0:01 Hello and welcome to Drivechain Twitter Spaces. 0:06 Today, May 4th, 2023, we are gathered to chat once again about BIP300 and BIP301, what 0:17 we believe is a transformative upgrade for Bitcoin, an important soft fork that could 0:25 be, maybe, Bitcoin's last major change. A change that would introduce extensibility 0:37 of a high degree for Bitcoin, enabling all kinds of new protocols and applications, features, 0:46 and capabilities for Bitcoiners, on Bitcoin, by Bitcoiners, for Bitcoiners, with a goal 0:54 towards internalizing all of the innovation that is possible on blockchain to Bitcoin, 1:01 instead of that innovation with its value and people flowing to altcoins. In the very 1:09 long run, by the power of network effects, one layer one will accrue almost all the value 1:21 in the blockchain marketplace. By the power of network effects, a single unit of account 1:29 will become used across the globe. That's what we believe. We believe the blockchain 1:36 revolution is going to be transformative for the global economy, and we want Bitcoin 1:44 to be the one and only unit of account used. We believe that if Bitcoin becomes the layer 1:51 one for every blockchain application, then Bitcoin is without competition, and it would 1:59 have indomitable network effect, indomitable hash rate security, and it would be more successful 2:08 than we can possibly imagine. So, what Drivechain is all about is making Bitcoin the platform 2:15 for a wide variety of technological innovation and experimentation, and it uses an architecture 2:23 which features partitioned venues for this innovation and experimentation. Partitioned 2:29 meaning if one of the sidechains fails, then that doesn't harm the mainchain, and it doesn't 2:37 harm the people who didn't opt in to the sidechain. So, that's what Drivechain is all about. It's 2:49 about enabling peer-to-peer, two-way pegged sidechains where people can build on a new 2:55 blockchain that has no native token other than Bitcoin. So, the goal here is to maintain 3:04 Bitcoin's monetary policy while radically expanding the technological capabilities of 3:12 one can do with that monetary unit. So, instead of just having Bitcoin for payments, 3:19 we would also have built-on Bitcoin ultra-private protocols such as Zcash and Monero, 3:27 but using the Bitcoin unit of account. Highly scalable, low decentralization, 3:35 high throughput, large block Bitcoin sidechain called Thunder using one gigabyte blocks 3:43 for global cash at a massive scale with billions of transactions a day. 3:52 And that would be the world's cash for small, casual transactions and microtransactions, 3:57 something Satoshi himself was excited about. Satoshi was excited about these microtransactions 4:04 and while the Lightning Network is an excellent and exciting part of this story, 4:11 we would like to see more experimentation and a wider variety of technology 4:15 oriented towards meeting the world's needs for small, casual transactions and microtransactions. 4:22 And a large block version of Bitcoin is the solution for that as a complement to Lightning. 4:29 And there could even be a sidechain focused on facilitating Lightning. So, there is a synergy. 4:35 There is a synergy between Lightning and sidechains. They're not in competition. 4:42 They are synergistic technologies. The introduction of peer-to-peer sidechains would 4:49 facilitate the continued growth of Lightning and other technologies that would be possible 4:57 on Bitcoin sidechains that aren't possible in the mainchain are sophisticated DeFi such as 5:04 peer-to-peer oracles, so prediction markets. So, in addition to privacy and high throughput, 5:14 large block sidechains, we could also have oracles as well as DNS. DNS, in fact, was 5:22 the application that Satoshi himself countenanced as a potentially valuable 5:29 blockchain-based application that isn't money. So, Satoshi explicitly talked about the first altcoin 5:36 and he said that it was great and you can read about what he thought. You can read what he 5:42 thought if you go to the archives of the forum that he posted on in August of 2010. 5:50 The exact name of the thread includes the word BitDNS. That was the name of the altcoin at the 5:55 time. It later became known as Namecoin. And as a Bitcoin sidechain after drivechain is adopted, 6:03 this idea might take root in a way that is much more successful than it has so far. So far, 6:09 DNS on blockchain hasn't taken off. The world is not embracing that yet. 6:15 I think there's some of it going on in Ethereum, but what we want to do is bring all of that and 6:20 much more to Bitcoin. And then we will fulfill Satoshi's view that DNS and blockchain, there's 6:27 a harmony there technologically. People should have a ability to self-sovereign custody, 6:34 custody, this website domain technology that DNS facilitates. 6:42 And there's all kinds of other applications, tools and features that can be built on top 6:48 of blockchain to facilitate the sovereign individual cypherpunk vision of how cryptography 6:55 and blockchain and encryption can enable the human society to have more 7:03 autonomy and independence and freedom through the internet electronically on blockchain. 7:09 There's a big story here that's much bigger than Bitcoin for just money. 7:13 Probably about half of the value in the future in the world, half of the value that's on blockchain 7:20 will not just be Bitcoin layer one. It'll be these sidechains. As I said, 7:24 the Oracle sidechain called Hivemind, the large block sidechain called Thunder, 7:31 as well as a sidechain for privacy called Zside, which is using the Zcash privacy technology, 7:38 but on a Bitcoin sidechain so that you're using the technology of the altcoin Zcash, 7:44 but you're not using their token. You're not using their altcoin. You're not using their 7:49 unit of account. Instead, you're using one of the 21 million Bitcoins. So this is all about using 7:55 Bitcoin's monetary policy, but the technology that currently is only available in altcoins. 8:02 But once drivechain is adopted by the Bitcoin community, then that technology can be cloned 8:10 into a Bitcoin sidechain that will be peer to peer. Right now, every Bitcoin sidechain 8:16 is federated. That's no good. That's why the Bitcoin sidechains aren't successful, 8:21 we believe. We believe that the reason why Bitcoin sidechains aren't successful now 8:26 is that they're still using these training wheels of federations, which is a 15-party 8:32 multisig that controls all of the value of the Bitcoin in the sidechain. And if those parties 8:38 are unfortunately arrested, or something happens to them, or if they collude, there is potential 8:45 risk to that value. So why would anyone put money in a sidechain that uses a 15-person federation? 8:52 In the case of these federations, typically, no one even knows who controls the money unless 8:58 they're inside the clique that set it up. So the goal here is not to have these anonymous 9:04 small groups control things. That's pretty fiat in its mentality and nature. What's much better 9:10 is to have the dynamic global multitude of Bitcoin miners in control. Drivechain places the miners 9:18 in an important role in terms of the security model for the Bitcoin sent to the sidechain. 9:27 Bitcoin already places a similar dynamic of control in the miners, in that if over half of 9:35 all Bitcoin miners decide to attack Bitcoin, Bitcoin would stop working. So drivechain 9:42 doesn't really increase the risk profile for Bitcoin at all, because that risk is already there. 9:49 We're already trusting the miners, in a sense. What drivechain does is it makes use of that 10:00 risk model in a dynamic way to enable these sidechains. It gives the miners the ability to 10:05 handle the security model of these merge mine sidechains, and it enables Bitcoin to have peer 10:11 to peer sidechains instead of federated. That's really the change. As Adam Back would say, 10:17 he's tweeted this, with drivechain, Bitcoin's sidechains become more peer to peer. 10:24 More peer to peer is the key phrase there. One might argue that the federation with 15 people 10:30 is categorically similar to the dynamic federation of thousands of miners around the world. I would 10:38 say they're completely different, but some would say that they're similar and just debatably 10:44 different. But we can at least say that it's better for Bitcoiners to have the option, 10:50 to have the option of using a peer to peer sidechain rather than a federated one. 10:55 I think that once drivechains adopted, if it ever is, then people will only use BIP300 and 11:03 BIP301 sidechains. They won't use federated sidechains anymore, probably. And people will 11:11 use the word sidechain to refer to a drivechain sidechain once drivechain is adopted. 11:18 People will dispense with this practice of using federated sidechains. Currently, there are two 11:23 large Bitcoin sidechains in existence. One is Blockstream's Liquid Network, which is an 11:30 outstanding project created by brilliant people at Blockstream. In collaboration with 60 other 11:37 companies, they operate a network that facilitates confidential transactions and issued assets and 11:45 other kinds of features and tools. However, it only has accrued about $50 million of value last 11:52 time I checked. And the other big sidechain is Rootstock, which is merge mined. So it's closer 12:02 to what a drivechain would be. Liquid is not merged mined. Rootstock also has, last time I 12:09 checked, about $50 million of value. So these two sidechains are like tiny little additions to 12:15 Bitcoin's market cap. Bitcoin has a market cap, last time I checked, around $400 billion. 12:21 So the inclusion of these $100 million sidechain projects isn't so significant economically for 12:30 Bitcoin. But they do increase the narratives that Bitcoin has around technological innovation. 12:36 However, if drivechain is adopted, maybe we would have billions of dollars, tens and hundreds of 12:43 billions of dollars of value in sidechains on Bitcoin, greatly increasing Bitcoin's technological 12:50 narratives as well as its price. And also, drivechain sidechains are merged mined, 12:58 meaning that all of the transaction fees, approximately all of them, 13:01 are sent to Bitcoin miners, strengthening Bitcoin's security, solving, as some would say, 13:09 solving Bitcoin's security budget. So we at LayerTwo Labs, in concert with a global network of drive 13:18 chain supporters and builders, think that a great change for Bitcoin could come from the adoption 13:25 of BIP300 and BIP301. And that's why we meet every Monday and Thursday on Twitter to chat 13:33 about this topic, to explain what it is and how it's cool, and to discuss the criticisms 13:41 that have been made and the very clear and logical arguments against those. 13:49 And we think this is essential for Bitcoin. Some drivechain supporters, 13:53 some drivechain supporters think it's essential for Bitcoin to have the drivechain upgrade. For 13:58 example, Fiatjaf, who created Nostr, the creator of Nostr, has tweeted that it is 14:07 important, very important that drivechain is adopted. And if it isn't adopted, then all of 14:13 the work of thousands of people for 13 years will have been in vain. Those are his words in a tweet. 14:19 So he's basically saying that Bitcoin will fail if drivechain isn't adopted. And some drive 14:26 chain supporters agree with that. Other drivechain supporters would say that drivechain 14:31 is important and that something else like it could be just as good. However, it's the best 14:38 available proposal right now. It could be a stepping stone to other great things and that 14:43 it's appropriate and best that it be adopted, but it's not life or death. So some drivechain 14:50 supporters have a milder approach to their support. And then there are others who are kind of neutral, 14:55 who would say drivechain is interesting and good. The community can go for it or the community could 15:00 decide not to go for it. So there's a whole spectrum of different opinions and styles of 15:06 advocacy for this project. Among those who think that it's essential and urgent, 15:15 they would point to the fact that if Bitcoin were to lose its market cap crown and become 15:23 one of the blockchains that by market cap are not number one, that would be damaging to Bitcoin's 15:31 narratives of network effects, of number go up, of global monetization, etc. I hold that view. 15:41 I think it's vital that Bitcoin stay number one and not just stay number one, but grow. We need 15:46 to grow so that Bitcoin is 100% of market cap. That is really the goal. We used to be there 15:55 back in the day. So it would be great to see a return to unparalleled dominance and the absence 16:03 of any competition for layer one, while on layer two, there would be a huge galaxy of different 16:11 applications and protocols and tools and features. In other words, all of the innovation and growth 16:19 and dynamism of the entire crypto ecosystem could be built on top of Bitcoin if drivechain 16:25 is adopted. That is the vision. It can't be a promise. The future is uncertain. Nothing is 16:31 perfect. But that is the drivechain vision. It's an optimistic vision for Bitcoin becoming 16:38 the base layer protocol of the entire blockchain market. 16:43 For anyone in the audience, if you'd like to come up and chat, 16:46 you could share a question or a comment. You're welcome to raise your hand and come on up. 16:55 Again, this is drivechain Twitter spaces. We chat every Monday and Thursday on Twitter spaces. 17:01 LayerTwo Labs is hosting this. And as you all know from reading Bitcoin, 17:08 is hosting this. And as you all know from reading Bitcoin magazine, LayerTwo Labs 17:14 raised millions of dollars from angel investors to develop technology, 17:21 to promote drivechain and related technology. And it's an exciting time in Bitcoin. 17:29 There is renewed attention. There is a renewal of attention towards layer twos and scaling and 17:37 development and innovation. People would like something to boost the Bitcoin narratives and 17:44 momentum and discourse. So this is an exciting time for that kind of innovation and growth. 17:51 Among the drivechain supporters are some of the most well-known names in all of Bitcoin, 17:56 as well as many people who are just plebs and ordinary Bitcoiners who like drivechain. 18:01 The drivechain telegram group has 700 members. And the videos on drivechain have been viewed 18:08 thousands of times on YouTube. And the founder and CEO of Blockstream, Adam Back, 18:19 whose name is the only name that appears in the body of the Bitcoin white paper. Adam Back 18:26 is a drivechain advocate who has appeared last year two times on stage at Bitcoin conferences 18:33 alongside the lead designer of drivechain, Paul Sztorc. Paul and Adam spoke about drive 18:40 chain at those conferences at Bitcoin Amsterdam and Baltic Honey Badger. And both times Adam 18:46 talked about his interest and support for drivechain and how he likes that it's all about innovation 18:52 and making Bitcoin able to platform more technology and experimentation in a way that is safe, 19:02 that doesn't risk harm to the main chain. The technologies that Dr. Back likes include 19:08 Zcash technology for privacy, as well as the large block technology of Thunder. 19:14 Those two sidechains are sidechains that he's talked about in favorable terms in tweets and 19:19 speeches as technologies that are potentially valuable for Bitcoiners. And he would like to 19:26 see Bitcoin have this playground for innovation. That's a phrase he used in the recent podcast 19:33 that he recorded, hosted by Brad Mills and featuring fellow guests, Jameson Lopp and 19:42 LayerTwo Labs co-founder Austin Alexander. I recommend that podcast. It's really great. 19:49 If you go to Brad Mills' website, which is Magic Internet Money Podcast. Again, 19:55 that's the Magic Internet Money Podcast. You can listen to Dr. Back speak with Jameson Lopp, 20:02 Austin Alexander, and Brad Mills. 20:05 About drivechain and related topics and the history of Bitcoin and the history of Blockstream's efforts, 20:14 great efforts to build out sidechains. They wrote a 2014 white paper on sidechains and then another 20:20 one in 2020 on Liquid. So Blockstream has put out two papers on sidechains and have done a lot of 20:30 great work in building sidechains on Bitcoin. Drivechain would be another step forward for the 20:37 Bitcoin community in the realm of sidechains and innovation. All right, we've got a bunch of people 20:49 in the audience. We always have listeners who also join afterwards to listen on demand. These 20:54 are recorded spaces. I encourage you to raise your hand and come on up if you have a question 20:59 about it, if you're interested in knowing what it's all about, or if you're an expert and have 21:06 a comment or you want to share your personal take. Come on up and chat. We run usually for 21:12 about an hour and a half, so we go from 9.30 to 11 Pacific in the morning here on Twitter Spaces. 21:23 Don't be shy. Come on up. 21:29 Maybe to get the conversation going, I'll find a good tweet to post in the Nest. 22:00 All right, we've got some tweets. 22:06 One of these... Ah, we have a speaker. 22:14 What's up? Welcome to the stage. 22:18 Can you hear me? 22:19 Yes, very well. What's up? 22:21 Awesome. 22:21 How's it going? 22:22 Hi there. Yeah, I just recently was watching some of the interviews done. I especially 22:31 liked the one done with... What was his name? Kevin Rook, I think, just three months ago. 22:39 Yeah, that was great. 22:40 Yeah, it was very insightful. First, when I started to investigate into drivechains, 22:48 I have to confess the topic is a little bit confusing. It's hard to see that it's basically 22:56 all about the standardization of a process, of a sidechain process, and not about a specific 23:05 sidechain at all. I think it would be great if you link the interview with Kevin Rook 23:17 into the LayerTwo Labs playlist on YouTube. I think this would be a good starter. 23:29 Cool. Yeah, it's there. 23:31 Okay, I just started with the one with Adam Beck, and it was a little bit thin, let's say, 23:39 in terms of information. But yeah, that last one really opened my eyes what it's all about. 23:49 I see it. It's on there. If you look at the LayerTwo Labs YouTube channel, 23:56 then you'll see it. I'll post the link, but continue. 24:00 Yeah, maybe I just skipped it in the first go. Okay, thanks. I also had a look at the 24:09 BIPs, the BIP300 and the BIP301. Also, I checked about the process of BIPs. 24:22 Maybe you can explain a little bit where in this BIP process drivechains are currently. 24:35 I saw they are in draft still, and I think the ideas are pretty settled. I heard that, 24:47 apparently, the duration of the lock of the funds in the sidechain actually changed 25:00 as one of the last things in the proposal. But apart from that, it's obviously pretty stable. 25:07 So my question would be, why are the BIPs still in draft, especially 25:15 since you obviously came up with a lot of proof of concepts? And maybe as a deeper 25:26 question regarding the BIP300, I was interested about your thinking and reasoning behind 25:35 how can, let's say, a sidechain that helps onboarding people with Bitcoin or Lightning 25:47 with respect to limited block sizes and full mempools, how can this help if, in the end, 25:59 the people want to own Bitcoin as an asset? Those are awesome questions. So you asked, 26:07 what stage are the BIPs in, why are they in draft, and how does drivechain help with onboarding 26:12 Bitcoiners to Lightning and getting people to own actual Bitcoin? 26:18 Exactly. Because if drivechain takes pressure out of the main chain, the layer one, 26:28 I think it pretty much depends on the wish of people to stay in the sidechain. 26:36 Because if everybody wants to return to layer one, to the main chain, 26:41 I think nothing is solved with respect to congestion in the main chain. 26:47 Yeah. Would be interested in your thoughts. Thanks. 26:54 So the BIPs are in a stage where if we were to try to bring them to activation readiness, 27:05 it would probably take about a year. If the community right now, if everyone were saying, 27:11 let's do this, probably it would take a year. And that's because the BIPs are currently being 27:18 rebased. I'm not a developer, but rebasing the BIPs, as you may know, involves making the code 27:26 ready to be merged into the current version of Bitcoin Core. Drivechain has been around for 27:32 years and it's important for a lot of work to be done to make those BIPs totally cleaned up 27:38 and ready for merging so that there's no inconsistency between the code for the BIPs 27:46 and the code that's already in Bitcoin. So making them merge together perfectly requires rebasing. 27:55 LayerTwo Labs has hired an extremely experienced Bitcoiner to handle that work. And 28:05 once that is done, I think it'll be something that people become aware of, like it'll become 28:11 public, like the drivechain BIPs are totally rebased. The code is ready for review. I think 28:17 that news event will be something that not the general public will understand, but the 28:24 intelligentsia within the Bitcoin community. For example, the people at the Blockstream 28:29 research team, people like that, who are very deeply aware of the code of Bitcoin and its 28:37 specifics, thousands of lines of code, they will be interested in the fact that drivechain has 28:43 been rebased. So that's one matter that's going on right now. That will be resolved in the coming 28:50 months, I think. And then the BIPs will be in draft form until the community decides to finalize 28:58 them and adopt them. Although I think that the fact they're listed in draft form, I'm not sure 29:07 when exactly that would change. It would require someone who's a maintainer of the Bitcoin GitHub 29:13 repo to go in there and edit that page that says that they're in draft. If I'm not mistaken, 29:18 the taproot BIPs were listed in draft even after activation. So sometimes whether something's 29:25 listed as draft is a little bit stale information. But yeah, drivechain is currently draft because 29:31 there hasn't been a complete rebasing completed and other tasks and reviews. 29:39 And there could be people who suggest changes so that it's still in a stage where you could, 29:43 one could suggest a change. And it's all public, open source information. So that's why they're 29:49 in draft. And that's the stage that they're in. And then you asked, how does the drivechain 29:58 process assist with onboarding and lightening? So one of the things that Adam Back and others 30:04 have talked about is that a large block Bitcoin sidechain could bring people into Bitcoin 30:10 at a scale and speed not possible with Bitcoin main chain alone. If we were to have the entire 30:17 world use Bitcoin, it would mean that 8 billion people would have to do a self-custody transaction 30:30 to buy Bitcoin and bring it into their ownership or open a lightening channel. 30:34 And 8 billion transactions wouldn't fit in Bitcoin's block space in terms of those transactions 30:42 and channel openings unless we were to wait decades, like 40 years of waiting. And that's 30:49 with assumptions such as every single block is completely full of only channel openings 30:54 and that sort of thing. So it would take like 100 years for the whole world to come onto Bitcoin, 30:59 which is not acceptable. And some other technology would win instead, unless everyone 31:06 just onboards to custody at Coinbase, which isn't a good plan, because if everyone's using custody, 31:12 then what was the point of the peer to peer system when most people are not peer to peer, 31:17 but instead peer to custodian? So the large block Bitcoin sidechain, as Adam Back would say, 31:24 I believe, is a layer of Bitcoin once it exists as a drivechain that enables people to onboard 31:32 to Bitcoin in a manner that's cheaper and more efficient. And if they want to buy a billion 31:38 dollars worth of Bitcoin, they would do it on layer one. But if they want to buy 50 dollars 31:43 of Bitcoin, they don't want to spend, you know, two bucks for a transaction, which is what it 31:48 currently costs. It costs like a dollar or two to do a Bitcoin transaction last time I checked. 31:54 So there's a need for Bitcoin to have a layer which is more efficient, higher throughput, 32:02 higher scalability, lower fee, lower decentralization. That's the goal there 32:07 is to make there be an optional, an opt in layer on Bitcoin that's cheaper and easier. 32:14 It's kind of like this. If you want to go out to eat and you want to get breakfast, 32:18 you can go to the restaurant in the Four Seasons, some fancy hotel, and you can spend 32:24 80 dollars for breakfast. Or you can go to McDonald's and you can get breakfast for eight 32:30 dollars. So do you want to spend 80 dollars for the highest quality breakfast or do you want to 32:36 spend eight dollars for the cheapest breakfast? So what we want to do with Bitcoin is give people 32:43 that option of McDonald's. The large block Bitcoin sidechain will be the McDonald's 32:50 of Bitcoin. It's cheap and it's fast and it's easy. It's still food, but it's cheap, low quality, 32:58 but it's something. It's much better than just having everyone use Coinbase because Coinbase 33:03 is free and easy, but then you're trusting the government not to take your money because the 33:07 government controls every company. May I just interrupt you here because that's exactly where 33:15 I got stuck with my thinking process. So let's assume there's this sidechain. I don't especially 33:24 call it a big blockchain. It's just a sidechain and it helps with scaling. And people 33:32 obtain the coins there and want to use it in, let's say, for lightning transactions. 33:46 These coins they obtain in the sidechain, they are not Bitcoin, but they are rather packed 33:52 to Bitcoin. So in order for them to actually use lightning then, they would have to change 34:01 it back to Bitcoin. Or as an alternative, there would be a different kind of lightning network 34:08 which uses the other coin or the sidechain coin. To my understanding, whenever there's 34:16 a BIP300 transaction towards the sidechain, this is basically someone who provides liquidity 34:30 for the sidechain, right? But this is not meant to be the average Joe who wants to 34:40 obtain coins of the sidechain, the packed coins, right? Yes. The two-way peg will be for professional 34:48 arbitrageurs in the same way that the futures market, people who trade futures on gold and 34:54 silver and lumber and timber, are mostly professionals and large players. The ordinary 35:00 person doesn't ever buy a timber or coal futures contract. There will be lightning and HTLC and 35:08 swapping instantly for the consumer. They will instantly be able to swap between the main chain 35:14 and the sidechain or the sidechain and other sidechains instantly at almost zero fee. And 35:20 there are technologies that are prepared for that. For example, sideshift. Sideshift is a 35:27 technology, I think, which is designed to facilitate this. It will be very cheap and easy for someone 35:33 to move their money. It'll be as easy as changing your dollars into quarters. Everyone's willing to 35:39 just change from dollars to quarters at almost zero or zero cost. But wouldn't this need a 35:46 transaction on layer one? If you have this sidechain coin and now you want to have lightning 35:54 and maybe you want to... I mean, when you want to use this sidechain coin, I don't know how 36:02 be it C coin or this sidechain Bitcoin, it doesn't matter. But if I want to use it as a lightning 36:10 liquidity or... There needs to be some transaction somewhere, right? And to be... Doesn't? 36:21 No, I don't think so. Not necessarily, at least. So there are multiple ways to do this, I guess. 36:28 But if you check out how Fedimint and Cashu works, then you quickly see that this model 36:36 is actually fully interoperable with just about any chain. So not only you could easily 36:44 create lightning, interoperable lightning-connected wallets with pretty trustless 36:52 LSPs providing a lightning bridge, basically, and you could spend a native balance from a 37:00 sidechain and you could basically either by creating a lightning channel to this LM bridge 37:08 on the sidechain, if it's available, or maybe entering a more primitive 37:16 escrow, time-locked refund escrow transaction on the sidechain with this LM bridge, 37:22 if you want it to be trustless. Or maybe if the LM bridge is willing to take a risk 37:27 because of how the sidechain works, you know, like a federated sidechain 37:35 or something where there is more control over transaction ordering and stuff like that, 37:41 maybe the double spend risk is non-existent, he may actually accept zero-conf transactions. 37:48 And so not only you can do this with this model with sidechains and basically have something like 37:55 MoonWallet. You use MoonWallet, you have an on-chain balance and you use it through lightning 38:00 and you don't even realize you are using it. So basically, it's almost like you have a lightning 38:07 wallet but you don't have a lightning wallet. And that's what this concept really feels like, 38:14 UX way. And not only you can do this with sidechains, but you can actually do this for 38:19 altcoins too, if you really want to. And basically, that way you can have seamless integration to 38:28 lightning payments on a sidechain like this. And there are other ways as well. So in theory, 38:36 you can create a lightning network that spans across blockchains and you can bridge them with 38:46 having nodes that exist on separate networks and are owned by the same 38:55 entity. And these nodes could have uncommitted virtual channels between them and then 39:01 someone just has to figure out the routing between different lightning networks. So it's 39:08 entirely possible that you could have a lightning node, an actual bona fide lightning node on a 39:12 sidechain, and you could still pay an on-chain invoice without doing an on-chain transaction. So 39:18 I just wanted to mention that there are possibilities to get around this and some of 39:23 them are very easy and trivial. Yeah, thanks for the explanation. So what I take away from this 39:33 is that people who are on board on the sidechain will most likely stay on the sidechain, right? 39:41 And from there on, they still can, with all this wizardry, refill their lightning balance, 39:54 but they wouldn't ever need or want to go to the layer one, right? 40:04 They can avoid going to the layer one, yes. 40:07 So like I said, if you know how MoonWallet works, 40:10 you understand that being able to transact, 40:13 send and receive on the lightning network 40:14 does not mean you have to actually be part 40:17 of the lightning network. 40:19 And there are ways to do this rather trustlessly 40:23 if some rudimentary smart contract capability 40:26 is present on the sidechain. 40:28 If, say you have something like Monero, right? 40:32 So Monero has no script. 40:34 It's very dumb in this regard, 40:37 so it can do time of refund contracts. 40:41 It can do some very bad multisig currently 40:45 and with the Seraphis upgrade, 40:47 I think they want to be able to do 40:50 better multisig escrow type contracts. 40:54 But still in a multisig escrow, 40:57 you have a trusted arbitrator, right? 40:59 So you have a counterpart 41:01 and you have a trusted arbitrator. 41:02 And if your counterpart calls you the trusted arbitrator 41:05 or they are the same behind the scenes, 41:08 then you are kind of screwed. 41:12 And so it's not really as trustless or trust minimized 41:18 as you can do with script capable blockchain. 41:24 But even with Monero, it is possible to do, 41:28 to create a wallet that you can use 41:30 as a Lightning wallet basically, 41:32 and have the native asset. 41:34 And there are multiple ways to do this. 41:36 Like I said, the Lightning bridge provider 41:41 can accept zero-coin transactions 41:43 if he is willing to shoulder that risk. 41:46 Or maybe you can put into an escrow contract 41:51 with an amount with it, 41:52 and that is your limit of outstanding 41:58 non-confirmed transactions 41:59 that you are spending over Lightning. 42:01 And as these transactions confirm, 42:04 you can spend again and again, 42:05 because you have sort of this safety deposit 42:09 with a multisig, right? 42:10 So you can't just run away. 42:13 After the Lightning invoice is immutably paid, 42:17 you can just double spend or something like that, 42:19 because you are basically logged in 42:21 with this safety deposit. 42:22 So you can do that. 42:24 And you can also do eCash. 42:26 So eCash can be denominated in anything, 42:29 and the Lightning bridge provider 42:31 may ask you to deposit a certain amount of Monero 42:35 into eCash. 42:39 And that eCash you can spend immediately over Lightning. 42:42 So like I said, even with something as incapable as Monero, 42:48 you can do it multiple ways. 42:50 So with a Bitcoin clone sidechain, 42:55 there is even more options you have. 43:04 All right, thanks a lot. 43:05 A lot of technologies to research for me now. 43:09 Thanks, Yves. 43:12 Thank you for your questions. 43:13 You had said that you don't wanna call 43:14 the large block sidechain a large block sidechain. 43:17 Could you say why? 43:18 Because what it is is just the clone of Bitcoin, 43:22 except that it's a large block instead of a small one. 43:26 So one gigabyte instead of one megabyte. 43:32 Yeah, I share your thinking that it's silly 43:42 that these terms are tainted, let's say. 43:45 And I don't necessarily think that 43:50 that it's good to never rethink options, 43:59 especially if the context changes. 44:02 However, I also think that, 44:09 well, to my understanding, 44:11 the way this so-called block size war turned out 44:17 is actually a favorable outcome for node operators 44:26 or private node operators. 44:28 I mean, the other day I just read 44:34 absolutely enormous amounts of storage you need 44:38 in order to run an Ethereum node and so on. 44:40 And also other big block blockchains 44:47 they suffer from getting too enterprisey. 44:54 And I think when you use the term big blocks 45:03 in conjunction with drivechain, 45:06 I think you always have to make clear 45:09 in the second sentence that drivechain 45:13 allows you to erase a history to a certain degree 45:17 that this big block sidechain is or can be run 45:23 by private enthusiasts. 45:31 And this is not comparable to the blockchain war ideas. 45:39 I think that's pretty important to distinct. 45:43 And if you only say, 45:44 oh, this is a chain with a big block, 45:47 people are misled. 45:51 Yes, many people are scared by the idea of big blocks 45:57 and they think that big blocks are bad. 45:59 But the truth is that they're completely wrong. 46:03 There is a very valuable potential use case 46:06 for large blocks as a layer two 46:08 as an optional way of using Bitcoin 46:13 that no one has to use, but everyone can use. 46:17 It's like, some people like gold bars 46:22 and some people like gold coins. 46:25 And the gold coins are easier to move around 46:28 and you can deal with them in smaller amounts. 46:32 So there's no reason to be prejudiced 46:34 against the small coins. 46:37 The large gold bars are nice for a large transaction 46:42 and the coins are useful for smaller transactions. 46:45 The block size war was decided correctly. 46:50 It was good that Bitcoin's layer one has small blocks, 46:54 but it is a mistake completely 46:57 to think that there is no value proposition 46:59 to large blocks as a sidechain, as a layer two. 47:04 And there is in the very long run 47:07 going to be a complete victory 47:11 by a blockchain that has a multi-layered design. 47:15 And if Bitcoin never achieves that multi-layered design, 47:19 then it is at risk in the long run 47:23 because it must achieve this layered architecture 47:28 where there is an optional venue 47:32 for highly scalable, low fee, 47:35 low decentralization transactions. 47:39 What small blocks achieve on layer one 47:42 is high decentralization, 47:45 meaning that the small block lowers the amount of data 47:50 involved in downloading a full copy of the blockchain. 47:53 And therefore it literally decentralizes the blockchain 47:59 by localizing the activity of validation to the individual. 48:04 So an individual, if he wants to, can validate, 48:07 doesn't have to go to some other place or some other person. 48:11 Instead, at the individual level, validation is possible. 48:14 So that is the definition of decentralization. 48:17 It geographically, it spatially 48:19 decentralizes the blockchain. 48:22 And you're right that large block, 48:25 it's harder to have a full node. 48:27 So there'll be lower decentralization 48:29 in the large block sidechain, 48:31 but it must be available. 48:34 It's kind of like, again, the McDonald's analogy. 48:36 Not everyone wants to eat at the Four Seasons 48:40 and pay $80 a person for breakfast. 48:43 So if Bitcoin only offers that, 48:47 then it's not a system that can scale to billions of people. 48:52 The fees will rise and it'll be unaffordable 48:55 for the average person to do a channel opening. 48:58 If it costs $50 to open a lightning channel, 49:02 no one's gonna do it except the rich people. 49:05 And then Bitcoin will be only for rich people. 49:07 It won't work that way. 49:08 It'll lose its network effect. 49:11 And that's the bad case. 49:13 But with drivechain, all of that is fixed. 49:15 With drivechain, people who want 49:17 extremely private transactions 49:19 can use the Z-side sidechain. 49:21 And the people who want cheap transactions 49:23 can use the funder sidechain for large blocks. 49:26 And those who want layer one 49:28 and not to use any sidechains can do that. 49:30 It's all optional. 49:31 And all of the fees from all of these sidechains 49:34 are paid to layer one miners. 49:35 So layer one has a massive security budget with drivechain. 49:39 We can say optimistically that it'll all work. 49:45 And you mentioned Ethereum 49:46 and how it's expensive to validate. 49:49 You should be aware, as I'm sure you are, 49:51 that the Ethereum roadmap 49:53 is headed towards eventual ossification. 49:56 But before they do that, 49:58 one of the steps in their roadmap is called the purge, 50:01 where they're going to wipe out all of the past data. 50:03 In other words, the drivechain advocates 50:07 believe that Ethereum is targeting 50:10 a design very similar to drivechain. 50:14 And what they're targeting in the long run 50:17 is a small block size ossified layer one 50:21 with a high degree of extensibility 50:23 for peer-to-peer protocols to exist as layer twos. 50:27 In other words, they are targeting a drivechain design. 50:31 And Bitcoin should do it first. 50:35 And Bitcoin should do it as soon as possible. 50:41 That's what we believe as drivechain advocates. 50:45 Because Bitcoin currently has the market cap crown. 50:48 So it has the network effect. 50:49 It has the value. 50:50 If it launches drivechain now, 50:52 then it will win. 50:53 It'll begin to absorb all the technology of Ethereum. 50:57 The drivechain testnet has a copy of Ethereum 51:02 as a sidechain and a copy of Zcash as a sidechain. 51:05 So those are the first two that the designers pursued 51:11 in terms of building out the actual implementation. 51:14 And pretty much all of the good altcoins, 51:17 all the ones that really have any value 51:20 will be copied into sidechains on Bitcoin 51:22 once drivechain's adopted. 51:24 And then those altcoin tokens will go to zero. 51:26 That's the drivechain vision. 51:31 And then Bitcoin's price will absorb 51:34 all of the value from those altcoins. 51:36 Because the only way to create the token on the sidechain 51:40 is to send Bitcoin to it. 51:42 So as the altcoin prices fall, 51:46 Bitcoin's price will go up concomitantly. 51:50 And as a result, it could even happen dramatically. 51:54 There could be a tidal wave of migration of users and value 51:58 because of game theory. 51:59 As soon as anyone in the altcoin community 52:02 sells his token, such as Zcash, 52:06 to buy the Zcash token on the Bitcoin sidechain, 52:10 which is really Bitcoin, 52:12 it causes Bitcoin's price to rise 52:14 and the Zcash token to go down. 52:17 So that exchange rate could actually go all the way to zero 52:20 where the token on the altcoin is worth nothing. 52:23 And the exact same technology is available on Bitcoin 52:27 because then you have Bitcoin's network effect. 52:29 It's such a better product 52:30 to have the technology of the altcoin, 52:32 but with the unit of account of Bitcoin 52:34 because Bitcoin has the lowest volatility 52:38 of purchasing power. 52:42 Moonsettler, please chime in. 52:45 Yeah, I just wanted to comment 52:47 on this big block, small block thing. 52:52 So the interesting thing about that whole bait 52:56 is actually both sides were wrong. 53:00 They were both wrong and they did a lot of damage 53:04 that should have been avoided really. 53:07 And it's not so clear cut 53:12 that it's impossible. 53:14 Why is my hand up? 53:17 So it's not so clear cut 53:22 that you necessarily lose the properties 53:27 that we cherish in Bitcoin if you increase the block size. 53:31 This is not actually a necessary consequence. 53:35 We already know multiple ways to solve the EBD problem, 53:40 the initial block download problem. 53:43 We know how to get rid of all junk. 53:46 And really, it's getting supercharged 53:52 with zero sync research right now. 53:54 So eventually, full validating nodes 53:59 could join the network in seconds. 54:02 They can just download the chain state, 54:05 verify the ZK proof that proves the computation 54:10 that was done by someone 54:13 and know that the state of the UTXO set is correct 54:20 and then verify the proof of work on the header chain. 54:25 Basically, you have a very, very, very high probability, 54:28 very high confidence that you are on the right chain. 54:32 You can do this. 54:35 And this would work with pretty much any block size 54:39 that is not completely unreasonable. 54:42 So I'm not talking about BSV level of delusions. 54:47 So I don't think that these fears are well-founded 54:50 that you hear and this PTSD is reasonable that you hear, 54:54 but I understand the concern that if you go around 54:58 and say you want big blocks, 55:00 then people will just revert to this 2017 55:07 war state of mind and whatever. 55:13 So I just wanted to mention this. 55:16 It's not that small blockers were right. 55:18 They were wrong, of course, as well. 55:23 Interesting to hear you say that. 55:25 I've heard Paul Sztorc speak about this. 55:28 He would say that the block size war 55:30 was won by the right side, 55:31 but that victory led to complacency. 55:38 So because those small blockers won, 55:42 they didn't embrace sidechains as much as they should have. 55:49 Why is your view? 55:51 So do you agree? 55:52 What part of his argument, if you're familiar with it, 55:55 do you disagree with where he writes? 55:56 No, I disagree that there were winners in that war. 56:00 Like, do you agree that small blocks 56:04 are the definition of decentralization, as he claimed? 56:07 Yeah, yeah, that's nonsense to me, technically. 56:11 And also, like I said, 56:13 I don't believe there were winners in that war. 56:16 There were only losers in that war 56:17 and it should not have happened, but it is what it is. 56:23 So, yeah, I think Bitcoin lost big time in that war 56:28 and small blockers were just as strong as large blockers, so. 56:34 Well, what exactly should the block size be, 56:37 in your opinion? 56:39 What size should it be? 56:43 I don't think that an idea of block size exists, right? 56:48 So you can't tell me that there is a fixed block size 56:53 that will just sweep Bitcoin indefinitely, 56:55 and I will agree to that. 56:57 This does not exist. 56:58 It's impossible that such a thing would exist. 57:00 Is it currently, is the limit too high or too low, 57:03 in your view? 57:05 It depends. 57:07 So it depends on how many people need to use Bitcoin 57:12 in a self-serving way and what way they can do it. 57:16 And it also depends on what we have. 57:20 You know, currently, we don't really have 57:26 a true trustless and self-custodial way 57:30 to multiply UTX ownership. 57:34 Right in this moment, we do not have that. 57:37 Right in this moment, if a lot of people 57:39 would try to come to Bitcoin, 57:41 they would not be able to self-custody. 57:44 They would have to be banked, basically. 57:47 You know, this whole thing, 57:49 we just had a little fun with it today, 57:51 that Bitcoin is going to bank the unbanked, 57:53 and I wrote that it was supposed to be unbanking the bank. 57:58 Right, it was supposed to be the other way around. 58:00 So the UTXO ownership is a serious limitation 58:07 that right now stems from the block size. 58:10 And of course, sidechains are supposed to offer 58:17 one way to sidestep this issue. 58:22 But there are all sorts of caveats to this 58:25 that we are constantly talking about. 58:27 So it's not the same. 58:29 Owning a UTXO on a sidechain is not the same 58:32 as owning it on the mainchain. 58:35 And the other thing is that we don't know exactly 58:42 what sort of L2s we can unlock 58:46 that can actually multiply this UTXO ownership 58:49 with some livable compromises. 58:53 And that is why I say, 58:54 I don't know what the ideal block size is. 58:57 I know that if nothing changes significantly, 59:00 and we just have Lightning as L2, 59:02 then the blocks are too small today 59:04 to accept a larger cohort of people, 59:08 or sell certain users. 59:10 If the number of users never grows, 59:13 if this is peak adoption, 59:14 then the block size is just fine, 59:16 probably too big, 59:17 because we see all this bullshit spam onchain, you know. 59:21 I don't like, sorry, 59:23 I don't like JPEGs on Bitcoin blockchain. 59:27 I think it's not a sensible way to use our shared resources. 59:32 So blocks can both be too big, too large, and too small. 59:37 And it all depends on the demand for that block space 59:41 and the economic need that Bitcoin should serve 59:45 and the available technology that we can use. 59:48 And I also don't agree with that. 59:52 That people would not be able to use Bitcoin or would abandon Bitcoin necessarily, if they are not able to own an onchain UTXO. 1:00:03 Because I think what we actually see is that like 1% of Bitcoiners self-custody roughly. 1:00:10 So, or maybe 10, 10 tops, 1 to 10%, let's say. 1:00:15 So 1 to 10% Bitcoiners self-custody, Bitcoin owners self-custody, and the rest is just perfectly fine in custody. 1:00:22 And these are the early adopters, right? So these are the more cypherpunk-leaning people, not the normies. 1:00:29 So all the mass adoption and all the normies, and what you will get is that likely less than 1% will want to self-custody. 1:00:39 So this is the sad truth, and it's very likely that people would be perfectly fine with certain sorts of custodial solutions instead. 1:00:49 Instead of whatever sidechains or altcoins, if the, how to say this, if the price action validates their thesis or basically forces them. 1:01:06 Because altcoins have practically infinite competition, and what we see is that altcoins don't actually tend to keep up with Bitcoin. 1:01:18 Most of them long-term loses against Bitcoin. 1:01:22 And so people notice this, even people who are hardcore believers of Ethereum hold Bitcoin, just in case, as they say, for short- to middle-term madness or whatever. 1:01:34 But if this madness continues, then they will continue to own Bitcoin. 1:01:38 And this is why I'm a bit skeptical about the necessity of defection. 1:01:50 I also see it as a possibility, so I'm not saying it's impossible that people will be fed up with high fees and just defect Bitcoin. 1:01:58 I'm just saying it's most likely they will first defect to custody. 1:02:02 And that's actually pretty anti-ethical, anti-ethos to Bitcoin, in my opinion, and I don't actually like that. 1:02:09 I'm just saying that it's not necessary that they will go to altcoins. 1:02:14 That's about it. 1:02:17 All right. 1:02:22 If I understood you correctly, your view is that drivechain adoption wouldn't necessarily lead to the devaluation of all altcoins. 1:02:37 Is that right? 1:02:38 I'm not sure. 1:02:41 I don't know. 1:02:42 I think it's a dubious claim that it has to. 1:02:46 I think it remains to be seen. 1:02:48 So like I said to you before, if drivechain was activated, I think it would take a decade to see how it plays out. 1:02:54 At least one or two decades to see how it transforms this whole ecosystem to have a full effect. 1:03:02 It will not have an effect immediately, I think. 1:03:06 And I'm not sure it actually gives people what they want from altcoins. 1:03:17 I don't think it actually gives what people want from altcoins. 1:03:21 I think it serves an entirely different need. 1:03:24 And when I hear you say, and I was especially pleased to hear this new narrative gaining more prevalence or being brought forward, that you said the love for innovation, the love for permissionless innovation, and letting this more free is the primary reason. 1:03:53 To activate drivechains. 1:03:55 I think this is the narrative that I don't want to pick a fight with. 1:04:03 I think that is a perfectly fine reason to advocate for drivechain activation. 1:04:09 As opposed to other narratives that I just completely disagree with. 1:04:13 Yes, I understand what you're saying. 1:04:15 So I agree with you because I know what you mean. 1:04:20 I understand you to be, having spoken to you a number of times, I think you're someone interested in technology. 1:04:26 You are not, as a Bitcoiner, primarily interested in its price. 1:04:32 However, I think that drivechain could have a very big effect on Bitcoin's narratives and price. 1:04:42 Because the technological change of enabling peer-to-peer sidechains, of enabling every altcoin to be cloned into a Bitcoin sidechain, that could send all of the altcoins to zero quickly. 1:04:58 I don't think it necessarily will, but it could happen. 1:05:01 And in fact, in the conversation that Brad Mills had on his most recent podcast episode, recorded at Satoshi Roundtable in Dubai with Adam Back, Jameson Lopp, and Austin Alexander, 1:05:17 Dr. Back said that in 2014, when the sidechain's white paper came out from Blockstream, the altcoins went down in price. 1:05:26 That there was a moment in Bitcoin's history where people thought, wow, everything will be built on Bitcoin, all of the altcoins will go to zero. 1:05:38 And I think maybe if drivechain is adopted, that will happen again, but this time it'll happen in a bigger way. 1:05:48 The reason why anything can happen, so I agree with you that it can, I appreciate you acknowledging that. 1:05:56 But I also know that you like the narrative that drivechain should be done for love of innovation. 1:06:03 That is something that I say because Mike Tidwell, the organizer of TabConf, he wrote that in a tweet. 1:06:11 And I feel that is the best tweet I've ever seen on drivechain, where he wrote, I would like to see it done for love of innovation, and I think it would be a bad thing. 1:06:21 And a sad day, he wrote, if drivechain is adopted merely to try to steal value from altcoins. 1:06:31 But in my opinion, and this has been said to me by some people who are more interested in Bitcoin's narratives and price than in its technology. 1:06:39 There are plenty of Bitcoin people who mainly are concerned with its price and narratives and not actually the technology. 1:06:46 They don't really care about privacy, they don't really care about the security budget, they don't really care about peer-to-peer. 1:06:55 They just want the number to go up and, you know, get rich and sound money. 1:06:59 So those people, I think, they will probably get interested in things like drivechain if the flippening comes. 1:07:09 So I think that Mike Tidwell will eventually be disappointed because drivechain will be adopted but not for the reasons that he wants. 1:07:17 It'll be adopted because of the flippening threatening the Bitcoin community with the humiliation and the possibility of the loss of the narratives. 1:07:28 Like if the flippening happens, then narratives are lost, like number go up, global monetization, you know, money moves to one, network effects. 1:07:38 All of these things you can't say anymore. 1:07:41 If Bitcoin isn't number one, you can't say, oh, we have the biggest network effect. 1:07:45 So I'm worried that we'll get drivechain but not for the right reasons. 1:07:49 I know it's a cynical view. 1:07:51 I've been saying more recently innovation is the best. 1:07:55 Because that's what Adam Back says. 1:07:57 He talks about innovation. 1:07:58 He doesn't talk about it doing stuff for price. 1:08:00 Paul Sztorc is the one who does both. 1:08:02 And that's what I like. 1:08:04 Like I agree with his view. 1:08:06 He says that it's good for security budget and for price and for devaluing altcoins and for the innovation. 1:08:14 I agree with that. 1:08:15 Look, I agree with that, basically. 1:08:17 So I think most likely activating drivechains would increase the valuation of Bitcoin, the total value that the network provides. 1:08:27 And I think it would poke a hole in a lot of, I'm sorry, I will call them shitcoins, narratives. 1:08:36 So it just makes it harder to sell a shitcoin with these promises that it will do something that Bitcoin can't. 1:08:47 But I'm also cynical about the reasons why people buy altcoins for real. 1:08:52 So there are sheer narratives and people are buying into these narratives. 1:08:58 Not because they actually want to use that utility or because they believe in it. 1:09:02 No. 1:09:03 They actually just want to be early. 1:09:05 That's what everyone wants from altcoins. 1:09:08 They want to speculate on number go up. 1:09:11 If you can't speculate on number go up in relation to Bitcoin, then it will make no sense to them. 1:09:17 So that is why I say I find the claims that drivechain will kill altcoins in this sense, you know, the speculation sense, dubious. 1:09:28 Because I know that's not what motivates people. 1:09:31 It's not the supposed utility. 1:09:33 In most cases, there might be exceptions. 1:09:36 I acknowledge that some of the altcoins might be exceptions. 1:09:40 They might have an actual hardcore cruel crowd that actually wants to use that utility and that actually is excited about it. 1:09:49 But the vast majority of them is just speculation. 1:09:54 And you actually remove this speculation. 1:09:57 The very thing that most people are interested in with drivechains. 1:10:01 And that's just the one thing I wanted to note because I basically agree with the other stuff. 1:10:07 So like I said, I agree that it will probably increase Bitcoin's value and it will make the creation of new shitcoins a harder sell. 1:10:17 And it might decrease the valuation of some of them. 1:10:21 But I don't think it will remove the speculation from the picture. 1:10:25 Well, almost all of the value of Bitcoin is speculation. 1:10:30 So speculation is everywhere and there's nothing at all wrong with speculation. 1:10:38 Speculation is perfectly legitimate and completely to be expected. 1:10:46 And what the speculation is predicated on is the speculation is all about the expectation of future demand. 1:10:56 So all of the value, I think this is a Fiatjaf tweet that I'm thinking of that I'm getting this from. 1:11:03 That the value of Bitcoin, the value of Ethereum, the value of Dogecoin, it's all people thinking that in the future other people will want this. 1:11:13 But I believe, I think people would say that they believe that ultimately the technology is what really matters. 1:11:21 So at the base of everything is Bitcoin's peer-to-peer design, monetary policy and other fundamentals. 1:11:29 And Ethereum has slightly different fundamentals. 1:11:33 That's one of the drivechain community's insights is that the difference between Bitcoin and Ethereum is much smaller than the toxic maximalist Bitcoiners think. 1:11:44 They think Bitcoin is one thing and everything else is totally different. 1:11:47 But actually, technologically, they're very similar. 1:11:51 And, you know, the toxic maximalists even have a sophistry sort of religion of saying that, well, there's only one real blockchain and it's Bitcoin. 1:12:00 Like, no, Bitcoin is almost the same as Ethereum in many ways. 1:12:04 And in the very long run, these technological differences and their narratives will lead to value accrual. 1:12:14 So, for example, if we look at the Ethereum white paper, the Ethereum white paper on the very at the very beginning in paragraphs, probably paragraph approximately 15, Vitalik wrote, building a new blockchain allows for unlimited freedom in building a feature set. 1:12:36 So when he talks about freedom there, I think what he's really saying is something that he couldn't have said if drivechain were available. 1:12:44 If drivechain had been invented by Satoshi and had been around from the very beginning, Vitalik never would have been able to write that sentence. 1:12:53 And I think he probably would have never launched Ethereum. 1:12:56 So I think that the whole toxic maximalist view that the altcoins are all about speculation and money grab, it's not true. 1:13:05 And as long as Bitcoin lacks drivechain or something like it, this freedom sentence is going to be driving the value accrual of altcoins. 1:13:16 The way I see it is Ethereum is the only threat to Bitcoin in terms of Bitcoin's narratives and market cap. 1:13:25 Like that's Paul Sztorc's view that there's only two blockchains in the world that are genuinely trying to become the layer one for everything else. 1:13:35 So eventually things like Zcash will go away and Zcash will be a sidechain of Bitcoin or it'll be a roll up on Ethereum and there'll be no more Zcash altcoin. 1:13:50 It'll just be a privacy technology that was copied into Bitcoin or Ethereum and then the altcoin will go away. 1:13:57 So that's Paul's view is that there's Bitcoin and Ethereum. It's like the Republicans and Democrats. 1:14:02 Every other party is kind of irrelevant. They're never going to win the presidency probably. 1:14:07 I understand why Paul would say that, but I think there are a lot of people that wouldn't even look at Ethereum. 1:14:15 So if Bitcoin, let's say something happened to it, like it became captured in some way, which most maximalists find unthinkable and impossible, 1:14:29 but I think that's just because they don't actually understand Bitcoin. 1:14:35 And some of the people, a lot of people that are currently Bitcoiners would probably not even look at Ethereum. 1:14:43 So I don't think it's just between the two, but when you are talking about capitalization and network effects and stuff like that, 1:14:57 I can see why someone would come to this conclusion that these are the two that matter. 1:15:03 So what I wanted to mention is not this, this is just a side remark, that freedom is not just measured in features. 1:15:13 So freedom is actually freedom. 1:15:16 There will be altcoins that value their independence from Bitcoin, the Bitcoin consensus, 1:15:24 because they don't think the Bitcoin consensus is resilient enough for what we are trying to do. 1:15:30 And those people will never become Bitcoin sidechains, their crowd will never consent to this, 1:15:36 unless Bitcoin proves it beyond doubt that it is the most resilient and the most censorship-resistant thing ever invented. 1:15:45 In that case, in that far future revelation, they might actually find it a reasonable trade-off, 1:15:53 but I'm not sure if that day will ever come. 1:15:56 I think there will always be an excuse, there will always be a narrative to throw around, 1:16:01 because deep down for an altcoiner to basically come to a Bitcoin sidechain, it means they have to sell their bags. 1:16:13 So they have to dump their bags and try to be the first to dump their bags, because the last one gets nothing. 1:16:21 Basically, the price collapses if there is a consensus on that narrative that they are better off as a sidechain. 1:16:29 So they can transfer their holdings, their bags, their hopes for the future to a Bitcoin sidechain, 1:16:35 it just doesn't work because you can't do that. 1:16:40 You can only sell and buy Bitcoin. 1:16:44 So these are multiple reasons, I think, why it's not preordained and not necessary that everything will become a Bitcoin sidechain 1:16:56 or subordinate to the Bitcoin consensus, especially not in the near future. 1:17:01 So if you are talking about the next decade where this fight may be decided, 1:17:06 if Bitcoin will be able to remain free and will be able to remain number one, 1:17:13 this next decade I don't see a lot of altcoins making this choice or finding it acceptable or alluring. 1:17:22 Just talk to a monetary fund for five minutes and just mention to him that there could be a sidechain on Bitcoin 1:17:30 and there is no need to create a separate asset and then listen to him and you will understand what I'm talking about. 1:17:39 But the one thing I would add to your outlook is it's not that each altcoin community would choose independently 1:17:51 whether or not to migrate to a sidechain. 1:17:53 If one altcoin migrates to a sidechain, every other one is necessarily at risk for the same dynamic. 1:18:04 So as soon as the very first person in any altcoin sells his altcoin to use the Bitcoin sidechain version of his altcoin, 1:18:14 every single altcoin in existence is at risk for the same thing. Do you agree? 1:18:21 I think that's a stretch, so I could probably poke holes into it, but I understand what you are saying. 1:18:31 On the other hand, when I look at concrete examples, so let's say you move a privacy coin to a sidechain. 1:18:39 So what happens is that you have a network, you have people who are fiercely loyal to their bags and their narratives and their community 1:18:47 and they have a great anonymity set and you are starting a new, much weaker consensus as a sidechain 1:18:55 that does not have the anonymity set, that does not have all the infrastructure and markets that they built around it. 1:19:03 And you are expecting them to find that immediately more valuable than where they are and I don't see how that could possibly be. 1:19:11 So let's consider this example. Imagine that Bitcoin launches drivechain and then the Zcash sidechain is created. 1:19:23 Imagine if 1% of Bitcoiners send their Bitcoin to the Zcash sidechain. 1:19:31 Bitcoin has a market cap of $400 billion. 1:19:41 So if 1% of Bitcoiners send their Bitcoin to the Zcash sidechain, the Zcash sidechain has a market cap of $4 billion. 1:19:50 Right there, from Bitcoiners. 1:19:53 So already Bitcoiners alone have created a software with a native token of Bitcoin, but the software is identical in technology, in code, to the Zcash altcoin. 1:20:07 So the Zcash sidechain now is $4 billion of market cap and the Zcash altcoin has a market cap of like $1 billion. 1:20:18 So I know that the Zcash altcoin has a security model of issuance maybe and it has a different economic security model. 1:20:29 But let's just suppose for the sake of simplicity that the transaction fees on the Zcash sidechain are greater than all of the miner revenue on the Zcash altcoin. 1:20:43 So let's just suppose that the security of the Zcash sidechain is greater than on the altcoin. 1:20:50 So you're saying that they're loyal to their bags, but these privacy people, they want privacy and they also probably want utility of a stable purchasing power. 1:21:01 So I think they would all go over. 1:21:02 The only person who's loyal to Zcash might be the founders. 1:21:06 That's one of the things Paul always emphasizes is that there are different groups of people in an altcoin. 1:21:11 There are the founders, there are the investors, and then there are their actual technology users, people who really want the privacy. 1:21:20 And those people, they're what matter. 1:21:22 And if they're going to come to whatever blockchain is best, it's like Fiatjaf, he's an actual Bitcoin user. 1:21:29 He has tweeted, if another blockchain comes along that's better than Bitcoin, I would be there already. 1:21:36 In other words, he's saying, I am not loyal to Bitcoin. 1:21:40 I'm not a Bitcoin forever person. 1:21:44 He wants to use the best technology. 1:21:46 So I think one day, you know, either Drivechain will be adopted or maybe he'll say, I've decided like Hasu and, you know, Eric Wall and all these other people, I've decided just to kind of orient myself towards Ethereum because Bitcoin has these problems, doesn't adopt Drivechain. 1:22:05 It doesn't have peer to peer sidechain. 1:22:08 So it's going to eventually fail like that. 1:22:11 So I think I think you should maybe talk to some of these people because, for example, let's say they even believe that they would have the same set of anonymity set on a sidechain to Bitcoin. 1:22:32 Let's say they somehow you could convince them that Bitcoin not having a tail emission does not jeopardize the long term security budget. 1:22:44 Let's say you could move all these aside. 1:22:48 They would still they would still think that the way ASICs and the whole energy market relations that are that Bitcoin is working so hard to build with the states and the energy grids, they are still a strong force for basically pushing Bitcoin towards full capture. 1:23:13 And the full case EML enforced on chain and and everything becoming fully, you know, controlled and surveilled that is going on Bitcoin. 1:23:27 Even if all the rest is out of the way, they will still believe this and they will still be fiercely loyal to their independence for their consensus from Bitcoin and its ASIC fleet. 1:23:40 So that's why I'm saying it's not as simple, I think, but it's also not impossible that that 18,000 of the 10,000 shitcoins just cease to exist. 1:23:55 I don't know. 1:23:56 I'm just saying that there might be a few exceptions that will not be so easy to pursue. 1:24:03 Of course, of course, there will always be something being done for whatever reason. 1:24:10 But in the in the market for money, there are there are powerful network effects. 1:24:17 The network effect power is stronger in money than any other market. 1:24:21 So. I think the Zcash people, they want to move their money around in a way that is as private as possible. 1:24:31 So if the privacy guarantees are strong. 1:24:35 Then they'll move over to the more stable unit of account, which is Bitcoin. 1:24:39 Now, I agree with you that if they have concerns about the mining and if they think that the Zcash, if the Monero people think that the Monero mining technology is better. 1:24:50 They might use that or if they or, you know, people believe proof of stake is actually more secure than proof of work, especially long term, that it is it is something that is more in line with the ethos that the holders and the users should be able to deal with a hostile attacker than proof of work. 1:25:19 There are people out there, not not a few people that firmly believe this, and you will not be able to convince them to come to a sidechain where they are ultimately not only they are subservient to Bitcoin's proof of work and be able to deny service or get captured through that. 1:25:38 You know, if everything is a Bitcoin sidechain, then someone only needs to capture Bitcoin to capture everything. 1:25:44 That's what I meant when I said the freedom part is not just the freedom of innovation and the freedom of doing new cool stuff, that the freedom might be literally freedom from Bitcoin and Bitcoin's consensus and then the Nakamoto consensus. 1:25:59 And this weird, weird world, this weird fiat world we live in, where basically cheap manufacturer energy production on the massive scale and the financial markets are all in control of our fiat overloads and Bitcoin is basically betting everything on that, that making it expensive. 1:26:23 In, I don't know, kindergarten terms, making it expensive to capture Bitcoin will be a victory over the very people who basically create this money for free and who already control everything that Bitcoin depends on for its, you know, consensus and a lot of people out there don't agree with this. 1:26:47 That's why I said some time has to pass, the Bitcoin narrative has to be validated by real world events and a test of battle probably. 1:27:00 And before that happens, I think a lot of people will simply not be convinced that this is a good idea to bet everything on Bitcoin and then be subservient to its consensus. 1:27:17 Well said. 1:27:20 Well said. 1:27:25 Could you say a little bit more about your perspective or comments on claims that proof of stake is long term superior than Bitcoin? 1:27:40 What were you referencing there? 1:27:42 And also, could you comment on the Monero claims about Monero's mining being not captured in comparison? 1:27:51 I'm not sure I can advocate for that very strongly because I'm not sure that is actually correct, but they firmly believe so. 1:28:00 So they think that ASIC resistance is the key to ensure that this industrial scale mining centralization that Bitcoin enjoys does not happen because they believe that if you concentrate the hash power, especially so much integrated into the energy infrastructure, then it's impossible to hide it. 1:28:24 If the state wants, then it can capture it and it can control it. It can coerce it into compliance and therefore they can remove all privacy and self sovereignty from the chain. 1:28:36 That's the thesis they have. 1:28:38 I'm not sure if using general purpose hardware is a guaranteed way here, but I don't want to get too much into this. 1:28:49 So basically they have this thesis. They have not been dissuaded from this thesis since 2015, so it's unlikely they will be dissuaded until something breaks. 1:29:01 And what I wanted to mention, because I have to go soon, is the way I see proof of stake and proof of work. 1:29:10 The most important distinction between the two is what can the community do if there is a super majority attack, if there is a super majority cartel collusion and censorship happening. 1:29:27 And basically stakes have identity. From the purposes of computer code, the client we run, stakes have identity. 1:29:37 We can target the bad actors, we can write a few lines of code and we can basically eradicate them in a targeted way. 1:29:50 You can do the same thing with proof of work. 1:29:53 So I have done some calculations on this and it comes out and this does not mention the host of other properties that are different and why I think proof of work is superior. 1:30:05 This just deals with the very specific cost, the probabilistic cost of an attack and the likelihood of failure of said attack. 1:30:17 And I think there is a good argument to be made that proof of stake actually might be, from this perspective alone, superior to proof of work where hash power does not have identity. 1:30:30 So you can target miners, you can target the attacker miners specifically in the Nakamoto consensus, you can just fold them off. 1:30:38 You can punish all the miners collectively and you can reset your network security. 1:30:44 And you can basically eliminate the cost to a new attack with a different hashing algorithm that is totally retarded. 1:30:53 Or you can devolve from a decentralized consensus to a more centralized one by some signing committee of Bitcoin greybergs or developers, well-trusted personals who would try to coordinate an effort. 1:31:11 But this would be completely anti-ethos to Bitcoin again. 1:31:16 So it would be a loss again. 1:31:18 So it's very hard, very difficult to deal with 51% protection. 1:31:22 It's not that expensive to get it together, especially if basically the miners are doing the heavy lifting and they are concentrating themselves. 1:31:31 So I'm very much in favor of proof of work. 1:31:34 I love Bitcoin. I want it to work. 1:31:37 But I acknowledge that the people who say that proof of stake actually has a higher cost and a lower probability for capture, 1:31:46 assuming assumptions about how the community behaves and how they can reach consensus, 1:31:52 I think there is something there. 1:31:55 And I think it remains to be seen which one will actually work. 1:32:00 And we will never know if no one ever moves with the capability to capture Bitcoin. 1:32:05 No one ever moves to actually capture Bitcoin. 1:32:07 Then we will never sadly learn which one is the superior. 1:32:13 And also, if no one tries to capture Ethereum, right, 1:32:17 Ethereum already shows serious problems with this whole concept of staking pools and centralization and the map boost and whatever. 1:32:28 I don't want to get into too deep. 1:32:30 But the point is both can fail and we don't know which one will prevail or maybe a hybrid will be in the future. 1:32:40 We don't know. And I'm trying to keep an open mind. 1:32:43 But I love proof of work more and I wish that it will succeed. 1:32:49 So I'm sorry I have to go. But it was a nice talk. Thank you. 1:32:53 It was great talking to you as always. Thank you. 1:32:55 Well, this is the end of our chat today. 1:32:58 Thanks to everyone who spoke. It was a fun episode. 1:33:01 We'll be back on Monday. 1:33:04 This has been Drivechain Twitter Spaces hosted by LayerTwo Labs. 1:33:09 See you all next time. 1:33:12 Thanks to those who spoke.
