0:07 Hello, and welcome to Drivechain Friday Conversations. 0:14 Today is July 7th, and we're excited for another weekly chat about Drivechain, 0:20 which is Bitcoin Improvement Proposal 300 and 301. 0:28 These are recorded spaces. We do them once a week. 0:32 We are LayerTwo Labs, and we are advocates for BIP300 and 301, 0:40 which we think is an extraordinarily powerful upgrade for Bitcoin, 0:44 bringing potentially immense value accrual to Bitcoin, 0:49 potentially immense increases in adoption of Bitcoin, 0:55 as well as transaction fee revenue for miners, 1:00 potentially immensely growing. 1:03 Drivechain has solutions for all kinds of users and all kinds of interests. 1:09 Everyone who is interested in promoting Bitcoin and encouraging its use 1:14 would benefit in many different interesting ways from Drivechain adoption. 1:19 It's a very powerful idea, enabling people to get what they want, 1:24 whether they want larger blocks or more privacy or more programmability, 1:28 oracles, DNS, all kinds of innovation and experimentation could be built on Bitcoin 1:35 in a way that enables Bitcoin's mainchain to be stable and conservative and small block, 1:42 while sidechains exist in a very successful and economically powerful way, 1:48 contributing to the number go up of the token. 1:54 Because all of the sidechains and the mainchains share monetary policy and share hash rate. 2:04 So, as Bitcoin grows, the sidechains would all be sharing the same monetary policy 2:15 and contributing to that growth. 2:18 Welcome to the stage, Paul. 2:20 Everyone's free to come on up and ask questions. 2:23 Welcome to those who've joined the audience. 2:26 You can come on up and ask questions, share comments and thoughts on Drivechain. 2:32 Happy Friday, Paul. 2:36 Hello, happy Friday. 2:43 We've had a lot of really great discourse on Twitter and in the Telegram group. 2:48 Thank you for joining. Welcome to the stage. 2:53 We love it when you join and bring your questions and comments. 2:56 What's on your mind? 2:58 Hey, guys. Happy Friday. 3:01 I had a question, Paul, for you about the, you know, 3:07 I'm required for hash rate escrow for like a sidechain withdrawal. 3:12 I think I heard you say at one point that the current proposal is something like three months. 3:17 Is that right? 3:20 That is. It's correct. 3:23 But the timing is kind of hard to understand sometimes because... 3:27 It's like three months of consistent, like, yes votes, right? 3:31 Right. And it's kind of like there's a train leaving, you know, like New York and going to L.A. 3:37 and it takes three months to get there. 3:40 And so if you miss the train, it can be six months. 3:42 And then if the trains both move half as slow, it can be, it could theoretically be 12 months. 3:49 Yeah, sure. 3:50 Yeah, I was thinking about this the other day. 3:52 I was thinking about other peg-in mechanisms and, you know, something that I realized was 4:02 even if you had, like, say that you have a really good, like, zero-knowledge proof, like, verification opcode, right? 4:14 You could, you know, like the original dream of the sidechain paper with, like, SPV proofs 4:21 was that you would, like, get a lightweight SPV verification 4:28 that a withdrawal conformed to, like, the consensus rules of the sidechain 4:32 without actually having to, like, validate them on mainchain. 4:35 But then the problem there is that you don't know if that transaction is actually part of, like, the longest sidechain 4:43 or if somebody can, you know, forge a proof with, like, enough hash power. 4:49 And I was thinking that you might actually have a really similar problem 4:52 even if we had, like, some ZKP system. 4:55 And so you would need some way of letting the users of that sidechain, like, intervene in a withdrawal that's gone bad. 5:06 And I realized that a kind of neat attribute of using hashrate escrow for sidechain withdrawals 5:13 is that if you have a really popular sidechain, it's, like, super valuable. 5:19 You know, everybody in the world is using it for coffee payments. 5:22 There's a lot of economic value there. 5:25 And the current set of miners decide to collude and steal from that sidechain. 5:30 Like, a thing that you could do is you could raise a bunch of money as those sidechain users 5:36 and go buy a bunch of ASICs and become part of the hashrate and actually, like, fight back on it. 5:43 Right? 5:44 And really, you can either rent them or you could actually cut a deal with the other miners. 5:48 Yeah, like, pay the miners more. 5:50 Say, like, hey, you know, I'll bribe you to not do this. 5:54 Yeah, that's a very good game theoretic analysis. 5:57 In fact, there's a word for this, but I can't remember exactly what it is. 6:00 But it's strongly related to Tom Schelling's famous Schelling salience idea. 6:06 In particular, the withdrawal destination has to be declared up front. 6:11 So you have to say, I'm withdrawing these coins. 6:14 I'm taking 14 to this address, 3 to this address, 12 to this address, 12.5 to this other address. 6:21 So you have to declare that in advance. 6:23 And yet, no one really knows who will own what hashrate or who will find which blocks over the next three months. 6:31 So actually, the miners who want to steal face a weird little conundrum. 6:37 And their coalition can collapse because it's going to be very easily melted down and reformed. 6:43 So the whole drivechain idea is just that this is a very, very accurate measurement 6:50 of whether or not the miners as a group give the whole sidechain idea as a group the thumbs up or not. 6:57 And the reason why I built it like that is because my view is just that the sidechain-enabled Bitcoin 7:05 will have a higher market price and more net present value of fees total than one that does not. 7:12 And so then the miners will just be like, well, we really cannot. 7:15 They'll be in a position where they just really cannot. 7:17 They'll feel as though they cannot miswithdraw the coins ever because it'll be like a nuclear war. 7:24 And I put this in the original November 15 post, 7:27 the guys with the nuclear warheads who are shooting bows and arrows at each other. 7:30 And they're like, it's a bridge too far. The retaliation would be too great. 7:35 So yes, that's exactly the line of thinking that I used. 7:44 You can see for yourself, I'm sure you've noticed it. 7:48 I'm sure it's very apparent to you now that people have this kind of obsession with the ZK proof thing. 7:55 It's like this obsession that the miners, we want to keep the miners on a very short leash. 8:00 We want to make it impossible for them to ever even be able to steal. 8:04 But as you've pointed out, this is kind of a fool's errand because it's not even so much breaking the rules of the sidechain. 8:10 It's like, which sidechain is the longest? Was something hidden from me later? 8:14 So I have this emphasis on auditability instead that is very different. 8:18 It's very, very different. And in fact, me allowing the miners to steal, 8:22 that's just the loose coupling that gets us away from the criticism 8:26 that drivechain is a block size increase or something. 8:30 Because it is not a layer one block size increase in the slightest. 8:33 But it does solve the problem for people who wanted to opt into larger blocks. 8:39 So it's a long answer. 8:41 I also wonder if you had, let's just imagine a magical opcode. 8:47 Call it opmagic. I don't know how it works. 8:51 It's magic, but it lets you do a trustless peg out. 8:55 If your threat model is that the miners are actively hostile, 9:02 like a super majority of the miners are actively hostile to your sidechain, 9:07 then it seems that if they had an opcode, 9:10 then they could actively reorg blocks that used opmagic 9:15 to process withdrawals from your sidechain. 9:18 So either the miners are not actively attacking your blockchain, 9:25 your sidechain, or they are. 9:27 And if a super majority of miners are actively attacking your sidechain, 9:31 then you're kind of screwed no matter what. 9:33 Yeah, you're absolutely correct. 9:35 You have the full expert level understanding of it. 9:41 I mean, when I was designing it, what I did is, 9:43 literally, I remember doing this. 9:45 I had a blank piece of paper, and I drew a line down the middle. 9:48 And on the left, I kind of put, 9:50 what would everyone want to be happy in the small blocker camp? 9:54 They don't want to have to audit a lot of data. 9:57 So it has to be the case that they could ignore the data, 10:01 the data of the large block sidechain. 10:05 It has to be the case that they could ignore that. 10:07 And then I thought, well, what do the large blockers want? 10:13 They want a different blockchain with larger blocks. 10:15 And I thought, what are they willing to give up? 10:17 They are willing to give up SPV mode. 10:22 And they are willing to – 10:24 So I kind of thought, like, how do we bridge this gap? 10:27 And I was just kind of, like, literally writing things on each side of the page. 10:31 And I was like, well, already the small blockers don't mine. 10:37 No one mines, so mining is not in the left column. 10:41 And we can just have – 10:42 And then on the right side of the column, I thought, like, 10:45 well, what if 51% attacks the sidechain? 10:48 Won't those people, the large blockers, feel bad about that? 10:51 But then on the right side, I had already written or something, like, 10:55 if 51% turns against – 10:58 These people already buy – 11:00 They're already into believing that 51% of the hash rate is not destroying Bitcoin. 11:04 So it's kind of, like, more or less how I came up with the idea. 11:08 And the fact that it's easier for miners to steal from the BIV300 sidechain, 11:15 which is the truth, that's true. 11:18 And the critics point that out, and they're right. 11:19 But what they don't really point out is that that's why it's three months. 11:23 And that's why all the outstanding activity is pre-compressed into just one hash. 11:29 So it's just one hash every three months. 11:31 So that's sort of supposed to offset the fact that it's easier for them 11:37 to just kind of arbitrarily take the coins and to withdraw them to any destination they want. 11:43 But the three months and what you just described about the strategic instability, 11:47 they'd have to organize this coalition in advance, this 51% coalition in advance, 11:52 if the coalition fails, they'll be at the very least sort of shamed and humiliated. 11:58 The mining pools, the only thing they own is their brand. 12:02 The underlying clients, the hashers, the people with the ASIC chips, 12:06 they can switch at any moment. 12:08 Now, would they switch because of this? 12:10 Like, the pool could say, hey, I'm trying to get you more money. 12:12 Unclear, but the only thing the pools have is their brand. 12:16 And for people to even talk about doing this, I think, would be itself subversive. 12:21 And even if they succeeded, they would just be, so, yeah, so this is me rambling, 12:25 but I think you have a very, you know, A-plus, basically, 12:32 understanding of what I was thinking when I made it, which was just, 12:36 this is something that will help resolve the dispute of the block size war. 12:40 The small blockers will get what they want. 12:42 The large blockers will get what they want. 12:44 No one will get – no one will be harmed at all. 12:49 It turns out that was a little naive because actually a lot of people had made a little, 12:52 something of a career out of fighting the block size war, 12:55 and a lot of people had made a career out of like, you know, 12:58 they're like professional defenders of Bitcoin, 13:01 and people have worked on similar, like maybe what you might call competing ideas. 13:07 So there were still, there was still this group of people who are harmed. 13:12 These are enemies of Bitcoin, enemies of Bitcoin's success, in my view, 13:17 who are harmed by this idea, but it ultimately didn't matter 13:20 because the large blockers decided to declare war and fork off, 13:24 first with the SegWit2x and then with BCH, 13:27 and as a result no one became interested in like a win-win solution to this problem, 13:32 and it sort of just languished, and that's the history of the idea. 13:35 Yeah, another, and the reason why I, you know, 13:39 started by asking about the time limit was when I realized that 13:44 a strength of hash rate escrow is that you have a time window 13:51 during which you can go strike a deal with the miners, 13:56 or go rent hash power, or go buy hash power, whatever. 14:00 It actually made me think, you know, maybe that period should be longer, right? 14:04 Like I originally thought like six months was too long, 14:07 and now I'm wondering if three months is too short, you know, 14:10 especially if you can do like cross-chain atomic swaps 14:12 to like get liquidity out of the sidechain, right? 14:15 Like I imagine that, you know, the people who would actually be doing 14:20 sidechain withdrawals might be like exchanges or service providers, 14:25 and you would just go buy your sidechain coins from them, right? 14:28 It would be something like that. 14:30 Well, I can, this is an interesting point. 14:32 So what I was thinking, when I first designed it, I made it two weeks, 14:36 and I thought this is so long, and what I was thinking of 14:39 was two events that had happened recently, relatively recently, 14:42 in Bitcoin's history. 14:43 They were recently, from my point of view, in 2015. 14:46 And one was the LevelDB lock database incident 14:51 that had like just happened in July, 14:54 and that one was a total freak surprise 14:57 that happened at like 2 a.m. Eastern time or something. 15:00 Maybe I'm not remembering that detail correctly, 15:02 but the point is it was a complete surprise, and no one knew. 15:05 Like Luke Dax Jr. was just like on the IRC chat saying, 15:08 like, LOL, Bitcoin has forked, and like no one had noticed. 15:12 But even still, even despite this kind of emergency surprise attack, 15:17 this issue was resolved. 15:19 This issue which had to resolve, this was like a relatively complex situation, 15:24 and it was resolved within five or six hours. 15:27 And then previously there was a value overflow or value underflow incident 15:32 where like 2 billion Bitcoin had been created. 15:34 That was a long time ago. 15:36 But that one also was a surprise, and someone just posted a Bitcoin talk, 15:39 and then they had to write, they wrote new code and shipped the thing, 15:43 and that was resolved within five hours. 15:46 So I was thinking about that, and I thought two weeks is a long time. 15:50 And then I went to Scaling 3 in October 2016 in Milan. 15:55 After having presented on scaling via sidechains, 15:59 I did some presentations, and then people were meeting and talking with me, 16:02 including people like Adam Back, Matt Corallo, people who were great people, 16:08 and they were talking about the idea. 16:10 And they asked why it was two weeks, and I explained to them 16:13 about what you were saying about how you could swap out instantly 16:16 so it doesn't really matter. 16:17 So the more time is more security, but it's kind of free 16:21 because time value of money. 16:23 And so they said, well, why not make it longer? 16:26 And that's when I decided to just make it three months 16:28 because I was like it doesn't really make any difference. 16:30 And then what happened after that was as years went by, 16:33 I realized that none of the critics really knew anything about Drivechain at all. 16:40 So then I started to second-guess myself. 16:42 I said I made it three months just because someone made a comment, 16:45 but none of these people really get it. 16:47 And I was kind of like, so I kind of, the timing thing, 16:50 I kind of go a little bit back and forth on, 16:52 but I really do believe that there is no actual cost. 16:58 So to address your last point, what I really think will happen 17:03 or could happen is that the people who, when you swap out instantly, 17:09 who's collecting those coins? 17:10 They're going to clump up on certain individuals, 17:13 and these are the individuals who are either the most patient 17:16 and they think the risk of the sidechain of BIP300 withdrawal failing is the lowest. 17:22 So these coins are going to be changing hands. 17:25 Some of those people could themselves be miners or mining pool operators. 17:29 So just in the very next instant, over the next whatever it is, 12 hours or so, 17:35 all the withdrawals will be piling up in the hands of whoever it is out there 17:41 that thinks that they can get them across BIP300 the honest way, 17:46 across the withdrawal the honest way. 17:50 And so it's kind of like very quickly, they'll just be already, 17:54 that idea you expressed before about people negotiating a coalition, 17:58 it's kind of like the coalition will already be pre-made, 18:01 the coalition of people who want to fight for the honest BIP300 withdrawal. 18:08 They'll already have kind of opted into it in exchange for a tiny yield. 18:13 And so it's kind of like I still now think like maybe I made it three months 18:20 and maybe it was too long because remember it's three months 18:23 if 100% of the hash rate is participating in every withdrawal. 18:28 And then still you can miss that one. 18:31 They can be going like a Mussolini fascism train on time. 18:37 They could be going every three months. 18:39 And if you just barely miss one, you really have to wait six months. 18:43 So I kind of thought it was pretty long. 18:44 But yeah, you're right. 18:46 A lot of people don't grasp that only specialists will be using the BIP300 withdrawal. 18:53 Regular laypeople will just be swapping out. 18:59 Yeah, and another idea that I think is really interesting, 19:02 it came up in a thread that I was on, I believe you were on, 19:07 and then John Light was on. 19:08 One of my evergreen concerns that I had had with drivechain had been over time 19:20 if a miner wants to make sure that they are processing the correct withdrawal 19:28 or just doing right by the sidechain, 19:33 do they have to run very computationally or bandwidth or data intensive processing 19:41 in order to validate those sidechain rules 19:44 and make sure that they're picking the right proposal? 19:46 And a thing that John Light said that I thought was really interesting was, 19:50 so you have that dynamic maybe playing out, maybe not, but maybe playing out. 19:55 And then on the other side of it, with things like Stratum V2, 20:00 we really want individual miners to be doing their own transaction selection for blocks 20:06 instead of having a small number of pools deciding what transactions get into blocks. 20:13 And the thing that John Light said that was kind of a big unlock for me 20:17 was you could always have some ZK client that's really inexpensive to run 20:25 that, you know, like if... 20:28 If Paul is a proponent of the big block sidechain, and he wants to make sure that all of the miners process his withdrawals, 20:37 then the economic incentive is there for him to spend all the processing power on producing, you know, ZKPs or something that are very cheap to validate by individual miners who are running Stratum V2. 20:51 So, you know, like we can use some of the new moon math to make it still very cheap for miner decentralization to move in the right direction while still having, you know, really complex sidechain rules that people don't actually need all the data for. 21:08 So I thought that was just a really interesting point that I hadn't seen expressed or talked about, and it allayed one of my bigger concerns around drivechains. 21:21 I don't know if that made sense. I haven't had enough coffee yet today, but it's interesting. 21:37 Paul, did you have thoughts on that question? 21:46 I don't even think it was a question. I think I'm just saying it out loud. 21:50 Maybe he's disconnected for the moment, but those are great thoughts, Reindahl. 21:56 Reindahl, do you share John Light's interest in a privacy sidechain being an exciting thing? Do you think that has potential? 22:06 You know, if let's say hypothetically drivechain were adopted as soon as possible, so, you know, 12 months from now, the, you know, perhaps the privacy sidechain with zero cash technology would exist or something like that. 22:23 Do you think maybe the privacy altcoin community and just, you know, do you think generally there could be a big adoption of the Bitcoin privacy sidechain in your view? 22:34 Or what are the, you know, the things that would make you feel that might happen or might not happen? 22:41 So I think the mistake would be to make like a privacy sidechain that's just like the privacy sidechain. 22:51 I think it has to be a sidechain that's like very desirable for some other reason and then has privacy built in. 22:58 So if we did a sidechain that was really optimized for payments and you can do like lots of very low latency micropayments, you can do, you know, your daily coffee purchase. 23:11 It like replaces lightning. It does the thing that lightning wants to be, but without all of the liquidity provisioning requirements. 23:21 And it just so happens to use, you know, ZK shielding or some other like privacy technology. 23:28 I think that makes sense. Like one of the problems that I have with kind of privacy coins is that the anonymity set is all people who decide to use that privacy coin and not something else. 23:42 Right. Like if the number one feature for some network is that it's like the privacy thing, then your anonymity set is like the people who chose that as their primary feature. 23:54 If instead it's like, hey, the reason why I'm using this sidechain is because it's the best thing for payments. 24:00 And it just so happens to have really, really, really good privacy. 24:04 Then you kind of get like a more useful anonymity set to sit in that that's like bigger and has more diverse payment activity. 24:16 And. Yeah, I mean, it's like. Yeah, totally. 24:23 I just wanted to say that I heard you the first question, but for some reason, the mic wasn't working. I don't really know why. 24:32 So I had to restart. But the question about is if do miners have to validate sidechains? 24:41 The answer is that it's like this. The whole framing of the question is wrong. 24:47 And it's an unfortunate thing because the you have to separate everything to two columns again, which is that the column on the sort of left is like what the small blocker column of someone who doesn't want the sidechain. 25:03 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. 25:13 They want the withdrawals and deposits to work. So we have to care about that person. 25:18 So it's an idea of giving two people, two groups of people what they want, even though they have a dispute. 25:24 And if you don't think about it that way, then I don't think any of it will make sense to you. 25:30 And I think that's what a lot of people don't don't understand. I think you get it. 25:33 But I think so. The answer is. That do miners have to validate the side? 25:40 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 merge mining fees. 25:51 One hundred percent or ninety nine point nine percent, whatever the fees minus the cost of the notice of the effective, all of it without doing any of that. 26:00 But if they don't do the withdrawals the right way, then users will not really be using sidechains. 26:07 As I say, the withdrawal. How do I know that I actually withdraw the coins that are sent into the sidechain? 26:15 And if I own some over there, how will I get them back? 26:18 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. 26:36 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. 26:51 And every single block and in every single block header, in fact. 26:56 So the way the question is sometimes, as with many drivechain questions, when I answer it, it's actually misleading somewhat to people, even though I'm doing my best to answer it honestly. 27:10 Because I'll start talking about all these things I do to make it easy to validate. 27:14 But when push comes to shove, the answer is that no, no one has to do any validation of the L2 at all. 27:21 It's not mandatory at all. 27:22 And yet we have to point out that what the miner can do is they can just assume that everything's working until enough people complain. 27:31 Then, just like anyone who investigates anything, they could start to maybe run the sidechain node in SPV mode, which costs almost nothing, a few megabytes per year of block space to check the headers. 27:48 And then if they wanted to, they could start up a full node and sync like a pruned node or an assumed valid node or something or a ZK node, exactly as you were saying. 27:58 They have an enormous continuum of possibilities open to them. 28:04 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. 28:20 It's like you're investigating a murder and someone says, well, I have HD video on my video camera. 28:25 I have the video for the last 10 years, and I have a video of the person, and I'm an unimpeachable witness. 28:31 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. 28:39 But when I do that, that makes me look like I'm saying that, oh, no, no, it's going to be really easy. 28:44 But that's not – when push comes to shove, the answer is that no one has to do this. 28:47 But the easier it is, just the harder it is, the more of a deterrent it is to – 28:52 Well, I mean, yeah, and I think the thing that's important, right, is that there's steps that might take progressively more resources but give increasing fidelity to let you – 29:07 if there is some dispute and if there's a big Twitter hashtag campaign because the wrong withdrawal is happening, you can go find out. 29:17 And you don't have to go from zero to now I have to run a big block node. 29:23 There's steps along the way. 29:26 And there could totally be market solutions to this, right? 29:30 The same way that in other chains there's now kind of third-party block producers that maximize MEV. 29:39 I'm not saying that's what we'd have here, but you could imagine that maybe if there's a lot of individual home miners in a post-Stratum V2 world who don't want to deal with any of this, 29:49 they just want to know which sidechain block headers to include, they use a service that just tells them for these 20 sidechains, this is the hash you should use. 30:01 And if they start getting yelled at on Twitter, then they leave that service. 30:04 And so that service is 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. 30:15 There's a lot of interesting economic ways that this can just be self-correcting. 30:22 That was a very high-level, very technical discussion on the miners. 30:27 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, 30:42 which is you said that 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. 30:56 So right now what we have is 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. 31:09 So the drivechain vision, and I know you know all of this already, but I want to hear your reaction to any part of it that you don't agree with in my view. 31:19 The drivechain vision is that we want to make every change of Bitcoin's main chain opt-in unless it's proven. 31:31 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. 31:45 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. 31:54 But on the sidechain, you wouldn't have to worry about a currency rate fluctuation against Bitcoin's token. 32:00 Like if you're holding Monero, you might worry that it might drop against Bitcoin any moment, but you're using it for the privacy tech. 32:09 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. 32:20 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. 32:36 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. 32:51 Does that vision resonate in your view? 32:55 I mean, so I don't know if people holding big bags of other coins will dump them to come over to a Bitcoin sidechain. 33:10 I think it's like alts will live forever because you don't really have the ability to get 10,000x on Bitcoin anymore. 33:22 If you just want to pump your bags, the best move is still to market a new coin from zero to a dollar and ride that all the way up. 33:33 But I think what is exciting is there's a lot of people who are in Bitcoin or aren't in anything and or would be willing to sell their alt bags. 33:48 And, you know, I think like lightning has a bunch of problems. I think a lot of other systems have a lot of problems. 33:58 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 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. 34:21 And maybe like maybe that doesn't actually need to come into main chain, right? 34:25 Like maybe in the fullness of time, Bitcoin is where like very high value public transactions happen and it's the anchoring layer for sidechains. 34:37 But like all the payment activity actually just happens in this thing that is not globally replicated to all of the users. 34:44 And like that's that's probably OK. Yeah, I don't know. So I think I see it a little bit differently. 34:51 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. 34:58 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. 35:08 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. 35:20 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. 35:32 Yeah, you're right about all of that. But I do think that there is the idea that drivechain will kill alt coins. 35:40 I think this idea is not this idea is misunderstood. It's often misrepresented as like, yeah, the idea that drivechain comes out and then all the coins just vanish the next day. 35:53 I don't believe that that will happen. 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, the ones that have given legitimacy to the whole category. 36:14 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. 36:23 And then they just launched an alt coin because they had no other choice. And those, you know, those like four or five legitimate alt coins, Namecoin, now Ethereum, you know, Monero, whatever. 36:38 Small number. These things like Zcash also. They gave enough legitimacy to the category to allow the category to exist. 36:47 And Bith 300 solves a similar problem. It says, if you want to do your new thing, you can now do it with this. 36:55 So that's one sense in which drivechain kills the alt coin idea. But the other sense is that it's not as though the Ethereum people will just switch tomorrow on day one, but eventually it will become clear that Ethereum, the alt coin has no future in the sidechain world. 37:12 Because people make the copy of Ethereum to start copying everything. 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. 37:25 And money has very strong network effects. Technology has very strong network effects. 37:29 So it'll eventually just become clear that the Ethereum sidechain is better for many users. And then eventually it'll just become clear that the ETH token is superfluous and has no future. 37:45 And then with a heavy heart and resignation, they will then abandon it. 37:53 But yeah, you're right. People like to do this podcast stuff and they like to do this idea of complacency. It's 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, $200,000 per coin, 200k by conference day, and just chant memes like a weird cult. 38:17 And that gets you a little further along, but it ends up harming Bitcoin because 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 and it's going to have trial and error. 38:39 It's easy to just say something sacred and abstract and just say, never go up, whatever. But yeah, unfortunately, I think the biggest enemies of Bitcoin now are the complacency mouthpieces. 38:54 Which would ironically include basically Michael Saylor at this point. People who just think Bitcoin success is inevitable. When I think of that, I always think of a Star Wars episode one about how everyone thought that it would be an inevitable success. And that one thought, I think, is exactly just what destroyed it. 39:17 We have a hand. 39:22 Hey, DJ, thanks for joining. What's up? 39:26 Thanks for having me. Appreciate it. Great conversation. It's always, always interesting to listen into you guys. You guys are definitely way more technical than I probably will ever be. So I love listening and learning. 39:39 I'm curious if you can maybe help me out here and explain. I really appreciated what Rendell just said, right? 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. 40:01 And then everything like micropayments and smaller transactions will happen on other layers. So this brings me to my question. If you can help me understand, what's the difference between a sidechain and a layer two or layer three? 40:17 Well, if you ask me, a sidechain is a layer two, but the definition is sort of contested by people. I think layer two is just something where the money is changing hands and layer one doesn't see it. So in that sense, a bar tab is like a custodial layer two. 40:37 And even something like Mt. 40:39 Gox, there used to be like Mt. 40:40 Gox, like credits or something that had like transferable BTC, transferable USD, like on an exchange, Coinbase, whatever, used to have that type of thing. 40:49 They probably still do. So anything where it's transferred on some layer, the coins can change hands, but layer one doesn't have to know about it. 40:58 So you have one, I think what my understanding of it is colored by economics because I have a background in economics. 41:06 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. 41:20 It'd be a lower bank. 41:21 It's all in a big pyramid. 41:23 So like Bank of America has an account at the Fed and Chase, JPMorgan Chase, Manhattan, et cetera, as in they have an account at the Fed, Wells Fargo, they have an account. 41:36 So the Fed is just a bank of banks. 41:40 And then you have an account at Wells Fargo and so does your friend. 41:44 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. 41:53 It's not literally an Excel spreadsheet, but you know what I mean? 41:55 They don't have to do anything. 41:57 They say we lucked out. 41:59 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? 42:12 Well, it's still not a big deal. 42:13 They just they net it out. 42:15 And then at the end of the day, the Fed will, you know, have everyone settle up. 42:20 But it has to go through the other level, so it's better if it stays in their system. 42:24 And that's why sometimes people charge fees for things. 42:28 If it leaves, charge fee for a wire transfer because wire transfer has to use a more expensive system. 42:34 So I don't know if that's helpful, but really the way the money works is there's this Bank of International Settlements that is in order to have an account there. 42:42 You have to be a central bank. 42:43 So the Fed has an account. 42:46 The, you know, whatever, European Central Bank has an account, Bank of Japan. 42:52 So they all have an account there and then that's for people who move. 42:55 But of course, well, these are nuanced issues, but basically it's a big pyramid, you know, like the bar tab. 43:01 You go to the bar tab. 43:03 You say, I want to I want another one. 43:06 You buy three or four drinks. 43:07 You buy drinks for your friends. 43:09 Then you settle up with one payment with the credit card company, and then the credit card company is itself netting them up. 43:15 It's netting them all up, net, net, net, net, net. 43:18 And then at the end of the month, it gives you the statement and then you pay the statement with your bank account. 43:25 So I don't know if that's making any sense. 43:26 Maybe that's too long of an answer. 43:28 No, it makes perfect sense. 43:29 So basically, at that level, then can't it just be that even layer twos can transact with each other? 43:41 If you look at it where Bitcoin, for example, the base layer one would be the Fed and then any other layer two will simply be a banking institution? 43:56 Yes, that could be the case. 43:58 I wrote a little article about this that I called Funder as a kind of joke, but it's called The Futures. 44:03 It's just search for TruthCoin Thunder. 44:05 You should find it on my blog, TruthCoin.info. 44:07 And I wrote a big thing about all this in that kind of detail. 44:10 I touched on all that, all those points. 44:14 And yeah, I think what I would say is that most people, most people have never seen the Fed and they've never seen a Federal Reserve. 44:22 They know what a dollar is, but they don't. 44:24 You have when you have a dollar or something, that's like an abstraction. 44:28 So you could have four quarters or you could have one dollar bill. 44:32 And if you have five, you could have a five dollar bill. 44:34 It could be a five dollar bill or five singles or it could be whatever that is, 20 quarters. 44:41 And so you the having a dollar or something is just like you could have a dollar of oil, you could have a dollar's worth of arcade tokens, a dollar's worth of rice. 44:53 So the Fed has these reserves. 44:55 No one has a bank account at the Fed. 44:56 No one has seen a reserve. 44:58 No one has ever used a reserve. 44:59 Most people have never heard of the Bank of International Settlements. 45:04 And so most of what I'm trying to say to answer your question is that most people live their whole lives like in like level four and five or something. 45:12 They have like IOUs, they have credit cards, they have an account with Wells Fargo. 45:17 They don't even know about the lower layers. 45:19 You know, they don't even know anything about the Bank of International Settlements. 45:23 They don't know anything about gold, which would have been theoretically like a kind of layer one, layer zero. 45:30 So most people just they don't even need to know, they just care about what they have to care about. 45:35 They learn what they have to learn. 45:37 And they're not really harmed in any way by not knowing about how the banking system works. 45:43 Other than, of course, it's going to be harder for them to get into Bitcoin and make their own financial future. 45:49 That way, so in that way, it does suck. 45:51 But they're also harmed because the foundation is always debased from under them. 45:58 So therefore, all of the currency that they continue to earn is being rugged and stolen from them. 46:04 All right. I think these issues are related. 46:06 In fact, the idea that so few people understand it just means that it's a great vector for scamming the public, which, of course. 46:15 Every inflation tax is being paid by someone. 46:18 They get free money and someone is paying. 46:21 It's very hard to tell who it is, but someone, some people are paying. 46:25 So couldn't it be then that all these layer twos, that basically anyone who has access to the base layer today could become a banking institution and therefore could create their own layer two? 46:37 And then everyone who wants to like transact from layer two to layer two, then couldn't it potentially be that in the future a layer two wouldn't even need to go back to the main chain? 46:52 They could simply pass private keys between one another every three months or every year? 46:57 Oh, well, they wouldn't. Yeah, the answer is that they don't even have to go back down a layer if they don't want to. 47:05 So you're right about that. 47:06 They don't have to move private keys around. 47:08 All they have to do is if they're transacting. 47:11 What I think I read about this in the article, I actually just think it will just clump up geographically. 47:16 We just like have people like in the US East or like in Southeast Asia. 47:24 And those will be like the chains, the chain will just be like a chain that is. 47:29 Most of where most of the trade is internal to that network, but plenty of people want to like go on vacation or they want to ship goods internationally, those people will sort of in theory need to transactions because they'll have to transact off of their L2 and onto someone else's just to send their own money to themselves. 47:50 But in practice, they won't really like we would be just new people or, you know, new ways of just netting it out where they, you know, in practice, this would be like very, very, very, very straightforward to do. 48:05 You just have money on all the networks that you transact on and then you you net everything up and then sometimes you send the coins back and forth among the network. 48:16 Sometimes you have to use L1 if you can't find anyone who will swap the coins for you. 48:22 But L1 is already pretty big because it can already do about twenty five hundred transactions every block, which is every 10 minutes and there's about a thousand blocks every week. 48:32 So it's already twenty five hundred per block, a thousand blocks a week. 48:37 So whatever that is, two point five million every week is the current L1 capacity. 48:43 So you can compare that to some other markets where, like, for example, the London Gold. 48:50 I don't I think I don't remember the exact number, but it's something like they do five or six actual transactions per day. 48:55 Everything else is just netted up. 48:57 They net, net, net everything and then they actually do like very, very small number. 49:03 That would be on the order and they're closed on weekends. 49:05 So that's like twenty five a week. 49:08 So we're already a million times more throughput than than that situation. 49:13 So there's already a lot on layer one and layer one is. 49:18 People have been using L1 directly this whole time, so to switch to layer twos or even have more layer twos, layer threes, et cetera, will be a huge geometric increase. 49:30 And there's yeah, I think a lot of people will not feel the need to go back to L1. 49:37 But some people will. 49:39 And if if the cost is cheap enough, a lot of people will do it because of the more security and reliability. 49:45 And that's what that's a good thing. 49:47 We want to make it as we want to drive down the cost for everything as little as possible. 49:51 We want to have like some L3, L4 where it's like Venmo, where it's practically free. 49:57 And then we want to have everyone who wants to stay on L1, if they're willing to pay the five dollar transaction fee, ten dollar transaction fee, fifty dollar transaction fee. 50:06 Then they should be able to. 50:07 And that could be like long term cold storage. 50:11 That could be like a savings account or like a CD. 50:14 I don't even know if people use CDs anymore, but not the compact disc, the certificate of deposit. 50:21 But like, you know, this is like you store your longer term wealth in a safer place. 50:26 You do your retirement savings quarterly. 50:29 You sweep it in into there or something. 50:31 I can see that. I think that would be very reasonable. 50:33 What we should have is a continuum where the relative costs and benefits match the scenario. 50:39 So something where you can rapidly turn it over, like the bar tab at low risk, rapid turnover. 50:46 And then we have alternatively, we have something where there's. 50:51 Where you're very, very paranoid, you have the vault, very, very paranoid, but it's slightly more expensive to enter and exit. 50:58 So you should have the full range. 51:00 Hey, Alex, nice to have you on stage here. 51:03 Thanks for joining. 51:04 I put one of your pro drivechain tweets in the nest. 51:09 It's always great to read your technical writing online. 51:12 What's on your mind today? 51:13 Thanks for joining. 51:16 Hey, thanks for having me. 51:17 Hey, Paul. 51:17 How are things going? 51:19 Yeah, I just saw there was a space and I thought I'd hop in. 51:23 I have two questions and I think it might be beneficial. 51:26 I'm sure, Paul, you get tired answering one of those. 51:30 So feel free to just point to links. 51:34 But then the second one might be interesting. 51:36 So the first one is like, I mean, there's a lot of with any upgrade. 51:39 Obviously, there's debates back and forth. 51:41 I follow it on Twitter and I feel it often gets very political and personal about, you know, 51:46 where the drivechain should be at it or not. 51:48 And what I personally really care about is like, so the technical pros, we, I think, understand those quite well. 51:55 What are the risks? 51:56 What are them? 51:57 Can we pinpoint maybe the two biggest kind of technical challenges of drivechains and why, 52:03 you know, things that might be a problem and like maybe something that, you know, 52:09 like drivechain supporters, like we could actually look into and try to fix. 52:14 And the second question would be more on like people migrating from Ethereum to. 52:20 But that's to be fair. 52:21 That's for later. 52:25 Well, I really don't think if you look at the risks, like the risks of not doing it versus doing it, 52:31 I don't really think there are. 52:32 I think it's. 52:32 But that's not the spirit of the question is sort of like what could go wrong if we do this. 52:38 But also just the way I think people are confused about soft versus hard forks, like soft forks 52:47 tighten the rules, hard forks loosen the rules. 52:51 But this little post-it note thing has, I think, confused people. 52:58 But I'll say everyone straight, which is that you do a soft fork to add BIP300. 53:04 And then if people later decide that it's a huge mistake, you could just soft fork again. 53:11 It's more or less the same thing to just close it off. 53:15 So the first soft fork is doing is taking this like anyone can spend script and it's reducing it to 53:20 it's subtracting everything else that's not BIP-3. 53:22 It's just like a marble block. 53:24 You chisel away everything that's not BIP300. 53:28 And you're left with BIP300. 53:31 That's the soft fork that activates BIP300. 53:33 Then people use the statue. 53:36 But then if you want to get rid of BIP300, you just chisel away the entire statue. 53:39 And there's just nothing there. 53:40 It's gone. 53:41 And now no one can ever broadcast this. 53:42 It's true you burned one message type that can never be broadcast in the blockchain again. 53:47 But there's literally billions of those, endless surplus of those. 53:52 There's not a scarce resource. 53:57 So there's really like you add it. 53:59 And then if people don't like it, they can unadd it. 54:02 I suppose the risk would be that there's some kind of like big social 54:06 drama about not adding it or something. 54:08 But then there's the... 54:11 So that's just this type of soft fork in general, having no risks. 54:15 But the core idea is really not any different than things that people already do. 54:20 So like for a start, the only people who are really affected by this 54:27 are the people who choose to send their coins into the L2. 54:30 So if you just don't do that, then you're really no different than you were pre-BIP300 activation. 54:38 So it's kind of like those people, they choose to opt into a risk. 54:41 They take a risk. 54:44 It should be an informed decision. 54:46 Hopefully it is. 54:47 Maybe it's not. 54:49 But you know, those people volunteer. 54:51 You know, the volunteer can't claim injury. 54:55 And so for everyone else, it's just enforcing the BIP300, not the sidechain rules. 54:59 They're enforcing only the BIP300 rules, which is just like an integer that counts up to 13,150, 55:04 which is the three-month block. 55:06 Which is really just an integer counting up. 55:09 And then as far as the overall ecosystem effect, it's really just merge mining, 55:13 which was invented by Satoshi himself in 2010. 55:16 And we've been doing it for 12 years with Namecoin. 55:18 No one ever complained about it before. 55:20 It's true that this is a totally souped up version of merge mining, 55:24 which I regard as correcting a long mistake, which is the neglect of merge mining, 55:30 the neglect of miner revenues, the neglect of wanting miners, 55:37 wanting everyone to just maximize the transaction throughput, 55:41 maximize the usage of the chain, 55:43 just utterly dominate the world and use Bitcoin for every type of thing. 55:48 I think that that was what Satoshi wanted to do in 2010 55:52 when he invented merge mining for Namecoin, for BitDNS, as it was called. 55:58 So I think that's just correcting yet another mistake, 56:00 killing two birds with one stone. 56:02 But even whatever you think, we've already been doing it. 56:04 And of course, altcoin merge mining has the feature 56:07 that it cannot possibly be stopped on layer one. 56:11 You cannot stop any altcoin from merge mining with Bitcoin 56:15 because it's just the way it is. 56:16 You modify the altcoin so that part of it is a Bitcoin block header. 56:20 So it's impossible to stop. 56:22 So it's already something we've already been doing 56:25 that's impossible to stop anyway. 56:27 And that Satoshi invented to help Bitcoin dominate the world 56:30 that we just kind of have neglected this whole time. 56:33 So that's like, you know, and then you compare this to the risks of not doing it. 56:38 We have all the, we have the SegWit2x, we have a hard fork campaign. 56:41 We have people, we have the possibility that an altcoin will flip in BTC, 56:45 which would send it to zero and cause the entire project to fail completely. 56:50 We have the risk of all the toxicity. 56:52 We have the lack of creativity. 56:55 We have the security budget problem. 56:57 We have the fact that the only realistic way 56:59 of shrinking the layer one block size and ossifying the layer one code 57:05 is to give people more, give people the flexibility 57:09 and openness that they want on the upper optional layers. 57:14 It's the really only realistic way to achieve 57:17 an increase in decentralization on layer one. 57:21 What about the fact that Zcash and these people working on Zk-SNARKs, 57:25 they have so much better privacy scalability than Bitcoin has. 57:30 We could have that, you know, tomorrow with, if we had side... 57:35 So I think there's really no risks at all to the idea. 57:41 Even if something does go wrong, 57:43 the idea can just be shut off as easily as it was turned on 57:46 and it will be exactly where we started before, 57:48 except for one code out of like 4.2 billion will be burned, one prefix. 57:54 And then I think if you just zoom out and look at the whole thing in context, 57:57 it's just the bigger risk is just not to do it. 58:01 Especially once you have all these people now being so complacent 58:04 and overconfident in the face of such... 58:06 You know, like Michael Saylor has been, you know, 58:08 shilling lightning, which is great. 58:11 I think Michael Saylor is a smart guy. 58:12 I think he's an ally of Bitcoin. 58:14 But, you know, he is kind of a bullshitter, basically. 58:16 He doesn't really know. 58:18 Like we can now see that, like, 58:22 the idea that he knows what he's talking about 58:24 when he's talking about lightning is not true. 58:27 Rhindol, when you said earlier here that it was so interesting, 58:31 when you said that you think perhaps there will always be altcoins 58:35 because people want to get in early to something with a small market cap. 58:42 But I think that's actually an incomplete and inaccurate 58:48 theory. 58:50 The power of network effects in economics 58:53 is most present in the market for money 58:57 more than the market for any other kind of economic good. 59:02 So network effects are very powerful in money. 59:06 Money is the most liquid, the most tradable, the most saleable asset. 59:11 And when you say that people will always want to get in on smaller, 59:19 you know, newer altcoins because they want that 10,000x, 59:22 which they can't get from Bitcoin, 59:24 you're right that when Bitcoin has fully matured and taken over the world, 59:29 a very high rate of real return from holding Bitcoin won't exist 59:33 because the adoption cycle will have been completed globally. 59:37 So there won't be any more new early adopters 59:41 once Bitcoin has reached its total addressable market. 59:45 So you're right that Bitcoin won't offer the real return rate that it offers today. 59:51 It'll offer a lower real return once it's fully adopted globally. 59:55 However, your point, so that's the correct part of your view, I would say. 1:00:01 But your other point was that people will always be 1:00:04 developing and speculating and boosting slightly the price of newer, 1:00:10 smaller coins because of the chance they could do a 10,000x. 1:00:13 But that assumes there will always be a narrative 1:00:19 among those building and buying altcoins that they might succeed. 1:00:24 They might have that 10,000x. 1:00:26 However, if Bitcoin becomes massively huge and it has a natural 1:00:33 and it has a narrative where when someone has a new good idea for a blockchain, 1:00:38 they launch a Bitcoin sidechain. 1:00:40 They try to launch a Bitcoin sidechain with that idea. 1:00:44 If that's the dominant narrative, if that's like the status quo, then no one will have hope for these startup altcoins. 1:00:52 It'd be like starting a whole new language today, like people aren't starting, go ahead. 1:00:56 They're starting a new keyboard layout or something, you know. 1:00:59 But Alexei, didn't you say you have a second question? 1:01:02 Was it related to that? 1:01:04 Yeah, so that's on the technical side, like something that we've been kind of thinking about. 1:01:09 So, you know, outside of like Bitcoin right now, you have a lot of new projects spinning out from like smart contracts to their own chains. 1:01:17 And it kind of, you know, drivechains would kind of fit this slightly somewhat. 1:01:22 And please don't kill me for saying that for like in this option thesis that it makes sense to have like stand like specialized chains that do something specific. 1:01:28 And the question is, well, where to plug them in, right? 1:01:31 And like drivechains will be why to plug them into Bitcoin. 1:01:34 But how do you get like how do you counter liquidity fragmentation? 1:01:39 How do you really convince people in these bigger projects to move off Ethereum, where the biggest benefit is composability and being able to, you know, move between different applications, borrow, lend, swap, do all of this with like compose all these like things into one transaction. 1:01:56 Whereas the moment we are fragmented across different chains, we run into a big problem. 1:02:00 So how would drivechains address that? 1:02:02 How would we be able to, you know, interact between different drivechains in a way that, you know, let's say one there is a drivechain that specializes in in trading and the other one in fast payments? 1:02:13 How do we interact between them? 1:02:16 Yeah, it's a very good question. 1:02:16 We sort of got a little of this question before, but it's good when we can answer it in more technical detail now, because you're right that Ethereum has its own network effects. 1:02:26 And it enjoys being like in a world where the smart contracts are all interoperable with each other. 1:02:34 And I think that that if that effect is strong enough, it inevitably implies that a general there'll be a general purpose sidechain that is popular. 1:02:46 Perhaps. 1:02:48 I'm not sure that, see, like, as you know, because you've known me a long time, since like 2017, at least, I think, I kind of have always thought that Ethereum shouldn't work, like it wouldn't work optimally the way it is with everything on one chain, because like everything should have like a different gas rate. 1:03:07 And sometimes, sometimes these weird predictions I made have come true, where like a certain type of contract uses gas at a certain rate and prices everything else out for a short time. 1:03:19 But yeah, in general, Ethereum has its own network effect of its state. 1:03:24 And so just copying the ETH rules and the ETH reality, the ETH protocol would not draw these people over. 1:03:37 And as I said in the previous answer, the real angle is something like convincing people that now that the now that Bitcoin can do anything, including an ETH thing, some people would start to copy the low hanging fruits, you know, like the stuff on ETH that is good, but maybe just a little expensive at the moment, it would be on its new. 1:03:59 So like ETH has already gone through many phases where fees have risen, and then someone does like a copycat, like a Binance Smart Chain or Solana or whatever, Avalanche, they do EVM, but it's just for the for making more block space. 1:04:14 So you can kind of have that going to the sidechain. 1:04:16 But the really the angle is that eventually, the Ethereum altcoiners lose hope. 1:04:24 They just see the writing on the wall. 1:04:26 And they think, more or less, that I love the stuff I'm doing with ETH, but we are doomed because we're number two. 1:04:36 We're playing musical chairs. 1:04:37 There's only one chair. 1:04:39 And even though it's very respectable to come in second place, the earlier we jump ship, the better. 1:04:46 And they all jump ship. 1:04:47 But yeah, you're definitely right. 1:04:49 Like, I don't actually think it would be very easy. 1:04:51 It would be possible. 1:04:53 But I don't think it would be very easy to write stuff that uses multiple sidechains at once, where they say like, well, I want this chain C to interact with chain F and G. 1:05:05 And if something happens, it would be possible, but it would just be kind of probably clunky, you know. 1:05:14 So I think they would, if there is benefit to having a bunch of features co-located in a chain, then probably people have a chain that does that. 1:05:25 However, I'm still to this day, I still kind of hold my original position, which is that most of the stuff on Ethereum is just as exactly as I predicted in 2015. 1:05:35 It's like it's all mostly gambling or just most of what Ethereum is, is like what I would think of as the BitAsset sidechain, where it's just it's basically a counterparty of the sidechain where you're issuing stuff and trading it to other people. 1:05:48 And some of that stuff is digital art, like NFTs. 1:05:52 Some of it is like maybe represents something else, like stock, like ICOs or something, you know, just represents proportional ownership of something. 1:06:01 And people are trading them back and forth, staking them, using as liquidity. 1:06:05 That's awfully self-referential to me. 1:06:07 But most of that is just basically if this payment goes through, trigger some other payment. 1:06:13 So it's not really I mean, what on Ethereum is really, really is has a novelty that goes past a payment being triggered by some other payment. 1:06:29 It's mostly but, you know, obviously I'm going to be wrong about that. 1:06:33 It's mostly something like that. 1:06:35 And I think there will be specialized sidechains to do the cool things. 1:06:38 They will be like the ZK, Zcash privacy sidechain. 1:06:42 They'll be the prediction markets. 1:06:43 Oracle side will be on its own sidechain. 1:06:45 I think they'll be the Namecoin will be its own thing, maybe. 1:06:49 On the flip side, on the other hand, I can I can see it being the case that the large block sidechain, just because it has a high number of people on it, that might be where the privacy stuff starts to break in, because with with abundant block space and cheap fees and a lot of users, that can be very helpful. 1:07:11 So I can actually see that happening also where. 1:07:14 Something that is made for payments just ends up becoming, you know, it has it just has a lot of stuff and ends up having its own counterparty and etc. 1:07:27 But again, fair enough, that's a fair take. 1:07:31 I mean, the question for me is so looking at, for example, Namecoin, right. 1:07:35 So for me to succeed. 1:07:36 So why would I get a DNS name? 1:07:38 Right. 1:07:38 I mean, if a Namecoin name would be ideal, if I can use that as a universal identifier to receive funds instead of giving you my account, you know, my address, I just give you my Namecoin name and that's how you send funds to me. 1:07:50 That's, I think, a very big usability improvement that and like some other chains have been trying, like doing things like that. 1:07:56 But the Namecoin is a standalone chain, right? 1:07:58 So it's kind of would be one possible drivechain. 1:08:01 But how do I use Namecoin names, for example, on a chain that specializes in payments then? 1:08:07 So that's, I think, something that I would really love to do that. 1:08:10 I think that if we can get that to work, that would be I think it would be a benefit and an added benefit questions, obviously, how? 1:08:17 Because I I'm not so sure I would bet on their like emerging one single drivechain that has all these functionalities in it just because you need different teams to build them. 1:08:29 And building on a smart contract is limited, right? 1:08:32 Because you can't really specialize your chain. 1:08:35 So Namecoin is specialized to do to do names. 1:08:38 Right. 1:08:39 So I think it would be interesting to see, like, how can we have Namecoin and that's that that's where we register names. 1:08:45 And then we can use that to receive payments. 1:08:48 And I can use that also potentially to pay for storage and another one and have this kind of composability. 1:08:55 It's definitely tricky, but that's what that comes to mind to answer to try to answer your question. 1:09:02 I think is that since all the sidechains are optional, there's a sense there's a very easy way where if there is a service that says this requires both things, just like I'm trying to think of some kind of analogy. 1:09:15 But it's kind of like if you say like you want to play a game on your computer and you need Windows and you need DirectX or something and you need something else. 1:09:25 I don't know. 1:09:26 So in that way, you build a protocol that is on top of both. 1:09:32 Chains, and then it's very easy because then you just say, I want to be paid on sidechain number four. 1:09:37 Look at my this is me on the you know, the Namecoin sidechain, which is such a number three or something, and then it will just do it for you because it'll just say, OK, we're both looking at the same two block chains. 1:09:51 So then it would be as if you had them both. 1:09:52 And in that sense, it would be very, very easy since anyone can opt into both. 1:09:56 You can just have the application maker do all of that. 1:10:01 One hundred percent. 1:10:03 So and there's something else you said that I wanted to react to, but I can't remember what it was, but. 1:10:08 Oh, well, it was great, whatever it was, but you're right that I think that's an easy way to answer your question. 1:10:15 I remember you were saying I was thinking of something interesting based on what you had said, but I can't remember. 1:10:20 Never mind. 1:10:21 Anyway, thanks for having me. 1:10:23 I'm super interested in conversation. 1:10:29 I think I fully agree about. 1:10:32 Like Namecoin. 1:10:33 Oh, I remember now it was like. 1:10:36 There will be specialized chains for a lot of reasons, I think one is disputes. 1:10:42 So like programmers have big egos, but also the community will grow and grow. 1:10:47 And then there'll be just some kind of dispute over something. 1:10:50 It doesn't even, you know, it could be the block size. 1:10:52 It could be about privacy. 1:10:53 It could be about when do we add? 1:10:56 How aggressively do we add new features? 1:10:58 There'll be like a liberal and conservative group in each group. 1:11:03 And then eventually the liberal group will get so tired of the conservative group that they will just make their own thing. 1:11:09 So I think it is inevitable that like, you know, we're going to have a lot of disputes. 1:11:14 Make their own thing. 1:11:14 So I think it is inevitable that lots of stuff will be tried. 1:11:18 Some will come up with a great idea and they'll first they'll try to present it to the world. 1:11:23 And so here's my great idea. 1:11:24 It's really new and everyone will say that idea sucks. 1:11:27 And then they'll say, no, it doesn't suck. 1:11:29 And then the world will say it does. 1:11:31 And then they'll say, fine, I'll start my own chain. 1:11:35 And then that idea will make it into the world. 1:11:37 So there will be, I think there will be new sidechains being made all the time. 1:11:45 I think there'll only be like 12, 15 that are actually used by people. 1:11:53 But I could easily be totally wrong about that. 1:11:56 And that would be better if I was. 1:11:57 Because that would mean that there's so many ideas out there of different shapes and sizes that would have gone totally neglected. 1:12:07 And no one would have brought into the world had we not done the 300 sidechains. 1:12:16 But Rindale, did you have your hand up at some point? 1:12:23 Oh, yeah. 1:12:23 I mean, on the question about like, how do you get the Ethereum people to move their stuff over? 1:12:31 My hot take is I don't think you do. 1:12:34 I think the first sidechain that gets built after the ones that Paul already has ready to go is a 1:12:44 basically a better version of RapidBitcoin. 1:12:47 And it's just a bridge to Ethereum. 1:12:49 And like, you know, like, there's already Rootstock, which lifted EVM and tried to recreate 1:12:57 the Ethereum ecosystem and something that's, you know, pegged to Bitcoin. 1:13:02 Liquidity is super thin, and usage is really small. 1:13:05 Because like, nobody wants to dump their ETH bags to go and recreate the same applications 1:13:12 on something else and kind of start over. 1:13:15 So I think, you know, what you would end up with is all the Ethereum people would keep using 1:13:21 Ethereum, but they would have a less trusted way to move between Bitcoin and Ethereum. 1:13:26 And then I think, you know, to Paul's last point, I don't think there ends up being a lot 1:13:32 of sidechains. 1:13:32 I think there ends up being a really small number of them. 1:13:35 You get one that's like, really optimized for payments, and maybe has really good privacy. 1:13:40 And you have like, a trustless bridge to Ethereum for people who want to do Ethereum-y stuff. 1:13:46 And I think that's kind of it. 1:13:47 Like, I don't think you end up with a huge number of these things. 1:13:51 But I don't actually know. 1:13:52 That's just my guess. 1:13:54 But I think I'm... 1:13:55 Yeah, I agree. 1:13:56 But I think it's like, it's always dangerous to bet against innovation, right? 1:14:00 Because you never really know. 1:14:01 Like, you'd be like, oh, I just never thought... 1:14:03 I mean, people could be playing this recording in years, and they'll be like, that's what 1:14:09 they thought back then. 1:14:10 You know, like, because think about it. 1:14:12 What if you said something like, well, there's an awful lot of people who are like, well, 1:14:18 there's an awful lot of things where the actual use of them is not understood immediately, 1:14:24 you know, throughout history. 1:14:26 It's happened many, many times. 1:14:29 Yeah, I mean, that's definitely true. 1:14:30 But you know, like, what I would say is, I think the current cryptocurrency landscape 1:14:37 is a bad prophecy for trying to forecast how many sidechains we would have if we had an 1:14:43 actual trustless pegout mechanism. 1:14:45 Because most of them are either, you know, outright scams, or they are governance tokens 1:14:54 for applications that don't actually need their own, like layer one, like they're, you 1:14:59 know, a voting token or something, or like the NFT ecosystem is collectibles that in 1:15:06 the fullness of time, maybe they end up being transferable DRM tokens, but they're just 1:15:11 collectibles. 1:15:12 Like, most things in the ecosystem today, don't actually need their own network, which 1:15:18 is why they're all like Ethereum tokens, or clones of Ethereum tokens, like Avalanche 1:15:24 or, you know, Binance Smart Chain or something, right? 1:15:27 So I like, I agree with you. 1:15:30 So maybe there's not two chains, maybe there's five or 10 or something. 1:15:34 But, you know, I don't think that there's thousands, right? 1:15:40 I think that there could be thousands of tokens, right? 1:15:45 But it's thousands of tokens on three chains or something. 1:15:50 That's exactly right. 1:15:51 You're exactly right that we should not make the error of projecting the market cap of 1:15:57 Ethereum onto a future hypothetical drivechain world. 1:16:01 We should not make the error of thinking that the largest sidechain on Bitcoin, if drive 1:16:06 chain is adopted, would be akin necessarily to Ethereum. 1:16:11 There would be a whole different constellation of narratives at hand, which is why earlier 1:16:18 I wanted to address that idea that there won't always necessarily be this ocean of altcoins. 1:16:25 Drivechain might completely change the narratives in all of crypto. 1:16:30 Because if Bitcoin gains a narrative that deprives the altcoin founders and investors 1:16:36 of hope, then people will just say, well, everything is getting built on Bitcoin. 1:16:41 There's no reason to even start an altcoin. 1:16:43 No one's going to invest in that. 1:16:45 Well, I mean, maybe. 1:16:46 And maybe what ends up happening is that for each incremental new project, there's a harder 1:16:52 decision to be made about, do I go and make this an ERC20 token or do I build it on a 1:16:58 Bitcoin sidechain? 1:16:59 But there's also a future here where there's enough network effects and enough money on 1:17:05 something like Ethereum that the first sidechain that comes out is just a better bridge between 1:17:13 those two networks. 1:17:14 And you still have kind of money-centric use cases happening on Bitcoin, and you have other 1:17:20 stuff happening on another network, and you just have a bridge between them. 1:17:23 And it doesn't kill all the alts. 1:17:25 It just makes it so that the next incremental project has more optionality on Bitcoin. 1:17:34 That's, I think, an equally likely use case or outcome. 1:17:39 I don't know. 1:17:40 I'll give up my talking stick. 1:17:41 I saw Bob just joined and DJ has his hand up. 1:17:43 Yeah, welcome, Bob. 1:17:44 Bob, thank you for joining. 1:17:46 I really appreciate it. 1:17:47 I had tweeted to you to please join the conversation, and I thank you very much for joining. 1:17:56 OK, so apologies to Paul. 1:17:58 Respect you very much. 1:17:59 But let me throw out the opposite opinion. 1:18:01 This whole conversation sounds a lot like the conversation over the last 10 years, literally, 1:18:07 with every single altcoin, every single ICO, and every single thing on top of Ethereum. 1:18:12 I posted on the Twitter thread this lemonade coin skit that was done. 1:18:16 Like, you want to buy lemonade? 1:18:17 No, you have to have lemonade coin. 1:18:20 And that sounds a whole lot like the description Paul gave a little bit ago about having like 1:18:24 kind of geographic centers. 1:18:27 And, you know, at the end of the day, we already have that, right? 1:18:29 We have dollars. 1:18:29 We have euros. 1:18:30 We have Chinese yuan. 1:18:32 We have, you know, lots of currencies. 1:18:33 We already have a Byzantine fragmented thing. 1:18:36 But, you know, for various reasons, you don't actually have to pay a Chinese supplier in 1:18:39 dollars because somebody does that for you. 1:18:40 But nobody actually wants a wallet with a whole bunch of different currencies, right? 1:18:44 That's what we want to get away from, right? 1:18:47 But so I guess what I'm seeing here is more of the same, right? 1:18:52 We have attempted to make experimental chains before, right? 1:18:56 Liquid was like a lot of the narratives I hear around drivechains are exactly the same 1:19:01 as those made around Liquid when Liquid was launched. 1:19:03 Like, we want to do experimentation. 1:19:04 We can't experiment on Bitcoin. 1:19:06 We need a platform to do that, right? 1:19:09 And so this spawned, you know, thousands of altcoins and they did their experimentation. 1:19:13 Some of that experimentation is quite good, to be honest. 1:19:16 Liquid did their experimentation. 1:19:18 And today, you know, if you want to go do some kind of experiment, you can go to Liquid 1:19:22 and you can go if you want to use, you know, Ethereum smart contracts, you can go to Rootstock. 1:19:28 And it's not happening. 1:19:29 You know, I think, you know, one should zoom out here and say, I like to zoom out and say, 1:19:35 what are the asset classes present that are going to be useful? 1:19:39 Right. 1:19:39 So one is money. 1:19:40 Money you want to be universal. 1:19:42 Bitcoin is the first time we can have a truly global currency, right? 1:19:47 Nowadays, you know, you've got to trade your dollars for euros or whatever when you go 1:19:50 to another country. 1:19:51 But if Bitcoin is accepted globally, we could have a uniform global currency. 1:19:55 And I don't need to do all that. 1:19:56 I don't need layers upon layers of intermediaries and market makers to trade all of my 27 different 1:20:02 lemonade coins in my wallet. 1:20:03 Right. 1:20:03 I have one global currency. 1:20:05 The second valuable use case is ICOs, which are basically equities, right? 1:20:11 They're holding ownership or some other kind of responsibility to a company. 1:20:15 This is completely legitimate to do, completely valuable to do. 1:20:18 And in my mind is a completely separate use case, right? 1:20:21 The censorship resistant properties of stocks are wildly different from that of currency. 1:20:27 If you want to pay somebody for coffee, who really gives a shit? 1:20:29 You know, go ahead and pay. 1:20:31 But equities have a lot of constraints around them. 1:20:36 And I think that's, you know, that is what has happened with Ethereum, with all the ICOs. 1:20:39 All of the ICOs are effectively equities. 1:20:42 And anybody who says otherwise is lying. 1:20:45 The what remains is is is currency, right? 1:20:49 We don't want a Byzantine currency model where we have 27 different local currencies. 1:20:53 We already have that. 1:20:59 That's really the best you got. 1:21:02 I knew you wouldn't like what I had to say. 1:21:05 Bob, I mean, it's ridiculous what you're saying. 1:21:07 You're saying that a 20 dollar bill in cash, you put it into a an ATM and you get 20 1:21:12 dollars in your checking account. 1:21:14 That's having 27 different currencies, according to you. 1:21:17 The whole point of the currency is that they exchange at a bar, one to one pegged to each 1:21:22 other. It's like the whole point. 1:21:25 OK, so fine. All right. So I have 27 different one to one pegged BTC variants, right? 1:21:31 Now, you can go back to the block size debate, right? 1:21:34 Would we have been better off making a larger block size rather than having 27 points? 1:21:38 A lot more complex. Everybody involved have 27 different versions of Bitcoin than just 1:21:42 one. And that's a block size. 1:21:45 Well, of course, we would not have been better off with 27 different versions of Bitcoin 1:21:48 because of network effects, because it's it's not the same thing if you had ATM coin and 1:21:53 then you had cash and then you had and then somehow you had quarters where four quarters 1:21:59 doesn't exactly add up to a dollar all the time. 1:22:02 That would be annoying and ridiculous for everyone when you write someone a check for 1:22:05 one hundred and forty dollars. 1:22:07 Sometimes they get one hundred and eighty dollars in their checking account. 1:22:11 That the whole point of the whole point, you understand that when you deposit five 1:22:15 Bitcoin to the Lightning Network, you get five Bitcoin on the Lightning Network, right? 1:22:20 Does that let's let's say there are only two. 1:22:23 Right. There's there's two I have to track. 1:22:25 Right. So one is going to be, let's say, a big block drivechain, right, which can which 1:22:29 can handle lots of transaction volume. 1:22:30 Another is native Bitcoin. 1:22:31 Right. And my wallet holds both. 1:22:34 Right. And to your previous claims, you keep saying this is not a block size increase. 1:22:38 But if I want to track both my native Bitcoin and this large block drivechain, which has 1:22:44 much more transaction capacity because that's what's needed to get everybody one of 1:22:48 these. Right. This is effectively block size increase. 1:22:52 Now, everybody has to track both of these chains. 1:22:53 We wouldn't. 1:22:59 Yeah, but you again, you missed the entire point is that the whole point of the block 1:23:02 size dispute was that a bunch of small blockers who did not want the block size to 1:23:06 increase were pitted against large blockers who did not want it to 1:23:12 stay the same. So you had two groups of people who wanted different things. 1:23:15 So when the idea of it being a block size increase for someone 1:23:20 who wants that is a good thing. 1:23:23 But it for it being it's the difference between, you know, being raped and having sex. 1:23:26 I mean, it's like the no one. 1:23:29 I can't choose not to do it. 1:23:31 Right. If the payment is already, you just don't use the L2. 1:23:35 You just don't use the L2. And then when you build someone, you say when you conduct it, 1:23:39 when you agree to work for someone. 1:23:41 It's not like they it's like they're not going to tell you, but you go if you go to New York 1:23:45 City or somewhere and you say, I want a job and it pays one hundred thousand a year. 1:23:49 Everyone knows you're talking about one hundred thousand dollars, US dollars. 1:23:53 They you know, or if you work for someone and they say we can only pay you in yen, you 1:23:57 know, they're going to tell you that before before if I buy something from Europe, they 1:24:01 charge in euros. So you just if you want the L1 coin, you charge the L1 coin. 1:24:06 These things are a lot more to negotiate, difficult to negotiate. 1:24:08 You might imagine I literally signed a contract today for a consulting gig in another 1:24:12 currency. Right. I didn't even bother trying to go and get them to pay me in US dollars 1:24:17 because I know what that where that conversation would go. 1:24:19 I mean, how many of you have done that? 1:24:20 Yeah, but the alternative, Bob, is that the layer two chain doesn't exist at all or it 1:24:26 becomes an altcoin, pure altcoin or it's some kind of custodial garbage. 1:24:31 So the idea that you at least have something that's now denominated in the twenty one 1:24:36 million bitcoin. 1:24:38 Bob, when you said that there would be twenty seven different currencies if there were 1:24:43 twenty seven different sidechains, if I heard you correctly, that's what you were 1:24:47 saying. To me, that's that's not making sense to me because. 1:24:52 That's kind of like saying people who use Venmo, which is denominated in U.S. 1:24:57 dollars for me in America, you know, I go into Venmo, it's in dollars, it's as if 1:25:02 you're saying that's a different currency than dollars in my pocket physically. 1:25:07 Well, on a technical level, it is a different currency, right, because it's on a 1:25:11 different blockchain with a different consensus. 1:25:13 Right. So now can you make an interface like Venmo that hides the fact that there are 1:25:17 actually a bunch of different block chains underneath it? 1:25:19 Sure. Yes, you can. 1:25:21 But the consequence of that is that anybody implementing such a thing has to track all 1:25:25 of the chains that are doing that. 1:25:27 And now we're back to the big block debate. 1:25:29 This is now effectively a big block, which I think we're not at all black. 1:25:33 I find it somewhat disturbing that because you do seem like a smart guy and I find it 1:25:38 disturbing that you have some kind of weird glitch out on this point because the block 1:25:43 size dispute, that dispute was about the entire group having to go in one direction 1:25:49 that not everyone enjoyed. 1:25:52 I'm not talking about those. 1:25:53 Yeah, that's someone who is someone who says, oh, can you pay me on Venmo? 1:25:56 And they say yes. 1:25:58 I'm not talking about who says, can you pay me on Venmo? 1:26:00 And they say no. And they say, well, too bad, because we're all Venmo now and now you 1:26:04 have to do it. 1:26:05 So Bob, you're not talking about the death and burial. 1:26:11 Bob, I'm talking about how much state do I have to track as a provider like Venmo? 1:26:15 If I want to be Venmo, how many nodes do I have to run? 1:26:18 How many gigabytes of disk space does it take? 1:26:19 How much bandwidth do I need? 1:26:21 There there would be professional arbitrageurs. 1:26:24 Don't you don't we? 1:26:26 No, I mean, we already have like if you want to build a wallet that abstracts the 1:26:30 difference between on chain and lightning, you already have a bunch of additional 1:26:35 infrastructure and a whole bunch of additional state to track. 1:26:37 And if you don't want to do that, then you don't support lightning. 1:26:39 You say we're a layer one wallet. 1:26:42 Yes, Bob, there would be professional arbitrageurs who monitor the real purchasing 1:26:49 power, who monitor the exchange rate among these different sidechain bitcoins and 1:26:56 equilibrium and force them to equal. 1:26:58 I can't tell them having network issues. 1:27:00 Is Bob coming through for anybody else? 1:27:03 I was not speaking. I was OK. 1:27:05 I was just saying, Bob, yeah, but that's not the point. 1:27:08 Even though Henry is because that will just confuse people further about these tiny 1:27:12 details about that are related to the 30 days time value of money that are not. 1:27:18 They're not even germane to the one to one peg, I think it is a little bit important. 1:27:22 So let's say we do have a bunch of different sidechains. 1:27:25 Right. And I say, OK, somehow this is all going to be automatic. 1:27:27 This can be done. Right. 1:27:29 You can have a bunch of different, quote unquote, bitcoins, each of which have 1:27:32 different, you know, on chain representations or on different blockchains. 1:27:35 You can even do it between Bitcoin and Litecoin. 1:27:37 Let's say let's let's use Litecoin as a payment. 1:27:40 And many people have tried this idea where you say, all right, some arbitrageur is 1:27:43 going to come in and do the arbitrage. 1:27:45 And so I look like I'm paying in my native currency, but actually it's going on 1:27:47 Litecoin. This is exactly what the strike app does in dollars to Bitcoin. 1:27:51 Right. So this requires the development of an ecosystem of exchanges. 1:27:57 Right. Our history with exchanges is fucking terrible. 1:28:00 Right. And we really need decentralized exchanges. 1:28:02 We, in my opinion, we do not have any form of decentralized exchange which is 1:28:06 capable of fulfilling this role right now. 1:28:08 I do think it's technically possible, but we don't have it right now. 1:28:12 And what will end up happening is we'll end up creating Wall Street. 1:28:15 We'll have a bunch of arbitrageurs. 1:28:16 They're going to arbitrage all of these different things and make it look like one 1:28:19 currency. The only people who can implement a payment process have a lot of 1:28:22 resources. No one can run a home node. 1:28:25 This is no longer a self-sufficient, decentralized currency because no one can 1:28:30 run a home node anymore. And now we also have the centralization pressure of 1:28:33 those arbitrageurs because they're using centralized exchanges. 1:28:36 The full node cost is totally unaffected from what it is now. 1:28:39 If you because right now you're only running L1, you're not running any side 1:28:43 chain nodes. If that's the full node thing you want, then just keep that 1:28:48 experience. Just keep doing that. 1:28:51 But then I can't pay a guy who wants a Bitcoin on one of the direct chains. 1:28:56 It's what if he'd asked you for an altcoin? 1:29:00 You also couldn't pay him. Or if he asked for a marble statue. 1:29:06 The goal is to get down to a set of possible currencies I can pay and that has 1:29:11 exactly one thing in it. 1:29:12 Right. I mean, that's that's kind of the global goal. 1:29:14 Right. You know, I could give you rhinestones or seashells or gold or whatever. 1:29:18 And, you know, over time, the number of currencies globally has reduced. 1:29:22 Right. And we're still on that trajectory of reducing the number of currencies. 1:29:25 Randal, what do you think of Bob's view? 1:29:28 What do you think he's saying and do you agree with it or not? 1:29:35 Randal? Oh, maybe Randal is not available. 1:29:47 What they want is what they want. 1:29:49 You want they want something from you. 1:29:51 You want something from them. 1:29:54 That's between the two of you. 1:29:55 So if you say I am committed to L1 and I will never leave L1 ever, then luckily for 1:30:04 you, the sidechains all exchange at par. 1:30:06 So they have an absolutely equal purchasing power. 1:30:09 It's twenty dollars worth of cash or twenty dollars worth of ATM. 1:30:13 So if someone says that's like someone saying I demand to be paid in a cashier's 1:30:18 check and you say I only have I'm Bob McElrath. 1:30:21 I only have cash or whatever. 1:30:24 And you say I refuse to get this cashier's check. 1:30:28 Well, then, you know, you and that person, I'm sure someone will work something out 1:30:33 where they have whatever some intermediaries and some intern will go. 1:30:39 Collect the cash from your house, get the cashier's check or the trade will fall 1:30:43 apart, but if it was going to fall apart over that, then how serious is it really? 1:30:47 I mean, that's friction. I mean, the fact of the matter is any form of. 1:30:52 Right now, the L2 doesn't exist at all. 1:30:54 It doesn't exist. So it'd have to be an altcoin or have to be some something even 1:30:57 where to be some custodial Bitcoin thing that that might be mandatory KYC or some 1:31:04 completely fully centralized CBDC universe. 1:31:09 As far as anyone is aware. 1:31:12 So at least you've got this thing that exchanges that is the exact same currency 1:31:17 as the universe. 1:31:18 I think at the heart, maybe of Bob's objection is maybe he thinks that if drive 1:31:24 chain is adopted, then the sidechains wouldn't be demanded. 1:31:28 Maybe he thinks that they wouldn't be large, even though. 1:31:31 No, I think he's saying the opposite. 1:31:32 He's saying they'll be so big that I won't be able to spend my L1 coins anywhere. 1:31:38 I think this is effectively a block size increase and everybody's going to move to 1:31:43 a drivechain, which has a tremendously large block. 1:31:45 And the only people who can actually run that blockchain are industrial service 1:31:48 providers. And we're going to put centralization around that one chain. 1:31:51 The fact that you can you can peg back into main chain Bitcoin will only use for 1:31:56 international settlements or large settlements, which, you know, that's a way things 1:32:03 could go. But that does mean that this is no longer the decentralized currency where 1:32:07 I can run a home node. So what's a better solution than Bob? 1:32:12 I'm just curious, in your perspective, how do we solve the scalability solution? 1:32:17 Because like based off of what Paul was saying earlier, right, so there's two and a 1:32:21 half million transactions on the base layer per week. 1:32:24 There's 52 weeks in a year. 1:32:27 So we're coming to roughly like what? 1:32:29 One hundred and thirty is that million or is that I don't know. 1:32:33 Not really good with that kind of big number math in my head, but one hundred and 1:32:37 thirty ish million transactions per year. 1:32:40 I'm guessing I can double check the math in a second, but what's the better scalability 1:32:45 solution? Or do you think like what you just said would happen where the base layer 1:32:49 will simply be used for the larger value transactions and final settlement of those 1:32:55 transactions between bigger banking institutions, which will all basically be the 1:32:59 layer two solution. 1:33:00 So any layer two will basically become the new banking institution like Lightning and 1:33:06 anything else like ARK or whatever comes up next. 1:33:09 The latter. So in other words, we can't scale Bitcoin, period, full stop. 1:33:13 Right. We can't keep it and keep its properties that we like. 1:33:16 Right. We compromise and we lose its decentralization properties. 1:33:20 We lose the ability to run a home number. 1:33:22 We lose the ability for everybody to check that what's going on is kosher. 1:33:25 And we, you know, by making big blocks, you can only run it on a big server, et cetera. 1:33:30 So the answer in the short term is don't try and scale Bitcoin or rather don't try and 1:33:36 scale Bitcoin today, but trust that we will come up with a solution in the future. 1:33:39 But one thing, one statistic I'd like to pull up occasionally is, do you know how long 1:33:44 it took for credit cards to penetrate the market and across the world? 1:33:48 How long? 1:33:49 It was more than 40 years. 1:33:51 Right. And this was because, you know, the credit card processing companies had to 1:33:55 distribute credit card readers to the companies as well as, you know, credit cards to 1:34:01 the banks, which ultimately went to the customers. 1:34:04 This is a chicken and egg problem. 1:34:05 We are also in a chicken and egg problem with Bitcoin. 1:34:07 There aren't any vendors that accept Bitcoin. 1:34:09 So this whole conversation about drivechain is somewhat moot. 1:34:12 I think we should really focus on pretending this problem doesn't exist. 1:34:19 Right. And actually using Bitcoin in the ways that we can use it demonstrate there's 1:34:23 actually an economy here without trying to build an economy that can service every 1:34:27 single human on the planet. 1:34:28 Right. With Bitcoin on main chain and lightning, we can actually go out in a lot of 1:34:33 different countries in the world and pay for things we want to pay for without actually 1:34:37 having thought that. And I think that this conversation is happening around drive 1:34:40 change and all the other things is very healthy. 1:34:41 I'm really happy to see all the discussion around all this, because ultimately this 1:34:44 will lead to a good solution, whether it's lightning or Ark or anything else. 1:34:51 We'll get there, but we're not going to get there. 1:34:55 What is the difference between a custodial like you still don't grasp that there is 1:35:01 no effect on the layer one full node cost, even if there's an eight gigabyte side 1:35:07 chain, which is the whole point. 1:35:09 So you don't get the one full node. 1:35:13 If I could check the international transfers of Chase Bank, but I can't check my own 1:35:17 coffee transaction. What's the point of that? 1:35:20 Because right now you don't lose anything net of where you are now. 1:35:27 Right now you can run your layer one node and you could still do that in a world where 1:35:30 a sidechain is popular. 1:35:32 But what if instead of a sidechain, what if instead of it being a BIP300 sidechain, 1:35:38 Bob, what if instead I just started my own company, Paul Corp, and I do all the payment 1:35:42 processing through that and I accept and I allow I dispense Bitcoin and I accept 1:35:48 Bitcoin when you it's like a big casino or something or a bank. 1:35:52 People send Bitcoin in and I give them credit and it's fully custodial. 1:35:56 And then I do all the payments there. 1:35:58 And now the cost of running a Paul Corp full node. 1:36:02 Well, let's say I let anyone who gives me ten million dollars, I let them I let them 1:36:07 look at the database. So that's a ten million dollar per year full node of Paul Corp. 1:36:13 Would you be opposed to that? 1:36:18 I wouldn't want to build such a thing, but I think what you do use the exact same 1:36:23 argument you just used that Bitcoin has now lost its so we no longer have a 1:36:26 decentralized currency. 1:36:28 Which is what you just said. 1:36:30 Custodial solutions are a solution to scaling. 1:36:35 Netting is also a solution to scaling. 1:36:38 Both of those are going to happen, whether we like it or not. 1:36:41 I think the goal of everyone in this group is to build other solutions. 1:36:44 But those things are going to happen. 1:36:46 I mean, look, right. 1:36:47 The cash, right now, but other things that. 1:36:53 That is what it is. 1:36:55 It's the non-custodial Paul Corp. 1:37:01 Those already exist with Bitcoin, with the cash app that already exists. 1:37:06 No, that's not it is the non-custodial version. 1:37:11 That's the thing that you said you wanted, you were looking to find. 1:37:15 This is the thing. 1:37:17 All right, let me let me understand. 1:37:19 You want Paul Coin to be non and what it does here, want to be non-custodial. 1:37:24 And what you're doing is you're introducing friction by saying you can't run a node. 1:37:27 It's non-custodial, but you can't run a node unless you pay me much money. 1:37:30 Is that what you're saying? 1:37:31 We're complaining about how the nodes are so expensive. 1:37:33 I'm saying, hey, here's something that has a $10 million a year per node, or 1:37:36 maybe even infinite, because I have a monopoly on Paul Corp, I'm the legal 1:37:40 owner, I own the whole thing and I don't let anyone run a node. 1:37:46 So the cost is now infinite. 1:37:47 Now that's possible today. 1:37:49 And I could scale Bitcoin, as you just said, people will do custodial stuff. 1:37:54 So I, we use the same L1 Bitcoin. 1:37:56 There's no BIP300, but I start Paul Corp. 1:37:59 According to you, this is an improvement for everyone, for Bitcoin and 1:38:02 for all the users of Bitcoin. 1:38:04 It's an improvement. 1:38:05 If instead of we have a decentralized peer to peer sidechain with open source 1:38:09 software and a blockchain that anyone can and people holding their own keys and 1:38:13 this decentralized deposit withdrawal process with an incentive aligned dynamic 1:38:17 group of anonymous members. 1:38:18 If instead of doing that, I start Paul Corp and I accept people's Bitcoin, which 1:38:23 is the same as them, maybe opening a lightning channel or depositing to a side 1:38:28 chain, that would be the analogy. 1:38:29 They do, they send coins to me and then I let them do payments and I 1:38:33 become like a super visa. 1:38:35 And I do all the payments and all the, and I do all the coffee payments. 1:38:40 And this is what you were just complaining about when you said, oh, I 1:38:43 can't validate my coffee payments. 1:38:44 What's the point? 1:38:46 And now you can't validate your coffee payments because they go through Paul 1:38:48 Corp and I'm telling you, are you going to say the exact same thing you just 1:38:53 said about the large block sidechain, which is that we no longer have a 1:38:56 decentralized currency. 1:39:02 I'm still a bit confused. 1:39:03 I mean, like, so, uh, so first of all, it sounds like every single altcoin, 1:39:08 right? 1:39:09 Uh, that's literally what they do. 1:39:12 There's no altcoin. 1:39:13 Why would you say that? 1:39:15 I could be an altcoin. 1:39:16 It could be Bitcoin, right? 1:39:17 So I mean, 1:39:20 okay. 1:39:20 All on Bitcoin. 1:39:21 All right. 1:39:21 So I'm gonna start with Paul Corp. 1:39:23 Um, in one sense, this is called a payment services processor, right? 1:39:27 Uh, it is, uh, lots of these, BitGo. 1:39:34 Yeah. 1:39:34 I mean, this is a valuable corner of the, of the sector of this economy, right? 1:39:39 We must have those because a coffee shop owner does not want to run his own order. 1:39:43 He is going to hire somebody to do it. 1:39:44 And this does increase scalability. 1:39:47 Um, now we don't want all people to be doing that. 1:39:49 Like I think everyone, everyone in this conversation says, well, let's, 1:39:52 what's the other solution here. 1:39:53 Right. 1:39:54 But it will happen. 1:39:56 No, I'm not holding a gun to anyone's head to use Paul Corp, but it's, 1:40:01 let's say it's popular and there's also lightning and arc and there's a layer 1:40:04 one on chain layer one, it's the whole world out there, but let's just say Paul 1:40:08 Corp is as big as the large, the group of large block sidechains would have 1:40:13 been. 1:40:13 It's exact. 1:40:14 Coincidentally, it's exactly as big. 1:40:16 You say this is an improvement. 1:40:17 You say somehow this is an improvement over the BIP300 sidechains. 1:40:21 I'm not saying it's improvement. 1:40:22 I'm saying we can't help it. 1:40:23 We can't stop this. 1:40:24 I mean, so there's always a better or worse for the same. 1:40:30 It's definitely worse, right? 1:40:32 It is an improvement over the Paul Corp idea. 1:40:37 That's all I'm saying. 1:40:37 And that's what you were just asking a moment ago was about what do we do instead? 1:40:42 And you said, well, it'd be custodial. 1:40:43 And I'm saying now this is an improvement. 1:40:45 I'm getting lost here, Paul. I'm sorry. 1:40:47 You can put it on a big continuum. L1 is the cumbersome to use. L1 is what we would prefer everyone use. 1:40:57 We don't want people to use custodial, 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. 1:41:11 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. 1:41:23 Well, OK. 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. 1:41:31 Being able to run a node and not having the blocks be too big is another row in this matrix. 1:41:35 But it's better on both, though, because you can't run a PaulCorp node because it's private and you can't hold your own keys either. 1:41:43 PaulCorp is a straw man that immediately throws me to LemonadeCoin. 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. 1:41:56 That's basically what PaulCorp would do, except that it's on a blockchain instead of as a private corporation. 1:42:04 So when we say PaulCorp, are we referring to custodial scaling? 1:42:08 Yeah, like Visa. 1:42:11 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. 1:42:28 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. 1:42:43 And I think what Paul is saying in response to that... 1:42:46 That's correct. 1:42:47 I'm sorry. Did you say something? 1:42:51 I said that's correct. 1:42:54 I'm just trying to give 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... 1:43:09 Yeah, I know. Just be honest. It's about me. I don't get it. 1:43:13 It's about me. So I think what you're saying, Bob, is that if billions of people were using a large block sidechain for some of their money and keeping only their 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. 1:43:42 And they don't have a node. 1:43:43 So, you know, because let's say the cost is more. 1:43:48 So let's say it always will cost, you know, maybe a couple hundred dollars of laptop and Internet to validate main chain Bitcoin. 1:43:56 But let's say people's coffee purchases are using the thunder sidechain, the big block sidechain. 1:44:03 And most people aren't having a node. 1:44:05 So it's not as self-sovereign. 1:44:09 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. 1:44:19 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. 1:44:34 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. 1:44:49 And so the network effect of that blockchain growing forever might be according to your own view. 1:45:00 Let me stop you there. So everything you said, let's let's just cut off the conversation when we got to stock markets, because that's a whole other can of worms. 1:45:07 Right. Everything you said up to that point, I think, is a correct characterization of my views. 1:45:11 Effectively, what we're doing is we're saying that we're actually going to have a big block blockchain. 1:45:16 I want to buy coffee with it, but I can't run a node because it's just it's too much data. 1:45:21 And I'm gonna have to hire a service provider. Right. And that service provider is dominantly going to be custodial. 1:45:27 Right. 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. 1:45:32 They don't need this large block blockchain because they're all just custodial. 1:45:36 But the guys on the large block blockchain are also going to be custodial. They're also going to do everything for you. 1:45:43 The situation isn't actually different. It's enormously different. 1:45:47 First of all, let me address this claim about how expensive this is, because the reality is it's not significant. 1:45:54 It's touted as though there's this night and day difference between. But there's really not. 1:45:59 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. 1:46:08 But it's just it's just cumbersome to download 550 gigabytes if you can get away with not doing it. 1:46:14 And in fact, I've been on more than one panel, including more than one that was recorded. 1:46:19 So, for example, at 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. 1:46:27 I'm for layer one. 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. 1:46:38 You know, we're not running like a like a Ralph Albright Silk Road empire. 1:46:43 So it doesn't really matter to us. But so a lot of people don't that people already don't run the full node, even with the blocks being small. 1:46:49 The cost of I have estimated with actual numbers that even a cost of a one gigabyte block node. 1:46:57 Which is outrageous overkill orders of magnitude more than what we would have and even what we would need to meet all the demand. 1:47:06 Since we will actually do is we'd phase one or two or three in over time. 1:47:10 They each grow geometrically. I can go into more detail on this if you want. 1:47:14 But really, the total cost is like a few thousand dollars up front, a few hundred dollars a month. 1:47:20 So the idea that it's like some kind of complete and that's for absurd overkill. 1:47:25 And so the idea that there's some kind of thing where it's just like impossible for people to do is not true. 1:47:31 There's people are different. People are all around the world. 1:47:35 They're very different in their in their need for payments and their net worth. 1:47:39 And there's some region of people for which this will not be a problem at all. 1:47:44 Other people will have either a friend or they'll rely on some other node. 1:47:50 They'll rely on fraud proofs or SPV, which are very reliable. 1:47:55 You're willing to accept trust in someone running a big node, but you're not willing to accept trust in someone holding your funds. 1:48:02 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 transaction is in the same situation. 1:48:11 So the coffee transaction is not the same as the Russell Bright drug transaction, which would need to be more. 1:48:18 That latter one needs to be more private and more decentralized. But the coffee one really doesn't need to be. 1:48:24 And so it doesn't matter as much for the people who are using it. 1:48:28 That that that block size be small for the coffee transactions. 1:48:34 Coffee is a silly example, to be honest. Right. 1:48:39 I mean, Ross Albrecht's been in jail for a while. You know, the whole that whole thing imploded. 1:48:44 Let's say I live in Louisiana and my girlfriend needs to get an abortion. 1:48:48 She has to drive another state. I want to pay for that. Right. Maybe that's a more kind of modern example. 1:48:53 You know, this is a this is a transaction I want to get hidden. I get prosecuted for this transaction. 1:48:57 I think it's my whatever you think of this subject. Lots of people think it's their human right to do this. 1:49:03 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. 1:49:11 And the goal here is that the thesis of Bitcoin is that a guy in Africa on solar power can run a node. 1:49:19 Right. What can we possibly get away with? 1:49:24 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. 1:49:29 You know, we're doing this really disturbs me that you can't grasp this point. 1:49:34 The whole point of the 300 is that it makes both groups. 1:49:41 It gives both groups of people what they want. The people who want small. 1:49:45 No one knows that people who are larger blocks, no one. 1:49:50 Right. I didn't. You can't. No one can run a node that can that can validate terabyte blocks. 1:49:57 We centralize that you have. Well, there's no terabyte. 1:50:02 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. 1:50:12 Well, like, Bob, I think that the drivechain vision is that you did claim what other people may or may not do. 1:50:20 And each person is in their own situation. That's very presumptuous. 1:50:24 I think the the drivechain vision is that there will always be disagreements about what the blockchain should contain. 1:50:34 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 blockchain to opt in to a variation such as more private, more scalable, more expressive. 1:50:55 While maintaining Bitcoin as it is today as the base layer, and if we don't do that, some other blockchain 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. 1:51:15 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. 1:51:37 But the the drivechain vision is that, like, the sooner we act, the stronger Bitcoin will be. 1:51:43 We should experiment. Go ahead. 1:51:47 I'm going to push back on that point. I I I'll be completely honest here. 1:51:52 I think something like drivechain is inevitable. 1:51:55 Right. You know, if you read the L2 paper, ELTOO, right, you can maintain an alternate chain via state updates on L2. 1:52:05 Right. We already have five different versions of this that don't have the custodian. 1:52:11 The only thing that's different about drivechains is the peg in peg out mechanism. 1:52:15 We already have, you know, liquid Rootstock counterparty, Omni and Ethereum. 1:52:20 Right. And they're doing their thing. And I think it's early days. 1:52:24 I think the conversation I mean, one of the problems with drivechains is that there there's a number of different narratives around it. 1:52:31 Right. I like the conversation we're having about like a big block sidechain versus the main chain. 1:52:35 It's very narrow. Let's let's talk about it. Right. 1:52:37 But it very quickly gets diverted into ICOs and stock assets and, you know, all kinds of other things. 1:52:44 And, you know, Paul's previous description having like geographically localized currencies and then my description of 27 different currencies. 1:52:52 All right. This is all very confusing. Right. I don't see the emergency, I guess, is my big picture. 1:52:59 The tail emission argument is correct. You know, the that paper is correct. 1:53:06 And but we have 100 years to solve it. So why now? 1:53:10 The tail emissions argument, I would suggest, and I'm not sure which paper you're referring to, 1:53:15 but they're all very interesting about Bitcoin's long term fee reliant security model. 1:53:22 That that argument every day. 1:53:24 It's something with any bad times. 1:53:28 Yeah, Paul. Yeah. You lost perception, but you're back now. That's great. 1:53:32 So you would like to actually can't hear me right now. 1:53:36 Yes, we can hear you. I can hear you, Bob. 1:53:40 We summarize that we I mean, I appreciate that you just said that. 1:53:46 I appreciate you said drivechain is is something or something like it is inevitable. 1:53:53 And also that you are if I heard you correctly just now, 1:53:58 you're somewhat persuaded by concerns related to Bitcoin's long term fee reliant security model. 1:54:05 So I would argue that it isn't a problem for the future. 1:54:08 That that concern exists today and is eroding Bitcoin's credibility in the eyes of not just alt coiners, 1:54:16 but some at in within Bitcoin's community like Peter Todd and Paul Sztorc 1:54:22 and others see it as a more concerning problem than what you described, which is that it's 100 years away. 1:54:30 So anyone who doubts Bitcoin's security model might not invest in Bitcoin. 1:54:37 And the alt coiners, you know, voice this concern daily to erode Bitcoin's narrative of monetary stability. 1:54:45 Right. They say that Bitcoin is a problem. 1:54:49 The by the way, the paper I'm talking about specifically is from a group of Princeton. 1:54:53 And the title of the paper is Bitcoin is unstable without the block reward. 1:54:57 I believe this is the tail emissions argument. As far as I can tell, that is correct. 1:55:01 Oops. The argument being that you can see tonight. 1:55:06 OK, go back. What happened to my phone? No, that paper. Can you guys hear me? 1:55:11 Yeah, that paper is not. Yes, we can. We can, Paul. 1:55:15 Yeah, that paper, Bob, is not about the need for tail emissions so much as an argument that when security becomes fee reliant, 1:55:26 then the array of selfish mining and other kind of mining attacks or mining behaviors would increase that are not incentive compatible. 1:55:39 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. 1:55:50 They didn't explicitly call for tail emission in that paper. 1:55:54 But I think you're right that there is there are questions around whether the fees will be robust enough. 1:56:00 Right now, they're quite low. We're 14 years in a couple hundred million people own Bitcoin in some form. 1:56:06 And and yet there is still a question about why aren't the fees higher? 1:56:11 So it would be great. I think you would agree that all things equal like Ceteris Paribus. 1:56:16 Ceteris Paribus, would you agree that boosting fees by having more users use blockchains that pay to Bitcoin that would you agree that is a favorable thing? 1:56:26 If we keep everything else equal, it's better if Bitcoin has more users on more chains that merge-mined with Bitcoin main chain. 1:56:36 No, I think having more people use Bitcoin is better. That's what creates that. 1:56:41 And that what causes that having people have people having Bitcoin, it's on ramps, it's off ramps. 1:56:47 It is payment providers. And, you know, one of my long term frustrations is that I see very, very few. 1:56:54 I work on evaluating startups and I see very, very few, almost zero applications for VC funding for payment processor. 1:57:03 I will take your Bitcoin. I'll give you dollars. It's very fucking simple. You're in three percent off the board. 1:57:07 It's really fucking simple. You know, Bitcoin, Bitco, quit this business. 1:57:12 Sorry, not Bitco, the other one. Anyway, I don't know why people aren't doing this. 1:57:18 And all of this stuff we're talking about about blockchains is fucking irrelevant if nobody actually has it in their wallet. 1:57:24 And a payment processor isn't either side saying, I want to take that money. Right. 1:57:29 You know, it's a payment processor and it also is an on ramp because you can be on boarded directly to layer two. 1:57:36 Without this is all abstract, I'm talking about a physical coffee shop with a physical iPad that has physical software on it actually takes my payment. 1:57:43 I don't give a shit what that payment is, you know, whether it's like coin or whatever, that doesn't exist. 1:57:48 Yeah, well, it's true that Bitpay used to do that. 1:57:51 And Bitpay, I think it's partly because of the lack of sidechains that we had the whole block size war at all. 1:57:58 And that's partly that that whole half of the community that was more interested in payments got completely marginalized, which is enormous. 1:58:08 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. 1:58:19 But he said something like drives are inevitable. So if something really important happened, then that someone would love to hear me respond to them. 1:58:29 I would love it if they would repeat it. But if I was inevitable, we already have five different versions of them operating right now. 1:58:36 You know, Rootstock, Omni, et cetera. 1:58:38 Yeah, but, you know, the federated model is night and day different in my eyes to BIP300. 1:58:47 You have to choose the federation. You have to prove to people the federation is trustworthy. 1:58:51 The federation, as more coins go in, the federation has more upside from stealing. 1:58:58 But they don't have a corresponding increase in downside as the miners get paid more transaction fees from every sidechain. 1:59:04 They get paid in BTC, which has an exchange rate that they want to be high. 1:59:09 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, whereas the federation gets nothing. 1:59:20 If the Bitcoin price goes up or if the fees go up, they don't get nothing else for themselves. 1:59:28 Exactly. Just to elaborate on that for a moment. 1:59:36 If you say to us, as you have, that we already have Liquid and Rootstock and a few others, why do we need Drivechain? 1:59:47 But you also say that Drivechain in the long run is Drivechain or something like it is inevitable. 1:59:53 I want to ask, suppose we use SuperTestNets phrasing, which is that, as he's tweeted, Drivechain gives us slightly better sidechains. 2:00:02 And he supports BIP300. I shared his tweet in the nest. 2:00:06 Do you agree or would you agree that if we get slightly better sidechains, that would improve Bitcoin's total addressable market, improve Bitcoin's security budget expectations and thereby strengthen Bitcoin's rate of value accrual and miner revenue and grow Bitcoin adoption? 2:00:30 I agree with that statement. The latter half of that statement sounds like Ponzinomics. 2:00:36 Like, let's make the number go up, which I really don't like. 2:00:40 Second of all, the... 2:00:44 We already have five of these things. And the fact of the matter is that if you're a business and I want to make a sidechain to do blah, blah, blah, I can go do that. 2:00:53 I can do it on Liquid. Bitcoin is really important and that's better than making my own chain or doing it on Ethereum. I could go do that. It's not happening. 2:01:01 The business use cases for using sidechains is not happening. So I don't think the reason that's not happening is because of the pegout mechanism. 2:01:11 And if you really think that is the reason, go find some CEOs who started a business and said, yeah, I was going to do this on Bitcoin, but I couldn't. 2:01:20 And the reason... 2:01:31 Jeremy Rand, and Dinkcoin. 2:01:34 Everyone, myself with the Prediction Markets Project. 2:01:37 Roger Veer and Roger Veer tried to do all of that. 2:01:40 Roger Veer was obviously a Bitcoiner before the split. 2:01:44 everyone tried to do it Bitcoin first. 2:01:47 all of the legitimate options. 2:01:51 The 2:01:51 The Federation has many problems, but one is that all that anyone can prove is that it's controlled by 15 keys or so. As far as anyone knows, all those 15 keys are the same person. 2:02:03 So this, I think, creates a somewhat of... Liquid is not even open source. So I think it's not quite... 2:02:10 In a business, you can handle that risk, right? Every business has risks. Your investors understand those risks. You put in your disclosure, you take out insurance. 2:02:19 Unfortunately, I have to go do a real... I'll be back, but I have to temporarily leave and do actual work, a meeting for a moment. So I'll be back. So everyone hang out and have fun. 2:02:30 Okay. Thanks, Paul. 2:02:32 I'll be back. See you later in a second. 2:02:36 Bob, you tweeted in the past and we discussed yesterday on Twitter and some very nice tweets and thank you for responding to all of them. 2:02:43 Like I tweeted to you that you have said in writing on Twitter that Ethereum is a sidechain of Bitcoin. 2:02:51 So when I heard you just now say that there's very limited use of Liquid, if I heard you correctly, I think that if you want to steal a man the case for drivechain, then you should say something as follows. 2:03:06 You might say, and let me know if this is what you're thinking, you believe that drivechain would bring potentially many billions of dollars of demand for Bitcoin. 2:03:17 But since you believe that Ethereum is a sidechain, therefore there's enormous market for sidechains on Bitcoin and making them better by your own terms, because you wrote that Ethereum is like a sidechain of Bitcoin. 2:03:30 So you and also you object, it seems you have this principled kind of objection to talking about making Bitcoin's price higher through Bitcoin development, technically. 2:03:42 We should think that that's something we can, not something that makes the number go up. 2:03:48 Because if you want to make the number go up, you fool with interest rates, which is exactly what Ethereum did. 2:03:53 That is not interesting. 2:03:55 You mean interest rates like the way they have staking and that sort of thing? 2:04:03 Yeah, moving from proof of work to staking, right? 2:04:05 So now there's interest rates and now they can manipulate that interest rate. 2:04:07 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, in other words, increasing Bitcoin's potential for value accrual and return to Bitcoin holders. 2:04:25 Then that is not morally dubious, you know, all else equal. 2:04:31 Don't we want Bitcoin to be enormously successful and aren't we literally invested in it? 2:04:39 I think everyone in this conversation wouldn't be in this conversation if that wasn't the case. 2:04:44 Right. Myself included. Now, it's a scammy argument. 2:04:50 Right. Let's do whatever we can to make our number go up. 2:04:53 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 Ethereum Foundation does. 2:05:05 If the goal is number go up, that leads to a lot of terrible outcomes. 2:05:09 Right. That shouldn't be the goal. And I don't think that should be the argument. 2:05:13 It's a scammy argument. The argument that let's try and get Bitcoin to as many people as possible and make it a uniform payment across the world. 2:05:20 That's compelling. And it also makes number go up. But the narrative can't be I want my own personal profits to increase. 2:05:26 You can't you can't go out on Twitter and say I want to be rich. Right. 2:05:30 And, you know, that's what the whole number go up and television argument stuff sounds like. 2:05:36 I think it's I understand what you're saying. But, you know, I've been a libertarian my whole life. 2:05:41 I identify as an anarcho capitalist. I love the writings of Von Mises and Rothbard. 2:05:47 I think Bitcoin's value accrual and the growth of its network effect as rapidly as possible is a moral imperative. 2:05:57 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. 2:06:14 But I think that, you know, the growth of the protocol economically is simply a fact that would attend its success. 2:06:25 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. 2:06:34 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 and the absorption of all of the good technology that you've noted in this conversation. 2:06:59 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. 2:07:10 We want them to build it on a Bitcoin sidechain instead of an altcoin if those are the choices. 2:07:16 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. 2:07:27 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. 2:07:36 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. 2:07:44 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. 2:07:54 You really need to focus the narrative on something much more concrete and much more valuable. Another another goal, another purpose. I want to be the one that's raspberry pie. OK, fine. 2:08:03 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. 2:08:13 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. 2:08:21 We don't want to emulate that. We need to be higher, maybe better. Right. We need a better argument. 2:08:27 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. 2:08:39 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. 2:08:49 And that's how we wrest control of money away from government. Right. That's not a narrative of getting rich. 2:08:56 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. 2:09:10 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. 2:09:17 Can I respond to what you said? Yeah, please. 2:09:23 When when you say number go up. Right. This this comes down to investment advice. Right. 2:09:28 And there are a lot of people in this world that have less technical capacity of the people on this call. 2:09:33 All of us may know in the back of our mind that a given thing might cause number go up. Right. 2:09:37 We might vote for it for those reasons. Right. When you go out in a public forum and you say on Twitter number go up, 2:09:44 what you're really doing is you're encouraging people to invest in Bitcoin. Now, this is security fraud, basically. 2:09:51 Right. It's promising future returns. And the people looking at that don't have the capability to evaluate whether that's really true. 2:10:00 Right. 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. 2:10:09 We've been in the commodities corner, not the securities corner. But as soon as enough people are saying number go up, 2:10:16 there's a lot of people on Twitter promising future returns. This now satisfies one of the one of the pegs of the Howie test. 2:10:22 Right. 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. 2:10:27 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. 2:10:33 Right. Sure. We all want to get rich. Everybody here is here because they care about Bitcoin. 2:10:38 But that can't be the goal and it can't be the narrative and it can't be the thing you talk about on Twitter. 2:10:44 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. 2:10:54 Reindahl, please. And DJ, jump in any time. I was going to take the conversation in a slightly different direction. 2:11:01 Getting back to something that Bob said a few minutes ago, I wasn't able to speak. I was doing something else. 2:11:07 But, you know, I think it's important to look at, like, what use cases have gotten traction for Bitcoin and other things. Right. 2:11:16 Like, you never know what people want to use some piece of technology for. 2:11:20 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. 2:11:37 Like like there's there's more people transacting more value or storing more value in Bitcoin than the rest of the ecosystem combined. 2:11:45 And I think it's because, you know, people like the network effects of money are real. 2:11:51 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. 2:12:04 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. 2:12:17 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. 2:12:29 Like Bitcoin is bigger than everything else combined. 2:12:32 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. 2:12:45 You know, maybe it doubles like the size of Bitcoin in terms of, you know, utility market cap, like all these things. 2:12:53 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 a theorem contracts on it or something. 2:13:08 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 Rootstock is because they don't like the peg out mechanism. 2:13:23 Like, it'd be really interesting to find people who say, like, oh, man, Rootstock would be perfect if not for the peg out. 2:13:30 So I had to go use a theorem instead. 2:13:32 Like, I don't I don't know if you're going to find those people. 2:13:34 I think the reason why people pick a theorem over Rootstock is because it has its own network effects. 2:13:41 And people who want to build IBM applications want to do it where there's more tokens, more tooling, more developers, like more services, more applications. 2:13:51 So, like, 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 don't address those use cases. 2:14:12 I think SuperTestNet has said that he's not sure if he would use a federated sidechain. 2:14:24 So I think some people are in the Bitcoin community attuned to the lower level of the security design of a federated sidechain as opposed to a drivechain sidechain, because the federated sidechain, as Paul mentioned earlier, even if you're happy with it right now, it doesn't scale well. 2:14:47 It's the same 15 people, whether there's $50 million or $50 billion in the sidechain. 2:14:55 So as the value of the sidechain increases, the risk of collusion or coercion of the functionaries increases, whereas in a drivechain, it's, as Adam Back says, more peer to peer because anyone can participate in mining and run a node and get involved in the security model without a social privilege. 2:15:22 They don't have to be chosen for it. 2:15:24 They just need the resources. 2:15:26 What it really is, is it the dynamic federation whose membership is set by hash rate, right? 2:15:32 Like that's really what we're talking about. 2:15:34 Yes. 2:15:35 Yes, although I think that saying it's more peer to peer, which is Adam Back's phrase, is right because that's what Bitcoin is all about. 2:15:42 Anyone can participate in any part of Bitcoin without a social privilege, whereas in a federated sidechain, people are chosen socially and that means it's, one might say, not peer to peer. 2:15:56 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. 2:16:08 It's a group of people who aren't named who are walking around with the keys to the billions of Bitcoin there. 2:16:18 You can't participate in that security model if you have hash rate, but in a drivechain sidechain, you can participate in the security model. 2:16:26 So it's more like Bitcoin. 2:16:28 It is making Bitcoin layered, layered money. 2:16:31 Like that's the future. 2:16:33 Like as Bob says, things like this are inevitable. 2:16:36 So the real question is, you know, does the community feel like Bob does that there isn't a crisis 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? 2:17:01 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? 2:17:11 And then that altcoin would, would compete with Bitcoin in a very serious way. 2:17:23 How do you feel, Rheindahl? 2:17:25 I also don't think it's a given that if we had drivechains tomorrow, it would absorb the whole ecosystem. 2:17:31 Like I think I said earlier, I think the first drivechain that comes out that's from somebody other than LayerTwo Labs, it ends up being a BIP300 powered peg to Ethereum. 2:17:47 Right. Because like, like if you're, if you're out there and you, you know, want to earn fees and you follow all this, I think you don't say, all right, I'm going to go make Rootstock as drivechain. 2:18:02 You say, I'm going to go and try to knock over WBTC by having a less trusted peg to Ethereum. 2:18:11 And, you know, like does that provide mining revenue for Bitcoin miners? 2:18:15 Like, yep, absolutely. It's also less trusted than, you know, WBTC right now. 2:18:21 But I, I don't think it's a given that, you know, drivechains lets Bitcoin just swallow all of the other alts. 2:18:32 Bob? 2:18:33 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. 2:18:45 I don't know how many of you were around then. This is like 2018, I think, 2017, when they started Liquid. 2:18:53 And they said, all right, so like, it's hard to experiment on Bitcoin. Let's make a sidechain to do it. 2:18:57 So they did it. And then, you know, there's a federated peg out peg in mechanism. 2:19:01 As far as I'm concerned, when I said it's inevitable, it's already happened at least five times. 2:19:08 There's probably more I don't even know about. Right. It's already happened. Right. 2:19:11 Now, if this sidechain mechanism is truly valuable, somebody will build a business on those things. Right. 2:19:18 Why haven't they? And I think the reason that they haven't is that. 2:19:23 And the reason drivechains is getting subtracted from the community is name affinity. Right. 2:19:28 If I build a, you know, something on a Rootstock, who the fuck knows? Well, what's Rootstock? I don't know. Is it Bitcoin? I don't know. 2:19:34 Right. So there is an affinity scam going on where we say, oh, but we're actually on Bitcoin. Right. 2:19:41 That's that's what's really going on. I think there are a number of ways to do peg in and peg out. 2:19:47 You could use a federation. In fact, you can use a federation of miners who do things but don't involve the mining process. 2:19:53 Use a federation of, you know, two thirds plus one of a bunch of people and do that. 2:19:59 But a federation with two thirds plus one is effectively the same as a mining federation. Right. 2:20:08 It's just a different set of players. So what's really the point here? Right. 2:20:13 The point is that none of these things have succeeded. No one is building businesses on any of these five alternative chains. 2:20:22 And I want to see, you know, before I vote for something like drivechains, which, again, I think is inevitable. 2:20:27 I want to see businesses built on. I want to see the sidechains actually make sense. 2:20:32 But Bob is the original discussion where we have like a big block, small block discussion, which doesn't make sense. 2:20:41 No, those are great comments. I appreciate you sharing them. 2:20:45 So this brings me back to your tweet where you wrote that Ethereum is a sidechain of Bitcoin. 2:20:52 So since you believe it is, you cannot say that sidechains don't have hundreds of billions of dollars of market right now. 2:21:04 So one more thing, 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 2:21:15 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 and so I 2:21:25 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 2:21:32 ordinary user. It is only for exchanges to move Bitcoin around in high volume. 2:21:38 It's not for ordinary people. 2:21:40 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 2:21:48 people at large scale. 2:21:50 But that wasn't the original historical record, I think, according to Hompas. 2:21:57 Maybe Hompas didn't pop in. 2:21:59 Both are true. 2:21:59 Right. So I know Matt, Matt worked at Blockchain at the time. 2:22:04 And yeah, so there's a business narrative and there's a practical narrative, right? 2:22:08 So the business narrative like Blockstream as a company created a Liquid platform at the time. 2:22:13 I worked at Fidelity and they really wanted Fidelity to be one of the validating nodes. 2:22:16 Right. And so they came to us and we looked at it and we said, all right, so you want us to host this thing? 2:22:20 And they're like, oh, we're a service provider. 2:22:22 We're just going to hand you the box. 2:22:23 Why don't you put your data center and run it? 2:22:25 We're like, that's weird. 2:22:26 What's the liability considerations around that? 2:22:28 What if somebody loses money when on their payout? 2:22:30 Right. What do we do with that? 2:22:32 How do I how do I handle that? 2:22:33 How do we even know that that's happened? 2:22:35 And, you know, so long story short, Fidelity declined to be a validating node for Liquid because there are important liability concerns. 2:22:49 You know, I think one of one of the narratives in this community that we like to say is let's make a federation that will solve all problems. 2:22:55 Well, no, in actual business, you know, in the way business works, you want to know who to sue. 2:23:01 And so when something goes wrong and you lose money, you need to know who to sue. 2:23:04 And if that's like seven or 15 people, you're kind of fucked. 2:23:07 Right. You're never going to sue them. 2:23:09 Right. Yeah. 2:23:09 It might work better from a computer science perspective. 2:23:11 From a business perspective, it doesn't make any sense at all. 2:23:13 You're right. So we chose not to be your validator. 2:23:18 So go ahead. You're right. 2:23:19 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 to 2:23:34 apology. So that's what we want for Bitcoin's sidechains. 2:23:39 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. 2:24:01 OK, now let's say I'm starting a business and I want that business to use sidechain for whatever reason. 2:24:07 There's a sidechain, right? Do I want to let's say something goes wrong with the sidechain? 2:24:12 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. 2:24:21 We know who to sue. 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? 2:24:28 It's 15 people. Maybe I can get blockchain to tell me who they are. 2:24:31 I don't know. Or are they going to be happy with a miner federated peg in, peg out where it's, you know, literally impossible to figure out who these people are? 2:24:39 Good. From a business perspective, the first one is preferable. 2:24:44 No, I think no one is doing all of all of the businesses who want who everybody claims wants this would not want the first option. 2:24:52 I would only want to keep on coming back to the fact that you've said that Ethereum is a sidechain. 2:24:59 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. 2:25:08 But you also believe, as you wrote, that Ethereum is a sidechain, which is so large that it's rivaling Bitcoin, right? 2:25:15 It's almost half the value of Bitcoin. 2:25:17 So I don't understand your view. 2:25:19 Are sidechains popular or unpopular, Bob? 2:25:26 Why is why is Ethereum popular? 2:25:28 It's because of ICOs. It's because the ability to issue unregulated securities. 2:25:32 Right. And again, Bitcoin so far has survived not being a regulated security. 2:25:38 If we suddenly tie, you know, thousands of drivechain unregulated securities to ourselves, we will suddenly find ourselves in the crosshairs of every regulator on the globe. 2:25:47 And they're going to say, oh, you know, OK, another another important statistic to keep in fact in mind is that the total market cap of equities across the world is approximately 10 times that of gold. 2:26:01 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. 2:26:09 Right. So, you know, when those things exceed Bitcoin's market cap, what does it matter? 2:26:15 This 10 percent little payment system that somebody created back in 2009, who cares about that? 2:26:22 There's billions and billions of dollars of fraud happening in the securities market. 2:26:26 Let's go for that. If we have to shut down that other system to do it. 2:26:30 They're going to do it. 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. 2:26:44 And if we don't aim to do that, then a different protocol will. 2:26:47 No, false. The security concerns of a security of an equity are very, very different than that of money. 2:26:54 I think that's a very important concept to think you can tie everything to Bitcoin. 2:26:59 It's technically possible. That's why I said it's inevitable. 2:27:02 We already have five different implementations of this. 2:27:04 You can do it right now. 2:27:06 The security concerns of a stock or an equity are very different. 2:27:12 You know, you've got to register with your local thing. 2:27:14 You've got to not short sell. You've got to register the executives. 2:27:17 You've got to not do insider trading. 2:27:19 You've got to do all these things. 2:27:20 Right. And that needs to be regulated. 2:27:22 It should be regulated. 2:27:24 We're all we're all for the worse. 2:27:27 If we allow insider trading, we say, fuck it. 2:27:29 Everybody can register anything. 2:27:31 We're going to insiders to trade as much as they want. 2:27:33 Right. We are all fucked by doing that. 2:27:35 We want the regulators to actually do their job. 2:27:38 And the security concerns around a securities chain. 2:27:42 Salon is a great example. 2:27:44 Better than Ethereum, in my opinion, are different from Bitcoin. 2:27:47 And when you mix the two, you risk bringing in the regulators to Bitcoin. 2:27:53 Well, that's an interesting line of reasoning. 2:27:57 It sounds like, you know, compliance is top of mind for you. 2:28:03 And the cypherpunk vision, which is the cypherpunk perspective, 2:28:09 which is what can we build using cryptography and. 2:28:16 And, you know, the vision of electronic commerce, 2:28:20 you know, peer to peer technology, what can be built there, 2:28:22 let's build everything we can to empower people. 2:28:25 That's not a compliance first mentality. 2:28:28 I think the Satoshi mentality, that cypherpunk mentality 2:28:32 is different than what you seem to present, which is like compliance first. 2:28:36 No, no, no, no, no, no, no, no, no, no, no. 2:28:38 The different things. Right. 2:28:39 So the security first compliance mentality is not one I espouse. 2:28:43 It's not what I appreciate. It's not what I want. Right. 2:28:45 But it is the way the rest of the world works. 2:28:48 And we have to we live in that world right now. 2:28:51 Let's try and make sure our cypherpunk experiment 2:28:55 doesn't get tainted by that bullshit. 2:28:57 That that's what that's what I'm really concerned about. 2:29:01 I mean, I would argue that it's not just my sense 2:29:03 like of what Satoshi would say about this. 2:29:05 We know for a fact that he explicitly countenanced, 2:29:10 meaning he acknowledged and approved of bit DNS. 2:29:14 And he referred to a whole multitude when he used the phrase 2:29:17 all the networks in the world. 2:29:19 So he believed that perhaps every blockchain ever would be merged 2:29:23 mine with Bitcoin. 2:29:25 And it follows logically that I think if he had known about a mechanism 2:29:28 for a two way peg, he would, of course, preferred that all the block chains 2:29:33 share not only hash rate, but also share monetary policy 2:29:37 through the two way peg. 2:29:39 I think that is an unstoppable vision. 2:29:41 And suppressing it or delaying it endangers Bitcoin 2:29:45 because another protocol, as you say, will eventually it'll be adopted. 2:29:51 OK, so here's the thesis, right? 2:29:52 There are two potential theses with respect to the long term 2:29:56 value of Bitcoin. 2:29:57 The first thesis is that 2:30:00 it remains gold like, let's say, right? 2:30:05 It is digital gold, right? 2:30:07 And it behaves like gold is that gold is approximately 10 percent 2:30:10 of the total equities market cap is a small fraction of the total 2:30:15 economy of the world. Right. 2:30:17 So that's one thesis. 2:30:18 Bitcoin remains for all time, 10 percent of equities. 2:30:21 All right. 2:30:22 The second thesis is that we tie everything to Bitcoin, all equities, 2:30:26 all everything to Bitcoin, right? 2:30:29 This means that the the price of Bitcoin has to accelerate 2:30:34 to a number that is not just equal to the total market 2:30:38 cap of all other equities, but far beyond that. Right. 2:30:41 And this comes back to the argument. Right. 2:30:43 So if I can short one thing 2:30:46 and then trade another, right, that's that's basically right. 2:30:50 In order for Bitcoin to be the consensus model 2:30:54 for all these other things, that means I can't short this other thing 2:30:57 and degrade Bitcoin's consensus to 2:31:02 make my trade profitable. Right. 2:31:05 Which means Bitcoin has to have a higher market cap 2:31:08 than all of these other things combined. 2:31:10 So these are the two theses in my mind. 2:31:12 Bitcoin remains gold like remains about 10 percent of total equities 2:31:15 or Bitcoin remains. 2:31:17 It goes the other direction and says Bitcoin is like basically proportional 2:31:21 to the total sum of the market cap of everything in the world. 2:31:25 I think the latter thesis is rather hard to believe. 2:31:30 I think it's possible. 2:31:32 I think it's hard to believe. 2:31:33 I think in the interim, while we're arguing about drive 2:31:35 chains and stuff like this, bringing regulators is not a good thing. 2:31:38 Let's try to remain independent as long as we fucking can. 2:31:42 But those are the two things, right? 2:31:44 And there's nothing in the middle. 2:31:45 OK, so I think the middle ground, the the strategy. 2:31:49 OK, you suggest, which is to try to avoid regulatory pushback. 2:31:53 That's one that Satoshi mentioned in the early discussions back in 2010. 2:31:58 He said, let's not bring the heat from, you know, associating Bitcoin 2:32:03 with WikiLeaks. 2:32:03 However, another way of looking at it at this point, 14 years, 2:32:07 roughly 14 years later, is that if Bitcoin grows as fast as possible, 2:32:13 then we would be following in the roadmap that Hayek mentioned in 84, 2:32:18 which is sly and roundabout and then something they can't stop. 2:32:23 So if we blitz scale, if we increase Bitcoinization as rapidly as possible, 2:32:28 trying to absorb every blockchain community onto Bitcoin, 2:32:32 strengthening it in every way, 2:32:34 that is an end run around the regulatory state, the welfare warfare state. 2:32:40 And we get to the touchdown end zone, which is it's global money. 2:32:45 There's innumerable projects built on top of it. 2:32:47 Everyone is using it. 2:32:49 It's unstoppable. 2:32:50 It's succeeded. 2:32:52 Isn't that a better strategy than one of fear and limitation? 2:32:58 Yes, I think you're completely correct about all of that. 2:33:01 Do you really think we're anywhere near the latter thing you said? 2:33:04 How many things can you buy with Bitcoin? 2:33:06 Right. If all the governments in the world said, fuck this shit, 2:33:09 this interferes with our monetary policy, we're not going to allow it. 2:33:12 Right. This is not a technical argument. 2:33:13 Right. I mean, like governments can say you cannot do Bitcoin and go to jail. 2:33:17 Right. All governments can do that. 2:33:18 Right. The inevitability argument relies upon commerce first. 2:33:25 We don't have commerce today. 2:33:27 We have to develop commerce before we get to that point. 2:33:30 Developing drivechains where we can develop a stock market 2:33:33 on top of it is way, way, way premature. 2:33:36 I think the stock market idea is so different 2:33:39 than what the drivechain community has contemplated. 2:33:43 So it's sort of out of left field. 2:33:45 I mean, the sidechains that we think will have traction 2:33:48 such as privacy, scaling and others 2:33:53 aren't about the stock market. 2:33:55 I think that the whole idea of 2:33:58 scaling chains are there. 2:34:00 Right. Most of them are equities. 2:34:02 Right. Again, ten times the market cap of equities is ten times that of gold. 2:34:06 You're going to get ten times more equities than you're going to get gold. 2:34:09 And if you include scammers, you're going to get a hundred times more equities. 2:34:12 So if, Bob, if the if Ethereum is blessed 2:34:16 hypothetically tomorrow by the SEC, then it seems like your 2:34:20 your own statements would lead us to conclude, if they're correct, 2:34:25 that Ethereum is going to have ten times the market cap of Bitcoin. 2:34:30 Sorry, I missed the last part. 2:34:31 Ethereum is going to what? 2:34:34 It just seems like you are you are saying that the total market, 2:34:37 the total addressable market of the Ethereum roadmap, in your view, 2:34:40 is much larger than the total addressable market of Bitcoin 2:34:44 in its current form, in your view. 2:34:46 And therefore, I wonder how you reconcile that with the fact 2:34:50 that network effects in money will cause a larger protocol 2:34:54 unit of account to displace a competitor. 2:35:02 So Ethereum is not going to supplant Bitcoin 2:35:06 and be a stock market 2.0. 2:35:07 I mean, again, there are two theses. 2:35:09 One is money and the other is stock market 2.0. 2:35:12 Ethereum is never going to be stock market 2.0 2:35:14 because of scalability concerns, right? 2:35:18 Now, there are 17 different ways of doing 2:35:21 polygon chain and all this other shit. 2:35:23 I don't even know all of them, but it's not going to happen. 2:35:26 Right. But isn't that kind of the problem, though? 2:35:28 But isn't that the thing for a stock market 2.0? 2:35:34 Isn't this kind of the problem, though, is that if you're against sidechains, 2:35:38 you kind of have to claim infallibility. 2:35:40 You have to say, I know everything that every altcoin is doing, 2:35:44 and I know that it's not as good as the BTC strategy, 2:35:49 which seems like an awfully big risk to take for in exchange for no benefit. 2:35:52 Because remember, if anything bad happens because of Bith 300, 2:35:56 we can just soft forked out 2:35:58 either any individual sidechain or just the entire Bith 300 thing. 2:36:02 So just rewind for a second. 2:36:06 I'm talking about general market structure here. 2:36:07 And you just made me very lost. 2:36:09 And Rindle's been holding up his hand for a long time. 2:36:11 I think you let him speak, too. 2:36:12 Oh, it was just as a kind of, I don't know, rhetorical bit of feedback. 2:36:17 Like, I generally don't find appeals to Satoshi to be very convincing arguments. 2:36:21 So I would just like, be careful how many of your arguments are appeals 2:36:25 to Satoshi Post from like 2010. 2:36:29 Yeah, that's fair. That's totally fair. 2:36:30 And I do that. We know a little bit about history. 2:36:34 No, I did it. It's Henry. It's me. It's all me. 2:36:38 I make mistakes all the time. 2:36:40 I mean, yeah, I I totally respect that, Rindle, of course. 2:36:44 You're 100 percent right on that point. 2:36:46 And also, you know, thanks, everyone. 2:36:48 I just want to take a moment, just a breather to say thank you, Bob, for being here. 2:36:53 Thank you, Rindle and DJ and others who've who've come up or who who've requested to. 2:37:00 We've had a bunch of requests, but I we had such a an in-depth conversation going. 2:37:05 I didn't want to have the stage become too crowded. 2:37:07 So thanks, everyone, for your patience. 2:37:10 Just to reset the room for a moment. 2:37:12 We meet every week here on Twitter to talk about drive 2:37:16 chain and related topics. 2:37:18 Everyone's welcome. 2:37:19 We especially appreciate it when when, you know, excellent thinkers 2:37:25 like Bob and others who aren't fully on board 2:37:29 with drivechain at this moment come in to share their view 2:37:34 because it's essential that the community develop the best possible understanding 2:37:39 so that they can make the best informed view and decision. 2:37:43 So it's so valuable to have you here. 2:37:45 Why don't we go for another half hour or so 2:37:49 and then we can maybe wrap for next week and let's jump back into it. 2:37:55 I need a fucking calendar to do this. 2:37:57 I just saw it on Twitter and I did fucking jumped in. 2:38:04 Right, well, Rindle, why don't you kind of give your take on these recent topics 2:38:09 because you've been listening for a while, what's your take on on Bitcoin's total 2:38:13 addressable market, whether it should be money or whether it should be 2:38:18 a platform for many things other than just money like oracles 2:38:22 and or more scalable money, more private money, multiple blockchains. 2:38:27 Does that excite you? 2:38:28 What do you think about that? 2:38:30 I'm I'm just listening. 2:38:31 I mean, like is Bitcoin money or Bitcoin smart contract fuel 2:38:35 is a debate that's been happening for a really long time. 2:38:39 So I'm I'm just listening to the conversation. 2:38:44 And again, the sidechain point is that everyone should be able to get 2:38:51 exactly what they want. 2:38:52 They should get it like a la carte. 2:38:55 And if they want, if you all you want is layer one 2:38:58 ossified layer one that doesn't change and is just the same thing, 2:39:02 you can just keep that and you can ignore all the sidechains. 2:39:05 Your layer one node does not need to know about any sidechain software 2:39:10 or any sidechain blockchains to be a fully validating node on L1. 2:39:16 Can ignore all of that. 2:39:18 That's why the whole miners can steal thing is even possible. 2:39:21 It would be easy to make that impossible. 2:39:24 By just flipping that other trade. 2:39:26 I'm not saying the miners can steal, but I want to go back to our previous 2:39:28 argument where we end up with one drivechain with very big blocks. 2:39:32 Right. And that becomes a payment infrastructure versus the main chain. 2:39:35 What's the value of running a Bitcoin node in that circumstance? 2:39:38 Right. It's like as much as we can't even get 2:39:41 like speaker participants in conferences to run, you know, main chain today. 2:39:47 Someone who just wants to buy coffee or get an abortion for his girlfriend in Florida 2:39:52 is definitely not going to run a node with big blocks. 2:39:54 So. I don't I don't look at you, I don't think. 2:39:58 Yeah, well, I guess you don't. I mean, 2:40:02 yeah, like right now they don't accept Bitcoin at all. 2:40:05 So you're in the exact same problem. 2:40:07 So, yeah, the way I see it is relative to you have to compare 2:40:11 where we are today to where we would go in the large block sidechain world. 2:40:16 Which is exactly the same if they only accept the large block sidechain, 2:40:21 except better because they're going to accept Bitcoin. 2:40:23 So whoever's doing it, BitPay or whatever, I mean, look at it from BitPay's 2:40:26 point of view, they're going to run the large block sidechain. 2:40:30 Right. Or whoever it is, the payment processor. 2:40:33 It stands to reason they would. 2:40:35 First of all, in order to run a sidechain node, just the technology. 2:40:42 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. 2:40:49 It's a fundamental requirement because it needs to know about which deposits are being sent to it, needs to know about merge mining. 2:40:56 So everyone who accepts 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. 2:41:09 So maybe they can make a management decision. 2:41:13 The marginal cost of running a layer one node when you're running a drivechain node is small, right? 2:41:19 It's literally zero because you cannot run any sidechain node without the layer one node, so you must be done. 2:41:25 You already have the node, you may decide to use it. 2:41:30 You're trying to make the argument you said has no layer one impact, 2:41:33 which means I can run a layer one node. 2:41:35 I have no idea who I'm fucking paying, can't pay any of my payments. 2:41:38 Why would I do that? 2:41:39 You pay on layer one. 2:41:40 You pay on layer one. 2:41:42 You say, listen, your preference right now is that people pay you with Bitcoin on layer one. 2:41:47 Your preference is that you be paid with layer one Bitcoin. 2:41:51 We're not scaling, you know why? 2:41:53 No, I have to make a payment. 2:41:59 No, that's not the case. 2:42:00 If I understand what you're saying correctly, is that today, here we are, it's a Friday in 2023, 2:42:05 you want to be able to use your layer one Bitcoin to buy whatever, coffee, doesn't matter. 2:42:13 That's what you want, right? 2:42:17 I'm all about abortions at this point, but anyway, go ahead. 2:42:21 I got onto that topic. 2:42:22 Oh, go ahead. 2:42:23 I'm pissing off Apple. 2:42:28 Well, yes, but what you're trying to say is your concern is that when we move to a world 2:42:36 where there is an optional large block sidechain at the coffee shop, 2:42:41 that that will somehow be bad for your position. 2:42:44 But I'm saying is that at worst, it's exactly the same 2:42:47 because that coffee shop is already not taking L1 Bitcoin, or if they are, 2:42:51 they have no reason to stop because they are taking the large block one as well. 2:42:56 Bad for node operators and bad for decentralization. 2:42:59 It's not bad, but you understand there's different operators though. 2:43:02 You understand every single layer two node operator is a layer one operator, but not the reverse. 2:43:08 Correct. 2:43:09 Correct. 2:43:09 But I mean, coming back to your point, if all I care about is paying for coffee or paying 2:43:16 for an abortion or whatever else, I want to pay for something, right? 2:43:18 And I want to be able to pay for that. 2:43:21 Apologies. 2:43:22 Sorry. 2:43:30 I can't verify that payment, right? 2:43:32 So I can't run a node that can verify that I actually paid for the service provided, right? 2:43:37 You understand there's two different nodes though, right? 2:43:39 You understand it's two completely different pieces of software. 2:43:46 Both require a node. 2:43:49 Yeah. 2:43:49 Different node though. 2:43:50 One is a node. 2:43:55 My payment is on layer two. 2:43:57 I need a layer two node. 2:43:58 I need the full giant fucking block. 2:44:01 If you meet the demand of the coffee shop, they demand to be paid on layer two and then you do it. 2:44:10 Well, first of all, you don't need to run a full node to send. 2:44:13 You will know that you only need it to receive, right? 2:44:16 You can send all you like. 2:44:17 You don't actually care. 2:44:19 You couldn't care less one bit if it's in a block or not. 2:44:22 You're going to send it and they're the ones who want to know that it's in a valid block. 2:44:27 It has two, three, four, five confirmations. 2:44:30 So you really only need the node to receive. 2:44:33 But maybe you own the coffee shop. 2:44:34 I don't know. 2:44:35 I don't really understand where this is going because none of it makes any sense to me because 2:44:39 it's all optional. 2:44:41 It's all optional. 2:44:42 I think we're getting close to a good understanding. 2:44:45 I think that we're making progress here. 2:44:47 Like I think like things you're saying, Bob, are very interesting. 2:44:50 But I am truly optimistic that you're going to grok drivechain in the near future. 2:44:56 I feel like you're pretty close when you say that you're you're somewhat attuned to like 2:45:01 security budget concerns. 2:45:03 You think drivechain is inevitable for Bitcoin in the long run. 2:45:06 So you're you're really there. 2:45:09 Well, yeah, but let's. 2:45:13 But this is a key point. 2:45:15 So the nodes are two different nodes. 2:45:19 So it's like the analogy is the what if the coffee shop only took, you know, Bitcoin SV 2:45:25 or something that's quite similar to the current situation where they only take U.S. 2:45:31 dollar. 2:45:31 Maybe they only take Visa. 2:45:33 You know what I mean? 2:45:34 It's like you draw a line and you say Bitcoin Core is here and then a little ways down is 2:45:40 large block sidechain and then further down is Bitcoin SV and then further down is the 2:45:46 U.S. dollar. 2:45:47 So we want to move it. 2:45:50 As far along in the good direction as possible. 2:45:54 But you don't have to right now, you already run a full node of the U.S. 2:45:58 dollar blockchain or whatever you want to call it, you already meet the demands of the 2:46:03 coffee Oracle database. 2:46:05 I do not want one of those anyway. 2:46:08 Yeah, but you know what I'm saying, right? 2:46:10 You meet the demand. 2:46:11 They say we take U.S. 2:46:13 dollar here. 2:46:13 We don't take any Bitcoin at all. 2:46:15 And you still buy coffee there. 2:46:18 OK, there are two solutions to this problem, right? 2:46:21 So one is I we have a common currency, right? 2:46:27 My your bills in the same unit as mine. 2:46:30 Right. 2:46:30 And I hate this phrase, but there is an economic phrase called the coincidence of common 2:46:41 wants. 2:46:41 I believe it is something like this. 2:46:42 Coincidence of wants. 2:46:44 Yes. 2:46:44 It's a rejection of order. 2:46:46 I think it's apparently just completely made up. 2:46:51 That's not the way primitive society has actually worked. 2:46:54 But nonetheless, the concept, I think maybe some of you know that. 2:46:57 And, you know, all right. 2:46:58 So the other solution is that there exists a situation with a bunch of arbitrageurs and 2:47:03 a bunch of markets where I can pay in one thing and receive in another. 2:47:07 Right. 2:47:07 So the coffee maker receives euros. 2:47:10 The customer of the coffee maker pays in dollars. 2:47:14 Right. 2:47:15 And in between a bunch of magic happens. 2:47:16 And I know all of the magic in that latter situation is fundamentally centralized, increases 2:47:22 points of centralization, increases, frankly, increase the business opportunities. 2:47:27 For companies to perform that role, not decentralized, the more currencies that exist that we want 2:47:35 to pay in more payment currencies, the more friction there is and the more intermediaries 2:47:40 there is, and therefore the more centralization and regulation around those intermediaries. 2:47:46 That's not true, though. 2:47:46 That's no different than the coffee station saying we accept Visa and MasterCard and cash 2:47:51 and we accept checks and we accept quarters and we accept whatever gift cards. 2:47:58 They're all denominated in dollars. 2:47:59 They'll exchange at par. 2:48:01 So they're not different. 2:48:02 They don't cash out. 2:48:03 And I don't I don't question those places because they don't accept the preferred currency. 2:48:07 I think eventually you think eventually they will, though, right? 2:48:10 Probably eventually everyone will just accept Venmo. 2:48:12 WeChat pay. 2:48:13 Everyone will just take everybody will accept all 27 unless you're one of the unlucky ones 2:48:17 where you've got the 28th currency and they don't accept your shit. 2:48:20 Right. 2:48:20 Look, a single currency is a global human goal that I think we need to be striving for. 2:48:26 We need a global side. 2:48:28 Chains are part of that goal, though. 2:48:30 When you and this is what I understand that you don't get, Bob, is that it's it's the 2:48:35 difference between having the ATM. 2:48:37 You're saying an ATM is bad because it makes a new currency, but it's actually good because 2:48:41 it extends the reach of the US dollar in the cash direction and in the digital checking. 2:48:46 Yeah, Bob, Bob, the all the sidechains share the same monetary policy as the main chain 2:48:52 and drivechain. 2:48:52 The main chain monetary policy is extended across all the sidechains. 2:48:57 So there is only one currency, Bitcoin. 2:49:01 I'm not concerned about monetary policy. 2:49:03 I'm concerned about whether the receiver knows what I'm sending. 2:49:07 If it's if it's on a drivechain, maybe it says, I don't understand that driving shit. 2:49:12 Uh, you know, maybe the receiver requests the payment from you. 2:49:16 That's that's the other thing I was trying to say before, is that now they say they say 2:49:23 we only take we only accept Visa here. 2:49:26 When you go into the coffee shop, you say, oh, do you take MasterCard? 2:49:29 And they say, no. 2:49:30 They say, do you take this? 2:49:32 They're the ones who decide. 2:49:33 Now, of course, most businesses have every reasonable incentive to accept as many different 2:49:38 kinds of payment mechanism as they can reasonably do, which I presumably. 2:49:45 Presumably, I mean, I don't have too much trouble paying for things, but I think. 2:49:51 Right. 2:49:51 So the idea that every business wants to accept every form of currency, I think is false 2:49:55 because they quit. 2:49:57 And if you're a coffee shop and you don't want to deal with it, shouldn't want to hire 2:50:00 someone. 2:50:01 There is no one to hire. 2:50:03 Let's build that before we build alternative. 2:50:07 I mean, if I had like ten billion dollars, I think I would acquire. 2:50:11 I don't know what happened with BitPay. 2:50:12 I would probably either try to recreate BitPay or acquire them. 2:50:15 So I agree with you that. 2:50:16 But, you know, part of what happened, Bob, as you know, is there was this scaling war 2:50:22 and there's a whole crop of people who chant endlessly that it doesn't matter. 2:50:27 Bitcoin should never be used for payments and Bitcoin is just for saving and that it 2:50:32 doesn't matter if Bitcoin is actually ever used for anything. 2:50:37 And those people have a point, which is that it's not necessary for Bitcoin to be used, 2:50:42 but it's certainly better. 2:50:44 It's as if someone found out that gold could cure cancer and could allow you to teleport 2:50:51 across the universe. 2:50:52 That would be good for gold. 2:50:53 But a lot of people in Bitcoin have decided that any endorsement of payments is like Roger 2:51:00 Vera's large Roger Vera's and large block ism or something. 2:51:05 And so now that's all that's all hated now, including the people in BitPay are all. 2:51:10 BitPay also did a silly that silly QR code thing that like was that called the payment 2:51:15 protocol? 2:51:16 And everyone hated it. 2:51:17 Absolutely loathed it. 2:51:18 But BitPay really put it out there anyway. 2:51:23 Um, no, I can put my hand up. 2:51:27 Yeah. 2:51:28 Mike, should we let Mike say something, maybe? 2:51:30 Yeah, I have a question. 2:51:32 I have a question to Bob about his earlier point about Bitcoin losing its commodity status 2:51:38 by enabling these sidechain ICOs. 2:51:41 It's a two part question. 2:51:42 The first is, I don't actually follow how that would change Bitcoin from a commodity 2:51:47 to a security. 2:51:48 And the second part is, are you worried about BRC 20s? 2:51:51 And is this an early indicator? 2:51:53 Uh, OK, so so the second question, yes, to the first question, so BRC 20s are an early 2:51:59 indicator of potential stock market type behavior, right? 2:52:02 Which brings regulators. 2:52:03 Second, the question is how? 2:52:07 Basically, the simple answer is just make it illegal, right? 2:52:11 Every country, many countries have tried this, you know, when we all hope that that won't 2:52:15 work for them. 2:52:16 But in practice, it does work, right? 2:52:18 But in practice, it does work, right? 2:52:20 So if a country decides that there's a bunch of fraud happening in this particular ecosystem, 2:52:29 they can simply make it illegal to transact Bitcoin. 2:52:31 That's that's all there is to it, right? 2:52:33 It's very simple. 2:52:34 They don't have to do a 51% attack. 2:52:36 They don't have to, like, issue new dollar coin or make a CBDC or any of this kind of 2:52:41 complicated stuff people talk about on Twitter. 2:52:43 They just make it illegal. 2:52:45 And that's going to happen, right? 2:52:48 Because securities law has a whole lot more guardrails around it than commodities law. 2:52:56 So for context, I used to work for SolidX, their company in New York City. 2:53:03 We filed the first Bitcoin ETF in competition with the Winslow Voss brothers. 2:53:07 We got turned down, which is around the time I left the company. 2:53:09 So I was with them through that whole process and every conversation they had with the SEC 2:53:16 and talks about surveillance and manipulation and things like this. 2:53:20 So one of the things that stuck with me was that there's a copper ETF, right? 2:53:28 All of the copper, majority of the copper that's mined is outside the U.S. 2:53:33 I believe it's Argentina. 2:53:35 Somebody correct me if I'm wrong. 2:53:36 But anyway, copper is a huge commodity. 2:53:39 Like, you've got some in your house. 2:53:40 You're probably sitting within five inches of some copper right now. 2:53:45 But, you know, we accepted a copper ETF, even though it was entirely outside our jurisdiction, 2:53:52 right? 2:53:52 There was no surveillance. 2:53:53 There was no anything. 2:53:55 The constraints on the copper ETF were far, far less than they require on the Bitcoin ETF. 2:54:02 So I forgot where I was going with that. 2:54:08 We don't want to bring regulation, I think, is the point of that. 2:54:13 It can be terrible. 2:54:16 And I think the road to the ETF is a road to legitimacy within the eyes of the government 2:54:24 that we want to happen. 2:54:26 We want the government to be comfortable with this as an asset. 2:54:29 All of those, from my previous comments about number go up, don't say number go up. 2:54:35 But at the same time, an ETF is possibly the biggest thing that could happen to make number 2:54:39 go up, because you don't understand how much trapped capital there is in the world that 2:54:45 cannot invest in Bitcoin. 2:54:47 Retirement funds in particular. 2:54:48 There's trillions of dollars in retirement funds that cannot invest in Bitcoin today 2:54:52 because of custody laws. 2:54:54 So anyway. 2:54:58 Yeah, I think it's compliance first mentality is not probably what the community wants. 2:55:04 If I had to speculate, I feel like compliance as a top priority is a road towards just sort 2:55:13 of adopting the perspective of the state, which is that Bitcoin shouldn't exist because 2:55:17 it would deprive the state of the money printer. 2:55:23 So eventually there's going to be a war with the state. 2:55:26 And the way to win that war is to grow as rapidly as possible so that there is no political 2:55:31 I'm saying something very different. 2:55:34 I'm saying I'm very different. 2:55:35 I'm saying the securities law and currency law are wildly different animals. 2:55:40 And then separate from that is commodities law. 2:55:43 Right. 2:55:43 So right now, Bitcoin is a official currency of El Salvador. 2:55:48 Right. 2:55:48 That puts it into a special bucket within the regulatory regime of the U.S. and many 2:55:52 countries that says, oh, it's a currency of a foreign country. 2:55:56 Now we have to be able to trade. 2:55:58 We have to be able to transact. 2:55:59 So we have to like that. 2:56:00 That is that by itself is super fucking important. 2:56:04 The second thing is the commodities bucket. 2:56:08 So commodities don't have as much restriction around their trading because generally commodities 2:56:13 involve physical transport of goods. 2:56:16 I had a friend a while back who worked on gold trading and he told me stories about 2:56:22 like I've got a pilot of gold. 2:56:23 It's going to go on a 747 from Singapore to New York. 2:56:26 Right. 2:56:27 I've got to buy insurance. 2:56:28 I got my insurance between the time the plane leaves the gate to the time it hits the runway. 2:56:36 I got a different kind of insurance between the runway and wheels up. 2:56:40 I got my third kind of insurance between wheels up and crossing the Pacific. 2:56:45 I got to buy a fourth kind of insurance to land. 2:56:48 Gold trading is really fucking expensive. 2:56:49 This is why gold has a carrying cost, right? 2:56:52 There's an effective net negative interest rate on gold because it's cost. 2:56:58 You have to pay to keep it. 2:56:59 You got to pay custody costs. 2:57:00 Even if you don't move it, you got to keep it in a vault. 2:57:03 You got to pay somebody to keep it in that fucking vault. 2:57:08 We're doing this story. 2:57:10 I apologize. 2:57:11 I've been drinking. 2:57:11 I have a follow-up question because this is very interesting. 2:57:14 Go ahead, Mike. 2:57:15 Is your opinion, Bob, that in order to have a global currency, it has to go through the 2:57:21 phase of store of value first and then unit of account? 2:57:23 Or can they happen in parallel? 2:57:30 The reason I ask is because the BlackRock ETF is being marketed as digital gold. 2:57:35 To me, I think that's great because it's kind of like a Trojan horse, right? 2:57:39 The people are just buying it as a store of value, like gold, and then they adopt it. 2:57:45 And eventually, enough people do that, it can start stabilizing and being less volatile 2:57:50 and more compliant and more institutionalized. 2:57:53 And then eventually, over a decade or two, it can become a unit of account and a real 2:57:57 money. 2:57:58 I don't see how you go to a unit of account before it's a store of value. 2:58:03 I completely, 100% agree. 2:58:05 You must be a store of value before your unit of account. 2:58:09 I've got a ton of sand around me. 2:58:12 It could be a unit of account. 2:58:13 That's great. 2:58:14 But it does not store value. 2:58:16 This is a useless concept, right? 2:58:19 It must be a store of value first. 2:58:22 And Bitcoin has done that. 2:58:23 It has demonstrated its capability of being a store of value. 2:58:25 And I think a lot of people in the ecosystem, including Ethereum, have gotten that wrong. 2:58:28 They're going to be fuel for the world computer, which is some nebulous bullshit concept that 2:58:32 just doesn't make any fucking sense. 2:58:34 But you must be a store of value. 2:58:36 And Bitcoin has accomplished that in spades. 2:58:43 Well, Paul, we've been going for three hours today. 2:58:47 Do you feel that we should continue or resume next week? 2:58:54 I can stick around a little bit. 2:58:55 I'm not sure. 2:58:56 I don't know. 2:58:56 I'll stick around if people want to stick around. 2:58:58 Well, I just want to mention a couple of things again. 2:59:01 We meet every week on Friday to talk about Drivechain. 2:59:04 This is a recorded space. 2:59:06 And everyone is welcome to be here, whether you're a fan of Drivechain, a newcomer, or 2:59:11 a critic or skeptic. 2:59:13 Everyone's welcome to speak. 2:59:15 So if you didn't catch the whole conversation, we had a very good conversation with Reindahl 2:59:21 and others and Bob that started three hours ago. 2:59:24 So once this space ends, the whole thing will be recorded and available on the LayerTwo Labs 2:59:30 Twitter account. 2:59:32 Why don't we aim to wrap up in the next few minutes if you have further thoughts and questions 2:59:37 that would perhaps bring closure to this episode of our dialogue, Bob, Mike, or DJ? 2:59:45 I'll just say thank you for the space. 2:59:47 And I agree with the notion that we need to keep educating ourselves and other people 2:59:53 about Bitcoin and helping people adopt Bitcoin as the base layer money for the whole financial 2:59:59 world. 2:59:59 Thank you. 3:00:01 Yeah, thanks for hosting this. 3:00:03 I am a proponent of BIP300 myself, but I encourage as much possible debate and dissent 3:00:10 and argumentation because it's a very, you know, changing the protocol is very risky 3:00:14 and you want to be careful and take our time. 3:00:16 So thanks. 3:00:20 Paul or Bob, any further comments you want to share to kind of try to bring closure to 3:00:26 what you discussed for a couple hours today, which was a very interesting dialogue on 3:00:30 the nodes of the sidechains, the mainchain, whether or not, you know, there are multiple 3:00:35 currencies or only, as I would argue, as we would argue as drivechainers, one currency 3:00:39 involved in drivechain inherently or natively. 3:00:43 So why don't you address that, you know, Paul or Bob, kind of try to wrap up today's 3:00:49 conversation. 3:00:51 If you'll allow me, Paul, I'll go first unless you have the last word. 3:00:54 I, so I posted a thread on Twitter yesterday about the dynamics of creating new ideas in 3:01:03 Bitcoin, right, and how that goes, right. 3:01:05 And I characterize Paul as a passionate, I lost my word, passionate champion of the idea, 3:01:15 right. 3:01:16 He originated it. 3:01:17 It says he obviously is a passionate champion. 3:01:20 And, you know, it is a fucking difficult position to be in. 3:01:25 And, you know, Paul and I have gone back and forth on Twitter about various things. 3:01:29 And I want to I always want to bring it down to civil discourse, like, let's let's bring 3:01:34 it down. 3:01:35 Like, let's not be mad at each other. 3:01:37 Let's try and have the actual debate. 3:01:40 And I think Paul is reaching the point of, you know, I think he's reaching the point 3:01:45 of frustration. 3:01:51 And I described this in my post where there's two. 3:01:54 There's the passionate creator of things, and then there's the dispassionate maintainer 3:02:03 of something, right. 3:02:04 And, you know, I've been working in open source software since I was in my 20s, like 25 3:02:10 fucking years now. 3:02:11 I have seen this play out over and over and over again, where somebody shows up, they 3:02:18 say, I want to do this. 3:02:19 It's fucking awesome. 3:02:21 Why don't you guys agree? 3:02:22 It's fucking awesome. 3:02:23 And they just go through their thing and they have lots of mailing list posts and all kinds 3:02:26 of stuff. 3:02:27 I have seen this hundreds, literally hundreds of times. 3:02:31 It is a dynamic that is real. 3:02:33 It is human. 3:02:34 It's natural. 3:02:34 It is normal. 3:02:35 Nobody's at fault. 3:02:36 Nobody's wrong. 3:02:38 We need the person to show up with a fucking good idea and tell us it. 3:02:41 Right. 3:02:41 In this case, in this conversation is Paul. 3:02:44 He put a fucking lot of work into this and he put it, you know, put it into it. 3:02:49 But after that comes a bunch of people who say, let's discuss it for a while. 3:02:56 Right. 3:02:56 And to the person who created the idea, this is super fucking frustrating. 3:03:00 Like, no, I already, I already decided that I already evaluated that. 3:03:03 I already figured it out. 3:03:05 But there's so many things that happen in the process of creating an idea that you don't 3:03:10 communicate to other people. 3:03:13 It just takes time to percolate. 3:03:15 And there are going to be things you didn't see in the process of that. 3:03:19 So I think I want to, I want to call up Paul. 3:03:22 I want to, I want to say props for putting so much fucking effort into this and, you 3:03:27 know, good job. 3:03:29 Again, I do see this as inevitable. 3:03:30 There are five fucking examples of sidechains. 3:03:33 Right. 3:03:34 It is inevitable. 3:03:35 It is a good idea. 3:03:36 It has been done. 3:03:37 It has been used professionally and purposefully and in interesting ways. 3:03:42 His specific implementation, I really don't want to comment on. 3:03:47 I really want to see the whole concept of sidechains have some, have something. 3:03:52 But the point of that thread is let's all try and read more and debate less. 3:04:03 Read Paul's bips. 3:04:06 Have a journal club. 3:04:07 Read, you know, other competing ideas. 3:04:12 But, you know, debate less. 3:04:14 We live in a very volume-based world, very Twitter-based world where people just spout 3:04:19 their opinions without having much bullshit behind it. 3:04:23 And Paul accuses me of this. 3:04:24 And in certain cases, he's right. 3:04:27 But let's, let's evaluate. 3:04:29 Read. 3:04:30 Read is really the real thing. 3:04:32 Read. 3:04:33 I'll finish with that. 3:04:35 Well said. 3:04:36 All right, Paul, you get the last word today. 3:04:40 Paul? 3:04:42 Okay. 3:04:43 Yes. 3:04:46 That's mostly correct. 3:04:48 You know, I think that was very well put in general because the, but the idea is very 3:04:54 old. 3:04:54 It's from November 2015. 3:04:56 So, you know, it's like easy to be very patient for a while. 3:05:03 One thing that makes me sort of, I think one thing that happens is kind of like, I really 3:05:10 feel like Jeremy Rubin was treated very badly with respect to BIP119. 3:05:16 And then now it's kind of like years later, because of Ark, now everyone is going to just 3:05:24 flip and, you know, it's all going to be memory hold. 3:05:26 And everyone's going to say, oh, yeah, we always liked BIP119 when I remember it being 3:05:31 very differently. 3:05:32 And in a way, I kind of see that as a preview of with BIP300, where people are going to 3:05:36 just be like, oh, yeah. 3:05:38 And I don't know, that just kind of gives like an enormous eye roll from me. 3:05:41 After all this, what you might call toxicity, all this like kind of like disagreement over 3:05:54 the blockchain, what the blockchain should contain, and all these people just saying 3:05:57 like they have it right. 3:05:58 And it's in reality, we should try this harmless idea that lets people have different things. 3:06:05 Another thing that I kind of think is weird is that no one, you know, Ethereum has changed 3:06:10 a lot. 3:06:11 Like this is like a sour grapes. 3:06:14 Ethereum used to be complete and total garbage. 3:06:17 And now it's merely not very good, but it has improved by maybe like 500x. 3:06:24 And so in the past, people rightly were dismissive of it. 3:06:29 But now people are more dismissive of it. 3:06:31 But it's kind of gotten better. 3:06:32 There's no proportional increase in respect for it. 3:06:37 And like no one, people have heard of Vitalik Buterin, who they'll never hear of Greg Maxwell 3:06:43 or maybe even Gavin Andresen. 3:06:45 They'll probably never hear of those people. 3:06:47 And not that that makes it a success. 3:06:49 But I don't know, I just kind of feel like one thing that people should read more and 3:06:56 one thing they should read is the drivechain FAQ, where you'll see why it's so easy for 3:07:02 me to answer many of the questions in the space, because I've been getting it for the 3:07:05 last six years. 3:07:07 And then another thing that would be interesting to read is the original November 2015 post, 3:07:13 which is, you know, for 2015 with the five. 3:07:15 And then you may get an idea of like all this, a lot of stuff is pre-anticipated in there. 3:07:23 And then you just think, well, what is it going to be eight more years of repeating 3:07:26 this? 3:07:27 So yeah, I think it's true that there's an impatience idea. 3:07:33 To it, and I just kind of thought people would come around eventually, which they are actually. 3:07:38 So, but it is just kind of, it's very bizarre to get questions. 3:07:44 I mean, I think it is bizarre, the idea that $20 in cash is different than 20 is a different 3:07:50 currency than $20 in a checking account. 3:07:52 I think a lot of these ideas are bizarre, but I'm happy to keep coming back every Friday. 3:07:58 All right. 3:07:59 Thank you, Paul. 3:08:00 Thank you, Bob, DJ, and everyone. 3:08:03 Thank you. 3:08:04 We're going to meet one week from today. 3:08:07 So that'll be, if you follow LayerTwo Labs on Twitter, follow this account. 3:08:12 You'll see the space. 3:08:13 Everyone's welcome to come on up and talk more. 3:08:17 We aspire to be one of the best places for open conversation with critics and skeptics 3:08:22 and fans about the ideas here. 3:08:25 About the ideas here. 3:08:27 So this was a great conversation, Bob. 3:08:29 Your scientific perspective is so valuable and thanks for being here. 3:08:34 Please come back again soon. 3:08:37 All right, everybody. 3:08:38 Have a great Friday. 3:08:39 For more information, you can go to drivechain.info to find the FAQ. 3:08:45 That's drivechain.info. 3:08:47 You can also go to layer2labs.com. 3:08:50 At LayerTwo Labs, you can download the Drivechain testnet software and run it on your own computer. 3:08:57 You can also, at layer2labs.com, find links to GitHub where you can read the BIPs 3:09:05 written by Paul and CryptAxe. 3:09:07 BIP300 and BIP301. 3:09:10 So do what Bob said. 3:09:12 Read. 3:09:12 Read it and study it. 3:09:15 Understand it thoroughly. 3:09:17 It's an intellectual adventure. 3:09:19 It's very important for the cause of liberty. 3:09:22 Go for it. 3:09:23 We have a YouTube playlist also if you really hate reading. 3:09:29 YouTube is okay. 3:09:31 Yes. 3:09:33 That's right. 3:09:34 We're on YouTube. 3:09:34 You can find the links to YouTube if you go to layer2labs.com. 3:09:37 Our YouTube link is there as well. 3:09:39 We also have a Drivechain-focused Telegram group. 3:09:42 So there's a whole bunch of different ways you can get involved and learn more. 3:09:45 All right. 3:09:46 I'll see you all next week right here for more Drivechain conversation.
