0:01 Hello, everyone, and welcome to Drivechain Twitter Spaces. 0:06 Today is Monday, March 13th, and we're thrilled to have another conversation today, 0:12 as we do every Monday and Thursday about Drivechain. 0:15 So, all are welcome to raise their hand and chat. 0:19 Drivechain has so many interesting features and facets to it. 0:24 There is so much to be said about how Drivechain could strengthen potentially Bitcoin's future growth 0:31 and expand the developer community and number of interesting projects that are on Bitcoin 0:38 that are energizing interest in Bitcoin. 0:40 And it's also so interesting to think about Bitcoin history 0:44 and learn how Drivechain's role in history is important in terms of, you know, 0:50 Drivechain was thought up first in 2015 at a time when sidechains were very much on the forefront of Bitcoin thought 0:59 and theory about, you know, potential future Bitcoin growth. 1:03 And now sidechains are once again on the minds of many people as we contemplate extensibility 1:11 and how extensibility is one of the important dimensions of Bitcoin that could be expanded through an upgrade. 1:18 So, people are interested in making Bitcoin able to have potentially more features and interesting projects, 1:25 projects related to privacy, projects related to scaling. 1:29 So, there could be a sidechain focused on privacy like Zcash, 1:33 but with Bitcoin as the unit of account and with the fees paid to Bitcoin miners, 1:37 there could be another one or perhaps a number of them that are large block Bitcoin sidechains, 1:43 Thunder sidechains that could bring a lot of an enormous number of small fees that would accrue to a total that's significant in fee revenue 1:52 to Bitcoin layer one as MergeMine, Thunder sidechains, 1:57 and might perhaps might bring back some of the big block Bitcoiners back to Bitcoin to use that sidechain 2:03 rather than remain in the altcoin, you know, Bitcoin fork community. 2:09 And then, of course, there's very interesting projects like HiveMind, BitAssets, and BitNames. 2:17 You know, BitNames is the project that is similar to Satoshi's own idea that not that he had the idea, 2:25 but he commented on it in writing back in August of 2010, BitDNS. 2:30 So, DNS is an idea that is a non-monetary use of Bitcoin's technology that could be an exciting part of the Bitcoin ecosystem, 2:40 you know, website domains being something which people could own in a way that is secured by blockchain 2:47 and something Satoshi himself thought was cool and thought would be a MergeMined blockchain on Bitcoin. 2:54 So, that would be exciting to see that happen. 2:58 And that's what Drivechain is all about, is making Bitcoin more inclusive and exciting. 3:06 So, enabling developers who have new ideas to remain in the Bitcoin community and be able to build on Bitcoin 3:13 rather than splitting off and into an altcoin and having Bitcoin lose that share of the thinking and development 3:22 and economic activity in terms of value and fees. 3:25 So, it's all about making Bitcoin a place where people are happier and feel they can do whatever they want within Bitcoin. 3:32 That way, Bitcoin can become the world's choice for money as well as other blockchain technology applications. 3:42 So, that's why it's an exciting idea because it brings people together, it helps them stay together even when they have different ideas. 3:49 Because one of the great things about capitalism is people with different opinions and different interests can collaborate in a harmonious way. 3:57 So, that's one reason why I like Drivechain. It's about people getting along, which is great because that's really what economics is all about. 4:05 Instead of fighting in tribes, we can get along through trade, even when we have different skills, different interests, different things we focus on. 4:14 And with that, I would just say again, all are welcome to join the stage and share thoughts. 4:20 We usually run for about an hour and a half, and it's great to have people of all interests join. 4:29 There's a bunch of content on GitHub, which is great for those who are programmers or those who are interested in stretching their intellectual experiences with New Horizons. 4:41 So, people like me, I don't have a programming background, but as a lawyer, I should introduce myself as I always do in these chats. 4:49 I'm Henry of LayerTwo Labs. 4:50 So, as a lawyer, the Drivechain topic is just an intellectual adventure because there's so many interesting parts of it. 4:59 Open source, code development, the community's consensus and how it's achieved or not achieved, how is it measured. 5:07 There's so many open questions. 5:08 It's a very diverse and interesting intellectual space, the topic of BIPs and Drivechain in particular because it has such a strong economics fabric to the ideas. 5:20 When we're talking about fee revenue and value accrual to Bitcoin, Bitcoin's network effect, these are economic concepts. 5:29 So, Drivechain is very much an idea which is interesting for someone of an economics orientation, not just only those people with a software development background. 5:38 And it's really those economics ideas that got me into Bitcoin in the very beginning. 5:43 Satoshi's thread on Mises and Rothbard was that lightbulb moment for me. 5:49 Well, I see a bunch of familiar faces in the audience. 5:53 All are welcome to chat. 5:56 If you're interested in chatting, all you have to do is raise your hand and you can come up to the stage and share your thoughts on Drivechain. 6:07 We've had a bunch of interesting Twitter threads lately. 6:12 And we've also had interesting conversations in the Drivechain Telegram group where over 700 people have joined to observe the conversation on Drivechain. 6:24 The Telegram group is accessible easily. 6:26 If you want the link for it, you can just go to drivechain.info and then click on Telegram in the list of links. 6:35 And then that will take you to the Telegram group. 6:37 It's free to join. 6:38 It's free to participate. 6:40 And the conversation is pretty open. 6:42 People can say what they really think and get some interesting feedback and discussion. 6:48 Sometimes it's an argument. 6:50 Sometimes it's just a lively conversation. 6:53 But it's all about Drivechain. 6:56 So it's great for people to be able to engage that way using the Internet rather than back in the old days. 7:03 There were just magazines for people interested in the ideas. 7:07 But now we have live conversation and writing. 7:10 Pretty dynamic stuff. 7:13 Well, we have all the familiar faces here. 7:15 People who are interested in Drivechain. 7:17 I recognize some very nice faces. 7:19 Some of us are supporters. 7:22 Some of us are skeptics. 7:23 And some people have a neutral opinion. 7:25 There are some people, for example, our most recent Drivechain talk, Twitter Space, last week was with Moon Settler. 7:32 And he is very interested in Drivechain, has so much to say about it. 7:39 When I ask him if he's emphatically for it, he says, you know, it depends. 7:47 So some people who are very interested in it and like it and often defend it, even they aren't sure categorically if they're for it. 7:55 Another person who has a strong interest in Drivechain is Fiatjaf, the creator of Nostr. 8:00 He clearly is an emphatic supporter. 8:03 Adam Back, he says favorable things about Drivechain. 8:07 And I would be an emphatic supporter as a humble pleb. 8:13 And, you know, others who have, you know, notable reputations are some of them are supporters. 8:19 Some of them are skeptics. 8:20 And that's fine. 8:21 So the ideas are evolving. 8:24 Understanding is evolving. 8:26 And there's a whole bunch of different ways people can be interested in Drivechain. 8:29 There's like five, at least, very interesting, different ways of getting interested in Drivechain. 8:36 You can be interested in Drivechain because you want there to be more ability for developers to develop on Bitcoin in a peer-to-peer way. 8:46 So technological inclusiveness and creativity and development. 8:52 Those are, you know, experimentation. 8:54 Those are ideas that could foster a person's interest in Drivechain. 8:58 And completely separate from that, a person could be interested in having Bitcoin be the biggest. 9:04 So having altcoins not grow as much, Drivechain might help with that. 9:09 So Drivechain might help Bitcoin maintain its role as the leading cryptocurrency that's peer-to-peer, you know, and, you know, by market cap. 9:18 So that's another read. 9:19 You can be interested in Bitcoin's growth relative to altcoins. 9:22 And that could help and, you know, get you interested in Drivechain. 9:27 Totally separate from the first topic, which was development extensibility. 9:31 And then there's also others like the security budget. 9:34 So there's a whole bunch of interesting different ways a person can encounter Drivechain and come to it and develop, you know, an interest for it. 9:43 And then, of course, there's also more reasons like if a person is interested in relieving Bitcoin from the stress and strain of consensus upgrades. 9:54 You know, the difficulties and risks of introducing changes to layer one. 9:58 Drivechain helps with that. 10:00 Drivechain helps relieve the pressure that the Bitcoin community experiences on layer one consensus upgrade discussions by enabling people who want to do a change to just do it in a Drivechain. 10:14 And they can test it out. 10:16 And if that appears very stable and if that appears very successful, then that could help make it easier for the community to bring that change down to the layer one, the foundation. 10:28 So Drivechain could, if it's successful and operates exactly as intended, could be a great way for the consensus upgrade process to be much easier for Bitcoin. 10:41 And it might even enable there to be no more changes conceivably. 10:44 There could be 100 years, maybe, where there's no more soft forks because the Drivechains are operating so well as a way of enabling changes and experimentation and growth on technology other than layer one. 10:59 And those are a bunch of the ways that people can get interested in Drivechain. 11:03 Just to wrap up the summary, because I recently have been reflecting on this in conversations with friends, that there are four or five different ways to get interested in Drivechain. 11:15 Namely, the love of innovation and extensibility and development, the interest in alleviating the stress and strain of upgrades for layer one, the security budget question about low fees, and then the growth of altcoins. 11:33 In other words, trying to keep Bitcoin as number one. 11:35 So it has the biggest network effect, the strongest number go up narrative. 11:42 So those are some of the four or five different ways that people can get interested in Drivechain and become fans of it. 11:51 Probably the one which is most fundamental and engaging to the most number of people, especially among the technologically sophisticated, probably the most compelling reason for Drivechain might be how it enables innovation on Bitcoin. 12:08 I think that a love of innovation and experimentation in a way that's safe and partitioned, that is what appeals to some of Drivechain's most notable supporters. 12:20 They want to see Bitcoin enable more innovation and experimentation in a manner that's partitioned and conservative in terms of its design and safety. 12:30 So I think that's a great reason to like Drivechain. 12:34 Liking it because it could help Bitcoin get more fees and value economically is appropriate. 12:42 However, I think that those inspirations aren't as internal to Bitcoin. 12:52 Some people wouldn't find those to be compelling reasons because those have to do with worrying about things that might not necessarily be worth worrying about, like the growth of altcoins. 13:04 Many Bitcoiners don't find that to be a compelling reason to do anything. 13:08 And that's fine. Maybe they're right. Maybe they're not. 13:10 But also the security budget, it could be decades away from ever being an issue if it is an issue at all. 13:16 So I understand and appreciate the notion that maybe the best justification for Drivechain is to make Bitcoin become more about the love of innovation and expression so that there can be more development on Bitcoin. 13:30 Like if a person is a privacy enthusiast, they want to do Zcash technology, they want to do Monero technology. 13:36 Well, wouldn't it be great if they could do that on a Drivechain? 13:39 Probably a large portion of the users of those privacy coins and potentially maybe virtually all of them might migrate to Drivechain if Drivechain were adopted. 13:49 It might be a great thing for Bitcoin to have those technologists back in the Bitcoin community because that privacy topic is so closely tied to Bitcoin's soul in a sense. 14:02 Like Satoshi himself had a whole section on privacy in the white paper and recommended people. 14:09 He said, I recommend you use Tor and don't reuse addresses. 14:15 So I think that it'd be great to have the privacy enthusiasts within the Bitcoin community rather than the altcoin community. 14:24 Of course, many privacy enthusiasts are within Bitcoin, but a portion have left and it'd be great to bring them back. 14:30 It would be one of the great dramas and exciting things of Drivechain adoption to see to what extent do the altcoiners return to Bitcoin. 14:39 Wouldn't that be amazing? 14:41 And wouldn't it be great for the Bitcoin community and the whole crypto community to be unified? 14:47 To be unified in their interests for advancing and advocating for property rights and digital property rights and open protocols. 15:01 Lots of the things that Bitcoiners and altcoiners share, like an interest in cryptocurrency as a technology and as a thing that can improve society. 15:10 It would be great if those communities spoke with one voice, a unified voice, and that way there can be more political strength in the community. 15:22 Ah, we have a speaker requesting. 15:24 Welcome to the stage, AcrossFireX. 15:31 Hi there. Thanks for joining. 15:32 How are you doing? 15:34 Yeah, generally, I'm kind of a fan of the idea of Drivechains for mostly the reasons you've been citing here around keeping focus on Bitcoin and allowing more innovation. 15:48 All of those sorts of things sound great to me. 15:51 Generally, I'm still kind of making up my mind kind of in the grand scheme of things about Drivechains because it also has to be assessed with whatever risks that might introduce us. 16:02 Well, to Bitcoin, you know, and one that I was trying to understand recently is the dynamics around mining. 16:11 So I know, like, it's already, you know, an issue, obviously, if there were, you know, pools that were able to get to 51 percent of the Bitcoin hash rate just for, you know, the main chain as is. 16:23 But it does sound like there might be some additional dynamics that might be introduced with Drivechain as well, if that were to happen. 16:29 And I know right now, you know, a lot of times people can kind of, you know, quell concerns about that by saying, you know, hey, it's easy for miners to move to a different pool. 16:40 And there's, you know, new innovations like Stratum V2 for, you know, for individual miners to have more say in the blocks that are produced by the mining pools, and that can mitigate some of the concerns for the main chain. 16:51 Do you find that those are, you know, kind of similar for Drivechain? 16:58 Is Stratum V2 kind of, like, viable at mitigating some of those concerns for Drivechain? 17:03 Are there other ideas that might help in kind of avoiding, you know, mining pool concentration? 17:09 Because, you know, Foundry and, you know, a couple others are already pretty large. 17:13 So, you know, that could be a potential concern, you know, if they were to get to, you know, 51% or something like that, and these things become, you know, something more realistic. 17:26 Thanks for that question. 17:27 Regarding the question about Stratum V2, there has been some commentary about that in the Drivechain talk Twitter group, Telegram group, and people have, you know, shared ideas on it. 17:43 One person in Drivechain Twitter spaces a few weeks ago, Greg Slephak, tweeted that he thinks that Drivechain is more compelling to him, in his view, because of Stratum V2. 17:58 So I know of one person, and he came in here and talked about it. 18:02 It was great. He did a really great interview with me, basically, in Drivechain Twitter spaces like a month ago about that and other things. 18:09 So there's at least one person I know of who's pretty technical, who has an interest in Stratum V2, who sees it as a benefit in terms of understanding Drivechain and the possibility that Drivechain could operate well. 18:22 So I know for one person, there is, you know, he saw that as like a good thing with respect to Drivechain. 18:31 It's a great question. 18:33 Cool. Yeah. 18:35 And then, yeah, Satoshi, welcome to the stage. Crown Bitcoin and also Satoshi Enjoyer. 18:47 Hello. 18:49 Please jump in, share your thoughts. 18:51 Thanks. Do you hear me? 18:53 I do. Yes. Welcome. 18:55 Great. Great. Thank you for having the spaces. 18:58 So first time I heard about Drivechains, I think, was maybe a year or two ago at a conference when Paul was speaking about it. 19:05 And I thought that this was like an amazing idea right away. 19:09 And I was more curious, how come there hasn't been more talk about it? Because it seems like he came up with this many years ago. 19:16 So I did a little bit of research and more recently, I did a more deeper dive. 19:22 I listened to all of Paul's talks and I wanted to see what is the biggest arguments against it. 19:28 Why aren't people talking about it? Why aren't people excited about it? Why isn't it a bigger thing? 19:33 So I do have some questions because I didn't really read the specs and I'm not as technical. 19:39 But from watching the videos, I have a few holes that maybe people can help fill in. 19:45 So I think it does boil down to what AcrossFire was talking about. 19:52 But more specifically, basically, if there's a drivechain, it doesn't have to have 10 minute blocks. 20:00 The way I understand, it can have smaller blocks, but ideally, it would still bring something from every 10 minute block from Bitcoin onto its drivechain for its own security to say, hey, we have a stamp from Bitcoin. 20:14 So we're going to include it. And then another thing is, as a miner, if they actually have to run a drivechain, or can they run an SPV node of the drivechain? 20:28 And the idea is if the miner is incentivized to have more bandwidth and more storage, basically more resources, or can they just as effectively get the fees from the drivechain without needing to run any additional resources? 20:46 Because I think the crux of the potentially of people that might not like this idea, and maybe I don't understand it the best, but I think that their idea is that if you are incentivizing miners to have more resources, then you are potentially creating miners that would potentially make more fees because they have more resources available. 21:10 So that can potentially over time, geographically, create more miners that have better bandwidth. 21:20 I'm so sorry, please continue. I clicked a button by mistake. So please continue with your... 21:28 Sure. Yeah, feel free to stop me at any point. 21:30 Oh, no, that was no, it was completely accidental. Please continue with your question. Thanks. 21:35 Sure. I mean, it's a little bit of a tangent. I guess there's a lot of questions there. So if you want, you can stop me. But I just wanted to get the whole idea across. 21:43 So if potentially you are incentivizing miners to have more resources and hardware, basically, that's how we're defining it, then potentially, if there is some type of like evil miner of 51%, you are incentivizing for that to happen, from what I understand. 22:05 Yeah, those are great questions. Welcome, Paul, to the stage. There seems to be a little bit of glitching going on with Twitter spaces. But I'm trying to enable those who have requested to join to join. Can you hear me, Satoshi? 22:26 Yes, I hear you. But I don't see Paul on stage. He's just a listener right now. 22:30 Yeah, I know. Sometimes when people try to get on stage, it glitches a little bit on Twitter spaces. Your question was really great. And it's cool that you went through some of the interviews that people had on Drivechain. And that you're like, as you say, kind of in the process of reading about it. So you asked, what are the major objections? That was like the first part of your question. 22:51 So the skeptics and critics of Drivechain, I've read a lot of their writings and listened to a lot of their talks. The main objections they have, if I had to list the top two or three, they would be some people think that the security of the two-way peg would be not guaranteed very well. 23:14 So for example, in the Blockstream Liquid white paper from 2020, there is this paragraph or two on Drivechain on the second page. And they succinctly present that argument that the security of the two-way peg might not function and that instead, a well-funded group of miners could steal the Bitcoin that's in the two-way peg. 23:38 So that's one objection to Drivechain. 23:40 And an implicit claim in that line of reasoning is that the Drivechains would not grow very large, in my view. 23:49 That's implied there. So that's one objection is that Drivechains wouldn't be successful because the Bitcoin could be stolen out of them by a 51% miner. 24:02 And this theft would take a long time. It would take at least a few months. And the majority of Bitcoin's hash rate would be deployed as part of this attack. 24:16 So it would be a very significant operation to do this. 24:21 However, it's logically possible in the view of these critics and skeptics. 24:27 So the argument becomes one of like, is this likely to happen or is this unlikely? 24:34 So I like to refer to Fiatjaf's essay on Drivechain with respect to this topic. 24:40 He has a great essay at fiatjaf.com. This is the creator of Nostr. 24:45 And his essay, you can find it if you go to fiatjaf.com, F-I-A-T-J-A-F.com. 24:53 And then you click on Bitcoin and then you click on Drivechain and you'll see his essay. 25:01 It just takes about 10 minutes to read. And he gives a whole bunch of reasons, like six or more reasons, why he thinks the miners are very unlikely to ever steal from a Drivechain that is operating well and in the way that Bitcoiners want it to operate. 25:23 And I make that second point because the theft from the Drivechain would actually be, in some theoretical cases, something Bitcoiners would want. 25:33 Because if a Drivechain were operating in a manner that was harmful to Bitcoin or harmful to other Drivechains, like for example, if the Drivechain were doing something that was very bad and somehow lowering Bitcoin's value, then it would actually be the community's will that the Drivechain is extinguished. 25:53 So actually, the way that the miners have some power over the Drivechain is actually consistent with the intended design, if you know what I'm saying. 26:03 And then the other most often heard objection to Drivechain, other than the one that the miners can steal, is that the result of the Drivechains becoming very large and economically significant would be that the concentration or centralization in the mining market would increase. 26:29 So there'd be fewer miners and they would be larger. 26:32 Kind of like how in the restaurant industry, there are tens of thousands of restaurants in America, but power companies, there's only a few big ones in each area. 26:45 So things like that, there's a concentration there or a lesser degree of decentralization. 26:54 So some Bitcoin thinkers view it to be very important that there's a lot of decentralization in mining and they have their own ways of defining what that decentralization is. 27:07 And then they argue that Drivechain would diminish that decentralization and therefore whatever benefits Drivechain offers, in their view, are outweighed by this diminution of decentralization with respect to mining. 27:24 So there are responses to that as well. 27:29 So just like I referred you to Fiatjaf's essay on Drivechain to see arguments about why the miners aren't going to steal, most likely, from the Drivechain that's operating well. 27:45 There's also arguments that are interesting to read about why the alleged reduction in decentralization of mining resulting from Drivechain also isn't a compelling argument, I think. 28:00 And one summary of that, it's pretty complicated, but one summary is to say that the opponents of this, the people who make this criticism, what they're essentially saying is not specifically a criticism of Drivechain so much as a criticism of merged mining in general. 28:24 And merged mining, this is my view, as they say, merged mining has been around in Bitcoin for over a decade. 28:32 Satoshi himself even way back in the day was aware of it and talked about it and sort of invented it, you could say, or discovered it. 28:41 So merged mining is a way for these blockchains other than Bitcoin's blockchain to pay fees to Bitcoin's miners. 28:52 And in return, those blockchains benefit from utilizing the proof of work activity of the Bitcoin miners. 28:59 So it's kind of a win-win, symbiotic, harmonious relationship among two blockchains, where one is the layer one and the merged mine one is kind of like the child or the layer two. 29:11 This is used in Dogecoin, where Litecoin is the layer one in terms of the Litecoin miners. 29:19 And the people who say that the decentralization would decline as a result of merged mining, what they're saying is that in order to be a miner and get the fees from the merged mine chain, the miner would have to run the sidechain node. 29:43 And in blind merged mining, which is BIP301, the miners running of the sidechain node is optional. 29:51 So right now, merged mine blockchains on Bitcoin, there are a number of them, and they're paying a number of Bitcoin every month to Bitcoin layer one miners. 30:03 In fact, about half of Bitcoin's hash rate is merged mining RSK Rootstock, which is the largest merged mine sidechain on Bitcoin. 30:11 One moment. 30:14 Sure. Yeah. So I don't see any of those two arguments as being strong because I guess the reasons you gave. 30:24 But I still want to understand that if there's a drivechain with faster blocks, from what I understand, miners are the ones that decide which drivechains are going to even be included, first of all. 30:39 So they can make sure that any drivechain that is being included, all the fees will go to the base layer one miners. Correct? 30:46 Like they can make sure, hey, if you're going to make a drivechain, any fee that happens on that drivechain goes to us. 30:52 They can't enforce that because if they don't like the drivechain, they just won't include it. From what I understand. Is that correct? 30:58 I think you're correct in your view overall. The way I've heard it articulated by those who understand it much better than me is that approximately 100% of the fees from the sidechain are going to be paid to the layer one. 31:21 So you're right. 31:24 Right. So if that happens, let's make that a given now. And let's make a given that the miner does not have to run a full node of the drivechain. 31:36 They can run an SPV node or they can trust their friend that runs the node of the drivechain. 31:42 Right. So then as a miner, actually, or a base layer miner, you really don't necessarily have an incentive directly for economic reasons to have a full node of the drivechain or to have actually more bandwidth or more resources. 31:58 And you are compatible to have just as much fees as any other miner that might want to run the full node. 32:07 I want to give voice to the critics of drivechain. They would say, because I think it's very important that every criticism of drivechain is heard thoroughly. 32:19 That way, the advocates can understand what they're dealing with. And it's very important that everyone is very aware of all the ideas in favor and against. 32:30 So the advocates of the criticism about the so-called centralization of mining would say that although blind emerged mining enables people to mine without running the node of the other blockchains, that the miners would have an economic incentive to run the node because they would potentially make more money by running the node. 32:59 And the reason why has to do with things that are related to such things as MEV and other issues like that, where there are sophisticated reasons why running the node might be a little bit more money would come to you. 33:14 And then that's what they think. So your share of the profits would be a little bit less if you don't run the node. And therefore, if you don't run the node, you'll make less money. 33:26 And that's what some people say. So they think that miners will tend to run the nodes to make more money. But I want to provide the kind of the end of my argument against that, which I was getting to earlier, which is that people who say that it's not good if miners have a profit motive to run the node, because then they'll have to have a few more computers and they'll have to have more hardware to run those nodes. 33:54 And then mining will centralize further because miners feel they need to run these nodes. The reason why this is not a good argument, I think, is there are many, many ways right now by which miners make more money by doing different things. 34:18 Some of them cost a lot of money to do. For example, in order to have a special custom relationship with a power company, a miner has to be a large industrial player, as I understand. The ordinary person can't call up the local nuclear power station and say, hey, can I have an agreement with you where I'll mine only when you don't need to send electricity to other people. 34:45 So that's an example of a special arrangement that would be available only to a large miner. So there are already 1,001, so to speak, ways in which miners can make more money by doing different things that aren't easily available to smaller miners. 35:04 And the people who criticize merged mining and say that it's going to cause more centralization of mining, those same people do not criticize the other 1,000 ways in which miners are already subject to market forces that drive some degree of centralization. 35:24 The main difference between merged mining and these other ways to make money is that merged mining occurs in software. So among these critics of drivechain, there is, I would argue, an irrational prejudice against software that is productive. 35:45 Because those people are tolerant and advocate for miners doing other things that make money that don't involve software. But when it comes to merged mining, because it's software based, they're against it. 35:59 So I would allege that the only real difference between merged mining and the other many ways in which miners make money that might lead to centralization, quote unquote, in mining is that it's software based. 36:14 So if that's the only difference, then of course we shouldn't have a prejudice against software. There's nothing wrong with software in general. 36:23 So I think they have an irrational bias. And I mean irrational not in the sense that they're nutty, only in the sense that there is no valid, coherent basis for this claim, for this aversion to merged mining. 36:40 And it's also, I think, just from a historical perspective, quite notable that we've had merged mining in Bitcoin for a very long time. And it has never been said that this is harming Bitcoin actively, as far as I'm aware. 36:54 Some people don't like it. I've seen people tweet, merged mining is an attack on Bitcoin. But I don't think I've ever read a good argument as to why that's the case. And of course, Bitcoin is doing fine with merged mining going on every single day for over a decade. 37:11 So I think that if we were to have more merged mining, not only would it be okay, but it is potentially a very important solution to the security budget problem, to the extent that that is a problem. 37:25 Now, I personally think that it is a problem. Some very smart people don't. So I respect that. But what actually really got me into Drivechain at the very beginning of my Drivechain journey a year ago or so was the security budget and how Drivechain could, if it's most successful, it could be something which brings a ton of fees to the Bitcoin miners in the future, 37:52 greatly growing the fee market for Bitcoin and making all the people who are saying Bitcoin doesn't have a sustainable economic security model, it would make all those people wrong. I don't think that those people know about Drivechain, who think that Bitcoin is doomed, or they're more sophisticated and they think that Bitcoin won't adopt Drivechain. 38:16 And therefore, they think the security budget problem will exist. There's actually a couple altcoiners I've spoken to who they say, and this is someone with quite a large following, said, I like the ideas of PulseDorts, but I don't think that Drivechain will be adopted. I don't think it's ever going to be popular enough. 38:37 So although it might actually defeat the security budget problem, I don't think that the community understands this well enough. And there's too many people who just want to keep Bitcoin as it is and hope for the best. Because they think that, well, if the whole world is using Bitcoin, who's going to adopt it? I mean, who's going to attack it? 38:53 There are interesting arguments that might end up being true. But as far as I can tell, it would be great if we had higher fees. I'd like to see the higher fees. So yeah, merged mining is cool. I mean, Satoshi, obviously a genius, not perfect, right? I mean, we shouldn't appeal to authority. I'm not saying he necessarily is right about this, but he did explicitly say that merged mining would strengthen the network in the future. 39:20 I mean, if you read that passage from the BitDNS thread on the forum from August 2010, the only plain English meaning it could have had is that the use of merged mining in the future will help strengthen the network, making it harder and more expensive for someone to be a hostile 51% miner. 39:42 So, yeah, I think the fees from merged mine sidechains is a really cool thing. 39:48 And I love how that is a potential solution to the security budget concerns. 39:52 Because there's only three ways things can go in the future. 39:55 One is we get more merged mining. 39:57 Another is we get inflation fork adopted by the Bitcoin community. 40:03 And another is we do nothing. 40:05 Now if we do nothing with respect to this issue, then either that'll work out well or 40:11 it won't. I personally don't understand how it won't. 40:16 I mean, how people think, like, maybe it'll just be fine. 40:22 I think it can still be fine. 40:25 Potentially, it would depend on adoption of layer one. 40:28 As long as there's enough adoption of layer one, that idea can, I guess, be fine. 40:35 Yeah, I would tend to agree with that as well, especially now that, you know, we are 40:40 starting to see some other innovation happening on L1 with ordinals and, you know, 40:44 potentially sovereign roll ups. 40:45 And maybe in the future, if we get the right op codes, you know, more sophisticated roll 40:50 ups. But I still don't think that necessarily makes it where this wouldn't be an avenue 40:55 that's worth pursuing. 40:57 I guess one question I would also have is whether or not there's been any conversations 41:03 with some of the alternative proof of work chains and their miners as to whether or not 41:10 they would be interested in, you know, taking that hash that they have there, even 41:14 though it's a small fraction of, you know, what we have on the Bitcoin network. 41:19 But if they were willing to move over to mining on Bitcoin because now they could have 41:24 like, you know, a Litecoin sidechain or a BSV sidechain or, you know, Monero side 41:31 chain, you know, and all of a sudden that hash starts to be added to the Bitcoin 41:37 network in some way that could be part of the decentralization story. 41:42 But I mean, it's largely theoretical unless we actually have people from those 41:46 communities saying they're willing to do that. 41:48 I know the Rootstock people have done that, but, you know, for anybody outside of like 41:53 the Bitcoin community proper, I'd be curious if they had any thoughts about drivechain 41:58 and whether they would start mining over here. 42:01 There has been some favorable, very interested commentary from the leader of Zcash. 42:08 So if you go to the advanced Twitter search page and you type in his handle and then, 42:17 you know, the word drivechain, you'll see the times he's commented on it and he's 42:21 interested in it. There has been an interesting pattern in history where most altcoin, 42:28 most developers who left Bitcoin layer one decided to do an altcoin. 42:32 But some, as you rightly point out, chose to do what Rootstock did, which was build a 42:37 sidechain and use merged mining, which is awesome. 42:41 That's like the closest thing you can do to a drivechain right now is a federated 42:45 sidechain with merged mining. 42:48 And, you know, the problem is there, of course, that unlike an altcoin, the sidechain 42:55 is federated, meaning that a party of 15 people control the Bitcoin that has been 43:03 sent to the sidechain. 43:05 So it has that vulnerability where hypothetically, if the government were to or 43:10 governments were to, you know, try to arrest the people who have that Bitcoin, you know, 43:16 they would be at risk. 43:19 Whereas it's better, I think, that the entire Bitcoin mining community control the 43:25 hashrate escrows because, you know, the mining community is a multitudinous, dynamic 43:33 party with thousands of people around the world. 43:37 And therefore it's much more dispersed and powerful in nature. 43:45 And also critically, it's sort of categorically different than a multi-sig, because if you 43:50 have 15 people who control something and, you know, they aren't constantly changing, 43:56 there would have to be a social kind of an approval by some board about, OK, we're 44:00 going to have this person retire and we're going to hire a replacement to be one of the 44:04 new signers. But with Bitcoin mining, parties are constantly coming and going all the 44:09 time. People are leaving and joining. 44:12 And then, you know, as the fees go up, you know, people come online, more mining 44:16 happens. So there's a dynamic nature to the Bitcoin mining industry that a federation 44:24 can't be as dynamic and constantly changing and can't have thousands and thousands of 44:28 people involved. As far as I understand, although I do think that there are some very 44:32 smart, very good people working on federations to make them as good as they can be. 44:38 I think the best attitude is not to view things as let's do one or the other. 44:43 The best attitude is to ask what would be best for Bitcoin and its users? 44:47 Might it be best if they have a choice, if we can find out if drivechains work well by 44:53 enabling them and seeing them operate on Bitcoin? 44:57 So it would be great for the consumers to have that choice. 45:00 That's the pro-drivechain view is let's have the choice because the potential gains 45:06 to Bitcoin outweigh the potential setbacks by such a large margin. 45:12 You know, if Bitcoin has a number of very large, very successful drivechains on it, the 45:17 result could be much more of a sense that Bitcoin is a place for innovation and not 45:22 just, you know, buy and hold, never sell. 45:26 Instead of that, we would have all that all these interesting technologies like oracles, 45:31 like privacy sidechains, high throughput, low fee sidechains like a Thunder sidechain 45:40 which has one gigabyte blocks would be the planned drivechain for scaling. 45:48 And there could be a whole number of them. 45:50 And then the whole world would be using peer-to-peer cash. 45:53 That's a Bitcoin sidechain instead of non-peer-to-peer arrangements like a 45:58 federated, you know, custodial model where people just, you know, move their money 46:03 around on a Coinbase ledger like that wouldn't be a good future. 46:07 That's how gold stopped working is that all of the gold was in bank vaults and people 46:12 traded paper. So then eventually the bank vaults were seized by the government because 46:18 they were walled gardens. 46:19 They were honeypots. 46:21 If the whole world is using peer-to-peer cash such as a peer-to-peer Bitcoin sidechain, 46:26 that would be great because that's really the essence of Bitcoin is that it's peer-to-peer. 46:30 And what is peer-to-peer? 46:32 Peer-to-peer, in my view, means there's no social approval involved in the acquisition 46:40 of a role. So if you want to have a role in Bitcoin, like you want to be a user, you want 46:44 to be a miner, you want to have a node, no one needs to give you permission to do that. 46:49 All you need is a little bit of money and knowledge. 46:53 You don't have to be approved. 46:54 It isn't like getting a degree from a school or getting a job from a company or becoming 46:59 appointed to the board of directors or becoming a politician who's in office. 47:04 Those are all socially approved roles in society. 47:07 But in Bitcoin, everything needs to be peer-to-peer. 47:10 And that's what a drivechain is. 47:11 It's a peer-to-peer sidechain as opposed to a federated one. 47:15 For me personally, that is the fundamental difference between drivechain and everything 47:21 else. So I view federated sidechains as being akin to custodial arrangements. 47:29 I mean, indeed, when you're using Coinbase, you're literally using a federation. 47:34 At the company, they're going to have 15 people who hold iPhones that have technology on 47:40 them to allow peg outs and such things. 47:44 There's literally multi-sigs at these custodial companies. 47:48 So fundamentally, it's the same technology as a federated sidechain, which again, are 47:54 great technologies and great people doing great things. 47:58 I think these crypto companies are great and the federated sidechains are great. 48:01 But I would love to see, for example, RSK wrote in their own white paper that they will 48:08 become a drivechain once drivechain is enabled. 48:11 They wrote that in their white paper. 48:13 And Sergio Demian Lerner, the chief designer of that sidechain, has recently tweeted to 48:19 that effect that as soon as they can, they will become a drivechain to be more 48:23 decentralized. That's how he put it. 48:26 So that's sort of the next sort of stage of Bitcoin's growth, I feel, is these drive 48:33 chains. It would be, I like to say, the final frontier of innovation and experimentation 48:39 and growth. And there can be some really cool stuff built on them. 48:44 I think there are some people who have great ideas and they're waiting for drivechain 48:48 to happen. I think, you know, if kind of the most optimistic view, right, or if there 48:56 was a lot of successful drivechains that got really big and kind of to your point 49:01 earlier, where it still might be more profitable for mining pools to run nodes for 49:07 the drivechains they want to support because of MEV opportunities and things like 49:12 that. That maybe could help with miner decentralization if there were enough 49:18 successful drivechains, because if there was, say, for an example, you know, an EVM 49:23 style drivechain, that would take a certain level of expertise around, you know, 49:29 smart contract systems to be able to properly take advantage of the MEV opportunities 49:34 there. And then, you know, potentially for something that's maybe more just explicitly 49:39 NFT oriented or something like that, that might have a different set of opportunities or 49:44 expertise where maybe another miner is more successful at doing something like that. 49:50 And if that were the case, then maybe it wouldn't make as much sense to have, you know, 49:54 a pool like Foundry with 35 percent hash rate. 49:58 Maybe it would be, you know, a little bit of a motivator for different pools to kind of 50:03 gain some kind of specialization in their particular drivechain, where 50:09 that could maybe divert that hash or divide that hash up a little bit better. 50:14 Yeah, I don't know. I think that's one of the things that, you know, for me, that's my 50:19 biggest concern about drivechains is the potential, you know, hash rate concentration 50:24 issues. But that also could be, you know, a way that it works in the opposite direction. 50:28 I kind of feel like that the hash rate issue when it comes to MEV is one of the biggest 50:40 downsides to drivechains. 50:43 If you had decentralized enough mining pools that were solely motivated by profit or 50:49 miner attractable value, the short term and by short term, I can mean, you know, six month 50:55 incentive would be to loop any large enough drivechains. 51:01 The analyses that I've seen point to the idea that MEV in that situation would result in 51:11 like an experience to the sidechain users and not the mainchain users. 51:17 So one of the essential features of drivechain is that they are opt in. 51:22 So users don't have to use any sidechain. 51:26 They don't have to use any drivechain. 51:28 And to the extent that a user doesn't want to experience the hazards of transaction 51:35 reordering by miners for the sake of profit in connection with smart contracts on the 51:42 drivechain, no one has to use that drivechain. 51:45 There are drivechains like you were saying, a crossfire where it would just be NFTs 51:49 being traded or people moving a coin around with no smart contracts like the privacy 51:55 drivechain probably would just have a token like Zcash, you know, on the privacy drive 52:00 chain that is just being moved around without a lot of smart contracts. 52:04 And therefore there's no MEV because there's no ability to like reorder a contract to 52:11 make money on the trade somehow. 52:13 So I think that because it's opt in, that is that's really the right response to these 52:19 concerns. And the analyses get very complicated. 52:23 And I've heard, you know, brilliant people in this space argue on in different ways 52:28 about how the MEV that results to the drivechain would affect only the users of the 52:36 drivechain and wouldn't have a like a deleterious impact on someone just holding 52:41 Bitcoin on layer one or someone doing a Bitcoin layer one transaction. 52:48 But isn't it on the in the docs for drivechains and in most of the discussions, one of 52:54 the primary defenses of the drivechain, if the miners were to try to loot a drivechain, 53:00 would be social attacks which would manifest on layer one, like user activated soft 53:04 forks, which could result in a forks or reorg on layer one. 53:07 Well, we were talking about MEV, so it's I think it's important we have like, you know, 53:15 we keep our focus on whatever like issue we're talking about. 53:20 But of course, you're right to bring up the other very interesting topics. 53:24 So what would happen if there's like a disagreement about the state of the drive 53:29 chain, if there's a disagreement about the state of the drivechain, how would that be 53:33 settled? That's one of the perennial questions. 53:36 So I just mean, it's related. 53:37 Sorry. You're totally right. 53:39 Yeah, the MEV concern is, if you say MEV doesn't have any impact on L1, that's not true 53:45 because to prevent the looting, it would potentially have an impact. 53:50 So, you know, if we say, well, we just won't try to stop them from stealing, then fine, 53:55 it won't have an impact. But I don't think that anybody thinks that you won't try to stop 53:58 them from stealing, which means it would have an impact. 54:01 Well, I don't really think this is an issue because, like, it all boils down to you are 54:07 trusting that model by going into that drivechain, so you are essentially gambling with 54:13 those funds, you know, the trust trade off, and you know that there's a potential of this 54:17 crazy 51% attack over three months or six months for your loss of funds. 54:22 I think that's a fair trade off. 54:24 I think that there's a there's another attack and it's a purely financial one. 54:30 It's a purely theoretical attack of basically if there's if there's 51% of the 54:38 hashrate in a certain jurisdiction and a certain political force has an ability to 54:46 force censorship. 54:49 Let's just give a hypothetical scenario. 54:51 Fifty one percent of the hashrate is in America and United States and United States 54:55 pay. You are not a U.S. 54:57 lawyer since you are, you know, public companies, you follow the law, the law is you 55:02 cannot include a certain transaction. 55:04 And if you if you if you include this transaction, we might go after you legally. 55:11 And not only you can include a transaction, you can build up a block that includes this 55:14 transaction. Right. 55:16 So so this is a jurisdictional political attack. 55:19 It's very hypothetical because 51% of the hashrate being in one jurisdiction would be 55:24 very hard. And our recourse would be to just fire the miners with a user activated 55:29 software for a new hashing algorithm. 55:31 Right. So it essentially says that these miners that are in this jurisdiction, they 55:36 either follow the law and completely lose everything they have because we're going to 55:41 fire them or they're going to have to like basically start moving their hashrate 55:45 somewhere else. But they have no choice because they're going to lose in the end 55:48 because we will just fire them. 55:50 But the question here would drivechains is and I think layer two brought up a great 55:57 point that as far as concentration of hashrate, we already have an incentive, for 56:00 example, a power company, right, that has nuclear power. 56:04 You're already incentivizing miners to have this economic incentive being 56:09 geographically all in one place because of this, which which you can't solve. 56:13 And that's not like that's we can also say that's a good thing. 56:15 We want miners to make more money because we will be more secure. 56:18 So the question is, if drivechains also creates an incentive for hashrate to be in 56:24 one area where you can have this hypothetical, you know, 51 percent attack from a 56:29 jurisdiction. I just I don't think that the attack on drivechains is jurisdictional at 56:35 all, and I don't think it's based on censorship. 56:37 The attack on drivechains is is economically incentivized. 56:42 It's decentralized miners who want to make the most money, which is what miners want, 56:47 especially when they don't care about society, you know, the point of mining. 56:51 I'm going to put up my machines. 56:52 I want them to create as much yield as possible. 56:54 And the way to do that is to loot drivechain. 56:56 So if nobody else does, then, you know, I create a pool that says, hey, you want a 57:01 guarantee payout in six months that includes X, Y, Z on whatever drivechain you got 57:08 to mine in this pool. And then that's the math. 57:11 Then if you want to generate the most yield economically in a decentralized way, then 57:16 you loot the drivechain, not through a government or censorship attack. 57:21 So I don't think this is sorry, I'm sorry, I don't think that this is the two separate 57:28 issues, right? I'm not talking about an issue of the drivechain being looted because I 57:32 think that it's a fair tradeoff if you're getting into the drivechain, like you should 57:35 know that I'm thinking of the attack is being on layer one Bitcoin, not on the drive 57:41 chains, because the drivechains, you know, your tradeoff and either you play by those 57:44 rules or you don't. So an attack of looting, looting a drivechain is a separate issue 57:49 because, you know, you're your tradeoffs and you don't have to, you don't have to play 57:53 that. Now, the attack of layer one is more interesting because do drivechains 57:58 incentivize another attack surface for layer one? 58:01 Now, it's not another attack surface because this attack surface does exist, even though 58:05 it's purely hypothetical. 58:06 But does it incentivize a greater reason for such an attack to happen, even though it's 58:12 purely, purely, you know, like out of out of reach, I guess. 58:18 Could you clarify, Satoshi, like I understood what Crown said, could you clarify what 58:23 you're saying about what are the two different attacks that you're asking about? 58:27 So I believe Crown's attack is actually looting the drivechain, and I'm not talking 58:32 about that attack at all. I'm talking about an attack of 51 percent of the hash rate is 58:36 in the United States. And politically, they are forced to censor a certain transaction, 58:43 do not include it in the block and do not build off any blocks that this is included 58:46 in. Well, let's just let's just start from there. 58:49 Right. Let's assume that that is happening. 58:52 Right. Even though it's not. 58:53 But let's assume that's happening. 58:54 What recourse do we have as layer one? 58:56 And let's just move drivechains completely out of the equation. 58:59 Like there's no such thing as drivechains in this scenario. 59:01 Right. Fifty one percent of the hash rate is in one political jurisdiction and the 59:04 political jurisdiction says you cannot build off a certain transaction. 59:07 You can't build off a block that has a certain transaction. 59:10 Also, as Bitcoiners, we have a solution, user activated soft fork, or the word, the 59:19 biggest inconvenience I understand is either we are DOSed, right, and we just like we 59:25 can't use the network for a certain amount of time because like we're being censored or 59:29 we just fire the miners. 59:32 Right. We fire them and we have a different algorithm. 59:35 So I think that that solves that, even though it's, you know, I think that that's the only way to solve that. Right. 59:41 So sorry, Henry, did you want to answer? It's really not a drivechain question. It's more of a Bitcoin question. 59:48 Yeah, go ahead. How do you stop 51 percent or more of the miners trying to, I guess, grief Bitcoin by, I guess, mining empty blocks or only mining certain transactions? 1:00:02 It's a Bitcoin question. Right. So historically and the way that Bitcoin was designed, economically, you should lose money if you try to do this attack. 1:00:13 I mean, it's hard to concoct a scenario where where you do this profitably. 1:00:17 But but that aside, if you didn't care about losing money, let's say you're a government and you want to dedicate some nuclear power plants worth of energy because that's what it would take. 1:00:26 It would take literally like several entire nuclear power plants worth of energy to perform this attack. 1:00:32 And somehow you had the voters on your side. I mean, this is an extreme scenario with an extreme amount of resources that you're literally just throwing away. 1:00:39 It's an extreme, I would say. But but in that extreme, you don't I don't think I don't think the best option is to fork the algorithm because, you know, presumably they don't care about the money anyway. 1:00:50 The cheaper the asymmetric attack there is to use the invalidate block. 1:00:54 And just when you can identify them as you know, people always say, and it's true, you can't really change Bitcoin unless everybody agrees. 1:01:04 It's it's it's like trying to tell everybody in the world to jump at the same time. 1:01:07 It's kind of you don't want you want to avoid coordination. I think the more coordination you have, the more centralized you are. 1:01:13 So switching to your algorithm that that favors more centralization, you can in a very decentralized way. 1:01:21 I can look at the blockchain and say this block doesn't include any transactions. 1:01:28 It's obviously an attack on the network from a state actor or whoever that's not caring about money. 1:01:33 You can tap into your network, invalidate block, that block. 1:01:37 And as long as other people independently of you have also decided to invalidate that block, you'll be on a separate chain of Bitcoin without that attacker block. 1:01:48 And they can, of course, they can switch to your new chain without them on it as much as they want. 1:01:55 But it costs them, you know, hundreds of dollars to do that. 1:01:59 And it costs you three seconds in a console. 1:02:02 So it's very asymmetric attack or very asymmetric defense in terms of the cost you simply invalidate. 1:02:08 And this is something that you couldn't use this, you know, in everyday operation. 1:02:12 You couldn't just, hey, I don't like this guy. Let me invalidate the block. 1:02:15 It would only work in this extreme case where there are potentially billions of dollars being exerted to try to censor the chain and against the will of basically the entire population. 1:02:28 I agree that this is not a rational miner, right? 1:02:33 Because obviously they're shooting themselves in the foot economically. 1:02:36 So this is not a rational miner. 1:02:38 So in the attack, you have an irrational miner. 1:02:41 And the reason why they're rational is because they're politically have to. 1:02:45 It's illegal for them to include a certain block or mine from a block that has included this transaction. 1:02:53 Let me jump in. 1:02:55 I think that the inspiration for the security budget concerns is related to this question. 1:03:03 Because your question has to do with, like, what if the government wants to try to control Bitcoin mining to make it permissioned so certain people can't get their transactions through? 1:03:16 I think this would involve not only the government saying that the Bitcoin miners can't process transactions to or from a certain address. 1:03:24 It would also involve the reorging of transactions that are involving those addresses. 1:03:32 So that's where the rubber meets the road. 1:03:36 For example, some people think that 51% of attacks aren't a big deal because we had one years ago during the block size war and nothing happened. 1:03:46 Nothing really big happened, people say. 1:03:48 Some people say this, where for over a year, Bitmain and others allegedly were mining empty blocks. 1:03:55 And there were periods where a few blocks would go through, they would all be empty. 1:04:00 And then the fees finally would process and transactions would get through. 1:04:04 There were delays and this was going on. 1:04:07 This was not a 51% attack, rightly understood. 1:04:12 I think that there was not one time during that year when there was a reorg. 1:04:18 So it wasn't a hostile attack on Bitcoin. 1:04:22 It was someone mining in a way that was very costly and unprofitable in order to try to increase the Bitcoin community's support for larger blocks. 1:04:34 So it wasn't intended to destroy Bitcoin. 1:04:37 It was intended to assist a political campaign to encourage adoption of larger blocks. 1:04:44 So the intent here wasn't to attack Bitcoin in the way that we're contemplating could happen now. 1:04:51 Which is like you're saying, what if someone really wanted to attack the ability for some or everyone to use the blockchain? 1:04:57 And of course, the worst case scenario, the most severe kind of attack would be trying to make everyone censored. 1:05:04 So that would be a complete hostile attack. 1:05:08 And if the majority miner, 51%, is controlled or coerced by parties to do that, then there would be a serious problem. 1:05:19 So there'd be mining and reorging at every opportunity. 1:05:23 So every time the majority of the hash rate finds a block, then they would reorg out all of the transactions of other people. 1:05:31 And that would be a true hostile attack. 1:05:34 Because otherwise, let's say 40% of the miners' hash rate is processing transactions from everyone and they're not censoring. 1:05:45 Then you simply have to wait a little bit longer to get your censored transaction to process and become uncensored. 1:05:51 But if the hostile party is reorging at every opportunity and they have the heaviest chain, that's game over for Bitcoin in the ordinary sense. 1:06:02 Unless the countermeasures Crown has described work. 1:06:06 Now, I've read Nick Szabo say that they wouldn't work. 1:06:10 He tweeted a few years ago in a thread with Vitalik and Arthur Brightman and others were having a thread on Twitter. 1:06:21 And they were talking about what would happen in this kind of scenario. 1:06:26 And Szabo says what I agree with, which is that what Bitcoin does well is it tries to avoid and minimize as much as possible any kind of socially coordinated governance. 1:06:38 And the invalidate block mechanism that Crown mentioned, I think, would arguably be that kind of activity. 1:06:48 Where it's not the kind of activity which is part of Bitcoin's fundamental design. 1:06:54 So Bitcoin's fundamental design assumes that miners and users are mutually distrusting and anonymous and self-interested. 1:07:04 But invalidating blocks is trying to identify bad miners and ignore them. 1:07:12 That is an activity which is not one in which things are just assumed to be anonymous, mutually distrusting and self-interested. 1:07:20 Instead, you're adding in there a social coordination component. 1:07:24 And what's worse is that probably it'll be not effective because the miner that's attacking in a hostile manner is going to be sophisticated. 1:07:33 So they're not going to be simpletons. They're going to appear on chain as a thousand different pools. 1:07:41 They're not going to look like one pool. 1:07:44 So it's going to be an attack that has a complexity, which isn't so simple to just, OK, we're going to invalidate this and then no longer do we have to worry about the bad guy. 1:07:55 You can't just press a button and turn off the attack. 1:07:58 It's going to be a sophisticated, complex attack that is designed to make it very nearly impossible for the community to recover from it. 1:08:07 So the security budget problem, as I understand it, is one in which we want it to be extremely expensive. 1:08:14 You know, trillions of dollars per year of expense for someone to try to do this. 1:08:19 And thinking that like, well, we'll just invalidate block. That'll be all right. 1:08:24 Not that you said that. You didn't say that. In fact, you said the opposite. 1:08:27 You said it was an extreme theoretical situation and that would be a potential countermeasure. 1:08:32 But I just want to emphasize my view, which is that I don't think that what I've heard from various people about that, I don't think it's a compelling argument. 1:08:40 And I think that some Bitcoin thinkers like Szabo would agree, although it's also worth noting, I don't think he's a drivechain advocate at all. 1:08:48 But I do think that like any kind of socially coordinated countermeasure to a hostile attack is something which I would hope Bitcoin never has to rely on. 1:08:59 I think everybody would agree. 1:09:01 I would agree because I think like the way I understand the example is the software is very binary. 1:09:08 Is this the change that has the most work? Yes, no. That's it. 1:09:12 Once you add social aspects to that, you know, like you're opening Pandora's box where now there's way more attacks. 1:09:22 Where if you're just leaving it very binary, is this the chain that has the most work? Yes, no. 1:09:26 Then it's not really a social consensus. It's more about just the work that's involved. 1:09:33 And I think it's very important for Bitcoin to stay that way. 1:09:37 Is this the chain that has the most work? Yes, no. And that's it. No other way. 1:09:43 But my attack is not about that. 1:09:47 Yeah, sure. 1:09:48 Sorry, two things I want to mention because there's a nuance to your check that I didn't understand the first time, 1:09:54 which is you're talking about not a rational government actor or not a rational, not an otherwise incentivized government actor, 1:10:03 but a collaboration of companies following the law in various jurisdictions. 1:10:12 Exactly. 1:10:13 Now, that is even harder to pull off or harder to imagine because it's even easier to stop. 1:10:19 Now, you wouldn't stop it, you know, through invalidate block. 1:10:22 That's the, you know, we made six new nuclear power plants and somehow, I don't know, 1:10:26 forced Intel to make us trillions of dollars worth of computer hardware to do this thing that's not going to make us any money. 1:10:34 But in this case, we have we've seen already examples of what's called censorship or compliance with the law, OPEC with MARA, the mining pool MARA. 1:10:47 They were probably compliant mining pool on Bitcoin. 1:10:50 The only one that I know of that was announcing their compliance with OPEC and OPEC. 1:10:58 And they stopped after a few months. 1:11:02 They were, you know, they were they were not able to get any hash. 1:11:05 It was very unpopular. And they ended up having to stop because it wasn't it wasn't feasible for them to operate in a compliant way on Bitcoin. 1:11:14 It's the opposite of what we've seen on things like Ethereum, where the pools which are benefiting from censorship are some of the largest ones. 1:11:22 But but on Bitcoin, we've seen already in real life they stopped mining. 1:11:27 And I think that, you know, miners and jurisdictions that try to limit what they can mine. 1:11:32 Obviously, individual miners will not favor those pools because it comes down to pools, not necessarily where the miners are based. 1:11:38 People and we've seen this in China. People will find ways to point their hash wherever it is most profitable, 1:11:44 even if it means maybe stretching the law or operating in a gray area. 1:11:47 And of course, enforcement will increase. 1:11:49 And as that happens, people will be incentivized to put their hardware in places where, you know, it's the safest for them. 1:11:56 I know guys that are mining in Venezuela, even though it's very hard to do, partially because if you can do it, 1:12:01 you can you basically have full reign over there. You've got to pay off what we have to pay off. 1:12:05 But, you know, that's going to be unique situation on the ground. 1:12:08 We've seen it with the Chinese and that's just the way the world's always worked. 1:12:11 You're going to have a financial advantage not to be in jurisdictions which try to control your hardware. 1:12:16 And so those miners would be very unlikely to be the majority. 1:12:20 And the best thing about that is once they are no longer the majority, even with 51 percent, 1:12:25 even with 51 percent, you can get behind for a while. They just become a worthless chain that nobody cares about. 1:12:30 You're going to the government's going to be forcing companies to mine a chain that nobody recognizes, 1:12:37 not even the longest chain. When you say that they're not allowed to mine blocks that contain uncompliant transactions. 1:12:43 Well, then you're saying they're not allowed to mine Bitcoin because the longest chain will contain those transactions 1:12:48 and they won't be able to do anything about it. And nobody will care about that. 1:12:53 Yes, I agree with everything you're saying, though. Here, my question is where drivechains come in, 1:13:00 because currently, right, this attack doesn't have that much economic incentive. 1:13:06 And in fact, it has no economic incentive because you're basically telling the miners, hey, 1:13:11 you like lose money because we're telling you it's illegal for you to make money. Right. So lose money. 1:13:16 Now, if drivechains has an economic incentive for miner hash rate to be concentrated geographically 1:13:24 because of bandwidth, because of resources, now this attack becomes a tiny smidge more possible 1:13:31 because you have that concentration or you have that economic incentive for miners to be concentrated 1:13:36 geographically in one area because of bandwidth, for example. 1:13:40 We don't have drivechain today, and yet there is concern that mining concentration poses a threat to Bitcoin. 1:13:47 For example, on October 27th of last year, Shinobi wrote an article in Bitcoin magazine titled 1:13:55 Mining Concentration in America Poses a Major Threat to Bitcoin. 1:14:00 So I think that there's already concern about geographic issues. 1:14:06 And I don't think I've ever heard anyone say that drivechain would result in a geographic concentration 1:14:13 in any specific jurisdiction, because I don't know how it would be the case that, like, 1:14:20 there's a concentration trajectory for mining with respect to any one jurisdiction, 1:14:26 which would be like altered or furthered by drivechain. I mean, drivechain is jurisdiction agnostic. 1:14:34 It's like saying Bitcoin is somehow inherently going to end up mostly in Africa. 1:14:38 Like, I don't see why that would be the case with drivechain or without it. 1:14:43 Well, if you want to assume that, I mean, this is where it's important if blind merge mining and SPV mining, 1:14:51 where the second, the drivechain node does not need to have more resources. 1:14:57 But that's where you added that. Well, if the miner is having a full drivechain node, 1:15:03 they might have a little bit more fees because of MEV. So you're introducing that now. Do you see? 1:15:11 Well, yeah, I said that in order to give voice to the criticism of drivechain, 1:15:17 which is that there would be MEV. Some people think MEV is a bad thing. Others think it's a good thing. 1:15:24 Yeah, I'm not saying that. I'm just saying like, yeah, it's completely agnostic geographically. 1:15:30 Though, if you are incentivizing miners to have better bandwidth and you're incentivizing them to have better resources, 1:15:38 then it would make sense for them to have an incentive to be in one area. It doesn't matter which area. 1:15:43 They could just concentrate in areas that have better bandwidth and where they have better resources. 1:15:49 Like it's not necessarily a bad thing. I'm not saying it's a bad thing. 1:15:51 I'm just saying it's an additional thing that can incentivize. And I don't know if it does. 1:15:57 That's why I'm just like, you know, just. Yeah. Great questions. Really great questions, Satoshi. 1:16:04 So the nature of Bitcoin mining is that it's going to centralize to some extent. 1:16:09 This is something Satoshi wrote at the very beginning of Bitcoin, that in the future, 1:16:13 there would be large server farms and people, ordinary users would not be mining on their laptops 1:16:20 because of economies of scale and difficulty adjustment and other factors. 1:16:28 So what we're going to see in the future is Bitcoin miners, if Bitcoin is more valuable, Bitcoin miners will. 1:16:36 And if the block space appreciates, so if there's high fees and if Bitcoin is valuable, 1:16:40 then we'll see miners concentrate near very cheap power in places that are very hot. 1:16:47 So, you know, Norway, if they have like a ton of oil there and it's cold, that's like a great place to mine. 1:16:54 Or, you know, the country of Georgia, places like that. Iceland with falling water in Iceland. 1:17:00 So like drivechain is just going to be another factor in the very complex market for Bitcoin mining. 1:17:10 And I think my personal opinion, the overwhelming effect of drivechain would be enormously good for Bitcoin 1:17:17 because in the best case scenario, a huge amount of fees flow from a large multitude of sidechains that are drivechains. 1:17:27 And that fee revenue is coming from different drivechains and it's going to bring fees. 1:17:33 And that will help the mining component in the Bitcoin system be very resilient from an attacker. 1:17:42 Whereas if we have falling fees and falling value, if we have low fees forever, 1:17:48 then as a result of the halvings of the coinbase, eventually these concerns like Shinobi has about, you know, 1:17:54 what if there's a hostile majority? Like in that article I mentioned, he talks about 51 percent. 1:18:01 He writes this sentence that I like to quote. I like to quote drivechain critics because I feel like that makes it more credible 1:18:07 than if I just only quote the advocates. He writes in this article in October in Bitcoin magazine. 1:18:13 From day one, it has been very clearly delineated that a majority, 51 percent or more of the Bitcoin hash rate can act maliciously 1:18:22 in a way that severely degrades or entirely breaks the security of the entire system. 1:18:28 So I feel like it is implied in that article right there that if the fees don't rise, then as a result of halvings, 1:18:39 Bitcoin will be very vulnerable. So I think he would agree here that we need high fees in the future 1:18:49 because we want it to be very expensive to try to be a 51 percent miner. And if it's extremely expensive, 1:18:55 then probably the only party who would get very big in mining is one who wants Bitcoin to succeed, 1:19:01 not one that's trying to destroy it. Because there is an enormous profit motive. 1:19:05 Like you mentioned the word irrational when talking about hostile mining. 1:19:09 I think we should be careful using the word irrational in economics because it's not technically irrational 1:19:16 for parties in power in government to try to destroy Bitcoin because they would reap the financial reward 1:19:23 of the reinstitution of fiat money or the maintenance of the establishment of fiat money, 1:19:29 which allows for their sovereign, allows for their senior rich profits. 1:19:35 So the profit of issuing fiat money is very lucrative and therefore it's not quote unquote irrational 1:19:42 for a party to be trying to destroy Bitcoin. 1:19:44 For that reason. So the two ways that a party can be a hostile Bitcoin miner would be, you know, a sovereign state that wishes to establish fiat money or a sovereign or a non-sovereign, which is a terroristic attacker that just wants to destroy money for their own reasons. 1:20:02 But those aren't per se irrational. Those are just, you know, their particular ideologies. Some people want the government to be able to print money to hand it out to the parties that it deems fit. Right. The welfare, warfare state. Like, you know, is that irrational or is that just their philosophy? 1:20:20 Yeah, so two points before I get to the rational rational. The first point is, I think that the best counter to this theoretical attack of 51% hijacked of, you know, the hash rate is very simple where you're saying, well, there's already an incentive for hash rate to be concentrated because of the way mining works. And since, you know, energy cheaper is better. So you already have that incentive. 1:20:50 So you can't say that drivechain is going to introduce that incentive because that incentive is already there. Now, you can also say that drivechain actually fixes this incentive. Why? Because now it makes it a lot more expensive. This whole 51% attack of a hijacking, it becomes way more expensive because drivechains are introducing fees. And so you're going to even argue that, hey, this is this is not an issue of drivechain, drivechain is fixing potentially or making it harder. And as far as irrational, I'm using it as, yes, that was the first point. 1:21:19 The second point, as far as irrational, I'm using it as basically economic game theory, where it's irrational because, and I'm using it loosely, but I'll try to define it, is because if they were to instead play by the rules, they would make more money, though, if they wanted to attack because they like their fiat seniorage, since they cannot attack Bitcoin ultimately, and we will win in the end, because of, you know, all our other ways of dealing with such attacks, it would make more money. 1:21:49 It would make more rational sense for them to just continue to play by the rules and make some fees. And that's why I mean by it's irrational, because, yeah, you might think, well, they have a rational reason for it, because they want to keep their fiat, but it would cost them way more to try to attack and realize that it's just not going to be successful. And that cost would actually benefit them to use it properly instead and get fees. So rationally, I think that's how I'm using rational or irrational. 1:22:19 Well said. I completely agree with what you're saying. 1:22:22 One really interesting tweet recently that I've talked about for a few of these spaces is the Atomback tweet that I just put in the nest, where he talks about how Roger Ver could have remained a Bitcoiner and use the drivechain. 1:22:40 Of course, drivechain is not yet available on Bitcoin, but once it is, if it is, then people who like big block Bitcoin will be able to clone their software from their altcoin into a drivechain, and then use that software in a Bitcoin sidechain with the benefit of having the native token of their sidechain be a synthetic Bitcoin that has Bitcoin in it. 1:23:10 So that's Bitcoin's unit of account and Bitcoin's hash rate. Of course, it's also worth noting that the security budget of a drivechain is its fees, which is distinct from the security budget of Bitcoin layer one. 1:23:28 Yeah, so to me, it just comes back to square one, where there's amazing benefits to drivechains. And when I first heard about it, I'm like, wow, this is amazing. Why isn't this talked about? Why aren't people talking about this? Why aren't they making a bigger buzz about it? 1:23:48 And it drove me down, looking for criticisms of it, right? And this is one of the reasons why I wanted to be on this talk, is to talk about the criticisms of it. And it still brings me back to square one, where there's no good criticisms. And like, it's good to talk about those criticisms. That's my idea. So let's talk about them. But I just don't see any actual good criticisms. 1:24:08 I agree. I think that the main reason why drivechain isn't adopted today is the reasons that are set forth in the liquid white paper. So if you read that white paper from 2020, on the second page, I think it is, there's a couple paragraphs about drivechain. 1:24:30 They say that drivechain has complex incentives, that, you know, the incentive structure, I think is the word they use, is very complex, and it's unclear how it would play out. And then they secondly add that perhaps the peg would be stolen from by a well funded group of miners. 1:24:54 They don't elaborate, as they could have, to say that the theft would take three to six months, and would be public, and would involve a majority of the hash rate. They don't say all that. They just say a well funded group of miners could steal. They don't say how long it would take, how difficult it would be. And then they lastly, they make three criticisms, the third one, and they're all valid criticisms, like they're not illogical. 1:25:20 They're technically valid in the weakest sense of that word valid. Like they don't say something that's false. And then the third criticism is that the drivechain code is not available, you know, in their words for immediate deployment. 1:25:34 So the, you know, their three criticisms are basically like, number one, if I just summarize it, you know, try to do it honestly, and like, you know, fairly, their three criticisms are drivechain might be complicated. Maybe it would result in complicated stuff like in mining and elsewhere that we don't understand. 1:25:56 Number two, maybe that miners will steal from the hash rate escrow. And number three, the code isn't ready today for deployment. Like that's what they're saying back in 2020. So of course, the code could be, you know, readied and combed over and prepared for merge that would alleviate that concern. But as to the question of will the miner steal from the hash rate escrow, I think let's enable it and see what happens. 1:26:19 And probably there won't be a theft. And if there is, then drivechains don't work. And the entire model needs to be reconsidered. And I think the drivechain authors, if they were to find that the concerns that others have said, which is that like, the thefts will occur, if that's right, then the whole system will have to be reconsidered. And probably some people who are very bullish about Bitcoin, because of the possibility of drivechain, those people will have to reconsider their whole outlook. 1:26:49 Well, yeah, I also think it's fair to say that this is a feature that miners can loot from a drivechain, because proponents of drivechains would say, we want that, right? 1:27:00 Right. 1:27:01 So I don't think it's okay to say that it's a criticism, but it's also a feature. It's inherently a good reason why we have that. 1:27:09 So Fiatjaf says it well, in his website at fiatjaf.com. I'll just find it now and read that one sentence, one or two sentences. 1:27:30 If miners still do steal from a good drivechain, that will mean the failure of the drivechain experiment. 1:27:38 This is Fiatjaf's words, who created Nostr. 1:27:41 He writes that it will very also likely mean the failure of the Bitcoin experiment too. 1:27:48 will be proven that miners can coordinate to act maliciously over a long 1:27:54 period of time, regardless of and social incentives. 1:27:59 And then the sentence continues. 1:28:00 It's a long sentence, but that's the essence of it. 1:28:04 Everyone can read it. 1:28:05 It's at fiatjof.com forward slash drivechain.html. 1:28:08 If you go to fiatjaf.com, you'll find it very easily with two clicks, that whole essay. 1:28:14 But basically, like, I agree with him that if drivechain doesn't work, then maybe Bitcoin doesn't work. 1:28:22 Now, of course, this is a minority view. Most Bitcoiners would say, Henry, you're silly. You know, you're just fixated on one idea. 1:28:30 But to me, the whole incentive structure of drivechain is so powerful. It enables extensibility, innovation and creativity in partitioned environments. 1:28:39 So if they don't work out, that's okay. Anyone who didn't opt in doesn't get hurt. It enables more fees if they do work. 1:28:48 If the sidechains do work, tons of fees coming to Bitcoin. Right now, 15 times more fees are paid outside of Bitcoin than in Bitcoin. 15 times. 1:28:58 So Bitcoin is getting less than 10 percent of all blockchain fee revenue. 1:29:03 Ethereum is growing every day. And they're pursuing a design that is similar to drivechain in nature, arguably, with a multilayered structure that has, in the very long run, their aspiration is a ossified layer one and a multitudinous layer two design. 1:29:26 So I would love to see Bitcoin maintain its role as the number one crypto and in fact return to 100 percent dominance. 1:29:35 That's the drivechain vision. One hundred percent dominance for Bitcoin, not perpetually falling dominance. 1:29:42 Bitcoiners used to point to the dominance a lot back when it was 90 or 80 percent. Now it's not such a popular topic. 1:29:50 And instead, there's this coping and denial and people dismissing dominance entirely. 1:29:55 And I think the same thing is true of fees. Back when Bitcoin fees were high, Greg Maxwell wrote in December of 2017 on the Linux Foundation email list that he's breaking out the champagne because Bitcoin fees are high, sufficient to pay for security as the Coinbase diminishes. 1:30:13 That's almost a word for word quote of what he wrote. 1:30:18 He was breaking out the champagne when Bitcoin fees were $50 a transaction. Today, they're, last time I checked, like $2 or $1 a transaction. 1:30:27 So, you know, 2 percent of what he was talking about in the past. And he is not breaking out the champagne anymore. 1:30:36 But I would think that someone so brilliant as he, because I've enjoyed his videos, which are posted on the Blockstream web YouTube channel. 1:30:43 I think that people like Greg Maxwell are going to eventually come out for drivechain. That's my personal belief. 1:30:50 They're going to study everything going on in Bitcoin and they're going to realize that the best path forward is merged mining and sidechains. 1:31:03 You know, it's the wisdom of Satoshi merged mining multiple blockchains and the two way peg is what drivechain contributes. 1:31:11 Satoshi never thought of the two way peg. He didn't know how to do it. 1:31:14 So that was Paul Sztorc. That was his invention with Cryptex was how to do the two way peg for a sidechain, which is so much better than merged mined altcoins. 1:31:26 So, you know, Namecoin was a merged mine altcoin, but RSK is a merged mine sidechain. 1:31:32 And the last step that's needed is a miner controlled peer to peer two way peg of value between the sidechain and the main chain. 1:31:43 Because right now the federated bottle, it's no good. That's one of the reasons why people sometimes aren't sure about drivechain. 1:31:48 They feel, well, it's complicated and the sidechains today are so small. So why should we improve them? 1:31:54 Why should we do something that RSK wants when RSK is only worth 50 million dollars? 1:32:00 There's about three Bitcoin per month that are paid by RSK to Bitcoin layer and miners, you know, so people think, well, that's not very much. 1:32:08 Why should we change Bitcoin to serve the interests of such a small community on Bitcoin? 1:32:16 But of course, that's an apples and oranges comparison, because once the drivechain technology is enabled and RSK becomes a drivechain, maybe then it'll grow much more. 1:32:27 Because, you know, why would developers want to work on a Bitcoin sidechain that's federated when they can work on an altcoin that's fully peer to peer in nature? 1:32:40 I mean, right now, 100 percent of Bitcoin sidechains are federated. 1:32:44 That's something Shinobi wrote in his five essay series in Bitcoin magazine last year. 1:32:51 He wrote five essays. One of them was on drivechain. 1:32:54 It was essays on sidechains, and he described drivechain well in that essay, even though he's not a supporter. 1:33:02 But he writes that all Bitcoin sidechains are federated today. 1:33:06 So I think that people like Maxwell and Shinobi, I think they actually would like to see some of the things that drivechain stands for occur on Bitcoin. 1:33:16 And they just aren't yet satisfied with the complexities and questions and how they're answered. 1:33:22 And they don't feel as much as drive chainers do an urge to do this as soon as possible. 1:33:30 They would say Bitcoin's doing fine. Let's wait a decade. Let's wait however long it takes. 1:33:36 Let's let's get, you know, roll ups instead. 1:33:39 Maybe roll ups can do what drivechain is trying to do. 1:33:44 So it's a complex topic. 1:33:47 I think a lot of people want to see something like drivechain, but they don't. 1:33:51 They're not convinced yet that drivechain in particular is the solution and that, you know, the arguments in favor of it are compelling enough at this time. 1:34:01 So they don't they don't have they're very optimistic on Bitcoin. 1:34:05 And they're so bullish on Bitcoin and they're so bearish on altcoins that they. 1:34:11 They don't feel inspired to act today. 1:34:14 But I think drive chainers have a different view. 1:34:17 They view Ethereum as a threat to Bitcoin's protocol network effect, and they view the low fees as a serious problem in the near future, not the far future. 1:34:27 Yeah, well said. 1:34:30 And as we speak now, mempool's 480 megabytes as mempool.space is showing up. 1:34:36 And it seems like, you know, demand for block space. 1:34:41 It might potentially be that, you know, we have block space buyers of last resort now that will always put in transactions at one tap per byte for arbitrary data to be stored. 1:34:53 And that might potentially continue to rise, you know, to two stats per byte. 1:34:59 Maybe with the price of Bitcoin rising, that can affect it going back down. 1:35:04 But I think as more people find different use cases for block space, obviously, it's a good thing. 1:35:09 Right. Well, we all agree that this is a good thing. 1:35:11 And it wasn't it was basically a given that eventually on-chain transactions are supposed to be very expensive for this protocol to be effective. 1:35:20 What's his name? Howthinny wrote about this in 2010. 1:35:24 Yeah, I'm sure we all know about this. 1:35:26 We want block space to be used. 1:35:27 We want we want fees to be high. 1:35:29 Like, that's good. That's not bad. 1:35:32 If you could DM me the Howthinny quote that you have in mind, I would love that. 1:35:37 Oh, yeah, sure. 1:35:40 I am such a nerd. 1:35:42 I look at every day the total transaction fees on Bitcoin and I almost never look at the price. 1:35:50 Like, I couldn't tell you what the price is most days. 1:35:53 Sometimes for a month, I won't know what the Bitcoin price is, whether it's in the 20s, the 30s or the 40s. 1:35:58 I don't know. But almost every almost every few days, at least, I look at the total transaction fees. 1:36:05 The website I've been using is blockchain.com. 1:36:08 But ever since people told me that's somehow a shitcoin company, then I've been using instead Glassnode. 1:36:16 But Glassnode doesn't give you the latest few weeks of data unless you pay. 1:36:20 And I've compared the data. It's exactly the same at Glassnode as blockchain.com for this chart. 1:36:26 So what I'm talking about now is the total transaction fees for Bitcoin measured in U.S. dollar equivalent terms. 1:36:35 So if you go to blockchain.com and then click on Explorer and then click on Charts and then select Total Transaction Fees parenthesis USD. 1:36:47 You'll see the chart that I'm talking about now. 1:36:50 And the reason why I'm talking about it is you just mentioned that like, you know, the recent activity with ordinals and inscriptions perhaps is a buyer of last resort. 1:36:58 And we're going to see a solution to the security buzzard. 1:37:01 I don't agree with this, with that view. 1:37:05 So we've seen fees in recent days over the last month. 1:37:12 Fees trend up a little bit. 1:37:17 I just want to restate this. I don't think that this is the solution, though I think it's headed to the right direction because at least we have some more demand for block space. 1:37:26 But it might not be enough, which is what I'm saying. 1:37:29 So if you read Paul Sztorc's articles from 2019 and 2021 called Security Budget in the Long Run and then Security Budget 2, Part 2. 1:37:38 Those two articles, they're very good. 1:37:40 And one of the things they argue that I completely agree with is that the way to measure block space value is total transaction fees. 1:37:50 Not average fee, not, you know, other ways of looking at the block space. 1:37:56 The value of Bitcoin's block space is the total transaction fees paid per any unit of time. 1:38:03 So I go to blockchain.com and look at the chart that I described to you. 1:38:09 I can see that over the last month, so 30 days ago, the fees per day were about $410,000 per day. 1:38:20 Right now it's about the same, $440,000 per day. 1:38:25 So we're right where we were 30 days ago. 1:38:28 Let's compare to six months ago. 1:38:32 The fees were $340,000 per day in September of 2022. 1:38:38 And now they're $441,000. 1:38:42 So slightly higher than six months ago. 1:38:47 I think it's better to check it in Bitcoin terms. 1:38:51 No, that's wrong. 1:38:53 Because the real value of the block space is the purchasing power of the block space. 1:39:06 Yes, but when you're looking at it in dollars, you're introducing the volatility price of Bitcoin into your equation. 1:39:13 Exactly. 1:39:15 The volatility of Bitcoin relative to other goods and services over short periods of time is higher than the volatility of the dollar. 1:39:26 And therefore, when we want to speak about whether something is more valuable or less valuable than it was at some other point in the recent past, it is more rational and reasonable to denominate the value in dollars. 1:39:47 I appreciate you asking that question. Bitcoiners very often who have a simple perspective on 1:39:58 the security budget will say, Henry, you're talking about dollars. That's a fiat mindset. 1:40:03 You haven't said anything like that. But they'll say it's a fiat mindset. All that matters 1:40:07 is Bitcoin. One Bitcoin equals one Bitcoin. Bitcoin fees are paid in dollars. On-chain 1:40:13 miner revenue is paid in dollars. In the long-term future, everything will be paid in Bitcoin. 1:40:19 What am I saying? The fees are paid in Bitcoin. The on-chain revenue is in Bitcoin. The coin 1:40:23 base is in Bitcoin. Everything in Bitcoin is denominated in Bitcoin. In the future, 1:40:27 if there's Bitcoinization, everything will be denominated in Bitcoin. So the argument 1:40:32 goes, Henry, why are you talking about the total transaction fees in dollar terms? But 1:40:39 as you just understood, it is most important to look at it in dollars. I understand that. 1:40:45 Because it's more stable. So if you're trying to understand the value of it, it makes sense 1:40:50 to denominate it in a more stable currency. Anyone who wants to dismiss the importance 1:40:55 of dollars need only talk to someone who went all in on Bitcoin a year ago and now they're 1:41:01 down like 50 or 80 percent. That person is feeling the hurt. They're feeling the pain. 1:41:07 Their bills are in dollars. The apples they buy at the store are in dollars. 1:41:12 So yeah, but check this out. And I understand your view of this might not be sharing the 1:41:19 idea that this is not solving the security budget, meaning the ordinal phase or whatever. 1:41:26 But if you think of it like this, we did have empty blocks. We had plenty of empty blocks 1:41:31 or not even empty blocks, but blocks that had plenty of space and where now we don't. 1:41:38 It doesn't matter whether the blocks are full and it doesn't matter whether there is a million 1:41:43 transactions waiting in the min pool or not. The only thing that matters for the security budget 1:41:50 is the total transaction fee rate. It doesn't matter if there are a billion 1:41:55 ordinals waiting to be inscripted. It doesn't matter. 1:42:00 Yeah, but yes, it doesn't in the terms of we need the total amount of dollars spent 1:42:07 for transaction fees. And in that sense, it doesn't matter. You're right. But if you look 1:42:11 at it like as demand is, let's say it's static and there is as much demand outside of ordinal 1:42:18 inscription transactions, regular Bitcoin transactions without that, there's as much 1:42:22 demand today as there was, let's say, yesterday or last year. There is still space then in blocks for 1:42:30 other transactions. And now you are complementing it with inscriptions. I mean, I'm looking at the 1:42:37 chart that I believe that you're looking at blockchain.com slash explorer slash charge 1:42:41 slash transaction fees, right? USD, yes. Okay. And then I believe the blue color is the USD, 1:42:48 right? Oh, no, that's the Bitcoin. Do you have USD in your URL? No, I don't. 1:42:54 Transaction dash fees, and then what? It should be transaction hyphen fees hyphen USD. 1:43:01 Okay, let me check that right now. But you can get to it just by clicking on, 1:43:07 if you clicked on charts, and then mining. Okay, so if you go to like, let's say a three year 1:43:13 period, do you see a slow uptick more recently? Let's say beginning this year, beginning of 1:43:19 January, you see like a floor rising. So if you click on market, where it says market price, 1:43:24 if you click that, it eliminates that from the chart. And that way, you can focus solely on the 1:43:29 blue line. Do you see that? I clicked on market price, and now I see only, okay, yeah, right. 1:43:38 Good. So it makes it easier to see. So if you click on market price, you eliminate the market 1:43:44 price from the chart and we only see the total transaction fees. So you see here that three 1:43:49 years ago, on March 13, 2020, the miners made $286,000. And today, they make as of March 11, 1:44:01 two days ago, $441,000. So wait, one second, I'm sorry, I'm back at this blockchain.com slash 1:44:09 explorer slash charts, slash transaction fees, USD, what do I need to click on next? 1:44:16 You're at the right place. If your chart is titled total transaction fees, USD. 1:44:21 Yes. And I see two different lines, the price of Bitcoin, which is a dark and then the blue 1:44:27 line on the bottom. So in the chart, the top right of the chart, click on the words market 1:44:33 price, and that will eliminate that from the chart. Okay, right. And I'm seeing in this year, 1:44:41 a floor rising. Do you see that also? 1:44:46 That's a, I mean, how about October 2021, the floor was rising, and then it rose back. 1:44:52 Yes, but that was a bull market. You can say that that was just demand of retail coming in 1:44:56 for whatever reasons. Okay, so your identification of a rising value for the block space during 1:45:03 a bear market for Bitcoin is an important and correct insight, which is that one of the things 1:45:10 that drive chainers are looking for, to see that the security budget problem isn't a problem. One 1:45:17 of the things they're looking for is to see the block space rise in value on this chart in real 1:45:24 purchasing power terms, while Bitcoin is not going through a mania. 1:45:31 And it's fair to say that this is extremely insignificant. Because looking at the chart, 1:45:35 you can see it's extremely insignificant, but you can still correlate a floor rising, 1:45:40 even as insignificant as it is. I think there, well, I agree with what you're saying, 1:45:45 which is that it might be statistically nothing. Like we might just be looking at yet another one. 1:45:50 I mean, look at the all time chart, click on the word all. You can see that for most of Bitcoin's 1:45:56 history, the block space had very low value. And there were two brief, enormous spikes in value 1:46:03 where the miners made millions of dollars a day, like $12 million a day on December 18th, 2017. 1:46:13 And then once again, there was a spike on April 19th, they made $16 million in one day 1:46:19 because of a surge in demand for block space. But with every one of these surges, 1:46:26 there's all kinds of things that grow, that reduce the likelihood of another surge. 1:46:32 Like traders move into custodial trading venues, or they move into some snark layer on Ethereum 1:46:41 to trade wrapped Bitcoin. There's all kinds of ways people avoid high fees, 1:46:47 because they don't like paying. 1:46:48 Right. But inscriptions cannot avoid that because inherently they're on base one, 1:46:53 layer one. And if this chart is showing that, then I don't know if it's a fair assessment, 1:46:59 but it could be a fair assessment to say that inscriptions could potentially be making an 1:47:04 effect, though extremely insignificant as now because it's only one month in. 1:47:09 But it might be fair to say that it could be making a tiny effect in the future. 1:47:14 Yeah, I agree with you. Like the market might demand Bitcoin block space and discriminate 1:47:23 against other block spaces and other ways of transacting Bitcoin, you know, derivatives. 1:47:29 So instead of people trading wrapped Bitcoin, they might prefer to trade layer one Bitcoin. 1:47:34 And that would make the block space more valuable. Yeah. I think that the evidence... 1:47:40 But here you have a protocol that relies the whole, I think the whole novelty of the protocol 1:47:45 is that it's layer one. And the arbitrary data is on layer one. I think that that's the whole 1:47:50 novelty and like the value proposition of this meta protocol. So it's like, yeah, 1:47:54 you can have market demand for wrapping BTC off chain or, you know, be on chain. 1:47:59 But that's still subjective because, well, what might be more effective to you, right? 1:48:03 Maybe you trust the trade off of having wrapped Bitcoins, whatever it is, right? But here you 1:48:08 have a much stronger incentive of... It's not only much stronger, it's like the whole idea is 1:48:13 to be on layer one. Yeah. Yeah. I think you make a great point that it's logically possible 1:48:19 that the recent episode of inscriptions and ordinals and things of that sort may result in 1:48:28 higher demand for Bitcoin block space and thus could, quote unquote, maybe in the best case, 1:48:34 solve the security budget problem. However, if that is true, then we're going to see it 1:48:41 on this chart. We're going to see Bitcoin transactions. Another one to look at is like 1:48:48 go to on the left hand side of the screen and click on in the section called mining information, 1:48:56 click on the chart that says fees per transaction USD. And then you can look at like, you know, the 1:49:06 three year chart there, you can see that in April of 2021, it costs $62 to send a Bitcoin layer one 1:49:16 transaction. Today, it costs under $2 as of two days ago, March 11th. But I'm also looking at 1:49:24 this chart and I'm trying to see a floor rise. Yeah, I don't see any floor rising. Also, I would 1:49:29 know you have to you have to look at the floor rise from when inscription started. Also, which 1:49:35 is about a month ago, right? Or two months ago, if you want. Right. Another thing to think about 1:49:39 is when you're looking at this chart. Maintain awareness that especially when looking at a 1:49:46 long term chart, like three years or all time, that these charts do not reflect inflation of 1:49:53 U.S. dollar. In other words, it's very important to understand that the real value, like if the 1:50:00 miners make half a million dollars a day from fees, and they made half a million dollars a day 1:50:06 six years ago from fees that are making less. Yeah, they're making a lot less, like probably 1:50:13 20% less. So it's a very interesting puzzle. I would agree with you that it's most likely 1:50:20 insignificant, meaning the inscriptions fees going up. I would say it's not it didn't solve 1:50:28 the security budget, most likely will not solve the security budget. But from another point of 1:50:33 view, you can look at it's so cheap to put arbitrary data on chain and it's very easily 1:50:38 accessible that there might potentially be a use case for somebody to always want to pay at least 1:50:44 one SAP for BitByte because it's just so cheap to put data on Bitcoin using this envelope in 1:50:50 the witness. Right. So because of that, you will always have at least potentially, like I don't 1:50:56 know, right, but potentially you might always have one SAP for BitBytes in the mempool. And of 1:51:01 course, that's not significant for the security budget, but tiny equation to it. Tiny, less than 1:51:08 1%. Yeah, but I totally agree with what you're saying, because if there's a huge number of people 1:51:16 in the world who would like to do a layer one transaction for inscription purposes or other 1:51:22 purposes at a low fee, that means Bitcoin will always have a buyer of last resort. But the 1:51:29 problem is, as you say, you know, if the buyer of last resort is only willing to pay a penny, 1:51:36 then it doesn't really matter because Bitcoin has small blocks. See, this is why some people 1:51:41 are large blockers. But there's another point here where, yes, there is, let's say, potentially a huge 1:51:49 amount of people that are ready to pay one penny. But now there might be a smaller amount of people 1:51:54 that are ready to pay two pennies because you introduced a new use case. Right. And over time, 1:52:00 that two pennies will be a larger amount, and then there might be a smaller amount for three 1:52:05 pennies. Right. Right. I understand what you're saying. You're right. There might be. I don't 1:52:10 think there is, but there might be. But I also wanted to just finish my thought there about the 1:52:14 large blockers. There is a large kernel of truth in large blocker thinking that large blocks are 1:52:21 valuable in certain circumstances. Now, I'm not a large blocker in the sense that I don't want 1:52:26 large blocks on layer one, but there is an enormous number of people who want to pay a 1:52:31 little bit of money, like a penny, to do a transaction that's peer to peer. But that 1:52:36 should be a layer two. That should be a drivechain. So I think that like there could be a ton 1:52:41 of pennies collected from a big block drivechain, and then that money is brought to Bitcoin 1:52:48 layer one miners. And therefore, that's like the harmony, the symbiosis of large block and small 1:52:54 block. The one problem is that the large blockers that I've talked to, they're not too excited about 1:53:00 this because they're like, why do I want to be on a sidechain? Like they kind of view that as a 1:53:05 lesser thing. But that's kind of like saying, you know, I want to live in a nice big house. 1:53:12 I don't want to be in an apartment. But then, you know, the person comes to New York City 1:53:17 and they realize that having a large house in New York City costs like a billion dollars. 1:53:22 Almost no one has a house with a front lawn in New York City, except the very richest people 1:53:26 in the whole world. You know, I'm talking about Manhattan specifically. So yeah, I think there 1:53:34 could be a ton of pennies collected, as you say, from many people who are willing to pay a little 1:53:38 bit of money. But then you need large blocks. Otherwise, those pennies, they're waiting in line. 1:53:43 They're waiting in line to get their transaction through because the blocks are so small. Only a 1:53:47 few pennies can be processed every 10 minutes, only a few thousand transactions. But if we had 1:53:53 a big block sidechain, maybe, you know, then a lot of the ordinal stuff and a lot of these 1:53:59 small transactions could happen. We are going to have to break. We've been going for almost two 1:54:04 hours. This has been a great conversation. Thank you very much for everyone joining. 1:54:08 Acrossfire, you just joined. I want to give you the remaining part of the time to speak, 1:54:15 if you'd like. Yeah, sure. Thanks. Yeah, I'll keep it brief. But I just wanted to kind of add 1:54:21 on to that last bit of the conversation. We were talking about ordinals and inscriptions and 1:54:26 their ability to contribute to security budget. While I agree in their current form, they're 1:54:31 unlikely to fully solve the security budget. I do think they'll provide kind of a healthy 1:54:38 fee mechanism, if you will, the buyer of last resort. And we've already seen there's a lot 1:54:43 of people that do it from one SAT per V-byte, two SATs per V-byte. But then there's the higher 1:54:48 profile artists that do know they have buyers that do tend to pay much higher fees for their 1:54:54 inscriptions. And you always see a few of them that do end up in the very next block. 1:54:59 So they are those that are willing to kind of fill up those box with those higher fees. 1:55:04 And then I also know that conversation is still very much evolving just due to the nature of it 1:55:09 being so new. At first, people were just focusing on the NFT aspect, but it's already starting to 1:55:15 be where people are looking at it more as just a generalized envelope where you could do more 1:55:20 creative things and other meta protocols with that data. And that's kind of what led to RollKit and 1:55:29 some of the ideas that Eric Wall has been discussing, these other kind of meta protocols 1:55:33 that are starting to exist. Even some people were talking about joking around and playing 1:55:38 around with BRC20s and these kind of fungible token standards on this. And so I think there's 1:55:43 going to just be a lot of various use cases, and some of them will be one to two SAT per V-byte 1:55:49 use cases, but others might be much higher. And I think in combination with drivechains, 1:55:55 as well as other ideas, I think we should look at all of these working in kind of a symbiotic way 1:56:01 to enhance the fee mechanisms for Bitcoin. It's not necessarily that inscriptions don't 1:56:08 contribute. They will. They'll just be part of a bigger block of solutions for fixing the security 1:56:14 budget. Well said. I agree entirely. Eric Wall is a supporter of drivechain, like many other people, 1:56:24 and I personally have made a list of over 50 supporters for drivechain that I've found on 1:56:31 Twitter. There are many more. My list is merely a sample of support. You can find it if you go 1:56:37 to drivechain.info and then click on drivechain friends. Well, thank you so much. We've got a 1:56:46 break now, but we will be back on Thursday. We meet every Monday and Thursday to chat about 1:56:51 drivechain. If you have questions in the meantime, join the drivechain talk telegram group, the 1:56:56 drivechain's Reddit, or other places that you can get involved and learn more. So I hope to see you 1:57:02 all on Thursday. Thanks to those who spoke, and thanks very much to those who listened.
