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Welcome to Drivechain Twitter Spaces, where we discuss Bitcoin Improvement Proposal 300 and 301, the project known as Drivechain.

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Drivechain is designed to strengthen and expand the potential of Bitcoin through enabling sidechains that are more peer-to-peer,

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sidechains that increase Bitcoin's extensibility, Bitcoin's capacity to platform a wide variety of valuable applications, features, and customizations for Bitcoiners by Bitcoiners.

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The objective of Drivechain is to enable Bitcoin's community to resolve disputes about how Bitcoin should be coded without resorting to internal civil wars.

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Instead of civil wars, we can just have innovation on sidechains. So, for example, people who want to experience Bitcoin in a way that's more private and more higher fungibility can do that on a privacy-focused sidechain.

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And that has already been developed by the developers focused on Bitcoin for advanced sidechains, specifically the Zside sidechain, which exists on the Drivechain testnet.

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So we already have this privacy-focused sidechain up and running, an experimental beta version. And in addition, there are other exciting sidechains out there, like Thunder, which is another Drivechain-style sidechain, and this one has large blocks.

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So unlike Zside, which is for privacy, Thunder is for large block Bitcoin. So it has very high throughput, very high capacity and volume, and lower decentralization.

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So it's like a clone of Bitcoin, except it has large blocks. So this is a great example, perhaps the simplest example, of what sidechains can do. Sidechains can allow someone to just increase the block size if they want and use that in a Bitcoin sidechain.

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So this enables the feature of large blocks on an optional basis. No one has to use it. And people can experiment with that. And that's what Drivechain is all about. Sidechains are all about experimentation and innovation, testing things, tinkering, trying new things in a way that doesn't harm layer one. That's the goal.

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Hello, welcome. Moon Settler, one of our favorite and most frequent speakers here at the Drivechain Talk Twitter spaces. What's up? Are you going to be at Bitcoin Miami 2023 like we are? Or will you be just observing from afar?

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Oh, no, I'm just going to watch the streams, I guess. So I wanted to ask you if you managed to get any info on the stuff I asked, I'm not sure you saw it, about Thunder and Lightning. So I'm just gonna find the tweet.

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Let's see. And yeah, here it is. So I asked you if Thunder we have covenants at the start, if you are planning to do something like APO or CTV or some other stuff, I guess APO would be the easiest for a new Lightning oriented sidechain to add.

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Yeah, I don't have the answer to that. But a great place to find the answer is to ask a question of a technical nature to Paul Sztorc and CryptAxe, who are the leading designers working on sidechains within the Drivechain community.

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And they'll know whether the Thunder plan, the planned sidechain called Thunder, for which the code is available on GitHub, they'll know whether it has the feature you're talking about. And also, it might be possible for you to suggest changes, like you can go into GitHub and do like a pull request to add the extra code that you would like.

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And maybe that will be included in the code by the administrators of that.

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I see. So if I want something, do the PR, right?

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Basically, that might be the way it is. I put in the nest, a link to the GitHub for Thunder. So it's on there. It's on GitHub. Anyone who wants to can check out what it's all about.

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My understanding is that it's a large block version of Bitcoin. And if we had done this in the past, if the Bitcoin community had enabled Drivechain in the past, and then a large block version of Bitcoin could have existed as a sidechain, then it's very possible that the entire block size war might have been avoided.

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Because maybe all of the people who were excited about low fees on Bitcoin through large blocks, they could have used the sidechain.

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And recently, when Bitcoin's fees spiked, maybe Bitcoin lost some users because of the congestion that they experienced high fees. So maybe it would have been great for Bitcoin to have a large block sidechain enabled.

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That way people could just use that when the fees are high on mainchain.

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It's interesting to see that the fees have come down. Some people were celebrating high fees, like me. People who want to see Bitcoin have high fees because, as Greg Maxwell wrote in December of 2017, when fees are very high on Bitcoin's mainchain, then we see evidence that high fees are possible that would sustain Bitcoin's economic security.

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Far into the future, as the Coinbase is halved every four years.

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But in the last couple of days, the fees have come back down, down to their usual level.

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I think right now it's about $2 or less to send a Bitcoin Layer 1 transaction.

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I just checked a few minutes ago. That's what I was seeing at mempool.space, a website that I very much appreciate Rafael in the audience pointing me towards from time to time.

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The website shows that it's about $2 a transaction. So that's what we've seen for the last five years, except during these times where the fees spiked.

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So it was great that fees spiked recently. It prompted a lot of great discussion and conversation about, are high fees good or bad?

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We saw people like Tomer Strohleit, an excellent thinker in the space of Bitcoin.

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He's been saying that the ordinals and inscriptions are not good and the BRC20s are not good.

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We don't want all of this altcoin style gambling and frivolity on Bitcoin.

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We want to keep Bitcoin pure and the high fees aren't so good.

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So some people don't actually like the high fees, but I feel certain that it's much better for Bitcoin to be a place where everyone can come and do whatever they want and their money is accepted and their value is accepted.

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Kind of like at Walmart. Walmart is very successful because they sell almost everything a person could need and they do it in an efficient manner.

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It wouldn't be good for Walmart to exclude a lot of their customers because of moralizing or other reasons.

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So it would be great for Bitcoin to have a bunch of sidechains that would meet all the needs of these different kinds of users.

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Those who wish to gamble on NFTs, there's a planned drivechain for them, a planned sidechain called BitAssets.

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And for DNS, there's BitNames and there's Thunder for large blocks and Zside for privacy and Ethside, a clone of Ethereum for smart contracts.

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There's all these different sidechains.

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Moonsilver, what are your thoughts on the possibility of a future where Bitcoin has 10 different sidechains providing different features for different kinds of uses?

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Do you think that that would be a great path towards high fees in the future on the main chain, enabling a strong security budget and a large community of users all satisfied with the features on their respective sidechains?

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Does that vision appeal to you?

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Yeah, I'm generally very interested in blind merge mining.

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I think blind merge mining is great.

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But, you know, the other stuff is up for question.

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So, as I said not so long ago, I think something will pick up the slack, right?

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So Bitcoin block space is obviously a limited scarce resource and it looks to me that it will remain so because the high replication, the high data availability of Bitcoin is a very tempting target for people to put all sorts of things there relatively cheaply.

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And so I think it will probably have to remain very scarce, even if demand for block space grows.

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And I think something will have to pick up the slack.

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I said that either altcoins or sidechains will, I think.

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So if we don't do sidechains, I think that will legitimize certain altcoins and they will simply just provide this alternative block space and they will start moving very closely with Bitcoin.

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You know, the aggregate demand for the altcoin asset and Bitcoin is going to find some equilibrium and they are going to trend to a volatility factor of 1 to Bitcoin.

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Those that somehow make it.

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And this basically in effect in some ways breaks the 21 million limit, right?

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But it also does not require anyone's permission.

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So people who think can actually stop adding more block space to Bitcoin are going to be disappointed, I think, because people can really just start using alternative chains.

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But would you say one more time, who did you say would be disappointed, do you think?

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The people who think they can keep people from adding more block space, other people, or they can somehow magically convince everyone to abandon altcoins and they all go to zero.

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I think those people will be disappointed.

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If sidechains don't pick up this, you know, don't satisfy this demand for more block space in the future, then I think altcoins will.

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We're in agreement about how the lack of drivechain or something like it legitimizes altcoins.

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But it sounds like you're saying that it will be demand for block space that leads people to do altcoining.

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Whereas I think that the kind of classical argument for drivechain, like the Paul Sztorc argument for drivechain, which is different because some people support drivechain for different reasons.

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But I think that drivechain was invented because of the narrative that when there are disagreements within the Bitcoin developer community over how the blockchain should be organized, like, should it have this feature or that feature?

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Should it have large blocks or small blocks?

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Disagreements internal to the Bitcoin community, such as how large the block size should be.

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Disagreements like that are the reason why we need drivechain.

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And if there isn't something like drivechain, then people, when they have those disagreements, will go to altcoins.

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So that's the argument, whereas the argument you're making is one that's more economic.

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Whereas the one I was giving was more about technology design, like the design of Bitcoin, how should it be.

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Where you're saying that economically, if there isn't enough block space, if there is high fees on Bitcoin, then people will flow to altcoins.

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Is that correct? Is that what you're saying?

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Yeah, because if you think about it, like, technologically, Bitcoin works for a very specific use case.

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And there is probably going to be a larger demand for that use case than what Bitcoin can satisfy on Layer 1.

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So that is why I think altcoins don't need to do anything crazy or anything very special to get adopted.

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It can just be for the block space.

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And of course, they can have features that people want and stuff.

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But I don't think that is, in certain times, that is not the main reason for adoption.

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I just listened to an interesting podcast where they said the Ethereum hype had nothing to do with actual smart contracts.

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So the whole thing can be very closely correlated to China, you know, clamping down on the top four crypto assets.

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On the top four only, and Ethereum was fifth, so they did not actually ban people from using Ethereum.

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And the people just went for the biggest thing that they could use to get their money out of China and into Western countries, Western markets and stuff.

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So basically, it can very well be for so simple economic reasons that something gets adopted.

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It's entirely not sure that it has anything to do with the feature set.

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I mean, I can't rule it out, but the way I see it, it can be that simple.

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I see. So if I understand correctly, your view is that peer-to-peer electronic cash or even just electronic cash that is demanded, and that's the killer app for blockchain in your view.

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Whereas I think the classical drivechain view is that about half of all blockchain activity in the future will be money.

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And the other half will be all of the other kinds of variations on blockchain design that Bitcoin doesn't have.

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My point is you can't even satisfy the money use case.

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If you are trying to do everything only on Bitcoin, you can't actually do that. It doesn't work.

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I'm pretty sure we already kind of proved that.

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Yes.

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And the big thing is I don't think the peer-to-peer is a good discriminator or a good way to distinguish things.

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Because the way I see it, eCash, I'm not sure how familiar you are with eCash, but eCash is a lot more peer-to-peer.

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In some regards, a lot more peer-to-peer than anything on a blockchain.

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But in another perspective, it's an IOU. That's how it works, right?

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So it's someone's liability. It's a fiduciary media.

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And the thing that blockchains, especially Elans, have in common is that they have this weird decentralized game theoretical consensus.

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And ideally, no one is the ruler of that consensus.

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And basically, people want that. They actually want to participate in that.

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And it is not so much peer-to-peer. As I said before, there are many ways to define peers in such networks.

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And probably we're never going to have an agreement on the exact definition of peer.

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And you can absolutely use these blockchains in a non-peer-to-peer manner, right?

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So you can use them in a server-client manner. It doesn't matter.

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That's not the point that makes people want to use them.

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It's not the right thing that attracts people to hold assets on blockchains.

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They are on blockchains, I think.

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Okay. Well, you expressed that the peer-to-peer attribute of Bitcoin is not as important as some people would say. Is that what you're saying?

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No, no, no, no, no. I'm saying it's a total misnomer, right? So that's not how Bitcoin works.

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When you are sending someone Bitcoin, it's not a peer-to-peer transaction.

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What's a peer-to-peer transaction is if you put that Bitcoin on an OpenDime or a subscribe or some other physical add to and you hand it over to someone, that's a peer-to-peer transaction.

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But if you send Bitcoin over the blockchain, that's not peer-to-peer.

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And arguably Lightning payments are not peer-to-peer either, right?

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Especially in the directions we are going, the whole ecosystem will be extremely reliant on LSP, Lightning Service Providers.

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So it's not exactly peer-to-peer either.

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I think people get a little bit confused about how peer-to-peer is meant.

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I think when Satoshi was writing about peer-to-peer electronic cash, he used the phrase peer-to-peer to refer to the network, not to a transaction.

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So when you said that handing someone an OpenDime is more peer-to-peer than like doing a layer one transaction, I think that's not peer-to-peer in the way that Satoshi meant it.

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Peer-to-peer in my understanding means that every role in the network is a role that is not socially granted, but instead is available to everyone with the only barrier to entry being economic.

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So anyone can mine, anyone can have a node, anyone can transact.

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There's no special role, there's no privileged status, there's no party that has a special role.

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So that's what I think.

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You can define it that, but we don't even know what Satoshi meant by that.

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Because at first, Bitcoin, I think, didn't even have addresses, right?

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So you could send Bitcoin to an IP address, basically, and someone had to run the node to receive the Bitcoin.

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And that was, in a way, in some perspective, especially if they both run the miner process, right?

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If they both generated blocks, then it was a pretty peer-to-peer thing.

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Because if the recipient could generate blocks and they could get included in the blockchain,

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and they received this over IP, you know, direct connection,

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then it was definitely a peer-to-peer transaction by any definition.

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But that's not how Bitcoin works today, like at all.

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Welcome, Paul, to the stage.

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Oh, hello. What are we talking about?

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Are we talking about anything good?

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We're talking about sidechains.

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And we had an interesting discussion, Moonstellar and I.

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He was talking about how demand for block space will tend to, over time, continue to legitimize altcoins.

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I think he means, and correct me if I'm wrong, Moonstellar,

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that you're saying that when there are fee spikes in Bitcoin's block space,

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then people will migrate to altcoins, and you think that will happen until we have a large block sidechain on Bitcoin?

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No, I think I meant, and I think Eric Voskouly has tweeted about this as well.

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He has this particular view that it's perfectly normal, perfectly sensible,

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that people will find alternative goods to satisfy their needs

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when you have these price hikes, these supply crunches, or whatever you want to call it,

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when the mempool completely clogs up and fees go up.

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So it's a perfectly rational and normal human behavior to seek alternatives.

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And either sidechains or altcoins, we are going to have to satisfy that need.

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That's what I actually meant.

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And I think it's up to Bitcoiners which direction they want to take it.

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But if they don't do anything, then it will be altcoins.

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Yeah, I completely agree.

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That's sort of what I said in my second fees post about, and in the first one, really.

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But in the second one, I especially made it clear that there's no difference between Litecoin's block space,

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as far as the block space is concerned, and just stamping out a copy of BTC four times,

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and then you just have more space.

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And I completely agree with Eric that it's a completely different type of good.

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The block space is a completely different type of good than a lightning channel.

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There's a lot of reasons why people would prefer one.

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They like the blockchain message because you just get in, you get in and out,

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and you get infinite liquidity.

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You don't have to have a hot wallet.

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So I completely agree with all that.

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Paul, what is your view on the latent expressivity of Bitcoin as demonstrated in recent months

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with the BRC-20 and the ordinals and inscriptions?

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Do you think that people will continue to find ways to do new things on Bitcoin without a soft fork

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and that that might create a lot of demand for the block space in the future?

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Or do you expect that your posts on the security budget will be vindicated in their expectation

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that there's a high likelihood that fees will remain low until we have drivechain or something like it?

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Well, I'm not sure they have as much to do with each other.

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So, for example, if people figure out how to do BRC-20 tokens,

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that may increase the demand for a block space,

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but it really just doesn't change the fundamental fact that the fees paid are what the miners earn.

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And so that's just the equation.

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So does that make sense or no?

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Because the miners want to earn a lot of money, but the users don't want to pay a lot of money.

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But it's the same value, so only one of those people is getting what they want.

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It's probably going to be the users who will just not pay.

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The miners will then not have a lot of money, which will be low security budget.

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So if I understand correctly, your view is that with a layered system,

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then we can achieve high income to the miners by collecting the fees across the entire blockchain economy.

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So if all blockchains were sidechains of Bitcoin, then the fees would be high enough.

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Well, the fees have no ceiling.

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The total fees collected by miners, there is no limit to the growth,

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so the growth could just grow geometrically forever,

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which is what everything else does, like what Visa does and what.

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Yeah, and the security budget actually can be, I think, can be really evaluated in itself.

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So it has to be viewed in relation to what is the amount of value transferred

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that is actually secured by proof-of-work, Nakamoto consensus.

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Because there are multiple ways to achieve finality.

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So it's entirely possible that proof-of-work only really works for a specific size of transactions

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and changes over time naturally with the subsidy declining and the fees and stuff.

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And it may not work for microtransactions.

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It might not work for hundreds of billions of dollars, right?

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But it might find the paying demand, the transaction sizes that it can actually provide good finality for.

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Well, I think, I mean, if the security budget gets very low, then it may change quite a lot,

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where it will be very insecure for proof-of-work to send almost every transaction

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that person, that anyone considers reasonable.

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Like just to take an extreme example, if it only cost, you know, 10 cents to do a thousand block reorg,

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that's just an extreme case.

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But then you can see that you don't really need to compare it to the size of the transaction necessarily,

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because it's like a transaction of basically any size is dead in that situation.

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Yeah, that's what I tried to explain to people that when you have like 10,000 Bitcoin transactions

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and people assume that it is secured by proof-of-work

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and the total miner revenue is like 0.1 Bitcoin in the future, that doesn't make any sense.

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That just doesn't make sense.

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It's not a workable thing.

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And the way the entire thing is constructed with this push towards increased efficiency

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and increased sized settlements on layer one, secured by a lower and lower miner revenue,

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it doesn't seem workable long term unless something changes.

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And like I said, one option is to defect from proof-of-work and find alternative means to achieve finality.

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So maybe that will happen for these large settlements.

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But that begs the question that why would Bitcoin and proof-of-work be tolerated in a world

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where it does not actually secure the volume transacted, right?

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Yeah, I think it's like it's all interacting systems.

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So it's like, you know, what good is the circulatory system without the muscular system or the nervous system?

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You know, it's like they're all kind of like intertwined.

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So I think it's pretty clear that Satoshi had a bet that proof-of-work would be used.

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Satoshi clearly had in mind that there would be lots of transactions using Bitcoin in some way.

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He clearly had in mind many different merge mine blockchains.

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In fact, he clearly had in mind that either he says that line about,

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there's a lot of things that are ambiguous about what Satoshi believes.

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But he said, you know, in 20 years, there will either be a lot of transactions or basically zero.

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He says it's basically, you know, it's win or lose.

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Clearly designed it to take advantage of the case where it had achieved network effects and it was being used like by everyone.

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And I think what people don't consider is like I said,

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the current way Bitcoin works is pushing the settlement transactions to larger and larger sizes.

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So that the higher and higher fees, it would be still economically the higher and higher fees.

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So Satoshi had in mind probably was that as Bitcoin appreciates in price,

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the average value of the transactions will go down.

231
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And so it's fine for the subsidy to decline with that.

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I get this feeling when I read that line, you know, that he did not expect transactions to go super large.

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And this diminishing amount of revenue would have to secure that magically somehow, you know.

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Yeah, Michael Saylor, he still doesn't grasp, I think, the difference between,

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the all important difference between coins and layer one block space,

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where there's 21 million coins and then there's 10, there's, you know, a certain amount,

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certain number of bytes of layer one block space produced every 10 minutes.

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So they're completely different goods.

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They're as different as chalk and cheese.

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But it's very, for some reason, it's very difficult.

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I don't know exactly why this is the case,

242
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but it's very difficult for people to actually separate them in their mind.

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And they just do not understand that the dollar value of coins could go up or down.

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The dollar value of block space could independently go up, down, or remain unchanged.

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And Michael Saylor, I've heard him several times say something like,

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well, the transaction fees would be 1% of, it'll be, you know,

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there'd be like $100 million transaction, it'll be $3 trillion transaction,

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and it'll be 1% of 1% of that.

249
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And that will be all the security budget you need.

250
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But, you know, there's a value lower than 1%.

251
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It could be 0.000001%.

252
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I'm pretty sure that if Bitcoin is going to have a percentile fee on the transactions,

253
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then it would have to be enforced by a consensus rule.

254
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Otherwise, it will simply not happen.

255
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It doesn't make any sense.

256
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And I don't know why people assume that central banks are settling between each other.

257
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Some have this hyper-Bitcoinization idea that banks and central banks will just settle,

258
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and they will pay enormous fees,

259
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and they think the shims are going to get the transactions in between those

260
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and we'll be secured by these fees.

261
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It doesn't make any sense.

262
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There would be altruism if they did.

263
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So, like, if they paid the fees, it would just be them giving donations, basically.

264
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The example I gave in my second article is I say,

265
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I talk about people paying to read the New York Times as a joke,

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and then I say, talking about people paying to listen to music.

267
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And I say, well, people love music.

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You know, Elon Musk, he loves music.

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But he doesn't have to pay 1% of YouTube's net worth or whatever it would be.

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I don't even know what the analogy would be.

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But he can go on YouTube and listen to music for free, basically the same as the rest of us.

272
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So there's no inherent reason why it would be 1% of the value of music or whatever that would even mean.

273
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There is no rationale to it either.

274
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So they don't actually get good finality by paying a 1% fee on the transactions.

275
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It's a complete free rider problem.

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Paul, I have a quick question for you about the security budget.

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I understand your expectation is that these spikes that we have every few years,

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like in 2017, 2021, and this year, these spikes in fees will tend to be sporadic, unpredictable, and short-lived,

279
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and that a return to low fees will unfortunately be the case for Bitcoin in its current form.

280
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So without drivechain, we'll have low fees in the far future, possibly.

281
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And if that is vindicated, if that pessimistic view is vindicated,

282
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and that Bitcoin will eventually have a security budget problem,

283
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do you believe or think that it will materialize as an immediate acute problem, such as a hostile 51% attack,

284
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or will a variety of problems arise that aren't so acute,

285
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such as some kind of degraded network performance that isn't catastrophic and acute?

286
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What do you think will be the way that security budget problem in the future arises?

287
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Will it be acute or will it grow over time in some way that's noticeable?

288
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Well, that's a good question.

289
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I think it will be a combination of those things.

290
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So like one of the things that will grow over time is that more and more people will comment about it and complain about it.

291
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So I think that that is the case.

292
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I think that people will just see that the thesis is a pretty simple one.

293
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That doesn't necessarily mean it's correct.

294
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But the thesis, like I was saying, is just that people prefer having more money to having less money.

295
00:35:02,231 --> 00:35:10,231
So like Elon Musk, he could pay a billion dollars a year to listen to music,

296
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but he just prefers having the billion dollars a year.

297
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Like why pay it if you don't have to?

298
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For the same reason, we can be very, very rich, but we don't pay.

299
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I go on YouTube and I just listen to whatever music I want, and I prefer not paying.

300
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Yes, I understand that end users prefer very low fees,

301
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and therefore the world would do well to have a thunderside chain, a drivechain with large blocks on Bitcoin.

302
00:35:38,231 --> 00:35:42,231
But my question is, if we have low fees on main chain forever,

303
00:35:42,231 --> 00:35:48,231
there has yet to be an acute, noticeable problem that's perceived by everyone.

304
00:35:48,231 --> 00:35:53,231
And do you think that when a problem materializes, will it take an acute form,

305
00:35:53,231 --> 00:35:57,231
or will it take a form that is gradual but apparent,

306
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such as some kind of measurable problem of degraded performance on the network

307
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because miners are doing something that they can do that's profitable but is not incentive compatible?

308
00:36:09,231 --> 00:36:13,231
That's a good question.

309
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I don't think it will actually reach a point where someone attacks the network and destroys it.

310
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I think it will instead be that there is a frustration with the lack of solution,

311
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and then Bitcoin will be replaced by some other coin,

312
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or Bitcoin will become very niche and then die off, would be the eventual thing.

313
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And that would be kind of acute, I think, because a lot of people would be...

314
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But I don't know how long that would take until more people recognize the problem,

315
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because right now we're kind of coasting on the fact that the security budget,

316
00:36:52,231 --> 00:36:58,231
the block subsidy is still high, there is still no good competitor to BTC at all,

317
00:36:58,231 --> 00:37:03,231
and so few people understand this problem still.

318
00:37:03,231 --> 00:37:06,231
So it's still not even at the point where people would recognize it.

319
00:37:06,231 --> 00:37:11,231
But I think it's a good question, because the question is kind of like,

320
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so what, the security budget, whatever, who cares?

321
00:37:15,231 --> 00:37:17,231
What would actually happen?

322
00:37:17,231 --> 00:37:24,231
Right. For example, some people, I felt lately in recent weeks with fees very high,

323
00:37:24,231 --> 00:37:28,231
the argument for drivechain, instead of being about security budget,

324
00:37:28,231 --> 00:37:32,231
can be about the need for scaling Bitcoin.

325
00:37:32,231 --> 00:37:37,231
And scaling Bitcoin as a rallying cry for innovation and sidechains and drivechain

326
00:37:37,231 --> 00:37:41,231
is an easier case to make, because there's a tangible materialized problem

327
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where ordinary people can't do a layer one transaction affordably.

328
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If it's $50, it's hard for many people to do it.

329
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So Bitcoin needs to be scaled, and with the high fees, if they were permanent,

330
00:37:53,231 --> 00:37:57,231
if they were sustained, we'd have a tangible thing to point to

331
00:37:57,231 --> 00:38:00,231
as a solution that a sidechain can fix.

332
00:38:00,231 --> 00:38:06,231
Whereas with low fees and no hostile attacker, the case for sidechains,

333
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to the extent that it pertains to the security budget,

334
00:38:10,231 --> 00:38:14,231
that case is harder to make because it involves a theoretical problem

335
00:38:14,231 --> 00:38:16,231
that has never materialized before.

336
00:38:16,231 --> 00:38:18,231
Bitcoin has never had a hostile attacker.

337
00:38:19,231 --> 00:38:22,231
So that's 51% of mining.

338
00:38:22,231 --> 00:38:25,231
So it's a hard case to make.

339
00:38:25,231 --> 00:38:26,231
Yeah, I completely agree.

340
00:38:26,231 --> 00:38:29,231
With the fees are high, there's a clear victim.

341
00:38:29,231 --> 00:38:30,231
Yes, right.

342
00:38:30,231 --> 00:38:34,231
So when the fees are high, it's easy to say, hey, let's do drivechain.

343
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Let's try a large block sidechain on Bitcoin.

344
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Let's opt in.

345
00:38:38,231 --> 00:38:41,231
But when fees are low, it's a much more difficult problem

346
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because some Bitcoiners will say, hey, there's never been an attacker.

347
00:38:44,231 --> 00:38:45,231
Maybe there never will be.

348
00:38:45,231 --> 00:38:47,231
Why do we need to care about fees at all?

349
00:38:50,231 --> 00:38:51,231
Yeah.

350
00:38:51,231 --> 00:38:57,231
So it's very weird because if you just listen in on the vibe,

351
00:38:57,231 --> 00:39:00,231
on what is going on, say Bitcoin Twitter,

352
00:39:00,231 --> 00:39:07,231
and what the collective consciousness of the Bitcoiners is spitting out,

353
00:39:09,231 --> 00:39:12,231
they actually somehow convince themselves

354
00:39:12,231 --> 00:39:16,231
that Bitcoin is this ultimate form of security.

355
00:39:16,231 --> 00:39:20,231
And just by its own virtue of existing,

356
00:39:20,231 --> 00:39:24,231
it will be able to secure arbitrary amount of wealth

357
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and arbitrary large transactions somehow.

358
00:39:29,231 --> 00:39:35,231
And that to me kind of suggests that none of them actually understands

359
00:39:35,231 --> 00:39:40,231
how proof of work and Bitcoin works.

360
00:39:40,231 --> 00:39:43,231
And it's pretty weird.

361
00:39:43,231 --> 00:39:54,231
So I don't know if you can actually explain the security budget problem to them.

362
00:39:54,231 --> 00:39:58,231
But the fees is something that everyone feels right away, right?

363
00:39:58,231 --> 00:39:59,231
That pain.

364
00:39:59,231 --> 00:40:02,231
If you want to transact, if you want to open a lightning channel

365
00:40:02,231 --> 00:40:06,231
and 500 sorts per byte is the lowest,

366
00:40:06,231 --> 00:40:09,231
you can get into a block that people understand.

367
00:40:09,231 --> 00:40:12,231
Moon Settler, could you walk us through?

368
00:40:13,219 --> 00:40:20,059
What you think the security budget problem, if it materializes, what will that look like?

369
00:40:20,539 --> 00:40:24,419
Because you just explained how high fees are easy to point to as a problem, right?

370
00:40:24,419 --> 00:40:29,698
We know high fees are they're painful to people who want to transact on layer one if they're poor.

371
00:40:29,939 --> 00:40:36,099
But can you tell us when the security budget problem, if it ever materializes, what will that feel like?

372
00:40:36,099 --> 00:40:39,939
What will that look like? Do you think it'll be, you know, one day everything's fine.

373
00:40:39,939 --> 00:40:44,179
The next day there's a hostile perpetual attack there where no one ever transacts again.

374
00:40:44,419 --> 00:40:48,579
Or will it be something that grows over time in a noticeable way?

375
00:40:50,178 --> 00:40:51,178
Which is it?

376
00:40:51,979 --> 00:41:05,178
I think the base assumption that you have to make to talk about this in a clear way is that miners will be profit oriented.

377
00:41:05,338 --> 00:41:07,498
So they will want to maximize their profit.

378
00:41:08,338 --> 00:41:10,698
And either of two things is true.

379
00:41:11,459 --> 00:41:18,098
One is either there is a very liquid futures market that allows them to hedge their moves.

380
00:41:19,498 --> 00:41:27,579
So they can actually profit from Bitcoin going down in value or at least be hedged in that case.

381
00:41:28,699 --> 00:41:32,379
Or the other is that Bitcoin is basically taken over everything.

382
00:41:32,379 --> 00:41:41,979
It is the only real money that matters, the reserve currency of sort, and it can't really devalue against anything.

383
00:41:42,138 --> 00:41:50,778
And, you know, the Nakamoto consensus does act as the source of truth for this world, right?

384
00:41:50,939 --> 00:41:58,979
So a lot of Bitcoiners think that somehow this proof of work, sacred time chain thing is the ultimate source of truth.

385
00:41:59,178 --> 00:42:05,778
And whatever it shows us is the truth, even if it experiences a reorg, right?

386
00:42:05,939 --> 00:42:11,659
So humans have this subjective time where they think they saw a block before, you know.

387
00:42:11,818 --> 00:42:21,578
But if the Bitcoin time chain decides that block never happened, right, that is not part of the network going forward because a reorg happened,

388
00:42:21,738 --> 00:42:23,859
then it is no longer the truth.

389
00:42:24,018 --> 00:42:43,259
So that is the sanctity and primacy of the Nakamoto consensus and proof of work results that you just accept reorgs as if the losing chain was the attack and not the winning chain.

390
00:42:44,059 --> 00:42:46,139
I don't think humans work like that.

391
00:42:46,259 --> 00:42:48,178
So this is a pretty wild assumption.

392
00:42:48,219 --> 00:42:52,139
I don't think humans would find this particularly useful.

393
00:42:53,139 --> 00:43:03,059
But if people do accept this and if Bitcoin cannot really, you know, go down in value against anything because it has already consumed everything,

394
00:43:04,098 --> 00:43:09,098
then basically attacking Bitcoin does not have a serious cost.

395
00:43:10,899 --> 00:43:17,098
And the same is true if they can just simply hedge their bets on futures markets.

396
00:43:17,098 --> 00:43:22,658
They might actually make an attack that is not successful, profitable, if they do it right.

397
00:43:23,098 --> 00:43:26,378
And these are externalities to the Bitcoin protocol, right?

398
00:43:26,419 --> 00:43:38,619
So the way it is defined in the client software and the consensus rules, these are external factors that developers and people who run those don't really control.

399
00:43:39,499 --> 00:43:53,779
And people just don't seem to understand that these factors completely influence or decide the outcome of these hypothetical events like an attack, which is not really an attack, right?

400
00:43:53,818 --> 00:44:01,499
So if you accept the sanctity of proof of work and its absoluteness as a source of truth, then it's not really an attack to do a reorg.

401
00:44:02,499 --> 00:44:09,059
It's perfectly normal by the protocol to just rewrite history and double spend on transactions, right?

402
00:44:09,499 --> 00:44:12,059
So it's pretty interesting.

403
00:44:12,098 --> 00:44:24,059
But what I wanted to go with this is there is always going to be a size of transaction where if the counter value of the transaction has better finality,

404
00:44:24,658 --> 00:44:34,619
then it might be very, very, very profitable for the miners to accept the bribe and just reorganize the chain and make the Bitcoin side never happen.

405
00:44:35,059 --> 00:44:48,619
So I think the key to understand the security budget is this, that there is always going to be a size of transaction that just cannot be secured by proof of work, given how much revenue the miners have.

406
00:44:48,619 --> 00:44:58,178
So the miner revenue pretty much puts a maximum to the practical amount and your finality assumptions on what proof of work can secure.

407
00:44:58,619 --> 00:45:09,178
And that is why I said it's entirely possible that we will find an equilibrium on the size of transactions that are rational to be secured by proof of work.

408
00:45:09,619 --> 00:45:14,178
And other transactions may not actually be secured by proof of work.

409
00:45:15,178 --> 00:45:29,738
So you can just make a giant multisig pool for the central banks of the world and these central banks would internally settle with an N of N multisig.

410
00:45:30,178 --> 00:45:39,738
We can, I think, assume that central banks will be able to maintain an online presence 24-7, so it's not a problem for them to sign state updates.

411
00:45:40,738 --> 00:45:44,298
They can actually defer these state updates as we've seen with the Lightning Network, right?

412
00:45:44,738 --> 00:45:57,298
So Lightning Network channels are relatively rarely writing state updates on the Bitcoin blockchain and they are just keeping this offline tab.

413
00:45:58,298 --> 00:46:10,858
And I'm pretty sure that if we go that way, then these large financial entities will figure out how to solve the Byzantine General problem outside of Bitcoin's proof of work.

414
00:46:11,298 --> 00:46:19,858
Because it is simply not suitable at securing transactions at that size, at that scale. It's just not.

415
00:46:19,858 --> 00:46:36,418
And also, like I said, of course, microtransactions would be extremely secure because you just can't dream up an economic motivation to redo even a single block.

416
00:46:36,858 --> 00:46:43,418
But for other technical reasons, they might not be feasible on Bitcoin.

417
00:46:44,418 --> 00:46:49,978
And that's why I said we will probably find the size of transactions that make sense on Bitcoin.

418
00:46:50,418 --> 00:46:56,978
The only problem is if something comes along that is just cheaper and has better finality than Bitcoin.

419
00:46:57,418 --> 00:47:09,978
Let me ask you, I understand what you're saying about a theoretical limit, but my question is about a tangible negative experience that would arise as a result of low fees.

420
00:47:09,978 --> 00:47:27,539
So it sounds to me like you're saying the answer to the question we've discussed, the question of whether a security budget problem in the future because of low fees on main chain Bitcoin would be acute or not acute, but instead incrementally increasing.

421
00:47:27,539 --> 00:47:46,099
You're saying, maybe you're saying that it would be not acute because the way that the security budget problem would materialize is an increase in the severity and frequency of reorgs, which would tarnish Bitcoin's...

422
00:47:46,659 --> 00:48:01,659
I think there's an interesting, more interesting angle to it, which is that like, so like some people say that you can just wait for more confirmations, which I normally reply that that's not the case.

423
00:48:01,659 --> 00:48:21,219
But I think what you're talking about, the equilibrium size thing, that is a case where you could have a heterogeneity and you could blend large value transactions with small value transactions with the large value people just waiting for more confirmations, even though I normally dismiss that argument.

424
00:48:21,219 --> 00:48:27,779
But I like your equilibrium idea of just like the network can only do so much.

425
00:48:27,779 --> 00:48:57,299
See, another interesting twist on that is that people have often, so for example, extremely smart people, such as Peter Weil, have said stuff like, they'll say, we don't want assets on Bitcoin because the assets will have a great, such a high value that the value transacted will be enormous compared to the miner bribe amount, the security budget, and then that would be bad.

426
00:48:57,299 --> 00:49:04,859
But you're just sort of saying, well, they wouldn't do that, foreseeing the risk of the miner bribe, they would just, they would just not do that.

427
00:49:04,859 --> 00:49:23,618
Yeah, I think the main problem with putting exogenous assets on Bitcoin is that if these assets are not like Bitcoin, the token itself, they are actually someone's liability, someone is actually backing them, someone is putting the USD on Bitcoin as a token.

428
00:49:23,618 --> 00:49:40,618
Then when it comes to consensus forks, they have a huge undue influence, especially if most of the value settled on Bitcoin and held on Bitcoin would be such stablecoins or whatever, then the issuers of those stablecoins would basically tell us which fork is going to be.

429
00:49:40,618 --> 00:49:55,618
So that's one big problem with them putting them on Bitcoin. On the other hand, if you make alternative assets consensus subservient to Bitcoin, then you will never get to a situation where the alternative asset has better finality than Bitcoin.

430
00:49:55,618 --> 00:50:22,618
So what I was talking about, that something, the other side of a transaction, like say I buy a yacht for 10,000 Bitcoins, a super yacht, and I just sail away with that yacht in a hypothetical universe where I can just, you know, in a balkanized world I can just say hello to everyone and somehow slip away.

431
00:50:22,618 --> 00:50:47,618
And I can bribe the miners into reorganizing the blockchain. At the very minimum, the guy that I gave the 10,000 Bitcoins is going to get shafted, because either the miners will have the 10,000 Bitcoin, and if I happen to be like a 30% miner, then I will at least get a 30% of it back.

432
00:50:47,618 --> 00:50:54,618
So I'm going to get that yacht 30% cheaper than what was the asking price for it, at the very minimum.

433
00:50:54,618 --> 00:51:09,618
Or maybe I am going to be able to outbid him, and maybe he will not be able to fight very hard or very effectively, it all depends if he even realizes what is happening.

434
00:51:09,618 --> 00:51:30,618
But if he just assumes like a 100 block finality or something like that, and the miner revenue is so small that it's going to be economic to make that reorg, then I don't think it's a good idea to trade Bitcoin against anything that has this faster finality effect.

435
00:51:31,618 --> 00:51:48,618
And this can also be true of proof-of-stake chains. So if you have a proof-of-stake chain where the expected cost of an attack is maybe magnitudes higher than on Bitcoin, then you can have this discrepancy in certain cases.

436
00:51:48,618 --> 00:52:01,618
Because on Bitcoin the cost of the attack is basically always going to be upper bound by the miner revenue, alternative cost of that period that you are trying to reorg.

437
00:52:01,618 --> 00:52:21,618
If you fail, you can't really lose more than that. And on a proof-of-stake chain, if you have a supermajority recruited, that supermajority worst case could lose their stake, and that is a huge deflationary effect, so the users are actually incentivized to go along with this lynching.

438
00:52:21,618 --> 00:52:38,618
And the expected cost of the attack is enormous. And when you have these two chains doing some peer-to-peer or atomic swap or whatever, decentralized exchange transaction between them that is large enough, then it opens Bitcoin up for a reorg.

439
00:52:38,618 --> 00:52:56,618
And like I said, I think people will find the value that is rational to settle on Bitcoin. The problem with this is if this value keeps dropping and going slower and slower, then I think more and more of the economic activity will just root around this problem and will find other means.

440
00:52:56,618 --> 00:53:01,618
And this will eventually mean that Bitcoin is abandoned, right?

441
00:53:02,618 --> 00:53:16,618
Yes. I think we could summarize because a lot of the stuff is very nuanced and it's sort of complicated, but I think a good summary is if the security budget is too low, then the whole network is just dead.

442
00:53:16,618 --> 00:53:37,618
Nothing matters. Confirmations don't matter. When you have a blend of – well, like if it's sort of limping along, then the larger transactions can wait for more confirmations. The small confirmations get more finality, the equilibrium.

443
00:53:38,618 --> 00:53:52,618
I think that people's willingness to pay for block space is low and it will plummet over time because new stuff will be invented for a start.

444
00:53:52,618 --> 00:54:08,618
There were no credit cards 100 years ago. There were no wire transfers, and now we have Venmo. Venmo is free. People love Venmo. They actually enjoy posting to Venmo because of the social aspect.

445
00:54:08,618 --> 00:54:20,618
So there's positive utility to just use Venmo for free. You get to FOMO. You FOMO your friends. They can see that you show everyone that you're having a good time.

446
00:54:21,618 --> 00:54:41,618
And so I think all that will plummet, I think. So yeah, that's just the situation. We would want to align everything with the situation where willingness to pay for block space per byte is very low.

447
00:54:41,618 --> 00:54:55,618
It's like my summary. I really like your equilibrium idea, though, which is that as the security budget falls, people will just be less willing to make enormous transactions on the network.

448
00:54:56,618 --> 00:55:14,618
The reason why they'll be less willing is not just for theoretical concerns about a reorg. It would be because the data that appears publicly in people's actual experience will be that there will be an increasing number of reorgs in terms of their severity and frequency.

449
00:55:15,618 --> 00:55:27,618
Well, not necessarily. I don't think so. It could just be anticipated. The market cap can just never grow. So for starters, it will justify altcoins, legitimize the altcoins.

450
00:55:28,618 --> 00:55:44,618
And this is exactly what we have been seeing, is that we've moved from a world where it would be unthinkable to leave the Bitcoin tribe, 99% Bitcoin dominance, to a world where this is just becoming very normal now.

451
00:55:45,618 --> 00:56:10,618
Yes, understood. So that's the tricky nuance thing, is that this problem can materialize in a way that never is apparent in terms of data where people actually suffer a reorg. But instead, the lower security leads to a perceived need, correctly, to use another blockchain that has higher security, higher fees, higher economic security, higher transaction finality.

452
00:56:11,618 --> 00:56:13,618
Well, just higher security budget and lower fees.

453
00:56:14,618 --> 00:56:16,618
Right, because of a multi-layer design.

454
00:56:17,618 --> 00:56:36,618
Well, and there's more lower fee rates. Like they use Litecoin now. Because they'll still have the block subsidy. So it's just turning over, it's basically just justifying an endless block subsidy in the form of an altcoin that still has a block subsidy.

455
00:56:37,618 --> 00:56:40,618
Right, right.

456
00:56:41,618 --> 00:56:55,618
Yeah, because basically, as others have said, block subsidies is like a VAT tax. So you are putting some of the burden of securing the chain on the hodlers.

457
00:56:55,618 --> 00:57:12,618
And the hodlers are, at least currently, the primary benefactors of Bitcoin's appreciation and its perceived status. So a lot of people don't like subsidy and they can't wait for it to go away for various reasons.

458
00:57:12,618 --> 00:57:40,618
But it's not necessarily an evil thing, as others have pointed out. And I'm not advocating for adding tail emission to Bitcoin, by the way. I'm just saying I don't find it unreasonable that some people hold the position that this is not necessarily a bad setup, that those that hold the asset are paying this way for the security.

459
00:57:41,618 --> 00:57:57,618
I think the drivechain view is that if the tail emission is needed, then that is a symptom of an already existing larger problem where Bitcoin fails to have the multilayered, multifaceted design of drivechain.

460
00:57:58,618 --> 00:58:02,618
So do you think we should ask if anyone else wants to speak?

461
00:58:02,618 --> 00:58:18,618
Yeah, certainly. Everyone is welcome to come on up to the stage, raise your hand and ask your question or share a comment about the things we've been talking about today. We're talking about drivechain, sidechains, Bitcoin security budget, the fee rates.

462
00:58:18,618 --> 00:58:45,618
If you'd like to come on up and share a thought, please do raise your hand and we'll let you up to ask your question. Don't be shy. If you're not sure what we're talking about, come on up if you're not sure what we're talking about so we can answer questions that others might be having.

463
00:58:45,618 --> 00:58:50,618
So don't be afraid to ask a question. Others might be thinking the same kind of question.

464
00:58:57,618 --> 00:59:06,618
Okay, cool. I have to go actually. Unless there's a really great question. But there doesn't seem to be any.

465
00:59:07,618 --> 00:59:09,618
Well, we love it when you pop in, Paul.

466
00:59:10,618 --> 00:59:11,618
Okay, great.

467
00:59:11,618 --> 00:59:12,618
Take care.

468
00:59:12,618 --> 00:59:13,618
See you later. Bye.

469
00:59:15,618 --> 00:59:42,618
So this is drivechain discussion. Bitcoin proposal 300 and 301 is why we're here to chat about making Bitcoin stronger and more exciting. And it's all about innovation. It's all about enabling more features that are desired by more people to exist on top of Bitcoin in a safe way where it's on a sidechain, where if the sidechain fails, it doesn't harm people who didn't opt into it.

470
00:59:43,618 --> 01:00:04,618
And even if you're not using the sidechains, it's benefiting you as a Bitcoiner because all of the fees on the sidechain, approximately 100% of them almost, will be paid to layer one through a process that Satoshi invented called merged mining and which drivechain enhances through blind merge mining.

471
01:00:05,618 --> 01:00:07,618
Welcome to the stage, Michael.

472
01:00:09,618 --> 01:00:12,618
Once you're connected, please share your question or comment.

473
01:00:15,461 --> 01:00:17,581
This was a very interesting conversation, Moon Settler.

474
01:00:17,581 --> 01:00:19,781
I've been wondering about this for a long time.

475
01:00:19,781 --> 01:00:22,501
How will the security budget problem materialize?

476
01:00:22,501 --> 01:00:26,061
People have often asked to me and others

477
01:00:26,061 --> 01:00:28,941
who are interested in topic of Bitcoin's fees

478
01:00:28,941 --> 01:00:30,561
and the need for them to be high.

479
01:00:30,561 --> 01:00:32,461
People say, well, what's the problem?

480
01:00:32,461 --> 01:00:34,061
Like, why do we need high fees?

481
01:00:34,061 --> 01:00:37,020
Bitcoin hasn't had high fees for most of its history.

482
01:00:37,020 --> 01:00:39,481
There's never been any kind of problem.

483
01:00:39,481 --> 01:00:41,141
What if the fees are low forever?

484
01:00:41,141 --> 01:00:43,020
Wouldn't that be okay?

485
01:00:43,020 --> 01:00:48,021
But unfortunately, we want to see high fees.

486
01:00:48,260 --> 01:00:50,001
The higher, the better.

487
01:00:50,001 --> 01:00:52,380
And this discussion has been about that

488
01:00:52,380 --> 01:00:55,080
and what it would look like if the fees aren't high.

489
01:00:56,021 --> 01:00:58,100
What form would the problem take?

490
01:00:58,100 --> 01:00:59,541
How would it materialize?

491
01:01:00,380 --> 01:01:04,260
So I appreciate you articulating how the reorg frequency

492
01:01:04,260 --> 01:01:06,181
and severity could be high,

493
01:01:06,181 --> 01:01:08,100
but I also sympathize with what Paul said,

494
01:01:08,100 --> 01:01:11,900
which is that people could perceive the threat,

495
01:01:11,900 --> 01:01:15,861
theoretically, of the reorg due to the low fees

496
01:01:15,861 --> 01:01:19,221
and simply not transact large amounts.

497
01:01:19,221 --> 01:01:23,880
And therefore, Bitcoin would suffer from less use,

498
01:01:23,880 --> 01:01:25,980
even though there isn't a noticeable,

499
01:01:25,980 --> 01:01:29,740
detectable reorg frequency occurring.

500
01:01:30,781 --> 01:01:32,941
So it's a tricky topic.

501
01:01:32,941 --> 01:01:35,261
Hi, Michael, thanks for joining.

502
01:01:35,261 --> 01:01:36,420
Yeah, no worries.

503
01:01:36,420 --> 01:01:38,141
Sorry about the connectivity problems,

504
01:01:38,141 --> 01:01:39,660
but can you guys hear me okay?

505
01:01:40,581 --> 01:01:41,420
Yeah, perfectly.

506
01:01:41,740 --> 01:01:42,581
What's up?

507
01:01:42,581 --> 01:01:44,821
So I've been following along with Drivechains

508
01:01:44,821 --> 01:01:46,501
for a little over a month now.

509
01:01:50,181 --> 01:01:52,181
What I really like about Drivechain

510
01:01:52,181 --> 01:01:54,581
is the permissionless innovation

511
01:01:54,581 --> 01:01:59,581
and being able to issue other coins

512
01:01:59,581 --> 01:02:02,380
for the technical aspects on top of Bitcoin

513
01:02:02,380 --> 01:02:05,380
without affecting the entire network as a whole,

514
01:02:05,380 --> 01:02:06,541
if it's a bad idea.

515
01:02:07,700 --> 01:02:10,300
In the time that I've taken to learn Drivechains,

516
01:02:10,300 --> 01:02:12,501
there's been so much happening on Bitcoin

517
01:02:12,501 --> 01:02:16,861
with, obviously, ordinals and even BRC20 tokens.

518
01:02:16,861 --> 01:02:19,861
So if I was to speak to somebody at a high level,

519
01:02:19,861 --> 01:02:22,580
not super technical, and I said,

520
01:02:22,580 --> 01:02:23,901
no, the thing about Drivechains

521
01:02:23,901 --> 01:02:24,940
and why it should be implemented

522
01:02:24,940 --> 01:02:28,421
is we can issue other sidechains

523
01:02:28,421 --> 01:02:31,181
with tokens, whatever, attached,

524
01:02:31,181 --> 01:02:32,860
and it doesn't affect the overall network,

525
01:02:32,860 --> 01:02:34,561
and their response would be,

526
01:02:35,740 --> 01:02:39,621
well, can't we do that with BRC20 tokens?

527
01:02:39,660 --> 01:02:41,940
What would your response to that be?

528
01:02:44,821 --> 01:02:48,421
Well, I think that gambling is perfectly acceptable

529
01:02:48,421 --> 01:02:50,541
from a capitalist standpoint.

530
01:02:50,541 --> 01:02:54,781
So for starters, I would say that

531
01:02:54,781 --> 01:02:57,181
people who frown upon gambling

532
01:02:58,140 --> 01:03:03,140
are deviating from Satoshi's own personal take,

533
01:03:03,660 --> 01:03:07,261
which was that poker on blockchain might be interesting

534
01:03:07,261 --> 01:03:09,740
and that people can do things like gamble

535
01:03:09,740 --> 01:03:11,580
or have fun or entertainment,

536
01:03:12,461 --> 01:03:14,220
especially in a private manner,

537
01:03:14,220 --> 01:03:16,261
anonymously or pseudonymously,

538
01:03:16,261 --> 01:03:17,541
and that's acceptable.

539
01:03:17,541 --> 01:03:19,701
So from a libertarian standpoint,

540
01:03:19,701 --> 01:03:21,541
if people wanna have fun doing something

541
01:03:21,541 --> 01:03:23,981
like playing poker or playing a game

542
01:03:23,981 --> 01:03:26,621
kind of like Dogecoin, it's almost like a game, right?

543
01:03:26,621 --> 01:03:28,380
No one really knows where it's headed.

544
01:03:28,380 --> 01:03:30,181
It's totally speculative.

545
01:03:30,181 --> 01:03:32,580
I don't own any Doge, never have, probably never will,

546
01:03:32,580 --> 01:03:34,940
but some people just are into that kind of thing.

547
01:03:34,940 --> 01:03:36,220
So it's okay.

548
01:03:36,220 --> 01:03:40,341
So the idea that it's contemptible, I think, is wrong,

549
01:03:40,341 --> 01:03:42,981
or at least is so puritan in nature

550
01:03:42,981 --> 01:03:46,421
that it's quite different from what Satoshi himself felt,

551
01:03:46,421 --> 01:03:48,701
not that he was perfect, of course,

552
01:03:48,701 --> 01:03:51,380
but it's just notable that Bitcoin has never been about

553
01:03:51,380 --> 01:03:53,940
that kind of puritanical contempt

554
01:03:53,940 --> 01:03:56,500
for entertainment and speculation.

555
01:03:56,500 --> 01:03:58,580
And in fact, having all of that done

556
01:03:58,580 --> 01:04:01,300
in a totally blockchain-based,

557
01:04:02,261 --> 01:04:07,261
peer-to-peer, anonymous, cypherpunky way

558
01:04:07,901 --> 01:04:09,140
is cool and exciting,

559
01:04:09,140 --> 01:04:10,461
and there might be good innovations

560
01:04:10,461 --> 01:04:12,461
that come out of this effort.

561
01:04:12,461 --> 01:04:14,821
But I also wanna say that you mentioned

562
01:04:14,821 --> 01:04:19,380
that enabling new tokens on top of Bitcoin

563
01:04:19,380 --> 01:04:22,261
is something that could be aligned well

564
01:04:22,261 --> 01:04:24,781
with the sidechain or drivechain movement.

565
01:04:24,781 --> 01:04:27,821
I feel that eliminating altcoins

566
01:04:27,821 --> 01:04:30,020
and eliminating speculative tokens

567
01:04:30,020 --> 01:04:33,700
is actually at the core of the drivechain mission.

568
01:04:33,700 --> 01:04:36,140
And in fact, much of the speculation

569
01:04:36,140 --> 01:04:38,580
on all these tokens out there

570
01:04:38,580 --> 01:04:42,580
is because Bitcoin doesn't have the ability

571
01:04:42,580 --> 01:04:45,781
to platform all kinds of technology.

572
01:04:45,781 --> 01:04:47,980
And if Bitcoin had more extensibility,

573
01:04:47,980 --> 01:04:50,461
if more could be built on top of Bitcoin,

574
01:04:50,461 --> 01:04:52,540
then the entire narrative that,

575
01:04:52,540 --> 01:04:53,901
oh, there's gonna be another Bitcoin,

576
01:04:53,901 --> 01:04:56,501
let's invest when it's small, then it will grow,

577
01:04:56,501 --> 01:04:58,700
that whole speculative craze

578
01:04:58,740 --> 01:05:01,420
might have been much diminished.

579
01:05:01,420 --> 01:05:04,140
There might have been much less speculation

580
01:05:04,140 --> 01:05:07,381
on meme coins and tokens

581
01:05:07,381 --> 01:05:10,300
and ponzinomics and tokenomics over the last eight years

582
01:05:10,300 --> 01:05:13,181
had drivechain been adopted in the past

583
01:05:13,181 --> 01:05:16,020
when it was first conceived in 2015.

584
01:05:16,020 --> 01:05:18,501
If it had been built up and adopted,

585
01:05:18,501 --> 01:05:21,341
then maybe there would have been a lot less

586
01:05:21,341 --> 01:05:25,941
of this sort of unnecessary and frivolous speculation

587
01:05:25,941 --> 01:05:27,860
because there would be perhaps

588
01:05:27,860 --> 01:05:29,700
a higher market cap for Bitcoin,

589
01:05:29,700 --> 01:05:31,140
a much higher dominance,

590
01:05:31,140 --> 01:05:33,980
and therefore much less of a perceived opportunity

591
01:05:33,980 --> 01:05:36,860
for people to launch a competing blockchain

592
01:05:36,860 --> 01:05:39,781
that might one day supplant Bitcoin.

593
01:05:39,781 --> 01:05:42,860
So if Bitcoin were bigger and larger,

594
01:05:42,860 --> 01:05:46,300
and if it were the unparalleled L1 with no competition,

595
01:05:46,300 --> 01:05:50,540
like if Ethereum were 1,000th the size of Bitcoin

596
01:05:50,540 --> 01:05:52,941
instead of one half the size of Bitcoin,

597
01:05:52,941 --> 01:05:57,941
then if Bitcoin had virtually no substantial competition,

598
01:05:58,580 --> 01:06:03,580
then there might be much less speculation on tokens

599
01:06:04,221 --> 01:06:07,061
because the overall narrative of all this speculation

600
01:06:07,061 --> 01:06:11,341
is that maybe one day some new project that today is tiny

601
01:06:11,341 --> 01:06:14,621
will become the big world leading blockchain

602
01:06:14,621 --> 01:06:16,540
like Bitcoin is now.

603
01:06:16,540 --> 01:06:19,260
So I think that it'd be great for Bitcoin

604
01:06:19,300 --> 01:06:23,300
to be having no serious competition economically.

605
01:06:23,300 --> 01:06:24,980
If it were the only L1,

606
01:06:24,980 --> 01:06:27,300
and if everything were built on top of it,

607
01:06:27,300 --> 01:06:29,980
including these entertaining little projects

608
01:06:29,980 --> 01:06:33,260
and Ponzi games of tokenomics

609
01:06:33,260 --> 01:06:35,381
that are just PepeCoin, things like that,

610
01:06:35,381 --> 01:06:36,781
if all of that were built on Bitcoin,

611
01:06:36,781 --> 01:06:37,700
it'd be good for Bitcoin

612
01:06:37,700 --> 01:06:41,140
because even where there's a speculative altcoin,

613
01:06:41,140 --> 01:06:43,181
it's better if it exists on top of Bitcoin

614
01:06:43,181 --> 01:06:45,061
in a way that pays the transaction fees

615
01:06:45,061 --> 01:06:46,540
to Bitcoin's miners.

616
01:06:46,540 --> 01:06:49,101
So as Paul and Moonsettler were discussing earlier,

617
01:06:49,941 --> 01:06:51,221
there are two goods in the Bitcoin network,

618
01:06:51,221 --> 01:06:53,901
the token and the block space.

619
01:06:53,901 --> 01:06:58,621
So as Satoshi discussed in 2010,

620
01:06:58,621 --> 01:07:00,501
altcoins that are merged mined

621
01:07:00,501 --> 01:07:04,181
pay transaction fees to Bitcoin's blocks,

622
01:07:04,181 --> 01:07:05,700
to Bitcoin's miners,

623
01:07:05,700 --> 01:07:10,381
and it'd be ideal if all the technologies

624
01:07:10,381 --> 01:07:11,700
were sidechains of Bitcoin

625
01:07:11,700 --> 01:07:14,860
using synthetic Bitcoin as the native token.

626
01:07:14,860 --> 01:07:17,020
Synthetic Bitcoin has the native token of the sidechain

627
01:07:17,020 --> 01:07:20,980
to eliminate the money printing aspect

628
01:07:20,980 --> 01:07:23,980
of the use of the new technology.

629
01:07:23,980 --> 01:07:25,140
Does that make sense?

630
01:07:26,181 --> 01:07:27,980
Oh, I see you're a listener.

631
01:07:27,980 --> 01:07:29,260
Maybe you lost connection,

632
01:07:29,260 --> 01:07:30,941
but thanks for your question.

633
01:07:30,941 --> 01:07:32,740
The two things I wanted to touch on are first,

634
01:07:32,740 --> 01:07:35,901
in summary, the speculative altcoin craze.

635
01:07:35,901 --> 01:07:37,420
It's not to be condemned.

636
01:07:37,420 --> 01:07:39,820
Instead, we want it on Bitcoin.

637
01:07:39,820 --> 01:07:42,860
We want there to be no other layer ones in the whole world.

638
01:07:42,860 --> 01:07:44,941
We want Bitcoin to be the one-stop shop

639
01:07:44,941 --> 01:07:47,501
where everyone is building on top of Bitcoin.

640
01:07:47,501 --> 01:07:49,461
They're experimenting on Bitcoin.

641
01:07:49,461 --> 01:07:51,740
They're getting their entertainment on Bitcoin.

642
01:07:51,740 --> 01:07:53,341
Even if they're going to trade

643
01:07:53,341 --> 01:07:55,980
some silly little altcoin meme,

644
01:07:55,980 --> 01:07:57,621
they're going to do it on Bitcoin,

645
01:07:57,621 --> 01:08:00,020
and at least then the transaction fees

646
01:08:00,020 --> 01:08:00,980
are paid to Bitcoin.

647
01:08:00,980 --> 01:08:04,181
Now, in the case of something like Monero or Zcash,

648
01:08:04,181 --> 01:08:06,820
where unlike Pepe, it's an actual technology

649
01:08:06,820 --> 01:08:08,501
with legitimate use,

650
01:08:08,501 --> 01:08:11,140
such as a privacy technology

651
01:08:11,140 --> 01:08:14,461
that is stronger or more experimental

652
01:08:14,461 --> 01:08:18,140
than the privacy tech available on Bitcoin's layer one,

653
01:08:18,140 --> 01:08:19,381
like CoinJoin, right?

654
01:08:19,381 --> 01:08:21,901
The Zcash technology is more innovative.

655
01:08:21,901 --> 01:08:23,860
It's more next-generation,

656
01:08:23,860 --> 01:08:27,820
but also less auditable and less time-tested.

657
01:08:27,820 --> 01:08:29,221
So we want that kind of thing.

658
01:08:29,221 --> 01:08:30,740
As Adam Bach has said,

659
01:08:30,740 --> 01:08:34,061
we would like that to be on a drivechain, sidechain.

660
01:08:34,061 --> 01:08:36,181
So it's existing on Bitcoin,

661
01:08:36,181 --> 01:08:39,260
and the unit of account is Bitcoin,

662
01:08:39,260 --> 01:08:41,540
something which is redeemable for Bitcoin,

663
01:08:41,540 --> 01:08:43,781
something which trades one-for-one with Bitcoin.

664
01:08:43,781 --> 01:08:45,420
That's a synthetic Bitcoin.

665
01:08:45,420 --> 01:08:47,620
So there's no money printing

666
01:08:47,620 --> 01:08:51,981
when you have a Zcash technology drivechain on Bitcoin.

667
01:08:51,981 --> 01:08:54,421
So as Adam Bach has written,

668
01:08:54,421 --> 01:08:56,820
this is innovation maximalism,

669
01:08:56,820 --> 01:09:00,020
but altcoin seniorage minimalism.

670
01:09:00,020 --> 01:09:02,940
In other words, we want to have the privacy tech

671
01:09:02,940 --> 01:09:07,940
of Bitcoin and Monero without the altcoin token.

672
01:09:08,380 --> 01:09:09,981
So that's the goal of drivechain,

673
01:09:09,981 --> 01:09:13,260
is to use the Bitcoin token,

674
01:09:13,260 --> 01:09:16,341
but at the same time use the technology

675
01:09:16,341 --> 01:09:19,861
that right now is only available on altcoins,

676
01:09:19,861 --> 01:09:22,421
if you want to do it in a peer-to-peer way.

677
01:09:22,421 --> 01:09:25,180
Because Bitcoin sidechains today are federated.

678
01:09:25,180 --> 01:09:28,140
The drivechain sidechains, as Dr. Bach says,

679
01:09:28,140 --> 01:09:29,380
are more peer-to-peer.

680
01:09:29,380 --> 01:09:31,380
So that's the drivechain vision,

681
01:09:31,380 --> 01:09:34,820
is to have advanced sidechains

682
01:09:34,820 --> 01:09:37,260
and hopefully a lot of use of them.

683
01:09:37,260 --> 01:09:40,781
And therefore the communities like Monero and Zcash,

684
01:09:40,781 --> 01:09:44,301
for example, might abandon their altcoin

685
01:09:44,301 --> 01:09:48,620
and use the exact same technology on top of Bitcoin

686
01:09:48,620 --> 01:09:49,940
in a Bitcoin sidechain.

687
01:09:49,940 --> 01:09:53,380
And that way they have the benefit of, it's a win-win.

688
01:09:53,380 --> 01:09:55,500
That's another thing Adam Bach has tweeted about drivechain.

689
01:09:55,500 --> 01:09:57,140
It provides win-win solutions

690
01:09:57,140 --> 01:10:00,861
because you get the privacy potentially

691
01:10:00,861 --> 01:10:02,580
of Zcash and Monero,

692
01:10:02,580 --> 01:10:04,461
but you're using Bitcoin's unit of account,

693
01:10:04,461 --> 01:10:06,260
which is the best unit of account

694
01:10:06,260 --> 01:10:07,820
in all of monetary economics.

695
01:10:07,820 --> 01:10:11,020
It's the most reliable monetary policy.

696
01:10:11,020 --> 01:10:13,260
21 million, no more.

697
01:10:13,260 --> 01:10:14,341
So you get that.

698
01:10:14,341 --> 01:10:16,820
People want the monetary policy of Bitcoin

699
01:10:16,820 --> 01:10:21,221
with the privacy technology of Zcash or Monero.

700
01:10:21,221 --> 01:10:24,661
So that's what drivechain aspires to offer,

701
01:10:24,661 --> 01:10:26,020
is the latest technology,

702
01:10:26,020 --> 01:10:28,741
the most experimental cool technology,

703
01:10:28,741 --> 01:10:31,140
but also the monetary policy of Bitcoin.

704
01:10:31,140 --> 01:10:32,580
So there's no altcoin involved.

705
01:10:32,580 --> 01:10:33,940
There's no money printing.

706
01:10:33,940 --> 01:10:36,461
There's no altcoin senior rich profits

707
01:10:36,461 --> 01:10:38,260
to token founders.

708
01:10:38,260 --> 01:10:42,421
Instead, everyone buys into Bitcoin's monetary policy,

709
01:10:42,421 --> 01:10:44,901
the monetary policy of the main chain,

710
01:10:44,901 --> 01:10:48,140
but gets the technology of the altcoins in the sidechain.

711
01:10:50,180 --> 01:10:51,541
So that's the vision there.

712
01:10:52,981 --> 01:10:55,060
And if we had that design,

713
01:10:55,060 --> 01:10:58,260
if Bitcoin were a system

714
01:10:58,260 --> 01:11:00,020
where there's a multi-layered architecture

715
01:11:00,020 --> 01:11:01,781
of main chain with high fees

716
01:11:01,781 --> 01:11:03,820
and then sidechains with low fees,

717
01:11:03,820 --> 01:11:05,940
sidechains for privacy scaling,

718
01:11:06,820 --> 01:11:10,101
peer-to-peer oracles in the hive mind sidechain

719
01:11:10,101 --> 01:11:12,781
and ETH side for smart contracts,

720
01:11:12,781 --> 01:11:15,820
then Bitcoin would have a narrative,

721
01:11:15,820 --> 01:11:18,020
which is that there's all kinds of experimentation

722
01:11:18,020 --> 01:11:20,700
and innovation going on on top of Bitcoin.

723
01:11:20,700 --> 01:11:23,341
And that would tend to greatly diminish

724
01:11:23,341 --> 01:11:28,341
the amount of altcoin creation and speculation

725
01:11:29,140 --> 01:11:33,500
because there would be a sort of consensus

726
01:11:33,500 --> 01:11:36,180
among the entire crypto community

727
01:11:36,180 --> 01:11:38,661
that everything is being built on top of Bitcoin

728
01:11:38,661 --> 01:11:41,940
and therefore nobody would launch a speculative altcoin,

729
01:11:41,940 --> 01:11:46,101
or at least there would be somewhat less of that

730
01:11:46,101 --> 01:11:48,981
because of the strengthening of Bitcoin's narrative.

731
01:11:48,981 --> 01:11:50,940
It would be like Bitcoin in 2011

732
01:11:50,940 --> 01:11:54,221
where people weren't thinking about launching competitors.

733
01:11:54,221 --> 01:11:57,101
Instead, they were focused on just understanding

734
01:11:57,101 --> 01:12:00,140
and investigating and experiencing

735
01:12:00,140 --> 01:12:02,180
and experimenting on Bitcoin.

736
01:12:03,541 --> 01:12:05,781
So when Bitcoin was young

737
01:12:05,781 --> 01:12:07,620
and people didn't fully understand it

738
01:12:07,620 --> 01:12:10,140
and they were exploring its potential,

739
01:12:10,140 --> 01:12:13,781
Bitcoin didn't have people launching alternatives.

740
01:12:14,901 --> 01:12:17,461
So what Drivechain aspires to do

741
01:12:17,461 --> 01:12:21,380
is open the door to a virtually unlimited

742
01:12:22,301 --> 01:12:24,580
amount of innovation and experimentation

743
01:12:24,580 --> 01:12:26,380
on Bitcoin's sidechains,

744
01:12:27,341 --> 01:12:29,260
sidechains that are more peer-to-peer

745
01:12:29,260 --> 01:12:30,981
than the ones we have today,

746
01:12:30,981 --> 01:12:33,940
all of which use a 15-party federated multisig

747
01:12:35,020 --> 01:12:37,500
or 15-party multisig federation.

748
01:12:38,341 --> 01:12:40,700
And that's a limiting factor

749
01:12:40,700 --> 01:12:44,341
in the path towards innovation on sidechains

750
01:12:44,341 --> 01:12:47,060
because people have to acknowledge

751
01:12:47,060 --> 01:12:50,380
and deal with the fact that there's this federation

752
01:12:51,301 --> 01:12:52,901
that is controlling all of the Bitcoin

753
01:12:52,901 --> 01:12:53,940
locked in the sidechain.

754
01:12:53,940 --> 01:12:57,620
So if you're using RBTC or LBTC,

755
01:12:58,500 --> 01:13:00,741
you're benefiting from Bitcoin's monetary policy,

756
01:13:01,500 --> 01:13:03,940
but the security model is one in which,

757
01:13:03,940 --> 01:13:06,781
instead of trusting the Bitcoin network,

758
01:13:06,781 --> 01:13:10,861
you're trusting also the 15 people

759
01:13:10,861 --> 01:13:14,981
or 15 parties involved in that multisig federation,

760
01:13:15,901 --> 01:13:19,380
which isn't a cyber-punky thing so much,

761
01:13:19,380 --> 01:13:21,981
to be trusting specific people,

762
01:13:21,981 --> 01:13:25,620
15 people to not get arrested or not to collude.

763
01:13:25,620 --> 01:13:28,180
It would be better if Bitcoiners had the option

764
01:13:28,180 --> 01:13:30,341
to, instead of use a federated sidechain,

765
01:13:30,940 --> 01:13:33,380
experiment with a drivechain model,

766
01:13:33,380 --> 01:13:37,101
which involves the miners in an important way

767
01:13:37,940 --> 01:13:39,940
with regard to the security model.

768
01:13:40,901 --> 01:13:45,901
And the miners are a dynamic global set of parties,

769
01:13:47,221 --> 01:13:48,741
and they're constantly changing.

770
01:13:48,741 --> 01:13:50,861
That's why we say dynamic.

771
01:13:50,861 --> 01:13:52,741
People are constantly joining and leaving

772
01:13:52,741 --> 01:13:54,981
the set of parties who are miners.

773
01:13:54,981 --> 01:13:57,940
So in that way, it's more Bitcoin-y.

774
01:13:57,940 --> 01:14:00,341
It's more peer-to-peer, one could argue.

775
01:14:01,260 --> 01:14:03,260
And there's no absolute guarantee it'll work.

776
01:14:03,260 --> 01:14:06,421
So drivechain involves the courage

777
01:14:06,421 --> 01:14:11,421
and excitement of experimentation and innovation.

778
01:14:11,981 --> 01:14:13,580
No one can be totally sure it'll work.

779
01:14:13,580 --> 01:14:15,020
It's like going to the moon.

780
01:14:15,020 --> 01:14:17,101
No one had absolute certainty

781
01:14:17,101 --> 01:14:19,620
that the effort to go to the moon

782
01:14:19,620 --> 01:14:21,981
in the 1960s would succeed.

783
01:14:21,981 --> 01:14:24,301
Some people thought it would fail.

784
01:14:24,301 --> 01:14:25,901
Some people thought it would work.

785
01:14:25,901 --> 01:14:29,020
But it requires optimism and experimentation.

786
01:14:29,020 --> 01:14:32,500
And for Bitcoin, that's the path towards success,

787
01:14:32,500 --> 01:14:34,180
we believe, as drive chainers.

788
01:14:37,700 --> 01:14:38,700
There's a lot people can learn

789
01:14:38,700 --> 01:14:40,741
about drivechain on the internet.

790
01:14:40,741 --> 01:14:42,380
So check out in the Nest.

791
01:14:42,380 --> 01:14:45,060
We've posted some useful links.

792
01:14:45,060 --> 01:14:46,461
There's the GitHub where you can see

793
01:14:46,461 --> 01:14:49,260
a lot of important code related to drivechain,

794
01:14:49,260 --> 01:14:50,421
and you can read the BIPs

795
01:14:50,421 --> 01:14:53,940
for Bitcoin Improvement Proposal 300 and 301.

796
01:14:53,940 --> 01:14:55,661
That's what drivechain is.

797
01:14:56,421 --> 01:14:58,380
Drivechain refers to those two BIPs.

798
01:14:59,820 --> 01:15:02,140
And there's also a whole bunch of videos,

799
01:15:02,140 --> 01:15:05,221
and there's a Telegram group with over 700 people.

800
01:15:07,541 --> 01:15:09,301
Everyone's welcome to come on up to the stage

801
01:15:09,301 --> 01:15:13,580
and ask a question or share a comment, share a criticism.

802
01:15:15,180 --> 01:15:16,020
Any thought you have?

803
01:15:16,020 --> 01:15:17,781
Oh, Moon Settler, please jump in.

804
01:15:22,421 --> 01:15:24,260
Yes, Moon, what's up?

805
01:15:26,101 --> 01:15:29,060
I'm sorry, I assume I have to go as well.

806
01:15:29,060 --> 01:15:31,741
I just wanted to say that one thing

807
01:15:31,741 --> 01:15:36,541
that seems to be a hot topic coming around again

808
01:15:36,541 --> 01:15:41,541
is the various ways that Bitcoin could take to scale

809
01:15:44,380 --> 01:15:47,301
and the consequences of these parts

810
01:15:47,301 --> 01:15:52,301
in regards to potential debasement of Bitcoin itself, right?

811
01:15:52,661 --> 01:15:55,901
So yes, Bitcoin can lose market cap to altcoins,

812
01:15:55,901 --> 01:15:57,781
but it's also a possibility

813
01:15:57,781 --> 01:16:00,820
if we go down the custodial scaling part

814
01:16:00,820 --> 01:16:03,661
and say these big banks like JP Morgan

815
01:16:03,661 --> 01:16:05,620
start to play with Bitcoin

816
01:16:05,620 --> 01:16:09,221
and maybe start to issue Bitcoin-denominated credit.

817
01:16:10,140 --> 01:16:13,260
So we can go down an interesting path

818
01:16:13,260 --> 01:16:16,981
that basically in effect breaks the 21 million

819
01:16:16,981 --> 01:16:20,020
without changing a line of consensus code.

820
01:16:20,060 --> 01:16:25,060
And the interesting thing is that people see sidechains

821
01:16:27,101 --> 01:16:28,901
as the lesser evil in this regard

822
01:16:28,901 --> 01:16:33,101
because they can actually help scale Bitcoin

823
01:16:33,101 --> 01:16:36,861
and help provide the users with the needed block space

824
01:16:36,861 --> 01:16:39,260
to say, expand the Lightning Network further

825
01:16:39,260 --> 01:16:40,580
and stuff like that.

826
01:16:40,580 --> 01:16:43,661
So allow people to transact and hold Bitcoin.

827
01:16:43,661 --> 01:16:46,020
And in a way that actually does not allow

828
01:16:46,020 --> 01:16:49,140
really for debasement in general.

829
01:16:49,140 --> 01:16:50,940
So I just wanted to throw in that,

830
01:16:50,940 --> 01:16:53,060
but I have to step down.

831
01:16:53,060 --> 01:16:55,541
Thank you guys and have a nice day.

832
01:16:55,541 --> 01:16:56,380
Thank you.

833
01:16:56,380 --> 01:16:57,461
As always, please come back.

834
01:16:57,461 --> 01:16:59,781
It's always great to have you chat.

835
01:16:59,781 --> 01:17:02,541
It's always cool when you're able to talk with Paul.

836
01:17:02,541 --> 01:17:04,700
We get to hear a pretty high level,

837
01:17:04,700 --> 01:17:07,060
pretty detailed technical discussion.

838
01:17:11,500 --> 01:17:14,741
It sounded like you were comparing debasement

839
01:17:14,741 --> 01:17:19,741
by a central bank to the existence

840
01:17:19,780 --> 01:17:21,621
of fractional reserve banking.

841
01:17:22,741 --> 01:17:26,101
And there's an important distinction to be made there.

842
01:17:26,101 --> 01:17:31,101
When a central bank, when the issuer of the money

843
01:17:32,621 --> 01:17:35,700
increases the quantity of fiat units,

844
01:17:36,580 --> 01:17:39,180
that would be debasement, that would be inflation.

845
01:17:39,180 --> 01:17:44,180
But when the broad money supply, as opposed to the base,

846
01:17:44,300 --> 01:17:46,741
when the broad money supply increases

847
01:17:46,741 --> 01:17:50,700
because of private banks running fractional reserves,

848
01:17:50,700 --> 01:17:52,741
that isn't the same thing as debasement.

849
01:17:54,540 --> 01:17:56,981
The fractional reserving does lower

850
01:17:56,981 --> 01:17:59,221
the purchasing power of money

851
01:17:59,221 --> 01:18:04,060
because there is more demandable claims on Bitcoin

852
01:18:04,060 --> 01:18:07,940
if a private bank is running a fractional reserve.

853
01:18:07,940 --> 01:18:11,580
So they do tend to increase the number of claims on Bitcoin

854
01:18:11,580 --> 01:18:14,940
and therefore lower the purchasing power of Bitcoin.

855
01:18:14,940 --> 01:18:18,341
But there is a tether in that situation

856
01:18:18,341 --> 01:18:23,341
where the private banks aren't able to issue forever.

857
01:18:25,060 --> 01:18:30,060
At infinitum, they're not able to issue more and more

858
01:18:30,300 --> 01:18:33,461
because eventually they would have insolvency.

859
01:18:33,461 --> 01:18:36,700
So there's a longstanding debate

860
01:18:36,700 --> 01:18:38,900
within the Austrian School of Economics

861
01:18:38,900 --> 01:18:42,381
over whether or not the fractional reserving is legitimate.

862
01:18:42,381 --> 01:18:44,820
And I think the emerging consensus

863
01:18:44,820 --> 01:18:47,180
that we're creeping towards this decade

864
01:18:47,180 --> 01:18:50,940
is that it's part of the free market

865
01:18:50,940 --> 01:18:54,341
that some parties will engage in fractional reserve

866
01:18:54,341 --> 01:18:56,940
and unsecured credit.

867
01:18:56,940 --> 01:18:59,180
People will put their Bitcoin in a bank

868
01:18:59,180 --> 01:19:01,660
and then want that bank to loan it out

869
01:19:01,660 --> 01:19:03,621
and then try to have it be available

870
01:19:03,621 --> 01:19:05,621
at the same time for the depositor.

871
01:19:06,580 --> 01:19:08,461
And that way the bank can pay yield.

872
01:19:08,981 --> 01:19:10,180
Some people will prefer that.

873
01:19:10,180 --> 01:19:12,261
And that's part of the free market.

874
01:19:12,261 --> 01:19:14,141
It's kind of like people gambling on Dogecoin.

875
01:19:14,141 --> 01:19:15,461
It's part of the free market

876
01:19:15,461 --> 01:19:19,660
that some people will choose a yield-bearing deposit account

877
01:19:19,660 --> 01:19:21,101
and assume the risk.

878
01:19:21,101 --> 01:19:22,540
The important thing is that the government

879
01:19:22,540 --> 01:19:24,900
doesn't bail out the failed banks when they fail.

880
01:19:24,900 --> 01:19:26,300
That's the important thing.

881
01:19:26,300 --> 01:19:28,861
It needs to be completely opt-in.

882
01:19:28,861 --> 01:19:31,141
But the fact that fractional reserving

883
01:19:31,141 --> 01:19:34,341
lowers the purchasing power of the monetary unit

884
01:19:34,341 --> 01:19:37,621
is something which is not a problem.

885
01:19:37,621 --> 01:19:39,861
No one is entitled,

886
01:19:39,861 --> 01:19:43,900
no one is entitled to a certain purchasing power of Bitcoin.

887
01:19:43,900 --> 01:19:48,900
So if someone in the world decides to put money in a bank

888
01:19:49,060 --> 01:19:51,501
and allow that bank to lend it out,

889
01:19:52,660 --> 01:19:57,381
then that would increase the broad money supply

890
01:19:57,381 --> 01:20:01,621
because it increases the total demandable claims on Bitcoin.

891
01:20:01,621 --> 01:20:04,780
And therefore it lowers the purchasing power of Bitcoin.

892
01:20:04,780 --> 01:20:05,981
But that's not harming anyone.

893
01:20:05,981 --> 01:20:07,940
That's just the free market operating.

894
01:20:10,342 --> 01:20:23,382
I would make a careful distinction between debasement by the central authority, which could be likened to a decision by the Bitcoin community to adopt tail emission, which we, of course, oppose as drive-chainers.

895
01:20:23,382 --> 01:20:25,862
We're totally opposed to inflation.

896
01:20:25,862 --> 01:20:47,701
A hundred percent. The advocacy for drivechain, in fact, is probably, one could say, exactly the opposite of advocating for inflation on Bitcoin because drivechain can, you know, the main reason why anyone would call for inflation on Bitcoin is because fees are going to be too low in the future.

897
01:20:48,262 --> 01:20:54,662
They might believe that they might believe fees will stay low and therefore they want to see the tail emissions begin.

898
01:20:54,662 --> 01:21:00,021
But drivechain advocates understand that merged mining can be a solution to low fees.

899
01:21:00,021 --> 01:21:02,021
We can collect fees from every blockchain.

900
01:21:02,822 --> 01:21:07,381
And if Bitcoin were doing that, the fees would be 10 or 20 times higher than they are today.

901
01:21:07,381 --> 01:21:17,941
Because the fees across all blockchains is roughly 10 to 20 times more than the fees paid on Bitcoin's blockchain.

902
01:21:17,941 --> 01:21:28,262
So the drivechain aspiration is to collect the fees from every single blockchain in the world because they would all become sidechains of Bitcoin.

903
01:21:28,262 --> 01:21:28,902
That's the goal.

904
01:21:29,381 --> 01:21:34,021
Everyone is welcome to raise your hand and come on up, debate me.

905
01:21:34,021 --> 01:21:37,222
I'm sure I make mistakes, you know, no one's perfect.

906
01:21:37,222 --> 01:21:47,621
I welcome you to come on up and discuss drivechain, share your question, ask your question, share your comment.

907
01:21:47,621 --> 01:21:49,621
We're here every Monday and Thursday.

908
01:21:49,782 --> 01:21:54,102
Now, this is a special week because we are headed to Miami.

909
01:21:54,102 --> 01:22:00,502
The employees of LayerTwo Labs, most or all of us, are going to head to Miami for the Miami Bitcoin Conference.

910
01:22:00,502 --> 01:22:12,021
So I, Henry, will be standing in a booth ready to answer in real life your drivechain questions if you're lucky enough to be able to go to the Miami Bitcoin Conference this week.

911
01:22:12,021 --> 01:22:16,021
So this is it, the biggest conference of all in Bitcoin history.

912
01:22:16,021 --> 01:22:21,141
As far as I know, is this week and we're excited to be there.

913
01:22:21,141 --> 01:22:39,062
Many companies that are very friendly to drivechain will be there and we look forward to meeting and mingling with all of the people in the Bitcoin community who currently support drivechain or might support it in the future, which is really almost everyone.

914
01:22:39,622 --> 01:22:41,622
There's very few people who are avowedly against it.

915
01:22:41,622 --> 01:22:45,622
Probably most Bitcoiners have never heard of it and haven't really formed an opinion.

916
01:22:45,622 --> 01:23:05,622
But we believe that this is an idea, the time of which has come now that there is more attention on the Bitcoin fees being too low and then more recently the Bitcoin fees being too high.

917
01:23:06,182 --> 01:23:18,182
There's more attention on the need for sidechains to make sure Bitcoin's fees are high forever and also to enable more innovation and experimentation on top of Bitcoin.

918
01:23:18,182 --> 01:23:24,182
Enabling more people to be Bitcoiners rather than leave and go to Ethereum or go to some other project.

919
01:23:24,182 --> 01:23:28,182
We want to enable them to stay and build their new ideas on Bitcoin.

920
01:23:28,182 --> 01:23:32,182
So the whole idea of drivechain is you get many blockchains to exist.

921
01:23:32,741 --> 01:23:44,741
There should be lots of blockchains, but we want all of them to be sidechains of Bitcoin, meaning that they don't have a native token other than Bitcoin.

922
01:23:45,301 --> 01:23:55,301
So the way that you send tokens is you send Bitcoin to the sidechain and you receive the sidechain token.

923
01:23:55,301 --> 01:23:59,301
So for each Bitcoin you send to the sidechain, you get one sidechain token.

924
01:23:59,301 --> 01:24:09,301
And then when you're done, you go through the two-way peg to get back to the main-chain to get hard Bitcoin, the layer one Bitcoin.

925
01:24:09,861 --> 01:24:17,861
So the idea is that we would have a multitude of sidechains, but only 21 million units throughout all of them.

926
01:24:17,861 --> 01:24:25,861
So that's the idea. We're using the Bitcoin monetary policy on layer one for all the sidechains.

927
01:24:26,422 --> 01:24:32,422
Hello, Moth. Welcome.

928
01:24:34,422 --> 01:24:40,422
Welcome. Welcome to drivechain talk. What is up?

929
01:24:46,422 --> 01:24:52,422
I don't think we can hear you, unfortunately. You are as quiet as a moth.

930
01:24:56,422 --> 01:25:00,422
He's gone.

931
01:25:02,422 --> 01:25:06,422
He was as ephemeral as a moth might have been.

932
01:25:08,422 --> 01:25:16,422
Well, it's almost 11 o'clock here on the West Coast, so we've been running for about 90 minutes. We usually run for 90 minutes.

933
01:25:16,422 --> 01:25:20,422
What we're asking you to do as Bitcoiners in the audience is... Oh, he's back.

934
01:25:20,422 --> 01:25:24,422
Okay. Welcome.

935
01:25:24,982 --> 01:25:36,982
Hey, I had a question. I haven't looked at the entire proposal, but it looks like something I read in the bib said that it's limited to 256 drivechains. Is that true?

936
01:25:36,982 --> 01:25:38,982
Yes, that's right.

937
01:25:38,982 --> 01:25:48,982
So if any new drivechain gets formed, it said that it could replace it. My question then is, with each replacement, would that require a soft fork?

938
01:25:49,542 --> 01:25:53,542
No, it would not. To my understanding.

939
01:25:53,542 --> 01:26:07,542
Okay. So these six additional ops will go in for the witness script? Is that it's like each sidechain will be a new transaction? Is that how it works?

940
01:26:08,102 --> 01:26:18,102
Yes. However, to make sure you get the most accurate information, I would send you to the technical discussion available in the drivechain telegram group.

941
01:26:18,102 --> 01:26:26,102
People who know a lot more about it than I do are there to give you more details on exactly how that would work.

942
01:26:26,661 --> 01:26:40,661
But you're totally right that there is 256 drivechains slots available at the start. So there could be more in the future in different ways.

943
01:26:40,661 --> 01:26:48,661
You could have drivechains on drivechains. So let's say we wanted to do that. Then there would be a multi-layer design.

944
01:26:49,221 --> 01:26:57,221
It would be sort of like L2, and then the L2 would have L3s, like Layer 3, Layer 2. And that's one approach.

945
01:26:57,221 --> 01:27:05,221
Another approach is there could be in the very distant future a soft fork to enable another higher number of drivechains.

946
01:27:05,221 --> 01:27:15,221
But the reason why 256 was chosen is that it would involve an even lower amount of data to burden the Bitcoin network.

947
01:27:15,781 --> 01:27:25,781
If the number had been 10,000 potential sidechains at the start, then that would have an ongoing burden to the nodes.

948
01:27:25,781 --> 01:27:29,781
So to simplify things, 256 was chosen.

949
01:27:29,781 --> 01:27:39,781
Paul Sztorc, who is the leading designer of the drivechain BIPs, he reflected for years on how many sidechains there might ever be.

950
01:27:40,341 --> 01:27:48,341
He couldn't think of there being more than maybe 20. And he thinks that 10 of them, in fact, will be the same kind.

951
01:27:48,341 --> 01:27:56,341
So he thinks that there might be, for example, one privacy-focused sidechain, or we can call it a drivechain with a lowercase d.

952
01:27:56,341 --> 01:28:04,341
Like one privacy-focused drivechain, one drivechain focused on providing smart contracts like Ethereum.

953
01:28:04,901 --> 01:28:10,901
And then there might be more like BitAssets, BitNames, and others.

954
01:28:10,901 --> 01:28:16,901
And then he hypothesizes that maybe there would be 5 or 10 drivechains that have the large block approach.

955
01:28:16,901 --> 01:28:22,901
So they're like Bitcoin, but they have large blocks, 1 gigabyte blocks, called Thunder sidechain.

956
01:28:22,901 --> 01:28:30,901
So he thinks that there would be maybe like 10 Thunder sidechains to serve the world's needs for global peer-to-peer cash with large blocks.

957
01:28:31,461 --> 01:28:35,461
So the number of different types of drivechains might only be like 10.

958
01:28:35,461 --> 01:28:47,461
But then maybe there'd be a number of identical drivechains that have the large block design, bringing the total number of drivechains to perhaps 15 or 20.

959
01:28:47,461 --> 01:28:51,461
So that's far fewer than 256.

960
01:28:52,021 --> 01:29:04,021
So even the most optimistic and bullish of those in the drivechain community do not perceive any substantial likelihood of a need for more slots.

961
01:29:04,021 --> 01:29:16,021
So there are like hundreds of thousands of altcoins in existence, but the vast majority of them, as we all know, don't actually offer any legitimate, interesting, valuable technology, probably.

962
01:29:16,581 --> 01:29:28,581
So the number of different blockchains that will be needed in the future will be probably just like 10 or 20 sidechains on Bitcoin.

963
01:29:28,581 --> 01:29:34,581
That set of sidechains will provide every potential need and variation.

964
01:29:36,581 --> 01:29:38,581
So that's why there's only 256.

965
01:29:38,581 --> 01:29:40,581
But it's a great question. People sometimes wonder about that.

966
01:29:40,581 --> 01:29:42,581
Why is it so low?

967
01:29:42,581 --> 01:29:44,581
Why isn't it 256,000?

968
01:29:45,141 --> 01:29:47,141
So those are great questions.

969
01:29:47,141 --> 01:29:55,141
But yeah, check out our Telegram group because there's people in there like Moonsettler who have a lot of technical knowledge who can help answer.

970
01:29:55,141 --> 01:29:57,141
Actually, he's not there.

971
01:29:57,141 --> 01:30:05,141
But many people are there and they can answer technical questions about how that works, how the drivechain can be terminated if it's a problem.

972
01:30:05,141 --> 01:30:13,141
So there's a mechanism by which the community can express its will to terminate a drivechain if it's problematic.

973
01:30:13,701 --> 01:30:17,701
In fact, the entire drivechain BIP could be forked out if it's a problem.

974
01:30:17,701 --> 01:30:19,701
So we can always go backwards and just get rid of it.

975
01:30:19,701 --> 01:30:23,701
If that were desired, it would be possible.

976
01:30:25,701 --> 01:30:33,701
Sounds good. And all of this depends on the passing of BIP-119, correct? The check template one?

977
01:30:33,701 --> 01:30:37,701
Drivechain is BIP300 and BIP301.

978
01:30:38,261 --> 01:30:46,261
Yeah. Is it dependent on the implementation of CTVs and Bitcoin?

979
01:30:46,261 --> 01:30:48,261
It's not dependent on that.

980
01:30:48,261 --> 01:30:58,261
However, I believe Paul Sztorc was and is a supporter of BIP-119.

981
01:30:58,261 --> 01:31:07,261
And Jeremy Rubin has tweeted favorably, I think, about drivechain once or twice, but I'm not positive.

982
01:31:07,821 --> 01:31:17,821
So I think there's like a friendly sort of attitude among the communities that are interested in those various proposals.

983
01:31:17,821 --> 01:31:32,821
Which is not surprising because people who are interested in innovation and developing Bitcoin in exciting new directions tend to have some sympathy for the idea in general that Bitcoin may need to change.

984
01:31:33,382 --> 01:31:37,382
Some people think that Bitcoin should just be as it is forever with no changes.

985
01:31:37,382 --> 01:31:43,382
Of course, it's been changing every few years forever.

986
01:31:43,382 --> 01:31:47,382
So some people just have this attitude of no changes of any kind.

987
01:31:47,382 --> 01:31:58,382
But among the developers and thinkers who are interested in potential changes, there's some level of harmony in terms of a common understanding that some change might be needed.

988
01:31:58,942 --> 01:32:03,942
There might just be miner differences about what exactly that change should be.

989
01:32:05,942 --> 01:32:17,942
Yeah, I think from the point of view of Justin and others that have spoken to, our main concern right now is just kind of like we know that Taproot is great, right?

990
01:32:18,502 --> 01:32:30,502
But the lifting of the size limit of the witness script just caused new things to be built that weren't as cost-effective before that.

991
01:32:30,502 --> 01:32:32,502
It was possible, but it didn't.

992
01:32:32,502 --> 01:32:47,502
So our main concern is with the addition of six more flags, like what else creative way, I'm not going to say a hack, but what other creative ways could other people come up with to put other stuff on the blockchain?

993
01:32:48,062 --> 01:32:52,062
And I guess a big part of that was Taproot's deployment activation.

994
01:32:52,062 --> 01:32:55,062
It was fast-tracked, and even the testing, I believe.

995
01:32:55,062 --> 01:32:58,062
So I'm guessing that won't happen again.

996
01:32:58,062 --> 01:33:01,062
Maybe there would be a lot of resistance to doing that.

997
01:33:01,062 --> 01:33:06,062
But still, I guess just as an FYI, I think a lot of people share this concern.

998
01:33:06,062 --> 01:33:08,062
You're scared right now.

999
01:33:11,062 --> 01:33:12,062
Well said.

1000
01:33:12,062 --> 01:33:14,062
That was very interesting.

1001
01:33:14,622 --> 01:33:18,622
I agree with everything you're saying, I think.

1002
01:33:22,622 --> 01:33:24,622
Those are great questions.

1003
01:33:24,622 --> 01:33:37,622
Yeah, I think over time, it would be nice if I think more people would now pay attention during the testing phase and implementation phase that, hey, how can we use this in a not-so-intuitive way?

1004
01:33:37,622 --> 01:33:41,622
And I guess it's going to be better, I'm hopeful.

1005
01:33:42,182 --> 01:33:48,182
Moth, what are your thoughts on the recent episode of high fees on Bitcoin's mainchain?

1006
01:33:48,182 --> 01:33:49,182
What do you think about that?

1007
01:33:49,182 --> 01:33:54,182
Will the fees come down as they have or will they ascend higher?

1008
01:33:54,182 --> 01:34:00,182
And what will the narratives and developments be as a result of high or low fees in the future?

1009
01:34:01,182 --> 01:34:06,182
I like to think of myself as a Bitcoin purist, like let Bitcoin be the money protocol.

1010
01:34:06,182 --> 01:34:11,182
I understand that high fees is eventually not avoidable.

1011
01:34:11,742 --> 01:34:13,742
That is the plan by design, right?

1012
01:34:13,742 --> 01:34:17,742
To keep rewarding the miners, to keep running their miners.

1013
01:34:17,742 --> 01:34:22,742
My only problem right now is what exactly is taking up the block space.

1014
01:34:22,742 --> 01:34:28,742
It's not the high fees that I or others that I've spoken to have a problem with.

1015
01:34:28,742 --> 01:34:31,742
It's the why, the high fees, the why.

1016
01:34:31,742 --> 01:34:40,742
The fact that there is inscriptions and there are 546 transactions happening just to get something on the blockchain.

1017
01:34:41,302 --> 01:34:44,302
And that is why a lot of this fee issue is happening.

1018
01:34:44,302 --> 01:34:49,302
And I understand that BRC20 is at the end of the day, it's just like a small JSON file,

1019
01:34:49,302 --> 01:34:56,302
which could be converted to binary or other base64 and be put on the operator instead.

1020
01:34:56,302 --> 01:35:00,302
But still, it's something that wasn't done before.

1021
01:35:00,302 --> 01:35:03,302
And it's just, it's a difficult place.

1022
01:35:03,302 --> 01:35:07,302
It's kind of like fear of the unknown, I understand that.

1023
01:35:07,862 --> 01:35:12,862
It's not the high fees, it's the what is causing the high fees, that's the problem.

1024
01:35:12,862 --> 01:35:16,862
And so with new implementations and proposals for new flags,

1025
01:35:16,862 --> 01:35:20,862
it's like what else could people come up with that would increase the fees?

1026
01:35:20,862 --> 01:35:26,862
I don't consider this a natural adoption-based increase in high fees,

1027
01:35:26,862 --> 01:35:32,862
because I would consider natural adoption as adoption by people to use Bitcoin as money,

1028
01:35:32,862 --> 01:35:36,862
not to use it as a JPEG sharing mechanism.

1029
01:35:37,862 --> 01:35:39,862
Well said.

1030
01:35:39,862 --> 01:35:45,862
I don't agree with just one part of what you said, which is that high fees are inevitable.

1031
01:35:46,862 --> 01:35:49,862
High fees are not inevitable on Bitcoin.

1032
01:35:49,862 --> 01:35:58,862
The result of capitalism, competition and innovation is to continuously suppress

1033
01:35:58,862 --> 01:36:02,862
the growth of fees for every product and service.

1034
01:36:03,422 --> 01:36:07,422
So people will use the block space more efficiently.

1035
01:36:07,422 --> 01:36:13,422
And over time, there's always that downward pressure on the fees.

1036
01:36:13,422 --> 01:36:17,422
So the ability for the block space to accrue value,

1037
01:36:17,422 --> 01:36:24,422
that is to say the ability for high fees to sustainably appear on Bitcoin's main chain,

1038
01:36:24,422 --> 01:36:26,422
isn't guaranteed.

1039
01:36:26,422 --> 01:36:31,422
In fact, the whole narrative that's been around since about 2018,

1040
01:36:31,982 --> 01:36:36,982
which is the so-called Bitcoin security budget problem,

1041
01:36:36,982 --> 01:36:44,982
that line of reasoning is a concern that Bitcoin might not have high fees in the future.

1042
01:36:44,982 --> 01:36:53,982
And if that's the case, then there will be not enough transaction finality assurance.

1043
01:36:53,982 --> 01:36:56,982
So I don't agree that it's inevitable we'll have high fees.

1044
01:36:57,542 --> 01:37:02,542
Could you elaborate on your thoughts regarding what would be the consequence

1045
01:37:02,542 --> 01:37:05,542
of low fees in the future if that were to appear?

1046
01:37:09,542 --> 01:37:12,542
Are you familiar with the notion that low fees,

1047
01:37:12,542 --> 01:37:16,541
in combination with successive halvings of the coinbase,

1048
01:37:16,541 --> 01:37:20,541
results in a low amount of value flowing to miners,

1049
01:37:21,102 --> 01:37:30,102
which then would mean that the economic barrier to become a majority of the hash rate would be low,

1050
01:37:30,102 --> 01:37:39,102
and therefore the protection that Bitcoin would have from a hostile majority miner would be low,

1051
01:37:39,102 --> 01:37:42,102
and therefore Bitcoin wouldn't be perceived as secure.

1052
01:37:42,102 --> 01:37:46,102
Do you follow that line of reasoning and what do you think about it?

1053
01:37:46,662 --> 01:37:51,662
Yeah, I've seen that line of reasoning, especially by Bitcoin critics,

1054
01:37:51,662 --> 01:37:58,662
but even Bitcoin proponents, and I wouldn't say I disagree.

1055
01:37:58,662 --> 01:38:00,662
I would just say that maybe I'm too biased.

1056
01:38:00,662 --> 01:38:05,662
I don't see that as happening unless Bitcoin adoption fails to happen.

1057
01:38:05,662 --> 01:38:10,662
Because if Bitcoin is heading where most of us see that it is heading to,

1058
01:38:10,662 --> 01:38:14,662
which is the base monetary layer of the whole world,

1059
01:38:15,221 --> 01:38:21,221
then the fees are going to be, yes, they could not be astronomically high,

1060
01:38:21,221 --> 01:38:27,221
but basically the more layer 2 solutions there are, the more settlements there's going to be.

1061
01:38:27,221 --> 01:38:31,221
And if there's not enough settlements happening on the base layer,

1062
01:38:31,221 --> 01:38:37,221
people owning Bitcoin on the base layer are going to prefer to transact on the base layer itself.

1063
01:38:37,221 --> 01:38:42,221
So I see that where we are heading with more number of layer 2 solutions,

1064
01:38:42,782 --> 01:38:46,782
and the need for layer 2 solutions, as is evident for the last couple of weeks,

1065
01:38:46,782 --> 01:38:57,782
I see that in a way it is inevitable that the base layer transfer of value is going to be cheap for long.

1066
01:38:57,782 --> 01:39:01,782
I'm not saying that it's now never going back to 1 sat, it might,

1067
01:39:01,782 --> 01:39:07,782
but several years from now where lightning has matured and other layer 2 solutions,

1068
01:39:07,782 --> 01:39:09,782
maybe drivechains get implemented,

1069
01:39:10,341 --> 01:39:14,341
I see that at the base layer they're all going to need to be settled.

1070
01:39:14,341 --> 01:39:24,341
And if adoption continues the way it is, it is going to be a tough fight for block space,

1071
01:39:24,341 --> 01:39:29,341
because that block space is intentionally so small so that it remains precious and coveted.

1072
01:39:31,341 --> 01:39:35,341
It's small not to cause fees to be high.

1073
01:39:35,341 --> 01:39:38,341
It is small not for that reason.

1074
01:39:38,341 --> 01:39:47,902
The block space is small because that lowers the economic burden of directly validating the blockchain state.

1075
01:39:50,296 --> 01:39:58,296
Right, yeah. But it is, won't you say, it is an effect, an intended effect. It wasn't like nobody expected it.

1076
01:39:58,296 --> 01:40:10,296
People were fine when they decided that, hey, we're going to keep the block space down, and because we need the validators to be able to run their nodes irrespective of where in the world they are.

1077
01:40:11,296 --> 01:40:22,296
And hey, by the way, there's this thing that, you know, as people are going to use it more and more, the fees is going to get higher because naturally everybody wants their transactions on the blockchain.

1078
01:40:22,296 --> 01:40:40,296
And I think layer two, the need for layer two solutions arose from that, as well as the need for like fast payments, is because it is going to be difficult for most people to move money around on the base layer itself.

1079
01:40:41,296 --> 01:41:08,296
Yes, I agree. So when the Bitcoin community resolved to maintain the small block size that Satoshi himself established, then there was an understanding that this would lead to higher fees in the future, assuming demand for block space grows and the block space remains the size that it is.

1080
01:41:08,296 --> 01:41:29,296
So we have to then confront the reality that fees are low right now. I checked earlier today and it looked like on thenpool.space the fees were under $2, which is where they've been for most of the last five years, with a few periods where they were higher because of a spike.

1081
01:41:29,296 --> 01:41:42,296
So we had a spike in 2017 in December. We had a spike in 2021. And then in the last few weeks, we had a spike with, you know, gambling and entertainment activity happening on top of Bitcoin.

1082
01:41:42,296 --> 01:42:08,296
But now we're back to the usual level of under $2 a transaction. And we have to confront, like, on the one hand, the inevitability you described. And on the other hand, the reality that over 200 million people, arguably, own Bitcoin in some form and were, you know, 11 or 12 or 13 years into the project.

1083
01:42:09,296 --> 01:42:22,296
And yet the block space is still cheap in the sense that it doesn't cost a whole lot to send a Bitcoin transaction. The majority of the miner revenue is coming almost all the time from the subsidy and not the fees.

1084
01:42:22,296 --> 01:42:46,296
So I think that it's legitimate for theoreticians to wonder if in the far future, Bitcoin might not have a sustained high level of fees. Because as I said earlier, capitalism tends to push down the prices of everything.

1085
01:42:47,296 --> 01:43:11,296
So people are expecting high fees, but they've been expecting that every day for a decade. And most of the time the fees have been low. So the vision for Drivechain with regard to the security budget is that it'll increase the security budget, it'll increase the fees paid to miners by collecting fees from a multitude of merged mined blockchains.

1086
01:43:11,296 --> 01:43:25,296
That's exactly what Satoshi envisioned. He wrote in August of 2010 in the BitDNS thread that we've all read, he wrote, every blockchain in the world will be merge-mined with Bitcoin, increasing total strength.

1087
01:43:25,296 --> 01:43:54,296
So he explicitly contemplated the idea that every blockchain would be built on Bitcoin. Now, he was thinking of merged mined altcoins, but Drivechain improves upon his vision, because Drivechain envisions not merged mined altcoins, instead, merged mined sidechains, in which the native token of the sidechain is a token that's only created when Bitcoin is locked in the hash rate escrow of the sidechain.

1088
01:43:54,296 --> 01:44:11,296
In other words, as Adam Back says, we preserve the 21 million limit of Bitcoin across all the sidechains. So we're innovating with technology on the sidechains without creating any more units ever than 21 million total.

1089
01:44:11,296 --> 01:44:36,296
So it preserves Bitcoin's monetary policy while allowing the Bitcoin community to copy and absorb all of the technological innovation on altcoins, hopefully sort of rugging the altcoins value and bringing that value to Bitcoin. Are you familiar with that narrative and do you think it's just a dream or do you think it might make sense, Moth?

1090
01:44:36,296 --> 01:45:02,296
No, yeah. In my vision for the constant high fees being enough for the miners to keep mining. Yeah. I mean, layer two. I don't know if I'm guessing you're considering sidechain as a type of layer two, correct? So yeah, that definitely is part of how I'm seeing that there is very low probability that Bitcoin fees remains low and including the sidechains.

1091
01:45:02,296 --> 01:45:18,296
Yeah, I think that sooner or later, even if we are scared of like adding the op flags, I think it will become clearer and clearer that we need something. We need more layer two solutions and more mature layer two solutions.

1092
01:45:18,296 --> 01:45:47,296
And I think the notion that, oh, you got to have layer two, which is more centralized or it's not Bitcoin. I think more people need to understand that like payment system is not the same as monetary layer and that building a payment system over the base monetary layer that's like that's Bitcoin is better than having a payment system like Visa and MasterCard built over central banking and fiat.

1093
01:45:47,296 --> 01:45:53,296
And I think that message needs to be propagated more clearly and more loudly.

1094
01:45:54,296 --> 01:46:07,296
Exactly right. So what we're discussing here is, on the one hand, Hal Finney's idea, which we don't hold, which is that it would be great if we have Bitcoin as the monetary layer.

1095
01:46:07,296 --> 01:46:27,296
And on top of that, governments or companies issue Bitcoin backed payment units so that people are using a fiat layer, a layer of trust on top of a layer of Bitcoin monetary policy.

1096
01:46:27,296 --> 01:46:42,296
We don't want that. Instead, we want things that are built on Bitcoin so that the peer to peer blockchain features and experience of Bitcoin can exist in an optional in an opt in format at a higher layer with more scalability.

1097
01:46:42,296 --> 01:46:47,296
So a large block sidechain on Bitcoin is the vision here for the world's cash.

1098
01:46:47,296 --> 01:46:58,296
That's the drivechain vision, which is said to be, I think, superior than if Bitcoin is the base layer and then there's a fiat layer on top of trusted parties.

1099
01:46:58,296 --> 01:47:09,296
So right now, all of Bitcoin's sidechains, every single one, involves a 15 party multi-sig federation controlling the Bitcoin locked in the sidechain.

1100
01:47:09,296 --> 01:47:11,296
And that's a good first step.

1101
01:47:11,296 --> 01:47:15,296
But a better step would be a miner controlled two way peg.

1102
01:47:15,296 --> 01:47:26,296
So that's what BIP300 delivers is the miner controlled two way peg so that Bitcoiners can consider, do I want to use a federated sidechain or a miner controlled two way peg sidechain?

1103
01:47:26,296 --> 01:47:37,296
I believe that overnight, if drivechains adopted, we'll see the understanding that, as Adam Back would say, this is making sidechains more peer to peer.

1104
01:47:37,296 --> 01:47:41,296
So that's what drivechain does is it develops and enhances.

1105
01:47:41,296 --> 01:47:45,296
It delivers a more advanced version of the sidechains we have today.

1106
01:47:45,296 --> 01:47:52,296
Sidechains today can have two way pegs, but they involve a federation allowing the peg outs back to the main chain.

1107
01:47:52,296 --> 01:47:54,296
So we want to remove that.

1108
01:47:54,296 --> 01:47:57,296
Now, currently, the sidechains are quite small.

1109
01:47:57,296 --> 01:48:02,296
There's only about 100 million or 200 million total in all the sidechains on Bitcoin.

1110
01:48:02,296 --> 01:48:11,296
The largest two, I think, are Liquid, which is a great development by Blockstream and Rootstock, which is a great development by the Rootstock founders.

1111
01:48:11,296 --> 01:48:14,296
One cool thing about Rootstock is it's merged mined.

1112
01:48:14,296 --> 01:48:23,296
So every month, a total of about three Bitcoin are paid to Bitcoin miners that are merged mining RSK.

1113
01:48:23,296 --> 01:48:29,296
And it would be great if that was like 3000 Bitcoin a month, you know, billions of dollars.

1114
01:48:29,296 --> 01:48:36,296
So it would be great if more and more funds were flowing from merged mining to Bitcoin miners.

1115
01:48:36,296 --> 01:48:39,296
And Liquid isn't merged mined.

1116
01:48:39,296 --> 01:48:41,296
They chose a different approach.

1117
01:48:42,296 --> 01:48:50,296
And in the far future, if drivechains adopted, maybe all the sidechains will be merged mined and there'll be some that are very, very large.

1118
01:48:50,296 --> 01:48:57,296
Paying maybe even the majority of Bitcoin miner revenue could come from these sidechains.

1119
01:48:57,296 --> 01:49:01,296
You were one of the best commenters we've really ever had in this space.

1120
01:49:01,296 --> 01:49:04,296
I hope you'll come back more and chat more.

1121
01:49:04,296 --> 01:49:10,296
For more information about drivechain, everyone can check out drivechain.info.

1122
01:49:10,296 --> 01:49:17,296
And there's also a bunch of information posted in the nest for people to grapple more with it.

1123
01:49:17,296 --> 01:49:20,296
If you're technically minded, please read the BIPs.

1124
01:49:20,296 --> 01:49:29,296
And if you like to watch videos, check out our YouTube channel, where at LayerTwo Labs, we've collected a bunch of lectures and discussions on drivechain.

1125
01:49:29,296 --> 01:49:34,296
They're mostly Paul Sztorc, you know, delivering lectures on drivechain.

1126
01:49:34,296 --> 01:49:39,296
Some of them feature Paul alongside Adam, like last year at Bitcoin Amsterdam.

1127
01:49:39,296 --> 01:49:46,296
And then again at Baltic Honey Badger, Paul was on stage with Adam talking about drivechain and sidechains.

1128
01:49:46,296 --> 01:49:52,296
And how the next generation of sidechains could be a momentous leap forward for Bitcoin in many ways.

1129
01:49:52,296 --> 01:49:56,296
There's so many interesting facets to the drivechain story.

1130
01:49:56,296 --> 01:50:00,296
Like it came out at one point, 2015, it was a new idea.

1131
01:50:00,296 --> 01:50:04,296
Now it's a familiar idea to some people who've been thinking about it for years.

1132
01:50:04,296 --> 01:50:08,296
So it's almost become like the conservative development option.

1133
01:50:08,296 --> 01:50:13,296
Whereas in the far past, it was, you know, cutting edge and brand new.

1134
01:50:13,296 --> 01:50:24,296
And the people who have been talking about it for years, like Adam Back and others, view it now as more of a familiar thing than something that's totally experimental.

1135
01:50:24,296 --> 01:50:26,296
So there's been quite a bit of testing of sidechains.

1136
01:50:26,296 --> 01:50:29,296
And it's an idea which is gaining traction every day.

1137
01:50:29,296 --> 01:50:35,296
It's so interesting to witness how with low fees, there's concern about the security budget.

1138
01:50:35,296 --> 01:50:45,296
But with high fees on Bitcoin, which comes from time to time, generally only for a little while, like a few days, we have a fee spike, as we recently did.

1139
01:50:45,296 --> 01:50:51,296
With high fees, then the rationale for drivechain involves scaling Bitcoin.

1140
01:50:51,296 --> 01:50:54,296
But of course, we're not opportunistic.

1141
01:50:54,296 --> 01:50:58,296
We're not going to pick arguments that only work in the moment.

1142
01:50:59,296 --> 01:51:01,296
The proof is online.

1143
01:51:01,296 --> 01:51:03,296
It has been for years.

1144
01:51:03,296 --> 01:51:08,296
The idea for a large block sidechain has been around for a long time, for many years.

1145
01:51:08,296 --> 01:51:24,296
And the idea, as Adam Back tweeted, he tweeted about three months ago to Roger Ver about how it would have been great if the large block Bitcoin community had developed the drivechain years ago for large block Bitcoin.

1146
01:51:24,296 --> 01:51:27,296
And then they would have been remaining in the Bitcoin community.

1147
01:51:27,296 --> 01:51:29,296
So that's what drivechain is all about.

1148
01:51:29,296 --> 01:51:32,296
Ultimately, it's never been about just the security budget.

1149
01:51:32,296 --> 01:51:35,296
It's never been about just scaling.

1150
01:51:35,296 --> 01:51:37,296
It's never been about just privacy.

1151
01:51:37,296 --> 01:51:48,296
Rather, drivechain ultimately is about enabling the Bitcoin community to handle disagreements about what the blockchain should be.

1152
01:51:48,296 --> 01:51:50,296
Should it be for JPEGs?

1153
01:51:50,296 --> 01:51:51,296
Should it be for privacy?

1154
01:51:51,296 --> 01:51:55,296
Should it be for anything else?

1155
01:51:55,296 --> 01:51:58,296
The answer is allow people to do sidechains.

1156
01:51:58,296 --> 01:52:01,296
If they do sidechains, they don't have to leave the community.

1157
01:52:01,296 --> 01:52:05,296
They can do their variation of the blockchain as a sidechain.

1158
01:52:05,296 --> 01:52:08,296
And then they're happy and everyone's happy.

1159
01:52:08,296 --> 01:52:15,296
And we're all paying fees to the same set of miners, enabling that set of miners to be very large and powerful.

1160
01:52:15,296 --> 01:52:28,296
So it's all about innovation and resolving disagreements amicably instead of having people who disagree leave the community, start an altcoin.

1161
01:52:28,296 --> 01:52:35,296
And then that altcoin, its monetary unit, competes existentially against Bitcoin for monetary premium.

1162
01:52:35,296 --> 01:52:37,296
That's no good.

1163
01:52:37,296 --> 01:52:47,296
Right now, Bitcoin has a large competitor, Ethereum, which every day is growing more and more users and value, more and more transaction fee revenue.

1164
01:52:47,296 --> 01:52:50,296
It's gaining economic traction.

1165
01:52:50,296 --> 01:52:58,296
And it would be great for Bitcoin to devalue that altcoin by copying all of its technology into a sidechain.

1166
01:52:58,296 --> 01:53:03,296
And then there would be perhaps no reason for anyone to use the altcoin.

1167
01:53:04,296 --> 01:53:11,296
They could instead use the most powerful monetary policy and architecture, Bitcoin.

1168
01:53:11,296 --> 01:53:15,296
So that's the drivechain vision.

1169
01:53:15,296 --> 01:53:18,296
It has a bunch of interesting consequences.

1170
01:53:18,296 --> 01:53:21,296
It increases the ability for Bitcoin to have innovation.

1171
01:53:21,296 --> 01:53:25,296
It increases the ability for Bitcoin to have scalability.

1172
01:53:25,296 --> 01:53:29,296
It potentially boosts the fees a lot on the main chain.

1173
01:53:29,296 --> 01:53:37,296
And it strengthens Bitcoin's narratives around technology, innovation, experimentation and variety and extensibility.

1174
01:53:37,296 --> 01:53:41,296
That's the word Adam Back uses is extensibility.

1175
01:53:41,296 --> 01:53:50,296
So sidechains increase Bitcoin's extensibility, meaning enabling people to build innovative new features that aren't possible on layer one.

1176
01:53:50,296 --> 01:53:58,296
To conduct research and development in a live environment on Bitcoin in a manner that's more peer to peer than a federated sidechain.

1177
01:53:58,296 --> 01:54:01,296
So that's all the cool stuff that drivechain can bring.

1178
01:54:01,296 --> 01:54:10,296
And it's very interesting to watch this project evolve and wonder what will be the impetus for greater understanding and adoption of it.

1179
01:54:10,296 --> 01:54:18,296
Will it be that fees are too high and then people will want the scaling solution of a thunder large block sidechain with one gigabyte blocks?

1180
01:54:18,296 --> 01:54:26,296
Or will it be that fees are too low for too long and there is an increase in the frequency and severity of reorgs?

1181
01:54:26,296 --> 01:54:36,296
And then people will want more fees and they'll turn to merge mining as a better solution than tail emission.

1182
01:54:36,296 --> 01:54:44,296
Because, of course, tail emission would disrupt Bitcoin's monetary policy, one of its most important features.

1183
01:54:45,296 --> 01:54:55,296
And ultimately, the original case for drivechain might be the one that leads to its adoption, which is that it's all about reducing these disagreements within the community.

1184
01:54:55,296 --> 01:55:07,296
When people disagree about what Bitcoin should be, the ability to launch a sidechain that has the features that are desired helps resolve that disagreement and preserve harmony within the community.

1185
01:55:07,296 --> 01:55:17,296
Rather than seeing it fracture with civil wars and disagreements about what should be on the Bitcoin blockchain or what should the configuration of the blockchain be?

1186
01:55:17,296 --> 01:55:26,296
So we meet here twice a week, Mondays and Thursdays, 930 a.m. Pacific.

1187
01:55:26,296 --> 01:55:35,296
However, this Thursday, probably there'll be no event because we'll be live at Bitcoin Miami at the LayerTwo Labs booth.

1188
01:55:35,296 --> 01:55:40,296
So if you're going to be there, come on over and chat, pick up some T-shirts.

1189
01:55:40,296 --> 01:55:43,296
We're going to have tons of cool stuff to hand out.

1190
01:55:43,296 --> 01:55:50,296
So if you want some really great sunglasses and some other swag, we're going to have it for you.

1191
01:55:50,296 --> 01:55:55,296
And if you want, you can also just chat about drivechain.

1192
01:55:55,296 --> 01:55:57,296
So hope to see you all there.

1193
01:55:57,296 --> 01:56:05,296
And then later, just follow LayerTwo Labs here on Twitter to catch our spaces twice a week, Mondays and Thursdays.

1194
01:56:05,296 --> 01:56:12,296
Thanks to all of our really fantastic speakers today, Moon Settler and Moth.

1195
01:56:12,296 --> 01:56:13,296
See you next time.