0:00 Hey guys, good to be back with another episode of Truthcoin Talk, I'm your host, Paul Sztorc, 0:30 it's been a long break, probably too long, I kind of had a stretch where I needed to 0:37 just kind of unplug from the podcast world for a little bit, I've still been doing my 0:42 Twitter spaces, but just kind of got to the point where I wanted to figure out what I 0:49 wanted to do differently with this, and I don't know, it's good to be back, I'm excited 0:54 to start creating some content again, and I think this episode is a great start, I went 0:59 to the Litecoin Summit, and got to meet Paul, who we're going to interview here, Paul Sztorc, 1:04 who created, or wrote the BIP300/301, and he's an interesting character, he 1:15 has a lot to say, and that's always nice when you're hosting something, it's harder when 1:20 someone doesn't want to talk, but this is something that's interesting to Litecoiners 1:27 right now, the Foundation's mentioned it, Paul's been trying to get this added to Bitcoin 1:33 for probably 9 years, 8 or 9 years, and he's just not had a lot of luck, and the first 1:43 thing I want to really do with this is, how do we as Litecoiners go about understanding 1:51 it first, and then maybe in the future, we get some pushback as to why somebody might 1:59 not like it, why somebody thinks it's dangerous, I have kind of an opinion on it that Animal 2:06 and I will talk about a little bit at the end of the show after Paul leaves, oh yes, 2:10 by the way, if you're wondering who Animal is, if you listen to my Twitter spaces, you'll 2:16 recognize his voice, I got to meet him at the Summit, and we clicked really well in 2:20 person just like we do on spaces, and so it was great, we hung out for basically the 2:28 whole two days, if you want to go follow him on Twitter, he's at Animal underscore Litecoin, 2:36 I don't know, he didn't intend to be Animal, but he's just become Animal, so that's who 2:40 he is, if you hear me refer to him. 2:45 So yeah, this will be an interesting episode, I hope you learn a lot from it, we tried to 2:50 take it as slowly as we could because what Drivechains could enable is really, in my 2:56 opinion, pretty amazing, well the upside is, and I think my hope is that we get some excitement 3:03 around it and give it a thorough vetting, and if it's something that seems worthwhile, 3:10 it'd be exciting to see it happen, so, alright, I don't want to ramble too much, I have a, 3:17 like I said, I went to the Summit, I think I'll do a separate episode about the Litecoin 3:21 Summit, it was a really great experience, got to meet a lot of really great people, 3:26 but we'll talk about that some other time, enjoy the show. 3:32 Well Paul, I know I listened to you on the Peter McCormick episode this last week while 3:37 I was driving, and you're not a big fan of doing introductions, so I won't bother you 3:41 with it, I'll do it in some sort of separate intro. 3:45 But briefly, we have Paul Sztorc, I learned how to pronounce that at the Summit, who created 3:53 VIPS 300 and 301, or wrote them, and is the CEO of LayerTwo Labs, which, is that the entirety 4:03 of what LayerTwo Labs is up to, is getting Drivechains implemented? 4:08 I would say mostly it is about building the L2s, VIPS 300 and 301 are on the L1, so they 4:14 would be on Litecoin, Bitcoin Core, or Litecoin Core, or whatever, but that's only a tiny 4:23 percent of the actual total process, most of, 99% of the actual software, like, calculations 4:32 is on the L2, so we build some L2s that we think are good, so if we cloned Ethereum, 4:38 we cloned Zcash, we have a large block sidechain that is high performance and high throughput, 4:46 so we want to make these L2s, I do some other things with LayerTwo Labs, but that's the main, 4:54 the main idea is to try to make Bitcoin a success and get it used by 8 billion people, 5:02 but if Bitcoin is not going to do that, then anyone can just take the L2s and do that instead, 5:08 because it's all open source software. 5:11 So you're planning on the future where this is somewhere, whether it's Bitcoin or Litecoin? 5:18 I do think it's inevitable, I think it actually will be more like BIP39, like the 12 words, 5:24 where every chain, there will be a phase where every single chain has these Drivechains, 5:29 because they give you immediate global planetary scale, and they give you immediate Zcash level privacy, 5:36 so that's just reason enough, and then on top of that they give you everything else 5:42 that you might want, including the ability to flee the current dev team to a different 5:48 dev team without needing to fork the project, which is what killed many other things, 5:54 did it by the fork, died by the fork, so even Litecoin, when Litecoin first came out, 6:01 it then splintered into Feathercoin and Dustcoin and stuff like that, you saw funny things 6:05 like that, and Bitcoin Cash, of course, was immediately split by Bitcoin SV, and even 6:12 Amrisa Sheh wanted, then it was split again, because Amrisa Sheh, lead BCH developer, he 6:18 wanted dev techs for himself, or he wanted some kind of support, so then it split again, 6:26 which is Bitcoin ABC, I think, although, yeah, there's like Zcash now, right, remember there's 6:33 Bitcoin Diamond and Bitcoin Gold, of course, yeah, Unlimited, there's like a POS one, I 6:39 think, there's been all sorts of them, but yeah, okay, well, so actually one of the things 6:46 we wanted to do right at the beginning, and this might even be like we're going to use 6:50 you as a glossary a little bit, is getting some clear definitions, because that was one 6:55 thing I noticed listening to your other interview, is that you've always wanted to call them 6:58 sidechains, but you feel like Liquid has called themselves a sidechain, that kind of muddies 7:07 the water a little bit, and so, I guess, sidechain can just mean anything, it can just mean multi-sig 7:13 address with you and your friends, which is exactly what like Mt. Gox was, and that's 7:18 exactly what like all these Ethereum L2s that everyone says are fake, this is the stuff 7:23 that we would make fun of if we were Bitcoiners critiquing an altcoin, but now, like, that's 7:28 what Liquid is. Luckily, people finally come around, and they're finally making fun of 7:34 Liquid, and I think, I don't know, well, I'll let you ask the questions. 7:39 Yeah, that's okay. So, is it fair to say that a Drivechain is a type of sidechain that 7:46 has a different security, like, it's different to a peg, different bridge, or whatever, 7:51 yeah, I would say, yeah. So, the permissions are like, the administrators of them are 7:56 different, where sidechain today really could mean anything, it could mean. 8:00 Yeah, but the Drivechain is administrated by the mining process. 8:06 Okay. 8:06 So, that's a pretty big difference, because that's a big, that's the same as the difference 8:09 between eGold and Liberty Reserve, which failed completely, and Bitcoin, which was a huge 8:15 success. So, it's a pretty big difference, I think. 8:18 In my mind, like, a Drivechain is what, like, when I finally understood what you were trying 8:23 to accomplish, it is what I had envisioned sidechains to be like, right, miner controlled, 8:29 miner run. 8:30 Miners get the money, it's kind of, like, automatic, as long as they just do nothing, 8:34 it just works, and there's no, like, there's no person who can just take all the coins, 8:41 and unilaterally, you have to, like, you have to just either kill the whole idea for everyone 8:47 permanently, in which case you lose all the fees, and you lose all the any value add to 8:55 the exchange rate, or you just do nothing, and it all continues to work, and now everyone 9:00 can just send, they can just turn their Bitcoin, you know, move it from any piece of software 9:06 to any other piece of software. 9:08 So, that's, I think, a pretty big deal, because it restores competition to the software world. 9:15 Right now, if you want to use BTC, the coin, you have to run a Bitcoin core node, 9:22 and then, you know, you can then escape to any number of different Lightning L2s, 9:27 but Lightning doesn't work, so Lightning is a failed project, so that doesn't really help. 9:34 We need, the other thing is, Lightning is too cozy with L1. 9:37 We need, my vision is more of different developer groups that all hate each other 9:44 advancing their own vision, so, like, in my vision, we'd have, like, the 9:49 large blockers and the small blockers. 9:51 The fact that they hate each other is a good thing. 9:53 That will motivate them to work hard every day to get users, so the large block people 9:58 will launch their large block sidechain, and then from, they know exactly what their plan 10:03 is, you know, in my fictional world, that didn't exist. 10:06 Instead, they did their own thing, and I think they screwed up completely, and, you know, 10:10 I think we can go into that, if you want. 10:12 No, that's become a big part of, yeah, that would work. 10:17 But we want, they launched their L2 version. 10:21 They say, you know what, we have a different vision than Bitcoin Core. 10:23 We hate Bitcoin Core. 10:24 We want, we just, if we would like them to all get on a bus and drive it off a cliff, 10:28 but we can't accomplish that, so we make our own L2, and then here's, and we present it 10:36 to the world, and then we say, here's why you should send your coins from L1 to this 10:41 L2, and here's why you should only transact. 10:44 You should only really accept coins on the L2. 10:46 Here's our L2 wallet. 10:48 You should be a user of L2. 10:50 Don't use the L1, and that's kind of like my vision. 10:56 Unfortunately, coins have to go, L2 starts with zero coins, but someone, a rich person 11:01 like Roger Ver with a single transaction, they might, they could send like 100,000 in 11:06 theory, 100,000 BTC from L1 to L2, and then over there, they could start onboarding people, 11:12 and those people would never see L1. 11:15 Yeah, so you could even, you can spin up wallets, because it's a totally, this is 11:19 something I was trying to grasp last night. 11:21 Every single sidechain, or Drivechain, sorry, is going to have its own note, its own like 11:27 core software. 11:28 The sidechains are very similar to altcoins, really. 11:31 Other than that, they have the same underlying coin. 11:33 That's like really the only thread that connects, and the merge mining piece. 11:38 So block times can be different. 11:40 Yes. 11:41 Signet, or like. 11:42 Yeah, it could be written in a different program. 11:44 Your address formats will be wildly different. 11:46 Address format could be anything, or they could be the same, but that would actually 11:49 be misleading. 11:50 So we've actually changed it slightly so that, in our software, we have sometimes, 11:56 because we don't want people getting confused, we put like a little prefix in front of like 12:00 which chain you're on, and we even relabeled them, you know, instead of calling them all 12:04 BTC, I did call them BTC, and then SC0, SC1, SC2, SC3. 12:12 I call them different coins, even though they are all the same coin, because you just want, 12:17 it's just kind of confusing in the user interface to say, oh, give me five coins on sidechain 12:22 five in return for 4.9 coins on sidechain one. 12:26 It's like you just have to say, okay, I'll give you 4.9 BTC if you give me whatever, 12:31 SC3. 12:32 But they are the same thing. 12:36 They're one-to-one exchangeable. 12:38 So no matter what happens. 12:41 Before we get into this too much, I just want to go through, what are the differences? 12:45 What does BIP300 enable? 12:47 What is BIP301? 12:48 BIP301 is just a different type of merged mining. 12:51 Merged mining was invented by Satoshi. 12:53 I think the fact that it's possible at all is kind of amazing. 12:56 Bitcoin is really several different inventions rolled into one. 12:59 But some of them you can extend slightly. 13:02 So like the blockchain comes with it. 13:07 If you add these things, the anyone could spend outputs, you get the soft fork, which 13:13 is its own unbelievable invention. 13:15 And then similarly, if you take Satoshi's blockchain and then you add, you create a 13:25 new blockchain such that every chain of that second thing contains within it a valid L1 13:34 chain. 13:35 This is maybe confusing. 13:36 Yeah, sorry. 13:38 All I'm saying is that merged mining is like you mine two blockchains at once. 13:43 What I want to stress is that BIP301 is not that interesting because all it does is a 13:51 different type of merged mining. 13:52 Merged mining is already possible. 13:54 And in fact, it's unpreventable. 13:55 So there's no way of preventing. 13:57 Okay. 13:58 What's different about it? 13:59 Is it the blind merged mining? 14:01 Yes. 14:02 So what does that mean? 14:02 What is that? 14:03 Because right today, obviously, we were just talking about before you came on. 14:08 Well, hang on. 14:08 Dogecoin merge mines with Litecoin today. 14:11 Again, it's unpreventable. 14:12 I think we've talked about this in our spaces a lot. 14:14 Like 100 chains can choose to do it. 14:16 It's more about market demand that's going to dictate are those even worthwhile. 14:20 And Bell's coin is... 14:22 I don't know if you know about Bell's chain or Bell's coin. 14:24 If you've heard a lot about it, it's this other proof of work chain that 14:28 Billy Marcus from Dogecoin created before he created Dogecoin. 14:34 And so obviously, some Dogecoiners have latched onto this and they've started mining it again. 14:39 And they're going to change their code to merge mine with Litecoin 14:42 in the next, I think, like in the next month or so. 14:45 It's happening. 14:46 It may have already happened, honestly. 14:48 Block height, 144,000. 14:51 And so that's meant to happen by the end of the month, by the end of August. 14:55 So today, obviously, I guess I'm assuming today is not blind, 14:59 meaning these miners know what they're doing. 15:02 What is it about Blind Merged Mining? 15:04 How is that different than what we know of today in Litecoin and Dogecoin? 15:09 Well, there are two tiny improvements. 15:11 But in the grand scheme of things, it's really not that big of a deal. 15:16 But basically, traditional merge mining, the miners must run the second node. 15:22 So they must run the node of Dogecoin. 15:26 Right, exactly. 15:27 And then when they mine, they mine both blocks at once. 15:30 No additional hashing is required, but they run the two nodes. 15:34 They mine both blocks. 15:36 They get a Litecoin block full of Litecoin and they get the Doge block full of Dogecoin. 15:46 And so they get paid in Dogecoin. 15:48 But in Blind Merged Mining, it's simplified slightly so that what happens instead is 15:55 the miners do not need to run a node of Litecoin, excuse me, of Dogecoin. 16:02 No, I said the wrong thing there. 16:04 I don't know. 16:04 Whatever this Drivechain is in this world, they don't have to run that software. 16:09 Okay. 16:10 They don't run that. 16:11 And then they would get paid in Litecoin LTC. 16:15 Okay. 16:16 This is when kickouts happen, right? 16:18 No, this is unfortunately pretty confusing for people. 16:21 I would say if I could do it all over, I would never invent Blind Merged Mining. 16:25 Or I would invent it and publish it to the world after BIP300 was accepted by people. 16:32 Or I would have kept it as a theoretical thing because the two are completely interchangeable. 16:37 You can have BIP300 without 301 and vice versa. 16:40 And they are independent. 16:43 And merge mining, you cannot force people to merge mine a certain way or prevent people 16:48 from merge mining a certain way. 16:49 So they're completely different. 16:50 And I do think it has confused people. 16:52 But 300 is the deposits and withdrawals, the peg in, the peg out. 16:57 301 is every 10 minutes, the merge mining. 17:01 But there is a sense in which there is an automatic withdrawal, but it's indirect. 17:05 So what basically happens in 301 is someone who's on the L2, 17:10 but who has L1 coins. 17:13 Because everyone who's on the L2 also has L1 coins. 17:15 It's all the coins started on L1. 17:17 So I don't know. 17:18 Stop me if it's too confusing. 17:19 But basically, you have- 17:21 They're on the L2, but there is an L1 coin. 17:26 Wallet that they have. 17:27 It's the same. 17:28 See, what I'm saying is this is possible because it's the same person. 17:33 So there's a person on L1 and L2 who acts as a kind of bridge, a conduit. 17:37 And what they do is their software, their node software, which is not mining. 17:42 They are not doing any hashing. 17:43 They don't care about proof of work. 17:45 They don't care about electricity costs. 17:47 They build the L2- 17:49 For simplicity's sake, for simplicity's sake, let's call- 17:53 It's really not that important. 17:55 Let's call the Drivechain just... 17:59 Yeah, I guess we'll just call it like DC1, right? 18:01 So DC1 coin. 18:03 Yeah, LTC and then DC1. 18:06 Yeah, so DC1 only got there because I pegged into a- 18:14 Yeah, you have like a thousand- 18:17 You have a thousand Litecoin and you click in the software. 18:20 You say, I move seven Litecoin over to DC1. 18:23 And now I have DC1, the coin, seven of those. 18:26 Or 6.999 or what have you. 18:28 On the main chain, are those represented in a- 18:32 Those are locked in this BIP300. 18:34 This is a BIP300 script part. 18:36 Okay. 18:36 It's got its own address. 18:38 Yeah, basically. 18:42 It basically has its own address. 18:44 Although the addresses are not- 18:46 This is like a silly- 18:52 The biggest difference I see from an economic standpoint 18:54 is that a merged mine coin like Dogecoin or Bells 18:57 kind of are inflationary to Litecoin. 19:00 And the miners, they'll remove some tangible value 19:05 from Litecoin and Dogecoin if we say we're to add Bells. 19:10 Whereas if you add a sidechain, a Drivechain to Litecoin, 19:16 it's a deflationary type of- 19:17 Yeah, it's exactly the opposite. 19:18 It's this new feature, but it's the same 84 million LTC. 19:24 So you're increasing the value of the Litecoin, 19:27 of each Litecoin by sanctioning it to a certain Drivechain. 19:31 Which is appealing because at some point, 19:35 you can keep merge mining as many coins as you want. 19:37 And it kind of begs the question, 19:40 like, where does the value actually lie? 19:43 If you can just spin up another blockchain. 19:45 Yeah, I always thought altcoins would all go to zero. 19:50 I was definitely wrong about that. 19:51 And I thought, like, because I thought it's all open source. 19:55 So eventually everyone will just do everything 19:57 with this type of thing. 19:59 The big opportunity for Litecoin is that many other coins 20:04 instead of BTC have accumulated like this cultural damage. 20:08 Although I think just based on what I've observed 20:12 in my like being 24 seven in this industry 20:16 for like more than 10 years, I think it must, 20:19 I'm not very familiar with the Litecoin community, 20:21 but there must also be people in the Litecoin community 20:23 who have, because it seems universal 20:26 that people accumulate. 20:29 And there's even books about this 20:30 called like the innovators dilemma and stuff 20:32 about how there's a certain way of doing things 20:35 that just accumulates a kind of inertia, 20:40 like a status quo. 20:41 And there's high status people who are difficult to dislodge. 20:45 And so everyone has, no one has made this jump 20:49 to the sidechain universality. 20:51 So I think if like Litecoin were to do it, 20:55 Bitcoin would still just be like, 20:56 okay, maybe we'll keep thinking about it 20:58 for like months, so. 20:59 I was telling Grant yesterday about this, 21:02 but like, so I work in IT, right? 21:04 And we have a couple of rules, 21:06 you never deploy on Friday. 21:08 Fridays are like documentation days type of thing. 21:11 People are very hesitant to test in prod, right? 21:15 There's no testing in prod, it's a joke. 21:16 Sometimes there's some teams that do it, 21:18 but it's kind of like these guys are cowboys, right? 21:21 Or the product isn't that critical to the company. 21:24 But so with Bitcoin, let's say that's prod, okay? 21:28 And now you have Litecoin, 21:29 which still has a market cap of like 5 billion or something. 21:34 It used to be a test, like the test environment, 21:37 but now it's seen more as its own prod environment. 21:42 And so people are like hesitant to even like, 21:45 I wouldn't be surprised, David Burkett, Charlie Lee, 21:47 like I don't think they're super keen 21:49 on adding new features to something 21:52 that's worth $5 billion. 21:53 They would not want to put that market cap at risk, right? 21:57 I agree with this, but I do think that this is, 22:01 I think this is a little bit misconceived 22:03 because when people say the 5 billion is at risk, 22:06 I mean, it's like that meme with Feodin and Aragorn, right? 22:11 Where Feodin's like, I will not risk a war or whatever. 22:15 And Aragorn's like, well, war is upon you, 22:17 whether you would risk it or not. 22:19 And then you just delete war and you put like the other text. 22:23 So it's kind of like the 5 billion is at risk 22:26 of any day new coins could appear and take market share. 22:33 Not doing anything is I think a pretty big risk 22:36 because it's a market effect, 22:38 you know, it's a network effect market. 22:41 So, but there's another thing, 22:43 there's another piece of this puzzle, 22:45 which is I've invented this other thing 22:47 that I called CUSF, C-U-S-F, the Core Untouched Soft Fork, 22:51 which is kind of like a way of doing the soft fork 22:53 that is very, very easy to just reverse and abandon by, 22:59 so there's no change to the software, 23:02 the, you know, like the Litecoin core software. 23:05 Instead, you run a second little software demon 23:09 that activates the soft fork. 23:12 And if you just stop running that, then it deactivates. 23:14 So that was in part also because Bitcoin has the same problem 23:18 where in order to do a pull request to the Bitcoin core, 23:22 you have a whole slew of irrationalities 23:25 that you have to defeat. 23:27 And even they have like bizarre stuff like style guides 23:31 and things that they are inconsistently enforced. 23:33 And you never know if this is just like all big hazing ritual 23:37 or the whole thing is fake. 23:39 So this, I also have like a way of doing BIP300 23:45 that is much easier to, you know, it's a sort of lower risk, 23:48 I think, because it's pretty low risk 23:52 because people who aren't, who haven't run the activator, 23:56 they don't even realize that anything has happened. 23:58 So the risk has got to be pretty low 24:00 and there's no perceptible. 24:03 The risk part of it, like on a technical level, 24:06 I think is what, it doesn't seem that there's a lot of pushback 24:12 from the detractors you've had of like 24:14 that there's something functionally wrong with it 24:16 or that'll do anything to impact the L1. 24:18 And so could you just have it there? 24:21 And then eventually people just abandon it 24:23 and nobody cares about it. 24:24 And right, like no harm, no foul kind of thing. 24:28 Or maybe a couple of wallets get locked up, 24:29 someone created a sidechain and it didn't work as intended. 24:34 It feels like for the most part, 24:35 the criticism comes down to what is this game theory thing, 24:39 right, the incentive structure. 24:42 And do the miners, in my mind, 24:47 the miners have a vested interest 24:48 in mining chains that are popular, right? 24:51 They want, if I've deployed all this capital, 24:55 if I've deployed all this capital. 24:57 If I've deployed all this capital, I'm investing not only my time, I'm buying a lot of times land 25:02 and buildings and all this. And for me to have an asset that isn't keeping up with the times is 25:10 a scary thing. I mean, we know how quickly things change. And so the idea that like, 25:16 take the whole NFT craze, you know, most part Bitcoin and Litecoin missed out on that 25:22 because these weren't capable at the time back in 2021. So the idea that someone could just create 25:31 Polygon or whatever, or Aave as a sidechain, and there's no, you know, there's no commitment to an 25:37 average Litecoin or even get involved with it at all. It just feels like that makes a lot of 25:42 sense because you've got an asset that's already available everywhere and no one has to go find it. 25:50 You know, we were just talking about Bell's coin. I'm like, where do you buy Bell's coin? 25:53 Like it's just not even available, right? There's just no exchanges with it. It's unproven as far 25:58 as software. And, you know, so I feel like that end of things makes a ton of sense, 26:03 giving it these capabilities. And so the question is, what's the potential scary part of it? 26:12 Because I do feel like if this thing were implemented, it's not like it's not going to be 26:16 put through its paces. You know, obviously you're going to need people to give the green light in 26:21 the Litecoin community, which is, I think it's a positive and a negative that we have. 26:27 You know, Charlie is kind of this green, he's got to give the green light for the most part 26:34 for something to happen. I don't think it's a definite, but I think it helps a lot. Right. 26:37 So if the community is like, hey, this is cool. We like it. And there's no red flags technically. 26:43 And he doesn't say, well, hey, I think this is a horrible idea. It's going to ruin minor 26:47 incentives or something. And I think he's trying to stay out of things as much as possible. 26:51 Then I think you could get this going. But yeah, people just need to reach that comfort level 26:58 because it's a fairly new idea to us, at least in Litecoin. And I know you're probably pretty 27:05 exhausted trying to explain this to a bunch of different people. I've explained it many times. 27:10 And I do think that... Are you getting frustrated with it? 27:14 Well, there's two ways of looking at it. One way is maybe I'm like a complete crank and I'm totally 27:21 wrong and I'm completely wasting my time here, which is, you know, that you could look at it 27:25 that way. I feel like that a lot sometimes. Not about Paul. Not about Paul. The other way you 27:33 could look at it is just like, for whatever reason, I have like the right weird combination 27:40 of like background or good luck or something. And so I'm just like way early on this somehow. 27:46 And so like, isn't that a blessing? The reason why I'm very, very, very confident that I'm on 27:56 the right track here is just because I know so much about all the other stuff that people are 28:01 working on in Bitcoin. I know so much about the Lightning Network. And just like, it's completely 28:07 terrible and a hopeless idea. It's hopeless in a very different way. But like, 28:16 I know a lot about many of the other altcoins that are in contention. And 28:22 this is a real problem that people have where a regular person will show up and they'll say, 28:29 how do I know which crypto to buy? You know what I mean? They'll say something like that. 28:33 Oh, yeah. And so, but with the sidechains, you have an answer to ask, right? You have 28:38 kind of an answer with the sidechain. You say, well, now it doesn't matter because 28:42 they're all the same. If you buy Bitcoin, you can just transform it into BitTron or whatever, 28:48 or BitMonero. Or if you buy Litecoin, you can transform it into Lite, LTC, Ethereum or something. 28:58 So, yeah, I just think where who's got something as good as that is still in Bitcoin. There's no, 29:03 there's now no plan to scale Bitcoin other than like extremely, I've seen this story many times 29:09 where, you know, people are not ready, ready to live to give up on Litecoin. They're dragged, 29:16 kicking and screaming, basically. But still, oh, my God, sorry. I knew I was going to do that. 29:21 I told him before we started, I'm going to screw up Lite, Lightning and Litecoin, which is a shame 29:25 because they're pretty different now. Lightning, people, it wasn't until the criticisms became 29:37 so clear and so simple and just like ordinals where it disturbed the fee environment. This 29:43 is just one, this Litecoin has like 10 things that will just kill it. But one is, oh, my God, 29:48 damn it, I did it again. This is because my brain's trying to load the next, you know, 29:54 the next sentences. Oh, my gosh. So when the fees, when, if you have a channel with someone 30:04 and you just disagree on what the fee is, first of all, the fee can get too high and it's 30:09 uncooperative close. But then if you just disagree on what the fee is, it's uncooperative close. 30:13 And this has basically caused the Lightning channel to fail. One person gets their funds 30:18 frozen for two weeks. The other person pays a huge fee, or maybe they both pay a huge fee, 30:22 depending on how you've configured it. So when ordinals phenomenon caused some fee spikes, 30:31 they just caused the Lightning network to just explode, which is already, this is, again, 30:35 I'm just talking like this is one reason out of 10. The big reason for me that the Lightning 30:40 network cannot work is that every single person who joins needs an L1. So it did not have that 30:47 property I mentioned before, where Roger Ver can move a ton of coins over and then 30:52 onboard people over there. Instead, everyone who joins the Lightning network, they must 30:59 themselves purchase L1 coins and then open the channel on L1. So it means you can never onboard 31:04 many people. The best you can do is help that everybody. Yeah. In a self-custodial manner. 31:08 Yeah. The other problem with Lightning, this is an almost bigger problem with, with Lightning 31:13 is that people have caused this dichotomy between custodial and non-custodial Lightning. 31:20 The custodial Lightning is not, does not actually use the Lightning network. Every single paper, 31:26 every single word in the Lightning network white paper is irrelevant to custodial Lightning. And 31:32 in fact, there's no Bitcoin there either. It's just like an app with a number in it. And then 31:38 maybe they'll give you your Bitcoin back in some other format. But so the fact that people are so 31:44 committed to this lie, this, this phrase of custodial Lightning, which is like a fraudulent 31:49 phrase that, that also shows you though, how bad it is, you know, when people start lying 31:55 to themselves, you know, that the ship is going to go down. Yeah. So let me ask you something, 31:59 Paul, maybe this is something that is that I talked to Grant about earlier and I heard 32:05 rumors about it being discussed, but the potential of creating Lightning on MWeb, 32:12 like on the Litecoin MWeb extension block. If I were you guys, I would avoid the Lightning 32:17 network. I think it is actually not additive. It has many things in Bitcoin have been changed 32:24 to help support Lightning. So this, we are talking about SegWit obviously, but also 32:30 Taproot is partly about the cooperative close being slightly smaller. So there's this weird 32:37 Taproot and other descriptor wallets. I think all this is actually, this is like, so you're, 32:44 we were talking about IT before and like deploying to production and things like that. 32:48 There's the, like the, the code rot or the software maintenance, or just the diffusion of focus 32:56 because of Lightning, I think is now going to be the, is the number one, most likely way that 33:02 Bitcoin will fail and be replaced by something else like, like Lightning, like fucking Litecoin. 33:07 God damn it. Well, you know, it's funny, the interesting part, like you just mentioned is like, 33:12 I think that there are developers, again, I'm not, I'm not a developer at all, but I have to imagine 33:19 there's people that like you, at some point you go, this just doesn't work. Like how many times 33:24 are we going to try this and fail and, and you're in this. The user experience is never going to be 33:29 there. Yeah. It's like, you can't, you can't have transactions fail. Like if you imagine you use 33:34 Visa and use, you know, MasterCard, but every one out of every hundred times you use MasterCard, 33:42 it just doesn't, it just doesn't work. It like fails and it's awkward and it's, you know, 33:47 it like fails and it's awkward and you have to, the, the waiter or waitress comes over and says, 33:54 should we run it again? And then you say, yes, no one will be the 0%. The regular public will 34:00 always use Visa in that case. The reliability has to be so high. The fees all have to be lower 34:06 for the payment rail. It's just, it's completely, it's never going to happen. 34:11 You know, rebalancing your Lightning channels, routing, all that stuff. It's, it's work and 34:15 technical stuff. And you've got to, you've got to apply these, these rules, these constraints 34:21 that your outbound peers or inbound peers impose on you. You know, it's to, to do it properly. 34:28 I think you need something like 2 million Satoshis, right. To run a proper Lightning node. 34:34 Plus someone working full time managing the thing, right. 34:37 Yeah. The liquidity management is what would be one of the 10 reasons. I actually, I'm not pulling 34:42 this 10 number out of nowhere. I did write a tweet at one point where I had listed a bunch. 34:46 We're not here to kill it. We've already killed it. 34:49 And I just think it's just, yeah, you have to be online to receive funds. You have to sign. So you 34:54 need your private key. You have to sign in order to receive funds where, so I would just not, 34:59 I wouldn't put Lightning on. 35:00 Let's not get too caught up on Lightning. 35:04 I do have a couple other questions because when we were going through definitions, 35:08 so what's the difference between a Drivechain and like, we have extension blocks, 35:13 Mimblewimble extension block on Litecoin. How are those similar? 35:17 They're very similar. 35:18 Well, how can Litecoiners take that and say, okay, I understand how MWeb works. 35:22 Are they basically the same concept because you're just- 35:26 They're very, very similar. The extension block was invented first by, I think, 35:31 Lau or maybe Adam Back in December, 2014, as a possible resolution to the block size war. 35:39 Adam Back said something like, 35:42 well, we can have, if some people want eight megabytes, some people want one megabyte. 35:47 This is how, what a genius Adam Back was before he let those other people 35:50 at Blockstream corrupt his mind, unfortunately, is my interpretation of kind of what happened. 35:55 He said, old users can just run the one megabyte software, new users can upgrade, 36:03 and they'll have one megabyte L1 plus there'll be eight megabyte second block. 36:09 And we'll just put the hash of that in the L1 block. 36:13 And then as long as the miners do that, then you can always go one way. 36:18 So you can move coins from L1 to L2, but you cannot move them back. 36:23 But Adam Back was just kind of saying, this was just a mailing list idea. 36:26 It wasn't like a giant paper or anything. 36:28 He was just like, well, that would kind of solve the problem, right? 36:34 Because then Roger Ver and the large blockers can just go over 36:40 to this extension block, live over there. 36:44 And then, so what Drivechain adds to that is you can go forwards and back, 36:54 but when you go back, you go back in a way that has filtered out. 37:00 Okay, let me try to explain this the right way. 37:02 Because with Drivechain, the priority is ignoring what is going on in the block. 37:07 So does that make any sense? 37:08 The priority is we want, because we want to maximize people's freedom 37:13 when they create these L2s. 37:16 So we want to say anyone could create a new L2 blockchain whenever they want. 37:20 We don't care. 37:22 We're not going to look at it. 37:24 So what Drivechain does is it says, instead of us being responsible 37:30 for knowing what's happening in there, 37:32 there's just this really slow three-month compression thing 37:37 that just compresses all of the activity into this one hash. 37:41 So I'm going to, I know that I'm not happy with how that sounded. 37:43 So I'm going to try one more time. 37:47 Everything related a little bit to MWeb, 37:49 because from my understanding, again, I'm a noob on a lot of this stuff. 37:54 But you know what David Burkett had said is there's, 37:57 what you're trying to do when that block comes back in, 37:59 because every two and a half minutes, there's a block that goes out. 38:02 There's a peg out block and a peg in block. 38:04 And that peg in block that comes back is just trying to summarize 38:08 what happened in the last two and a half minutes 38:11 and give a final state of the addresses that exist 38:17 in MWeb or that are coming out. 38:20 So it's just kind of to prove that what happened in MWeb actually happened 38:24 and that these are the new balances that are accurate. 38:31 Is that what you'd understand? 38:32 You're muted. 38:32 Yes. 38:34 No, I thought you were going to say a little bit more after that. 38:37 Well, the Drivechain, what you're trying to do is get that where, 38:43 when that info comes back from the Drivechain, 38:46 that it's accurate as to the state of what's gone on, 38:50 but it doesn't care how it happened. 38:52 It's just saying, yes, we have an accurate... 38:54 These things, yeah, the reason as to why you would think it's accurate is different. 39:02 So I got one thing that I have to throw in here, 39:04 which I think will maybe clarify it, 39:06 this is the so-called data availability problem that you may have heard of, 39:11 but it's very important to understand this 39:13 because it's actually at the heart of all many different matters, 39:16 including block size war and everything else. 39:19 So basically, when you run a full node... 39:24 So what is Satoshi's blockchain? 39:27 It is a set of blocks, it's a set of all this data, 39:31 and we have agreed to be responsible for it. 39:34 So this is what the block size war was about. 39:36 Because it was like, everything in the blockchain has to be served back. 39:44 Okay, I promise this is going to pay off, though. 39:46 I'm just trying to make it the best explanation possible. 39:48 Have you seen this? 39:49 Someone has a little sticker that was going around recently that said, 39:53 there is no cloud, it's just someone else's computer. 39:57 Yeah, vaguely, yeah. 39:59 Yeah. 39:59 So when people say something is on the blockchain, 40:04 they think like, oh, that means I'll always be able to download it. 40:07 But if you download it, then someone else has got to be uploading it, right? 40:13 No, absolutely. 40:14 This is making some sense, though. 40:16 You mean the miners are the ones doing the uploading? 40:18 No, that's not what I mean. 40:19 What I'm trying to say is, this is what the block size war was about, 40:24 which is, what is the size of our commitment to upload? 40:29 Because for everything that someone out there 40:32 is going to be able to download, someone else has to upload. 40:36 Okay, so running that note that there is an accurate representation 40:42 of where the blockchain is today, 40:45 somebody's got to be maintaining that in order for me to connect to them. 40:52 So I'm going to go over this a couple of times, 40:54 because this is really, really important. 40:55 And I think anyone who understands this will have a much better understanding of Bitcoin 40:59 than even most of the senior Bitcoin core developers 41:02 who have, I think, a very confused understanding of it. 41:05 Listen to that. 41:06 On the Litecoin Underground podcast, 41:08 you're going to be better than a Bitcoin developer. 41:11 Definitely the people who want ZK roll-ups and stuff, I think, don't understand this. 41:18 And maybe, hopefully, there will be maybe, dare I say, a homework problem. 41:22 Someone could take out a blank sheet of paper and try to figure out maybe why I would say that. 41:26 But I'm going to re-emphasize that what is the blockchain? 41:33 You know, it's a bunch of one megabyte blocks in the case of BTC until SegWit came out, 41:38 in which case they could be four megabytes. 41:42 But it's a bunch of one megabyte blocks. 41:44 Everyone must be able to download and verify the whole chain history, right? 41:50 So you can't validate what happened in block 403 unless you download it from somewhere. 41:57 And I promise this is going to get tied back to this whole extension block Drivechain. 42:00 I think if you understand this, it will make a lot of sense. 42:03 So this is what I call it. 42:05 You could call this data availability or you could call it data responsibility. 42:10 I'm thinking about maybe writing an article about this. 42:12 So get it here first or whatever. 42:14 But it's like we are responsible for the X much, X amount of data. 42:21 We, collectively, everyone who runs nodes. 42:24 Now, that means that you can always download this because someone is always uploading it. 42:30 This does create this exact tension that was the block size war. 42:33 You see where the tension comes from now. 42:35 Because if the blocks are larger, there's more uploading that everyone has to do. 42:40 The full nodes are more expensive. 42:43 But if the blocks are smaller, then it's a reverse. 42:47 The full nodes are easier to run. 42:48 The full nodes are easier to hide the physical location behind Tor. 42:53 The full nodes are cheaper. 42:54 The full nodes are easier. 42:55 Everyone's responsible for less uploading. 42:58 But we just have less block space to use. 43:00 So the network cannot process the same number of transactions. 43:03 So this is what the block size war is about. 43:05 And now here's the tie-in, which is Atomback's extension blocks were considered, 43:11 basically, a one-way mandatory object. 43:14 So the miners, they would be mandatory, a permanent upgrade. 43:21 But with Drivechain, they're supposed to be optional. 43:23 And so the miners, everyone can run, mine things, 43:27 deposit, withdraw, with letting the sidechain die out. 43:31 So you are not, with the Drivechain, the people who are on L1, 43:36 they are not responsible for the contents of the Drivechain. 43:40 But with the extension block, they are. 43:47 So that's the difference. 43:48 But it's a very small difference, to be honest with you. 43:49 I think it's not that big. 43:50 But you can see how the attack would be 43:53 that you just keep adding a million extension blocks. 43:55 And then it becomes like Bitcoin SV or something. 43:58 And then it's just like the idea of what a full Litecoin full node. 44:04 Because what BIP300 does, I don't know if this is going too far into the weeds. 44:10 But BIP300 says, we will not look at anything that happened inside the extension block. 44:16 The extension block is itself responsible 44:18 for creating this extremely small summary, like 40 bytes, 44:27 of what happened and inserting it in Coinbase transaction on L1. 44:32 So BIP300 is only looking at things that happen on L1 44:34 to do the deposits and withdrawals. 44:36 It does not look into that. 44:37 And that is why you can ignore what happens on L2. 44:42 And the reason why that is important 44:43 is because now anyone can do any L2 that they want. 44:46 Because you've safely walled it off. 44:48 Because you've built a wall between you and your neighbor 44:51 that's like 10,000 feet high. 44:53 And it's made out of 15 feet of concrete. 44:57 Now they can play. 44:58 Everyone can play their music. 45:00 Exactly. 45:01 Yeah. 45:01 I was wondering if you can apply this to an example, Paul. 45:05 Are you familiar with the Torrens title system? 45:08 Like a system used to, I guess, distribute titles as a database. 45:15 Say, for example, every country has this, right? 45:18 Say, for example, well, in the US you have a Drivechain 45:24 that just keeps track, keeps a record of the title 45:28 for everyone's property. 45:31 Let's use a smaller country. 45:33 I don't want to get political or whatever. 45:35 But just like an Eastern European country that might be invaded, right? 45:42 And they have their own Torrens title system. 45:44 Everyone's got their property listed up there. 45:46 And it's being managed by a Drivechain inside this country. 45:50 And this country becomes invaded. 45:52 And suddenly the invaders shut down the miners that are in that country. 45:57 Or they take them over and shut down the nodes 45:58 that are running those Drivechains. 46:02 I guess one thing that sets Drivechains apart 46:04 is that anyone could run a node. 46:06 So a Canadian miner can run a Drivechain node 46:10 for the American title system, right? 46:13 So you can keep it decentralized in that sense. 46:18 But yeah, I wonder if you could speak to some of the strengths 46:20 in that scenario. 46:21 Because I think that's kind of one of the things 46:25 that sets it apart, right? 46:26 Is being able to run nodes for Drivechains 46:31 that really you don't have a real stake in yourself. 46:37 Say you could do it from an altruistic perspective, 46:39 keeping the Drivechains for each title system 46:43 for every country, right? 46:44 Just to keep a record. 46:45 I have mentioned that in the context of scaling, 46:49 it is not actually that hard. 46:52 I have this post where I split the world into 13 or 14 regions. 46:56 And they each have their own large block sidechain 46:59 that deletes history that's older than six months. 47:01 That's it. 47:05 Or like MWeb. 47:06 It's $2,000 a year. 47:09 Anyone? 47:10 You cut out for a second there. 47:12 You cut out for a second there, Paul. 47:14 You said it basically prunes as much data 47:18 past six months or something. 47:20 Yeah, and go on. 47:21 Yes. 47:23 And so basically what I mentioned in that post 47:29 is that if someone wants to shut down, 47:34 let's say, for example, the Russian government 47:38 wants to shut down Ukrainian transaction processing. 47:42 Anyone who's running the Ukraine full node, 47:44 they don't have to be in Ukraine. 47:45 They could be in the United States 47:47 or they could be working at the Pentagon 47:49 or they could just be in Hong Kong 47:51 or they could be in Japan. 47:52 So the people running the full node 47:55 don't necessarily need to be the same people 47:57 who are using the service. 47:59 And these people don't necessarily 48:00 need to be miners or whatever. 48:01 You can just program the computer to divide the labor. 48:05 And there's really no possibility 48:10 of people defrauding each other, 48:11 although there's a slight. 48:12 But it's very, very, it's so small 48:15 that it has to be negligible. 48:18 And so that is something that I have written about. 48:22 I don't know if that's what you're referring to specifically. 48:25 I think that would also be true of the extension block thing. 48:31 I do want to mention that in my opinion, 48:36 which may be wrong or whatever, 48:38 but when I zoom out, I think that actually Atomback 48:41 and I think it was, I don't remember who it was, 48:46 someone else right before him had proposed it, 48:49 this extension block idea in December, 2014. 48:52 I think really they were just small blockers 48:58 who didn't want to lose. 48:59 They knew that if I had this technique, 49:01 you could continue to expand what data 49:04 Bitcoiners were responsible for knowing forever. 49:08 And they knew that this was this data responsibility thing. 49:11 They didn't want to be responsible for the data. 49:13 They knew that the extension blocks, 49:15 it kind of chopped it into pieces. 49:17 But in practice, the other pieces were really mandatory, 49:23 whereas with Drivechain, they are not. 49:25 But in my view, that doesn't really make much of a difference 49:27 because you can, so I think that the, 49:31 I'm not sure if this is making any sense 49:33 or clarifying anything for anyone, 49:34 but I do think that that was like most of the idea there, 49:39 which is that we should just chop the data 49:42 into different bins. 49:43 Nonetheless, the Drivechain is an improvement over, 49:48 on this, on the one key issue that is really, 49:53 this is the issue. 49:57 Storing the information. 49:58 Drivechain, yeah, and you want it to be able to die off if it, if the chain becomes too heavy and it is not popular with users. 50:05 So there's no, people aren't paying transaction fees. 50:08 You want it to just like die off. 50:10 Let me ask about that. Let me ask about the death of the sidechain. 50:12 Cause like that to me is probably like, everybody is excited if they get to move their money and go get all these new capabilities. 50:19 But the real question is, how do I get it back? 50:22 It doesn't work out. 50:24 So what is the mechanism? 50:27 And this is one of the, one of the things I know I want you to take slowly and speak in simple terms because I know there's big numbers and long timeframes, but I'm on the Zcash Litecoin sidechain. 50:42 I'm wanting to move my coins back. 50:45 What's the mechanism? 50:46 I just, I just basically in my wallet, I just make a request and then there's a timeframe and a lockup. 50:54 How does that, how does that work? 50:58 There are two tracks and my opinion is that most regular, almost all regular people will use a different track basically, which is like the fast track, fast and slow. 51:11 So, however, this fast track only works if there is a slow track. 51:15 So it kind of works like this. 51:16 The fast track is trading, right? 51:20 Yeah. 51:20 The fast track is just, you find someone who has L1 coins, you do the swap and you immediately get out, but you have to pay a fee. 51:26 Yeah. 51:27 Cause how's the, cause it passes the buck to like, how's that person getting them out? 51:31 Yeah. 51:31 Yep. 51:31 Yeah. 51:32 I understand. 51:32 You know, right. 51:33 Exactly. 51:33 It's like the lightning, you're sacrificing some of your ideals for speed, right? 51:41 That's what you do with lightning. 51:42 Um, it's a trade off. 51:44 I don't want to get back into lightning. 51:45 So this is a specialization thing? 51:48 Yeah. 51:48 So this is like the most, someone will be a specialist in, it's like you have two towns and, uh, they're connected by like a long three month tunnel or something. 51:59 And you don't have, only one person actually has to go through the tunnel every three months. 52:04 So they, they, they're like the scapegoat, the biblical scapegoat. 52:07 They can be like going through the tunnel on behalf of everyone. 52:11 They take everyone's coins through. 52:13 Uh, so they swap the coin. 52:15 Everyone can swap the coins instantly. 52:18 The only question is how's that person getting out? 52:19 So then how that person gets out is, uh, they, yeah, the, they, are you on the L2? 52:25 You say, I want to withdraw these coins. 52:28 Um, in, in this, in the realistic example, uh, you can imagine as if there's a train leaving L2 and going to L1, you know, that it takes three months, the voyage. 52:40 And, and only one train can move forward at a time. 52:43 So in this context, probably your coins are waiting at the train station because a train is already on route. 52:50 So you have to wait for the next one to get on. 52:54 And they only, so the train only leaves every three months. 52:57 Right. 52:58 Oh, it tends to be longer. 53:00 Yeah. 53:01 That's, that's if all the miners are in consensus, right? 53:05 Yeah. 53:06 If they all agree, if they're all going as fast as possible, it's three months. 53:10 If you only have 51%, then it would take about six months. 53:14 And if you just miss that train, then you will, uh, you will have to wait six months for the next train to appear at the platform. 53:23 And then you have to ride it six months to the destination. 53:26 But here's why that doesn't matter because you can swap with people on L1. 53:31 So it's not going to, it's just going to be time value of money that the reason why it's so slow is because this enhances the security. 53:37 As I was saying before, we ignore what's going on in the L2, but we can't ignore completely because then the funds will not be secure. 53:47 So by having this really low frequency, it's basically this hash. 53:52 And if the hashes doesn't match, then the withdrawal should fail. 53:56 But if it does match, then that means absolutely 100% of everything being done on the sidechain was done perfectly. 54:02 So it's like a very, very sensitive trigger. 54:06 It says either everything was done perfectly or somewhere, someone did something wrong and we should just not allow the train. 54:12 How are the miners, what's the process they go through to validate the accuracy? 54:18 It's very easy if they wish this, um, okay, well, it's kind of interesting because I'd like to explain all the little different nuances of it. 54:27 But basically what can happen is the best way for them to do it is to sync a full node themselves. 54:35 But again, keep in mind, they only have to actually do this like once every six months and they can delete it if they want. 54:44 So, but there's many layers to this cake here. 54:47 This is like a, this is like an interesting little thing because in reality, it's going to be so difficult to lie since anyone who syncs the full node will get the right answer. 54:56 And there's only one right answer. 54:57 And the answer is only 32 bytes long, 64 characters. 55:01 It's just very, very difficult to actually pull off the lie. 55:05 So no, none of this is, will ever be necessary in practice, but another thing is intended that worse. 55:12 It's kind of like when you're, you go to Coinbase and they want six confirmations. 55:16 This is asking for so many confirmations that are extremely immutable. 55:20 That's exactly right. 55:21 And in fact, the more, the more difficult it is to get, it's kind of like if you, a prisoner is leaving a prison and they have to buzz you through all these different gates, you know, it's intentionally to slow it down. 55:32 So they buzzed you through, you know what I mean? 55:34 Like in law and order or whatever, and like go through, they got to shut the other door and then they knock on the window and then buzz next gate. 55:40 This is like, like six months worth of gates. 55:44 Now you see it's a deterrent. 55:46 The more difficult it is to attack the system, the more likely it is that no one even tries in the first place. 55:54 So the idea is just overwhelming force on this. 55:57 This is the, you try to run a scam and wait a year to find out it didn't exactly. 56:01 Yeah. 56:01 Or you try to like, you grab, you go to the Apple store and you grab like a, an iPad off the shelf, but then you turn to run away and you immediately get slowed down. 56:09 Like mine is a hundred. 56:10 You're like very slow. 56:13 And now they have plenty of time to call the police. 56:14 The police can come like two weeks from now and arrest you. 56:17 You know, you've only made it to like halfway halfway through the door. 56:20 So the idea is this part will be so reliable that actually will always work. 56:28 And since this part will always work, there will always be people willing to swap the coins instantly. 56:33 And so then they'll charge, well, they'll charge half a percent or whatever it is, you know, whatever the market bearing percent is. 56:39 The idea is it will just be anyone because about something like 20 or 30,000 people can fit on the train. 56:47 So it, it, it passively aggregates. 56:50 I'm not sure if this part will make sense. 56:52 Like I can say, I'm going to, I'm getting on the train and I'm taking my 14 coins and then you can say, oh, I've got three coins on, on the L2. 57:02 And I say, okay, you know what, listen, I have, I've got 2.9. 57:07 I'll take those three coins off your hands and I'll put them in my, on my train, you know, in my, in my luggage. 57:13 Yeah. 57:13 Reducing the amount that you have to write to the L1, right? 57:16 Exactly. 57:17 The transaction space. 57:18 Yeah. 57:18 So on L2, a lot could be happening. 57:20 Like he can be swapping to me, but all I'm doing is I'm, I'm incrementing my one little number from 14 to 17 to 21. 57:27 I'm giving you L1 coin. 57:29 You get the L1, my L1 coins in my completely different wallet today, but you pay a fee. 57:35 And now I'm just, I'm just still only taking up one seat on the train, but the number is going up. 57:41 It's going up 14, 21, 32, a hundred, whatever. 57:44 So I can be one guy, just like one Roger Ver could seed the sidechain. 57:50 One single guy can do all the withdrawals with one of the 20,000 seats. 57:54 So the 20,000 seats is also like total overkill because you, uh, those seats are, by the way, allocated by the L1 fee they pay. 58:04 So there's no possibility of someone taking up the all 21, all 20,000 seats. 58:10 He just pays a slightly higher L1 fee and then they're, they get bumped and everyone else gets kicked off the train. 58:15 So, so let's say a, a chain becomes, you know, it, it doesn't work well. 58:21 It's whatever reason the software wasn't written properly. 58:24 I've got my coins there and the train stations closing in a way, there's just not a lot of people who are even running the nodes to bother. 58:34 Um, does the, do the miners have any obligation to wait until that is emptied? 58:40 Can they do like a final closure and just say, yeah, we're gonna shut it down. 58:45 Everyone's coins will be returned to their proper owner. 58:48 In practice, I would, in practice, I would hope that they would do something like that. 58:53 Of course, there's no guarantee. 58:53 Oops. 58:54 Sorry. 58:54 I'm trying to make myself a little lunch here. 58:56 I dropped something. 58:56 Okay. 58:57 Um, the, uh, what I would hope they would do would be something like. 59:02 Uh, we're not collecting any fees from this chain. 59:04 No one cares about this chain. 59:05 So, so withdraw them because the next train is going to be the last train or maybe not, but we don't care. 59:14 Like there's a certain point where you just say, I declare that I'm not going to care about this anymore. 59:19 And now if people don't care, then no one knows if the withdrawal is being processed the right way or the wrong way. 59:25 They're just now the miners can just loot the sidechain, take all the coins. 59:28 It would be the fear. 59:30 Well, the miners, like there would be a danger though. 59:33 If, if, uh, someone who created this sidechain, um, made an error either, uh, 59:39 intentionally unintentionally to lock some coins up in an address that they don't have access to. 59:46 Like there's a possibility to, for people to lose funds in a improperly managed sidechain is what I'm saying. 59:51 Uh, they would deposit the funds on L one to a BIP300 scripts. 59:55 So that'd be my fault if it didn't work. 59:57 But the, for all the sidechains, no matter how badly, but the sidechain could be very badly programmed in that. 1:00:03 Um, no one knows like over there, it's very hard to tell. 1:00:08 Like maybe there's an inflation bug on the sidechain and now there's like a trillion coins over there. 1:00:13 And now over there, someone does a bunch of withdrawal. 1:00:17 Like there's only only 7,000 coins on L one have been deposited to the sidechain. 1:00:23 But however, over there, there's now like 50,000 coins. 1:00:26 Someone's going to, whoever tries to withdraw 7,000 coins first is going to trigger the train to leave. 1:00:32 And now like, now there's chaos over there. 1:00:37 Yeah. 1:00:38 But you see, this doesn't really affect L one and L one will eventually just pay out the 7,000 coins. 1:00:44 And then everyone will just say, well, that was an experiment that didn't work. 1:00:47 And this is, this is a good, this is a very good thing because just like, you know, when you go out and you go out to a 1:00:55 restaurant, why is the food, why is the food good? 1:00:59 And why is the food cheap? 1:01:02 Because the restaurant knows that if they don't, if they aren't competitive, they will go out of business. 1:01:07 And so actually the threat of collapse is partly what keeps people in line. 1:01:12 This is a very different paradigm. 1:01:14 There's no vested interest by anybody creating these sidechains. 1:01:17 Is there like, I don't make any money by building a great sidechain. 1:01:22 Yes, this is, I think this is another area where it's either genius or crank, but I think most people, so like Mark 1:01:31 Andreessen from A16Z, he has this motto about monopolies. 1:01:35 This is monopolies. 1:01:35 The motto of every monopoly is we don't care because we don't have to. 1:01:41 And I think this is the real thing about innovation is people actually desire it for its own sake. 1:01:47 And many of the great projects is trying to be on Bitcoin first. 1:01:51 And I have made a slight list of this. 1:01:52 If you saw the, I don't know if you saw the misinformation page on drivechain.info, but I have one of the questions. 1:01:59 I have a long list with citations of like Vitalik trying to create Ethereum on Bitcoin for many months, but being unable to. 1:02:09 Roger Ver, obviously trying to get large blocks on Bitcoin, only creating Bitcoin cash as like a kind of like multi-year last resort. 1:02:17 People from Namecoin, SIA, they wanted to do a Bitcoin project, but they could not. 1:02:26 So my point of view is actually that the true innovation is more likely to be of this kind where people want to do it. 1:02:34 They don't care about actually remuneration, they don't care about money, making money from the idea. 1:02:40 They just want the idea to be an improvement. 1:02:42 And actually, a lot of the other innovation is lower on the sort of food chain and it is not, it is like of an unsavory kind where it's just like pumping and dumping meme coins. 1:02:59 So my view is that these chains that will be created will be ones where people actually want to solve a problem for the end user. 1:03:07 And the miners will only activate or care about these merge mining these chains if they think it will increase their transaction fees or the exchange rate of the coin. 1:03:17 So that's my thought on this. 1:03:20 I think it's very, very difficult to, it's very difficult to like have a, what can we call it, like it's very difficult to have a situation where someone is paid to innovate. 1:03:36 I don't think it works that way. 1:03:37 I think the reverse is the case with like Bitcoin Core has this monopoly and now monopoly, the monopolies just don't care. 1:03:43 Bitcoin Core doesn't actually care about doing real innovation. 1:03:47 They don't, they just want to like maintain. 1:03:49 I got a couple of questions actually, you know, beforehand, well, it's kind of sprung to me recently. 1:03:55 So in your previous, when you were saying that it takes so long, people will just use, will just swap coins instead of bothering to off board and wait the year, you then become pretty reliant on exchanges, like you're, not that we're not today, but like your hope is that there would be some kind of marketplace that we could swap these things fairly easily. 1:04:22 Do you kind of envision they would become just like any other asset is today and they would appear on your Coinbases or maybe even, would there be a sidechain that becomes a DeFi sidechain that basically allows these to work? 1:04:38 Yes, that's exactly what I think. 1:04:40 That's exactly what I think. 1:04:42 So I think Coinbase, et cetera, would list them. 1:04:47 But I also think it's very easy to program the site because every sidechain in the Drivechain world, every L2 is fully aware of what happens on L1. 1:04:57 So every L2 knows exactly which transactions have happened on L1. 1:05:02 So you can make an L2 where the L2 transaction only triggers if an L1 transaction is triggered. 1:05:09 That's already possible with these HTLCs, but you can streamline it even more. 1:05:15 You can streamline it even more with a Drivechain that does this. 1:05:20 But even if you couldn't do that, you could just do the HTLCs. 1:05:23 You do a hash time lock contract and you have two people with the same hash. 1:05:26 So A pays B, the L2 coin, if only the hash is revealed, and B pays A, the L1 coin, if only the hash is revealed, it's the same hash. 1:05:39 Either it's revealed or it's not. 1:05:41 If it's not revealed, the thing is canceled after a certain time. 1:05:45 If it is revealed, then both transactions go through. 1:05:48 So I think that we would not be reliant on exchanges, but I do think that many people would use exchanges nonetheless. 1:05:55 And the market price, it would not be like going all over the place. 1:05:58 The market price would be going between like $0.99 to like $0.998 or $0.997 or something. 1:06:06 You know, it would just be basically. 1:06:08 And in particular, as the train approaches, as it leaves L2 and approaches L1, the fee, the implicit fee, should start to decrease because everyone will think, oh, no, the new train is going to be here soon. 1:06:23 So I'm. 1:06:24 And then once that train leaves the station, it should just skyrocket back up to a higher fee, because now it's like, oh, I got to wait a year instead of. 1:06:31 I really want to. 1:06:33 Yeah, because I'm kind of because one of the things I think is a fair critique of yours of lightning is that it it ultimately it takes those fees away from miners completely, where this this also would do a lot to reduce pressure on the blockchain. 1:06:50 And it would keep fees on the main chain very, very low. 1:06:54 And also the point that maybe people wouldn't even really use the main chain at all. 1:06:59 And the vast majority of transactions are going to happen on, like, let's say there's a BCH sidechains, 32 megabyte blocks, and they're all doing every transaction for a tenth of a penny. 1:07:12 Even all those transactions wouldn't really accumulate to be even worth a hand, you know, where Bitcoin is today, right? 1:07:20 If the main chain's down to one set per V byte, that depresses everything dramatically. 1:07:28 Do you feel like that even though some of the fees are coming back, it still reduces that overall fee income because it basically takes all that pressure off the main chain? 1:07:42 No, I do not. 1:07:43 I think people often confuse the fee rate and the total fee revenue. 1:07:48 So like the fee rate would be like, if you're selling watermelons or something, you sell one watermelon for 10 cents. 1:07:55 But you sell 40 million watermelons. 1:07:58 So now that's $4 million in sales versus when you say, okay, we're only going to sell 25 watermelons today, but we're going to sell them for $100 each. 1:08:08 Now that's a lot less than $4 million in revenue. 1:08:10 So one is the height of the rectangle and the other is the area of the rectangle. 1:08:15 And so I agree that if this idea is successful, since there's unlimited L2 block space, all of the fee rates will be low. 1:08:26 Although L1 would probably still be much higher than L2, but it won't be that much. 1:08:31 You know, the L1 would maybe be $5 for a transaction and the L2s would be like 10 cents a transaction or something like that on average, maybe some less, some more. 1:08:40 So that's the future that I envision is like the L2s have like 10 cents ish per transaction and the L1s have like, like three, four or five dollars per transaction. 1:08:52 And in my view, this maximizes the fee revenue given to the miners. 1:08:56 So the miners, they, because the L2, you can just look at the quantity. 1:09:05 There are many, many, like the total number of transactions on earth is an enormous number, which is about 8 billion people making multiple transactions a day, 365 days a year. 1:09:17 So it's like on the order of, you know, 6, 10 trillion transactions per year. 1:09:23 I'm not saying we'll get all those immediately, but I, what I am saying is you take 10 cents of that. 1:09:27 That is hundreds of billions of dollars per year. 1:09:30 It's like $700 billion per year. 1:09:34 And that grows the number of transactions that people have been doing has been growing over time. 1:09:41 Now, again, I'm not saying we immediately get 100% penetration into that. 1:09:44 But what I am saying is if anything works at all, it will depress the L1 fee rate. 1:09:51 So let's just say you have Bitcoin Core, the fees go up because of ordinals. 1:09:57 Everyone switches to custodial lightning. 1:09:59 The fees go back down. 1:10:02 Yeah, the L1 fees. 1:10:03 So you see, this is what you see time and time again with Bitcoin Core, which is the fees go up in these little episodic bursts, they go up in these big run ups, you know, but then they always go back down. 1:10:15 You can always find a period of time, like whenever the fees are high, it's always temporary. 1:10:22 And then it just goes back to being 10 cents or whatever a transaction. 1:10:26 So my view is that this is a long run, the so-called long run price elasticity of demand. 1:10:32 This is the term in economics for like, you know, my view is that in the long run, this is just going to be low no matter what, because there will always be some substitute. 1:10:41 You can always either defect out to custodial or you can just say, I'm not using Bitcoin anymore because the fees are too high. 1:10:47 I'm just going to go back to Visa or whatever. 1:10:49 So there was a thread recently. 1:10:51 I don't know if you were a part of it or this guy, you know, this fantasy where they're just like, well, in the future, when Bitcoin fees are $1,000 and I'm like, where, who the fuck is going to pay $1,000 of their money, 24 hours a day, 5,000 transactions every 10 minutes are going to pay $1,000. 1:11:07 Like, are you out of your mind? 1:11:08 Like, that just isn't, there's no fee. 1:11:10 There's no world where that even comes close to that. 1:11:13 You know? 1:11:14 Yeah, I agree. 1:11:15 I've tried to imagine it. 1:11:16 I have like a funny little story in my head. 1:11:18 Like, it's like when you throw the quinceanera for your child or you buy them their first car, you know, it's like we've saved up. 1:11:26 We've saved up. 1:11:27 Now it's time for you to have your first lightning channel, you know, and it's like buying a child and every 16, like every time the L1 blockchain is used around the world, that's like everyone turning 15 or 16 years old and their parents pay the $1,000 fee and they open. 1:11:44 That's the world that you have to live in. 1:11:45 You can see how that world is going to get crushed by a world where you just have Litecoin down the street has, you know, $5 L1 fees and 10 cent unlimited L2 transaction processing, right? 1:11:56 Yeah, but it's a shit coin. 1:11:57 You wouldn't pay. 1:11:59 Why would you? 1:12:00 Why would you save yourself $999.99 to use this shit? 1:12:04 See, but now you see the opportunity because you see how irrational BTC has become and that's the opening. 1:12:10 You know, that's the opening for Litecoin. 1:12:12 So who would have thought that would be, I would never have thought that it would become so irrational, but it really has. 1:12:16 So, so you see, this is the, the, the scenario I lay out is like $5 ish L1 fees. 1:12:25 This is the equilibrium long run and then unlimited like L2, which is like probably be like 10 cents ish or whatever. 1:12:32 And if you do that, the miners, the amount of fees collected by miners skyrocket enormously. 1:12:37 I mean, enormously from what it will make it up on volume. 1:12:42 You're enabling so many new capabilities. 1:12:46 I think that's, that's the, at the end of it all, that's the name of the game, right? 1:12:50 Is to bring this idea of this distributed ledger final settlement and expanding it to not just monetary transactions to whatever, whatever imagination people can come up with, whatever developers come up with. 1:13:05 And I actually think this works alongside altcoins. 1:13:09 I do think altcoins are just going to exist. 1:13:12 There's too much incentive for people to try new things and, and if you want to call it pump and dumps and token and shit tokens. 1:13:21 But there's actually a lot of good chains that have functions that you go, you know what? 1:13:25 That would be really useful if it were widely available to everybody. 1:13:30 So I think that that's, that's the tough part is getting the incentive for developers to create these things and to bring users over without the speculative thing, right? 1:13:44 That there's, they're going to build actual utility that people want to use and they want to remove the token. 1:13:53 Like removing the token is a benefit. 1:14:00 Hey, this is grant. 1:14:01 Just following up on the end of this episode. 1:14:04 I had to end up splitting these into a couple different episodes because of YouTube. 1:14:09 It will not allow me to upload anything over two hours and have it be an audio podcast on YouTube. 1:14:16 So it probably makes more sense and it's going to be more digestible for everyone just to get this over the course of two segments. 1:14:24 And actually there's a third one I'm adding. 1:14:26 You'll see up there as well. 1:14:28 That's kind of a follow-up conversation we had with Paul on Twitter spaces. 1:14:33 So yeah, anyway, I hope you enjoy it. 1:14:36 Oh, and I forgot to mention. 1:14:38 How could I forget? 1:14:39 Cake Wallet, the sponsor of our show, the greatest mobile wallet you can have. 1:14:45 You can buy, sell and trade Litecoin, Bitcoin, Monero, Ethereum, Bcash, Nano, Polygon. 1:14:52 All the assets that are listed in those protocols as well. 1:14:57 You can hold them as a custodial, your self-custody wallet. 1:15:01 You can trade in between them. 1:15:03 You can buy gift cards. 1:15:05 They're going to be adding privacy, special, I'm sorry, private payments. 1:15:12 What are they called? 1:15:13 Silent payments on Bitcoin is coming soon. 1:15:16 Mimblewimble is coming soon to Litecoin as well. 1:15:19 So they're always on the cutting edge. 1:15:20 And as I always say, man, the user interface, user experience is always top notch. 1:15:25 They're great customer service if you ever have an issue or a question. 1:15:29 So go check them out. 1:15:30 And yeah, keep stacking and have a good week. 1:15:35 Bye.