0:00 Hello, and welcome to Drivechain Talk Twitter Space. Today is April 17, 2023. 0:10 Welcome, everyone. Hello, Michael, in the audience. 0:16 I welcome you to come on up to the stage and chat if you'd like. 0:30 Okay. Yes. Hello. How's it going? Good, good. Appreciate you inviting me up to speak. I'm 0:44 pretty lucky. I'm down here in Puerto Rico, and I started the San Juan BitDevs a few months ago 0:53 with a fellow Bitcoiner that works at Lightning Labs, and we had the privilege of having 0:59 Austin Alexander, who I know, I don't know if he's a co-founder of LayerTwo Labs, and he was 1:08 able to give a presentation on Drivechain to all of us, and it was by far one of my favorite meetups 1:14 we've done to date. So, super interesting topic, and look forward to learning more. 1:20 Cool. That's great. He is a co-founder of LayerTwo Labs, 1:26 along with three other people, and Paul Sztorc included. 1:37 Okay, yeah. He's a super cool dude. I know he lives down here in Puerto Rico as well, 1:45 so it's really a privilege to get to hang out with them, and I look forward. I think you guys 1:50 have a booth at the Bitcoin conference coming up, so look forward to seeing you guys there, too. 1:58 Yeah, that's right. That's going to happen. I might be there, too. I'm Henry, 2:05 one of the employees. Well, it's awesome you met Austin, and it's cool that he gave that 2:11 presentation. Is there a video of it on YouTube, or is it just for people who are there live to 2:22 see? No, so it's just for when people are there live to see. Yeah, we don't record. 2:30 I wish we recorded, but I guess the nature of a BitDev meetup is it's a Socratic seminar, 2:36 meaning it's free to kind of critique, and that way people can't, you know what I mean, 2:43 be held to their views on certain things, I guess. So we choose not to record at this time, 2:49 but I'd like to see it, but I just try to follow the template of BitDevs. 2:57 Understood. Yeah, I was at a BitDevs in LA, and they also had the same approach, 3:07 Socratic and not recorded, or foster open dialogue. 3:14 It sounds like a good kind of environment for drivechain discussion, because 3:18 it's a little bit controversial, and people don't want to be labeled as supporters or critics. They 3:24 might just want to talk about it with the freedom of not being permanently, you know, quoted. 3:35 How have you been in terms of drivechain learning lately? Have you gotten a chance to check out the 3:42 Telegram group, or the website for drivechain, read the BIPs, things like that? Those are 3:51 some of the ways people sometimes engage. Yeah, so I've taken some time to, so Austin gave me a 3:58 little booklet that I think Paul used to give a presentation at the Atlanta TAB conference. It 4:06 might have been last year, 2021, I'm not sure. So I've gone through that. I went through you guys's 4:12 website. What really has led me down to the drivechain's route, and why, you know, I always 4:22 say I'm not a technical programmer, because I'm mechanical engineering background. My girlfriend's 4:29 a software engineer. She said I can't use that as an excuse anymore, because I have learned quite a 4:35 bit about the technical aspects of Bitcoin and all that. But what led me, what I really like about 4:42 the drivechain's groups and what you guys are looking to solve, I mean, it's really, you know, 4:48 I'm a Bitcoin maxi at heart, but it's shifted my perspective on just, you're right, the need for 4:55 permissionless innovation and how bad ideas can't necessarily affect my idea, or what I have going, 5:04 right? And then you guys are really the only group, because I've been studying Bitcoin pretty 5:09 hardcore since 2020, so we'll call it three years. And when people often ask me, you know, what's the 5:18 And when people often ask me, you know, what's the, you know, what's the bearish case for it? 5:25 It's hard to, it's hard to find that signal on what the bearish case for Bitcoin could be. 5:31 And it wasn't until I found out about drivechains that like, yeah, I mean, you guys highlight some 5:36 pretty obvious bearish signals that we should definitely be concerned and figuring out, 5:45 you know, what we need to do going forward. And obviously drivechains provide a lot of 5:49 solutions to that. And one of the big, one of the big indicators that Austin pointed out to me 5:56 was, again, I know you touched on a lot of this last week or two weeks ago when you had the 6:02 drivechains talk, but he had mentioned that, you know, if you think about it, Bitcoin, long before 6:08 I was in it, was birthed kind of through the dark web. You know, like a lot of people that I know 6:15 that got into Bitcoin got into it because of the dark web. And a lot of the dark websites don't 6:21 really use Bitcoin anymore. And that's for obvious reason. So, you know, is that necessarily a 6:28 bearish indicator? No, but I mean, that shows that there's a market for possibly a more privacy 6:35 focused coin. If you want to call it a BitMonero on a drivechain, that would provide that solution. 6:43 So it's just all really interesting. And I'm definitely looking forward to learning more 6:47 about it, at least for this next year and for sure at the conference this year. 6:57 Yeah. I put in the nest a tweet I saw today, which said that the number of Monero nodes has 7:03 exceeded the number of Bitcoin nodes. There is a lot of use of privacy blockchains in the global 7:14 private commerce market. It would be ideal if Bitcoin were the leader in that important 7:24 part of the economy, the part where people want to be private, which is, of course, they're right. 7:30 Maybe they're living in a jurisdiction where the government has a unethical, 7:36 oppressive approach to people moving money around. And therefore, it's great for them to be liberated 7:44 through technology. But it's notable if Bitcoin has a falling share of that market. So one of the 7:56 goals of drivechain would be to have a privacy blockchain attached to Bitcoin. 8:01 And it would be a sidechain. And all of the transaction fees would be paid to 8:06 Bitcoin miners. And all of the value that arises for the token on the sidechain would 8:15 accrue to Bitcoin. So as people are buying the sidechain token, it's pushing up the price of 8:21 Bitcoin on layer one. And that's how that happens because of the two-way peg 8:29 between the sidechain token and Bitcoin. So this is why Adam Back describes this as 8:38 innovation maximalism and altcoin seniorage minimalism. So we're enabling more features 8:49 for Bitcoiners without violating the $21 million hard cap. 8:59 Does that sound like a description that resonates with you? Or do you see it differently? 9:07 Everyone sees things a little bit differently. So I'm always curious to hear 9:11 if my descriptions make sense. No, no, you're hitting the nail on the head. 9:17 I'm really looking forward to this conversation just because I like when you go off on 9:22 explaining stuff. I feel like you can make it easy for everybody to understand. So 9:26 no, that definitely resonates. I did have a few questions, if you don't mind me asking one. 9:33 Sure. 9:36 So again, I, like everybody, heard about Bitcoin earlier on from my friends using the dark web. 9:44 But I didn't get into it until March 2020, when I really started to invest large sums of capital 9:51 and really became a hardcore Bitcoiner and knew everything about it. And obviously, 9:57 one of the big upgrades that Bitcoin has seen over the years was Taproot. 10:01 And I'm curious, because you guys are trying to implement drivechains, 10:08 and I know if you Google what does it take to implement a change in Bitcoin, you have to get 10:12 51% consensus. But one thing that the drivechains community has highlighted to me is, you know, 10:20 there are perhaps possibly gatekeepers on large Bitcoin ideas and things like that. 10:28 So in today's environment, what would it take to get something like drivechains implemented? 10:36 And maybe as a reference, what did it look like getting Taproot implemented? Because again, 10:41 that was before I was really involved. Was the sentiment the same? 10:46 Were there people that were concerned? Was there a lot of criticism? 10:53 Those are great questions. Personally, I was not deeply involved in Bitcoin at that time either. 11:03 So it'd be great if we had Paul on here, or Austin, or Adam Back, or any one of the other, 11:11 or Michael Tidwell, any one of the other people who supports drivechain and talks favorably about 11:16 it often. I think that it'd be great to have one of them, one of those OG types, compare and contrast, 11:25 you know, SegWit adoption, Taproot adoption, and then hypothetically, drivechain adoption. 11:31 I think that the view within, you know, the drivechain intelligentsia is that in order to 11:42 have drivechain adopted, one approach is to have a kind of mass uprising where ordinary Bitcoiners 11:49 support it. Another approach is to have kind of more of a top-down kind of intellectual community 11:56 adoption of it. And then that would lead to them, you know, all this sort of, 12:01 quote unquote, like sheep following, like casual Bitcoiners who don't have like a strong view. 12:09 I mean, in my understanding, the way history moves forward usually is that the latter occurs, 12:16 where like the very influential kind of intellectually rich people with like a 12:24 comprehensive understanding of Bitcoin, if they were to think that drivechain is good, 12:29 then they would explain why. And then there would be like a simplified narrative that arises in the 12:36 masses and they would support it. So to answer your question kind of concretely, I think, and 12:43 again, this is Henry speaking from LayerTwo Labs, you know, this is not the view of the company. 12:48 This is not necessarily the view of Paul Sztorc. But in my opinion, as far as I can tell, having 12:53 read about four books on Bitcoin and like a million hours of podcasts and read the drivechain 12:59 BIPs as well as the BIPs for all the other adopted and unadopted BIPs, I think that basically the 13:08 answer to your question of how does drivechain get adopted is if we had, let's say, Greg Maxwell, 13:13 Andrew Poelstra, Peter Weil, and Peter Todd. And, you know, if we had all of the 13:21 like very well known OG, like Blockstream, thinkers, you know, others, like, 13:33 if they were all to say that drivechain is great, we all like it, then probably the entire community 13:40 would follow. Because the objections to drivechain are pretty complicated. And very few people, 13:48 as a proportion of all Bitcoiners, understand them or know about them. 13:52 So if the thought leaders, as it were, were to dispense with those objections and support 13:59 drivechain, like Adam Back does, notably, then I think the, like, everyone would just say there's 14:07 consensus, there's unanimity on this, let's do it. And that's how things happened with 14:14 Taproot and SegWit. There was a sense that most people liked it. And, you know, 14:20 consensus in Bitcoin isn't about 51%, but it's also not about 100%. It's somewhere in between. 14:28 It's when there's like a sense that most people like it, and that the objections are mostly 14:34 unfounded. That's when there's sort of forward movement. 14:40 So I can't answer exactly on how precisely it would look different than Taproot. 14:46 But I do think that those key thinkers I mentioned, these, like, PhDs at Blockstream who 14:54 who have written or have objected to drivechain over the years, 15:03 if they were to support it, then that would be very, very helpful. Like if we had like, 15:10 you know, some essay come out from like Andrew Polstra saying that he has thought about it very 15:17 carefully and has decided that drivechain is great. Like if that were to happen, it hasn't. 15:22 But if that were to happen, that'd be very helpful. Because he's like a mathematician 15:26 and cryptographer who opines on these kinds of things. But what would also be helpful is that 15:33 people like you, like Bitcoiners around the world, who might not have like a million followers on 15:39 Twitter, but nevertheless, at their local meetups, if they're getting interested in drivechain, 15:44 that is helpful because to some extent, the thought leaders, they want to be cautious 15:51 because Bitcoin has grown so much over the years. It's become such a public project 15:56 that they don't want to be guilty of having made like a reckless decision that 16:02 leads to a setback for the community. So they've become more conservative. 16:07 And there's less of like a technological ambition, it seems, and more of a cautiousness. 16:15 And, you know, some of these some of these influencers, they've adopted a mindset where 16:21 it's actually fine for Bitcoin to remain simple and focused only on payments and let the other 16:27 stuff like let Ethereum, these people might say, do the more experimental things. Now, of course, 16:33 I'm not referring to the people I mentioned earlier, but for example, Eric Wall in his recent 16:41 What Bitcoin Did interview expressed this view. I don't want to misstate it. He wasn't saying that 16:47 I mean, he is on record in many tweets being supportive of drivechain. But he also in that 16:52 interview expressed a view that it probably would never happen on Bitcoin. So some thinkers like 16:59 that would say that, well, if that's the case, if we're not going to get more extensibility for 17:04 Bitcoin, then the way to see that favorably is to say, well, Ethereum will be the place 17:09 where interesting things happen. And Bitcoin will just be this valuable digital gold. 17:14 But I believe that's not a totally coherent view, because in the very long run, 17:22 if there are two blockchains and one of them has more extensibility, then in the very long run, 17:28 probably the one with more extensibility could accrue a lot of value and then ossify its layer 17:34 one. And then it would have all of the technological features and narratives that Bitcoin has, 17:40 plus the higher degree of extensibility. So the drivechain program, the drivechain vision is to 17:48 have a multitude of different blockchains built on Bitcoin in a manner that accrues value to 17:55 Bitcoin's token and Bitcoin's block space. Even if a person isn't using any of the sidechains, 18:05 that person would benefit because his Bitcoin would have higher value, meaning higher purchasing 18:11 power. And when he does a transaction, that transaction will have greater transaction 18:16 finality because of the higher transaction fee rate being collected from all of the sidechains. 18:24 So drivechain is designed to strengthen Bitcoin's purchasing power in terms of the value of the 18:29 token, as well as the value of Bitcoin's block space, meaning the transactions in total that are 18:37 paid per unit of time. That is the purchasing power of the fees within a given amount of time. 18:44 The higher that is, the better, because it means that Bitcoin would be more expensive 18:51 to attack through a hostile mining attack, such as like a perpetual 51% hostile attack. 18:58 Right now, it would cost a certain amount of money to attack Bitcoin's 19:03 network as a hostile 51% miner. And over time, if the transaction fees were to remain low like 19:11 they are now, then as a result of halvings of the coinbase, the cost of attack will fall. 19:19 So right now, like over 90% of the value that miners receive on-chain is from the coinbase, 19:27 and that's going to be cut in half in about a year from now, unless Bitcoin goes up in value. 19:35 But expecting higher and higher price forever isn't a great plan. 19:40 Bear markets will always happen. Bitcoin is volatile. So what we should do is try to get 19:48 higher fees. And that's the security budget problem. But there's also a fascinating 19:54 split among the drive-chainers. 19:57 Some people think that drivechain will come about perhaps because of a security budget problem. People 20:02 will want more fees, so they'll adopt merge mining rather than inflation. But others think that 20:08 drivechain will be adopted because of the fees being too high. Imagine if ordinals, for example, 20:15 if this NFT community were to move from Ethereum to Bitcoin, then, I mean, the ordinals are on 20:23 Bitcoin, but I'm saying if the whole NFT market were to move on to Bitcoin, it would send the 20:27 value of Bitcoin's block space higher because people would be constantly doing these transactions 20:34 that use up a lot of space on the block space. And if they're buying or selling some NFT that 20:40 has a high value, like some sort of bored ape or whatnot, then they might be willing to pay 20:48 $100 per transaction and not really care. Because if it's a $15,000 image, then $100 to transact it 20:55 is not that much. It's probably a lot cheaper than moving a painting around. So in the art 21:03 market, people are used to paying a lot of fees to move things around. It's not like buying a stock. 21:10 So we could see high fees permanently on Bitcoin, hypothetically. I don't expect that. I think that 21:14 fees will be low forever, which I think is the Paul Sztorc view. But that view also allows for 21:20 the fact that fees could go up and stay up. But that wouldn't have anything to do with 21:25 the justification for Drivechain because the ultimate original justification had nothing to 21:31 do with the fee market or the security budget. Drivechain was invented in 2015. The security 21:37 budget idea was invented in 2018 by Jordan McKinney, who Paul cites at the very beginning 21:47 of his 2019 essay called Security Budget in the Long Run. So just to land my little plane here, 21:53 what I'm saying is that if fees stay low forever, that's the security budget problem and the 21:57 solution is merged mining, not inflation. But if fees go up a lot, there's a different 22:04 justification for Drivechain, which is that we need scaling, which is a familiar topic, 22:09 right? Scaling Bitcoin. This has been talked about since like 2012. People have been talking 22:13 about how do we scale Bitcoin. Meaning, it means a bunch of things, but one of them is 22:18 how do we preserve the peer-to-peer nature of Bitcoin as it evolves from a network of 22:26 thousands of people to hundreds of thousands and then finally to billions? 22:30 If we have everyone using Coinbase and Wallet of Satoshi and other custodial facilities, 22:40 then the problems that arose for gold would arise for Bitcoin. Gold, to use a phrase from Nick 22:50 Carter, gold ended up in walled gardens, meaning banks that held most of the gold 22:58 and ordinary people stopped interacting with gold in their day-to-day lives. 23:06 I think that phrase day-to-day, that's from Von Mises. He explained that people stopped 23:11 handling gold in their day-to-day lives and that was the beginning of the failure of gold as money 23:17 and we ended up with just a completely fiat economy, fiat money economy. So we don't want 23:23 the future of Bitcoin to be that everyone is using non-peer-to-peer facilities. We would 23:28 rather the peer-to-peer sort of principles and technology and ethos of Bitcoin remain. 23:35 And one way to do that is through drivechain. So everyone could use like a large block drive 23:40 chain for their day-to-day cash with low fees. The same way you might keep a lot of your money 23:46 in stocks, but then keep like a small portion in cash for your transactions. Similarly, in a 23:52 Bitcoinized world, there could be people keep like most of their wealth in Bitcoin perhaps, 23:57 and then some of their wealth in like the drivechain with the large blocks called Thunder. 24:05 So the fees on the Thunder sidechain would be extremely low and the volume would be very high 24:11 and the total amount of fees would be high because of the high volume. 24:15 So if you have like a billion transactions a day, each of them paying one tenth of a penny, 24:22 well, that's still a large amount of money. It's like millions of dollars 24:25 per day because it's one billion times that small amount. 24:32 And then everyone in the whole world would be using a peer-to-peer blockchain. It just 24:37 wouldn't be as decentralized as layer one. But decentralization, as Paul Sztorc analogizes, 24:45 is like a plane in the sky where there's first class seats, there's second class seats, 24:50 there's basic economy, there's economy. So people have different willingness to pay 24:58 for quality in terms of decentralization. Not everybody wants to pay for the first class seat 25:08 with the champagne and the early boarding and early deplaning. It costs more, it's less 25:15 efficient for them. Some people prefer economy. Similarly with money, we absolutely must have 25:22 a layered money. And in fact, in Bitcoin, there's this book, Layered Money, which I haven't read, 25:28 but I think it's by one of the investor gurus. And I don't know if it mentioned anything about 25:34 sidechains or the need to actually have layers on Bitcoin, but it would be great if it did. 25:40 One interesting thing to read in Bitcoin books is whether or not 25:44 the index mentions anything about fees, security budget, 51% attacks, 25:51 merged mining. Usually books don't mention this at all. For example, it doesn't come up in the 25:56 block size wars by Jonathan Beer, anything about low fees being a problem. Of course, 26:02 that was written back before that was a topic. But the few other books I've seen don't mention it at 26:12 all. And then to his credit, Saifuddin Amous, in his book, The Bitcoin Standard, does have a very 26:20 carefully, very thoughtfully written page or two at the very end in the appendix part about 26:30 potential problems with Bitcoin. And he has a accurate, very conscious articulation of 26:37 like the 51% attack idea. And he sort of understands it fully, I would say like 90% 26:43 there, where he says, like, what if a party wanted to mine as a hostile miner? And then he says the 26:49 kind of familiar thing of, like, this is what Pierre Richard said in that research paper on 26:56 transaction fees from half a year ago, written under Riot, their website, where Amous and Richard, 27:06 they understand the 51% attack problem to some extent. They say things like, 27:10 what if the fees were low for a long time? What if it's not very expensive to attack? 27:15 But then they lapse into the error of saying, well, who would want to do this? Why would they 27:21 ever want to do that? Because if Bitcoin is used all over the world in the future, 27:26 why would anyone want to destroy their own money or destroy the money system? 27:31 The right way of thinking about it is that it might happen in the not too distant future 27:36 that the federal government could decide it's in the national interests and in the environmental 27:40 interests for the government to do a hostile mining operation on Bitcoin. And it would only 27:50 cost them a few billion dollars. The government can afford that. The US federal government's 27:57 annual military spending is 700 billion dollars, and it grows at 6% per year every year forever. 28:04 So they have an astronomical budget. It wouldn't be too hard to 28:11 seize or acquire covertly, commercially or build the equipment necessary to do this attack. 28:20 They could even do it inefficiently, and it wouldn't be that expensive. 28:23 They wouldn't have to do it that cleverly, perhaps. So I feel that these thinkers who 28:29 are pro-Bitcoin, like Rashard and Amoos, they do a good job, at least much better than others, 28:34 of acknowledging the possibility of a 51% perpetual hostile attack as distinct from a 28:42 greedy mining attack. So like a greedy miner, that's what Satoshi talked about, double spending. 28:51 But a hostile attacker is doing something different. They are reorging the chain for 28:57 the purpose of making it impossible for others to transact. So they're censoring everyone forever. 29:06 And people might say, well, why would anyone ever do that? Well, 29:09 people go to war all the time against other countries, against other tribes. 29:15 And it's entirely possible for that kind of phenomenon to arise in the monetary context 29:20 within one jurisdiction or globally, where, for example, the US, like the global monetary hegemon, 29:29 could decide to just try to take down Bitcoin for the benefit of everyone. Kind of like 29:36 trying to vaccinate the whole society just to stamp out some disease. 29:41 So the government could do all kinds of things. I think that the resistance from Bitcoiners would 29:48 be much smaller than, say, the resistance that arose when they tried to have everyone get 29:53 vaccinated. So it doesn't even require the consent of anybody. They could just do it tomorrow with a 30:02 stroke of a pen. And then the people at the Pentagon or the NSA or Jason Lowery's hash 30:08 force or whatever is needed, they would just get a bunch of ASICs up and running and begin to mine. 30:16 And they would have to pay someone to write the software to reorg at every opportunity. So every 30:23 time the attacker finds the nonce, they would have the heaviest chain and they would rewrite 30:31 the chain that others had built. And they can employ all kinds of techniques to make it as 30:39 potent as possible. They could mine and then they could pause at certain times. 30:46 There's different strategies for hostile mining in theory, where the hostile miner isn't even 30:51 mining all the time. All that's necessary is for there to be the expectation that the hostile 30:57 miner would be there to reorg the chain. And that alone can disincentivize any honest miner 31:03 from mining at all, because they'll be deprived of all of the rewards from mining. 31:16 It's a very interesting subject. Basically, we want the fees to be high. 31:20 And right now in the Bitcoin world, this is something that people just don't talk about that 31:24 much, because in every society, the most important truths are those that you're not allowed to say. 31:34 So within the Bitcoin culture, a great way to get excused from typical Twitter spaces is to say 31:44 something like, is to come up on stage and talk to some, you know, influencer and say things like, 31:52 what do you think about the fact that the fees are pretty low for Bitcoin? 31:56 And we're like 12 or 13 years in and the fees are still low. It's like under a dollar some days 32:03 recently to send a Bitcoin transaction. If it were $50, that would be something. But it's pretty low. 32:13 And of course, in the altcoin communities, this is understood. If you were to talk to any 32:24 Ethereum influencer like Justin Drake, Evan Van Ness, Vitalik Buterin, 32:33 Justin Bonds, if you talk to any of these people and say, what do you think about the fact that 32:40 Bitcoin has a transaction fee reliant economic security model? What are the implications of 32:48 this? They will tell you that it is just a matter of time until that takes its toll on Bitcoin and 32:56 until that takes its toll on Bitcoin and eventually the insufficiency of economic 33:03 security would devalue the token in the future. So eventually, you know, when people always say 33:12 hash rate follows price, that kind of silliness, you know, kind of astrology of finance. 33:19 One variation on that, which is true, is that insufficient economic security, 33:26 which is not a function of hash rate, but a function of fees, is going to bring down the 33:33 price in the very long run unless something changes. So the ways that things can change 33:38 would be, you know, ordinals and other interesting uses of the blockchain on Bitcoin accumulate a 33:47 following and bring up the market price of the block space, or Bitcoin adopts... 33:58 If there's a lot more merged mining, that can bring in a lot of fees. 34:02 Just copy all of the altcoins that have high transaction fees, copy them all into Bitcoin 34:08 sidechains, and then there's a ton of transaction fees. Right now, the total amount of fees paid 34:16 across all of the blockchains is roughly 15 times more than the fees paid to Bitcoin's miners. 34:26 And it used to be more like 10, and before that it was like 5, right? So this is getting worse 34:31 and worse, where a larger amount of the fees paid on blockchains are paid outside of Bitcoin, 34:39 paid to Ethereum and other blockchains. So all of these blockchains are competing with each other 34:47 existentially. They're all competing for monetary premium, and more abstractly, 34:54 they're competing for transaction fee revenue. And ultimately, if a blockchain has very little fee 35:02 revenue, then it's going to have low security, low economic security. And therefore, in the very 35:11 long run, we can say that the market right now is either anticipating that Bitcoin's fees will rise, 35:22 or they're anticipating some kind of convenient solution will come along, or that the fees will 35:27 rise naturally. So we'll have to wait and see. To me, it's a great drama. We don't know what's 35:32 going to happen. There's an interesting drama ahead. Where will things go? Will the fees stay 35:40 low, or will the fees go up a lot? Now, if they go up a lot, that'd be great. We don't have to talk 35:44 about worrying about 51% of tax anymore. But instead, there's going to be an outcry among 35:50 the plebs globally, because the cost to open a Lightning transaction will have risen. So 35:58 how do we onboard the world if it costs $35 or $50 to do a single transaction on Bitcoin? 36:05 What we would then need is economy class Bitcoin, which is large block sidechain Bitcoin. 36:13 And that's Bitcoin for the world. Right? In other words, we can't really have the Citadel 36:21 if we don't also have the kind of outer suburbs. Like, what would Manhattan be without all of the 36:33 cities around Manhattan? In other words, we need lots of development outside the Bitcoin Citadel, 36:41 outside Bitcoin Layer 1. We want all these other interesting, prosperous communities to crop up 36:49 crop up, even though they won't have as much decentralization. And they might have other 36:56 features which are trade-offs. They're going to have things that are cool, like the Zcash sidechain 37:03 called Zside. It has, as Adam Back put into a great tweet, very cool R&D, like very cool research 37:11 and development, super high privacy technology. But it's not stable and reliable and tested enough 37:18 to be on Bitcoin mainchain. So the place to use it would be a sidechain in a partitioned venue 37:24 where if it collapses or if there's a bug, that's okay. Only those who opted in get hurt. 37:33 One of the worst coping 37:37 mentalities I've ever heard is where people say, we don't need drivechains because there's altcoins. 37:41 If anybody wants to do other stuff than Bitcoin, they can just use an altcoin. So why do we need 37:45 drivechains? What those people fail to understand is that if Bitcoin doesn't do 37:52 drivechain or something like it, then that legitimizes, it legitimizes the altcoins 38:00 as a category. And it also, as Eric Wall says, gives walkover, meaning, which is like a term 38:08 from soccer, I think, or cricket. So it opens the door to something growing and growing and growing 38:17 outside of Bitcoin, which eventually could displace Bitcoin in terms of network effect. 38:22 Network effect is a powerful force in economics, especially in money. In the market for money, 38:27 everybody wants to use the money that everyone else is using. You don't want to have your own 38:32 money that's unique to you, where no one recognizes it, you can't spend it, all the 38:37 prices aren't quoted in it. That's not good. So something is going to become the world's money. 38:45 Right now, we have 180 different fiat monies, and most transactions are in US dollars. But the dollar 38:52 has problems. It's ripe for disruption. There's been decades and decades of debasement. 38:59 So in Paul Sztorc's view, as I understand it from reading his articles, there are only two 39:07 crypto projects that are serious about becoming the world's money. It's Bitcoin and Ethereum. 39:13 Those are the two ones that are really trying to accomplish that. And Ethereum doesn't talk 39:20 about things quite like that way. They talk about it like we're the world computer. But in the long 39:27 run, they're probably going to try to ossify the main chain and get those monetary narratives 39:33 of scarcity, and stability, and ossification. Those are the narratives. Those are the 39:42 crypto economic features and means that give rise to monetary premium accrual to that main chain 39:53 token. 39:55 So there's like a race. There's a great drama. Who will get there? Who will become the world's money? 40:01 As Paul says, there is a $100 trillion prize in the future for the project that is correctly 40:08 designed. So the drivechain view is that Bitcoin is the best, but it needs drivechain or something 40:17 like it. It needs more extensibility. There has to be a way for people to build new features for 40:23 Bitcoiners that are peer-to-peer and that enable Bitcoin to internalize the value of that innovation. 40:31 And that's what drivechain does. It allows someone to build on Bitcoin 40:35 in a way that brings value to Bitcoin. 40:41 So it would be great if drivechain had been adopted back in 2015. Now it's seven years in 40:50 and, or eight years in, and the code is more ready than ever. The thinkers have had more 41:00 time than ever to think it over. There are more supporters than ever before. 41:06 So we're getting closer and closer to kind of vindication and acknowledgement, 41:12 I think. Whether we're on track, whether we have a pace of adoption and success, which is 41:19 sufficient is debatable, but there has been an uptick. Now, of course, Eric Wall on WhatBitcoin 41:27 did, did in fact say that drivechain is dead. So he did say that. However, 41:35 I think there's different ways to look at it. 41:40 History sometimes happens very quickly. There could be like a sea change. There could be a sea 41:45 change where a bunch of the believing thinkers sort of announced together or not far apart that 41:52 they support it. We could see something like that. There are different catalysts that could arise 41:58 that could lead to that kind of development. For example, if the flippening were to get a lot 42:04 closer, then like if Ethereum were at a market cap of 75% of Bitcoin, which it's never been before, 42:13 but if it were to rise that high, I think that would be, that would be important. 42:20 Ethereum has been for the last five years, I think, a very good example of that. 42:25 Ethereum has been for the last five years fluctuating in a range of approximately half 42:32 of Bitcoin's market cap. But if it were to get to the top of that range and then get to like a new 42:38 high where now it's like 85%, 90% Bitcoin's value, I think that the intensity of attention on 42:47 projects like drivechain would be much higher because as long as Bitcoin is number one by 42:53 market cap, as long as that's the case, the high priests of Bitcoin, these influencers and OGs, 43:04 venerated people like Greg Maxwell, for example, they enjoy, I would say, the status of having been 43:13 the architects of the project and the stewards of it during its success. But if all of a sudden 43:19 Bitcoin were to be about to lose its market cap crown, like let's say in a year from now, 43:26 you know, all of a sudden Ethereum is like 80% of Bitcoin's value, then probably such people 43:34 would think much more closely about the possibility that drivechain could be a great answer 43:40 to that development. It could be a path for Bitcoin to achieve a lot of 43:45 attention and excitement and value from a new development that opens the door to all kinds of 43:53 interesting projects and growth. So I think that in this little monologue, I've talked about how 44:01 low fees forever, the security budget problem, that's one potential impetus or catalyst for 44:08 drive chainization of Bitcoin. Another is high fees. If we get very high fees for a long time, 44:13 like a multi-month period, a three-month period, where the lowest transaction fee is 20 bucks, 44:18 that could lead to calls for drivechain to scale Bitcoin by enabling lightning on 44:23 peer-to-peer sidechains instead of main chain. And then aside from fees, the market cap flippening 44:32 topic, that is another potential force for drive chainization, the desire to have something 44:39 exciting, new, and high-tech come to Bitcoin. So drivechain could deliver that 44:47 and help prevent the flippening. But the very best justification for drivechain 44:55 is one that Mike Tidwell expressed in a tweet, which was that he hopes that Bitcoin community 45:05 adopts drivechain not to compete with altcoins, but instead to express their love of innovation. 45:17 So even if there were no altcoins, it would be better for the Bitcoin community to have drive 45:25 chain so that Bitcoin can be a platform for valuable, innovative technologies 45:37 rather than not do that. So the world would benefit greatly from peer-to-peer oracles, 45:43 from large blocks, from a privacy sidechain. The world would benefit from those things 45:50 regardless of whether or not those are developed on altcoins. 45:54 Regardless of whether they're developed on altcoins, we still want them to be Bitcoin side 45:59 chains. Bitcoin alone, as it is today, is not enough. About one half of all of the value of blockchain 46:13 is the potential features and innovations that would arise on sidechains. And if Bitcoin doesn't 46:19 build them, then other blockchains will. And eventually, possibly, the total value on another 46:27 blockchain could surpass Bitcoin's. And then that blockchain could ossify its layer one, 46:35 and then it would have the narratives of layer one digital gold plus the highly extensible 46:42 feature set of sidechains or some other scaling and development technology. 46:51 Anyone in the audience is welcome to come on up and vibe with me. If you'd like, ask a question, 47:12 express a criticism. Don't be shy. Come on up and 47:21 chat about drivechain. That's why we're here. Drivechain talk every Monday and Thursday. 47:27 Don't miss it. We also have a drivechain talk telegram group. 700 people are in there 47:37 talking about drivechain constantly. It's exciting. All the cool kids are interested in 47:43 drivechain. If you're interested in knowing who supports drivechain, you can go to a little list 47:57 that I made, which is at drivechain.info forward slash friends. Again, that's drivechain.info 48:06 forward slash friends, F-R-I-E-N-D-S. And if you go there, you will see a spreadsheet I made 48:18 that has the quotes from over 60 different supporters of drivechain, including the famous 48:29 creator of Nostr, Fiatjaf, who is probably the most vociferous drivechain supporter on Twitter 48:38 ever. Emphatically in favor of it. He has written, drivechain is our only hope. That's one of his 48:46 tweets. So I agree. Welcome back to the stage, Michael. What's up? Yeah, so I did have a quick 48:56 question or hoping you can elaborate on it. So it's on the topic of drivechains that it might 49:02 be a little off topic. I noticed that, you know, whenever somebody brings up drivechains, like 49:10 sure, there's going to be a lot of criticism as it's not implemented on the main net. It's only 49:15 on test net. But it sounds like lately there has been a lot of criticisms about lightning network 49:22 that seem to get brushed under the rug. And I was just curious, you're obviously very well 49:28 educated on the drivechain stuff. And I don't know if any of the criticisms of lightning network has 49:34 or if you've heard of these criticisms. I'm just wondering if you could 49:38 touch base on that or you heard anything in regards to that. 49:45 There is a great post on the limitations of lightning on Paul Sztorc's blog, which is 49:52 truthcoin.info. That's truthcoin.info. It's called the fundamental limitations of lightning. 50:03 And I don't have it in front of me, but he reviews there how it would be very difficult for 50:10 even using favorable assumptions lightning to serve the needs of humanity for peer to peer cash 50:18 in the near future. So the drivechain review on lightning generally, like what did pro drive 50:28 chain thinkers think of lightning? The answer, as I understand, is that lightning is cool. 50:36 However, bitcoiners as a community are better off when they have even more choices. Instead of just 50:44 lightning as the solution for building on bitcoin and enabling cheap, fast transactions 50:51 of smaller amounts, it would be good for bitcoiners to have sidechains with big blocks, 50:57 one gigabyte blocks on a sidechain called thunder. And there are also some potential synergies 51:06 between the large block sidechains and the lightning system. So you could have lightning 51:13 on a drivechain. There could even be a sidechain developed. You know, when we say drive 51:18 chain, we mean a sidechain using BF300 and BF301. There could be one that is designed 51:23 specifically to facilitate lightning. So there's all kinds of interesting combinations. 51:29 A lot of developers are working on lightning, and it's those people who will benefit greatly 51:34 from drivechain because they'll be able to build their ideas for bitcoin on sidechains 51:41 without having to seek consensus from the bitcoin community. It's much easier to build 51:47 a new sidechain. Everyone who uses it is opting in, and everyone who uses it is paying fees to 51:54 bitcoin layer one. So it's economically harmonious. The worst thing is for people who are building on 52:01 bitcoin to give up and leave and then go build an altcoin. Now, of course, if one is a scientist, 52:10 one is neutral as to which blockchain a certain technology is on. So the people who really 52:19 benefit the most from drivechain are people who are bitcoin only. That bitcoin only crowd, 52:25 that toxic maxi crowd, that is exactly the set of people who benefit the most from drivechain. 52:35 For example, if someone decides, let's say they decide after reading some Jimmy Song blog post 52:42 that they're only going to hold bitcoin and everything else is terrible and immoral. 52:48 So this person is 100% invested in bitcoin only. It's exactly that kind of person who benefits from 52:55 drivechain the most. Because if a lot of development happens on Ethereum and developers 53:03 are leaving bitcoin because of the lack of extensibility, then in the very long run, 53:10 that could lead to the network effect and value accrual to bitcoin being much lower. 53:16 Hello and welcome to the stage, Wayne. Thanks for joining. 53:28 Hello, Wayne, are you there? I can't hear you. 53:31 I think it still shows him as a listener. At least it does on my screen. 53:37 It says he's a speaker for mine. 53:41 Wayne, can you give a thumbs up if you can hear us? 53:45 We can't hear you. Maybe there's some problem. 53:52 But basically, Michael, the whole lightning project, it's awesome, but we definitely need 53:59 more. I think that there was a feeling in the bitcoin community years ago that lightning would 54:05 provide unlimited, massive, unimaginable benefit in every way and that we wouldn't have to do any 54:12 more soft forks. And instead, at this time, I think it's appropriate to contemplate how 54:20 drivechain as a complement to lightning could be the final change, maybe. 54:25 Because it would enable a lot of extensibility. Basically, you could have a whole separate 54:30 blockchain, a number of them, you could have 200, you know, drivechains out there, each with its 54:36 own features and user base, and they're all paying fees to bitcoin miners. So it's a very powerful 54:44 synergistic system, very different in nature than lightning. But both are cool. 54:49 Hey, can I ask a question and just make a comment? Yeah, please. Hey, everybody. For those 54:55 of you who don't know me, my name is Wayne. I'm an investor in LayerTwo Labs, a long time friend of 55:01 Paul Sztorc. And for several years, I financed the development of a drivechain. So, you know, 55:09 I listen to these calls all the time. I've been listening to these calls for a long time. I've 55:14 been listening to these calls on occasion when I get a chance to. And there's always a lot of 55:22 talks about the broad benefits of drivechain to the bitcoin ecosystem, to this audience, that 55:32 audience. And it's a little bit frustrating for me, because in my mind, my philosophy is all you 55:42 have to do is just build one useful thing with drivechain. It's kind of like a good analogy 55:48 might be the invention of bricks. You know, let's say that you invented bricks and you went around 55:53 the world telling people about all the great things that you could do with bricks. You could 55:58 build different kinds of buildings than you could with wood. It was better for insulation. It was 56:02 better for the environment. It was better for all of these other purposes. But the best thing you 56:09 could do to get people to understand how to use bricks is to build something with bricks that's 56:14 better than something that was built with wood and to make it easy for people to get bricks. 56:19 And I just wish that a lot of the energy that's being put into all these generic conversations 56:25 about let's build this or the event if it's that or there's all these multiple things you could do 56:30 is just build one useful thing and get it out there into the world and see if you can't get 56:36 other people to start using it and other people to start saying, hey, that thing's useful. I can 56:43 use it to build something else that looks kind of like this. It's my two cents. Hey, Wayne, can you 56:49 hear me okay? Yeah, well said. Go ahead. Thanks. Hey, Wayne, thanks for funding the development 56:58 in the beginning. And it's cool to see BIP300 getting more attention. At least that's how it 57:02 seems to me. So for context, I'm just someone who holds a bit of Bitcoin as like a diversification 57:09 strategy. I'm not so involved in the technical developments, although I'm seeing some of what's 57:13 happening these days with Lightning Network and BIP300. So long story long, what are sort of the 57:21 the big apps that you see coming? It might be too early to tell. And then for Michael, what are some 57:27 of the criticisms that you've heard of Lightning Network? What's the argument against it? You said 57:31 I've heard people say, what are people saying? So Wayne, if you wouldn't mind answering first, 57:34 and maybe Michael, if he's still listening. Sure. Those are really good questions. It's 57:40 like if somebody asks for you just to build something, well, what are the good things to build? 57:46 To be honest, I'm not 100% sure. If we had a big block sidechain, that is something that people 57:53 talk about frequently. I'm not sure what people would use that for. If you had a BitAsset side 57:59 chain, which has been talked about a lot, you might get people issuing NFTs or other sorts of 58:04 assets on the chain. But most assets in the real world have a high regulatory component to them. 58:12 Like, you know, real estate is heavily regulated. Obviously, any type of stable coins, stock, 58:19 bond, otherwise investment contract is heavily regulated. So it's not clear to what degree a 58:25 BitAsset sidechain would make things be different and advantageous over other methods 58:35 of regulatory arbitrage. One thing that has proven extremely useful on other platforms of 58:43 all different types are DEXs, decentralized exchanges, ways to trade things. If somebody 58:49 could figure out a way to build a DEX on a sidechain or some sort of derivatives exchange on a 58:54 Bitcoin sidechain, I think that might be useful. It's, you know, it is a bit of a chicken and the 59:01 egg sort of situation here. But it's kind of like inventing a web server. You know, web servers are 59:13 useful for all sorts of things. And at first, it wasn't entirely clear what web servers were 59:20 useful for besides, you know, cat JPEGs and, you know, publishing your own personal home page. 59:27 But eventually we figured out some applications. And e-commerce was a big vertical initially. 59:34 And I think that if, you know, because people wanted to sell things online, they wanted to be 59:38 able to reach a broader audience. And to, you know, to whatever degree you can find an application 59:45 like that and make a bet on building that application and get it out there. 59:51 I would say that would be advantageous for Drivechain, but just building, simply building the platform and extolling all the virtues of the platform just in my mind may not be enough. 1:00:07 Thanks, Wayne. 1:00:13 Michael, if you're still there, I was asking you what criticisms that you've heard people talk about in regards to Lightning Network? 1:00:21 Yeah, so I just it's came up on a couple of podcasts that I've listened to. 1:00:25 And then I think what I was getting at more than anything was just the fact that I know one of the main criticisms of Drivechains is it allows miners to steal funds. 1:00:39 But isn't it true that that same argument can be made to the Lightning Network? 1:00:44 But for whatever reason, that kind of gets brushed under the rug. 1:00:50 And again, that might be something more for Henry. 1:00:53 I'm probably not the person to ask, but that's kind of what I was getting at. 1:00:57 Your biggest concern or like the biggest proxy concern in which you've heard voiced is something about the security of users' funds. 1:01:02 Is that right? I could summarize that. 1:01:04 There's a theoretical argument against Drivechain, which is not elaborated completely because it applies to Lightning. 1:01:21 Is there a paper? 1:01:24 Yeah, if you DM me here, I will remember to send you written resources regarding this. 1:01:34 OK, yeah, I'll message you, but no stress. 1:01:36 Thanks. 1:01:38 More broadly, without respect to Lightning in particular, the argument about Drivechain being susceptible to theft, it involves some incomplete reasoning, I think, as Paul has written in his blog posts and in the Drivechain FAQ, which is available at drivechain.info. 1:02:00 And then you click on FAQ in the links. 1:02:04 So he explains in that FAQ that one of the reasons people think Drivechain might not work is that the miners could steal from the hashrate escrow. 1:02:16 But this way of thinking needs to be carefully unpackaged and explored, because it is actually the case that under certain assumptions, like the same kind of theft can occur or a similar kind of theft can occur on the main chain without any Drivechain usage. 1:02:37 For example, if so, first of all, when a Drivechain is being stolen from, it involves 51% of all the hashrate. 1:02:46 So it's not just some miners. 1:02:48 It would have to be over half of the entire hashrate is being deployed, and it has to be deployed for months at a time, continuously, at least three months and as much as six months. 1:03:04 And it has to be done in a way that's overt. 1:03:08 So it's not a secret attack. 1:03:10 Instead, it's something which is announced from the very beginning publicly, because that's the way Drivechain is designed, is that if a malfeasant mining operation were to commence to steal from the hashrate escrow, it would be public immediately when it begins. 1:03:29 Some things in life can be done in private, but stealing from a hashrate escrow is not one of them. 1:03:35 So as the process is moving along, it's known that this is happening. 1:03:39 So this is why Fiatjaf has correctly written in his essay on Drivechain about the fact that if Drivechain isn't a viable security model, then neither is Bitcoin mainchain. 1:03:54 Because if the miners can steal from the hashrate escrow, and this is something which happens, in fact, if Drivechain is adopted, if that happens, in fact, then that'll show that Drivechain doesn't work. 1:04:07 But also, in Fiatjaf's view, this is the creator of Nostr, it would have shown to him that Bitcoin itself is unstable, because over half of the Bitcoin miners, if there are thefts by them, over half of the Bitcoin miners are acting in a way that is malfeasant rather than incentive-compatible. 1:04:29 So is it the same vulnerability that exists on the main? It's the 50% plus one vulnerability? Is that it? 1:04:37 Yeah. So 51% of Bitcoin's hashrate can be deployed in a manner which is destructive to all of Bitcoin. 1:04:45 And stealing from a sidechain involves over half of Bitcoin's hashrate as well. 1:04:52 So what we're saying here, what I'm trying to advance, is the understanding that the critics of Drivechain point to miner theft, but they usually fail to articulate that such a theft involves over half of Bitcoin's hashrate necessarily. 1:05:13 And that it doesn't make sense to say, well, Drivechain is insecure because over half of Bitcoin's hashrate can steal from the hashrate escrow, but then not at the same time admit and acknowledge that if over half of Bitcoin's hashrate is going to act malfeasantly, then Bitcoin itself is unsustainable or unstable. 1:05:38 Because if over half of Bitcoin's hashrate is deployed in a way that's harmful to Bitcoin, Bitcoin will stop working. 1:05:46 This is something that the Drivechain critics acknowledge. 1:05:49 Like if you look at Shinobi's article from October of 2022, half a year ago, the article on American miner concentration and how the percentage of hashrate globally is increasing in America as a proportion of total hashrate. 1:06:08 He has this great sentence I like to quote. 1:06:13 I'll just find it now. 1:06:16 Just to kind of assist what Fuzzy Bear is saying. 1:06:22 So here's the sentence. 1:06:24 I just found it from his article on October 27th in Bitcoin Magazine. 1:06:29 Here's the sentence in the second paragraph. 1:06:31 This is by Shinobi. 1:06:33 From day one, it has been very clearly delineated that a majority, 51 percent or more, of the Bitcoin hashrate can act maliciously in a way that severely degrades or entirely breaks the security of the whole system. 1:06:48 And then he lists a bunch of ways they can attack it. 1:06:51 Oh, here's the answer to your question. 1:06:56 I forget who asked the question. 1:06:58 But regarding Lightning, he writes, they, referring to the 51 percent hashrate attacker, they could selectively refuse to process Lightning channel closures properly. 1:07:09 They could prevent peg ins and peg outs from sidechains. 1:07:12 They can entirely break the censorship resistance of the system and undermine the security of the base layer and any secondary layer. 1:07:21 So what's going on here is an acknowledgment that if we assume that we can't trust the majority of Bitcoin's hashrate to act in a way that's compatible with the functioning of Bitcoin, then we can't trust Bitcoin to work. 1:07:38 But that acknowledgment, that truth isn't seemingly contemplated by the critics of drivechain when they say that drivechain relies on the miners. 1:07:51 Well, so does Bitcoin. 1:07:53 That's the whole point. 1:07:54 So does Lightning. 1:07:55 Yeah, I see. 1:07:56 It's a kind of double think, right? 1:07:57 Right. 1:07:58 It's like on the one hand, oh, we can't trust the miners because in the block size war, we think that they were doing up where they're pushing for larger blocks and mining empty blocks. 1:08:07 And like, we can't trust the miners. 1:08:10 So that's the problem with drivechain is it puts a lot of trust in miners. 1:08:14 Well, like I have news for you. 1:08:17 Bitcoin involves trusting miners. 1:08:20 If you don't trust 51% of the hashrate to behave correctly, then you shouldn't be in Bitcoin because as Shinobi articulates in that paragraph, Bitcoin requires the incentive compatible behavior of 51% of Bitcoin's hashrate. 1:08:43 So when you explain it this way, it's obvious. 1:08:46 And I don't understand how proponents can, in good faith, argue this publicly. 1:08:50 So is it ignorance or is it malfeasance? 1:08:52 You mean the proponents or the opponents? 1:08:55 Did I say proponents? 1:08:57 The proponents. 1:08:58 No, the proponents of like this weakness, vulnerability. 1:09:02 Yeah. 1:09:03 So there are different criticisms of drivechain. 1:09:07 And the one that came up in this conversation that we're having right now, most recently, is the one that the miners might steal from the hashrate escrow. 1:09:15 But that actually isn't the allegation that Shinobi makes. 1:09:21 You see, he usually doesn't make that one. 1:09:25 He might say that they're insecure, but usually he argues the opposite. 1:09:30 So he's kind of like all over the map and sort of like wishy washy, in my opinion, like not interested in having a long form, unemotional, detailed, respectful, scientifically oriented, truth based, careful analytical discussion about this, which is why he explicitly declined to have a debate with Paul Sztorc about it. 1:09:55 He said that, oh, Paul will do all kinds of tricky reasoning and try to fool me in the audience. 1:10:00 That's what he wrote essentially in his tweet, which was in response to my, Henry, like my invitation to him, which was very respectful to debate these things. 1:10:11 But based on my listening to him and reading his stuff, he doesn't usually allege that the hashrate escrow will be stolen from. 1:10:20 Instead, what he alleges, in my understanding, based on his writings, he alleges that that drivechains will become large. 1:10:30 He thinks they'll get big, that a lot of people will use them, they'll get big, they'll be successful, but that their success will have an effect on the mining market, namely that the Bitcoin miners will will have an increase in their concentration, meaning there'll be fewer small miners and there'll be more large miners. 1:10:57 And that if there's only large miners in Bitcoin, then there's less miner decentralization, there's more miner concentration and that he thinks that's a bad thing. 1:11:10 So he wants to keep Bitcoin, like Peter Todd would say, like as simple as possible for the miner incentives. 1:11:17 How would increased profits or like higher revenues tend to centralize the ownership of the mining power? 1:11:39 Because if you look at YouTube, right, as an example, it's if anything, it's diversified the amount of content that exists as the revenue increases, because you give more bandwidth for everyone to kind of compete. 1:11:49 So I'm not exactly sure. Is it like state actors that are antithetical to Bitcoin that want to corrupt it and are willing to spend arbitrary amounts of money to destroy all of its value? Or who are these people getting together, I guess? 1:12:01 I mean, you're not proposing this if you have to steel man it, right? 1:12:06 Yeah, I think they're wrong. But what they think is that merged mining is not good. So their criticism of Bitcoin, like the Shinobi Peter Todd criticism, as I understand it, is a criticism of merged mining. 1:12:22 They don't actually dislike drivechain per se. They dislike the fact that it involves merged mining, which is already existing on Bitcoin and has since 2010 when Satoshi invented it. 1:12:41 So they don't like what Satoshi invented. And he talked about it explicitly. And he said it was good. And they disagree. So they think Satoshi is wrong. And that merged mining isn't good. And there shouldn't be multiple blockchains that the miners are all receiving fees from. 1:13:02 And they think that that will lead to... This is the answer to your question. They think that the miners will get a little bit more money if they run the sidechain node. So even though blind merged mining, which is Paul Sztorc's invention that allows miners to receive fees without running the sidechain node, even though that will exist with drivechain, Peter Todd and Shinobi point to the fact that there will be a profit motive for miners who can afford it. 1:13:32 They can afford to spin up the nodes of the sidechains to do that. That there'll be a profit motive that they'll think, OK, if I get a laptop and I run the node for the Thunder sidechain, maybe I'll make 1% more revenue per year. 1:13:50 I see. It raises the floor on who's able to compete, basically. So only people who can pay can play. OK. That's how the centralization happens. 1:13:58 Only people who can afford to run some sidechain nodes will make the extra profit from their mining. Now, a lot of miners are already using pools. So if you have hashing equipment like an ASIC like I have, but you're not running your own node, instead you use brains or slush pool. 1:14:20 So that is the pool layer. That's the layer at which the running of the sidechain nodes is necessary to get this extra profit in theory, where we're assuming that the critics are right, that there'll be more profit that comes from running the nodes. 1:14:35 So the pool will run it. The pool is making millions of dollars a year by taking a small fee from the revenue of the mining. So it wouldn't be hard for them to do it. But these critics would say, well, we don't want to have miners in general having any more power in the Bitcoin ecosystem. 1:14:54 And we don't want there to be more large miners. So therefore, we shouldn't do drivechain. But now Peter Todd, who's against drivechain, is in favor of inflation. He's openly in favor of Bitcoin doing an inflation fork. And I have the tweet, it's not hard to find, where he says, I support an inflation fork. 1:15:16 He tweeted that one time. He usually tweets things like, I would support it if the community wants it, but I don't think it's likely. But one time he just came out and said, I support it. So it's fair to say he supports it. He hasn't deleted the tweet. 1:15:29 And he also has tweeted that he thinks Bitcoin would more likely die than ever adopt inflation. So he's like cynical and kind of edgelording about inflation being a good idea, but then also saying that he doesn't think people will ever want it. Maybe he'll be eventually vindicated and the whole community will just decide to do inflation. I think that'd be terrible. 1:15:53 It's much better to preserve the monetary policy and to develop Bitcoin's extensibility and fee market through merged mining. I mean, that's the Satoshi view. And it's not right because Satoshi liked it. It's right just because it's right. 1:16:09 So the critics think that there'll be less decentralization in mining if the miners have to run these nodes to make extra profit. So the place in their reasoning where they're wrong is that those same people who criticize the possibility of more concentration in mining because of merged mining, 1:16:38 being more popular, those same people don't criticize the other thousand ways that mining is undergoing concentration and specialization. 1:16:54 So right now, large miners, not small miners, can negotiate with a power company to get a special arrangement where they get cheaper electricity as long as they operate only at certain times. Large miners, not small miners, can afford to build a giant hashing factory in Norway because it's right next to where the oil comes out of the ocean. 1:17:18 So large miners, not small miners, can build a hashing facility in some place where there's falling water or there's a volcano for geothermal. So large miners have all kinds of methods to make themselves more competitive. 1:17:38 And the critics of drivechain who think that drivechain will cause more centralization of miners, they don't criticize any of the things that miners are doing. And also it is inevitable and inexorable part of the free market economy that specialization occurs. 1:17:56 As an industry matures, some people specialize and they become very good at doing something and creating value doing it. And they push out all of the hobbyists. There are fewer people selling lemonade on the streets of America because McDonald's sells lemonade. 1:18:19 So McDonald's figured out people want lemonade and they make it by the billions of gallons a year and they sell it in their stores. So there's one big player in the lemonade market in America, which is McDonald's. That's where you get your lemonade when you're driving around. You don't stop at some little kid's stand and buy it from the kid. 1:18:40 So McDonald's put the kids out of business. Is that the end of the world? No, that's just capitalism. Similarly, Bitcoin involves just trusting that the majority of the hash rate isn't going to be deployed maliciously. 1:18:56 Satoshi wrote this in the very first paragraph of the white paper on page one, that as long as a majority of the hash rate is acting honestly, the system works. So this has been known from the get go. And Satoshi invented merge mining and it's been around for a decade. We've had merge mining constantly for a whole decade. There's never been a problem. 1:19:18 And yet these people who don't like drivechain, they say, well, it's all about the miners and the miners. They're already a problem. And then what if they get even worse? And there's just there aren't enough home miners. Instead, it's only big miners. Well, that's how Bitcoin works. 1:19:35 Satoshi wrote long ago that in the future, there will be server farms and specialists and not everyone will be generating new coins. He explicitly wrote that back in like 2010 on the forum. 1:19:50 All of the concerns against drivechain are. 1:19:56 Our concerns, which is fully understood and elaborated, are shown to be incoherent, like, oh, you can't trust the miners, well, then you shouldn't be using Bitcoin because Bitcoin involves trusting the miners and oh, you don't want the miners to specialize. 1:20:09 Well, then you shouldn't be doing capitalism because they're going to specialize and eventually the home miners won't work. 1:20:15 All of the people who think that they're going to be Bitcoin miners and toaster ovens, they don't really know what they're talking about. 1:20:22 Those economic ideas and memes come from people who don't understand how network effects work and specialization works. 1:20:30 The miners of the future will be large industrial players in different parts of the world that have cheap energy. 1:20:37 It's not going to be you at home with your toaster oven. 1:20:40 And whenever you're not toasting a bagel, you're instead Bitcoin mining with the toaster oven. 1:20:45 It's not how things work. 1:20:49 Instead, there's economies of scale and specialization, the same is true for Ethereum validation, there's going to be a few big players in Ethereum validation, they have centralizing forces just like Bitcoin mining. 1:21:03 That's one of the great insights of the whole Paul Sztorc oeuvre is he was the leading thinker. 1:21:10 More than anyone else alive, I think, on the subject of the crypto economics of proof of stake and how proof of stake consumes as much value as proof of work. 1:21:22 Except that the value consumed in proof of stake takes the form of consumed liquidity, whereas the value of that's consumed in proof of work takes the form of consumed energy and the consumption of liquidity is a complex topic that's abstract. 1:21:39 So people don't often understand this, but Vitalik understood it, and he modified his own articulation of the justifications for proof of stake after Paul wrote Paul's essay in 2015 titled Nothing is cheaper than proof of work. 1:21:54 The proof of stake people thought they're going to have a more efficient system because they figured, OK, if we don't burn all of this electricity. 1:22:02 Then we'll save a lot of money. 1:22:05 We'll save a lot of money. 1:22:06 What they didn't realize is that when you stake your capital over a period of time, instead of investing it in something else at that time, you are going to be consuming your liquidity and liquidity has value. 1:22:22 To understand this tangibly, just imagine if all of your money were locked up in a very high yield bearing arrangement for 10 years, you might find that to be unfavorable because you wouldn't be able to eat. 1:22:34 Right. So you don't want to lock up all of your money, even at a 30 percent annualized return rate for 10 years. 1:22:40 If it's all of your money, how will you eat? 1:22:42 So people want liquidity. 1:22:44 They don't want to have. 1:22:46 Yield always, sometimes they want liquidity, so in proof of stake, there is a lot of people staking all their capital, not all their capital, but a lot of society's capital in securing the payment system when that capital could have been deployed to other investment projects. 1:23:05 How do you run the two simulations in one where there's a state based model, a work based model to come up with the fact that on balance, they're pretty much the same. 1:23:14 How do you start to account for the cost of liquidity? 1:23:18 The way that you do that is no problem. 1:23:21 The way that you run the experiment is you run a theoretical analysis in your head of the two. 1:23:28 That's the only way to do economic reasoning, because you can't run like a test and then go back in time and do it differently. 1:23:37 Every moment in economics and society is like a unique constellation of a billion variables. 1:23:42 So the way that we understand and apprehend economic truths is by thought experiments. 1:23:48 And that's the only way you can abstractly distill the causal relationships between the variables, holding everything else equal. 1:23:58 You change one variable. 1:23:59 So we say in our minds that if we imagine a Bitcoinized society where there's using proof of work, Bitcoin, and then we imagine separately an alternative universe where it's the exact same world as the first one, except the Bitcoin is using proof of stake. 1:24:20 So what we're doing in our mind right now is we're imagining two otherwise identical systems, the only difference being one uses proof of work and the other uses proof of stake. 1:24:30 So they have the same value for their token. 1:24:33 They have the same transaction fees. 1:24:35 They have the same people. 1:24:36 Everything is the same except one uses proof of stake. 1:24:39 One uses proof of work. 1:24:40 They have the same block time. 1:24:42 They have the same block reward. 1:24:45 So right now, it's around six Bitcoin every 10 minutes. 1:24:51 Imagine if the way you get that Bitcoin is you burn electricity. 1:24:57 You consume electricity, if you consume a lot of it, then you get a large portion of that block reward statistically. 1:25:04 So let's say you're 10% of the Bitcoin mining market. 1:25:07 You have a big Bitcoin mining machine building full of Bitcoin miners. 1:25:11 Let's say you have 10% of the hash rate. 1:25:13 Hypothetically, that means about one-tenth of the time you're going to win the block reward. 1:25:19 So statistically, you're receiving about one-tenth of that block reward value over time. 1:25:29 Now, if you're one-tenth of the validators, then you would get one-tenth of that reward stream as well. 1:25:38 So how do you receive a part of that reward stream? 1:25:44 Well, in proof of work, you consume electricity. 1:25:46 In proof of stake, you consume liquidity by staking. 1:25:52 So there's work being done in both systems. 1:25:55 Proof of stake, in Paul's view, is obfuscated proof of work. 1:25:59 So there's still work being done, but it's obfuscated. 1:26:03 It's abstracted. 1:26:04 There's no energy being burned. 1:26:05 There's no hashing happening. 1:26:06 Instead, you commit capital for a period of time, and in return, you receive the reward, the block reward, which is part fees, part issuance. 1:26:18 So it makes sense to me. 1:26:20 I'm struggling to make the gap where it's like, I have 10% of the power over the network, so I receive 10% of the reward. 1:26:29 Yet in the stake-based model, it's unclear to me that the economy, generally, if it was operated completely on Bitcoin, in both the stake and the work-based model, would perform the exact same or have the same success rate or would come to the same inventions at the same amount of time or there'd be the same amount of investment. 1:26:50 It's not clear to me that all other things being equal besides stake versus work-based model, you'd have the same economic outcome generally. 1:26:58 So how do you reach that? 1:27:00 Because right now, people do commit their capital to get interest on accounts, and energy does really cost something. 1:27:08 So it's not clear to me that it is net the same when there's a real cost on one side and a cost people are already paying on the other side. 1:27:15 So the key insight that Paul had in his essay in 2015, Nothing is Cheaper than Proof of Stake, as well as in his 2017 response to Vitalik's response, and that is titled on Paul's blog as Proof of Stake is Still Pointless. 1:27:33 So in those two essays, what he's getting at there is the following insight that the value of the energy and other inputs in mining that are consumed by miners to receive their income, which is the on-chain income, plus any off-chain income, the value received by Proof of Work participants is the same amount of value as would be received by Proof of Stake. 1:28:04 Participants. 1:28:05 So the amount of resources that are brought, that are consumed in the Proof of Work process is equal to the amount of resources that are consumed in the Proof of Stake process. 1:28:19 I see. 1:28:20 I see. 1:28:24 equivalent systems, know that marginal cost equals marginal revenue. 1:28:29 In other words, miners are going to consume more and more resources to win more and 1:28:34 more 1:28:35 of a percent of the revenue up until the point where their consumption of resources 1:28:41 is equal to the revenue they're getting. 1:28:45 So it's kind of like if you have a restaurant 1:28:51 And rent more space. 1:28:52 I can serve more people. 1:28:53 OK, I'll do that. 1:28:54 I'll hire more servers. 1:28:55 I'll rent more space, have a larger restaurant. 1:28:57 And then you realize that you're not making as much money as you used to because there aren't enough customers. 1:29:03 You overbuilt. 1:29:04 Now you downsize. 1:29:05 So miners are doing that. 1:29:06 Stakers doing the same thing, too. 1:29:09 And what Proof of Stake people at first made the mistake of doing, and this is why Paul wrote his essay, is they thought that Proof of Stake, you know, people will get the block reward, but there'll be no value consumed by society to receive that reward. 1:29:28 When the staking participants are getting their reward, they're not doing anything. 1:29:32 But they are. 1:29:33 What they're doing is they're wasting their own liquidity or consuming their own liquidity. 1:29:38 In the same way that Bitcoin miners are consuming electricity and the value of machines, stakers are consuming their liquidity. 1:29:47 And it is possible to specialize in that. 1:29:50 And in the far future, most of the staking will be done by professionals in the same way that Bitcoin miners specialize in hashing. 1:29:59 Hashing is difficult. 1:30:00 Staking is the same way in that there'll be specialization, there'll be large players, there'll be centralizing forces to the same extent that there already is in Bitcoin mining. 1:30:13 And you asked, what are the effects? 1:30:15 Like if we have two otherwise equivalent systems, you know, in our mind, one is the world using Bitcoin with Proof of Work and the other is the world using Bitcoin with Proof of Stake. 1:30:27 The main difference is that in one of those worlds, a lot of energy is consumed in order to secure the payment system. 1:30:37 And in the other world, that energy is not consumed, it's available. 1:30:42 But a lot of society's capital, the liquidity on that capital is being consumed by securing the payment system. 1:30:53 So which is better? 1:30:54 Having a lower growth rate in society economically because of a lower rate of investment in projects because a ton of society's capital is being staked to secure the payment system. 1:31:06 But then there's more energy available for other projects because the energy isn't being consumed. 1:31:13 Like the main insight is that the two systems are roughly the same in terms of the value that's being consumed per unit of time. 1:31:21 But the value takes different forms. 1:31:23 Either society is burning up a lot of its electricity or society is burning up a lot of its liquidity. 1:31:29 So I rarely hear anyone express it this way, but I feel this is the right way to talk about it, that the choice between Proof of Stake and Proof of Work is economically a choice between having society consume value in the form of electricity or consume value in the form of liquidity. 1:31:49 And the effects of that decision are that electricity prices are probably higher if we do Proof of Work, but there's more capital available for investing in projects. 1:31:59 Or we do Proof of Stake, where a lot of society's capital is devoted to securing the payment system. 1:32:05 So there's less capital available for investing in projects, but there's more energy available for other things. 1:32:13 Now, the Proof of Work proponents would argue that, of course, Bitcoin mining has a synergistic potential with respect to the energy grid and renewable resources. 1:32:26 And there's other kind of interesting effects from Bitcoin mining and Proof of Work. 1:32:31 The Proof of Stake proponents would say this is more abstract. 1:32:36 It's more environmental. 1:32:38 There may be advantages with respect to anonymity, right, because it's more abstract. 1:32:46 So it can be more digital and more secret, right, because you don't leave like a heat trail, a heat signature. 1:32:55 Like Bitcoin mining uses up a certain amount of heat. 1:32:58 It actually rather develops heat, I'm saying. 1:33:01 And staking doesn't. 1:33:03 So staking might be more abstract and covert, potentially. 1:33:08 Now, one of the disadvantages of staking is it's much more complicated. 1:33:12 So Justin Drake of the Ethereum Foundation has said it's 20 times more complicated than Proof of Work. 1:33:18 So Proof of Stake is 20 times more complicated. 1:33:21 So that's a disadvantage. 1:33:23 So, of course, Bitcoiners enjoy the privilege of having a less complicated system as the consensus algorithm for their layer one. 1:33:36 So it's favorable to have less complication. 1:33:39 It's more time tested. 1:33:42 So those are all the advantages and disadvantages. 1:33:46 The most important insight is to realize that Proof of Stake is not free. 1:33:50 Some very smart people thought, well, if we get rid of the Bitcoin miners and do Proof of Stake, then we're going to save a lot of cost. 1:33:57 What they don't understand is that if people are locking up capital for any amount of time, then during that time they have less liquidity. 1:34:05 And liquidity has value to people. 1:34:08 One of the things people value economically is their own liquidity. 1:34:12 That's why everyone maintains a cash balance in their personal finances rather than invest that balance entirely in higher yielding, less liquid investments. 1:34:25 Like you don't put all of your money into gold bars or houses or stock to keep some in cash. 1:34:30 And that way you're liquid in case you have unexpected expenses in the future. 1:34:37 Thanks, that was really clear. 1:34:40 If there are benefits and disadvantages that might roughly equal out all things considered, then what's for me to prefer one over the other? 1:34:48 Consider staking and proof of work. 1:34:50 I know it's an old conversation, but I still want to go through it if there's time. 1:34:54 And if anyone else wants to jump in again, I guess. 1:34:56 Sure. 1:34:57 All are welcome to join the stage. 1:34:59 We're now past 11 o'clock Pacific, so usually we wrap up around this time unless there's like a vibrant conversation, which this is. 1:35:06 But I would just say that what I just said was sort of like the major tradeoffs. 1:35:10 Like if you're trying to decide which is cooler, Bitcoin's proof of work or Ethereum's proof of stake, the major sort of basic differences I would point out is Bitcoin's is more time tested. 1:35:24 Ethereum proof of stake is still a thing under development. 1:35:27 They just introduced withdrawals from staking days ago. 1:35:33 So Ethereum is less tested, less proven. 1:35:36 Bitcoin's is also much simpler. 1:35:39 So it's both more time tested and it's simpler. 1:35:43 So the likelihood that it has a fundamental catastrophic problem is lower. 1:35:47 Of course, Ethereum's community is more willing to do hard forks to fix problems and rapidly adjust. 1:35:54 So they kind of have like a like a pattern going up, just move fast and break things. 1:36:01 Bitcoin's more conservative now. 1:36:03 But the major tradeoffs to your question are if you do proof of work, then society is going to be securing its payment system by consuming electricity primarily. 1:36:13 And if you do proof of stake, then the economic value of the payment of the all the costs to secure the payment system doesn't change in terms of the amount of value. 1:36:25 But the form that the value takes is that you consume liquidity instead of consuming electricity. 1:36:32 So which would you rather have like. 1:36:35 In your hometown, like less investment in. 1:36:39 New businesses. 1:36:41 But cheaper electricity. 1:36:43 Or would you rather have more expensive electricity, but also more capital available for investing in businesses? 1:36:49 So which way should we secure the payment system? 1:36:52 It's almost like if you're going to eat food. 1:36:55 Would you rather eat. 1:36:58 You know, cows and lambs, or would you rather eat plants? 1:37:03 Some people prefer vegetarianism. 1:37:05 Some prefer eating meat. 1:37:08 So your question is like, which is better? 1:37:10 Well, each camp has its reasons for preferring what it prefers. 1:37:14 The vegetarians think it's ethical and healthy. 1:37:17 And the carnivorous think that their approaches is perfectly ethical and healthy. 1:37:24 So there's like an open debate on this. 1:37:26 I would say the whole crypto community right now is split. 1:37:29 You've got Bitcoin, the market cap leader, digital gold with proof of work. 1:37:35 And you've got pretty much every other project going all in on the proof of stake thing because it's environmental. 1:37:43 And there is an enormously strong movement in our generation towards environmentalism, which is a concept that's not at all new. 1:37:51 You can see it in the ancient Greek literature. 1:37:55 You know, if you read like the scribblings of Pythagoras and Herodotus, there are various like philosophers who were interested in just eating plants. 1:38:08 And these debates are age old. 1:38:10 Probably the debate on proof of work versus proof of stake will be with us for maybe a decade more until it's pretty clear what everyone prefers. 1:38:22 I think if we have drivechain, it'll strengthen the proof of work movement. 1:38:26 And all of the good altcoin technology can be cloned into drivechains. 1:38:32 And, you know, we'll have a big privacy community on the drivechain. 1:38:35 We'll have the big block community on a drivechain. 1:38:40 The entire Ethereum technology can be cloned into a drivechain. 1:38:44 And that's already existing. 1:38:46 In the drivechain testnet, they have the Ethereum sidechain already running. 1:38:51 So we'll see what happens. 1:38:54 Who will win proof of work, proof of stake? 1:38:56 It's fascinating. 1:38:57 But my main point there was that Paul Sztorc's essays were very important in the history of these ideas. 1:39:03 So I encourage anyone who's interested to go read his blog. 1:39:06 It's very difficult reading. 1:39:08 These are like Ph.D. level essays on crypto economics. 1:39:13 So it's at truthcoin.info. 1:39:16 And there's lots of interesting ones, not just about proof of stake and proof of work. 1:39:21 But also, you know, in some of the blog posts, he'll introduce a new idea, like the large block sidechain. 1:39:29 So there's a good post on Thunder sidechain. 1:39:32 And there's other ones as well. 1:39:34 Zcash sidechain. 1:39:36 And, you know, interesting ideas. 1:39:39 He has a post on gradually activated replay protection, imposed mutual exclusivity. 1:39:45 All kinds of interesting ideas out there that he's invented. 1:39:49 They're all in that blog for the world to read. 1:39:53 Thanks. 1:39:54 Yeah, I've seen Paul's blog. 1:39:55 It reminds me of like Paul Hanson's blog or Slate Star's blog. 1:39:59 They've got similar flavors. 1:40:01 I appreciate you explaining all this. 1:40:03 I just have a couple more questions, if I can sneak them in. 1:40:05 I know I passed time. 1:40:08 Please do. 1:40:09 Please ask your questions. 1:40:10 I'm happy to. 1:40:11 Thanks. 1:40:12 I was hoping you could define merged mining for me. 1:40:14 And I was hoping you could define hashrate. 1:40:17 I think you said hashrate escrow or hash escrow. 1:40:20 If you could define both those things, I'd appreciate it. 1:40:22 Sure. 1:40:23 So I can do that in a very simple way because I'm not a developer. 1:40:28 I'm not a software engineer. 1:40:30 And I didn't participate in creating these ideas. 1:40:33 So what I can do for people is present drivechain in pretty elementary terms 1:40:38 because I'm a lawyer by trade and a philosophy major. 1:40:42 So I can give you the simple version, kind of the Cliff Notes version. 1:40:45 But where you should really go for the best answers is to read the drivechain BIPs on GitHub 1:40:51 where Bitcoin Core has posted the BIPs, I believe. 1:40:59 Or they're on the GitHub for Bitcoin. 1:41:02 You can see the entire text of the BIPs and read all about them. 1:41:07 So that's where these things are defined. 1:41:09 That's where the official definitions are for hashrate escrow and blind merged mining, 1:41:15 which are the two inventions of the drivechain authors. 1:41:20 So hashrate escrow is the technology that is at the center of BIP300, 1:41:26 which is the more important of the two BIPs. 1:41:28 The second one is blind merged mining, which is at the center of BIP301, 1:41:34 which is like the secondary part of drivechain. 1:41:37 So drivechain refers to those two BIPs. 1:41:40 And hashrate escrow is the main event in 300. 1:41:44 And blind merged mining is the main event in BIP301. 1:41:49 And what they are is basically hashrate escrow is the trustless two-way peg for the sidechain. 1:41:56 So you send your Bitcoin into this address. 1:41:59 Your Bitcoin stays there and you receive the token on the sidechain. 1:42:03 And then you trade with it. 1:42:05 And if you get more sidechain token, which is redeemable for Bitcoin, 1:42:11 then you could peg out when you're done, you know, days or months or hours or years later. 1:42:16 You can peg out of the sidechain, get back to layer one Bitcoin. 1:42:19 That's the holy grail of Bitcoin development, this trustless peg out from a sidechain. 1:42:25 So the hashrate. 1:42:28 Thank you. 1:42:30 Sure. So the hashrate escrow is the two-way peg. 1:42:33 And it's called hashrate escrow because it's an account that uses the Bitcoin miners to keep track of, you know, the peg out, 1:42:44 like when it should occur. And you basically are trusting those like the 51 percent of Bitcoin's hashrate to properly conduct that activity. 1:42:54 And then the blind merged mining just means merged mining where the Bitcoin miners don't have to run the node of the sidechain 1:43:02 and they can still receive the transaction fees from the sidechain. 1:43:08 So it's blind, meaning you don't have to have the node and merged mining. 1:43:13 That's Satoshi's invention from August of 2010, over a decade ago. 1:43:19 So merged mining means you have two blockchains. One is the parent and one is the child. 1:43:25 Or you can use the vocabulary of one is the layer one and the other is the layer two. 1:43:30 So the base layer, the main chain, Bitcoin layer one, that's where the miners are. 1:43:37 And then the sidechain uses the same miners as a layer one. 1:43:42 So that's the layer two being merged mined with layer one. 1:43:45 So you have two different blockchains and they're both using the same set of miners. 1:43:51 So that's what merged mining is about, like Litecoin and Dogecoin. 1:43:54 They use merged mining where Dogecoin is the child chain and Litecoin is the parent chain. 1:44:01 So Drivechain aspires to have every blockchain in the world merged mine with Bitcoin, which, by the way, is exactly what Satoshi wrote in 2010. 1:44:10 He wrote that he believed every network in the world would share CPU power with Bitcoin, increasing total strength. 1:44:20 That's his phrase, increasing total strength. 1:44:22 He was explicitly saying how merged mining would solve the security budget problem there, 1:44:28 because what he's saying there is we get more fees from every blockchain and that would make Bitcoin's fees very high, 1:44:36 enabling Bitcoin to be stronger, harder to attack. 1:44:40 The two ideas work hand in hand. 1:44:42 So the Drivechain designers, as I understand it, they would like to see both of these BIPs adopted at the same time. 1:44:48 They split them into two different BIPs just to make it possible for the Bitcoin community to consider them in isolation. 1:44:56 But they really do work together very well. 1:44:58 And the goal is to have them both adopted together. 1:45:04 What's the economic incentive for me as a miner to run the sidechain if I can receive the benefits without actually running the software? 1:45:10 And it's going to cost more to run more software. 1:45:12 Well, as I described earlier, the critics of Drivechain like to talk about the fact that the miners would have an incentive to run the sidechain node, 1:45:22 even though they can receive the fees as a blind merged mining miner. 1:45:28 If they run the node, then they could do like MEV. 1:45:32 They could try to on occasion get more value out of the fees by maybe reordering transactions and doing other kinds of things that occasionally happen in blockchain, 1:45:48 where the miners do some trick and they get a little bit more money. 1:45:52 Like suppose we have a bet on a sidechain and I bet you that something will happen, 1:46:00 and we're betting on whether or not it'll happen before a certain block on the sidechain. 1:46:06 Well, the miner could engage in kind of like a conflicted transaction where he reorders the blocks and that delays the event. 1:46:16 And therefore he won the bet, but he was also changing who won the bet by delaying the event. 1:46:24 So there's a possibility that miners can engage in selfish mining or strategic mining or fork withholding. 1:46:30 There's all kinds of complicated stuff that can happen in mining where the miners can get a little bit more money by actively engaging in activity that an ordinary miner wouldn't. 1:46:44 So the critics of drivechain, some of them are very interested in how this MEV is happening in Ethereum a lot. 1:46:52 Because when you have a highly expressive blockchain with all kinds of sophisticated smart contracts, the amount of this malfeasant MEV-like behavior increases. 1:47:04 And some people don't like that because it's a centralizing force. 1:47:09 So there is that slight incentive, especially when you have smart contracting sidechains like the Ethereum sidechain. 1:47:18 People might want to run that node to get that MEV, get extra fees or extra revenue from that. 1:47:24 But that's not really a problem because the only people who would suffer from that would be the users of the sidechain would have their transactions delayed or reordered. 1:47:35 And if you didn't opt into using that sidechain, then you don't suffer. 1:47:43 Sorry, I just had some people come over, but I heard 80% of it. I trailed off in the last couple of minutes. 1:47:47 I really appreciate that explanation. That was amazing. 1:47:50 One last thing I wanted to say was that I tried to DM you, but it looks impossible. 1:47:54 So did you just mean tweet at you or did you mean DM? 1:48:00 Get the papers. 1:48:01 Are the DMs not here open? Maybe I need to open mine. 1:48:04 Oh, inside spaces? I don't know. I never used this before. 1:48:08 I gave you a follow, so I'll send you a message now. 1:48:12 All right. Thanks for doing that. There we go. I got you. 1:48:15 Hey, thanks for your time. I really appreciate it. 1:48:17 Thanks for your question. 1:48:18 Hogging all the space. 1:48:19 No, it was great. 1:48:20 Yeah, definitely. 1:48:22 Well, this has been Drivechain Twitter Spaces. We meet every Monday and Thursday. 1:48:26 I hope you found today's monologue thrilling. 1:48:30 And I'll catch you all on Thursday where we can dig into the exciting world of peer-to-peer sidechains on Bitcoin. 1:48:39 Get ready. It's coming. 1:48:41 The most exciting thing in the history of the world could be just moments away. 1:48:47 DriveChainization of Bitcoin, Blind Merge Mining, Hashrate Escrow, Thunder, BitAssets, Zside. 1:48:56 It's coming. Get ready. 1:48:59 See you all on Thursday.
