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Hello, everyone, and welcome to Drivechain Twitter Spaces.

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Today is Monday, March 13th, and we're thrilled to have another conversation today,

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as we do every Monday and Thursday about Drivechain.

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So, all are welcome to raise their hand and chat.

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Drivechain has so many interesting features and facets to it.

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There is so much to be said about how Drivechain could strengthen potentially Bitcoin's future growth

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and expand the developer community and number of interesting projects that are on Bitcoin

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that are energizing interest in Bitcoin.

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And it's also so interesting to think about Bitcoin history

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and learn how Drivechain's role in history is important in terms of, you know,

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Drivechain was thought up first in 2015 at a time when sidechains were very much on the forefront of Bitcoin thought

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and theory about, you know, potential future Bitcoin growth.

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And now sidechains are once again on the minds of many people as we contemplate extensibility

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and how extensibility is one of the important dimensions of Bitcoin that could be expanded through an upgrade.

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So, people are interested in making Bitcoin able to have potentially more features and interesting projects,

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projects related to privacy, projects related to scaling.

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So, there could be a sidechain focused on privacy like Zcash,

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but with Bitcoin as the unit of account and with the fees paid to Bitcoin miners,

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there could be another one or perhaps a number of them that are large block Bitcoin sidechains,

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Thunder sidechains that could bring a lot of an enormous number of small fees that would accrue to a total that's significant in fee revenue

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to Bitcoin layer one as MergeMine, Thunder sidechains,

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and might perhaps might bring back some of the big block Bitcoiners back to Bitcoin to use that sidechain

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rather than remain in the altcoin, you know, Bitcoin fork community.

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And then, of course, there's very interesting projects like HiveMind, BitAssets, and BitNames.

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You know, BitNames is the project that is similar to Satoshi's own idea that not that he had the idea,

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but he commented on it in writing back in August of 2010, BitDNS.

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So, DNS is an idea that is a non-monetary use of Bitcoin's technology that could be an exciting part of the Bitcoin ecosystem,

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you know, website domains being something which people could own in a way that is secured by blockchain

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and something Satoshi himself thought was cool and thought would be a MergeMined blockchain on Bitcoin.

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So, that would be exciting to see that happen.

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And that's what Drivechain is all about, is making Bitcoin more inclusive and exciting.

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So, enabling developers who have new ideas to remain in the Bitcoin community and be able to build on Bitcoin

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rather than splitting off and into an altcoin and having Bitcoin lose that share of the thinking and development

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and economic activity in terms of value and fees.

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So, it's all about making Bitcoin a place where people are happier and feel they can do whatever they want within Bitcoin.

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That way, Bitcoin can become the world's choice for money as well as other blockchain technology applications.

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So, that's why it's an exciting idea because it brings people together, it helps them stay together even when they have different ideas.

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Because one of the great things about capitalism is people with different opinions and different interests can collaborate in a harmonious way.

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So, that's one reason why I like Drivechain. It's about people getting along, which is great because that's really what economics is all about.

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Instead of fighting in tribes, we can get along through trade, even when we have different skills, different interests, different things we focus on.

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And with that, I would just say again, all are welcome to join the stage and share thoughts.

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We usually run for about an hour and a half, and it's great to have people of all interests join.

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There's a bunch of content on GitHub, which is great for those who are programmers or those who are interested in stretching their intellectual experiences with New Horizons.

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So, people like me, I don't have a programming background, but as a lawyer, I should introduce myself as I always do in these chats.

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I'm Henry of LayerTwo Labs.

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So, as a lawyer, the Drivechain topic is just an intellectual adventure because there's so many interesting parts of it.

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Open source, code development, the community's consensus and how it's achieved or not achieved, how is it measured.

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There's so many open questions.

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It's a very diverse and interesting intellectual space, the topic of BIPs and Drivechain in particular because it has such a strong economics fabric to the ideas.

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When we're talking about fee revenue and value accrual to Bitcoin, Bitcoin's network effect, these are economic concepts.

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So, Drivechain is very much an idea which is interesting for someone of an economics orientation, not just only those people with a software development background.

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And it's really those economics ideas that got me into Bitcoin in the very beginning.

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Satoshi's thread on Mises and Rothbard was that lightbulb moment for me.

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Well, I see a bunch of familiar faces in the audience.

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All are welcome to chat.

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If you're interested in chatting, all you have to do is raise your hand and you can come up to the stage and share your thoughts on Drivechain.

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We've had a bunch of interesting Twitter threads lately.

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And we've also had interesting conversations in the Drivechain Telegram group where over 700 people have joined to observe the conversation on Drivechain.

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The Telegram group is accessible easily.

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If you want the link for it, you can just go to drivechain.info and then click on Telegram in the list of links.

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And then that will take you to the Telegram group.

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It's free to join.

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It's free to participate.

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And the conversation is pretty open.

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People can say what they really think and get some interesting feedback and discussion.

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Sometimes it's an argument.

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Sometimes it's just a lively conversation.

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But it's all about Drivechain.

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So it's great for people to be able to engage that way using the Internet rather than back in the old days.

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There were just magazines for people interested in the ideas.

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But now we have live conversation and writing.

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Pretty dynamic stuff.

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Well, we have all the familiar faces here.

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People who are interested in Drivechain.

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I recognize some very nice faces.

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Some of us are supporters.

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Some of us are skeptics.

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And some people have a neutral opinion.

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There are some people, for example, our most recent Drivechain talk, Twitter Space, last week was with Moon Settler.

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And he is very interested in Drivechain, has so much to say about it.

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When I ask him if he's emphatically for it, he says, you know, it depends.

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So some people who are very interested in it and like it and often defend it, even they aren't sure categorically if they're for it.

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Another person who has a strong interest in Drivechain is Fiatjaf, the creator of Nostr.

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He clearly is an emphatic supporter.

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Adam Back, he says favorable things about Drivechain.

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And I would be an emphatic supporter as a humble pleb.

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And, you know, others who have, you know, notable reputations are some of them are supporters.

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Some of them are skeptics.

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And that's fine.

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So the ideas are evolving.

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Understanding is evolving.

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And there's a whole bunch of different ways people can be interested in Drivechain.

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There's like five, at least, very interesting, different ways of getting interested in Drivechain.

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You can be interested in Drivechain because you want there to be more ability for developers to develop on Bitcoin in a peer-to-peer way.

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So technological inclusiveness and creativity and development.

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Those are, you know, experimentation.

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Those are ideas that could foster a person's interest in Drivechain.

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And completely separate from that, a person could be interested in having Bitcoin be the biggest.

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So having altcoins not grow as much, Drivechain might help with that.

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So Drivechain might help Bitcoin maintain its role as the leading cryptocurrency that's peer-to-peer, you know, and, you know, by market cap.

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So that's another read.

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You can be interested in Bitcoin's growth relative to altcoins.

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And that could help and, you know, get you interested in Drivechain.

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Totally separate from the first topic, which was development extensibility.

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And then there's also others like the security budget.

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So there's a whole bunch of interesting different ways a person can encounter Drivechain and come to it and develop, you know, an interest for it.

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And then, of course, there's also more reasons like if a person is interested in relieving Bitcoin from the stress and strain of consensus upgrades.

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You know, the difficulties and risks of introducing changes to layer one.

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Drivechain helps with that.

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Drivechain helps relieve the pressure that the Bitcoin community experiences on layer one consensus upgrade discussions by enabling people who want to do a change to just do it in a Drivechain.

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And they can test it out.

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And if that appears very stable and if that appears very successful, then that could help make it easier for the community to bring that change down to the layer one, the foundation.

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So Drivechain could, if it's successful and operates exactly as intended, could be a great way for the consensus upgrade process to be much easier for Bitcoin.

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And it might even enable there to be no more changes conceivably.

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There could be 100 years, maybe, where there's no more soft forks because the Drivechains are operating so well as a way of enabling changes and experimentation and growth on technology other than layer one.

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And those are a bunch of the ways that people can get interested in Drivechain.

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Just to wrap up the summary, because I recently have been reflecting on this in conversations with friends, that there are four or five different ways to get interested in Drivechain.

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Namely, the love of innovation and extensibility and development, the interest in alleviating the stress and strain of upgrades for layer one, the security budget question about low fees, and then the growth of altcoins.

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In other words, trying to keep Bitcoin as number one.

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So it has the biggest network effect, the strongest number go up narrative.

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So those are some of the four or five different ways that people can get interested in Drivechain and become fans of it.

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Probably the one which is most fundamental and engaging to the most number of people, especially among the technologically sophisticated, probably the most compelling reason for Drivechain might be how it enables innovation on Bitcoin.

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I think that a love of innovation and experimentation in a way that's safe and partitioned, that is what appeals to some of Drivechain's most notable supporters.

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They want to see Bitcoin enable more innovation and experimentation in a manner that's partitioned and conservative in terms of its design and safety.

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So I think that's a great reason to like Drivechain.

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Liking it because it could help Bitcoin get more fees and value economically is appropriate.

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However, I think that those inspirations aren't as internal to Bitcoin.

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Some people wouldn't find those to be compelling reasons because those have to do with worrying about things that might not necessarily be worth worrying about, like the growth of altcoins.

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Many Bitcoiners don't find that to be a compelling reason to do anything.

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And that's fine. Maybe they're right. Maybe they're not.

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But also the security budget, it could be decades away from ever being an issue if it is an issue at all.

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So I understand and appreciate the notion that maybe the best justification for Drivechain is to make Bitcoin become more about the love of innovation and expression so that there can be more development on Bitcoin.

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Like if a person is a privacy enthusiast, they want to do Zcash technology, they want to do Monero technology.

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Well, wouldn't it be great if they could do that on a Drivechain?

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Probably a large portion of the users of those privacy coins and potentially maybe virtually all of them might migrate to Drivechain if Drivechain were adopted.

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It might be a great thing for Bitcoin to have those technologists back in the Bitcoin community because that privacy topic is so closely tied to Bitcoin's soul in a sense.

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Like Satoshi himself had a whole section on privacy in the white paper and recommended people.

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He said, I recommend you use Tor and don't reuse addresses.

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So I think that it'd be great to have the privacy enthusiasts within the Bitcoin community rather than the altcoin community.

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Of course, many privacy enthusiasts are within Bitcoin, but a portion have left and it'd be great to bring them back.

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It would be one of the great dramas and exciting things of Drivechain adoption to see to what extent do the altcoiners return to Bitcoin.

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Wouldn't that be amazing?

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And wouldn't it be great for the Bitcoin community and the whole crypto community to be unified?

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To be unified in their interests for advancing and advocating for property rights and digital property rights and open protocols.

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Lots of the things that Bitcoiners and altcoiners share, like an interest in cryptocurrency as a technology and as a thing that can improve society.

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It would be great if those communities spoke with one voice, a unified voice, and that way there can be more political strength in the community.

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Ah, we have a speaker requesting.

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Welcome to the stage, AcrossFireX.

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Hi there. Thanks for joining.

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How are you doing?

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Yeah, generally, I'm kind of a fan of the idea of Drivechains for mostly the reasons you've been citing here around keeping focus on Bitcoin and allowing more innovation.

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All of those sorts of things sound great to me.

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Generally, I'm still kind of making up my mind kind of in the grand scheme of things about Drivechains because it also has to be assessed with whatever risks that might introduce us.

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Well, to Bitcoin, you know, and one that I was trying to understand recently is the dynamics around mining.

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So I know, like, it's already, you know, an issue, obviously, if there were, you know, pools that were able to get to 51 percent of the Bitcoin hash rate just for, you know, the main chain as is.

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But it does sound like there might be some additional dynamics that might be introduced with Drivechain as well, if that were to happen.

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And I know right now, you know, a lot of times people can kind of, you know, quell concerns about that by saying, you know, hey, it's easy for miners to move to a different pool.

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And there's, you know, new innovations like Stratum V2 for, you know, for individual miners to have more say in the blocks that are produced by the mining pools, and that can mitigate some of the concerns for the main chain.

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Do you find that those are, you know, kind of similar for Drivechain?

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Is Stratum V2 kind of, like, viable at mitigating some of those concerns for Drivechain?

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Are there other ideas that might help in kind of avoiding, you know, mining pool concentration?

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Because, you know, Foundry and, you know, a couple others are already pretty large.

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So, you know, that could be a potential concern, you know, if they were to get to, you know, 51% or something like that, and these things become, you know, something more realistic.

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Thanks for that question.

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Regarding the question about Stratum V2, there has been some commentary about that in the Drivechain talk Twitter group, Telegram group, and people have, you know, shared ideas on it.

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One person in Drivechain Twitter spaces a few weeks ago, Greg Slephak, tweeted that he thinks that Drivechain is more compelling to him, in his view, because of Stratum V2.

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So I know of one person, and he came in here and talked about it.

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It was great. He did a really great interview with me, basically, in Drivechain Twitter spaces like a month ago about that and other things.

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So there's at least one person I know of who's pretty technical, who has an interest in Stratum V2, who sees it as a benefit in terms of understanding Drivechain and the possibility that Drivechain could operate well.

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So I know for one person, there is, you know, he saw that as like a good thing with respect to Drivechain.

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It's a great question.

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Cool. Yeah.

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And then, yeah, Satoshi, welcome to the stage. Crown Bitcoin and also Satoshi Enjoyer.

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Hello.

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Please jump in, share your thoughts.

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Thanks. Do you hear me?

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I do. Yes. Welcome.

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Great. Great. Thank you for having the spaces.

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So first time I heard about Drivechains, I think, was maybe a year or two ago at a conference when Paul was speaking about it.

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And I thought that this was like an amazing idea right away.

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And I was more curious, how come there hasn't been more talk about it? Because it seems like he came up with this many years ago.

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So I did a little bit of research and more recently, I did a more deeper dive.

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I listened to all of Paul's talks and I wanted to see what is the biggest arguments against it.

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Why aren't people talking about it? Why aren't people excited about it? Why isn't it a bigger thing?

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So I do have some questions because I didn't really read the specs and I'm not as technical.

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But from watching the videos, I have a few holes that maybe people can help fill in.

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So I think it does boil down to what AcrossFire was talking about.

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But more specifically, basically, if there's a drivechain, it doesn't have to have 10 minute blocks.

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The way I understand, it can have smaller blocks, but ideally, it would still bring something from every 10 minute block from Bitcoin onto its drivechain for its own security to say, hey, we have a stamp from Bitcoin.

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So we're going to include it. And then another thing is, as a miner, if they actually have to run a drivechain, or can they run an SPV node of the drivechain?

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And the idea is if the miner is incentivized to have more bandwidth and more storage, basically more resources, or can they just as effectively get the fees from the drivechain without needing to run any additional resources?

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Because I think the crux of the potentially of people that might not like this idea, and maybe I don't understand it the best, but I think that their idea is that if you are incentivizing miners to have more resources, then you are potentially creating miners that would potentially make more fees because they have more resources available.

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So that can potentially over time, geographically, create more miners that have better bandwidth.

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I'm so sorry, please continue. I clicked a button by mistake. So please continue with your...

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Sure. Yeah, feel free to stop me at any point.

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Oh, no, that was no, it was completely accidental. Please continue with your question. Thanks.

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Sure. I mean, it's a little bit of a tangent. I guess there's a lot of questions there. So if you want, you can stop me. But I just wanted to get the whole idea across.

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So if potentially you are incentivizing miners to have more resources and hardware, basically, that's how we're defining it, then potentially, if there is some type of like evil miner of 51%, you are incentivizing for that to happen, from what I understand.

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Yeah, those are great questions. Welcome, Paul, to the stage. There seems to be a little bit of glitching going on with Twitter spaces. But I'm trying to enable those who have requested to join to join. Can you hear me, Satoshi?

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Yes, I hear you. But I don't see Paul on stage. He's just a listener right now.

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Yeah, I know. Sometimes when people try to get on stage, it glitches a little bit on Twitter spaces. Your question was really great. And it's cool that you went through some of the interviews that people had on Drivechain. And that you're like, as you say, kind of in the process of reading about it. So you asked, what are the major objections? That was like the first part of your question.

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So the skeptics and critics of Drivechain, I've read a lot of their writings and listened to a lot of their talks. The main objections they have, if I had to list the top two or three, they would be some people think that the security of the two-way peg would be not guaranteed very well.

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So for example, in the Blockstream Liquid white paper from 2020, there is this paragraph or two on Drivechain on the second page. And they succinctly present that argument that the security of the two-way peg might not function and that instead, a well-funded group of miners could steal the Bitcoin that's in the two-way peg.

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So that's one objection to Drivechain.

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And an implicit claim in that line of reasoning is that the Drivechains would not grow very large, in my view.

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That's implied there. So that's one objection is that Drivechains wouldn't be successful because the Bitcoin could be stolen out of them by a 51% miner.

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And this theft would take a long time. It would take at least a few months. And the majority of Bitcoin's hash rate would be deployed as part of this attack.

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So it would be a very significant operation to do this.

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However, it's logically possible in the view of these critics and skeptics.

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So the argument becomes one of like, is this likely to happen or is this unlikely?

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So I like to refer to Fiatjaf's essay on Drivechain with respect to this topic.

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He has a great essay at fiatjaf.com. This is the creator of Nostr.

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And his essay, you can find it if you go to fiatjaf.com, F-I-A-T-J-A-F.com.

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And then you click on Bitcoin and then you click on Drivechain and you'll see his essay.

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It just takes about 10 minutes to read. And he gives a whole bunch of reasons, like six or more reasons, why he thinks the miners are very unlikely to ever steal from a Drivechain that is operating well and in the way that Bitcoiners want it to operate.

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And I make that second point because the theft from the Drivechain would actually be, in some theoretical cases, something Bitcoiners would want.

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Because if a Drivechain were operating in a manner that was harmful to Bitcoin or harmful to other Drivechains, like for example, if the Drivechain were doing something that was very bad and somehow lowering Bitcoin's value, then it would actually be the community's will that the Drivechain is extinguished.

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So actually, the way that the miners have some power over the Drivechain is actually consistent with the intended design, if you know what I'm saying.

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And then the other most often heard objection to Drivechain, other than the one that the miners can steal, is that the result of the Drivechains becoming very large and economically significant would be that the concentration or centralization in the mining market would increase.

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So there'd be fewer miners and they would be larger.

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Kind of like how in the restaurant industry, there are tens of thousands of restaurants in America, but power companies, there's only a few big ones in each area.

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So things like that, there's a concentration there or a lesser degree of decentralization.

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So some Bitcoin thinkers view it to be very important that there's a lot of decentralization in mining and they have their own ways of defining what that decentralization is.

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And then they argue that Drivechain would diminish that decentralization and therefore whatever benefits Drivechain offers, in their view, are outweighed by this diminution of decentralization with respect to mining.

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So there are responses to that as well.

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So just like I referred you to Fiatjaf's essay on Drivechain to see arguments about why the miners aren't going to steal, most likely, from the Drivechain that's operating well.

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There's also arguments that are interesting to read about why the alleged reduction in decentralization of mining resulting from Drivechain also isn't a compelling argument, I think.

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And one summary of that, it's pretty complicated, but one summary is to say that the opponents of this, the people who make this criticism, what they're essentially saying is not specifically a criticism of Drivechain so much as a criticism of merged mining in general.

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And merged mining, this is my view, as they say, merged mining has been around in Bitcoin for over a decade.

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Satoshi himself even way back in the day was aware of it and talked about it and sort of invented it, you could say, or discovered it.

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So merged mining is a way for these blockchains other than Bitcoin's blockchain to pay fees to Bitcoin's miners.

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And in return, those blockchains benefit from utilizing the proof of work activity of the Bitcoin miners.

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So it's kind of a win-win, symbiotic, harmonious relationship among two blockchains, where one is the layer one and the merged mine one is kind of like the child or the layer two.

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This is used in Dogecoin, where Litecoin is the layer one in terms of the Litecoin miners.

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And the people who say that the decentralization would decline as a result of merged mining, what they're saying is that in order to be a miner and get the fees from the merged mine chain, the miner would have to run the sidechain node.

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And in blind merged mining, which is BIP301, the miners running of the sidechain node is optional.

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So right now, merged mine blockchains on Bitcoin, there are a number of them, and they're paying a number of Bitcoin every month to Bitcoin layer one miners.

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In fact, about half of Bitcoin's hash rate is merged mining RSK Rootstock, which is the largest merged mine sidechain on Bitcoin.

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One moment.

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Sure. Yeah. So I don't see any of those two arguments as being strong because I guess the reasons you gave.

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But I still want to understand that if there's a drivechain with faster blocks, from what I understand, miners are the ones that decide which drivechains are going to even be included, first of all.

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So they can make sure that any drivechain that is being included, all the fees will go to the base layer one miners. Correct?

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Like they can make sure, hey, if you're going to make a drivechain, any fee that happens on that drivechain goes to us.

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They can't enforce that because if they don't like the drivechain, they just won't include it. From what I understand. Is that correct?

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I think you're correct in your view overall. The way I've heard it articulated by those who understand it much better than me is that approximately 100% of the fees from the sidechain are going to be paid to the layer one.

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So you're right.

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Right. So if that happens, let's make that a given now. And let's make a given that the miner does not have to run a full node of the drivechain.

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They can run an SPV node or they can trust their friend that runs the node of the drivechain.

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Right. So then as a miner, actually, or a base layer miner, you really don't necessarily have an incentive directly for economic reasons to have a full node of the drivechain or to have actually more bandwidth or more resources.

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And you are compatible to have just as much fees as any other miner that might want to run the full node.

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I want to give voice to the critics of drivechain. They would say, because I think it's very important that every criticism of drivechain is heard thoroughly.

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That way, the advocates can understand what they're dealing with. And it's very important that everyone is very aware of all the ideas in favor and against.

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So the advocates of the criticism about the so-called centralization of mining would say that although blind emerged mining enables people to mine without running the node of the other blockchains, that the miners would have an economic incentive to run the node because they would potentially make more money by running the node.

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And the reason why has to do with things that are related to such things as MEV and other issues like that, where there are sophisticated reasons why running the node might be a little bit more money would come to you.

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And then that's what they think. So your share of the profits would be a little bit less if you don't run the node. And therefore, if you don't run the node, you'll make less money.

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And that's what some people say. So they think that miners will tend to run the nodes to make more money. But I want to provide the kind of the end of my argument against that, which I was getting to earlier, which is that people who say that it's not good if miners have a profit motive to run the node, because then they'll have to have a few more computers and they'll have to have more hardware to run those nodes.

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And then mining will centralize further because miners feel they need to run these nodes. The reason why this is not a good argument, I think, is there are many, many ways right now by which miners make more money by doing different things.

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Some of them cost a lot of money to do. For example, in order to have a special custom relationship with a power company, a miner has to be a large industrial player, as I understand. The ordinary person can't call up the local nuclear power station and say, hey, can I have an agreement with you where I'll mine only when you don't need to send electricity to other people.

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So that's an example of a special arrangement that would be available only to a large miner. So there are already 1,001, so to speak, ways in which miners can make more money by doing different things that aren't easily available to smaller miners.

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And the people who criticize merged mining and say that it's going to cause more centralization of mining, those same people do not criticize the other 1,000 ways in which miners are already subject to market forces that drive some degree of centralization.

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The main difference between merged mining and these other ways to make money is that merged mining occurs in software. So among these critics of drivechain, there is, I would argue, an irrational prejudice against software that is productive.

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Because those people are tolerant and advocate for miners doing other things that make money that don't involve software. But when it comes to merged mining, because it's software based, they're against it.

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So I would allege that the only real difference between merged mining and the other many ways in which miners make money that might lead to centralization, quote unquote, in mining is that it's software based.

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So if that's the only difference, then of course we shouldn't have a prejudice against software. There's nothing wrong with software in general.

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So I think they have an irrational bias. And I mean irrational not in the sense that they're nutty, only in the sense that there is no valid, coherent basis for this claim, for this aversion to merged mining.

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And it's also, I think, just from a historical perspective, quite notable that we've had merged mining in Bitcoin for a very long time. And it has never been said that this is harming Bitcoin actively, as far as I'm aware.

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Some people don't like it. I've seen people tweet, merged mining is an attack on Bitcoin. But I don't think I've ever read a good argument as to why that's the case. And of course, Bitcoin is doing fine with merged mining going on every single day for over a decade.

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So I think that if we were to have more merged mining, not only would it be okay, but it is potentially a very important solution to the security budget problem, to the extent that that is a problem.

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Now, I personally think that it is a problem. Some very smart people don't. So I respect that. But what actually really got me into Drivechain at the very beginning of my Drivechain journey a year ago or so was the security budget and how Drivechain could, if it's most successful, it could be something which brings a ton of fees to the Bitcoin miners in the future,

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greatly growing the fee market for Bitcoin and making all the people who are saying Bitcoin doesn't have a sustainable economic security model, it would make all those people wrong. I don't think that those people know about Drivechain, who think that Bitcoin is doomed, or they're more sophisticated and they think that Bitcoin won't adopt Drivechain.

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And therefore, they think the security budget problem will exist. There's actually a couple altcoiners I've spoken to who they say, and this is someone with quite a large following, said, I like the ideas of PulseDorts, but I don't think that Drivechain will be adopted. I don't think it's ever going to be popular enough.

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So although it might actually defeat the security budget problem, I don't think that the community understands this well enough. And there's too many people who just want to keep Bitcoin as it is and hope for the best. Because they think that, well, if the whole world is using Bitcoin, who's going to adopt it? I mean, who's going to attack it?

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There are interesting arguments that might end up being true. But as far as I can tell, it would be great if we had higher fees. I'd like to see the higher fees. So yeah, merged mining is cool. I mean, Satoshi, obviously a genius, not perfect, right? I mean, we shouldn't appeal to authority. I'm not saying he necessarily is right about this, but he did explicitly say that merged mining would strengthen the network in the future.

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I mean, if you read that passage from the BitDNS thread on the forum from August 2010, the only plain English meaning it could have had is that the use of merged mining in the future will help strengthen the network, making it harder and more expensive for someone to be a hostile 51% miner.

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So, yeah, I think the fees from merged mine sidechains is a really cool thing.

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And I love how that is a potential solution to the security budget concerns.

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Because there's only three ways things can go in the future.

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One is we get more merged mining.

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Another is we get inflation fork adopted by the Bitcoin community.

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And another is we do nothing.

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Now if we do nothing with respect to this issue, then either that'll work out well or

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it won't. I personally don't understand how it won't.

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I mean, how people think, like, maybe it'll just be fine.

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I think it can still be fine.

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Potentially, it would depend on adoption of layer one.

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As long as there's enough adoption of layer one, that idea can, I guess, be fine.

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Yeah, I would tend to agree with that as well, especially now that, you know, we are

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starting to see some other innovation happening on L1 with ordinals and, you know,

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potentially sovereign roll ups.

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And maybe in the future, if we get the right op codes, you know, more sophisticated roll

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ups. But I still don't think that necessarily makes it where this wouldn't be an avenue

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that's worth pursuing.

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I guess one question I would also have is whether or not there's been any conversations

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with some of the alternative proof of work chains and their miners as to whether or not

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they would be interested in, you know, taking that hash that they have there, even

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though it's a small fraction of, you know, what we have on the Bitcoin network.

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But if they were willing to move over to mining on Bitcoin because now they could have

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like, you know, a Litecoin sidechain or a BSV sidechain or, you know, Monero side

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chain, you know, and all of a sudden that hash starts to be added to the Bitcoin

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network in some way that could be part of the decentralization story.

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But I mean, it's largely theoretical unless we actually have people from those

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communities saying they're willing to do that.

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I know the Rootstock people have done that, but, you know, for anybody outside of like

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the Bitcoin community proper, I'd be curious if they had any thoughts about drivechain

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and whether they would start mining over here.

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There has been some favorable, very interested commentary from the leader of Zcash.

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So if you go to the advanced Twitter search page and you type in his handle and then,

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you know, the word drivechain, you'll see the times he's commented on it and he's

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interested in it. There has been an interesting pattern in history where most altcoin,

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most developers who left Bitcoin layer one decided to do an altcoin.

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But some, as you rightly point out, chose to do what Rootstock did, which was build a

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sidechain and use merged mining, which is awesome.

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That's like the closest thing you can do to a drivechain right now is a federated

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sidechain with merged mining.

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And, you know, the problem is there, of course, that unlike an altcoin, the sidechain

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is federated, meaning that a party of 15 people control the Bitcoin that has been

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sent to the sidechain.

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So it has that vulnerability where hypothetically, if the government were to or

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governments were to, you know, try to arrest the people who have that Bitcoin, you know,

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they would be at risk.

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Whereas it's better, I think, that the entire Bitcoin mining community control the

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hashrate escrows because, you know, the mining community is a multitudinous, dynamic

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party with thousands of people around the world.

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And therefore it's much more dispersed and powerful in nature.

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And also critically, it's sort of categorically different than a multi-sig, because if you

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have 15 people who control something and, you know, they aren't constantly changing,

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there would have to be a social kind of an approval by some board about, OK, we're

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going to have this person retire and we're going to hire a replacement to be one of the

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new signers. But with Bitcoin mining, parties are constantly coming and going all the

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time. People are leaving and joining.

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And then, you know, as the fees go up, you know, people come online, more mining

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happens. So there's a dynamic nature to the Bitcoin mining industry that a federation

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can't be as dynamic and constantly changing and can't have thousands and thousands of

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people involved. As far as I understand, although I do think that there are some very

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smart, very good people working on federations to make them as good as they can be.

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I think the best attitude is not to view things as let's do one or the other.

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The best attitude is to ask what would be best for Bitcoin and its users?

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Might it be best if they have a choice, if we can find out if drivechains work well by

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enabling them and seeing them operate on Bitcoin?

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So it would be great for the consumers to have that choice.

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That's the pro-drivechain view is let's have the choice because the potential gains

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to Bitcoin outweigh the potential setbacks by such a large margin.

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You know, if Bitcoin has a number of very large, very successful drivechains on it, the

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result could be much more of a sense that Bitcoin is a place for innovation and not

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just, you know, buy and hold, never sell.

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Instead of that, we would have all that all these interesting technologies like oracles,

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like privacy sidechains, high throughput, low fee sidechains like a Thunder sidechain

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which has one gigabyte blocks would be the planned drivechain for scaling.

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And there could be a whole number of them.

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And then the whole world would be using peer-to-peer cash.

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That's a Bitcoin sidechain instead of non-peer-to-peer arrangements like a

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federated, you know, custodial model where people just, you know, move their money

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around on a Coinbase ledger like that wouldn't be a good future.

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That's how gold stopped working is that all of the gold was in bank vaults and people

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traded paper. So then eventually the bank vaults were seized by the government because

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they were walled gardens.

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They were honeypots.

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If the whole world is using peer-to-peer cash such as a peer-to-peer Bitcoin sidechain,

359
00:46:26,900 --> 00:46:30,821
that would be great because that's really the essence of Bitcoin is that it's peer-to-peer.

360
00:46:30,860 --> 00:46:31,860
And what is peer-to-peer?

361
00:46:32,420 --> 00:46:40,941
Peer-to-peer, in my view, means there's no social approval involved in the acquisition

362
00:46:40,941 --> 00:46:44,501
of a role. So if you want to have a role in Bitcoin, like you want to be a user, you want

363
00:46:44,501 --> 00:46:49,180
to be a miner, you want to have a node, no one needs to give you permission to do that.

364
00:46:49,300 --> 00:46:52,381
All you need is a little bit of money and knowledge.

365
00:46:53,180 --> 00:46:54,580
You don't have to be approved.

366
00:46:54,700 --> 00:46:59,501
It isn't like getting a degree from a school or getting a job from a company or becoming

367
00:46:59,700 --> 00:47:03,661
appointed to the board of directors or becoming a politician who's in office.

368
00:47:04,020 --> 00:47:06,941
Those are all socially approved roles in society.

369
00:47:07,261 --> 00:47:09,700
But in Bitcoin, everything needs to be peer-to-peer.

370
00:47:10,101 --> 00:47:11,740
And that's what a drivechain is.

371
00:47:11,740 --> 00:47:15,381
It's a peer-to-peer sidechain as opposed to a federated one.

372
00:47:15,821 --> 00:47:21,740
For me personally, that is the fundamental difference between drivechain and everything

373
00:47:21,740 --> 00:47:29,580
else. So I view federated sidechains as being akin to custodial arrangements.

374
00:47:29,621 --> 00:47:33,300
I mean, indeed, when you're using Coinbase, you're literally using a federation.

375
00:47:34,420 --> 00:47:40,621
At the company, they're going to have 15 people who hold iPhones that have technology on

376
00:47:40,621 --> 00:47:44,101
them to allow peg outs and such things.

377
00:47:44,341 --> 00:47:47,900
There's literally multi-sigs at these custodial companies.

378
00:47:48,501 --> 00:47:54,781
So fundamentally, it's the same technology as a federated sidechain, which again, are

379
00:47:54,781 --> 00:47:58,221
great technologies and great people doing great things.

380
00:47:58,261 --> 00:48:01,661
I think these crypto companies are great and the federated sidechains are great.

381
00:48:01,781 --> 00:48:08,501
But I would love to see, for example, RSK wrote in their own white paper that they will

382
00:48:08,501 --> 00:48:11,341
become a drivechain once drivechain is enabled.

383
00:48:11,381 --> 00:48:12,700
They wrote that in their white paper.

384
00:48:13,140 --> 00:48:19,300
And Sergio Demian Lerner, the chief designer of that sidechain, has recently tweeted to

385
00:48:19,300 --> 00:48:23,860
that effect that as soon as they can, they will become a drivechain to be more

386
00:48:23,860 --> 00:48:25,901
decentralized. That's how he put it.

387
00:48:26,740 --> 00:48:33,660
So that's sort of the next sort of stage of Bitcoin's growth, I feel, is these drive

388
00:48:33,660 --> 00:48:39,461
chains. It would be, I like to say, the final frontier of innovation and experimentation

389
00:48:39,501 --> 00:48:44,261
and growth. And there can be some really cool stuff built on them.

390
00:48:44,420 --> 00:48:48,100
I think there are some people who have great ideas and they're waiting for drivechain

391
00:48:48,100 --> 00:48:56,300
to happen. I think, you know, if kind of the most optimistic view, right, or if there

392
00:48:56,300 --> 00:49:01,061
was a lot of successful drivechains that got really big and kind of to your point

393
00:49:01,061 --> 00:49:07,501
earlier, where it still might be more profitable for mining pools to run nodes for

394
00:49:07,501 --> 00:49:12,261
the drivechains they want to support because of MEV opportunities and things like

395
00:49:12,261 --> 00:49:18,821
that. That maybe could help with miner decentralization if there were enough

396
00:49:18,821 --> 00:49:23,780
successful drivechains, because if there was, say, for an example, you know, an EVM

397
00:49:23,780 --> 00:49:29,581
style drivechain, that would take a certain level of expertise around, you know,

398
00:49:29,581 --> 00:49:34,941
smart contract systems to be able to properly take advantage of the MEV opportunities

399
00:49:34,941 --> 00:49:39,780
there. And then, you know, potentially for something that's maybe more just explicitly

400
00:49:39,780 --> 00:49:44,701
NFT oriented or something like that, that might have a different set of opportunities or

401
00:49:44,701 --> 00:49:48,941
expertise where maybe another miner is more successful at doing something like that.

402
00:49:50,461 --> 00:49:54,381
And if that were the case, then maybe it wouldn't make as much sense to have, you know,

403
00:49:54,381 --> 00:49:57,621
a pool like Foundry with 35 percent hash rate.

404
00:49:58,340 --> 00:50:03,540
Maybe it would be, you know, a little bit of a motivator for different pools to kind of

405
00:50:03,540 --> 00:50:09,340
gain some kind of specialization in their particular drivechain, where

406
00:50:09,340 --> 00:50:13,660
that could maybe divert that hash or divide that hash up a little bit better.

407
00:50:14,261 --> 00:50:19,261
Yeah, I don't know. I think that's one of the things that, you know, for me, that's my

408
00:50:19,261 --> 00:50:24,581
biggest concern about drivechains is the potential, you know, hash rate concentration

409
00:50:24,581 --> 00:50:28,860
issues. But that also could be, you know, a way that it works in the opposite direction.

410
00:50:28,860 --> 00:50:40,100
I kind of feel like that the hash rate issue when it comes to MEV is one of the biggest

411
00:50:40,100 --> 00:50:42,941
downsides to drivechains.

412
00:50:43,021 --> 00:50:49,261
If you had decentralized enough mining pools that were solely motivated by profit or

413
00:50:49,740 --> 00:50:55,621
miner attractable value, the short term and by short term, I can mean, you know, six month

414
00:50:55,621 --> 00:50:59,941
incentive would be to loop any large enough drivechains.

415
00:51:01,780 --> 00:51:11,141
The analyses that I've seen point to the idea that MEV in that situation would result in

416
00:51:11,621 --> 00:51:17,261
like an experience to the sidechain users and not the mainchain users.

417
00:51:17,540 --> 00:51:21,860
So one of the essential features of drivechain is that they are opt in.

418
00:51:22,621 --> 00:51:26,100
So users don't have to use any sidechain.

419
00:51:26,261 --> 00:51:27,740
They don't have to use any drivechain.

420
00:51:28,340 --> 00:51:35,300
And to the extent that a user doesn't want to experience the hazards of transaction

421
00:51:35,300 --> 00:51:42,141
reordering by miners for the sake of profit in connection with smart contracts on the

422
00:51:42,141 --> 00:51:44,501
drivechain, no one has to use that drivechain.

423
00:51:45,340 --> 00:51:49,860
There are drivechains like you were saying, a crossfire where it would just be NFTs

424
00:51:49,860 --> 00:51:55,780
being traded or people moving a coin around with no smart contracts like the privacy

425
00:51:55,780 --> 00:52:00,780
drivechain probably would just have a token like Zcash, you know, on the privacy drive

426
00:52:00,780 --> 00:52:04,660
chain that is just being moved around without a lot of smart contracts.

427
00:52:04,660 --> 00:52:11,141
And therefore there's no MEV because there's no ability to like reorder a contract to

428
00:52:11,141 --> 00:52:12,780
make money on the trade somehow.

429
00:52:13,501 --> 00:52:19,860
So I think that because it's opt in, that is that's really the right response to these

430
00:52:19,860 --> 00:52:22,980
concerns. And the analyses get very complicated.

431
00:52:23,340 --> 00:52:28,540
And I've heard, you know, brilliant people in this space argue on in different ways

432
00:52:28,540 --> 00:52:36,740
about how the MEV that results to the drivechain would affect only the users of the

433
00:52:36,740 --> 00:52:41,141
drivechain and wouldn't have a like a deleterious impact on someone just holding

434
00:52:41,141 --> 00:52:45,780
Bitcoin on layer one or someone doing a Bitcoin layer one transaction.

435
00:52:48,501 --> 00:52:54,261
But isn't it on the in the docs for drivechains and in most of the discussions, one of

436
00:52:54,261 --> 00:53:00,061
the primary defenses of the drivechain, if the miners were to try to loot a drivechain,

437
00:53:00,100 --> 00:53:04,461
would be social attacks which would manifest on layer one, like user activated soft

438
00:53:04,461 --> 00:53:07,941
forks, which could result in a forks or reorg on layer one.

439
00:53:07,941 --> 00:53:15,901
Well, we were talking about MEV, so it's I think it's important we have like, you know,

440
00:53:15,901 --> 00:53:19,740
we keep our focus on whatever like issue we're talking about.

441
00:53:20,220 --> 00:53:24,021
But of course, you're right to bring up the other very interesting topics.

442
00:53:24,340 --> 00:53:29,740
So what would happen if there's like a disagreement about the state of the drive

443
00:53:29,740 --> 00:53:33,340
chain, if there's a disagreement about the state of the drivechain, how would that be

444
00:53:33,340 --> 00:53:35,821
settled? That's one of the perennial questions.

445
00:53:36,141 --> 00:53:37,540
So I just mean, it's related.

446
00:53:37,540 --> 00:53:39,300
Sorry. You're totally right.

447
00:53:39,501 --> 00:53:45,180
Yeah, the MEV concern is, if you say MEV doesn't have any impact on L1, that's not true

448
00:53:45,180 --> 00:53:50,581
because to prevent the looting, it would potentially have an impact.

449
00:53:50,581 --> 00:53:55,220
So, you know, if we say, well, we just won't try to stop them from stealing, then fine,

450
00:53:55,220 --> 00:53:58,501
it won't have an impact. But I don't think that anybody thinks that you won't try to stop

451
00:53:58,501 --> 00:54:00,821
them from stealing, which means it would have an impact.

452
00:54:01,261 --> 00:54:07,980
Well, I don't really think this is an issue because, like, it all boils down to you are

453
00:54:07,980 --> 00:54:13,100
trusting that model by going into that drivechain, so you are essentially gambling with

454
00:54:13,100 --> 00:54:17,581
those funds, you know, the trust trade off, and you know that there's a potential of this

455
00:54:17,581 --> 00:54:22,660
crazy 51% attack over three months or six months for your loss of funds.

456
00:54:22,901 --> 00:54:24,340
I think that's a fair trade off.

457
00:54:24,980 --> 00:54:30,340
I think that there's a there's another attack and it's a purely financial one.

458
00:54:30,340 --> 00:54:38,300
It's a purely theoretical attack of basically if there's if there's 51% of the

459
00:54:38,300 --> 00:54:46,021
hashrate in a certain jurisdiction and a certain political force has an ability to

460
00:54:46,021 --> 00:54:47,740
force censorship.

461
00:54:49,180 --> 00:54:51,581
Let's just give a hypothetical scenario.

462
00:54:51,581 --> 00:54:55,061
Fifty one percent of the hashrate is in America and United States and United States

463
00:54:55,300 --> 00:54:57,220
pay. You are not a U.S.

464
00:54:57,220 --> 00:55:02,740
lawyer since you are, you know, public companies, you follow the law, the law is you

465
00:55:02,740 --> 00:55:04,220
cannot include a certain transaction.

466
00:55:04,621 --> 00:55:11,340
And if you if you if you include this transaction, we might go after you legally.

467
00:55:11,420 --> 00:55:14,941
And not only you can include a transaction, you can build up a block that includes this

468
00:55:14,941 --> 00:55:16,061
transaction. Right.

469
00:55:16,061 --> 00:55:18,461
So so this is a jurisdictional political attack.

470
00:55:19,340 --> 00:55:24,941
It's very hypothetical because 51% of the hashrate being in one jurisdiction would be

471
00:55:24,941 --> 00:55:29,740
very hard. And our recourse would be to just fire the miners with a user activated

472
00:55:29,740 --> 00:55:31,581
software for a new hashing algorithm.

473
00:55:31,901 --> 00:55:36,941
Right. So it essentially says that these miners that are in this jurisdiction, they

474
00:55:36,941 --> 00:55:41,381
either follow the law and completely lose everything they have because we're going to

475
00:55:41,381 --> 00:55:45,581
fire them or they're going to have to like basically start moving their hashrate

476
00:55:45,581 --> 00:55:48,941
somewhere else. But they have no choice because they're going to lose in the end

477
00:55:48,941 --> 00:55:50,021
because we will just fire them.

478
00:55:50,621 --> 00:55:57,061
But the question here would drivechains is and I think layer two brought up a great

479
00:55:57,061 --> 00:56:00,901
point that as far as concentration of hashrate, we already have an incentive, for

480
00:56:00,901 --> 00:56:03,780
example, a power company, right, that has nuclear power.

481
00:56:04,021 --> 00:56:09,141
You're already incentivizing miners to have this economic incentive being

482
00:56:09,141 --> 00:56:13,261
geographically all in one place because of this, which which you can't solve.

483
00:56:13,261 --> 00:56:15,780
And that's not like that's we can also say that's a good thing.

484
00:56:15,780 --> 00:56:18,420
We want miners to make more money because we will be more secure.

485
00:56:18,941 --> 00:56:24,581
So the question is, if drivechains also creates an incentive for hashrate to be in

486
00:56:24,581 --> 00:56:29,740
one area where you can have this hypothetical, you know, 51 percent attack from a

487
00:56:29,740 --> 00:56:35,180
jurisdiction. I just I don't think that the attack on drivechains is jurisdictional at

488
00:56:35,180 --> 00:56:37,100
all, and I don't think it's based on censorship.

489
00:56:37,420 --> 00:56:42,141
The attack on drivechains is is economically incentivized.

490
00:56:42,141 --> 00:56:47,021
It's decentralized miners who want to make the most money, which is what miners want,

491
00:56:47,021 --> 00:56:51,060
especially when they don't care about society, you know, the point of mining.

492
00:56:51,141 --> 00:56:52,700
I'm going to put up my machines.

493
00:56:52,781 --> 00:56:54,700
I want them to create as much yield as possible.

494
00:56:54,820 --> 00:56:56,901
And the way to do that is to loot drivechain.

495
00:56:56,901 --> 00:57:01,661
So if nobody else does, then, you know, I create a pool that says, hey, you want a

496
00:57:01,661 --> 00:57:08,460
guarantee payout in six months that includes X, Y, Z on whatever drivechain you got

497
00:57:08,460 --> 00:57:11,021
to mine in this pool. And then that's the math.

498
00:57:11,340 --> 00:57:16,781
Then if you want to generate the most yield economically in a decentralized way, then

499
00:57:16,781 --> 00:57:19,381
you loot the drivechain, not through a government or censorship attack.

500
00:57:21,060 --> 00:57:28,940
So I don't think this is sorry, I'm sorry, I don't think that this is the two separate

501
00:57:28,940 --> 00:57:32,700
issues, right? I'm not talking about an issue of the drivechain being looted because I

502
00:57:32,700 --> 00:57:35,661
think that it's a fair tradeoff if you're getting into the drivechain, like you should

503
00:57:35,661 --> 00:57:41,220
know that I'm thinking of the attack is being on layer one Bitcoin, not on the drive

504
00:57:41,220 --> 00:57:44,901
chains, because the drivechains, you know, your tradeoff and either you play by those

505
00:57:44,901 --> 00:57:49,460
rules or you don't. So an attack of looting, looting a drivechain is a separate issue

506
00:57:49,460 --> 00:57:53,381
because, you know, you're your tradeoffs and you don't have to, you don't have to play

507
00:57:53,381 --> 00:57:58,501
that. Now, the attack of layer one is more interesting because do drivechains

508
00:57:58,501 --> 00:58:01,940
incentivize another attack surface for layer one?

509
00:58:01,980 --> 00:58:05,700
Now, it's not another attack surface because this attack surface does exist, even though

510
00:58:05,700 --> 00:58:06,740
it's purely hypothetical.

511
00:58:06,940 --> 00:58:12,100
But does it incentivize a greater reason for such an attack to happen, even though it's

512
00:58:12,100 --> 00:58:14,781
purely, purely, you know, like out of out of reach, I guess.

513
00:58:18,621 --> 00:58:23,460
Could you clarify, Satoshi, like I understood what Crown said, could you clarify what

514
00:58:23,460 --> 00:58:26,901
you're saying about what are the two different attacks that you're asking about?

515
00:58:27,860 --> 00:58:32,340
So I believe Crown's attack is actually looting the drivechain, and I'm not talking

516
00:58:32,340 --> 00:58:36,901
about that attack at all. I'm talking about an attack of 51 percent of the hash rate is

517
00:58:36,901 --> 00:58:43,141
in the United States. And politically, they are forced to censor a certain transaction,

518
00:58:43,141 --> 00:58:46,381
do not include it in the block and do not build off any blocks that this is included

519
00:58:46,381 --> 00:58:49,301
in. Well, let's just let's just start from there.

520
00:58:49,340 --> 00:58:52,060
Right. Let's assume that that is happening.

521
00:58:52,100 --> 00:58:53,460
Right. Even though it's not.

522
00:58:53,501 --> 00:58:54,541
But let's assume that's happening.

523
00:58:54,860 --> 00:58:56,700
What recourse do we have as layer one?

524
00:58:56,700 --> 00:58:59,580
And let's just move drivechains completely out of the equation.

525
00:58:59,580 --> 00:59:01,541
Like there's no such thing as drivechains in this scenario.

526
00:59:01,820 --> 00:59:04,820
Right. Fifty one percent of the hash rate is in one political jurisdiction and the

527
00:59:04,820 --> 00:59:07,460
political jurisdiction says you cannot build off a certain transaction.

528
00:59:07,460 --> 00:59:10,301
You can't build off a block that has a certain transaction.

529
00:59:10,740 --> 00:59:19,100
Also, as Bitcoiners, we have a solution, user activated soft fork, or the word, the

530
00:59:19,100 --> 00:59:25,501
biggest inconvenience I understand is either we are DOSed, right, and we just like we

531
00:59:25,501 --> 00:59:29,940
can't use the network for a certain amount of time because like we're being censored or

532
00:59:29,940 --> 00:59:31,980
we just fire the miners.

533
00:59:32,580 --> 00:59:34,700
Right. We fire them and we have a different algorithm.

534
00:59:35,153 --> 00:59:41,153
So I think that that solves that, even though it's, you know, I think that that's the only way to solve that. Right.

535
00:59:41,153 --> 00:59:48,153
So sorry, Henry, did you want to answer? It's really not a drivechain question. It's more of a Bitcoin question.

536
00:59:48,153 --> 01:00:01,153
Yeah, go ahead. How do you stop 51 percent or more of the miners trying to, I guess, grief Bitcoin by, I guess, mining empty blocks or only mining certain transactions?

537
01:00:02,153 --> 01:00:13,153
It's a Bitcoin question. Right. So historically and the way that Bitcoin was designed, economically, you should lose money if you try to do this attack.

538
01:00:13,153 --> 01:00:17,153
I mean, it's hard to concoct a scenario where where you do this profitably.

539
01:00:17,153 --> 01:00:26,153
But but that aside, if you didn't care about losing money, let's say you're a government and you want to dedicate some nuclear power plants worth of energy because that's what it would take.

540
01:00:26,153 --> 01:00:32,153
It would take literally like several entire nuclear power plants worth of energy to perform this attack.

541
01:00:32,153 --> 01:00:39,153
And somehow you had the voters on your side. I mean, this is an extreme scenario with an extreme amount of resources that you're literally just throwing away.

542
01:00:39,153 --> 01:00:50,153
It's an extreme, I would say. But but in that extreme, you don't I don't think I don't think the best option is to fork the algorithm because, you know, presumably they don't care about the money anyway.

543
01:00:50,153 --> 01:00:54,153
The cheaper the asymmetric attack there is to use the invalidate block.

544
01:00:54,153 --> 01:01:04,153
And just when you can identify them as you know, people always say, and it's true, you can't really change Bitcoin unless everybody agrees.

545
01:01:04,153 --> 01:01:07,153
It's it's it's like trying to tell everybody in the world to jump at the same time.

546
01:01:07,153 --> 01:01:13,153
It's kind of you don't want you want to avoid coordination. I think the more coordination you have, the more centralized you are.

547
01:01:13,153 --> 01:01:21,153
So switching to your algorithm that that favors more centralization, you can in a very decentralized way.

548
01:01:21,153 --> 01:01:28,153
I can look at the blockchain and say this block doesn't include any transactions.

549
01:01:28,153 --> 01:01:33,153
It's obviously an attack on the network from a state actor or whoever that's not caring about money.

550
01:01:33,153 --> 01:01:37,153
You can tap into your network, invalidate block, that block.

551
01:01:37,153 --> 01:01:48,153
And as long as other people independently of you have also decided to invalidate that block, you'll be on a separate chain of Bitcoin without that attacker block.

552
01:01:48,153 --> 01:01:55,153
And they can, of course, they can switch to your new chain without them on it as much as they want.

553
01:01:55,153 --> 01:01:59,153
But it costs them, you know, hundreds of dollars to do that.

554
01:01:59,153 --> 01:02:02,153
And it costs you three seconds in a console.

555
01:02:02,153 --> 01:02:08,153
So it's very asymmetric attack or very asymmetric defense in terms of the cost you simply invalidate.

556
01:02:08,153 --> 01:02:12,153
And this is something that you couldn't use this, you know, in everyday operation.

557
01:02:12,153 --> 01:02:15,153
You couldn't just, hey, I don't like this guy. Let me invalidate the block.

558
01:02:15,153 --> 01:02:27,153
It would only work in this extreme case where there are potentially billions of dollars being exerted to try to censor the chain and against the will of basically the entire population.

559
01:02:28,153 --> 01:02:33,153
I agree that this is not a rational miner, right?

560
01:02:33,153 --> 01:02:36,153
Because obviously they're shooting themselves in the foot economically.

561
01:02:36,153 --> 01:02:38,153
So this is not a rational miner.

562
01:02:38,153 --> 01:02:41,153
So in the attack, you have an irrational miner.

563
01:02:41,153 --> 01:02:45,153
And the reason why they're rational is because they're politically have to.

564
01:02:45,153 --> 01:02:52,153
It's illegal for them to include a certain block or mine from a block that has included this transaction.

565
01:02:53,153 --> 01:02:55,153
Let me jump in.

566
01:02:55,153 --> 01:03:03,153
I think that the inspiration for the security budget concerns is related to this question.

567
01:03:03,153 --> 01:03:16,153
Because your question has to do with, like, what if the government wants to try to control Bitcoin mining to make it permissioned so certain people can't get their transactions through?

568
01:03:16,153 --> 01:03:24,153
I think this would involve not only the government saying that the Bitcoin miners can't process transactions to or from a certain address.

569
01:03:24,153 --> 01:03:32,153
It would also involve the reorging of transactions that are involving those addresses.

570
01:03:32,153 --> 01:03:35,153
So that's where the rubber meets the road.

571
01:03:36,153 --> 01:03:46,153
For example, some people think that 51% of attacks aren't a big deal because we had one years ago during the block size war and nothing happened.

572
01:03:46,153 --> 01:03:48,153
Nothing really big happened, people say.

573
01:03:48,153 --> 01:03:55,153
Some people say this, where for over a year, Bitmain and others allegedly were mining empty blocks.

574
01:03:55,153 --> 01:04:00,153
And there were periods where a few blocks would go through, they would all be empty.

575
01:04:00,153 --> 01:04:04,153
And then the fees finally would process and transactions would get through.

576
01:04:04,153 --> 01:04:07,153
There were delays and this was going on.

577
01:04:07,153 --> 01:04:12,153
This was not a 51% attack, rightly understood.

578
01:04:12,153 --> 01:04:18,153
I think that there was not one time during that year when there was a reorg.

579
01:04:18,153 --> 01:04:22,153
So it wasn't a hostile attack on Bitcoin.

580
01:04:22,153 --> 01:04:34,153
It was someone mining in a way that was very costly and unprofitable in order to try to increase the Bitcoin community's support for larger blocks.

581
01:04:34,153 --> 01:04:37,153
So it wasn't intended to destroy Bitcoin.

582
01:04:37,153 --> 01:04:43,153
It was intended to assist a political campaign to encourage adoption of larger blocks.

583
01:04:44,153 --> 01:04:51,153
So the intent here wasn't to attack Bitcoin in the way that we're contemplating could happen now.

584
01:04:51,153 --> 01:04:57,153
Which is like you're saying, what if someone really wanted to attack the ability for some or everyone to use the blockchain?

585
01:04:57,153 --> 01:05:04,153
And of course, the worst case scenario, the most severe kind of attack would be trying to make everyone censored.

586
01:05:04,153 --> 01:05:08,153
So that would be a complete hostile attack.

587
01:05:08,153 --> 01:05:19,153
And if the majority miner, 51%, is controlled or coerced by parties to do that, then there would be a serious problem.

588
01:05:19,153 --> 01:05:23,153
So there'd be mining and reorging at every opportunity.

589
01:05:23,153 --> 01:05:31,153
So every time the majority of the hash rate finds a block, then they would reorg out all of the transactions of other people.

590
01:05:31,153 --> 01:05:34,153
And that would be a true hostile attack.

591
01:05:34,153 --> 01:05:45,153
Because otherwise, let's say 40% of the miners' hash rate is processing transactions from everyone and they're not censoring.

592
01:05:45,153 --> 01:05:51,153
Then you simply have to wait a little bit longer to get your censored transaction to process and become uncensored.

593
01:05:51,153 --> 01:06:02,153
But if the hostile party is reorging at every opportunity and they have the heaviest chain, that's game over for Bitcoin in the ordinary sense.

594
01:06:02,153 --> 01:06:06,153
Unless the countermeasures Crown has described work.

595
01:06:06,153 --> 01:06:10,153
Now, I've read Nick Szabo say that they wouldn't work.

596
01:06:10,153 --> 01:06:21,153
He tweeted a few years ago in a thread with Vitalik and Arthur Brightman and others were having a thread on Twitter.

597
01:06:21,153 --> 01:06:26,153
And they were talking about what would happen in this kind of scenario.

598
01:06:26,153 --> 01:06:38,153
And Szabo says what I agree with, which is that what Bitcoin does well is it tries to avoid and minimize as much as possible any kind of socially coordinated governance.

599
01:06:38,153 --> 01:06:48,153
And the invalidate block mechanism that Crown mentioned, I think, would arguably be that kind of activity.

600
01:06:48,153 --> 01:06:54,153
Where it's not the kind of activity which is part of Bitcoin's fundamental design.

601
01:06:54,153 --> 01:07:04,153
So Bitcoin's fundamental design assumes that miners and users are mutually distrusting and anonymous and self-interested.

602
01:07:04,153 --> 01:07:12,153
But invalidating blocks is trying to identify bad miners and ignore them.

603
01:07:12,153 --> 01:07:20,153
That is an activity which is not one in which things are just assumed to be anonymous, mutually distrusting and self-interested.

604
01:07:20,153 --> 01:07:24,153
Instead, you're adding in there a social coordination component.

605
01:07:24,153 --> 01:07:33,153
And what's worse is that probably it'll be not effective because the miner that's attacking in a hostile manner is going to be sophisticated.

606
01:07:33,153 --> 01:07:41,153
So they're not going to be simpletons. They're going to appear on chain as a thousand different pools.

607
01:07:41,153 --> 01:07:43,153
They're not going to look like one pool.

608
01:07:44,153 --> 01:07:55,153
So it's going to be an attack that has a complexity, which isn't so simple to just, OK, we're going to invalidate this and then no longer do we have to worry about the bad guy.

609
01:07:55,153 --> 01:07:58,153
You can't just press a button and turn off the attack.

610
01:07:58,153 --> 01:08:07,153
It's going to be a sophisticated, complex attack that is designed to make it very nearly impossible for the community to recover from it.

611
01:08:07,153 --> 01:08:14,153
So the security budget problem, as I understand it, is one in which we want it to be extremely expensive.

612
01:08:14,153 --> 01:08:19,153
You know, trillions of dollars per year of expense for someone to try to do this.

613
01:08:19,153 --> 01:08:24,153
And thinking that like, well, we'll just invalidate block. That'll be all right.

614
01:08:24,153 --> 01:08:27,153
Not that you said that. You didn't say that. In fact, you said the opposite.

615
01:08:27,153 --> 01:08:31,153
You said it was an extreme theoretical situation and that would be a potential countermeasure.

616
01:08:32,153 --> 01:08:40,153
But I just want to emphasize my view, which is that I don't think that what I've heard from various people about that, I don't think it's a compelling argument.

617
01:08:40,153 --> 01:08:48,153
And I think that some Bitcoin thinkers like Szabo would agree, although it's also worth noting, I don't think he's a drivechain advocate at all.

618
01:08:48,153 --> 01:08:58,153
But I do think that like any kind of socially coordinated countermeasure to a hostile attack is something which I would hope Bitcoin never has to rely on.

619
01:08:59,153 --> 01:09:01,153
I think everybody would agree.

620
01:09:01,153 --> 01:09:08,153
I would agree because I think like the way I understand the example is the software is very binary.

621
01:09:08,153 --> 01:09:12,153
Is this the change that has the most work? Yes, no. That's it.

622
01:09:12,153 --> 01:09:21,153
Once you add social aspects to that, you know, like you're opening Pandora's box where now there's way more attacks.

623
01:09:22,153 --> 01:09:26,153
Where if you're just leaving it very binary, is this the chain that has the most work? Yes, no.

624
01:09:26,153 --> 01:09:33,153
Then it's not really a social consensus. It's more about just the work that's involved.

625
01:09:33,153 --> 01:09:37,153
And I think it's very important for Bitcoin to stay that way.

626
01:09:37,153 --> 01:09:43,153
Is this the chain that has the most work? Yes, no. And that's it. No other way.

627
01:09:43,153 --> 01:09:46,153
But my attack is not about that.

628
01:09:47,153 --> 01:09:48,153
Yeah, sure.

629
01:09:48,153 --> 01:09:54,153
Sorry, two things I want to mention because there's a nuance to your check that I didn't understand the first time,

630
01:09:54,153 --> 01:10:03,153
which is you're talking about not a rational government actor or not a rational, not an otherwise incentivized government actor,

631
01:10:03,153 --> 01:10:12,153
but a collaboration of companies following the law in various jurisdictions.

632
01:10:12,153 --> 01:10:13,153
Exactly.

633
01:10:13,153 --> 01:10:19,153
Now, that is even harder to pull off or harder to imagine because it's even easier to stop.

634
01:10:19,153 --> 01:10:22,153
Now, you wouldn't stop it, you know, through invalidate block.

635
01:10:22,153 --> 01:10:26,153
That's the, you know, we made six new nuclear power plants and somehow, I don't know,

636
01:10:26,153 --> 01:10:33,153
forced Intel to make us trillions of dollars worth of computer hardware to do this thing that's not going to make us any money.

637
01:10:34,153 --> 01:10:47,153
But in this case, we have we've seen already examples of what's called censorship or compliance with the law, OPEC with MARA, the mining pool MARA.

638
01:10:47,153 --> 01:10:50,153
They were probably compliant mining pool on Bitcoin.

639
01:10:50,153 --> 01:10:58,153
The only one that I know of that was announcing their compliance with OPEC and OPEC.

640
01:10:58,153 --> 01:11:02,153
And they stopped after a few months.

641
01:11:02,153 --> 01:11:05,153
They were, you know, they were they were not able to get any hash.

642
01:11:05,153 --> 01:11:14,153
It was very unpopular. And they ended up having to stop because it wasn't it wasn't feasible for them to operate in a compliant way on Bitcoin.

643
01:11:14,153 --> 01:11:22,153
It's the opposite of what we've seen on things like Ethereum, where the pools which are benefiting from censorship are some of the largest ones.

644
01:11:22,153 --> 01:11:27,153
But but on Bitcoin, we've seen already in real life they stopped mining.

645
01:11:27,153 --> 01:11:32,153
And I think that, you know, miners and jurisdictions that try to limit what they can mine.

646
01:11:32,153 --> 01:11:38,153
Obviously, individual miners will not favor those pools because it comes down to pools, not necessarily where the miners are based.

647
01:11:38,153 --> 01:11:44,153
People and we've seen this in China. People will find ways to point their hash wherever it is most profitable,

648
01:11:44,153 --> 01:11:47,153
even if it means maybe stretching the law or operating in a gray area.

649
01:11:47,153 --> 01:11:49,153
And of course, enforcement will increase.

650
01:11:49,153 --> 01:11:56,153
And as that happens, people will be incentivized to put their hardware in places where, you know, it's the safest for them.

651
01:11:56,153 --> 01:12:01,153
I know guys that are mining in Venezuela, even though it's very hard to do, partially because if you can do it,

652
01:12:01,153 --> 01:12:05,153
you can you basically have full reign over there. You've got to pay off what we have to pay off.

653
01:12:05,153 --> 01:12:08,153
But, you know, that's going to be unique situation on the ground.

654
01:12:08,153 --> 01:12:11,153
We've seen it with the Chinese and that's just the way the world's always worked.

655
01:12:11,153 --> 01:12:16,153
You're going to have a financial advantage not to be in jurisdictions which try to control your hardware.

656
01:12:16,153 --> 01:12:20,153
And so those miners would be very unlikely to be the majority.

657
01:12:20,153 --> 01:12:25,153
And the best thing about that is once they are no longer the majority, even with 51 percent,

658
01:12:25,153 --> 01:12:30,153
even with 51 percent, you can get behind for a while. They just become a worthless chain that nobody cares about.

659
01:12:30,153 --> 01:12:37,153
You're going to the government's going to be forcing companies to mine a chain that nobody recognizes,

660
01:12:37,153 --> 01:12:43,153
not even the longest chain. When you say that they're not allowed to mine blocks that contain uncompliant transactions.

661
01:12:43,153 --> 01:12:48,153
Well, then you're saying they're not allowed to mine Bitcoin because the longest chain will contain those transactions

662
01:12:48,153 --> 01:12:53,153
and they won't be able to do anything about it. And nobody will care about that.

663
01:12:53,153 --> 01:13:00,153
Yes, I agree with everything you're saying, though. Here, my question is where drivechains come in,

664
01:13:00,153 --> 01:13:06,153
because currently, right, this attack doesn't have that much economic incentive.

665
01:13:06,153 --> 01:13:11,153
And in fact, it has no economic incentive because you're basically telling the miners, hey,

666
01:13:11,153 --> 01:13:16,153
you like lose money because we're telling you it's illegal for you to make money. Right. So lose money.

667
01:13:16,153 --> 01:13:24,153
Now, if drivechains has an economic incentive for miner hash rate to be concentrated geographically

668
01:13:24,153 --> 01:13:31,153
because of bandwidth, because of resources, now this attack becomes a tiny smidge more possible

669
01:13:31,153 --> 01:13:36,153
because you have that concentration or you have that economic incentive for miners to be concentrated

670
01:13:36,153 --> 01:13:40,153
geographically in one area because of bandwidth, for example.

671
01:13:40,153 --> 01:13:47,153
We don't have drivechain today, and yet there is concern that mining concentration poses a threat to Bitcoin.

672
01:13:47,153 --> 01:13:55,153
For example, on October 27th of last year, Shinobi wrote an article in Bitcoin magazine titled

673
01:13:55,153 --> 01:14:00,153
Mining Concentration in America Poses a Major Threat to Bitcoin.

674
01:14:00,153 --> 01:14:06,153
So I think that there's already concern about geographic issues.

675
01:14:06,153 --> 01:14:13,153
And I don't think I've ever heard anyone say that drivechain would result in a geographic concentration

676
01:14:13,153 --> 01:14:20,153
in any specific jurisdiction, because I don't know how it would be the case that, like,

677
01:14:20,153 --> 01:14:26,153
there's a concentration trajectory for mining with respect to any one jurisdiction,

678
01:14:26,153 --> 01:14:33,153
which would be like altered or furthered by drivechain. I mean, drivechain is jurisdiction agnostic.

679
01:14:34,153 --> 01:14:38,153
It's like saying Bitcoin is somehow inherently going to end up mostly in Africa.

680
01:14:38,153 --> 01:14:42,153
Like, I don't see why that would be the case with drivechain or without it.

681
01:14:43,153 --> 01:14:51,153
Well, if you want to assume that, I mean, this is where it's important if blind merge mining and SPV mining,

682
01:14:51,153 --> 01:14:57,153
where the second, the drivechain node does not need to have more resources.

683
01:14:57,153 --> 01:15:03,153
But that's where you added that. Well, if the miner is having a full drivechain node,

684
01:15:03,153 --> 01:15:10,153
they might have a little bit more fees because of MEV. So you're introducing that now. Do you see?

685
01:15:11,153 --> 01:15:17,153
Well, yeah, I said that in order to give voice to the criticism of drivechain,

686
01:15:17,153 --> 01:15:23,153
which is that there would be MEV. Some people think MEV is a bad thing. Others think it's a good thing.

687
01:15:24,153 --> 01:15:30,153
Yeah, I'm not saying that. I'm just saying like, yeah, it's completely agnostic geographically.

688
01:15:30,153 --> 01:15:38,153
Though, if you are incentivizing miners to have better bandwidth and you're incentivizing them to have better resources,

689
01:15:38,153 --> 01:15:43,153
then it would make sense for them to have an incentive to be in one area. It doesn't matter which area.

690
01:15:43,153 --> 01:15:49,153
They could just concentrate in areas that have better bandwidth and where they have better resources.

691
01:15:49,153 --> 01:15:51,153
Like it's not necessarily a bad thing. I'm not saying it's a bad thing.

692
01:15:51,153 --> 01:15:57,153
I'm just saying it's an additional thing that can incentivize. And I don't know if it does.

693
01:15:57,153 --> 01:16:03,153
That's why I'm just like, you know, just. Yeah. Great questions. Really great questions, Satoshi.

694
01:16:04,153 --> 01:16:08,153
So the nature of Bitcoin mining is that it's going to centralize to some extent.

695
01:16:09,153 --> 01:16:13,153
This is something Satoshi wrote at the very beginning of Bitcoin, that in the future,

696
01:16:13,153 --> 01:16:19,153
there would be large server farms and people, ordinary users would not be mining on their laptops

697
01:16:20,153 --> 01:16:27,153
because of economies of scale and difficulty adjustment and other factors.

698
01:16:28,153 --> 01:16:36,153
So what we're going to see in the future is Bitcoin miners, if Bitcoin is more valuable, Bitcoin miners will.

699
01:16:36,153 --> 01:16:40,153
And if the block space appreciates, so if there's high fees and if Bitcoin is valuable,

700
01:16:40,153 --> 01:16:47,153
then we'll see miners concentrate near very cheap power in places that are very hot.

701
01:16:47,153 --> 01:16:54,153
So, you know, Norway, if they have like a ton of oil there and it's cold, that's like a great place to mine.

702
01:16:54,153 --> 01:17:00,153
Or, you know, the country of Georgia, places like that. Iceland with falling water in Iceland.

703
01:17:00,153 --> 01:17:10,153
So like drivechain is just going to be another factor in the very complex market for Bitcoin mining.

704
01:17:10,153 --> 01:17:17,153
And I think my personal opinion, the overwhelming effect of drivechain would be enormously good for Bitcoin

705
01:17:17,153 --> 01:17:27,153
because in the best case scenario, a huge amount of fees flow from a large multitude of sidechains that are drivechains.

706
01:17:27,153 --> 01:17:33,153
And that fee revenue is coming from different drivechains and it's going to bring fees.

707
01:17:33,153 --> 01:17:42,153
And that will help the mining component in the Bitcoin system be very resilient from an attacker.

708
01:17:42,153 --> 01:17:48,153
Whereas if we have falling fees and falling value, if we have low fees forever,

709
01:17:48,153 --> 01:17:54,153
then as a result of the halvings of the coinbase, eventually these concerns like Shinobi has about, you know,

710
01:17:54,153 --> 01:18:01,153
what if there's a hostile majority? Like in that article I mentioned, he talks about 51 percent.

711
01:18:01,153 --> 01:18:07,153
He writes this sentence that I like to quote. I like to quote drivechain critics because I feel like that makes it more credible

712
01:18:07,153 --> 01:18:13,153
than if I just only quote the advocates. He writes in this article in October in Bitcoin magazine.

713
01:18:13,153 --> 01:18:22,153
From day one, it has been very clearly delineated that a majority, 51 percent or more of the Bitcoin hash rate can act maliciously

714
01:18:22,153 --> 01:18:28,153
in a way that severely degrades or entirely breaks the security of the entire system.

715
01:18:28,153 --> 01:18:39,153
So I feel like it is implied in that article right there that if the fees don't rise, then as a result of halvings,

716
01:18:39,153 --> 01:18:49,153
Bitcoin will be very vulnerable. So I think he would agree here that we need high fees in the future

717
01:18:49,153 --> 01:18:55,153
because we want it to be very expensive to try to be a 51 percent miner. And if it's extremely expensive,

718
01:18:55,153 --> 01:19:01,153
then probably the only party who would get very big in mining is one who wants Bitcoin to succeed,

719
01:19:01,153 --> 01:19:05,153
not one that's trying to destroy it. Because there is an enormous profit motive.

720
01:19:05,153 --> 01:19:09,153
Like you mentioned the word irrational when talking about hostile mining.

721
01:19:09,153 --> 01:19:16,153
I think we should be careful using the word irrational in economics because it's not technically irrational

722
01:19:16,153 --> 01:19:23,153
for parties in power in government to try to destroy Bitcoin because they would reap the financial reward

723
01:19:23,153 --> 01:19:29,153
of the reinstitution of fiat money or the maintenance of the establishment of fiat money,

724
01:19:29,153 --> 01:19:35,153
which allows for their sovereign, allows for their senior rich profits.

725
01:19:35,153 --> 01:19:42,153
So the profit of issuing fiat money is very lucrative and therefore it's not quote unquote irrational

726
01:19:42,153 --> 01:19:44,153
for a party to be trying to destroy Bitcoin.

727
01:19:44,803 --> 01:20:02,682
For that reason. So the two ways that a party can be a hostile Bitcoin miner would be, you know, a sovereign state that wishes to establish fiat money or a sovereign or a non-sovereign, which is a terroristic attacker that just wants to destroy money for their own reasons.

728
01:20:02,682 --> 01:20:20,562
But those aren't per se irrational. Those are just, you know, their particular ideologies. Some people want the government to be able to print money to hand it out to the parties that it deems fit. Right. The welfare, warfare state. Like, you know, is that irrational or is that just their philosophy?

729
01:20:20,562 --> 01:20:50,442
Yeah, so two points before I get to the rational rational. The first point is, I think that the best counter to this theoretical attack of 51% hijacked of, you know, the hash rate is very simple where you're saying, well, there's already an incentive for hash rate to be concentrated because of the way mining works. And since, you know, energy cheaper is better. So you already have that incentive.

730
01:20:50,563 --> 01:21:19,442
So you can't say that drivechain is going to introduce that incentive because that incentive is already there. Now, you can also say that drivechain actually fixes this incentive. Why? Because now it makes it a lot more expensive. This whole 51% attack of a hijacking, it becomes way more expensive because drivechains are introducing fees. And so you're going to even argue that, hey, this is this is not an issue of drivechain, drivechain is fixing potentially or making it harder. And as far as irrational, I'm using it as, yes, that was the first point.

731
01:21:19,442 --> 01:21:49,362
The second point, as far as irrational, I'm using it as basically economic game theory, where it's irrational because, and I'm using it loosely, but I'll try to define it, is because if they were to instead play by the rules, they would make more money, though, if they wanted to attack because they like their fiat seniorage, since they cannot attack Bitcoin ultimately, and we will win in the end, because of, you know, all our other ways of dealing with such attacks, it would make more money.

732
01:21:49,362 --> 01:22:14,243
It would make more rational sense for them to just continue to play by the rules and make some fees. And that's why I mean by it's irrational, because, yeah, you might think, well, they have a rational reason for it, because they want to keep their fiat, but it would cost them way more to try to attack and realize that it's just not going to be successful. And that cost would actually benefit them to use it properly instead and get fees. So rationally, I think that's how I'm using rational or irrational.

733
01:22:19,362 --> 01:22:22,642
Well said. I completely agree with what you're saying.

734
01:22:22,642 --> 01:22:40,163
One really interesting tweet recently that I've talked about for a few of these spaces is the Atomback tweet that I just put in the nest, where he talks about how Roger Ver could have remained a Bitcoiner and use the drivechain.

735
01:22:40,163 --> 01:23:10,082
Of course, drivechain is not yet available on Bitcoin, but once it is, if it is, then people who like big block Bitcoin will be able to clone their software from their altcoin into a drivechain, and then use that software in a Bitcoin sidechain with the benefit of having the native token of their sidechain be a synthetic Bitcoin that has Bitcoin in it.

736
01:23:10,323 --> 01:23:28,002
So that's Bitcoin's unit of account and Bitcoin's hash rate. Of course, it's also worth noting that the security budget of a drivechain is its fees, which is distinct from the security budget of Bitcoin layer one.

737
01:23:28,002 --> 01:23:48,963
Yeah, so to me, it just comes back to square one, where there's amazing benefits to drivechains. And when I first heard about it, I'm like, wow, this is amazing. Why isn't this talked about? Why aren't people talking about this? Why aren't they making a bigger buzz about it?

738
01:23:48,963 --> 01:24:08,963
And it drove me down, looking for criticisms of it, right? And this is one of the reasons why I wanted to be on this talk, is to talk about the criticisms of it. And it still brings me back to square one, where there's no good criticisms. And like, it's good to talk about those criticisms. That's my idea. So let's talk about them. But I just don't see any actual good criticisms.

739
01:24:08,963 --> 01:24:30,963
I agree. I think that the main reason why drivechain isn't adopted today is the reasons that are set forth in the liquid white paper. So if you read that white paper from 2020, on the second page, I think it is, there's a couple paragraphs about drivechain.

740
01:24:30,963 --> 01:24:53,963
They say that drivechain has complex incentives, that, you know, the incentive structure, I think is the word they use, is very complex, and it's unclear how it would play out. And then they secondly add that perhaps the peg would be stolen from by a well funded group of miners.

741
01:24:54,963 --> 01:25:20,963
They don't elaborate, as they could have, to say that the theft would take three to six months, and would be public, and would involve a majority of the hash rate. They don't say all that. They just say a well funded group of miners could steal. They don't say how long it would take, how difficult it would be. And then they lastly, they make three criticisms, the third one, and they're all valid criticisms, like they're not illogical.

742
01:25:20,963 --> 01:25:34,963
They're technically valid in the weakest sense of that word valid. Like they don't say something that's false. And then the third criticism is that the drivechain code is not available, you know, in their words for immediate deployment.

743
01:25:34,963 --> 01:25:55,963
So the, you know, their three criticisms are basically like, number one, if I just summarize it, you know, try to do it honestly, and like, you know, fairly, their three criticisms are drivechain might be complicated. Maybe it would result in complicated stuff like in mining and elsewhere that we don't understand.

744
01:25:56,963 --> 01:26:19,963
Number two, maybe that miners will steal from the hash rate escrow. And number three, the code isn't ready today for deployment. Like that's what they're saying back in 2020. So of course, the code could be, you know, readied and combed over and prepared for merge that would alleviate that concern. But as to the question of will the miner steal from the hash rate escrow, I think let's enable it and see what happens.

745
01:26:19,963 --> 01:26:47,963
And probably there won't be a theft. And if there is, then drivechains don't work. And the entire model needs to be reconsidered. And I think the drivechain authors, if they were to find that the concerns that others have said, which is that like, the thefts will occur, if that's right, then the whole system will have to be reconsidered. And probably some people who are very bullish about Bitcoin, because of the possibility of drivechain, those people will have to reconsider their whole outlook.

746
01:26:49,963 --> 01:27:00,963
Well, yeah, I also think it's fair to say that this is a feature that miners can loot from a drivechain, because proponents of drivechains would say, we want that, right?

747
01:27:00,963 --> 01:27:01,963
Right.

748
01:27:01,963 --> 01:27:09,963
So I don't think it's okay to say that it's a criticism, but it's also a feature. It's inherently a good reason why we have that.

749
01:27:09,963 --> 01:27:20,963
So Fiatjaf says it well, in his website at fiatjaf.com. I'll just find it now and read that one sentence, one or two sentences.

750
01:27:30,714 --> 01:27:38,714
If miners still do steal from a good drivechain, that will mean the failure of the drivechain experiment.

751
01:27:38,714 --> 01:27:41,714
This is Fiatjaf's words, who created Nostr.

752
01:27:41,714 --> 01:27:47,714
He writes that it will very also likely mean the failure of the Bitcoin experiment too.

753
01:27:48,286 --> 01:27:54,146
will be proven that miners can coordinate to act maliciously over a long

754
01:27:54,146 --> 01:27:57,946
period of time, regardless of and social incentives.

755
01:27:59,505 --> 01:28:00,645
And then the sentence continues.

756
01:28:00,825 --> 01:28:03,565
It's a long sentence, but that's the essence of it.

757
01:28:04,245 --> 01:28:05,025
Everyone can read it.

758
01:28:05,105 --> 01:28:08,963
It's at fiatjof.com forward slash drivechain.html.

759
01:28:08,963 --> 01:28:14,963
If you go to fiatjaf.com, you'll find it very easily with two clicks, that whole essay.

760
01:28:14,963 --> 01:28:22,962
But basically, like, I agree with him that if drivechain doesn't work, then maybe Bitcoin doesn't work.

761
01:28:22,962 --> 01:28:29,962
Now, of course, this is a minority view. Most Bitcoiners would say, Henry, you're silly. You know, you're just fixated on one idea.

762
01:28:30,962 --> 01:28:39,962
But to me, the whole incentive structure of drivechain is so powerful. It enables extensibility, innovation and creativity in partitioned environments.

763
01:28:39,962 --> 01:28:48,962
So if they don't work out, that's okay. Anyone who didn't opt in doesn't get hurt. It enables more fees if they do work.

764
01:28:48,962 --> 01:28:58,962
If the sidechains do work, tons of fees coming to Bitcoin. Right now, 15 times more fees are paid outside of Bitcoin than in Bitcoin. 15 times.

765
01:28:58,962 --> 01:29:03,962
So Bitcoin is getting less than 10 percent of all blockchain fee revenue.

766
01:29:03,962 --> 01:29:26,962
Ethereum is growing every day. And they're pursuing a design that is similar to drivechain in nature, arguably, with a multilayered structure that has, in the very long run, their aspiration is a ossified layer one and a multitudinous layer two design.

767
01:29:26,962 --> 01:29:35,962
So I would love to see Bitcoin maintain its role as the number one crypto and in fact return to 100 percent dominance.

768
01:29:35,962 --> 01:29:42,962
That's the drivechain vision. One hundred percent dominance for Bitcoin, not perpetually falling dominance.

769
01:29:42,962 --> 01:29:50,962
Bitcoiners used to point to the dominance a lot back when it was 90 or 80 percent. Now it's not such a popular topic.

770
01:29:50,962 --> 01:29:55,962
And instead, there's this coping and denial and people dismissing dominance entirely.

771
01:29:55,962 --> 01:30:13,962
And I think the same thing is true of fees. Back when Bitcoin fees were high, Greg Maxwell wrote in December of 2017 on the Linux Foundation email list that he's breaking out the champagne because Bitcoin fees are high, sufficient to pay for security as the Coinbase diminishes.

772
01:30:13,962 --> 01:30:17,962
That's almost a word for word quote of what he wrote.

773
01:30:18,962 --> 01:30:27,962
He was breaking out the champagne when Bitcoin fees were $50 a transaction. Today, they're, last time I checked, like $2 or $1 a transaction.

774
01:30:27,962 --> 01:30:36,962
So, you know, 2 percent of what he was talking about in the past. And he is not breaking out the champagne anymore.

775
01:30:36,962 --> 01:30:43,962
But I would think that someone so brilliant as he, because I've enjoyed his videos, which are posted on the Blockstream web YouTube channel.

776
01:30:43,962 --> 01:30:50,962
I think that people like Greg Maxwell are going to eventually come out for drivechain. That's my personal belief.

777
01:30:50,962 --> 01:31:02,962
They're going to study everything going on in Bitcoin and they're going to realize that the best path forward is merged mining and sidechains.

778
01:31:03,962 --> 01:31:11,962
You know, it's the wisdom of Satoshi merged mining multiple blockchains and the two way peg is what drivechain contributes.

779
01:31:11,962 --> 01:31:14,962
Satoshi never thought of the two way peg. He didn't know how to do it.

780
01:31:14,962 --> 01:31:26,962
So that was Paul Sztorc. That was his invention with Cryptex was how to do the two way peg for a sidechain, which is so much better than merged mined altcoins.

781
01:31:26,962 --> 01:31:32,962
So, you know, Namecoin was a merged mine altcoin, but RSK is a merged mine sidechain.

782
01:31:32,962 --> 01:31:43,962
And the last step that's needed is a miner controlled peer to peer two way peg of value between the sidechain and the main chain.

783
01:31:43,962 --> 01:31:48,962
Because right now the federated bottle, it's no good. That's one of the reasons why people sometimes aren't sure about drivechain.

784
01:31:48,962 --> 01:31:54,962
They feel, well, it's complicated and the sidechains today are so small. So why should we improve them?

785
01:31:54,962 --> 01:32:00,962
Why should we do something that RSK wants when RSK is only worth 50 million dollars?

786
01:32:00,962 --> 01:32:08,962
There's about three Bitcoin per month that are paid by RSK to Bitcoin layer and miners, you know, so people think, well, that's not very much.

787
01:32:08,962 --> 01:32:15,962
Why should we change Bitcoin to serve the interests of such a small community on Bitcoin?

788
01:32:16,962 --> 01:32:27,962
But of course, that's an apples and oranges comparison, because once the drivechain technology is enabled and RSK becomes a drivechain, maybe then it'll grow much more.

789
01:32:27,962 --> 01:32:39,962
Because, you know, why would developers want to work on a Bitcoin sidechain that's federated when they can work on an altcoin that's fully peer to peer in nature?

790
01:32:40,962 --> 01:32:44,962
I mean, right now, 100 percent of Bitcoin sidechains are federated.

791
01:32:44,962 --> 01:32:51,962
That's something Shinobi wrote in his five essay series in Bitcoin magazine last year.

792
01:32:51,962 --> 01:32:54,962
He wrote five essays. One of them was on drivechain.

793
01:32:54,962 --> 01:33:02,962
It was essays on sidechains, and he described drivechain well in that essay, even though he's not a supporter.

794
01:33:02,962 --> 01:33:06,962
But he writes that all Bitcoin sidechains are federated today.

795
01:33:06,962 --> 01:33:16,962
So I think that people like Maxwell and Shinobi, I think they actually would like to see some of the things that drivechain stands for occur on Bitcoin.

796
01:33:16,962 --> 01:33:22,962
And they just aren't yet satisfied with the complexities and questions and how they're answered.

797
01:33:22,962 --> 01:33:29,962
And they don't feel as much as drive chainers do an urge to do this as soon as possible.

798
01:33:30,962 --> 01:33:36,962
They would say Bitcoin's doing fine. Let's wait a decade. Let's wait however long it takes.

799
01:33:36,962 --> 01:33:39,962
Let's let's get, you know, roll ups instead.

800
01:33:39,962 --> 01:33:44,962
Maybe roll ups can do what drivechain is trying to do.

801
01:33:44,962 --> 01:33:47,962
So it's a complex topic.

802
01:33:47,962 --> 01:33:51,962
I think a lot of people want to see something like drivechain, but they don't.

803
01:33:51,962 --> 01:34:01,962
They're not convinced yet that drivechain in particular is the solution and that, you know, the arguments in favor of it are compelling enough at this time.

804
01:34:01,962 --> 01:34:05,962
So they don't they don't have they're very optimistic on Bitcoin.

805
01:34:05,962 --> 01:34:10,962
And they're so bullish on Bitcoin and they're so bearish on altcoins that they.

806
01:34:11,962 --> 01:34:13,962
They don't feel inspired to act today.

807
01:34:14,962 --> 01:34:16,962
But I think drive chainers have a different view.

808
01:34:17,962 --> 01:34:26,962
They view Ethereum as a threat to Bitcoin's protocol network effect, and they view the low fees as a serious problem in the near future, not the far future.

809
01:34:27,962 --> 01:34:29,962
Yeah, well said.

810
01:34:30,962 --> 01:34:36,962
And as we speak now, mempool's 480 megabytes as mempool.space is showing up.

811
01:34:36,962 --> 01:34:40,962
And it seems like, you know, demand for block space.

812
01:34:41,962 --> 01:34:52,962
It might potentially be that, you know, we have block space buyers of last resort now that will always put in transactions at one tap per byte for arbitrary data to be stored.

813
01:34:53,962 --> 01:34:59,962
And that might potentially continue to rise, you know, to two stats per byte.

814
01:34:59,962 --> 01:35:03,962
Maybe with the price of Bitcoin rising, that can affect it going back down.

815
01:35:04,962 --> 01:35:09,962
But I think as more people find different use cases for block space, obviously, it's a good thing.

816
01:35:09,962 --> 01:35:11,962
Right. Well, we all agree that this is a good thing.

817
01:35:11,962 --> 01:35:19,962
And it wasn't it was basically a given that eventually on-chain transactions are supposed to be very expensive for this protocol to be effective.

818
01:35:20,962 --> 01:35:23,962
What's his name? Howthinny wrote about this in 2010.

819
01:35:24,962 --> 01:35:26,962
Yeah, I'm sure we all know about this.

820
01:35:26,962 --> 01:35:27,962
We want block space to be used.

821
01:35:27,962 --> 01:35:29,962
We want we want fees to be high.

822
01:35:29,962 --> 01:35:30,962
Like, that's good. That's not bad.

823
01:35:32,962 --> 01:35:37,962
If you could DM me the Howthinny quote that you have in mind, I would love that.

824
01:35:37,962 --> 01:35:38,962
Oh, yeah, sure.

825
01:35:40,962 --> 01:35:41,962
I am such a nerd.

826
01:35:42,962 --> 01:35:49,962
I look at every day the total transaction fees on Bitcoin and I almost never look at the price.

827
01:35:50,962 --> 01:35:52,962
Like, I couldn't tell you what the price is most days.

828
01:35:53,962 --> 01:35:57,962
Sometimes for a month, I won't know what the Bitcoin price is, whether it's in the 20s, the 30s or the 40s.

829
01:35:58,962 --> 01:36:03,962
I don't know. But almost every almost every few days, at least, I look at the total transaction fees.

830
01:36:05,962 --> 01:36:07,962
The website I've been using is blockchain.com.

831
01:36:08,962 --> 01:36:16,962
But ever since people told me that's somehow a shitcoin company, then I've been using instead Glassnode.

832
01:36:16,962 --> 01:36:19,962
But Glassnode doesn't give you the latest few weeks of data unless you pay.

833
01:36:20,962 --> 01:36:25,962
And I've compared the data. It's exactly the same at Glassnode as blockchain.com for this chart.

834
01:36:26,962 --> 01:36:34,962
So what I'm talking about now is the total transaction fees for Bitcoin measured in U.S. dollar equivalent terms.

835
01:36:35,962 --> 01:36:46,962
So if you go to blockchain.com and then click on Explorer and then click on Charts and then select Total Transaction Fees parenthesis USD.

836
01:36:47,962 --> 01:36:49,963
You'll see the chart that I'm talking about now.

837
01:36:50,963 --> 01:36:58,963
And the reason why I'm talking about it is you just mentioned that like, you know, the recent activity with ordinals and inscriptions perhaps is a buyer of last resort.

838
01:36:58,963 --> 01:37:00,963
And we're going to see a solution to the security buzzard.

839
01:37:01,963 --> 01:37:04,963
I don't agree with this, with that view.

840
01:37:05,963 --> 01:37:12,963
So we've seen fees in recent days over the last month.

841
01:37:12,963 --> 01:37:14,963
Fees trend up a little bit.

842
01:37:17,963 --> 01:37:26,963
I just want to restate this. I don't think that this is the solution, though I think it's headed to the right direction because at least we have some more demand for block space.

843
01:37:26,963 --> 01:37:28,963
But it might not be enough, which is what I'm saying.

844
01:37:29,963 --> 01:37:38,963
So if you read Paul Sztorc's articles from 2019 and 2021 called Security Budget in the Long Run and then Security Budget 2, Part 2.

845
01:37:38,963 --> 01:37:40,963
Those two articles, they're very good.

846
01:37:40,963 --> 01:37:49,963
And one of the things they argue that I completely agree with is that the way to measure block space value is total transaction fees.

847
01:37:50,963 --> 01:37:56,963
Not average fee, not, you know, other ways of looking at the block space.

848
01:37:56,963 --> 01:38:02,963
The value of Bitcoin's block space is the total transaction fees paid per any unit of time.

849
01:38:03,963 --> 01:38:08,963
So I go to blockchain.com and look at the chart that I described to you.

850
01:38:09,963 --> 01:38:18,963
I can see that over the last month, so 30 days ago, the fees per day were about $410,000 per day.

851
01:38:20,963 --> 01:38:24,963
Right now it's about the same, $440,000 per day.

852
01:38:25,963 --> 01:38:27,963
So we're right where we were 30 days ago.

853
01:38:28,963 --> 01:38:31,963
Let's compare to six months ago.

854
01:38:32,963 --> 01:38:37,963
The fees were $340,000 per day in September of 2022.

855
01:38:38,963 --> 01:38:42,963
And now they're $441,000.

856
01:38:42,963 --> 01:38:46,963
So slightly higher than six months ago.

857
01:38:47,963 --> 01:38:50,963
I think it's better to check it in Bitcoin terms.

858
01:38:51,963 --> 01:38:52,963
No, that's wrong.

859
01:38:53,963 --> 01:39:06,963
Because the real value of the block space is the purchasing power of the block space.

860
01:39:06,963 --> 01:39:12,963
Yes, but when you're looking at it in dollars, you're introducing the volatility price of Bitcoin into your equation.

861
01:39:13,963 --> 01:39:14,963
Exactly.

862
01:39:15,963 --> 01:39:26,963
The volatility of Bitcoin relative to other goods and services over short periods of time is higher than the volatility of the dollar.

863
01:39:26,963 --> 01:39:46,963
And therefore, when we want to speak about whether something is more valuable or less valuable than it was at some other point in the recent past, it is more rational and reasonable to denominate the value in dollars.

864
01:39:47,376 --> 01:39:58,256
I appreciate you asking that question. Bitcoiners very often who have a simple perspective on

865
01:39:58,256 --> 01:40:03,835
the security budget will say, Henry, you're talking about dollars. That's a fiat mindset.

866
01:40:03,835 --> 01:40:07,576
You haven't said anything like that. But they'll say it's a fiat mindset. All that matters

867
01:40:07,576 --> 01:40:13,255
is Bitcoin. One Bitcoin equals one Bitcoin. Bitcoin fees are paid in dollars. On-chain

868
01:40:13,296 --> 01:40:19,296
miner revenue is paid in dollars. In the long-term future, everything will be paid in Bitcoin.

869
01:40:19,296 --> 01:40:23,536
What am I saying? The fees are paid in Bitcoin. The on-chain revenue is in Bitcoin. The coin

870
01:40:23,536 --> 01:40:27,736
base is in Bitcoin. Everything in Bitcoin is denominated in Bitcoin. In the future,

871
01:40:27,736 --> 01:40:32,416
if there's Bitcoinization, everything will be denominated in Bitcoin. So the argument

872
01:40:32,416 --> 01:40:39,616
goes, Henry, why are you talking about the total transaction fees in dollar terms? But

873
01:40:39,616 --> 01:40:45,696
as you just understood, it is most important to look at it in dollars. I understand that.

874
01:40:45,696 --> 01:40:50,015
Because it's more stable. So if you're trying to understand the value of it, it makes sense

875
01:40:50,015 --> 01:40:55,696
to denominate it in a more stable currency. Anyone who wants to dismiss the importance

876
01:40:55,696 --> 01:41:01,015
of dollars need only talk to someone who went all in on Bitcoin a year ago and now they're

877
01:41:01,015 --> 01:41:07,816
down like 50 or 80 percent. That person is feeling the hurt. They're feeling the pain.

878
01:41:07,816 --> 01:41:12,975
Their bills are in dollars. The apples they buy at the store are in dollars.

879
01:41:12,975 --> 01:41:19,056
So yeah, but check this out. And I understand your view of this might not be sharing the

880
01:41:19,056 --> 01:41:26,136
idea that this is not solving the security budget, meaning the ordinal phase or whatever.

881
01:41:26,136 --> 01:41:31,856
But if you think of it like this, we did have empty blocks. We had plenty of empty blocks

882
01:41:31,856 --> 01:41:37,536
or not even empty blocks, but blocks that had plenty of space and where now we don't.

883
01:41:38,496 --> 01:41:43,935
It doesn't matter whether the blocks are full and it doesn't matter whether there is a million

884
01:41:43,935 --> 01:41:50,335
transactions waiting in the min pool or not. The only thing that matters for the security budget

885
01:41:50,335 --> 01:41:54,975
is the total transaction fee rate. It doesn't matter if there are a billion

886
01:41:55,696 --> 01:41:59,215
ordinals waiting to be inscripted. It doesn't matter.

887
01:42:00,575 --> 01:42:07,055
Yeah, but yes, it doesn't in the terms of we need the total amount of dollars spent

888
01:42:07,055 --> 01:42:11,935
for transaction fees. And in that sense, it doesn't matter. You're right. But if you look

889
01:42:11,935 --> 01:42:18,096
at it like as demand is, let's say it's static and there is as much demand outside of ordinal

890
01:42:18,096 --> 01:42:22,336
inscription transactions, regular Bitcoin transactions without that, there's as much

891
01:42:22,336 --> 01:42:30,096
demand today as there was, let's say, yesterday or last year. There is still space then in blocks for

892
01:42:30,096 --> 01:42:37,376
other transactions. And now you are complementing it with inscriptions. I mean, I'm looking at the

893
01:42:37,376 --> 01:42:41,295
chart that I believe that you're looking at blockchain.com slash explorer slash charge

894
01:42:41,295 --> 01:42:48,415
slash transaction fees, right? USD, yes. Okay. And then I believe the blue color is the USD,

895
01:42:48,415 --> 01:42:53,696
right? Oh, no, that's the Bitcoin. Do you have USD in your URL? No, I don't.

896
01:42:54,415 --> 01:43:00,896
Transaction dash fees, and then what? It should be transaction hyphen fees hyphen USD.

897
01:43:01,536 --> 01:43:06,415
Okay, let me check that right now. But you can get to it just by clicking on,

898
01:43:07,295 --> 01:43:13,456
if you clicked on charts, and then mining. Okay, so if you go to like, let's say a three year

899
01:43:13,456 --> 01:43:19,055
period, do you see a slow uptick more recently? Let's say beginning this year, beginning of

900
01:43:19,055 --> 01:43:24,736
January, you see like a floor rising. So if you click on market, where it says market price,

901
01:43:24,736 --> 01:43:29,215
if you click that, it eliminates that from the chart. And that way, you can focus solely on the

902
01:43:29,215 --> 01:43:38,415
blue line. Do you see that? I clicked on market price, and now I see only, okay, yeah, right.

903
01:43:38,976 --> 01:43:44,816
Good. So it makes it easier to see. So if you click on market price, you eliminate the market

904
01:43:44,816 --> 01:43:49,215
price from the chart and we only see the total transaction fees. So you see here that three

905
01:43:49,215 --> 01:44:01,135
years ago, on March 13, 2020, the miners made $286,000. And today, they make as of March 11,

906
01:44:01,135 --> 01:44:09,215
two days ago, $441,000. So wait, one second, I'm sorry, I'm back at this blockchain.com slash

907
01:44:09,215 --> 01:44:14,655
explorer slash charts, slash transaction fees, USD, what do I need to click on next?

908
01:44:16,655 --> 01:44:21,536
You're at the right place. If your chart is titled total transaction fees, USD.

909
01:44:21,536 --> 01:44:27,935
Yes. And I see two different lines, the price of Bitcoin, which is a dark and then the blue

910
01:44:27,935 --> 01:44:33,775
line on the bottom. So in the chart, the top right of the chart, click on the words market

911
01:44:33,775 --> 01:44:41,215
price, and that will eliminate that from the chart. Okay, right. And I'm seeing in this year,

912
01:44:41,935 --> 01:44:44,016
a floor rising. Do you see that also?

913
01:44:46,655 --> 01:44:52,016
That's a, I mean, how about October 2021, the floor was rising, and then it rose back.

914
01:44:52,016 --> 01:44:55,696
Yes, but that was a bull market. You can say that that was just demand of retail coming in

915
01:44:56,335 --> 01:45:03,696
for whatever reasons. Okay, so your identification of a rising value for the block space during

916
01:45:03,696 --> 01:45:10,655
a bear market for Bitcoin is an important and correct insight, which is that one of the things

917
01:45:10,655 --> 01:45:17,055
that drive chainers are looking for, to see that the security budget problem isn't a problem. One

918
01:45:17,055 --> 01:45:24,895
of the things they're looking for is to see the block space rise in value on this chart in real

919
01:45:24,895 --> 01:45:30,416
purchasing power terms, while Bitcoin is not going through a mania.

920
01:45:31,376 --> 01:45:35,935
And it's fair to say that this is extremely insignificant. Because looking at the chart,

921
01:45:35,935 --> 01:45:40,175
you can see it's extremely insignificant, but you can still correlate a floor rising,

922
01:45:40,175 --> 01:45:45,935
even as insignificant as it is. I think there, well, I agree with what you're saying,

923
01:45:45,935 --> 01:45:50,655
which is that it might be statistically nothing. Like we might just be looking at yet another one.

924
01:45:50,655 --> 01:45:56,655
I mean, look at the all time chart, click on the word all. You can see that for most of Bitcoin's

925
01:45:56,655 --> 01:46:03,296
history, the block space had very low value. And there were two brief, enormous spikes in value

926
01:46:03,296 --> 01:46:11,696
where the miners made millions of dollars a day, like $12 million a day on December 18th, 2017.

927
01:46:13,376 --> 01:46:19,296
And then once again, there was a spike on April 19th, they made $16 million in one day

928
01:46:19,856 --> 01:46:25,455
because of a surge in demand for block space. But with every one of these surges,

929
01:46:26,335 --> 01:46:32,335
there's all kinds of things that grow, that reduce the likelihood of another surge.

930
01:46:32,976 --> 01:46:41,856
Like traders move into custodial trading venues, or they move into some snark layer on Ethereum

931
01:46:41,856 --> 01:46:46,256
to trade wrapped Bitcoin. There's all kinds of ways people avoid high fees,

932
01:46:47,215 --> 01:46:48,175
because they don't like paying.

933
01:46:48,175 --> 01:46:52,416
Right. But inscriptions cannot avoid that because inherently they're on base one,

934
01:46:53,775 --> 01:46:59,696
layer one. And if this chart is showing that, then I don't know if it's a fair assessment,

935
01:46:59,696 --> 01:47:04,416
but it could be a fair assessment to say that inscriptions could potentially be making an

936
01:47:04,416 --> 01:47:07,856
effect, though extremely insignificant as now because it's only one month in.

937
01:47:09,136 --> 01:47:14,256
But it might be fair to say that it could be making a tiny effect in the future.

938
01:47:14,976 --> 01:47:23,215
Yeah, I agree with you. Like the market might demand Bitcoin block space and discriminate

939
01:47:23,215 --> 01:47:29,136
against other block spaces and other ways of transacting Bitcoin, you know, derivatives.

940
01:47:29,136 --> 01:47:33,775
So instead of people trading wrapped Bitcoin, they might prefer to trade layer one Bitcoin.

941
01:47:34,416 --> 01:47:39,935
And that would make the block space more valuable. Yeah. I think that the evidence...

942
01:47:40,335 --> 01:47:45,215
But here you have a protocol that relies the whole, I think the whole novelty of the protocol

943
01:47:45,215 --> 01:47:50,096
is that it's layer one. And the arbitrary data is on layer one. I think that that's the whole

944
01:47:50,096 --> 01:47:54,655
novelty and like the value proposition of this meta protocol. So it's like, yeah,

945
01:47:54,655 --> 01:47:59,055
you can have market demand for wrapping BTC off chain or, you know, be on chain.

946
01:47:59,055 --> 01:48:02,895
But that's still subjective because, well, what might be more effective to you, right?

947
01:48:03,775 --> 01:48:08,735
Maybe you trust the trade off of having wrapped Bitcoins, whatever it is, right? But here you

948
01:48:08,735 --> 01:48:13,615
have a much stronger incentive of... It's not only much stronger, it's like the whole idea is

949
01:48:13,615 --> 01:48:19,696
to be on layer one. Yeah. Yeah. I think you make a great point that it's logically possible

950
01:48:19,696 --> 01:48:28,735
that the recent episode of inscriptions and ordinals and things of that sort may result in

951
01:48:28,735 --> 01:48:34,256
higher demand for Bitcoin block space and thus could, quote unquote, maybe in the best case,

952
01:48:34,256 --> 01:48:41,456
solve the security budget problem. However, if that is true, then we're going to see it

953
01:48:41,456 --> 01:48:48,016
on this chart. We're going to see Bitcoin transactions. Another one to look at is like

954
01:48:48,576 --> 01:48:55,295
go to on the left hand side of the screen and click on in the section called mining information,

955
01:48:56,095 --> 01:49:05,295
click on the chart that says fees per transaction USD. And then you can look at like, you know, the

956
01:49:06,495 --> 01:49:16,896
three year chart there, you can see that in April of 2021, it costs $62 to send a Bitcoin layer one

957
01:49:16,896 --> 01:49:24,256
transaction. Today, it costs under $2 as of two days ago, March 11th. But I'm also looking at

958
01:49:24,256 --> 01:49:29,935
this chart and I'm trying to see a floor rise. Yeah, I don't see any floor rising. Also, I would

959
01:49:29,935 --> 01:49:35,055
know you have to you have to look at the floor rise from when inscription started. Also, which

960
01:49:35,055 --> 01:49:39,136
is about a month ago, right? Or two months ago, if you want. Right. Another thing to think about

961
01:49:39,136 --> 01:49:46,735
is when you're looking at this chart. Maintain awareness that especially when looking at a

962
01:49:46,735 --> 01:49:53,696
long term chart, like three years or all time, that these charts do not reflect inflation of

963
01:49:53,696 --> 01:50:00,816
U.S. dollar. In other words, it's very important to understand that the real value, like if the

964
01:50:00,816 --> 01:50:06,576
miners make half a million dollars a day from fees, and they made half a million dollars a day

965
01:50:06,576 --> 01:50:12,175
six years ago from fees that are making less. Yeah, they're making a lot less, like probably

966
01:50:13,136 --> 01:50:20,336
20% less. So it's a very interesting puzzle. I would agree with you that it's most likely

967
01:50:20,336 --> 01:50:28,735
insignificant, meaning the inscriptions fees going up. I would say it's not it didn't solve

968
01:50:28,735 --> 01:50:33,376
the security budget, most likely will not solve the security budget. But from another point of

969
01:50:33,376 --> 01:50:38,975
view, you can look at it's so cheap to put arbitrary data on chain and it's very easily

970
01:50:38,975 --> 01:50:44,016
accessible that there might potentially be a use case for somebody to always want to pay at least

971
01:50:44,016 --> 01:50:50,415
one SAP for BitByte because it's just so cheap to put data on Bitcoin using this envelope in

972
01:50:50,415 --> 01:50:56,016
the witness. Right. So because of that, you will always have at least potentially, like I don't

973
01:50:56,016 --> 01:51:01,055
know, right, but potentially you might always have one SAP for BitBytes in the mempool. And of

974
01:51:01,055 --> 01:51:08,175
course, that's not significant for the security budget, but tiny equation to it. Tiny, less than

975
01:51:08,256 --> 01:51:16,656
1%. Yeah, but I totally agree with what you're saying, because if there's a huge number of people

976
01:51:16,656 --> 01:51:22,975
in the world who would like to do a layer one transaction for inscription purposes or other

977
01:51:22,975 --> 01:51:29,855
purposes at a low fee, that means Bitcoin will always have a buyer of last resort. But the

978
01:51:29,855 --> 01:51:35,216
problem is, as you say, you know, if the buyer of last resort is only willing to pay a penny,

979
01:51:36,095 --> 01:51:41,855
then it doesn't really matter because Bitcoin has small blocks. See, this is why some people

980
01:51:41,855 --> 01:51:49,456
are large blockers. But there's another point here where, yes, there is, let's say, potentially a huge

981
01:51:49,456 --> 01:51:54,415
amount of people that are ready to pay one penny. But now there might be a smaller amount of people

982
01:51:54,415 --> 01:52:00,175
that are ready to pay two pennies because you introduced a new use case. Right. And over time,

983
01:52:00,175 --> 01:52:05,615
that two pennies will be a larger amount, and then there might be a smaller amount for three

984
01:52:05,615 --> 01:52:10,735
pennies. Right. Right. I understand what you're saying. You're right. There might be. I don't

985
01:52:10,735 --> 01:52:14,816
think there is, but there might be. But I also wanted to just finish my thought there about the

986
01:52:14,816 --> 01:52:21,535
large blockers. There is a large kernel of truth in large blocker thinking that large blocks are

987
01:52:21,535 --> 01:52:26,256
valuable in certain circumstances. Now, I'm not a large blocker in the sense that I don't want

988
01:52:26,256 --> 01:52:31,376
large blocks on layer one, but there is an enormous number of people who want to pay a

989
01:52:31,376 --> 01:52:36,735
little bit of money, like a penny, to do a transaction that's peer to peer. But that

990
01:52:36,735 --> 01:52:41,456
should be a layer two. That should be a drivechain. So I think that like there could be a ton

991
01:52:41,456 --> 01:52:47,696
of pennies collected from a big block drivechain, and then that money is brought to Bitcoin

992
01:52:48,256 --> 01:52:54,735
layer one miners. And therefore, that's like the harmony, the symbiosis of large block and small

993
01:52:54,735 --> 01:53:00,175
block. The one problem is that the large blockers that I've talked to, they're not too excited about

994
01:53:00,175 --> 01:53:04,415
this because they're like, why do I want to be on a sidechain? Like they kind of view that as a

995
01:53:05,055 --> 01:53:12,336
lesser thing. But that's kind of like saying, you know, I want to live in a nice big house.

996
01:53:12,336 --> 01:53:17,535
I don't want to be in an apartment. But then, you know, the person comes to New York City

997
01:53:17,535 --> 01:53:22,095
and they realize that having a large house in New York City costs like a billion dollars.

998
01:53:22,095 --> 01:53:26,816
Almost no one has a house with a front lawn in New York City, except the very richest people

999
01:53:26,816 --> 01:53:34,495
in the whole world. You know, I'm talking about Manhattan specifically. So yeah, I think there

1000
01:53:34,495 --> 01:53:38,816
could be a ton of pennies collected, as you say, from many people who are willing to pay a little

1001
01:53:38,816 --> 01:53:43,776
bit of money. But then you need large blocks. Otherwise, those pennies, they're waiting in line.

1002
01:53:43,776 --> 01:53:47,696
They're waiting in line to get their transaction through because the blocks are so small. Only a

1003
01:53:47,696 --> 01:53:53,376
few pennies can be processed every 10 minutes, only a few thousand transactions. But if we had

1004
01:53:53,376 --> 01:53:59,456
a big block sidechain, maybe, you know, then a lot of the ordinal stuff and a lot of these

1005
01:53:59,456 --> 01:54:04,656
small transactions could happen. We are going to have to break. We've been going for almost two

1006
01:54:04,656 --> 01:54:08,896
hours. This has been a great conversation. Thank you very much for everyone joining.

1007
01:54:08,896 --> 01:54:15,216
Acrossfire, you just joined. I want to give you the remaining part of the time to speak,

1008
01:54:15,855 --> 01:54:21,295
if you'd like. Yeah, sure. Thanks. Yeah, I'll keep it brief. But I just wanted to kind of add

1009
01:54:21,295 --> 01:54:25,615
on to that last bit of the conversation. We were talking about ordinals and inscriptions and

1010
01:54:26,336 --> 01:54:31,456
their ability to contribute to security budget. While I agree in their current form, they're

1011
01:54:31,456 --> 01:54:37,055
unlikely to fully solve the security budget. I do think they'll provide kind of a healthy

1012
01:54:38,175 --> 01:54:43,376
fee mechanism, if you will, the buyer of last resort. And we've already seen there's a lot

1013
01:54:43,376 --> 01:54:48,095
of people that do it from one SAT per V-byte, two SATs per V-byte. But then there's the higher

1014
01:54:48,095 --> 01:54:54,735
profile artists that do know they have buyers that do tend to pay much higher fees for their

1015
01:54:54,735 --> 01:54:59,456
inscriptions. And you always see a few of them that do end up in the very next block.

1016
01:54:59,456 --> 01:55:04,656
So they are those that are willing to kind of fill up those box with those higher fees.

1017
01:55:04,656 --> 01:55:09,376
And then I also know that conversation is still very much evolving just due to the nature of it

1018
01:55:09,376 --> 01:55:15,855
being so new. At first, people were just focusing on the NFT aspect, but it's already starting to

1019
01:55:15,855 --> 01:55:20,576
be where people are looking at it more as just a generalized envelope where you could do more

1020
01:55:20,576 --> 01:55:28,495
creative things and other meta protocols with that data. And that's kind of what led to RollKit and

1021
01:55:29,295 --> 01:55:33,615
some of the ideas that Eric Wall has been discussing, these other kind of meta protocols

1022
01:55:33,615 --> 01:55:38,576
that are starting to exist. Even some people were talking about joking around and playing

1023
01:55:38,576 --> 01:55:43,615
around with BRC20s and these kind of fungible token standards on this. And so I think there's

1024
01:55:43,615 --> 01:55:49,136
going to just be a lot of various use cases, and some of them will be one to two SAT per V-byte

1025
01:55:49,136 --> 01:55:55,136
use cases, but others might be much higher. And I think in combination with drivechains,

1026
01:55:55,136 --> 01:56:01,776
as well as other ideas, I think we should look at all of these working in kind of a symbiotic way

1027
01:56:01,776 --> 01:56:08,095
to enhance the fee mechanisms for Bitcoin. It's not necessarily that inscriptions don't

1028
01:56:08,095 --> 01:56:14,896
contribute. They will. They'll just be part of a bigger block of solutions for fixing the security

1029
01:56:14,896 --> 01:56:24,256
budget. Well said. I agree entirely. Eric Wall is a supporter of drivechain, like many other people,

1030
01:56:24,256 --> 01:56:31,776
and I personally have made a list of over 50 supporters for drivechain that I've found on

1031
01:56:31,776 --> 01:56:37,855
Twitter. There are many more. My list is merely a sample of support. You can find it if you go

1032
01:56:37,855 --> 01:56:46,735
to drivechain.info and then click on drivechain friends. Well, thank you so much. We've got a

1033
01:56:46,735 --> 01:56:51,536
break now, but we will be back on Thursday. We meet every Monday and Thursday to chat about

1034
01:56:51,536 --> 01:56:56,815
drivechain. If you have questions in the meantime, join the drivechain talk telegram group, the

1035
01:56:56,815 --> 01:57:02,975
drivechain's Reddit, or other places that you can get involved and learn more. So I hope to see you

1036
01:57:02,975 --> 01:57:07,855
all on Thursday. Thanks to those who spoke, and thanks very much to those who listened.