerns that I had had with Drivechain had been, 19:13 you know, over time, if. 19:16 If, you know, if a minor wants to make sure that they are processing the correct 19:22 withdrawal or like just just doing right by the sidechain, you know, 19:27 do they have to run very computationally or bandwidth or like data intensive 19:34 processing in order to like validate those sidechain rules and make sure that 19:38 they're like picking the right proposal? 19:40 And a thing that John Light said that I thought was really interesting was, oh, so 19:45 so you have like that dynamic maybe playing out, maybe not, but like maybe playing 19:49 out. And then on the other side of it, you know, with things like Stratum V2, we 19:54 really want individual miners to be doing their own transaction selection for 19:59 blocks instead of having, you know, a small number of pools deciding what blocks 20:04 get in or what what what transactions get into blocks. 20:07 And the thing that John Light said that that was kind of a big unlock for me was, 20:12 you know, you could always have some ZK client that's really inexpensive to run 20:19 that, you know, like if if if Paul is a proponent of the big block sidechain and 20:27 he wants to make sure that all of the miners like process his withdrawals, then 20:31 the economic incentive is there for him to spend all the processing power on 20:36 producing, you know, ZKPs or something that are very cheap to validate by 20:41 individual miners who are running like Stratum V2. 20:44 So, you know, like we can use some of the new moon math to make it still very cheap 20:52 for minor decentralization to move in the right direction while still having, you 20:58 know, really complex sidechain rules that people don't actually need all the data 21:01 for. So I thought that was just a really interesting point that I hadn't seen 21:06 expressed or talked about. 21:08 And it it allayed one of my bigger concerns around Drivechains. 21:15 I don't know if that made sense. 21:16 I haven't had enough coffee yet today, but it's it's interesting. 21:31 Paul, did you have thoughts on that question? 21:40 I don't even think it was a question, I think I'm just saying it out loud. 21:43 Maybe he's disconnected for the moment, but those are great thoughts, Reindahl. 21:50 Reindahl, how do you do you share John's John Light's interest in in a privacy side 21:56 chain being an exciting thing? 21:58 Do you think that has potential, you know, if let's say hypothetically Drivechain 22:02 were adopted as soon as possible, so, you know, 12 months from now, the, you know, 22:08 perhaps the privacy sidechain with zero cash technology would exist or something like 22:16 that. Do you think maybe the privacy altcoin community and just, you know, do you 22:22 think generally there could be a big adoption of the Bitcoin privacy sidechain in 22:27 your view? Or what are the, you know, the things that would make you feel that might 22:31 happen or might not happen? 22:34 So I think I think the mistake would be to make like a privacy sidechain that's just 22:41 like the privacy sidechain. 22:43 I think it has to be a sidechain that's like very desirable for some other reason. 22:49 And then as privacy built in. 22:51 So if we did a sidechain that was really optimized for payments and you can do like 22:58 lots of very low latency micro payments, you can do, you know, your daily coffee 23:04 purchase. It like replaces lightning. 23:06 It does the thing that lightning wants to be, but without all of the liquidity 23:13 provisioning requirements. 23:15 And it just so happens to use, you know, ZK shielding or some other like privacy 23:21 technology. I think that makes sense. 23:23 Like one of the problems that I have with kind of privacy coins is that the anonymity 23:29 set is all people who decide to use that privacy coin and not something else. 23:36 Right. Like if the number one feature for some network is that it's like the privacy 23:41 thing, then your anonymity set is like the people who chose that as their as their 23:46 like primary feature. If instead it's like, hey, the reason why I'm using this side 23:50 chain is because it's the best thing for payments and it just so happens to have 23:55 really, really, really good privacy, then you kind of get like a more useful 24:03 anonymity set to sit in that that's like bigger and has more diverse payment 24:08 activity. And. 24:11 Yeah, I mean, it's like. 24:14 Yeah, totally understood. 24:18 I just wanted to say that I heard you the first question, but for some reason, the mic 24:23 like wasn't working. 24:25 I don't really know why. So I had to restart. 24:27 But the the question about is if do miners have to validate sidechains? 24:34 The answer is that it's like this. 24:37 The whole framing of the question is wrong. 24:40 And it's an unfortunate thing because the you have to separate everything into two 24:46 columns again, which is that the column on the sort of left is like. 24:51 The column on the sort of left is like what the small blocker column of someone who doesn't want the sidechain. 24:56 That person never has to validate the sidechain, but then there's the people on the right who want to use the sidechain and they obviously they want it to work and they want it to work perfectly. 25:07 They want the withdrawals and deposits to work. 25:09 So we have to care about that person. 25:11 So it's an idea of giving two people, two groups of people what they want, even though they have a dispute. 25:17 And if you don't think about it that way, then I don't think any of it will make sense to you. 25:24 And I think that's what a lot of people don't don't understand. 25:26 I think you get it. But I think so. 25:28 The answer is. 25:31 That do miners have to validate the side, the answer is no, because not to mine a valid L1 block, they can mine an L1 block without validating the sidechain and they can collect all the Blind Merged Mining fees. 25:45 One hundred percent or ninety nine point nine percent, whatever the fees minus the cost of the notice of the effect of all of it without doing any of that. 25:54 But if they don't do the withdrawals the right way, then users will not really be using sidechains. 26:01 As I say, the withdrawal, how do I know that I actually withdraw the coins that are sent into the sidechain? 26:08 And if I own some over there, how will I get them back? 26:12 So since I, as the designer, want to appease both groups of people, I've gone to extraordinary lengths to make it very easy for everyone to figure out, not just the miners, but everyone to figure out whether or not the withdrawals are being done correctly. 26:30 And that starts by making them very slow and making only one withdrawal per period and making the entire withdrawal be covered by one hash and having the sidechain node, the full node will be screaming the single valid hash. 26:46 And every single block and in every single block header, in fact, so. 26:51 So the way the question is sometimes. 26:54 As with many Drivechain questions, when I answer it, it is actually misleading somewhat to people, even though I'm doing my best to answer it honestly, because I'll start talking about all these things I do to make it easy to validate. 27:08 But when push comes to shove, the answer is that no, no one has to do any validation of the L2 at all. 27:15 It's not mandatory at all. 27:16 And yet we have to point out that. 27:21 What the miner can do is they can just assume that everything's working until enough people complain. 27:26 Then, just like anyone who investigates anything. 27:30 They could start to maybe run the sidechain node in SPV mode, which is cost almost nothing, a few megabytes per year of block space to check the headers. 27:41 And then if they wanted to, they could start up a full node and sink, you know, sink like a pruned node or an assumed valid node or something, or a ZK node, exactly as you were saying. 27:52 They could do they have an enormous continuum of possibilities open to them. 27:58 And we, of course, like any intelligent person, we would rearrange what is we would want it so that whatever things are very easy to check and most indicative of the validity, the truth or falsehood of the claim, you check all those things first. 28:14 You know, it's like you're investigating a murder and someone says, well, I have HD video on my video camera. 28:18 I have a video for the last 10 years and I have a video of the person and I'm an unimpeachable witness. 28:24 Never. So so there's a whole continuum of things that you can do to investigate it and make it as easy as possible for everyone to figure out. 28:33 But when I do that, that makes it may look like I'm saying that, oh, no, no, it's going to be really easy. 28:37 But that's not that when push comes to shove, the answer is that no one has to do this. 28:40 But the easier it is, just the harder it is, the more of a deterrent it is to. 28:46 Well, I mean, yeah, and I think the thing that's important, right, is that there's. 28:51 Steps that might take progressively more resources, but give like increasing fidelity to let you like if there is some dispute and if there is a big like Twitter hashtag campaign because like the wrong withdrawal is happening, like you can go find out and you don't have to go from zero to now. 29:14 I have to run a big block node like there's steps along the way. 29:19 And, you know, like there could totally be market solutions to this. 29:23 Right. Like the same way that in other chains, there's now kind of third party like block producers that maximize MEV. 29:32 I'm not saying that's what we'd have here, but you could imagine that, you know, maybe if there's a lot of individual home miners in a post-stratum V2 world who like don't want to deal with any of this. 29:42 They just want to know like which sidechain, you know, block headers to include. 29:48 You know, they they use a service that just tells them for these 20 sidechains like this is the hash you should use. 29:54 And if they start getting yelled at on Twitter, then they leave that service. 29:57 And so that service is like strongly incentivized to do the right thing because it's cheap for people to switch and they basically get free money as long as they're being honest. 30:08 Like there's a lot of interesting like economic ways that this can just be self-correcting. 30:15 That was very high level, like very technical discussion on the miners. 30:21 And I thought maybe for our less technical members of the audience, if there are any, they might enjoy hearing a brief kind of elaboration on the part of Paul's response that addressed what you were saying, Reindahl, which is you said that 30:38 for the privacy sidechain, it would be great from a privacy enthusiast's standpoint if tons of people of all different types were using the privacy blockchain. 30:50 So right now, what we have is like some privacy altcoins and then the Bitcoin blockchain, and they're not synergistic in the sense that they aren't sharing hash rate and they're not sharing monetary policy. 31:03 So the Drivechain vision, and I know you know all of this already, the Drivechain, but I want to hear your reaction to any part of it that you don't agree with, in my view, like the Drivechain vision is that we want to make every change of Bitcoin's main chain opt in unless it's proven. 31:25 So what we should do is have a privacy sidechain and privacy enthusiasts currently using Bitcoin or altcoins would all potentially use that privacy sidechain. 31:39 And therefore, it would be strictly better, one might argue, than using an altcoin because the altcoin doesn't benefit from Bitcoin's number go up. 31:48 But on the sidechain, you wouldn't have to worry about a currency rate fluctuation against Bitcoin's token. 31:54 Like if you're holding Monero, you might worry that it might drop against Bitcoin any moment. 32:00 But you're using it for the privacy tech. 32:02 So it's strictly better to have the privacy tech and the Bitcoin unit of account if we assume all else is equal, which of course we can't assume except in theory. 32:14 But strictly speaking, it's much better for all of these experimental blockchains to be Bitcoin sidechains because then they get the Bitcoin hash rate and the Bitcoin monetary policy with their tech that's different. 32:30 And if the privacy chain were to grow and accrue hundreds of billions of value and be very successful, then that would enable the Bitcoin technical community to consider bringing that tech down to main chain after it's been proven in terms of use and stability. 32:45 Does that vision resonate in your view? 32:49 I mean, so I don't know if if like people holding big bags of other coins will dump them to come over to a Bitcoin sidechain. 32:59 Like, I think it's like alts will live forever because like you don't really have the ability to get 10,000 X on Bitcoin anymore. 33:10 Like, you know, if you if you just want to like pump your bags, the best move is still to market a new coin from, you know, zero to a dollar and like ride that all the way up. 33:21 But, you know, like, I think what is exciting is there's a lot of people who are in Bitcoin or aren't in anything and or would would be willing to do that. 33:32 And, you know, I think like lightning has a bunch of problems. 33:37 I think a lot of other systems have a lot of problems. 33:41 If if we could, you know, drop some of the constraints that we have on everything being verifiable by everybody and instead say we're going to build a layer that's like 100 times more secure than Bitcoin, I think that would be a lot of people would be willing to sell their alt bags. 33:56 And if we could just drop some of the constraints that we have on everything being verifiable by everybody and instead say we're going to build a layer that's like hyper optimized for payments that uses the lessons from these other chains to also be really private, then we could just like have a really good privacy preserving payment layer for Bitcoin. 34:14 And maybe like maybe that doesn't actually need to come into main chain. 34:19 Right. Like maybe in the fullness of time, Bitcoin is where like very high value public transactions happen. 34:27 And it's the anchoring layer for sidechains. 34:31 But like all the payment activity actually just happens in this thing that is not globally replicated to all of the users. 34:38 And like that, that's probably OK. 34:42 Yeah, I don't know. So I think I see it a little bit differently. 34:44 I don't see I don't think it's the case that if we were to have something like Drivechain that all of the alts would just evaporate. 34:52 But I do think it would be net positive for Bitcoin and for, you know, it would make Bitcoin more useful for more people, which is how Bitcoin becomes more valuable. 35:01 Like, you know, like podcasts and pontifications like only put so much more money into Bitcoin, like the real way to grow Bitcoin's value is to have it actually be useful for things. 35:14 And, you know, I think we need some kind of sidechain mechanism, whether it's Drivechain or something else to like make Bitcoin more useful for more use cases. 35:26 Yeah, you're 100 percent right about all of that, but I do think that there is the idea that Drivechain will kill alt coins. 35:34 I think this idea is not this idea is misunderstood. 35:38 It's often misrepresented as like, yeah, the idea that Drivechain comes out and then all the coins just vanish the next day. 35:47 I don't believe that that will happen. 35:49 But the what I do think is the way a lot of the alt coins are kind of only possible because we've had no sidechains, all the big alt coins or any ones that have gotten any use. 36:04 The ones that have given legitimacy to the whole category, those are all people who tried to do their thing on Bitcoin for a long time, you know, years of just effort and desperate attempts. 36:17 And then they just launched an alt coin because they had no other choice. 36:21 And those, you know, those like four or five legitimate alt coins, Namecoin, now Ethereum, you know, Monero, whatever, small number. 36:32 These things like Zcash also, they gave enough legitimacy to the category to allow the category to exist. 36:41 And Bith 300 solves a similar problem. 36:46 It says if you want to do your new thing, you can now do it with this. 36:48 So that's one sense in which Drivechain kills the alt coin idea. 36:52 But the other sense is that it's not as though the Ethereum people will just switch tomorrow on day one. 36:58 But eventually it will become clear that Ethereum, the alt coin, has no future in the sidechain world because people make the copy of Ethereum to start copying everything. 37:10 It'll be exactly the same, except it'll be plugged into Bitcoin's network and it'll be full of people who are committed to the idea of having one coin defeat everything. 37:19 And money has very strong network effects. 37:21 Technology is very strong network effects. 37:23 So so it'll eventually just become clear that the Ethereum sidechain is better for many users. 37:30 And then eventually it'll just become clear that the ETH token will have no doesn't doesn't is superfluous and has no future. 37:39 And then they'll with with a heavy heart resignation, they will then abandon him. 37:46 But yeah, you're right. Like people like to do this podcast stuff and they like to do this. 37:50 Like this idea of complacency is a very, very attractive because it's very easy to just go up there and be a cheerleader and say, yeah, we're going to go to the moon and we're going to go to whatever. 38:03 $200,000 per coin, 200K by conference day and just chant memes like a weird cult. 38:11 And that gets you a little further along. 38:15 But it it it ends up harming Bitcoin because it's anyone who wants to suggest that we do something real, something real is always going to be messy and it's going to have details. 38:31 It's going to have trial and error. 38:33 It's easy to just say something sacred and abstract and just say, you know. 38:38 Never go up, whatever. 38:40 But yeah, unfortunately, I think the biggest enemies of Bitcoin now are the the complacency mouthpieces. 38:47 So what should ironically include basically Michael Saylor at this point, the people who just think Bitcoin success is inevitable. 38:55 That is the only when I think of that, I always think of Star Wars episode one about how everyone thought that it would be an inevitable success. 39:03 And that one thought, I think, is exactly just, you know, what destroyed it. 39:09 So. 39:13 We have a hand. 39:16 We have a hand raised, DJ, thanks for joining. 39:18 What's up? 39:20 Thanks. Thanks for having me. 39:21 Appreciate it. 39:22 Great conversation is always, always interesting to listen into you guys. 39:26 You guys are definitely way more technical than I probably will ever be. 39:30 So I love listening and learning. 39:33 I'm curious if you can maybe help me out here and explain, like. 39:38 Really appreciated what Rendell just said, right, like because that's kind of how I'm seeing the future with Bitcoin is where the base layer will be more for the larger transactions for final settlements of like these billion dollar level kind of transactions. 39:55 And then everything like micro payments and smaller transactions will happen on other layers. 40:03 So this brings me to my question, if you can help me understand, like what's the difference between a sidechain and a layer two or layer three? 40:12 Well, if you ask me, it's not a chain is a layer two, but the definition is sort of contested by people. 40:18 I think layer two is just something where, you know, the money is changing hands and layer one doesn't see it. 40:25 So in that sense, a bar tab is like a custodial layer two. 40:30 And even something like Mt. 40:32 Gox, there used to be like Mt. 40:33 Gox, like credits or something like transferable BTC, transferable USD, like on an exchange, Coinbase, whatever used to have that type of thing. 40:43 They probably still do. 40:44 So anything where it's transferred on some layer, the coins can change hands, but layer one doesn't have to know about it. 40:51 So you have one. 40:55 I think what my understanding of it is colored by economics because I have a background in economics. 41:00 And actually, I have a I think a pretty decent understanding, maybe better than most that the way like what the Fed is, the Fed is a bank in the United States where in order to have an account there, you have to be a bank. 41:13 It'd be a lower bank. 41:15 It's all in a big pyramid. 41:17 So like Bank of America has an account at the Fed and Chase, JPMorgan Chase, Manhattan, etc. 41:25 As in, they have an account at the Fed. 41:28 Wells Fargo, they have an account. 41:29 So the Fed is just a bank of banks. 41:33 And then you have an account at Wells Fargo, and so does your friend. 41:37 If you and your friend, if you send money to someone who's also a Wells Fargo customer, they just, you know, they just update their, you know, their Excel spreadsheet or whatever. 41:46 It's not literally an Excel spreadsheet, but you know what I mean? 41:49 They don't have to do anything. 41:50 They say we lucked out. 41:52 But what if you what if I want to send money to you, DJ Satoshi, and you have an account at Bank of America or something or whatever, some credit union? 42:05 Well, it's still not a big deal. 42:06 They just they net it out. 42:08 And then at the end of the day, the Fed will, you know, have everyone settle up. 42:13 But it has to go through the other level. 42:15 So it's better if it stays in their system. 42:18 And that's why sometimes people charge fees for things. 42:21 If it leaves, charge fee for a wire transfer because wire transfer has to use a more expensive system. 42:27 So I don't know if that's helpful. 42:29 But really, the way the money works is there's this Bank of International Settlements that is in order to have an account there, you have to be a central bank. 42:36 So the Fed has an account. 42:39 The, you know, whatever. 42:42 European Central Bank has an account, Bank of Japan. 42:46 So they all have an account there. 42:47 And then that's for people who move. 42:48 But of course, well, these are nuanced issues. 42:51 But basically, it's a big pyramid, you know, like the bar tab. 42:54 You go to the bar tab, you say, I want to, I want another one. 42:59 You buy three or four drinks, you buy drinks for your friends. 43:03 Then you settle up with one payment with the credit card company. 43:05 And then the credit card company is itself netting them up. 43:08 It's netting them all up. 43:10 Net, net, net, net, net. 43:11 And then at the end of the month, it gives you the statement. 43:13 And then you pay the statement with your bank account. 43:18 So I don't know if that's making any sense. 43:19 Maybe that's too long of an answer. 43:21 No, it makes perfect sense. 43:23 So basically, at that level, then, can't it just be that even layer twos can 43:33 transact with each other if you look at it where Bitcoin, for example, the base 43:38 layer one would be the Fed and then any other layer two will simply be a banking 43:47 institution? 43:50 Yes, that could be the case. 43:51 I wrote a little article about this that I called Funder as a kind of joke, but 43:55 it's called, if you search truthcointhunder, you should find it. 43:59 It's on my blog, Truthcoin.info. 44:01 And I write, I wrote a big thing about all this in that kind of detail. 44:04 I touched on all that, all those points. 44:07 And yeah, I think what I would say is that most people, most people have never 44:12 seen the Fed and they've never seen a Federal Reserve. 44:16 They know what a dollar is, but they don't, you have, when you have a dollar 44:19 of something, that's like an abstraction. 44:21 So you could have four quarters or you could have one dollar bill. 44:25 And if you have five, you could have a $5 bill. 44:27 It could be a $5 bill or five singles, or it could be whatever that is, 20 44:32 quarters. 44:35 And so you, the, having a dollar of something is just like, you can have a 44:41 dollar of oil, you can have a dollar's worth of arcade tokens, a dollar's worth 44:45 of rice. 44:46 So the Fed has these reserves. 44:48 No one has a bank account at the Fed. 44:50 No one has seen a reserve. 44:51 No one has ever used the reserve. 44:53 Most people have never heard of the Bank of International Settlements. 44:57 And so most, so what I'm trying to say to answer your question is that most people 45:01 live their whole lives, like in like level four and five or something. 45:05 They have like IOUs, they have credit cards, they have an account with Wells 45:09 Fargo. 45:10 They don't even know about the, the lower layers, you know, the, they don't even 45:14 know anything about the Bank of International Settlements. 45:16 They don't know anything about gold, which would have been theoretically like a 45:19 kind of layer one, layer zero. 45:23 So most people just, they don't even need to know. 45:25 They don't do, just care about what they have to care about. 45:28 They learn what they have to learn. 45:30 And they're not really harmed in any way by, by not knowing about how the banking 45:35 system works, other than of course, it's going to be harder for them to get into 45:38 Bitcoin and make their own financial future that way. 45:43 So in that way, it does suck, but, uh, 45:46 Right. 45:46 Well, they're also harmed because the foundation is always debased from under 45:51 them. 45:51 So therefore all of the currency that they continue to earn is being rugged and 45:56 stolen from them. 45:58 Right. 45:58 I think these issues are related. 45:59 In fact, the idea that, that so few people understand it just means that it's a 46:03 great vector for scamming the public, which of course, every inflation tax is 46:11 being paid by someone. 46:12 They get free money and someone is paying. 46:14 It's very hard to tell who it is, but someone, some poor people are paying. 46:18 So couldn't it be then that all these layer twos, that basically anyone who has 46:24 access to the base layer today could become a banking institution and therefore 46:28 could create their own layer two. 46:30 And then everyone who wants to like transact from layer two to layer two, then 46:39 couldn't it potentially be that in the future, a layer two wouldn't even need to 46:44 go back to the main chain. 46:45 They could simply pass private keys between one another, uh, every three 46:49 months or every year. 46:51 Oh, well they wouldn't. 46:52 Yeah. 46:52 The, the, the answer is that they don't even have to go back down a layer if they 46:57 don't want to. 46:58 So you're right about that. 47:00 They don't have to move private keys around. 47:01 All they have to do is if they're transacting what I think I write about 47:05 this in the article, I actually just think it will just clump up geographically 47:09 where you just like have people like in the U S East or, uh, like in Southeast 47:15 Asia, and those will be like the chains. 47:19 The chain will just be like a chain that is mostly where most of the trade is 47:24 internal to that network, but plenty of people want to like go on vacation or 47:29 they want to ship goods internationally. 47:32 Those people will, will sort of in theory need two transactions cause they'll have 47:36 to trade, transact off of their L2 and onto someone else's just to send their 47:41 own money to themselves. 47:43 But in practice they won't really like they'll, we would be just new people or, 47:48 uh, you know, new ways of just netting it out where they, you know, in practice it 47:54 would, this would be like very, very, very, very straightforward to do. 47:58 Um, you just have money on all the networks that you transact on and then you, 48:04 you net everything up and then sometimes you send the coins back and forth among 48:09 the network. 48:10 Sometimes you have to use L1 if you can't find anyone who will swap the coins for 48:14 you, but L1 is already pretty big because it can already do about 2,500 48:20 transactions every block, which is every 10 minutes. 48:23 And there's about a thousand blocks every week. 48:25 So it's already 2,500 per block, a thousand blocks a week. 48:30 So whatever that is, 2.5 billion every week is the current L1 capacity. 48:36 So you can compare that to some other markets where like, uh, for example, the 48:40 London gold, uh, I don't, I think, uh, I don't remember the exact number, but 48:45 it's something like they do five or six actual transactions per day. 48:49 Everything else is just netted up. 48:51 They net, net, net everything. 48:52 And then they actually do like very, very small number that would be on the order 48:57 and they're closed on weekends. 48:59 So that's like 25 a week. 49:01 So we're already a million times more throughput than, than that situation. 49:07 So there's already a lot on, on layer one and layer one is, uh, people have been 49:12 using L1 directly this whole time. 49:14 So to switch to, to layer twos or even have a more layer twos, layer threes, 49:18 et cetera, will be a huge geometric, uh, increase. 49:23 And there's, yeah, there, I think a lot of people will not feel the need to go 49:29 back to L1, but some people will. 49:32 And if, if the cost is cheap enough, a lot of people will do it because of the 49:37 more security and reliability. 49:38 And that's what, that's a good thing. 49:40 We want to make it as we want to drive down the cost for 49:43 everything as little as possible. 49:45 We want to have like some L3, L4 where it's like Venmo, where it's 49:48 practically free. 49:50 And then we want to have everyone who wants to stay on L1, if they're willing to pay the $5 49:52 transaction fee, $10 transaction fee, $50 transaction fee, then they should be able to. 49:57 And that could be like long-term cold storage. 50:00 That could be like a savings account or like a CD. 50:03 I don't even know if people use CDs anymore, but, um, not the compact disc, the certificate 50:09 of deposit, but like, you know, this is like your store, your, you know, your, your, your 50:14 But like, you know, this is like your store, your, you store your longer term wealth in 50:18 a safer place. 50:19 You store, you do your retirement savings quarterly, you sweep it in, into there or 50:24 something. 50:25 I can see that. 50:26 You know, I think that would be very reasonable. 50:27 What we should have is a continuum where the relative costs and benefits match the scenario. 50:32 So something where you can rapidly turn it over like the bar tab at low risk, rapid turnover. 50:39 And then we have, alternatively, we have something where there's, uh, where you're very, very 50:45 paranoid. 50:46 You have the vault, very, very paranoid, but it's slightly more expensive to enter and 50:51 exit. 50:52 So you should have the full range. 50:53 Hey Alex, nice to have you on stage here. 50:56 Thanks for joining. 50:57 I put one of your pro Drivechain tweets in the nest. 51:01 It's always great to read your technical writing online. 51:05 What's on your mind today? 51:06 Thanks for joining. 51:09 Hey, thanks for having me. 51:10 Hey Paul. 51:11 How are things going? 51:12 Um, yeah, just, just saw there was a space on and thought I'd hop in. 51:15 Um, I, I have two questions and I think it might be beneficial. 51:19 And I'm sure Paul, you, you, you get tired answering one of those. 51:22 Um, so feel free to just point to, to links. 51:26 Um, but then the second one might be interesting. 51:29 So the first one is like, I mean, there's a lot of with, with ads, with any upgrade, 51:32 obviously there's debates back and forth. 51:34 I, I follow it on Twitter and I feel it often gets very political and personal 51:37 about, we know where the Drivechain should be added or not. 51:40 And what I personally really care about is like, so the technical pros, we, 51:45 I think understand those quite well. 51:47 What are the risks? 51:48 Like what, what are them? 51:49 Can we pinpoint maybe the two biggest kind of technical challenges of, of 51:54 Drivechains and why, you know, things that might be, might be a problem. 51:58 And like maybe something that, you know, um, like Drivechain supporters, 52:04 like we could actually look into and try to fix. 52:07 And the second question would be more on like people migrating from Ethereum 52:12 to, uh, but, but that's, that's to be fair. 52:14 That's for, for later. 52:18 Well, I really don't think if you look at the risks, like the risks of not 52:22 doing it versus doing it, I don't really think there are, I think it's a, 52:25 but that's not the, the spirit of the question is sort of like what could 52:29 go wrong if we do this? 52:31 But also just the way I think people are confused about soft versus hard 52:38 forks, like soft forks, tighten the rules, uh, hard forks, loosen the rules. 52:44 But, uh, this, this little posted note thing has, I think confused people, 52:51 but, uh, but I'll say everyone's straight, which is that the, this, 52:55 you do a soft fork to add BIP300. 52:57 And then if you, if people later decide that it's a huge mistake, 53:02 you could just soft fork again. 53:04 It's more or less the same thing to just close it off. 53:08 So the first soft fork is doing is it's taking this, 53:11 like anyone can spend script and it's reducing it to subtracting 53:14 everything else that's not BIP 3. 53:16 It's just like a marble block. 53:18 You chisel away everything that's not BIP300 and you're left with BIP300. 53:23 That's the soft fork that activates BIP300. 53:26 Then people use the statue. 53:28 But then if you want to get rid of BIP300, 53:30 you just chisel away the entire statue and there's just nothing there. 53:33 It's gone. 53:34 And now no one can ever broadcast this. 53:36 It's true you burned one message type that can never be broadcast 53:39 in the blockchain again. 53:41 But there's, you know, literally billions of those, 53:43 endless surplus of those. 53:45 There's not a scarce resource. 53:47 So you, uh, so there's really like you add it 53:52 and then if people don't like it, they can unadd it. 53:55 I suppose the risk would be that there's some kind of like big social 53:58 drama about not adding it or something. 54:01 But then there's the, so that's just this type of soft fork 54:06 in general having no risks. 54:08 But the core idea is really not any different than things 54:12 that people already do. 54:13 So like for a start, the people, 54:16 the only people who are really affected by this 54:20 are the people who choose to send their coins into the L2. 54:24 So if you just don't do that, 54:26 then you're really no different than you were 54:29 pre BIP300 activation. 54:31 So it's kind of like those people, 54:33 they choose to opt into a risk. 54:35 They take a risk. 54:37 It should be an informed decision. 54:39 Hopefully it is. Maybe it's not. 54:42 But you know, those people volunteer. 54:44 You know, the volunteer can't claim injury. 54:47 And so for everyone else, 54:49 it's just enforcing the BIP300, 54:51 not the sidechain rules. 54:52 They're enforcing only the BIP300 rules, 54:54 which is just like an integer that counts up to 13,150, 54:57 which is the three month block. 54:59 Which is really just, it's just an integer counting up. 55:02 And then as far as the overall ecosystem effect, 55:05 it's really just merge mining, 55:07 which was invented by Satoshi himself in 2010. 55:09 And we've been doing it for 12 years with Namecoin. 55:12 No one ever complained about it before. 55:14 It's true that this is a totally souped up 55:16 version of merge mining, 55:18 which I regard as correcting a long mistake, 55:21 which is the neglect of merge mining, 55:24 the neglect of miner revenues, 55:26 the neglect of wanting miners, 55:30 wanting everyone to just maximize 55:32 the transaction throughput, 55:34 maximize the usage of the chain, 55:36 just utterly dominate the world 55:38 and use Bitcoin for every type of thing. 55:41 I think that that was, 55:43 that was what Satoshi wanted to do in 2010 55:46 when he invented merge mining for Namecoin 55:49 for BitDNS as it was called. 55:51 So I think that's just correcting yet another mistake, 55:54 killing two birds with one stone. 55:56 But even whatever you think, 55:57 like we've already been doing it. 55:58 And of course, altcoin merge mining 56:00 has the feature that it cannot possibly be stopped 56:03 on layer one. 56:05 You cannot stop anyone, any altcoin 56:07 from merge mining with Bitcoin 56:08 because it's just the way it is. 56:09 You can't modify the altcoin 56:10 so that part of it is a Bitcoin block header. 56:13 So it's impossible to stop. 56:15 So it's already something we've already been doing 56:18 that's impossible to stop anyway 56:20 and that Satoshi invented to help Bitcoin 56:23 dominate the world 56:24 that we just kind of have neglected this whole time. 56:26 So that's like, you know, 56:28 and then you compare this to the risks 56:30 of not doing it. 56:31 We have all the, we have the SegWit2x, 56:33 we have a hard fork campaign. 56:34 We have people, 56:35 we have the possibility that an altcoin 56:38 would flip in BTC, 56:39 which would send it to zero 56:40 and cause the entire project 56:42 to fail completely. 56:44 We have the risk of all the toxicity. 56:46 We have the lack of creativity. 56:48 We have the security budget problem. 56:50 We have the fact that the, 56:52 the only realistic way 56:53 of shrinking the layer one block size 56:55 and ossifying the layer one 56:58 code is to give people 57:00 more, 57:01 give people the flexibility 57:03 and openness that they want 57:05 on the upper optional layers. 57:07 It's the really only realistic way 57:09 to achieve an increase 57:11 in decentralization on layer one. 57:14 What about the fact that Zcash 57:16 and these people working on Zk-SNARKs, 57:18 they have so much better privacy scalability 57:21 than Bitcoin has. 57:23 We could have that, you know, tomorrow 57:26 with, 57:27 if we had sidechain. 57:29 So I think if, 57:31 I think there's really no risks at all 57:33 to the idea. 57:34 Even if something does go wrong, 57:36 the idea can just be shut off 57:38 as easily as it was turned on 57:39 and it will be exactly 57:40 where we started before 57:41 except for one, 57:42 one code out of like 4.2 billion 57:44 will be burned. 57:46 One prefix. 57:47 And then, 57:48 I think if you just zoom out 57:49 and look at the whole thing in context, 57:50 it's just the, 57:51 the bigger risk is just not to do it. 57:54 Especially once you have all these people 57:55 now being so complacent 57:57 and overconfident in the face of such, 57:59 you know, like Michael Saylor 58:00 has been, you know, shilling lightning, 58:01 which is great. 58:04 I think Michael Saylor is a smart guy. 58:05 I think he's an ally of Bitcoin. 58:07 But, you know, 58:08 he is kind of a bullshitter, 58:09 basically. 58:10 He doesn't really know, 58:11 like, 58:12 we now see that, 58:14 like, 58:15 the idea that he knows 58:16 what he's talking about 58:17 when he's talking about lightning 58:18 is not true. 58:20 Rheindahl, 58:21 when you said earlier here 58:22 that 58:23 it was so interesting 58:24 when you said that 58:25 you think perhaps 58:26 there will always be altcoins 58:27 because people want to 58:30 get 58:31 in 58:32 early to something 58:33 with a small market cap 58:34 but I think 58:35 that's actually 58:36 an incomplete 58:37 and inaccurate 58:39 theory. 58:41 The power of 58:42 network effects 58:44 in economics 58:45 is most 58:46 present 58:47 in the market 58:48 for money 58:49 more than the market 58:50 for any other kind 58:51 of economic 58:52 good. 58:54 So, 58:55 network effects 58:56 are very powerful 58:57 in money. 58:59 Money is the most 59:00 liquid, 59:01 the most tradable, 59:02 the most saleable 59:04 asset. 59:06 And 59:08 when you say that 59:09 people will always 59:10 want to 59:11 get in on 59:12 smaller, 59:13 you know, 59:14 newer altcoins 59:15 because 59:16 they want that 59:17 10,000x which they can't 59:18 get from bitcoin, 59:19 you're right 59:20 that when bitcoin 59:21 has fully matured 59:22 and taken over the world 59:24 a very high rate 59:25 of real return 59:26 from holding bitcoin 59:27 won't exist 59:28 because the 59:29 adoption cycle 59:30 will have 59:31 been completed globally. 59:32 So, 59:33 there won't be 59:34 any more new 59:35 early adopters 59:36 once bitcoin 59:37 has reached 59:38 its total 59:39 addressable market. 59:40 So, 59:41 you're right 59:42 that bitcoin 59:43 won't offer 59:44 the real return 59:45 rate that it offers 59:46 today. 59:47 It'll offer 59:48 a lower real return 59:49 once it's 59:50 fully adopted 59:51 globally. 59:52 However, 59:53 your point, 59:54 so that's the 59:55 correct part 59:56 of your view 59:57 I would say. 59:58 But your other 59:59 point was that 1:00:00 people will always 1:00:01 be investing 1:00:02 and speculating 1:00:03 and boosting 1:00:04 slightly 1:00:05 the price of 1:00:06 newer 1:00:07 smaller coins 1:00:08 because of the 1:00:09 chance they could 1:00:10 do a 10,000x 1:00:11 but 1:00:12 that assumes 1:00:13 there will always 1:00:14 be a narrative 1:00:15 among those 1:00:16 building and 1:00:17 buying 1:00:18 altcoins 1:00:19 that they might 1:00:20 succeed 1:00:21 they might 1:00:22 have that 1:00:23 10,000x. 1:00:24 However, 1:00:25 if bitcoin 1:00:26 becomes massively 1:00:27 huge 1:00:28 and it has 1:00:29 a narrative 1:00:30 for a blockchain 1:00:31 they launch 1:00:32 a bitcoin 1:00:33 sidechain 1:00:34 they try to 1:00:35 launch a bitcoin 1:00:36 sidechain 1:00:37 with that idea 1:00:38 if that's the 1:00:39 dominant narrative 1:00:40 if that's 1:00:41 the status quo 1:00:42 then no one 1:00:43 will have hope 1:00:44 for these 1:00:45 startup altcoins 1:00:46 it'd be like 1:00:47 starting a whole 1:00:48 new language 1:00:49 today 1:00:50 people aren't 1:00:51 starting 1:00:52 a new keyboard 1:00:53 layout or 1:00:54 something 1:00:55 but Alexei 1:00:56 didn't you 1:00:57 say you 1:00:58 have a second 1:00:59 side 1:01:00 something 1:01:01 we've been 1:01:02 thinking about 1:01:03 outside of 1:01:04 bitcoin 1:01:05 right now 1:01:06 you have a lot 1:01:07 of new projects 1:01:08 spinning out 1:01:09 from smart 1:01:10 contracts 1:01:11 to their own 1:01:12 chains 1:01:13 Drivechains 1:01:14 would fit 1:01:15 this 1:01:16 somewhat 1:01:17 and please 1:01:18 don't kill me 1:01:19 for saying 1:01:20 that 1:01:21 in this 1:01:22 appchain 1:01:23 thesis 1:01:24 it makes 1:01:25 sense 1:01:26 to have 1:01:27 specialized 1:01:29 like 1:01:30 how do you 1:01:31 counter liquidity 1:01:32 fragmentation 1:01:33 how do you 1:01:34 really convince 1:01:35 people 1:01:36 in these 1:01:37 bigger projects 1:01:38 to move 1:01:39 off 1:01:40 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Like most things in the ecosystem today don't actually need their own 1:15:12 network, which is why they're all like a theorem tokens or clones of a theorem tokens like 1:15:19 avalanche or, you know, finance smart chain or something, right. So I like, I agree with you. So 1:15:25 maybe there's not two chains, maybe there's five or 10 or something. But, you know, I don't think 1:15:32 that there's 1000s, right? I think that there could be 1000s of tokens, right? But it's 1000s 1:15:39 of tokens on three chains or something. 1:15:43 That's exactly right. You're exactly right that we should not make the error of projecting the 1:15:49 market cap of Ethereum onto a future hypothetical Drivechain world. We should not make the error of 1:15:56 thinking that the largest sidechain on Bitcoin if Drivechain is adopted, would be akin, 1:16:02 necessarily to Ethereum, they would there would be a whole different constellation of narratives at 1:16:09 hand, which is why earlier, I wanted to address that idea that there won't always necessarily be 1:16:16 this ocean of altcoins Drivechain might completely change the narratives in all of crypto 1:16:23 because if Bitcoin gains a narrative that deprives the altcoin founders and investors of hope, then 1:16:32 people will just say, well, everything is getting built on Bitcoin. There's no reason to even start 1:16:36 an altcoin. No one's gonna invest in that. 1:16:38 Well, I mean, maybe and like, maybe what ends up happening is that for, you know, each 1:16:43 incremental new project, there's a harder decision to be made about, like, do I go and make this an 1:16:48 ERC 20 token? Or do I build it on like a Bitcoin sidechain, but like, there's also a future here, 1:16:55 where there's enough network effects and enough money on something like Ethereum that, you know, 1:17:01 like the first sidechain that comes out is just a better bridge between those two networks. And you 1:17:08 still have kind of money centric use cases happening on Bitcoin, and you have other stuff 1:17:13 happening on another network. And you just have a bridge between them. And it doesn't kill all the 1:17:18 alts. It just, you know, it makes it so that the next incremental project has, has, you know, more 1:17:26 optionality on Bitcoin. Like, that's, I think, an equally likely use case, or outcome. I'll give up 1:17:34 my talking stick. I saw Bob just joined and DJ has his hand up. 1:17:38 Bob, thank you for joining. I really appreciate it. I tweeted to you to please join the 1:17:42 conversation. And I thank you very much for joining. 1:17:46 I mean, okay, so apologies to Paul, respect you very much. But let me throw out the opposite opinion. 1:17:55 This whole conversation sounds a lot like the conversation over the last 10 years, literally, with 1:18:00 every single altcoin, every single ICO, and every single thing on top of, of Ethereum. I posted on the 1:18:06 Twitter thread, this lemonade coin skit that was done, like, you want to buy lemonade? No, you have 1:18:11 to have lemonade coin. And that sounds a whole lot like the description Paul gave a little bit ago about 1:18:17 having like, kind of geographic centers. And, you know, at the end of the day, we already have that, 1:18:22 right? We have dollars, we have euros, we have Chinese Yuan, we have, you know, lots of currencies, we 1:18:27 already have a Byzantine fragmented thing. But, you know, for various reasons, you don't actually have 1:18:31 to pay a Chinese supplier in dollars, because somebody does that for you. But nobody actually wants a 1:18:35 wallet with a whole bunch of different currencies, right? That's, that's what we want to get away from, 1:18:39 right? But so I guess, what I'm what I'm seeing here is, is more of the same, right? We've attempted to make 1:18:47 experimental chains before, right? Liquid was like, a lot of the narratives I hear around Drivechains are 1:18:53 exactly the same as those made around Liquid when Liquid was launched. Like, we want to do 1:18:57 experimentation, we can't experiment on Bitcoin, we need a platform to do that, right? And so this spawned, 1:19:03 you know, thousands of altcoins, and they did their experimentation. Some of that experimentation is 1:19:07 quite good, to be honest. Liquid did their experimentation. And today, you know, if you want to go do some 1:19:13 kind of experiment, you can go to Liquid and you can go if you want to use, you know, Ethereum smart 1:19:18 contracts, you can go to Rootstock. And it's not happening, you know, I think, you know, one should zoom out 1:19:26 here and say, I like to zoom out and say, okay, what are the asset classes present that are going to be 1:19:32 useful, right? So one is money, money, you want to be universal. Bitcoin is is the first time we can have a truly 1:19:38 global currency, right? Nowadays, you know, you got to trade your dollars for euros or whatever, when you when you 1:19:43 go to another country. But if Bitcoin is accepted globally, we could have a uniform global currency. And I don't 1:19:49 need to do all that. I don't need layers upon layers of intermediaries and market makers to trade all of my 27 1:19:55 different lemonade coins in my wallet, right? I have one global currency. The second valuable use case is ICOs, 1:20:02 which are basically equities, right? They're holding ownership or some other kind of responsibility to a company. 1:20:08 This is completely legitimate to do completely valuable to do. And in my mind is a completely separate use case, 1:20:13 right? The censorship resistant properties of stocks are wildly different from that of currency. If you want to pay 1:20:21 somebody for coffee, who really gives a shit, you know, go ahead and pay. But equities have a lot of constraints around 1:20:28 them. And I think that's, you know, that is what has happened with Ethereum with all the ICOs, all of the ICOs are 1:20:34 effectively equities, and anybody who says otherwise is lying. The what remains is is is currency, right? We don't want a 1:20:43 Byzantine currency model where we have 27 different local currencies, we already have that. 1:20:52 That's really the best you got. 1:20:56 I knew you wouldn't like what I had to say, Bob. 1:20:58 Bob, I mean, it's ridiculous what you're saying. You're saying that a $20 bill in cash, you put it into a, an ATM and you get 1:21:05 $20 in your checking account. That's having 27 different currencies, according to you. The whole point of the 1:21:11 Byzantine currency is that they exchange their cards. They're one to one pegged to each other. It's like the whole point. 1:21:18 Okay, so fine. All right. So I have 27 different one to one pegged BTC variants, right? Now, you can go back to the block 1:21:27 size debate, right? Would we have been better off making a larger block size, rather than having 27? It's a lot more 1:21:32 complex. Everybody involved have 27 different versions of Bitcoin than just one. And that's a block size. 1:21:38 Well, of course, we would not have been better off with 27 different versions of Bitcoin because of network effects. Because 1:21:43 it's, it's not the same thing. If you had ATM coin, and then you had cash, and then you had, and then somehow, you had 1:21:50 quarters where four quarters doesn't exactly add up to $1 all the time. That would be annoying and ridiculous, right? When 1:21:57 you write someone a check for $140, sometimes they get $180 in their checking account. That the whole point of the whole 1:22:06 point, you understand that when you deposit five Bitcoin to the lightning network, you get five Bitcoin on the lightning 1:22:12 network, right? Does that let's let's say there are only two, right? There's there's two I have to track, right? So one is 1:22:20 going to be let's say, a big block Drivechain, right, which can, which can handle lots of transaction volume. Another is 1:22:24 native Bitcoin, right? And my wallet holds both. And, you know, to your previous claims, you keep saying this is not a block 1:22:31 size increase. But if I want to track both my native Bitcoin and this large block Drivechain, which has, you know, much more 1:22:37 transaction capacity, because that's what's needed to get everybody one of these, right? This is effectively block size 1:22:44 increase. Now everybody has to track both of these chains. 1:22:52 But you again, you missed the entire point is that the whole point of the block size dispute was that a bunch of small 1:22:57 blockers who did not want the block size to increase, were pitted against large blockers who did not want it to stay the same. So 1:23:06 you had two groups of people who wanted different things. So when the idea of it being a block size increase, for someone who 1:23:14 wants that is a good thing, but it for it being it's a difference between, you know, being raped and having sex. I mean, it's like 1:23:21 the 1:23:23 I can't choose not to do it, right? If the payment is already, you just don't use the L2. You just don't use the L2. And then when you build 1:23:30 someone, you say, when you conduct it, when you agree to work for someone, it's not like they, it's not like they're not going to tell you, but 1:23:37 you go you if you go to New York City or somewhere, and you say, I want a job, and it pays 100,000 a year, everyone knows you're talking 1:23:43 about $100,000, US dollars, they, you know, or if you work for someone, and they say, we can only pay you in yen, you know, they're 1:23:50 going to tell you that before, before, if I buy something from Europe, they charge in euros. So you just if you want the L1 coin, you 1:23:58 charge the L1 coin. 1:23:59 These things are a lot more to negotiate difficult to negotiate, you might imagine, I literally signed a contract today for a 1:24:04 consulting gig in another currency, right? I didn't even bother trying to go and get them to pay me in US dollars, because I know what 1:24:11 that where that conversation would go. I mean, how many of you have done that? 1:24:14 Yeah, but the alternative, Bob, is that the layer two chain doesn't exist at all, or it becomes an altcoin, pure altcoin, or it's some 1:24:22 kind of custodial garbage. So the idea that you at least have something that's now denominated in the 21 million Bitcoin. 1:24:31 Bob, when you said that there would be 27 different currencies, if there were 27 different sidechains, if I heard you correctly, that's 1:24:40 what you were saying. To me, that's, that's not making sense to me. Because that's kind of like saying people who use Venmo, which is 1:24:49 denominated in US dollars for me in America, you know, I go into Venmo, it's in dollars, it's as if you're saying that's a different 1:24:56 currency than dollars in my pocket physically. 1:25:01 Well, on a technical level, it is a different currency, right? Because it's on a different blockchain with a different consensus, right? 1:25:06 So now, can you make an interface like Venmo that hides the fact that there are actually a bunch of different blockchains underneath it? Sure, yes, 1:25:13 you can. But the consequence of that is that anybody implementing such a thing has to track all of the chains that are doing that. And now 1:25:21 we're back to the big block debate. This is now effectively a big block, which 1:25:24 I think we're not at all black, I find it somewhat disturbing that because you do seem like a smart guy. And I find it disturbing that you 1:25:32 have some kind of weird glitch out on this point. Because the block size dispute, that dispute was about the entire group having to go in 1:25:41 one direction that not everyone enjoyed. 1:25:46 Yeah, that's someone who is someone who says, Oh, can you pay me on Venmo? And they say, Yes. 1:25:51 I'm not 1:25:53 Can you pay me on Venmo? And they say, No. And they say, Well, too bad, because we're all Venmo now. And now you have to do it. 1:25:58 So Bob, 1:26:01 and 1:26:04 Bob, do I have to track as a provider like Venmo? If I want to be Venmo? How many nodes do I have to run? How many gigabytes of disk space does it take? 1:26:14 There, there would be professional arbitrageurs. 1:26:17 Don't you don't we know? I mean, we already have like, if you want to build a wallet that abstracts the difference between on chain and 1:26:26 lightning, you already have a bunch of additional infrastructure and a whole bunch of additional state to track. And if you don't want to do that, then you don't support 1:26:32 lightning. You say we're a layer one wallet. 1:26:35 Yes, Bob, there would be professional arbitrageurs who monitor the real purchasing power, who monitor the exchange rate among these different side 1:26:47 chain bitcoins, and equilibrium and force them to equal. 1:26:51 I can't tell if I'm having network issues. Is Bob coming through for anybody else? 1:26:56 I was not speaking. 1:26:58 I was okay. I was just saying, Bob. 1:27:00 Yeah, but that's not the point, even though Henry is because that will just confuse people further about these tiny details about that are related to the 30 1:27:08 days time value of money that are not. They're not even germane to the one to one peg. 1:27:14 I think it is a little bit important. So let's say we do have a bunch of different sidechains, right? And I say, okay, somehow this is all gonna be 1:27:20 automatic. This can be done, right? You can have a bunch of different, quote unquote, bitcoins, each of which have different, you know, on chain 1:27:27 representations or on different blockchains. You can even do it between Bitcoin and Litecoin. 1:27:31 Let's say let's use Litecoin as a payment. And many people have tried this idea where you say, all right, some arbitrageur is going to come in and do the 1:27:37 arbitrage. And so I look like I'm paying in my native currency, but actually it's going on Litecoin. 1:27:41 This is actually exactly what the Strike app does in dollars to Bitcoin, right? 1:27:45 So this requires the development of an ecosystem of exchanges, right? Our history with exchanges is fucking terrible, right? And we really need 1:27:54 decentralized exchanges. In my opinion, we do not have any form of decentralized exchange, which is capable of fulfilling this role right now. I do think it's 1:28:02 technically possible. But we don't have it right now. And what will end up happening is we'll end up creating Wall Street. We'll have a bunch of 1:28:09 arbitrageurs. They're going to arbitrage all of these different things and make it look like one currency. The only people who can implement a 1:28:14 payment process have a lot of resources. No one can run a home node. This is no longer, you know, a self-sufficient decentralized currency because no 1:28:23 one can run a home node anymore. And now we also have the centralization pressure of those arbitrageurs because they're using centralized 1:28:28 exchanges. The full node cost is totally unaffected from what it is now, because right now you're only running L1. You're not running any sidechain 1:28:36 nodes. If that's the full node thing you want, then just keep that experience. Just keep doing that. 1:28:44 But then I can't pay a guy who wants a Bitcoin on one of the direct chains. 1:28:49 What if he had asked you for an altcoin? You also couldn't pay him? Or what if he asked for a marble statue? 1:28:59 The goal is to get down to a set of possible currencies I can pay in that has exactly one thing in it. Right. I mean, that's kind of the global 1:29:07 goal, right? You know, I can give you rhinestones or seashells or gold or whatever. And, you know, over time, the number of currencies globally has 1:29:15 reduced, right? And we're still on that trajectory of reducing the number of currencies. 1:29:18 Reindahl, what do you think of Bob's view? What do you think he's saying? And do you agree with it or not? 1:29:28 Reindahl? 1:29:33 Oh, maybe Reindahl is not available. 1:29:37 What they want is what they want. They want something from you. You want something from them. That's between the two of you. If you say I am 1:29:51 committed to L1 and I will never leave L1 ever, then luckily for you, the sidechains all exchange at par. So they have an absolutely equal 1:30:01 purchasing power. It's $20 worth of cash or it's $20 worth of ATM. So if someone says, that's like someone saying, I demand to be paid in a 1:30:10 cashier's check. And you say I only have, I'm Bob McElrath, I only have cash or whatever. And you say I refuse to get this cashier's check. 1:30:21 Well, then, you know, you and that person, I'm sure someone will work something out where they have, whatever, some intermediaries and some 1:30:29 intern will go collect the cash from your house, get the cashier's check, or the trade will fall apart. But if it was going to fall apart over that, then 1:30:38 how serious is it really? 1:30:40 I mean, that's friction. I mean, the fact of the matter is any form of commerce right now, the L2 doesn't exist at all. It doesn't exist. So it'd have to 1:30:48 be an altcoin or it'd have to be some something even where it'd be some custodial Bitcoin thing that that might be mandatory KYC or some 1:30:58 completely fully centralized CBDC universe as far as anyone is aware. So at least you've got this thing that exchanges that is the exact same 1:31:09 currency unit. 1:31:11 I think at the heart, maybe of Bob's objection is maybe he thinks that if Drivechain is adopted, then the sidechains wouldn't be demanded. Maybe he 1:31:21 thinks that they wouldn't be large, even though 1:31:24 No, I think he's saying the opposite. He's saying they'll be so big that I won't be able to spend my L1 coins anywhere. 1:31:32 I think this is effectively a block size increase, and everybody's going to move to a Drivechain, which has a tremendously large block. And the only 1:31:39 people that can actually run that blockchain are industrial service providers. And we're going to put centralization around that one chain. The 1:31:44 fact that you can you can peg back into main chain Bitcoin will only use for international settlements or large settlements, which, you know, 1:31:54 that's the way things could go. But that does mean that this is no longer the decentralized currency where I can run a home node. 1:32:02 So what's a better solution? I'm just curious, in your perspective, how do we solve the scalability solution? Because like, based off of what Paul was saying 1:32:11 earlier, right, so there's two and a half million transactions on the base layer per week, there's 52 weeks in a year. So we're coming to roughly like what 1:32:22 130 is that million or is that I don't know, not really good with that kind of big number math in my head, but 130 ish million transactions per year. I'm 1:32:34 guessing I can double check the math in a second. But what's the better scalability solution? Or do you think like what you just said would happen where the 1:32:42 base layer will simply be used for the larger value transactions and final settlement of those transactions between bigger banking institutions, which 1:32:51 will all basically be the layer two solution. So any layer two will basically become the new banking institution like lightning and anything else like 1:33:00 ARK or whatever comes up next? 1:33:02 The latter. So in other words, we can't scale Bitcoin, period, full stop, right? We can't keep it and keep its properties that we like, right, we 1:33:10 compromise and we lose its decentralization properties, we lose the ability to run a home number, we lose the ability for everybody to check that what's 1:33:17 going on is kosher. And we, you know, by making big blocks, you can only run it on a big server, etc. So the answer in the short term is don't try and scale 1:33:27 Bitcoin, or rather, don't try and scale Bitcoin today, but trust that we will come up with a solution in the future. But one thing, one statistic I'd like to 1:33:35 pull up occasionally is, do you know how long it took for credit cards to penetrate the market and across the world? 1:33:42 How long? 1:33:42 It was more than 40 years, right? And this was because, you know, the credit card processing companies had to distribute credit card readers to the 1:33:51 companies as well as, you know, credit cards to the banks, which ultimately went to the customers. This is a chicken and egg problem. We are also in a chicken 1:33:59 and egg problem with Bitcoin. There aren't any vendors that accept Bitcoin. So this whole conversation about Drivechain is somewhat moot. I think we should 1:34:08 really focus on pretending this problem doesn't exist, right? And actually using Bitcoin in the ways that we can use it demonstrate there's actually an 1:34:16 economy here, without trying to build an economy that can service every single human on the planet, right? With Bitcoin on main chain, and 1:34:24 Lightning, we can actually go out in a lot of different countries in the world and pay for things we want to pay for, without actually having thought that. And I think that this 1:34:32 conversation is happening around Drivechain and all the other things is very healthy. I'm really happy to see all the discussion around all this, because ultimately, 1:34:37 this will lead to a good solution, whether it's Lightning or ARK or anything else. We'll get there. 1:34:45 But what is the difference between a custodial, like, you still don't grasp that there's no effect on the layer one full node cost, even if there's an eight 1:34:59 gigabyte sidechain, which is the whole point. So you don't get the one full node. 1:35:06 If I can check the international transfers of Chase Bank, but I can't check my own coffee transaction. What's the point of that? 1:35:13 Because right now, you don't lose anything net of where you are now. Right now, you can run your layer one node, and you could still do that in a world where the 1:35:24 sidechain is popular. But what if instead of a sidechain, what if instead of it being a BIP300 sidechain, Bob, what if instead I just started my own 1:35:33 company, Paul Corp. And I do all the payment processing through that. And yeah, I accept and and I allow I dispense Bitcoin and I accept Bitcoin when you it's 1:35:43 like a big casino or something, or a bank, people send Bitcoin in, and I give them credit, it's fully custodial. And then I do all the payments there. And now the 1:35:52 cost of running a Paul Corp full node. Well, let's say I let anyone who gives me $10 million, I let them, I let them look at the database. So that's a $10 1:36:02 million per year, full node of Paul Corp. Would you be opposed to that? 1:36:11 I wouldn't want to build such a thing. 1:36:15 Why would you use the exact same argument you just used that Bitcoin is now lost? It's so we no longer have a decentralized currency, which is what you just said. 1:36:23 Custodial solutions are a solution to scaling. Netting is also a solution to scaling. Both of those are going to happen whether we like it or not. I think the goal of everyone in this 1:36:36 group is to build other solutions. But those things are going to happen. I mean, look, 1:36:40 right, the cash. 1:36:43 Other thing that that is what it is. It's the non 1:36:52 Paul Corp. 1:36:55 Those already exist with Bitcoin. Look at cash app that already exists. 1:36:59 No, that's different. 300 is the non custodial version. 1:37:02 That's the thing that you said you wanted that you were looking to find. This is that thing. All right, let me let me understand. You want Paul Coin to be non and what it does here? 1:37:16 Would it be non custodial? What you're doing is you're introducing friction by saying you can't run a node. It's not custodial. But you can't run a node unless you pay me much. Is that what you're saying? 1:37:24 We're complaining about how the nodes are so expensive. I'm saying, hey, here's something that has a $10 million a year per node, or maybe even infinite, because I have a monopoly on Paul Corp. I'm the legal owner. 1:37:35 I own the whole thing. And I don't let anyone run a node. So the cost is now infinite. Now that's possible today. And I could scale Bitcoin, as you just said, people will do custodial stuff. 1:37:47 So I we use the same L1 Bitcoin, there's no BIP300. But I start Paul Corp. According to you, this is an improvement for everyone for Bitcoin. And for all the users of Bitcoin. It's an improvement if instead of we have a decentralized peer to peer sidechain with open source software and blockchain that anyone can and people holding their own keys, and this decentralized deposit withdrawal process with an incentive aligned dynamic group of anonymous members. 1:38:12 If instead of doing that, I start Paul Corp. And I accept people's Bitcoin, which is the same as them maybe opening a lightning channel or depositing to a sidechain. That would be the analogy. They do they send coins to me and then I let them do payments and I become like a super visa. 1:38:27 And I do all the payments and although and I do all the coffee payments. And this is what you were just complaining about. When you said, Oh, I can't validate my coffee payments. What's the point? And now you can't validate your coffee payments because they go through Paul Corp. And I'm telling you, are you going to say the exact same thing you just said about the large block sidechain, which is that we no longer have a decentralized currency. 1:38:51 I'm still a bit confused. I mean, like, so yes, we are. So first of all, it sounds like every single altcoin, right? That's literally what they do. 1:39:03 There's no altcoin. Why would you say that? 1:39:06 I could be an altcoin. It could be Bitcoin, right? So I mean, 1:39:09 Bitcoin, I'm not going to name it on Bitcoin. 1:39:12 Okay, all on Bitcoin. All right, so I'm going to start Paul Corp. In one sense, this is called a payment services processor, right? It is Venmo. 1:39:22 Yes, Venmo. 1:39:23 Lots of these. BitGo. Yeah. I mean, this is a valuable corner of the sector of this economy, right? We must have those because a coffee shop owner does not want to run his own order. He is going to hire somebody to do it. 1:39:37 And this does increase scalability. Now, we don't want all people to be doing that. Like, I think everyone in this conversation says, well, let's what's the other solution here, right? 1:39:47 But it will happen. No, I'm not holding a gun to anyone's head to use Paul Corp. But it's, let's say it's popular. And there's also Lightning and ARK. And there's a layer one on chain layer one. It's a whole world out there. But let's just say Paul Corp is as big as the large, the group of large block sidechains would have been. It's exact coincidentally, it's exactly as big. You say this is an improvement. You say somehow this is an improvement over the BIP300 sidechains. 1:40:15 I'm not saying it's improvement. I'm saying we can't help it. We can't stop this. I mean, so there's always a better or worse for the same. 1:40:24 It's worse, right? 1:40:27 Improvement over Paul Corp idea. That's all I'm saying. And that's what you were just asking a moment ago was about what do we do instead? And you said, well, it'd be custodial. And I'm saying now this is an improvement. 1:40:39 I'm getting lost here, Paul. I'm sorry. 1:40:43 Put it on a big continuum. L1 is the cumbersome to use. L1 is what we would prefer everyone use. We don't want people to use custodial. 1:40:53 But instead we would take this. We would take a team of large block sidechains that are all optional and that have open source code and auditable blockchain. 1:41:05 And they have an open, you can audit the whole blockchain. You can hold your own keys. You can spend with multi-signal. Yeah, not everyone's going to use that. But that's an improvement over custodial. 1:41:17 Well, okay. Sometimes I think we need to make a matrix here of all the different desires. So holding your own keys and not custodial is a row in the matrix. Being able to run a node and not having the blocks be too big is another row in this matrix. 1:41:29 But it's better on both though because you can't run a Paul Corp node because it's private and you can't hold your own keys either. 1:41:37 Paul Corp is a straw man that immediately throws me to lemonade coin. That's where my head goes. So let's throw that out as that straw man and just go back to what Drivechains actually does. 1:41:50 That's basically what Paul Corp would do except that it's on a blockchain instead of as a private corporation. 1:41:58 So when we say Paul Corp, are we referring to custodial scaling? 1:42:02 Yeah, like Visa. 1:42:03 So I want to see if I understand Bob's view. So Bob, I think what you're saying is that if Bitcoin had a large block sidechain, which would share Bitcoin's monetary policy and miners, it would be potentially extremely successful. 1:42:20 And this would mean that billions of people would be using for their daily cash purchases a blockchain, which would be more expensive to validate than Bitcoin main chain. 1:42:36 And I think what Paul is saying in response to that. 1:42:39 That's correct. 1:42:41 I'm sorry. Did you say something? 1:42:45 I said that's correct. 1:42:46 Okay. So I'm just trying to give like a less technical discussion for anyone who wants to hear that and just to make sure that we're all following along together because you and Paul are able to have a much more challenging discussion than what the average listener might. 1:43:03 Yeah, I know. Just be honest. It's about me. I don't get it. 1:43:05 It's about me. So the so I think what you're saying, Bob, is that is that if everyone if billions of people were using a large block sidechain for for some of their money and keeping only their, you know, occasional big purchases money on main chain, then you think that it might be like the case that for some people, the only thing they're using is the large block sidechain. 1:43:35 And they don't have a node. So, you know, because let's say the cost is more. So let's say it always will cost, you know, maybe a couple hundred dollars of laptop and Internet to validate main chain Bitcoin. 1:43:49 But let's say people's coffee purchases are using the thunder sidechain, the big block sidechain, and most people aren't having a node. So it's not as self-sovereign. 1:44:02 But I think I think what Paul's response to that is that if you want Bitcoin main chain as it exists today, small block, highly decentralized, cheap to validate, if you want that to be the base layer of the future blockchain economy, if you want that to be the L1 to every other blockchain, then we need to enable something like Drivechain. 1:44:27 And if you don't do that, then Bob, your own statements, which are very interesting to read on Twitter, like you say that if I read correctly, like Ethereum has a massive total addressable market, much larger than the market for money because Ethereum is trying to do stock markets on blockchain. 1:44:42 And so the network effect of that blockchain growing forever might be, according to your own view, like... 1:44:58 I think it's a correct characterization of my views. Effectively, what we're doing is we're saying that we're actually going to have a big block blockchain. I want to buy coffee with it, but I can't run a node because it's just it's too much data and I'm gonna have to hire a service provider. 1:45:16 And that service provider is dominantly going to be custodial. How is that different? How is that any better than what we have now? Service providers are going to net out, they're going to go and maintain Bitcoin. They don't need this large block blockchain because they're all just custodial. But the guys on the large block blockchain are also going to be custodial. They're also going to do everything for you. The situation isn't actually different. 1:45:38 It's enormously different. First of all, let me address this claim about how expensive this is. Because the reality is it's touted as though there's this night and day difference between, but there's really not. Most people don't run a full node, even of the small block Bitcoin core that we have today, for a wide variety of reasons that we could discuss. 1:46:02 But it's just, it's just cumbersome to download 550 gigabytes, if you can get away with not doing it. And in fact, I've been on more than one panel, including more than one that was recorded. So for example, TabConf, when I was on panel with people, and it was me and some other small blockers, because I was a small blocker, and I still am, I'm for layer one. 1:46:23 But we said, you know, we admitted that we don't even run a full node, because we mostly get payments from people that we know, and that we just don't think are, you know, we're not running like a, like a Ralph Albright Silk Road empire. So it doesn't really matter to us. But so a lot of people don't, people already don't run the full node, even with the blocks being small. 1:46:43 The cost of I have estimated, with actual numbers, that even a cost of a one gigabyte block node, which is outrageous overkill, orders of magnitude more than what we would have, and even what we would need to meet all the demand, since we will actually do is we'd phase one or two or three in over time, they each grow geometrically, and I can go into more detail on this if you want. 1:47:08 But really, the total cost is like a few $1,000 upfront, a few $100 a month. So the idea that it's like some kind of complete, and that's for absurd overkill. And so the idea that there's some kind of thing where it's just like impossible for people to do is not true. There's the people are different. People are all around the world are very different in their in their need for payments and their net worth. 1:47:32 And there's some region of people for which this will not, you know, be a problem at all. Other people will have either a friend or they'll rely on some other node. They'll rely on fraud proofs or SPV, which are very reliable. 1:47:48 You're willing to accept trust and someone running a big node, but you're not willing to accept trust and someone holding your funds. 1:47:55 No, I'm saying that it's bad. I'm saying trust is not, not every person is in the same situation, and not every transactions in the same situation. So the coffee transaction is not the same as the Russell bright drug transaction, which would need to be more that ladder one needs to be more private and more decentralized, but the coffee one really doesn't need to be. 1:48:18 And so it doesn't matter as much for the people who are using it that that that block size be small for the coffee transactions. 1:48:26 Coffee is a silly example, to be honest. Right. I mean, Ross Albrecht's been in jail for a while. You know, the whole that whole thing imploded. Let's say I live in Louisiana and my girlfriend needs to get an abortion. She has to drive another state. I want to pay for that. Right. Maybe that's a more kind of modern example. 1:48:46 You know, this is a this is a transaction I want to get hidden. I need to get prosecuted for this transaction. I think it's my whatever you think of this subject. Lots of people think it's their human right to do this. Right. So there's a there's a large gray market and we need to, you know, Bitcoin ends up supporting this gray market, whether it likes it or not. And the goal here is that the thesis of Bitcoin is that a guy in Africa on solar power can run a node. Right. 1:49:14 And what we can possibly get away with. And, you know, when we make the compromise, we say, OK, let's just increase the cost a little bit, a little bit, a little bit. 1:49:22 I just really disturbs me that you can't grasp this point. The whole point of the 300 is that it makes both groups. It gives both groups of people what they want. The people who want small. 1:49:39 No one can run a node that people who want larger blocks. No one. Right. I didn't. No one can run a node that can that can validate terabyte blocks. We centralize around that. 1:49:54 Well, there's no terabyte. I explained to you that there's one where I did one with a one gigabyte node that only costs a small amount of money that we can be absolutely certain that a few people would. 1:50:06 Basically, like, Bob, I think that the Drivechain vision is I should be able to claim what other people may or may not do. Each person is in their own situation. That's very presumptuous. 1:50:19 I think the Drivechain vision is that there will always be disagreements about what the block chain should contain. 1:50:28 So if people want Bitcoin as it exists today, small block Bitcoin, highly decentralized to last, then we must enable everyone who doesn't like that block chain to opt in to a variation such as more private, more scalable, more expressive. 1:50:48 While maintaining Bitcoin as it is today as the base layer. And if we don't do that, some other block chain that has those features and those opt in extensibility will accrue much more network effect and completely destroy the network effect of Bitcoin in the long run. 1:51:09 So, Bob, I feel that your criticism is that that this idea doesn't resonate with you, but that you also said we should just wait and until something different comes along that achieves these same goals without any of the perceived tradeoffs that you note or that you perceive. 1:51:30 But the Drivechain vision is that the sooner we act, the stronger Bitcoin will be. We should experiment. Go ahead. 1:51:40 I'm going to push back on that point. I'll be completely honest here. I think something like Drivechains is inevitable. 1:51:49 You know, if you read the L2 paper, ELTOO, you can maintain an alternate chain via state updates on L2. We already have five different versions of this that don't have the Pagan. 1:52:05 The only thing that's different about Drivechains is the Pagan peg out mechanism. We already have, you know, Liquid, Rootstock, Counterparty, Omni and Ethereum. Right. And they're doing their thing. 1:52:15 And I think it's early days. I think the conversation I mean, one of the problems with Drivechains is that there there's a number of different narratives around it. 1:52:25 Right. I like the conversation we're having about like a big block sidechain versus the main chain. It's very narrow. Let's let's talk about it. Right. 1:52:31 But it very quickly gets diverted into ICOs and stock assets and, you know, all kinds of other things. 1:52:38 And, you know, Paul's previous description of having like geographically localized currencies and then my description of 27 different currencies. 1:52:46 All right. This is all very confusing. Right. I don't see the emergency, I guess, is my big picture. The tail emission argument is correct. 1:52:56 You know, the that paper is correct. And but we have 100 years to solve it. So why now? 1:53:04 The tail emissions argument, I would suggest, and I'm not sure which paper you're referring to, but they're all very interesting about Bitcoin's long term fee reliant security model. 1:53:15 That that argument every day. 1:53:19 Bad times. Yeah, Paul. Yeah. You lost perception, but you're back now. That's great. 1:53:25 So you would have actually can't hear me right now. 1:53:30 Yes, we can hear you. I can hear you, Bob. 1:53:35 We I mean, I appreciate that you just said that. 1:53:41 I appreciate you said Drivechain is is something or something like it is inevitable. 1:53:47 And also that you are if I heard you correctly just now, you're somewhat persuaded by concerns related to Bitcoin's long term fee reliant security model. 1:53:59 So I would argue that it isn't a problem for the future, that that concern exists today and is eroding Bitcoin's credibility in the eyes of not just alt coiners, but some at in within Bitcoin's community like Peter Todd and Paul Sztorc and others see it as a more concerning problem than what you described, which is that it's 100 years away. 1:54:24 So anyone who doubts Bitcoin's security model might not invest in Bitcoin. 1:54:31 And the alt coiners, you know, voice this concern daily to erode Bitcoin's narrative of monetary stability. 1:54:39 Right. They say that Bitcoin problem, the by the way, the paper I'm talking about specifically is from a group of Princeton, and the title of the paper is Bitcoin is unstable without the block reward. 1:54:51 I believe this is the tail emissions argument. As far as I can tell, that is correct. 1:54:56 The argument being that you can see tonight. 1:54:59 OK. 1:55:00 Back up. 1:55:01 What happened to my phone? 1:55:02 No, that paper. 1:55:03 Can you hear me? 1:55:05 Yeah, that paper is not. 1:55:07 Yes, we can. We can. 1:55:08 Paul. Yeah, that paper, Bob, is not about the need for tail emissions so much as an argument that when security becomes fee reliant, then the array of selfish mining and other kind of mining attacks or mining behaviors would increase that are not incentive compatible. 1:55:32 So they think that variable block rewards because of fees being all of the block reward or even just more of the block reward creates a risk for network performance. 1:55:43 They didn't explicitly call for tail emission in that paper, but I think you're right that there is there are questions around whether the fees will be robust enough. 1:55:54 Right now, they're quite low. 1:55:55 We're 14 years in a couple hundred million people own Bitcoin in some form. 1:55:59 And and yet there is still a question about why aren't the fees higher? 1:56:04 So it would be great. 1:56:06 No, I think having more people use Bitcoin is better. 1:56:32 That's what creates that. 1:56:34 Right. And what causes that? 1:56:37 Having people have people having Bitcoin, it's on ramps, it's off ramps. 1:56:41 It is payment providers. 1:56:43 And, you know, one of my long term frustrations is that I see very, very few. 1:56:47 I work on evaluating startups and I see very, very few, almost zero applications for VC funding for payment processor. 1:56:56 I will take your Bitcoin. I'll give you dollars. 1:56:58 It's very fucking simple. You're in three percent off the board. 1:57:00 It's really fucking simple. 1:57:03 Bitcoin with Bitcoin. 1:57:04 Quit this business. 1:57:06 Sorry, not to go the other one. 1:57:08 Anyway, I don't know why people aren't doing this. 1:57:11 And all of this stuff we're talking about about drive changes, fucking irrelevant. 1:57:15 If nobody actually has it in their wallet and a payment processor isn't either side saying, I want to take that money. 1:57:21 Right. But the large block size, you know, is a payment processor. 1:57:25 And it also is an on ramp because you can be on boarded directly to layer two. 1:57:30 Look, this is all abstract. 1:57:31 I'm talking about a physical coffee shop with a physical iPad that has physical software on it actually takes my payment. 1:57:36 I don't give a shit what that payment is. 1:57:38 You know, whether it's Litecoin or whatever, that doesn't exist. 1:57:41 Yeah, well, it's true that BitPay used to do that. 1:57:44 And BitPay, I think it's partly because of the lack of sidechains that we had the whole block size war at all. 1:57:52 And that's partly that that whole half of the community that was more interested in payments got completely marginalized, which is enormous. 1:58:02 So I don't know. The last thing I heard Bob McElrath say was that before my phone sort of like something happened to the battery and it shut off the 5G or something. 1:58:14 But he said something like Drivechains are inevitable. So if something really important happened, then that someone would love to hear me respond to then that I would love it if they would repeat it. 1:58:25 But if otherwise inevitable, we already have five different versions of them operating right now, you know, Rootstock, Omni, etc. 1:58:32 Yeah, but you know, there's a big difference between the federated model is night and day different in my eyes to BIP300. 1:58:41 You have to choose the federation, you have to prove to people the federation is trustworthy. 1:58:44 The federation as more coins go in, the federation has more upside from stealing, but they don't have a corresponding increase in downside. 1:58:54 Whereas the miners get paid more transaction fees from every sidechain, they get paid in BTC, which has an exchange rate that they want to be high. 1:59:03 So the miners are already a group of people that have an incentive to have the sidechains work and generate lots of fees for the far future. 1:59:12 Whereas the federation gets nothing if the Bitcoin price goes up or if the fees go up. They don't get nothing else for themselves. 1:59:21 Exactly. Just to elaborate on that. 1:59:25 Just to elaborate on that for a moment. 1:59:29 If you if you say to us, as you have that we already have Liquid and Rootstock and a few others, why do we need Drivechain? 1:59:40 But you also say that Drivechain in the long run is Drivechain or something like it is inevitable. 1:59:47 I want to ask, suppose we use super test nets phrasing, which is that, as he's tweeted, Drivechain gives us slightly better sidechains and he supports BIP300. 1:59:57 I shared his tweet in the nest. Do you agree or would you agree that if we get slightly better sidechains, that would improve Bitcoin's total addressable market, 2:00:09 improve Bitcoin's security budget expectations and thereby strengthen Bitcoin's rate of value accrual and miner revenue and grow Bitcoin adoption? 2:00:25 I agree with that statement. The latter half of that statement sounds like Ponzionomics, like let's make the number go up, which I really don't like. 2:00:34 Second of all, we already have, you know, five of these things. 2:00:40 And the fact of the matter is that, you know, if you're a business and I want to make a sidechain to do blah, blah, blah, you know, I can go do that. 2:00:46 I can do it on Liquid. Bitcoin is really important and that's better than making my own chain or doing it on Ethereum. 2:00:51 I could go do that. Right. It's not happening. The business use cases for using sidechains is not happening. 2:00:58 Right. So I don't think the reason that's happening is because of the peg out mechanism. 2:01:04 And if you really think that is the reason, you know, go and go find some CEOs who started a business and said, yeah, I was going to do this on Bitcoin, but I couldn't. 2:01:14 And the reason that already exists, you know, Vitalik himself tried to do that. 2:01:21 Ricardo Manero, Jeremy Rand at Namecoin, everyone, myself with the Prediction Markets Project. 2:01:29 There's tons of Roger Ver, Roger Ver tried to do all of that. Roger Ver was obviously a Bitcoiner before the split. 2:01:36 So everyone tried to do it on Bitcoin first. 2:01:40 So the Federation has many problems. 2:01:47 But one is that all people, all that anyone can prove is that it's controlled by 15 keys or so. 2:01:53 As far as anyone knows, all those 15 keys are the same person. 2:01:56 So this, I think, creates a somewhat of liquid is not even open source. 2:02:00 So I think it's not quite. 2:02:04 In a business, you can handle that risk, right? 2:02:06 Every business has risks. Your investors understand those risks. 2:02:08 You put in your disclosure, you take out insurance. 2:02:11 You know, I'll be back, but I have to temporarily leave and do actual work meeting for a moment. 2:02:21 So I'll be back. So everyone hang out and have fun. 2:02:24 OK, thanks, Paul. 2:02:26 I'll be back. See you later in a second. 2:02:30 Bob, you tweeted in the past and we discussed yesterday on Twitter and some very nice tweets. 2:02:35 And thank you for responding to all of them. 2:02:37 Like I tweeted to you that you have said in writing on Twitter that Ethereum is a sidechain of Bitcoin. 2:02:44 So when I heard you just now say that there's very limited use of liquid, if I heard you correctly, 2:02:52 I think that if you want to steal me in the case for Drivechain, then you should say something as follows. 2:02:59 You might say and let me know if this is what you're thinking. 2:03:02 You believe that Drivechain would bring potentially many billions of dollars of demand for Bitcoin. 2:03:11 But you believe since you believe that Ethereum is a sidechain, 2:03:14 therefore there is enormous market for sidechains on Bitcoin and making them better by your own terms, 2:03:21 because you wrote that Ethereum is like a sidechain of Bitcoin. 2:03:24 So you and also you object. 2:03:27 It seems you have this principled kind of objection to talking about making Bitcoin's price higher through Bitcoin development. 2:03:35 Technically, I feel like I feel like we should not something that makes the number go up, 2:03:42 because if you want to make the number go up, you fool with interest rates, which is exactly what Ethereum did. 2:03:47 That is not interesting. 2:03:51 You mean interest rates like like the way they have staking and that sort of thing? 2:03:57 Moving from proof of work to staking, right? 2:03:59 Now there's interest rates and now they can manipulate that interest rate. 2:04:01 I feel that a lot of people in Bitcoin's community and even in Bitcoin's technical community would agree that if something were to make Bitcoin's total addressable market much larger, 2:04:13 in other words, increasing Bitcoin's potential for value accrual and return to Bitcoin holders. 2:04:20 Then that is not morally dubious, you know, all else equal. 2:04:25 Don't we want Bitcoin to be enormously successful and aren't we literally invested in it? 2:04:33 I think everyone in this conversation wouldn't be in this conversation if that wasn't the case. 2:04:37 Right. Myself included. Now, it's a scammy argument. 2:04:43 Right. Let's do whatever we can to make our number go up. Right. And because there are a lot of things you can do to make the number go up, whether it's insider trading or whether it's, you know, pink slip stocks or whether it's fooling with the interest rate like the Fed and the Ethereum Foundation does, if the goal is number go up, that leads to a lot of terrible outcomes. Right. That shouldn't be the goal. And I don't think that should be the argument. It's a scammy argument. The argument that let's try and get Bitcoin to go up is a scam. 2:05:10 Let's try and get Bitcoin to as many people as possible and make it a uniform payment across the world. That's compelling. And it also makes number go up. 2:05:16 But the narrative can't be I want my own personal profits to increase. You can't you can't go out on Twitter and say, I want to be rich. Right. 2:05:24 And, you know, that's what the whole number go up and television argument stuff sounds like. 2:05:30 I think it's I understand what you're saying, but, you know, I've been a libertarian my whole life. I identify as an anarcho capitalist. 2:05:38 I love the writings of Von Mises and Rothbard. I think Bitcoin's value accrual and the growth of its network effect as rapidly as possible is a moral imperative. 2:05:50 And if it offends, you know, someone who is as science oriented as you to hear the phrase number go up, then I would suggest that your view and reaction is totally appropriate. 2:06:08 But I think that, you know, the growth of the protocol economically is simply a fact that would attend its success. So I get what you're saying, which is we don't want to have scammy marketing that resembles the bad acts in the other communities. 2:06:28 And we don't want to do everything that makes Bitcoin's number go up. But if there is a powerful upgrade that would increase Bitcoin's total addressable market and help secure the miner revenue, the, you know, the reabsorption of the communities that have left Bitcoin and the absorption of all of the good technology that you've noted in this conversation. 2:06:52 There is innovation and experimentation going on in altcoins. It would be better if those were going on on Bitcoin sidechains. Who knows what good idea somebody will have tomorrow. We want them to build it on a Bitcoin sidechain instead of an altcoin if those are the choices. 2:07:09 I disagree. And here's why. Ninety nine percent of the things that happened in Ethereum, all the ICOs were straight up scams. Right. We do not want to bring those straight up scams to Bitcoin. Right. We we gain guilt by association. We want to remain pure in our focus. And I don't think number go up should ever be a part of any conversation. 2:07:28 You might know it in the back of your head and you might vote on things. You know, we all have our own biases in our own portfolio and our own. But that should never be the motivation. You know, in public discussion, you should never say, I want to be rich, therefore I'm going to do X. Right. That's what number go up really means. That's a stupid fucking thing to say. Right. You really need to focus the narrative on something much more concrete and much more valuable. 2:07:51 Another another goal, another purpose. I want to be the one that's Raspberry Pi. OK, fine. I want everybody to be able to pay for their coffee. Fine. All right. Let's big bucks. You know, pick your pick your goal. But it shouldn't be. I want to be rich. Number go up says I want to be rich. I'm going to fool you. I'm going to scam you. And that's what has been done across the Ethereum ecosystem through, you know, thousands of ICOs. Right. We don't want to emulate that. We need to be higher. Maybe better. Right. We need a better argument. 2:08:22 I agree with you. We can make the argument in terms that do not involve in any kind of investment dimension. We can simply say, like the libertarian cause of sound money. And, you know, as Hayek said on that TV show in the early 80s, you know, something coming around that sly and roundabout and that the government can't stop. And that's how we wrest control of money away from government. 2:08:48 Right. That's not a narrative of getting rich. That's a narrative of freedom and financial empowerment for the world, especially the poor people everywhere, having, you know, no longer having to suffer the burden of inflationism from the from the US. So I agree with you. We can talk about it that way. And that's great. I think the Drivechain, you know, since you say it's inevitable. 2:09:11 Can I respond to what you said? 2:09:12 Yeah, please. 2:09:41 Now, this is security fraud, basically. Right. It's promising future returns. And the people looking at that don't have the capability to evaluate whether that's really true. Right. 2:09:54 That is that the security is all about. Right. And we don't want to walk ourselves into that corner because so far Bitcoin has been lucky. We've been in the commodities corner, not the securities corner. But as soon as enough people are saying number go up, there's a lot of people on Twitter promising future returns. This now satisfies one of the one of the pegs of the Howey test. Right. 2:10:16 And all of a sudden Bitcoin is a security because a lot of people on Twitter are saying the number is going to go up. Right. Let's not get there. Let's let's let's bring it down and bring it to a technical level and say and have other goals. Right. Sure. We all want to get rich. Everybody here is here because they care about Bitcoin. But that can't be the goal and it can't be the narrative and that can't be the thing you talk about on Twitter. 2:10:35 Well said. I mean, I think we're in agreement. I think the liberty argument and the innovation argument are just as dimensions are just as important. 2:10:47 I was going to take the conversation in a slightly different direction. Getting back to something that Bob said a few minutes ago, I wasn't able to speak. I was doing something else. But, you know, I think it's important to look at what use cases have gotten traction for Bitcoin and other things. Right. You never know what people want to use some piece of technology for. 2:11:13 And it seems like, you know, even though Bitcoin doesn't have certain features or expressibility, like it still has much broader adoption and, you know, like a larger market cap, like there's there's more people transacting more value or storing more value in Bitcoin than the rest of the ecosystem combined. 2:11:38 And I think it's because, you know, people like the network effects of money are real. And I think Bitcoin has found more traction as, you know, programmable money than, you know, other applications that maybe people would want to try to use it for. 2:11:56 I think something that's interesting is if if we say that the goal of Drivechain is to try to absorb the other capabilities of these other networks, I think it's interesting that, you know, it's not like the whole crypto ecosystem is like size one and Bitcoin is size like point one, like Bitcoin is bigger than everything else combined. 2:12:26 And so if you could like snap your fingers and Drivechain could absorb all of the people development effort, use cases like all of that stuff of all of the other networks combined, you know, maybe it doubles like the size of Bitcoin in terms of, you know, utility market cap, like all these things. 2:12:46 But I don't know if it thousand X is it like I don't know if, you know, the reason why Bitcoin isn't more useful to more people is because they they really need to be able to like run Ethereum contracts on it or something. 2:13:01 Right. Like to a thing that Bob said a few minutes ago that I think I've said before, too, is like, I don't I'm not really convinced that the reason why people don't use root stock is because they don't like the peg out mechanism. 2:13:16 Like, it'd be really interesting to find people who say, like, oh, man, root stock would be perfect if not for the peg out. So I had to go use Ethereum instead. Like, I don't I don't know if you're going to find those people. I think the reason why people pick Ethereum over root stock is because it has its own network effects. 2:13:34 And people who want to build EVM applications want to do it where there's more tokens, more tooling, more developers, like more services, more applications. So, like, I don't I don't know if, like, if we think that Bitcoin is programmable money, you know, maybe we should be aiming at soft forks that improve the money use cases and not really worry about trying to, you know, add features that, you know, 2:14:04 don't address those use cases. 2:14:34 mentioned earlier. 2:15:05 can participate in mining and run a node and get involved in the security model without a social privilege. They don't have to be chosen for it. They just need the resources. 2:15:19 What it really is, is that the dynamic federation whose membership is set by hash rate, right? Like that's that's really what we're talking about. 2:15:50 So I would argue that Drivechain sidechains are more like Bitcoin, whereas a federated sidechain is literally like the model that like Coinbase and Gemini would use to secure their Bitcoin. 2:16:02 It's a group of people who aren't named, who are walking around with, you know, the keys to the billions of Bitcoin there. You can't participate in that security model. If you have hash rate, but in a Drivechain sidechain, you can participate in a security model. 2:16:20 So it's more like Bitcoin. It is making Bitcoin layered, layered money like that's the future. Like as Bob says, things like this are inevitable. So the real question is, you know, does the community feel like Bob does that there isn't a crisis? 2:16:36 Or does the community feel more that something big like this should be embraced to strengthen Bitcoin and attempt to absorb the whole crypto community into the Bitcoin community, accelerating Bitcoin's growth and network effect? 2:16:53 Like if Bob says it's inevitable, then a question becomes, is it inevitable on Bitcoin or will it eventually be achieved on an altcoin? And then that altcoin would would compete with Bitcoin in a very serious way. 2:17:12 How do you feel, Ryan Dahl? 2:17:43 If you're out there and you want to earn fees and you follow all this, I think you don't say, all right, I'm going to go make root stock as Drivechain. You say, I'm going to go and try to knock over WBTC by having a less trusted peg to Ethereum. 2:18:04 And, you know, like, does that provide mining revenue for Bitcoin miners? Like, yep, absolutely. It's also less trusted than, you know, WBTC right now. But I don't think it's a given that, you know, Drivechains lets Bitcoin just swallow all of the other alts. 2:18:26 Bob? 2:18:28 For what it's worth, the narrative that a sidechain could swallow all the other alts is exactly the same narrative that the Liquid consortium had in the early days. 2:18:39 I don't know how many of you were around then. This is like 2018, I think, 2017, when they started Liquid and they said, all right, so it's hard to experiment on Bitcoin. Let's make a sidechain to do it. 2:18:51 So they did it. And then, you know, there's a federated peg out, peg in mechanism. As far as I'm concerned, when I said it's inevitable, it's already happened at least five times. There's probably more I don't even know about. It's already happened. 2:19:05 Now, if this sidechain mechanism is truly valuable, somebody will build a business on those things, right? Why haven't they? And I think the reason that they haven't is that and the reason Drivechains is getting subtracted from the community is name affinity. 2:19:21 If I build something on Rootstock, who the fuck knows? What's Rootstock? I don't know. Is it Bitcoin? I don't know. 2:19:28 So there's an affinity scam going on where we say, oh, but we're actually on Bitcoin, right? That's what's really going on, I think. 2:19:37 There are a number of ways to do peg in, peg out. You could use a federation. In fact, you can use a federation of miners who do things but don't involve the mining process. Use a federation of, you know, two thirds plus one of a bunch of people and do that. 2:19:53 A federation with two thirds plus one is effectively the same as a mining federation, right? It's just a different set of players. 2:20:04 So what's really the point here, right? The point is that none of these things have succeeded. No one is building businesses on any of these five alternative chains. 2:20:15 And I want to see, you know, before I vote for something like Drivechains, which again, I think is inevitable, I want to see businesses built on it. I want to see the sidechains actually make sense. 2:20:26 But Bob, this is the original discussion where we have like a big block, small block discussion, which doesn't make sense. 2:20:32 No, those are great comments. I appreciate you sharing them. So this brings me back to your tweet where you wrote that Ethereum is a sidechain of Bitcoin. So since you believe it is, you cannot say that sidechains don't have hundreds of billions of dollars of market right now. 2:20:56 So one more thing. So one more quick thing is, you know, I wasn't around in Bitcoin when Liquid was launched, but I've heard Paul say a number of times in these spaces that when it was launched, one of the founders, who I think he said his name was Matt Corallo, you know, said. 2:21:17 And so I might be getting this wrong in terms of the name I'm remembering, but said that Liquid should never be used by anyone who is an ordinary user. It is only for exchanges to move Bitcoin around in high volume. It's not for ordinary people. 2:21:33 So you said, I think, the opposite, which was that the original narratives of Liquid were that it could be an innovation platform for ordinary people at large scale. But that wasn't the original historical record, I think. 2:21:48 So I know Matt worked at Blockstream at the time. And yeah, so there's a business narrative and there's a practical narrative. So the business narrative, Blockstream as a company created the Liquid platform. At the time, I worked at Fidelity, and they really wanted Fidelity to be one of the validating nodes. 2:22:10 And so they came to us, and we looked at it, and we said, all right, so you want us to host this thing? And they're like, oh, we're a service provider. We're just going to hand you the box, and we want you to put it in a data center and run it. We're like, that's weird. What's the liability considerations around that? What if somebody loses money on their payout? What do we do with that? How do I handle that? How do we even know that that's happened? 2:22:29 And so long story short, Fidelity declined to be a validating node for Liquid because there are important liability concerns. I think one of the narratives in this community that we like to say is, let's make a federation. That'll solve all problems. 2:22:48 Well, no. In actual business, the way business works, you want to know who to sue. And so when something goes wrong and you lose money, you need to know who to sue. And if that's like 7 or 15 people, you're kind of fucked. You're never going to sue them. Yeah, it might work better from a computer science perspective. From a business perspective, it doesn't make any sense at all. 2:23:06 You're right. 2:23:07 We chose not to be a validator. Go ahead. 2:23:11 You're right. I just wanted to jump in and say that the fact that you can't sue Bitcoin because it is totally decentralized and peer-to-peer and you can't, as Satoshi said, you can't chop off the head of something that's having topology. 2:23:28 So that's what we want for Bitcoin's sidechains. We want to enable people to be free to create protocols for oracles, privacy tech, variations on Bitcoin with large blocks or other features and have Bitcoin be bigger and broader and enable people to have more freedom in a way that can't be sued and coerced. 2:23:55 Now, let's say I'm starting a business and I want that business to use sidechain for whatever reason. There's a sidechain. Let's say something goes wrong with a sidechain. Are my investors going to be happier with a sidechain that has a custodial peg-in-peg-out mechanism where they can identify the custodian and say, you fucked up, we know who to sue? 2:24:16 Or are they going to be happier with a federated peg-in-peg-out mechanism like Liquid where I don't know who to sue. It's 15 people. Maybe I can get blockchain to tell me who they are. I don't know. Or are they going to be happy with a minor federated peg-in-peg-out where it's literally impossible to figure out who those people are? 2:24:33 From a business perspective, the first one is preferable. And no one is doing it. All of the businesses who everybody claims wants this would not want the first option. 2:24:46 I keep on coming back to the fact that you've said that Ethereum is a sidechain. And then you seem to me, if I'm not mistakenly hearing you, you seem to be saying that people aren't using Liquid and that shows that there isn't demand for sidechains. 2:25:01 But you also believe, as you wrote, that Ethereum is a sidechain, which is so large that it's rivaling Bitcoin. It's almost half the value of Bitcoin. So I don't understand your view. Are sidechains popular or unpopular, Bob? 2:25:16 Why is Ethereum popular? It's because of ICOs. It's because of the ability to issue unregulated securities. And again, Bitcoin so far has survived not being a regulated security. 2:25:30 If we suddenly tie thousands of Drivechain unregulated securities to ourselves, we will suddenly find ourselves in the crosshairs of every regulator on the globe. 2:25:40 And they're going to say, oh, you know, OK. Another important statistic to keep in mind is that the total market cap of equities across the world is approximately 10 times that of gold. 2:25:54 We can expect that ICOs and things like them and equities are going to exceed the market cap of Bitcoin by approximately a factor of 10. 2:26:02 Right. So, you know, when those things exceed Bitcoin's market cap, what does it matter? This 10 percent little payment system that somebody created back in 2009, who cares about that? 2:26:14 There's billions and billions of dollars of fraud happening in the securities market. Let's go for that. If we have to shut down that other system to do it, they're going to do it. 2:26:23 So if you want Bitcoin main chain as it exists today to survive and thrive and be a permanent fixture as the foundation to the future economy, then we should build everything else on top of it. 2:26:36 And if we don't aim to do that, then a different protocol will. 2:26:40 No, false, false. The security concerns of a security of an equity are very, very different than that of money. 2:26:47 That's a very important concept to think. You can tie everything to Bitcoin. It's technically possible. That's why I said it's inevitable. 2:26:54 We already have five different implementations of this. You can do it right now. The security concerns of a stock or an equity are very different. 2:27:05 You've got to register with your local thing. You've got to not short sell. You've got to register the executives. You've got to not do insider trading. You've got to do all these things. 2:27:13 And that needs to be regulated. It should be regulated. We're all for the worse if we allow insider trading. We say, fuck it. Everybody can register anything. 2:27:23 We allow insiders to trade as much as they want. We are all fucked by doing that. We want the regulators to actually do their job. 2:27:31 And the security concerns around a securities chain, Solana is a great example, better than Ethereum, in my opinion, are different from Bitcoin. 2:27:40 And when you mix the two, you risk bringing in the regulators to Bitcoin. 2:27:45 Well, that's an interesting line of reasoning. It sounds like compliance is top of mind for you. 2:27:56 And the cypherpunk perspective, which is what can we build using cryptography and a vision of electronic commerce, peer-to-peer technology, what can be built there? 2:28:15 Let's build everything we can to empower people. That's not a compliance first mentality. 2:28:21 I think the Satoshi mentality, that cypherpunk mentality is different than what you seem to present, which is like compliance first. 2:28:29 No, no, no, no, no, no. The different things. So the security first compliance mentality is not one I espouse, it's not one I appreciate, it's not one I want. 2:28:38 But it is the way the rest of the world works. And we have to live in that world. 2:28:43 Now, let's try and make sure our cypherpunk experiment doesn't get tainted by that bullshit. 2:28:50 That's what I'm really concerned about. 2:28:53 I mean, I would argue that it's not just my sense of what Satoshi would say about this. 2:28:58 We know for a fact that he explicitly countenanced, meaning he acknowledged and approved of bit DNS. 2:29:07 And he referred to a whole multitude when he used the phrase all the networks in the world. 2:29:12 So he believed that perhaps every block chain ever would be merged mine with Bitcoin. 2:29:18 And it follows logically that I think if he had known about a mechanism for a two way peg, he would, of course, preferred that all the block chains share not only hash rate, but also share monetary policy through the two way peg. 2:29:31 I think that is unstoppable vision and suppressing it or delaying it endangers Bitcoin because another protocol, as you say, will eventually it'll be adopted. 2:29:43 OK, so here's the thesis, right? There are two potential theses with respect to the long term value of Bitcoin. 2:29:47 The first thesis is that it remains gold like, let's say, right? 2:29:55 It is digital gold, right? And it behaves like gold is today. 2:29:59 Gold is approximately 10 percent of the total equities market cap. 2:30:02 It's a small fraction of the total economy of the world. 2:30:07 Right. So that's one thesis. Bitcoin remains for all time, 10 percent of equities. 2:30:14 All right. The second thesis is that we tie everything to Bitcoin, all equities, all everything to Bitcoin. 2:30:21 Right. This means that the price of Bitcoin has to accelerate to a number that is not just equal to the total market cap of all other equities, but far beyond that. 2:30:33 Right. And this comes back to the MED argument. Right. So if I can short one thing and then trade another. 2:30:40 Right. That's that's MED basically. Right. In order for Bitcoin to be the consensus model for all these other things. 2:30:48 That means I can't short this other thing and degrade Bitcoin's consensus to make my trade profitable. 2:30:57 Right. Which means Bitcoin has to have a higher market cap than all of these other things combined. 2:31:03 So these are the two theses in my mind. Bitcoin remains gold like remains about 10 percent of total equities or Bitcoin remains. 2:31:10 It goes the other direction and says Bitcoin is like basically proportional to the total sum of the market cap of everything in the world. 2:31:18 I think the latter thesis is rather hard to believe. I think it's possible. 2:31:24 I think it's hard to believe. I think in the interim, while we're arguing about Drivechains and stuff like this, bringing regulators is not a good thing. 2:31:31 Let's try to remain independent as long as we fucking can. But those are those are the two things. 2:31:36 Right. And there's nothing in the middle. OK, there is no middle ground. 2:31:40 The strategy that you suggest, which is to try to avoid regulatory pushback, that's one that Satoshi mentioned in the early discussions back in 2010. 2:31:51 He said, let's not bring the heat from, you know, associating Bitcoin with Wikileaks. 2:31:56 However, another way of looking at it at this point, 14 years, roughly 14 years later, is that if Bitcoin grows as fast as possible, 2:32:05 then we would be following in the roadmap that Hayek mentioned in 84, which is sly and roundabout and then something they can't stop. 2:32:16 So if we blitz scale, if we increase Bitcoinization as rapidly as possible, trying to absorb every blockchain community onto Bitcoin, strengthening it in every way, 2:32:27 that is an end run around the regulatory state, the welfare warfare state. 2:32:33 And we get to the touchdown end zone, which is it's global money. There's innumerable projects built on top of it. 2:32:40 Everyone is using it. It's unstoppable. It's succeeded. Isn't that a better strategy than one of fear and limitation? 2:32:50 Yes, I think you're completely correct about all of that. Do you really think we're anywhere near the latter thing you said? 2:32:56 How many things can you buy with Bitcoin? Right. If all the governments in the world said, fuck this shit, this interferes with our monetary policy. 2:33:03 We're not going to allow it. Right. This is not a technical argument. 2:33:06 Right. I mean, like governments can say you can't do Bitcoin and go to jail. Right. All governments can do that. Right. 2:33:12 The inevitability argument relies upon commerce. First, we don't have commerce today. 2:33:20 We have to develop commerce before we get to that point. Developing Drivechains where we can develop a stock market on top of it is way, way, way premature. 2:33:29 I think the stock market idea is so different than what the Drivechain community has contemplated. So it's sort of out of left field. 2:33:38 I mean, the sidechains that we think will have traction, such as privacy, scaling and others, aren't about the stock market. 2:33:49 How many scaling chains are there? Right. Most of them are equities. Right. 2:33:55 Again, 10 times the market cap of equities is 10 times that of gold. You're going to get 10 times more equities than you're going to get gold. 2:34:02 And if you include scammers, you're going to get 100 times more equities. 2:34:05 So if Bob, if the if Ethereum is blessed hypothetically tomorrow by the SEC, then it seems like your your own statements would lead us to conclude, if they're correct, that Ethereum is going to have 10 times the market cap of Bitcoin. 2:34:20 It just seems like you are you are saying that the total market, the total addressable market of the Ethereum roadmap, in your view, is much larger than the total addressable market of Bitcoin in its current form, in your view. 2:34:38 And therefore, I wonder how you reconcile that with the fact that network effects in money will cause a larger protocol unit of account to displace a competitor. 2:34:51 So Ethereum is not going to supply Bitcoin and be a stock market. I mean, again, there are two theses. One is money. 2:35:02 Ethereum is never going to be stock market 2.0 because of scalability concerns. Right now, there are 17 different ways of doing the polygon chain and all this other shit. 2:35:16 I don't even know all of them, but it's not going to happen. Right. But isn't that kind of the problem, though, for a stock market 2.0? 2:35:25 Isn't this kind of the problem, though, is that if you're against sidechains, you kind of have to claim infallibility. You have to say, I know everything that every altcoin is doing, and I know that it's not as good as the BTC strategy. 2:35:41 Which seems like an awfully big risk to take in exchange for no benefit. Because remember, if anything bad happens because of Bith 300, we can just soft fork out either any individual sidechain or just the entire Bith 300 thing. 2:35:57 Rewind for a second. I'm talking about general market structure here, and you just made me very lost. And Rindle's been holding up his hand for a long time. I need you to let him speak, too. 2:36:05 Oh, it was just as a kind of rhetorical bit of feedback. I generally don't find appeals to Satoshi to be very convincing arguments, so I would just be careful how many of your arguments are appeals to Satoshi Post from 2010. 2:36:21 Yeah, that's fair. That's totally fair. 2:36:23 Did I do that? 2:36:24 We had talked a little bit about history. No, I did it. It's Henry. It's me. It's all me. I make mistakes all the time. 2:36:32 I mean, yeah, I totally respect that, Rindle, of course. You're 100% right on that point. And also, thanks, everyone. I just want to take a moment, just a breather, to say thank you, Bob, for being here. 2:36:46 Thank you, Rindle and DJ and others who've come up or who've requested to. We've had a bunch of requests, but we had such an in-depth conversation going, I didn't want to have the stage become too crowded. So thanks, everyone, for your patience. 2:37:02 Just to reset the room for a moment, we meet every week here on Twitter to talk about Drivechain and related topics. Everyone's welcome. We especially appreciate it when excellent thinkers like Bob and others who aren't fully on board with Drivechain at this moment come in to share their view. 2:37:26 Because it's essential that the community develop the best possible understanding so that they can make the best informed view and decision. So it's so valuable to have you here. Why don't we go for another half hour or so, and then we can maybe wrap for next week, and let's jump back into it. 2:37:48 I need a couple of talented people to do this. I just saw it on Twitter, and I did fucking jump in. 2:37:57 Rindle, why don't you kind of give your take on these recent topics, because you've been listening for a while. What's your take on Bitcoin's total addressable market, whether it should be money or whether it should be a platform for many things other than just money like oracles or more scalable money, more private money, multiple blockchains? Does that excite you? What do you think about that? 2:38:22 I'm just listening. Is Bitcoin money or is Bitcoin smart contract fuel is a debate that's been happening for a really long time. So I'm just listening to the conversation. 2:38:53 It's just the same thing. You can just keep that and you can ignore all the sidechains. Your layer one node does not need to know about any sidechain software or any sidechain blockchains to be a fully validating node on L1. You can ignore all of that. That's why the whole miners can steal thing is even possible. It would be easy to make that impossible by just flipping that other trade off. 2:39:18 I'm not saying the miners can steal, but I want to go back to our previous argument where we end up with one Drivechain with very big blocks. And that becomes a payment infrastructure versus the main chain. What's the value of running a Bitcoin node in that circumstance? 2:39:30 As much as we can't even get speaker participants in conferences to run main chain today, someone who just wants to buy coffee or get an abortion for his girlfriend in Florida is definitely not going to run a node with big blocks. 2:39:46 Right now they don't accept Bitcoin at all. So you're in the exact same problem. The way I see it is you have to compare where we are today to where we would go in the large block sidechain world, which is exactly the same if they only accept the large block sidechain. 2:40:14 Except better, because they're going to accept Bitcoin. So whoever's doing it, BitPay or whatever, look at it from BitPay's point of view. They're going to run the large block sidechain or whoever it is, the payment processor. 2:40:26 First of all, in order to run a sidechain node, just the technology requires that you run a layer one node. It's impossible to only run the L2 node. The L2 node requires a layer one node. It's a fundamental requirement because it needs to know about which deposits are being sent to it. It needs to know about merge mining. 2:40:49 So the scenario you've laid out is not even possible technically about someone only accepting the layer two coin because at the end of the day, BitPay or whoever it is, they're running both nodes. So maybe they can make a management decision. 2:41:03 The marginal cost of running a layer one node when you're running a Drivechain node is small, right? Agreed. It's literally zero because you cannot run any sidechain node without the layer one node. So you must be done. You already have the node. You may decide to use it. 2:41:22 You're trying to make the argument. You said it has no layer one impact, which means I can run a layer one node. I have no idea who I'm fucking paying. Can't vandalize any of my payments. Why would I do that? 2:41:33 You pay on layer one. Your preference right now is that people pay you with Bitcoin on layer one. Your preference is that you be paid with layer one Bitcoin. 2:41:44 We're not scaling. 2:41:46 No. 2:41:49 Make a payment. 2:41:51 No, that's not the case. If I understand what you're saying correctly, it is that today. Here we are. It's a Friday in 2023. You want to be able to use your layer one Bitcoin to buy whatever coffee doesn't matter. That's what you want, right? 2:42:11 I'm all about abortions at this point. But anyway, go ahead. 2:42:15 I got onto that topic. 2:42:16 Go ahead. 2:42:17 Well, yes, but what you're trying to say is that your concern is that when we move to a world where there is an optional large block sidechain at the coffee shop, that that will somehow be bad for your position. 2:42:37 What I'm saying is that at worst, it's exactly the same because the coffee shop is already not taking L1 Bitcoin, or if they are, they have no reason to stop because they are taking the large block one as well. 2:42:49 It's bad for node operators and bad for decentralization. 2:42:52 It's not bad for different node operators, though. 2:42:55 You understand every single layer two node operator is a layer one operator, but not the reverse. 2:43:01 Correct. Correct. But I mean, coming back to your point, if I don't want to care about paying for coffee or paying for an abortion or whatever else, I want to pay for something. 2:43:12 And I want to be able to pay for that. 2:43:23 I can't verify that payment, so I can't run a node that can verify that I actually paid for the service provided. 2:43:30 You understand there's two different nodes, though, right? You understand it's two completely different pieces of software. 2:43:39 Both require a node. 2:43:42 Yeah, different node, though. One is a node that's like the difference between Ethereum and Bitcoin Core. 2:43:48 My payment is on layer two. I need a layer two node. I need the full giant fucking block. 2:43:54 If you meet the demand of the coffee shop, they demand to be paid on layer two, and then you do it. 2:44:03 Well, first of all, you don't need to run a full node to send. 2:44:06 You will know that you only need it to receive, right? 2:44:09 You can send all you like. You don't actually care. 2:44:12 You couldn't care less one bit if it's in a block or not. 2:44:15 You're going to send it, and they're the ones who want to know that it's in a valid block. 2:44:20 It has two, three, four, five confirmations, so you really only need the node to receive. 2:44:25 But maybe you own the coffee shop. I don't know. 2:44:28 I don't really understand where this is going because none of it makes any sense to me because it's all optional. 2:44:33 It's all optional. 2:44:35 I think we're getting close to a good understanding. I think that we're making progress here. 2:44:40 I think things you're saying, Bob, are very interesting, but I am truly optimistic that you're going to grok Drivechain in the near future. 2:44:49 I feel like you're pretty close when you say that you're somewhat attuned to security budget concerns. 2:44:56 You think Drivechain is inevitable for Bitcoin in the long run. 2:44:59 So you're really happily there. 2:45:02 But this is a key point. 2:45:08 There are two different nodes. 2:45:13 The analogy is, what if the coffee shop only took Bitcoin SV or something? 2:45:20 That's quite similar to the current situation where maybe they only take Visa. 2:45:26 You know what I mean? 2:45:27 It's like you draw a line and you say Bitcoin Core is here and then a little ways down is large block sidechain and then further down is Bitcoin SV and then further down is the US dollar. 2:45:41 So we want to move it as far along in the good direction as possible. 2:45:47 But you don't have to. 2:45:49 Right now you already run a full node of the US dollar blockchain or whatever you want to call it. 2:45:54 You already meet the demands of the coffee. 2:45:57 Oracle database. 2:45:58 I do not want to know one of those anyway. 2:46:01 Yeah, but you know what I'm saying, right? 2:46:03 You meet the demand. 2:46:04 They say we take US dollar here. 2:46:06 We don't take Bitcoin at all. 2:46:08 And you still buy coffee there. 2:46:10 OK. 2:46:11 There are two solutions to this problem. 2:46:13 Right. 2:46:14 So one is I. 2:46:17 We have a common currency. 2:46:19 Right. 2:46:20 Your bill is in the same unit as mine. 2:46:22 Right. 2:46:23 And I hate this phrase, but there is an economic phrase called the. 2:46:32 The coincidence of common wants. 2:46:34 I believe it is something like this once. 2:46:36 Yes. 2:46:37 It's a rejection of barter. 2:46:39 I think it's apparently just completely made up. 2:46:44 That's not the way primitive societies actually worked. 2:46:46 But nonetheless, the concept, I think maybe some of you know that. 2:46:49 And, you know, all right. 2:46:51 So the other solution is that there exists a situation with a bunch of arbitrageurs and a bunch of markets where I can pay in one thing and receive in another. 2:47:00 Right. So the coffee maker receives euros. 2:47:03 The customer of the coffee maker pays in dollars. 2:47:07 Right. And in between a bunch of magic happens. 2:47:09 And I know all of the magic in that latter situation is fundamentally centralized, increases points of centralization, increases, frankly, 2:47:18 increase the business opportunities for companies to to perform that role, not decentralized. 2:47:25 The more currencies that exist that we want to pay in more payment currencies, the more friction there is and the more intermediaries there is. 2:47:33 And therefore, the more centralization and regulation around those intermediaries. 2:47:38 Oh, that's not true, though. 2:47:39 That's no different than the coffee station saying we accept Visa and MasterCard and cash and we accept checks and we accept quarters and we accept whatever gift cards. 2:47:51 They're all denominated in dollars. They'll exchange at par. 2:47:54 They don't have cash app. 2:47:56 And I don't I don't question those places because they don't accept the preferred currency. 2:48:00 I think eventually you think eventually they will, though. 2:48:02 Right. Probably eventually everyone will just accept Venmo. 2:48:05 WeChat pay. 2:48:07 Everybody will accept all 27 unless you're one of the unlucky ones where you've got the 28th currency and they don't accept your shit. 2:48:13 Right. Look, a single currency is a global human goal that I think we need to be striving for. 2:48:19 We need a global side. 2:48:21 Chains are part of that goal, though. 2:48:23 When you and this is what I understand that you don't get, Bob, is that it's it's the difference between having the ATM. 2:48:30 You're saying an ATM is bad because it makes a new currency. 2:48:33 But it's actually good because it extends the reach of the US dollar in the cash direction and in the digital checking. 2:48:39 Yeah, Bob's Bob, the all the sidechains share the same monetary policy as the main chain and Drivechain. 2:48:45 The main chain monetary policy is extended across all the sidechains. 2:48:50 So there is only one currency, Bitcoin. 2:48:54 I'm not concerned about monetary policy. I'm concerned about whether the receiver knows what I'm sending. 2:49:00 If it's if it's on a Drivechain, maybe it says, I don't understand that Drivechain shit. 2:49:04 You know, maybe denominators, the receiver requests the payment from you. 2:49:09 That's what I that's the other thing I was trying to say before. 2:49:12 Is that now they say they say we only take we only accept Visa here. 2:49:19 When you go into the coffee shop, you say, oh, do you do you take MasterCard? 2:49:22 And they say, no. They say, do you take this? 2:49:24 They're the ones who. Now, of course, most businesses have every reasonable incentive to accept as many different kinds of payment mechanism as they can reasonably do, which I presumably, presumably. 2:49:38 I mean, I don't have to pay for things, but I think. 2:49:44 Right. So the idea that every business wants to accept every form of currency, I think is false because they quit. 2:49:50 And if you're a coffee shop and you don't want to deal with it, you want to hire someone. 2:49:54 There is no one to hire. Let's build that before we build alternative. 2:49:59 I'm in favor of I mean, if I had like 10 billion dollars, I think I would acquire. 2:50:04 I don't know what happened with BitPay. I would probably either try to recreate BitPay or acquire them. 2:50:08 So I agree with you that. But, you know, part of what happened, Bob, as you know, is there is this scaling war and there's a whole crop of people who chant endlessly that it doesn't matter. 2:50:20 Bitcoin should never be used for payments and Bitcoin is just for saving and that it doesn't matter where if Bitcoin is actually ever used for anything. 2:50:30 And those people have a point, which is that it's not necessary for Bitcoin to be used, but it's certainly certainly better. 2:50:37 It's as if someone found it, found out that gold could could cure cancer and could allow you to teleport across the universe. 2:50:45 That would be good for gold. But a lot of people in Bitcoin have decided that any endorsement of payments is Roger Veras, large Roger Veras and large block ism or something. 2:50:57 And so now that's all that's all hated now, including the people in BitPay are all. BitPay also did a silly that silly QR code thing that like was that called the payment protocol? 2:51:09 And everyone hated it. They absolutely loathed it. But BitPay really. 2:51:14 But anyway, no, I can put my hand up. Yeah. Mike, should we let Mike say something, maybe? 2:51:23 Yeah, I have a question. I have a question to Bob about his earlier point about Bitcoin losing its commodity status by enabling these sidechain ICOs. 2:51:35 It's a two part question. The first is, I don't actually follow how that would change Bitcoin from a commodity to a security. 2:51:41 And the second part is, are you worried about BRC 20s? And is this an early indicator? 2:51:49 OK, so the second question, yes, to the first question. So BRC 20s are an indicator of potential stock market type behavior, right? 2:51:57 Which brings regulators. Second, the question is how? Basically, the simple answer is just make it illegal. 2:52:05 Right. Every country, many countries have tried this, you know, when we all hope that that won't work for them. 2:52:11 But in practice, it does work. Right. So if a country decides that there's a bunch of fraud happening in this particular ecosystem, they can simply make it illegal to transact Bitcoin. 2:52:24 That's that's all there is to it. Right. It's very simple. They don't have to do a 51 percent attack. 2:52:29 They don't have to like issue new dollar coin or make a CBDC or any of this kind of complicated stuff people talk about on Twitter. 2:52:36 It doesn't make it illegal. And that's going to happen. Right. 2:52:41 Because securities law has a whole lot more guardrails around it than commodities law. 2:52:49 So for context, I used to work for a solid X, their their company in New York City. 2:52:55 We filed the first Bitcoin ETF in competition with the Winklevoss brothers. 2:52:59 We got turned down around the time I left the company. 2:53:02 So I was with them through that whole process and like every conversation they had with the SEC and talks about surveillance and manipulation and things like this. 2:53:13 And, you know, so one of the things that stuck with me was that there's a copper ETF. 2:53:20 Right. All of the copper, majority of the copper that's mined is outside the US. 2:53:26 I believe it's Argentina. Somebody correct me if I'm wrong. Anyway, copper is a huge commodity. 2:53:32 Like you've got some in your house. You're probably sitting within five inches of some copper right now. 2:53:38 But, you know, we accepted a copper ETF even though it was entirely outside our jurisdiction. 2:53:45 Right. There was no surveillance. There was no anything. 2:53:48 The constraints on the copper ETF were far, far less than they require on the Bitcoin ETF. 2:53:56 So I forgot where I was going with that. We don't want to bring regulation, I think, is the point of that. 2:54:06 It can be terrible. And I think the road to the ETF is a road to legitimacy within the eyes of the government that we want to happen. 2:54:19 We want the government to be comfortable with this as an asset. 2:54:22 All of those for my previous comments about number go up. Don't say number go up. 2:54:28 But at the same time, an ETF is possibly the biggest thing that could happen to make number go up. 2:54:34 Because you don't understand how much trapped capital there is in the world that cannot invest in Bitcoin. 2:54:40 Retirement funds in particular, there's a trillions of dollars in retirement funds that cannot invest in Bitcoin today because of custody laws. 2:54:44 So anyway. Yeah, I think it's compliance first mentality is not probably what the community wants, if I had to speculate, I feel like compliance as a top priority is a is a road towards just sort of adoption of Bitcoin as an asset. 2:55:06 Sort of adopting the perspective of the state, which is that Bitcoin shouldn't exist because it would deprive it would deprive the state of the money printer. 2:55:16 So eventually there's going to be a war with the state. And the way to win that war is to grow as rapidly as possible so that there is no political. 2:55:24 I'm saying something very different. I'm saying I'm very different. I'm saying the securities law and currency law are wildly different animals. 2:55:33 And then separate from that is commodities law. Right. So right now, Bitcoin is a official currency of El Salvador. Right. That puts it into a special bucket within the regulatory regime of the US and many countries that says, oh, it's a currency of a foreign country. 2:55:49 Now, we have to be able to trade. We have to be able to transact. So we have to like that. That is that by itself is a super fucking important. 2:55:56 The second thing is the commodities bucket. Right. So commodities don't have as much restriction around their trading because generally commodities involve physical transport of goods. 2:56:09 I had a friend a while back who worked on gold trading and he told me stories about like I've got a pilot of gold. It's going to go on a 747 from Singapore to New York. Right. 2:56:20 I've got to buy insurance. I got my insurance between the time the plane leaves the gate to the time it hits the runway. I got my a different kind of insurance between the runway and wheels up. 2:56:33 I got my a third kind of insurance between wheels up and crossing the Pacific. I got my a fourth kind of insurance to land. Gold trading is really fucking expensive. 2:56:43 This is why gold has a carrying cost. Right. There's an effective net negative interest rate on gold because it's cost it. You have to pay to keep it. You got to pay custody costs. 2:56:54 Even if you don't move it, you got to keep it in a vault. You got to pay somebody to keep it in that fucking vault. 2:57:02 We're doing this story. I apologize. I've been drinking. 2:57:05 I have a follow up question. Is your opinion Bob that in order to have a global currency, it has to go through the phase of store of value first and then unit of account or can they happen in parallel? 2:57:18 The reason I ask is because the BlackRock ETF is being marketed as digital gold. And to me, you know, I think that's great because it's kind of like a Trojan horse. Right. 2:57:32 People are just buying it as a store of value like gold and then they adopt it. And eventually enough people do that, it can start stabilizing and being less volatile and more compliant and more institutionalized. 2:57:46 And then eventually over a decade or two, it can become a unit of account and a real money. I don't see how you go to a unit of account before it's a store of value. 2:57:55 That I completely 100 percent agree. You must be a store of value before your unit of account. Nobody like I've got a ton of sand around me. It could be a unit of account. That's great. 2:58:07 But it does not store value. This is a useless concept. Right. It must be a store of value first. And Bitcoin has done that is demonstrated its capability of being a store of value. 2:58:18 And I think a lot of people in the ecosystem, including Ethereum, have gotten that wrong. They're going to be fuel for the world computer, which is some nebulous bullshit concept that just doesn't make any fucking sense. 2:58:27 But you must be a store of value. And Bitcoin has accomplished that in spades. So. 2:58:36 Well, Paul, we've been going for three hours today. Do you feel that we should continue and or resume next week? 2:58:45 I can stick around a little bit. I'm not sure. I don't know. I'll stick around if people want to stick around. 2:58:51 Well, I just want to mention a couple of things again. We meet every week on Friday to talk about Drivechain. This is a recorded space and everyone is welcome to be here. 2:59:01 Whether you're a fan of Drivechain, a newcomer or a critic or skeptic, everyone's welcome to speak. 2:59:08 So if you didn't catch the whole conversation, we had a very good conversation with Reindahl and others and Bob that started three hours ago. 2:59:18 So you can once this space ends, the whole thing will be recorded and available on the LayerTwo Labs Twitter account. 2:59:25 Why don't we aim to wrap up in the next few minutes if you have further thoughts and questions that would perhaps bring closure to this episode of our dialogue, Bob, Mike or DJ. 2:59:38 I'll just say thank you for the space and I agree with the notion that we need to keep educating ourselves and other people about Bitcoin and helping people adopt Bitcoin as the base layer money for the whole financial world. Thank you. 2:59:54 Yeah, thanks for hosting this. I am a proponent of BIP300 myself, but I encourage as much possible debate and dissent and argumentation because changing the protocol is very risky and we want to be careful and take our time. So thanks. 3:00:10 Paul or Bob, any further comments you want to share to kind of try to bring closure to what you discussed for a couple hours today, which was a very interesting dialogue on the nodes of the sidechains, the main chain, whether or not there are multiple currencies or only, as I would argue, as we would argue as drive chainers, one currency involved in Drivechain inherently or natively. 3:00:36 So why don't you address that, Paul or Bob, kind of try to wrap up today's conversation. 3:00:44 If you'll allow me, Paul, I'll go first unless you have the last word. 3:00:47 So I posted a thread on Twitter yesterday about the dynamics of creating new ideas in Bitcoin and how that goes. And I characterize Paul as a passionate, I lost my word, passionate champion of the idea. He originated it. He obviously is a passionate champion. 3:01:17 I have been the passionate champion of many ideas in my past. And, you know, it is a fucking difficult position to be in. And, you know, Paul and I have gone back and forth on Twitter about various things. And I always want to bring it down to civil discourse. Like, let's bring it down. Like, let's not be mad at each other. Let's try and have the actual debate. 3:01:39 And I think Paul is reaching the point of frustration. And I described this in my post where there's two. There's the passionate creator of things and then there's the dispassionate maintainer of something. Right. 3:01:57 And, you know, I've been working in open source software since I was in my 20s, like, 25 fucking years now. I have seen this play out over and over and over again, where somebody shows up, they say, I want to do this. It's fucking awesome. Why don't you guys agree? It's fucking awesome. And they just go through their thing and they have lots of mailing list posts and all kinds of stuff. 3:02:21 I have seen this hundreds, literally hundreds of times. It is a dynamic that is real. It is human. It is natural. It is normal. Nobody's at fault. Nobody's wrong. We need the person to show up with a fucking good idea and tell us it. Right. In this case, in this conversation is Paul. He put a fucking lot of work into this and he put it, you know, put it into it. 3:02:42 But after that comes a bunch of people who say, let's discuss it for a while. Right. And to the person who created the idea, this is super fucking frustrating. Like, no, I already I already decided that. I already evaluated that. I already figured it out. But there's so many things that happen in the process of creating an idea that you don't communicate to other people. 3:03:04 It just takes time to percolate. And there are going to be things you didn't see in the process of that. So I think I want to I want to call up Paul. I want to I want to say props for putting so much fucking effort into this. And, you know, good job. Again, I do see this as inevitable. There are five fucking examples of sidechains. Right. It is inevitable. It is a good idea. It has been done. It has been used professionally and purposefully and interestingly. 3:03:34 His specific implementation, I really don't want to comment on. I really want to see the whole concept of sidechains have some have something. But the point of that thread is let's all try and read more and debate less. 3:03:54 Read Paul's bips, have a journal club, read, you know, other competing ideas. But, you know, debate less. We live in a very volume based world, very Twitter based world where people just spout their opinions without having much bullshit behind it. And Paul accuses me of this. And in certain cases, he's right. 3:04:20 But let's let's evaluate. Read. Read is really the real thing. Read. I'll finish with that. Well said. All right, Paul, you get the last word today. 3:04:31 OK, great. Yes, I think that's mostly correct. I think that was very well put in general because the idea is very old. It's from November 2015. So, you know, it's like easy to be very patient for a while. 3:04:54 It's like easy to be very patient for a while. One thing that makes me sort of. I think one thing that happens is kind of like I really feel like Jeremy Rubin was treated very badly with respect to BIP 119. And then now it's kind of like years later. 3:05:13 Because of ARC, now everyone is going to just flip and, you know, it's all going to be memory hold and everyone's going to say, oh, yeah, we always liked BIP 119. 3:05:23 When I remember being very differently. And in a way, I kind of see that as a preview of with BIP300, where people are going to just be like, oh, yeah. 3:05:31 And I don't know, that just kind of gives like an enormous eye roll from me after all this. 3:05:38 What you might call toxicity. 3:05:43 All this like kind of like. 3:05:46 Disagreement over the blockchain, what the blockchain should contain and all these people just saying like they have it right. And it's a reality. We should try this harmless idea that lets people have different things. 3:05:58 Another thing that I kind of think is weird is that no one, you know, Ethereum has changed a lot. 3:06:04 Like this is like a sour grapes. 3:06:07 Ethereum used to be complete and total garbage. 3:06:10 And now it's merely not very good, but it has improved by maybe like 500x. 3:06:16 And so. 3:06:20 In the past, people rightly were dismissive of it, but now people are more dismissive of it, but it's kind of gotten better and there's no proportional increase in. 3:06:28 Respect for it. 3:06:30 And like no one people I've heard of Vitalik Buterin who they'll never hear of Greg Maxwell or maybe even Gavin Andreessen. 3:06:38 They'll probably never hear of those people. 3:06:40 And not that that makes it a success, but. 3:06:43 I don't know. I just kind of feel like. 3:06:46 One thing that people should read more and one thing they should read is the Drivechain FAQ. 3:06:52 Where you'll see why it's so easy for me to answer many of the questions in the space, because I've been getting it for the last six years. 3:07:00 And then another thing that would be interesting to read is the original November 2015 post, which is, you know, for 2015 with the five. 3:07:08 And then you may get an idea of. 3:07:12 Like all this, a lot of stuff is pre-anticipated in there. 3:07:16 And then you just think, well, what is it going to be eight more years of repeating this? 3:07:21 So, yeah, I think it's true that there's an impatience idea. 3:07:25 To it, and I just kind of thought people would come around eventually, which they are actually so. 3:07:32 But it is just kind of. 3:07:34 It's very bizarre. 3:07:35 To get questions. 3:07:37 I mean, I thought I think it is bizarre. 3:07:39 The idea that $20 in cash is different than 20 is a different currency than $20 in the checking account. 3:07:45 I think a lot of these ideas are bizarre, but I'm happy to keep coming back every Friday. 3:07:52 All right. 3:07:54 Thank you, Paul. Thank you, Bob. 3:07:56 DJ and everyone. Thank you. 3:07:58 We're going to meet one week from today. 3:08:00 So that'll be if you follow LayerTwo Labs on Twitter, follow this account, you'll see the space. 3:08:08 Everyone's welcome to come on up and talk more. 3:08:11 We aspire to be one of the best places for open conversation with critics and skeptics and fans about the ideas here. 3:08:20 So this was a great conversation, Bob. 3:08:22 Your scientific perspective is so valuable. 3:08:25 And thanks for being here. 3:08:27 Please come back again soon. 3:08:28 All right, everybody. 3:08:30 Have a great Friday. 3:08:32 For more information, you can go to drivechain.info to find the FAQ. 3:08:38 That's drivechain.info. 3:08:40 You can also go to LayerTwoLabs.com. 3:08:43 At layer2labs, you can download the Drivechain testnet software and run it on your own computer. 3:08:50 You can also at LayerTwoLabs.com find links to GitHub where you can read the BIPs. 3:08:58 Written by Paul and Cryptax. 3:09:01 BIP300/301. 3:09:03 So do what Bob said, read. 3:09:06 Read it and study it. 3:09:08 Understand it thoroughly. 3:09:10 It's an intellectual adventure. 3:09:13 It's very important for the cause of liberty. 3:09:15 Go for it. 3:09:17 We have a YouTube playlist also if you really hate reading. 3:09:22 YouTube is okay. 3:09:24 Yes. 3:09:26 That's right. 3:09:28 You can find the links to YouTube if you go to LayerTwoLabs.com. 3:09:31 Our YouTube link is there as well. 3:09:33 We also have a Drivechain-focused Telegram group. 3:09:36 So there's a whole bunch of different ways you can get involved and learn more. 3:09:39 All right, I'll see you all next week right here for more Drivechain conversation. 3:09:58 Thank you.
