0:00 Richard actually has me doing two things, so I got a cool presentation on my prediction 0:19 markets work and my goals for that, but then he wanted me to do a Drivechain Q&A or sidechains 0:28 Q&A, and so that's kind of what, this is one, right, it's the earlier one, so I hope there 0:34 are some good questions, but otherwise I can kind of just give the same talk that I gave 0:39 at Breaking on Bitcoin yesterday. 0:41 What would you prefer, because I can just kick off with a couple of questions, so let's just start. 0:54 How many here know about what sidechains are and how to change them? 0:58 So it might be nice just to start with a brief introduction on what they are, and then anyone who 1:04 else has questions can jump in. 1:07 Yeah, that's good, that was a great first question. 1:11 So the sidechains are very similar to altcoins, where you use a completely different piece of independent 1:18 software, although the trick is that sometimes you would not want it to be totally independent, but the 1:23 point is you have the freedom to make something that's completely different and make all of the 1:27 mistakes that you want and wreck everything, or come up with something really cool. 1:33 So it's a kind of freedom, that's the shtick for it, that it's like permissionless innovation, and if you 1:40 want larger blocks, or you want these weird, terry-complete smart contracts or something, or any other 1:44 crazy idea that you have, you can do that, but these, unlike altcoins, they respect the 21 million coin 1:52 limit in Bitcoin, so they all share the same 21 million coins, the coins are mined on Bitcoin, 1:59 whatever the mainchain is, but in this case, in this framework, it would be Bitcoin Core, 2:04 and the coins are mined there, and then you send them over to this new piece of software that receives them, 2:12 and then over there you can play around with them and give them to new owners, spend them on weird 2:17 transactions, do crazy stuff, prediction market stuff, or rent hard drive space, or something like that, 2:25 and then the new owners can, whenever they want, they can send them back, and there's a lot of details 2:31 on making that work without it being too insecure, or without the whole thing immediately regressing 2:37 to just being a giant hard fork of Bitcoin or these other things, there's a lot of nuances to that, 2:43 but basically it's altcoins that don't have an independent coin, they just have the same 21 million 2:51 coins, and so they're a kind of response to interest in altcoins, they have a long history, 2:57 first of all, which is kind of interesting, so maybe we'll talk about it if people are interested, 3:03 but the idea of the sidechain is really a response to the idea of the altcoin, and just say, 3:09 well, we can do exactly what that thing does, but just on Bitcoin, and then you can go off, 3:14 people have disagreements over what to do, they can have their own piece of software, 3:18 so that's kind of the very short version, and a clever thing you can do is have the sidechains 3:24 be merge-mined the way Namecoin was, so that even though there's no coins being minted over there, 3:30 they still get all of the hash rate of Bitcoin, so the goal is to have it be something 3:37 that just completely replaces altcoins, kind of, although I'm not sure, they wouldn't replace 3:43 like a community, or different set of owners, or things like that, but it's a kind of, 3:52 it tries to do a lot of things at once, so it tries to do permissionless innovation, 3:55 but it also tries to protect the integrity of Bitcoin by not making it too vulnerable 4:01 to these kind of, to caring about what other people think it should be, because they just say, 4:06 well, right now, if you want to change Bitcoin, you have to change it for everyone, 4:10 it's this consensus system, everyone needs consensus down to the last byte, 4:13 but with this, you could just say, well, if you want to do something different, 4:17 you just do it on your own sidechain, and it's no different from installing apps on your phone, 4:22 and the apps almost never affect each other, and so that is the goal for sidechains as well, 4:29 that you would not have any weird sidechains that broke the sidechain system, 4:34 but that you would have this ecosystem of sort of a freedom, basically, 4:39 where anyone could create a piece of software, or use a piece of software, 4:42 so it's pretty important, it adds a kind of universality to Bitcoin, which is pretty ideal, 4:49 also, yes, oh yeah, do you have a question, real question, let's do it. 4:53 I wonder, is Drivechain fundamentally different from sidechain, or is it your implementation of sidechain? 5:02 Yeah, I usually explain it as being my implementation of sidechains, 5:05 but I suppose there are, for a long time, Blockstream wrote a paper in 2014, 5:12 and then they did some work on sidechains, but then they kind of really stopped working on them for a while, 5:18 and then I published the design for Drivechain in 2015, and then in late 2015, like November, 5:25 and then in 2016, I kind of worked on it to make it real, 5:30 and so then, for a long time, I was introducing it as the implementation of sidechains, 5:35 but now Blockstream has sort of caught up a little bit, 5:39 and they kind of have done a little bit more on making their original thing real, 5:43 and their thing is, their design is a little different, 5:48 but I think they're very similar, actually, but I think mine is actually a lot better, 5:54 and for a couple of reasons that I could go through, but they're a little dry, 5:59 but one thing about theirs is that it's a relatively simple point, 6:04 and it's that it only works for sidechains that have very similar block format, 6:11 transaction format, and hashing functions, whereas mine just works for anything. 6:17 In fact, I think it would be totally impossible to get theirs to work for something like MimbleWimble, 6:25 but I'm not sure about that. 6:26 It might be possible, but with mine, it wouldn't be possible. 6:30 More questions? 6:31 Anyone? 6:32 Yeah? 6:33 It's a sidechain, more like a sandbox, where you make use of the link of blockchain, 6:41 but you can still experiment with it like a sandbox. 6:45 Yes, so yeah, the question is like, is it sort of like a sandbox? 6:49 Yeah, I think the answer is yes. 6:51 I mean, someone might ask, like, why don't we already have a sandbox, 6:57 which is just make your own altcoin or something, 6:59 but the people who use that argument, I think that there's something that's wrong about that 7:05 that's very difficult to articulate, but I think I have a decent way, 7:08 which is that it's kind of as if you were going out to dinner with a bunch of friends, 7:13 and then you would say, even though there's nothing, 7:16 like no one's holding a gun to your head and forcing you to go to anywhere, 7:20 you don't want to go, one person, one friend can't like unilaterally defect 7:25 and just say, well, I want to try going to this place, 7:28 because the important thing is that you get to the same restaurant as everyone else. 7:31 That's like a key second. 7:32 You want to go to a good restaurant that you like, 7:35 but you really want to go to the same restaurant that everyone else is going to. 7:39 And in that sense, the altcoins are, you know, they're a non-starter. 7:43 They're totally useless. 7:44 You're starting this thing up completely alone, 7:46 and then you're going to get a lot of people who are not in it for the long haul. 7:50 You get the wrong type of early adopter in many cases. 7:54 And so the altcoins are really not a true sandbox, 7:58 but this would be, because this would be real Bitcoin on the line, 8:01 and if anyone steals them, or if something is wrong with your node, 8:04 or something happens, you know, they would then be, 8:08 you'd be able to exchange them for actual real Bitcoin. 8:11 So you would inherit, it's kind of more like going to like a food court 8:15 or something where everyone can go to their own place, 8:17 but you're still all in the same, 8:19 you can still sit at the same table or something like that. 8:21 So yeah, that, it adds a sandbox dimension that is not, 8:25 is really not there right now. 8:28 Yes. 8:29 Just a quick follow-on on that. 8:31 If you're not a Bitcoin maximalist and you just really like altcoins, 8:35 what would be the advantage for you to actually do right in this? 8:39 Yeah. 8:40 Is it, just a side question on that, 8:42 is it, since you're an economist, 8:45 is it that Bitcoin could provide certain security 8:51 and be a reserve? 8:54 Is there a real advantage to that? 8:56 Well, people use the word security in many, many different ways. 8:59 Sometimes we talk about hash rates, 9:00 sometimes we talk about whatever, 9:02 not getting your funds stolen, or something like that. 9:05 But I think one reason is actually, 9:08 it's kind of a strange, 9:10 it's horrible to forecast the death of the altcoins, 9:13 because you're just wrong every year, 9:15 and every year you just look crazier and crazier. 9:18 But I think that one reason would really just be self-defense, 9:21 because if some blockchain makes the jump to universality first, 9:27 you would think, why wouldn't it instantly replace 9:31 all of the other blockchains? 9:33 Now you can imagine a couple of reasons why 9:35 it wouldn't happen very quickly, 9:37 and that it may not happen at all, 9:39 and there may still be a place 9:40 for lots of different competing projects. 9:42 But on the other hand, 9:43 there are strong network effects when you use money, 9:46 and there are these people, 9:48 it's a little easier for me, 9:50 because I grew up learning English, 9:52 and even though I travel all around the world, 9:54 a lot of people speak English, 9:55 just because it's just so convenient to have, 9:58 having one common language is just so helpful. 10:02 In fact, I saw on this trip that I was in, 10:07 there was someone who was clearly German, 10:10 and someone who was clearly Portuguese, 10:12 and they were having a business meeting, 10:14 and they were speaking English, of course. 10:16 Everyone uses basically the same QWERTY keyboard, 10:19 even if they use Dvorak or something 10:22 to change the key layout, 10:24 and we just have these things, 10:26 these standardizations are just very efficient. 10:29 So you think over time, 10:31 it would be drawn towards just one thing, 10:33 and you would not want to be in a position 10:36 where since investing is involved, 10:39 people would be looking to the future, 10:41 and they'd be thinking, 10:42 would I rather have all this Dogecoin or something, 10:48 or would I rather have a new car or something like that? 10:51 I can sell this digital currency that I have 10:54 and get something real. 10:56 And the only reason you wouldn't would be 10:58 if you really thought that it had a pretty good, 11:01 either a future of appreciation 11:03 or just kind of being useful as money. 11:06 And so self-defense, I think, is a reason, 11:08 is that if you like your altcoin project, 11:11 and there are other reasons as well, 11:13 like if you just want to plug into the Bitcoin community 11:16 and try to get more users, 11:17 try to get better, more honest feedback 11:19 about the things that you're doing right, 11:22 because the altcoin world is beset 11:25 by crazy marketing 11:27 and just generally a very confusing media ecology, 11:34 to phrase it in some way. 11:36 It's very hard to figure out, 11:37 do people really like this project? 11:39 Are they just pumping the project? 11:41 What is going on? 11:42 So there are a couple reasons. 11:43 If you've got a really good project 11:45 that's underappreciated, 11:47 this is your chance to prove 11:49 that you really do care about it 11:52 and not the speculative return. 11:55 So there are a couple reasons like that, 11:57 but I think self-defense is really the main one, 12:00 is that, well, if you don't, 12:02 then someone will just copy this project 12:04 and then it'll be tough. 12:06 You'll be the guy who's, 12:07 you'll be the last guy who doesn't speak English 12:11 just trying to hold out against everyone else. 12:13 I don't, maybe, I don't know. 12:15 That might work, but maybe not. 12:17 Yes? 12:18 About one year ago, 12:20 I was trying to understand 12:22 the details of sidechains or Drivechains, 12:26 and I couldn't 12:27 because I found a lot of descriptions 12:30 but without every detail 12:32 that helped me understand 12:34 if there is no any detail 12:37 that prevents to do the same, 12:39 because, you know, 12:40 sometimes one detail can make it not a good solution. 12:44 So do you have some description 12:47 without the detail? 12:48 Yeah, I think if you're interested in that, 12:50 we do have, 12:52 now we have, 12:53 so we've tried to make it better and better. 12:55 It's very interesting 12:56 because, you know, 12:57 sometimes people complain, 12:58 like, oh, this is too long. 12:59 I get that complaint all the time. 13:00 So people complain, 13:01 not enough detail, 13:02 too much detail, whatever. 13:03 But I understand what you're saying. 13:05 And now we have, 13:06 if you go to drivechain.info, 13:08 we actually have the diff. 13:10 So we have all the code changes 13:11 to the latest release of Bitcoin Core 13:13 in one place. 13:15 So that would be the optimal amount 13:17 of just all the literal details 13:19 are exactly there. 13:21 I don't know 13:22 if that's not necessarily 13:24 a kind of an explanation, 13:26 but we also have the, 13:27 I also have a BIP 13:29 that you can see 13:30 if you go to the, 13:31 if you go to drivechain.info 13:33 and you go to GitHub 13:34 and then you will be able 13:35 to find it in docs section 13:37 where I have pull requested 13:39 into the BIPs repository 13:40 for Bitcoin Core. 13:42 And so that has much more detail. 13:45 And I don't remember exactly 13:46 when did I write that. 13:48 It was probably January of this year. 13:50 So if you tried last year, 13:52 then that wasn't there. 13:54 But now both of those things 13:55 are there now. 13:56 So maybe that will help you. 13:57 I don't know. 13:58 Are you more interested in, 13:59 because we have every line 14:00 of code changed 14:01 or altered or deleted 14:02 or whatever. 14:03 So that's one thing 14:04 you could find 14:05 if you scroll down 14:06 on the main page. 14:07 And then also the BIP 14:08 is like the explanation 14:12 for Bitcoin programmers. 14:15 And then I also recorded a video 14:18 that's also on drivechain.info 14:19 about the misconceptions 14:21 that I think 14:22 and about the kind of, 14:23 has more of an explanation feel. 14:26 So those are all kind of advanced. 14:29 And that video is two hours long. 14:32 It has like 200 slides in it 14:34 or something. 14:35 So those have a lot of detail. 14:38 And one of those 14:39 might be helpful for you, 14:41 I think. 14:42 Maybe. 14:43 So right now 14:44 you see that probably 14:45 there is no any detail 14:47 that can make 14:48 this project fail. 14:50 I mean, 14:51 you don't see such things. 14:52 Well, I wouldn't say that. 14:53 But I think you're kind of 14:54 getting at the idea 14:55 that you don't, 14:56 it's not really until 14:57 you release, 14:58 go through 14:59 and write everything 15:00 that you actually 15:01 check and see 15:02 that you've actually 15:03 thought everything through. 15:04 But yeah, 15:05 I think there's been, 15:06 this has actually been 15:07 in a kind of peer review state 15:09 for a very long time 15:10 despite how it may appear. 15:13 But people have been 15:14 kind of talking about this 15:15 for a while. 15:16 And I don't, 15:17 you know, 15:18 we have a code 15:19 and we have a unit test. 15:21 And I really wanted to, 15:22 before this trip, 15:23 I really wanted to release 15:24 an actual test net 15:25 that has a GUI, 15:26 has a cool little GUI 15:28 that someone made. 15:30 And it's a, 15:32 so we have kind of, 15:34 we have kind of done 15:35 the whole thing 15:37 as far as like 15:38 minimum viable product 15:39 or whatever phrase 15:40 you would like to use. 15:42 So I don't think 15:43 there's any, 15:44 you know, 15:45 sidechains are definitely, 15:46 sidechains are definitely different. 15:48 And so I don't know 15:49 if everyone would want 15:50 to use them. 15:51 And absolutely, 15:52 it's in a very similar situation 15:53 to the lightning network 15:54 where only a very special type 15:56 of person should be 15:57 using them first. 15:58 You know, 15:59 but there's like a ramp 16:00 up here where 16:01 if people use them 16:02 and then better 16:03 and better 16:04 user interface, 16:05 make sure that 16:06 there's no bugs, 16:07 stuff like that. 16:08 Because this is described 16:09 as a low level trust. 16:10 It's not described 16:11 as something trustless. 16:12 I mean, 16:13 to send the coins 16:14 to sidechain and back, 16:15 right? 16:16 There is, 16:17 I think, 16:18 you can recast it 16:19 because I would like, 16:20 I actually would like 16:21 certain sidechains 16:22 never to exist 16:23 and I would want them 16:24 to not be 16:25 in the ecosystem at all. 16:26 And so, 16:27 you can recast it 16:28 as saying that 16:29 miners will care enough, 16:30 as long as it's 16:31 very easy, 16:32 psychologically, 16:33 they will care enough 16:34 to send the coins 16:35 to sidechain 16:36 and back. 16:37 So, 16:38 it's very easy, 16:39 psychologically, 16:40 for them to figure out 16:41 what's going on, 16:42 which is a very big 16:43 kind of, 16:44 that's a big thing, 16:45 although I have, 16:46 you know, 16:47 design elements 16:48 to address that. 16:49 But I realize 16:50 that's kind of a vague thing 16:51 to just kind of say 16:52 in the middle 16:53 of an explanation. 16:54 So, 16:55 we can come back to that 16:56 if you want. 16:57 But, 16:58 as long as miners 16:59 can kind of 17:00 psychologically process 17:01 what this sidechain 17:02 is supposed to be doing 17:03 and see, 17:04 check to see 17:05 if it's doing that thing, 17:06 then I'm curating 17:07 the list 17:08 of which sidechains 17:09 are on 17:10 and which are off. 17:11 And, 17:12 when you 17:13 recast it that way, 17:14 I'm just assuming 17:15 that they will want 17:16 the ones that make 17:17 the exchange rate 17:18 go up 17:19 and stay up 17:20 to be on 17:21 than the ones 17:22 that make 17:23 the exchange rate 17:24 go down 17:25 because they're harmful 17:26 to the Bitcoin network, 17:27 actually. 17:28 You'd want them 17:29 to shut those off. 17:30 And so, 17:31 if you recast it 17:32 in those terms, 17:33 it's no longer 17:34 a question of 17:35 trusting the miners. 17:36 It's just, 17:37 do you believe 17:38 the, 17:39 you know, 17:40 the security model 17:41 that 17:42 a majority of 17:43 hash rate 17:44 is not trying 17:45 to make the network 17:46 any worse. 17:47 And so, 17:48 I think it actually rests 17:49 on the exact same 17:50 axiom 17:51 that regular Bitcoin 17:52 rests on. 17:53 Although, 17:54 again, 17:55 it is slightly, 17:56 I mean, 17:57 it's very difficult 17:58 to explain 17:59 because, 18:00 like, 18:01 Lightning Network 18:02 also has all these 18:03 weird quirks and things 18:04 you know, 18:05 you're trusting that 18:06 these other, 18:07 you have these outsourced 18:08 channel monitoring 18:09 and you have, 18:10 you know, 18:11 if your computer 18:12 has a glitch 18:13 and it accidentally 18:14 broadcasts the wrong 18:15 thing, 18:16 you lose your entire 18:17 channel balance. 18:18 So, 18:19 you know, 18:20 and I like the Lightning Network 18:21 a lot. 18:22 I'm not trying to 18:23 criticize the Lightning Network. 18:24 I'm just saying that 18:25 these things 18:26 that have different 18:27 security models, 18:28 it's sort of like, 18:29 what exactly, 18:30 you know, 18:31 what kind of answer 18:32 are you, 18:33 but, 18:34 yeah, 18:35 the security model 18:36 is different 18:37 but I think it really 18:38 rests on the exact 18:39 same security 18:40 assumptions, 18:41 I would say. 18:42 That's what I would say. 18:43 I don't know. 18:44 Does that help? 18:45 Yeah, 18:46 that's good. 18:47 So, 18:48 the last question. 18:49 So, 18:50 do you think it makes 18:51 sense to combine 18:52 sidechains with 18:53 Lightning Network? 18:54 Absolutely, 18:55 yeah. 18:56 Which is cross, 18:57 can be cross-chain 18:58 so that you can 18:59 control the flow 19:00 and stuff. 19:01 Okay, 19:02 so, 19:03 I'm not familiar 19:04 with cross-chain 19:05 atomic swaps 19:06 but I think 19:07 that stuff 19:08 is very exciting. 19:09 You can have 19:10 a situation 19:11 where someone, 19:12 because I would 19:13 imagine that, 19:14 well, 19:15 first of all, 19:16 withdrawing your 19:17 money from the 19:18 sidechain to the 19:19 mainchain 19:20 is intentionally 19:21 very slow 19:22 to make it 19:23 more secure 19:24 and so I'm 19:25 relying on 19:26 regular users 19:27 to never do that 19:28 anymore than 19:29 we would, 19:30 like, 19:31 some people 19:32 care about. 19:33 So instead, 19:34 they should be 19:35 using atomic swaps 19:36 and Lightning Network 19:37 transactions to 19:38 move back and forth 19:39 between the chains 19:40 but the other 19:41 interesting thing is that 19:42 if you make a sidechain 19:43 that has a cool 19:44 feature, 19:45 it might not be 19:46 enough coins 19:47 over there 19:48 because who would 19:49 want to leave their 19:50 coins on this 19:51 other new thing 19:52 when it said 19:53 you could just 19:54 do nothing 19:55 and stay 19:56 where your 19:57 coins are? 19:58 People like to 19:59 do nothing. 20:01 The advantage 20:02 of combining 20:03 the two is that 20:04 oh, 20:05 someone now has 20:06 an incentive to 20:07 just put some 20:08 coins over there, 20:09 start up a new 20:10 Lightning Channel 20:11 thing, 20:12 connect it to a 20:13 big node, 20:14 and remember the 20:15 nodes on the 20:16 Lightning Network 20:17 are independent 20:18 of any chain. 20:19 They could be 20:20 on any, 20:21 well, 20:22 that's kind of 20:23 speaking a little 20:24 loosely but 20:25 you could have 20:26 like a big, 20:27 if everything 20:28 on Bitcoin Network 20:29 is connected to 20:30 a big node, 20:31 everything connected 20:32 on a big hub 20:33 and then 20:34 you have the 20:35 guy administering 20:36 that hub 20:37 has a different 20:38 one on the 20:39 sidechain, 20:40 you connect 20:41 over there, 20:42 then you can 20:43 have these 20:44 payments go right 20:45 through. 20:46 So what I'm 20:47 getting at 20:48 is that 20:49 there's an 20:50 incentive to 20:51 move the 20:52 bitcoins over 20:53 to the 20:54 sidechain 20:55 and then 20:56 charge higher 20:57 fees on your 20:58 Lightning Channel 20:59 even if they 21:00 don't have any 21:01 coins on the 21:02 sidechain. 21:03 So if you're 21:04 paying for 21:05 some really 21:06 strange thing 21:07 like, 21:08 I don't know, 21:09 a digital identity 21:10 lookup or 21:11 something, 21:12 you just pay 21:13 and somehow 21:14 the Lightning 21:15 Network routes 21:16 it to this 21:17 other person 21:18 and it happens 21:19 on the 21:20 sidechain 21:21 and then 21:22 they ship 21:23 some piece 21:24 of data 21:25 back to you. 21:26 That's kind 21:27 of complicated 21:28 So we use 21:29 the sidechain 21:30 concept 21:31 for saying 21:32 we take this 21:33 one chain's 21:34 consensus 21:35 mechanism which 21:36 has some 21:37 feature we 21:38 don't like 21:39 and we're 21:40 extending this 21:41 chain's 21:42 consensus 21:43 feature with 21:44 a whole new 21:45 chain. 21:46 It's like 21:47 subjecting this 21:48 consensus 21:49 mechanism to 21:50 this one 21:51 chain. 21:52 In sidechains 21:53 actually you're 21:54 tying together 21:55 a different 21:56 consensus 21:57 mechanism. 21:58 So 21:59 why don't 22:00 we swap 22:01 one 22:02 coin for 22:03 the other? 22:04 Why 22:05 don't 22:06 we move 22:07 the coins 22:08 themselves 22:09 across? 22:10 Well 22:11 I think 22:12 in atomic 22:13 swaps it's 22:14 because it's 22:15 impossible 22:16 because you 22:17 would have 22:18 to have 22:19 one 22:20 network 22:21 be aware 22:22 of each 22:23 other 22:24 and so 22:25 they'd 22:26 have to 22:27 be 22:28 assigned to 22:29 me 22:30 or something 22:31 and so 22:32 I make 22:33 some 22:34 secret 22:35 R 22:36 random 22:37 number 22:38 and then 22:39 I compute 22:40 H 22:41 and then 22:42 I say 22:43 okay 22:44 I'll give 22:45 you one 22:46 bitcoin 22:47 if 22:48 the R 22:49 is revealed 22:50 for this 22:51 H 22:52 I have 22:53 the lock 22:54 which is 22:55 one 22:56 transaction 22:57 and the bitcoin 22:58 network only sees 22:59 the one part 23:00 and the litecoin 23:01 network only sees 23:02 the other part 23:03 and then I say 23:04 R 23:05 and it unlocks 23:06 both of them 23:07 at the same time. 23:08 For example 23:09 if you transfer 23:10 any other 23:11 coin 23:12 towards 23:13 bitcoin 23:14 the way 23:15 we express 23:16 it is 23:17 we take 23:18 the whole 23:19 coins 23:20 and we 23:21 put them 23:22 as a 23:23 Satoshi 23:24 and 23:25 there is a 23:26 currency 23:27 by which we 23:28 do consensus 23:29 by which we 23:30 do priority 23:31 in the network 23:32 and other 23:33 currencies 23:34 we just 23:35 keep them 23:36 as data 23:37 so you can 23:38 move around 23:39 this data 23:40 which is 23:41 like a litecoin 23:42 throughout 23:43 the bitcoin 23:44 network 23:45 and then 23:46 you know 23:47 you can 23:48 move it 23:49 never back 23:50 to the 23:51 litecoin 23:52 network 23:53 if you can do 23:54 that sort of 23:55 move between 23:56 chains 23:57 I feel like 23:58 the difference 23:59 between a side 24:00 chain 24:01 and another 24:02 chain 24:03 all together 24:04 disappears 24:05 this function 24:06 well I think 24:07 the 24:08 well 24:09 it's kind of 24:10 a strange 24:11 example 24:12 but I think 24:13 you 24:14 the point 24:15 of the side 24:16 chain 24:17 is that 24:18 you want 24:19 to use 24:20 bitcoin 24:21 for 24:22 something 24:23 that 24:24 is 24:25 like 24:26 betting 24:27 or 24:28 identity 24:29 or 24:30 that looks 24:31 up 24:32 the 24:33 dns 24:34 for something 24:35 or 24:36 these other 24:37 things 24:38 messaging 24:39 or 24:40 whatever 24:41 so 24:42 you'd 24:43 want to 24:44 use 24:45 it 24:46 or just 24:47 larger 24:48 blocks 24:49 or something 24:50 like that 24:51 to send 24:52 bitcoin 24:53 to someone 24:54 else 24:55 or to 24:56 the 24:57 miners 24:58 or whatever 24:59 you do 25:00 your 25:01 counterparty 25:02 wants to 25:03 get 25:04 bitcoin 25:05 back 25:06 that's 25:07 kind of 25:08 what's 25:09 going on 25:10 with side 25:11 chains 25:12 I think 25:13 your 25:14 example 25:15 where you 25:16 turn litecoin 25:17 into 25:18 satoshis 25:19 of 25:20 course 25:21 of course 25:22 there 25:23 are 25:24 other 25:25 coins 25:26 of course 25:27 there are 25:28 yes 25:29 if you 25:30 can reserve 25:31 the total 25:32 amount of 25:33 litecoin 25:34 yes 25:35 it doesn't 25:36 matter 25:37 how we 25:38 conference 25:39 like 25:40 the banks 25:41 using 25:42 bitcoin 25:43 as a 25:44 reserve 25:45 another 25:46 chain 25:47 can use 25:48 bitcoin 25:49 something 25:50 that was very 25:51 very 25:52 unlike 25:53 bitcoin 25:54 in many ways 25:55 where you 25:56 could just 25:57 say well 25:58 in this 25:59 sidechain 26:00 everything has 26:01 to be signed 26:02 by some 26:03 government 26:04 authority or 26:05 you know 26:06 federal bank 26:07 employee or 26:08 something 26:09 so 26:10 no but 26:11 that's what 26:12 i'm trying to 26:13 explain is 26:14 that with 26:15 the sidechain 26:16 you you're 26:17 working with 26:18 the side 26:19 chain so 26:20 the the 26:21 when you have a 26:22 family of 26:23 sidechains 26:24 everyone's using 26:25 the same 26:26 everyone's using 26:27 the same 26:28 using the 26:29 same money 26:30 and so you're 26:31 in you're 26:32 plugged into 26:33 the same 26:34 economic network 26:35 you know it's 26:36 like it's 26:37 sort of like 26:38 using like 26:39 euros versus 26:40 something else 26:41 if you 26:42 preserve values 26:43 across chains 26:44 you preserve 26:45 the economic 26:46 network 26:48 but once for 26:49 example 26:50 my bank is 26:51 able to hold 26:52 bitcoin i'll just 26:53 transfer bitcoin to 26:54 my bank and 26:55 then I'll use my 26:56 credit card or 26:57 whatever and 26:58 I'll be 26:59 transacting 27:00 bitcoin instead 27:01 of euros 27:02 it's this concept 27:03 of preserving 27:04 the coin 27:05 distribution 27:06 across different 27:07 technological 27:08 solutions and 27:09 sidechains are 27:10 a way to 27:11 take another 27:12 technical solution 27:13 and attach it 27:14 to your current 27:15 one so that 27:16 I feel like 27:17 atomic swaps 27:18 and being able 27:19 to swap the 27:20 currency onto 27:21 other chains 27:22 brings the 27:23 same economic 27:24 perspective 27:25 yes yeah okay 27:26 I think I 27:27 understand what you're 27:28 saying yeah I 27:29 agree and 27:30 there is some 27:31 differences yes 27:32 that my side 27:33 chain if my 27:34 sidechain is 27:35 okay but the 27:36 main chain is 27:37 fucked then my 27:38 sidechain is 27:39 also fucked 27:40 yes that's 27:41 true yes so 27:42 there are some 27:43 differences well 27:44 yeah so I 27:45 think one of 27:46 the things I 27:47 think is 27:48 interesting is 27:49 the fact that 27:50 you can't 27:51 even use 27:52 the reason 27:53 that why 27:54 atomic swaps 27:55 never caught 27:56 on is a 27:57 weird anecdote 27:58 is that 27:59 one person 28:00 has the 28:01 r, the 28:02 lock. 28:03 So you 28:04 try to 28:05 swap one 28:06 bitcoin for 28:07 four lite 28:08 coin and 28:09 one person 28:10 can just 28:11 wait and 28:12 see if it 28:13 moves against 28:14 the 28:15 other 28:16 coin. 28:17 It's 28:18 a mess. 28:19 But 28:20 lightning 28:21 network is 28:22 even 28:23 better because 28:24 it's much 28:25 faster. 28:26 You 28:27 could say 28:28 my alt 28:29 coin. 28:30 Okay. 28:31 I kind of 28:32 agree with 28:33 you in 28:34 general but 28:35 I think 28:36 in this 28:37 case I 28:38 do mean 28:39 the 28:40 lightning 28:41 network 28:42 because 28:43 I'm saying 28:44 what you're 28:45 saying is 28:46 someone will 28:47 pay lite 28:48 coin or 28:49 they pay 28:50 something weird 28:51 coin or 28:52 I think maybe 28:53 you're saying 28:54 it the other 28:55 way like 28:56 someone could 28:57 pay bitcoin 28:58 and they 28:59 could buy 29:00 a service on 29:01 the other 29:02 thing. 29:03 But 29:04 whatever it 29:05 means you 29:06 mean you're 29:07 across two 29:08 different 29:09 chains at 29:10 once. 29:11 That's 29:12 true. 29:13 It 29:14 even 29:15 tolerates the 29:16 exchange rate 29:17 fluctuations as 29:18 long as the 29:19 transaction is 29:20 fast enough. 29:21 So you're 29:22 right that you 29:23 can completely 29:24 get all the 29:25 same benefits 29:26 but the one 29:27 thing that you 29:28 can't get is 29:29 any guarantee 29:30 that the alt 29:31 coin will 29:32 actually 29:33 survive because 29:34 there will 29:35 be I 29:36 think I 29:37 really do 29:38 think there 29:39 will be a 29:40 kind of 29:41 like a theory 29:42 so this is a 29:43 conjecture of 29:44 mine but 29:45 it's like 29:46 this will 29:47 happen in 29:48 everyone's mind 29:49 I think very 29:50 quickly. 29:51 So there will 29:52 be 200 29:53 terrible and 29:54 then people 29:55 will sell number 29:56 200. 29:57 They'll realize 29:58 that number 29:59 200 can't 30:00 they'll realize that number 200 can't possibly compete because one of the 199 will be just copying these features with sidechains and so it's it's doomed as an investment as a as a kind of you know a store of value to use the phrase and then number 199 will be like wait you know this is a mistake we are not going to win this battle and then it would just kind of I don't really see why anyone will want why would anyone want to hold like even the second or the third largest 30:27 you'd always be wondering oh you know is this gonna be a big mistake am I gonna lose everything here maybe I should put a couple percentage points into the biggest one and the biggest one will be a kind of attractor I think and so but yeah you are right that you don't need if you have this market for if altcoins stick around which you know it's weird it's a very weird thought kind of theoretically and analytically but just empirically they do better and better all the time but yeah if they if they stick around you can do this thing where you don't 30:57 actually need sidechains at all but I think that's why I bring up the self-defense argument which is that if one blockchain has this universality it would probably tend to just replace all the other blockchains but that all that is a that is a lot of conjecture so I don't know if that will be represented in in reality but 31:27 yeah yeah I think so I think what you're saying is that right now there's been no weird collapsing of the altcoins but it's you know so they kind of are still around but I that's I that's exactly what I think too which is that if nothing it's safe to do nothing now the other thing is that there's no easy way although I think there will be very soon because I'm working on it myself 31:56 but there's no easy way to like short an altcoin right now it's very difficult but as if it's easy and especially if it's easy to buy like put options so you buy a little bit of money and you get trustless put option no counterparty risk yeah and yeah but the 32:18 if you pay more fee you can exit earlier yeah I feel like that's probably the biggest advantage of Bitcoin Core is if I'm a huge whale I can buy a shit ton of Bitcoin Core and always pay the highest fee to get out first and sell on the market when the price is still the highest so as long as I get enough whales to spread that wealth across enough accounts so if a whale is like accumulating in one account he's breaking this like informal rule that makes the deal work so 32:45 well you know there's a lot of efficient markets hypothesis kind of stuff wrapped up in that 32:49 it's so neat to have a coin where everyone goes in and if you try to do a back run big spayer gets up first 33:19 you'll go you'll go rich if the altcoin goes down in value you know sometime in the next five years or something like that it's a long-term put option you buy it today with a little bit of Bitcoin then you gain a lot of Bitcoin if the altcoin price goes down sometime in the next you know by the end of the five-year period 33:41 yeah so if you do that then I don't really see why lots of people wouldn't research all these coins and figure out like which because just the act of buying a put option does trigger selling because there's a difference in the implied price of this derivative world in the real world and you can always buy low and sell high so 34:01 anyway long story short the put options would drive the price down I think you would get self-fulfilling prophecies on many of these people would figure out very easily and then you would extract the entire market cap so if the market cap is like 300 million dollars then someone that golden sacks will figure out how to 34:24 maybe I'm high-teching the subject right now 34:28 no that's fine 34:29 you were talking a while ago about oracles 34:34 oh yeah yes I did yeah I was in last year I was in 34:38 can you give a summary of what you talked about 34:41 an understandable hash if you want 34:43 okay yeah I'll give it a try so I gave a talk at QCon in London last March about attempts to solve the oracle problem and it is recorded and you can find it on bitcoinheimland.com presentations where I will I'll be talking about that later but yeah that talk was about a history of attempts to solve the oracle problem which is a problem of getting the blockchain to figure out what something that may have happened in the real world 35:12 and it's very difficult because the primary difficulty is this opportunity cost of honesty so you have something some financial anything that is tied to the real world performance of something so an example that people often use is elections so they say okay this thing is worth one whatever one euro one bitcoin let's say one euro 35:35 towards one euro if Donald Trump is elected and it's worth one euro if Hillary Clinton is elected in the United States you know I just assume that you guys are aware of what happened over there but the point is it's worth one it's worth something or it's worth nothing but the trick is that it's you want the challenge is that you want to tie you want to build something that does that so you want to tie this payment to something that happened in the real world 36:02 and it's very difficult because once that information is learnable so Donald Trump wins Hillary Clinton loses now if everything is working as planned if everything is working as planned and you're doing a good job best case scenario then this all the Donald Trump shares or coupons whatever you want to call them they should be trading for basically one euro and the other one the Hillary Clinton and whatever Gary Johnson ones they should be trading for zero 36:30 but since that you have the information has to exist first and then you have to use the Oracle to report on it and then you have to pay people out so the things happen to have they must happen in that sequence so then you have a problem with step number two which is that someone knowing that Donald Trump has won would have an incentive to lie and say that he actually lost because they can go up and buy all the stuff for basically zero these useless Hillary Clinton shares and then lie 37:01 and thereby they can extract the entire delta of the market position at all so it's really no different than running an exchange being the Oracle is basically the same as running an exchange where you buy and sell this thing everyone has deposited with you and they trust that you will put the right outcome out but if you just put the wrong outcome out you can steal everything 37:23 so there's a major challenge there and I go through in the talk a kind of a historical journey that people have taken where they start with multi-sig and then now people are really not interested in that and then people moved on to this kind of we'll have these different arbiters compete we'll have these different marketplace of judges but I describe why I really don't think that that can work it's just multi-sig with like more competition but it's not good enough because the 37:51 why I describe three factors in the talk that the judges may suddenly they have no reason not to exit scam I guess this is a really short version of that but the judges incentives are triggered by three factors which are all very unreliable one is how much money they can make if they steal so then someone might have sort of like a super popular contract where they just set it up with their friends but then suddenly a hundred million dollars goes out and you don't know if that's going to happen when you set it up 38:21 so someone might bet and then they're like oh no I didn't realize that everyone would start betting and now ten million dollars would be on the line and of course this judge is going to lie and take ten million dollars for himself and he's gone and so it's like you're hoping it stays small and the thefts pay out but then also there's this other thing the stream of little transaction fees that he might earn that also could go down as the marketplace of judges becomes more competitive and why wouldn't it if it were doing really well 38:48 and then how much the judge cares about the future relative to the present you know the judge could get brain cancer or could just decide to exit scam for any other reason and so all three of those are unreliable so I described them what I did 39:02 I can repeat it if you're saying it could be even worse than a Chinese-Russian exchange well yeah I think so because a lot of the benefit to this type of thing would be that you want like trustlessness you want like no identities I mean at least if there's an exchange like people knew who like Mark Carpellis was right 39:31 and they could like find him and harass him or something you know like you got something you have some recourse but with this it's really kind of the goal is to make it kind of blind I mean that's the ideal the platonic ideal for all this stuff is that you just you sit on your computer and you just want to buy some Hillary Clinton defeat shares or something and you just hit enter and it just happens and then you don't need to have any figure out like oh is this a reputable exchange or let me do all my due diligence on this 40:00 in particular I have the last very short question before dinner is there one more question okay this is the last one then we're going to have dinner 40:10 just a quick question so can you merge sidechains into the core of the chain? 40:16 oh okay well that's an interesting question so you don't mean a code merge you mean like the 40:21 if you make a sidechain 40:23 you could make them mandatory yeah 40:25 could you make like consensus and make it mandatory 40:28 yeah well that's what you but I think the funny thing is I actually see when you use the word merge it reminds me of github where it's like you know fork and merge and I kind of feel that sidechains are allow it's kind of weird because those are abstract terms but what I feel is that the sidechains are the merge operation because it's like if you want to leave and go to the altcoin community like you can never come back but if you want to leave and go to the sidechains community then you can move your money back and so you kind of sidechains are kind of like 40:56 they're kind of like are the merge but yeah the part I think early on people thought that such excuse me people thought that sidechains would be used mostly for testing experimental features that would then be merged into Bitcoin core but I don't think that anymore now that we see the conservatism of core but also the interest in crazy altcoins and just the profound difference in vision that I think was probably foreseeable and inevitable as we get to just a bigger 41:26 and bigger community now it will be just for people who want to do different things will just that will just stay there so I don't think necessarily you would end up merging them back but it is possible in fact it's it kind of happens almost naturally because as more and more people use a set becomes much more difficult to imagine anyone getting away with an attack on one or the other without both of the communities 41:53 like refusing to put up with that we're taking very easily there's a huge asymmetry in Bitcoin and inside chains that the users have a lot of leverage in any you know UASFs or other things that they might want to do 42:07 so what about a round of applause for Paul and Q&A 42:22 you