1 00:00:00,240 --> 00:00:04,480 Good spacetime everyone and welcome to a new episode of the Citizen Web3 podcast, 2 00:00:04,480 --> 00:00:09,200 your source for educational insights into the Web3 universe and your connection hub 3 00:00:09,200 --> 00:00:12,480 to discovering those that contribute to building the decentralized world. 4 00:00:13,040 --> 00:00:18,560 Today we are joined by Paul Sztorc from LayerTwo Labs. We touch upon the fiat currencies, 5 00:00:18,560 --> 00:00:23,760 the winning coin, East versus West, and North versus South. We discuss competitiveness, 6 00:00:23,760 --> 00:00:28,320 freedom, and moral progress. Finally, we talk about prediction markets, printing press, 7 00:00:28,320 --> 00:00:32,080 and the Titanic. If you enjoy our podcast, please share this episode onto your favorite 8 00:00:32,080 --> 00:00:35,360 social platform and help us spread Web3 values into the universe. 9 00:00:58,320 --> 00:01:10,160 Hey everyone, welcome to a new episode of the Citizen Web3 podcast. Today I have 10 00:01:10,160 --> 00:01:14,960 Paul from LayerTwo Labs with me and I'm really glad and excited to hear what Paul has to share 11 00:01:14,960 --> 00:01:19,520 with us. So Paul, hi, welcome to the show. Hey, thanks for having me. Yeah, very glad. 12 00:01:21,200 --> 00:01:27,520 Well, I'm personally glad to have you on and ask you some questions that are probably related to 13 00:01:27,520 --> 00:01:32,240 your work, to Bitcoin and such, but apart from that, you know, you were already recommended by 14 00:01:32,240 --> 00:01:38,640 a couple of guests I had on, so can't wait to... Wow, really? Who recommended me? Ah, you see, 15 00:01:38,640 --> 00:01:44,480 well, at least Vlad, at least Vlad, at least Vlad. Okay. And I had a couple of more guests 16 00:01:44,480 --> 00:01:48,640 in the past year or so that have mentioned your name with regard to Bitcoin, so we're 17 00:01:48,640 --> 00:01:55,040 going to put the spotlight on you, Paul. Sorry, I'm joking, I'm joking. Paul, before I kick off 18 00:01:55,040 --> 00:01:59,040 and start to annoy you with all my questions, could you, for me, for the listeners, do like a 19 00:01:59,040 --> 00:02:04,320 brief intro of yourself, your work and how did you get into Web3? Well, I've been in Bitcoin for a 20 00:02:04,320 --> 00:02:10,320 long time. I started this company LayerTwo Labs. The idea behind LayerTwo Labs is that eventually 21 00:02:10,320 --> 00:02:16,320 one coin will be able to do everything and that coin is going to win. And so I am a sort of a 22 00:02:16,320 --> 00:02:22,000 Bitcoin maximalist in a way, in the sense that I think only one coin will win. I mean, I certainly 23 00:02:22,000 --> 00:02:28,000 hope it's Bitcoin. I think if Bitcoin drops the ball on features and on competitiveness, 24 00:02:28,000 --> 00:02:33,600 it will be something else. But whatever that is, I think it will eventually displace all the other 25 00:02:33,600 --> 00:02:40,080 crypto coins and it will then start taking over the worst fiat currencies and then eventually 26 00:02:40,080 --> 00:02:44,560 it will just take everything over. So I do believe in that maximalist logic. That was the old 27 00:02:44,560 --> 00:02:50,400 maximalist logic. So I come from like kind of an even an earlier era and I championed this idea, 28 00:02:50,400 --> 00:02:55,200 the sidechain, or now I call it the Drivechain. And that is basically the idea that you have one 29 00:02:55,200 --> 00:02:59,680 coin, but it can travel to completely different pieces of software. And so now the software can 30 00:02:59,680 --> 00:03:05,040 be any shape or size, just like you can have any app on your phone or on your desktop computer. 31 00:03:07,280 --> 00:03:13,040 And so these would be like altcoins in that they are completely different software, but they're 32 00:03:13,040 --> 00:03:19,600 unlike altcoins in that there's no coin for each thing. They're all managing the same 21 million 33 00:03:19,600 --> 00:03:25,200 Bitcoin in this. So that's what the company is about. That's sort of what I'm about. 34 00:03:27,200 --> 00:03:33,600 The company, LayerTwo Labs, we started it basically December. We're almost like at the end of the 35 00:03:33,600 --> 00:03:43,440 second year. So we've been a year and a little and we have produced, you know, we have a test 36 00:03:43,440 --> 00:03:49,040 network with fake Bitcoin, but it's exactly resembles the real Bitcoin network. And on that 37 00:03:49,040 --> 00:03:54,640 network, you can send the coins to like a clone of Zcash and you can get privacy there, or you can 38 00:03:54,640 --> 00:04:02,000 send them to a clone of Ethereum and do EVM, smart contracts there. And you can send them to, you 39 00:04:02,000 --> 00:04:08,160 know, a large block version is, of course, this famous block size dispute in Bitcoin. So I see 40 00:04:08,160 --> 00:04:13,600 myself as kind of almost transcending Web3 or maybe just zoomed out a little where I think people 41 00:04:13,600 --> 00:04:19,360 should be able to do whatever they want, you know, Web3 or large blocks or whatever Zk-SNARK 42 00:04:19,360 --> 00:04:26,080 privacy. So that's kind of what the sidechain, Drivechain, LayerTwo Labs, Paul Sztorc's idea is 43 00:04:26,080 --> 00:04:32,400 about this idea of tolerance among all these different pieces of software to unite everyone 44 00:04:32,400 --> 00:04:38,720 behind, you know, the winning coin. And that's sort of, so that should probably be enough of 45 00:04:38,720 --> 00:04:42,720 an introductory. I mean, I have all these websites, drivechain.info, LayerTwoLabs.com, 46 00:04:43,360 --> 00:04:49,200 Truthcoin.info. I'm going to dig a little bit because, you know, you spoke about, 47 00:04:50,080 --> 00:04:54,640 I have some questions for you with regards to, you know, the beeps that you authored and 48 00:04:55,760 --> 00:04:59,440 the Bitcoin improvement protocols, of course. And I have some questions with regards. 49 00:04:59,440 --> 00:05:05,600 300 and 301. But if you don't mind, before we go there, because like I said to you, you know, 50 00:05:05,600 --> 00:05:10,960 before I hit the record button, the show is mostly about, you know, the person rather than 51 00:05:10,960 --> 00:05:16,400 what they do. And, you know, we all are humans that choose, you know, some path in our life. 52 00:05:16,400 --> 00:05:21,040 You know, somebody chooses, you know, to go fight for the army, you know, go be religious, 53 00:05:21,040 --> 00:05:26,160 you know, go rebuild blockchains, you know, whatever, you know, fight the banks. It doesn't 54 00:05:26,160 --> 00:05:30,560 matter. We all should choose. And I want to talk a little bit about Paul, you know, before, like, 55 00:05:30,560 --> 00:05:37,360 not to get deep private, of course, but whatever, like you can share about what you did before 42 56 00:05:37,360 --> 00:05:43,040 Labs. What did you do before blockchain? Why did you get drawn to working with Bitcoin or trying 57 00:05:43,040 --> 00:05:48,480 to unite people over the idea that you just told me about? What was, what's driving you? 58 00:05:48,480 --> 00:05:54,480 One thing that is pretty clear is you can look at like, you know, East Germany versus West Germany, 59 00:05:54,480 --> 00:05:59,280 North Korea versus South Korea. And you can just read about, you can read like Gulag Archipelago 60 00:05:59,280 --> 00:06:03,520 versus like, you know, the Great Gatsby or something, you know, you can compare these worlds 61 00:06:03,520 --> 00:06:10,560 that where the worlds are nothing, they're nothing like at all. And one world is like hell on earth. 62 00:06:11,200 --> 00:06:16,960 And the other world is not so bad. And you can think like every problem that anyone has ever 63 00:06:16,960 --> 00:06:21,840 faced, like some people struggle so much with some problem. And if they just had, you know, 64 00:06:21,840 --> 00:06:26,080 penicillin, or if they just had toothpaste, or if they just knew, they just knew a little bit more 65 00:06:26,080 --> 00:06:36,320 about, you know, maybe psychology, or, you know, like, people get defensive, we have certain 66 00:06:36,320 --> 00:06:40,080 phrases that do a lot of work, you know, just because our culture has accumulated all this 67 00:06:40,080 --> 00:06:48,240 knowledge, we know how to deal with when people feel shy or something, but, but for a long time, 68 00:06:48,240 --> 00:06:51,440 people didn't have any of this knowledge, they didn't have knowledge about how to build roads, 69 00:06:52,400 --> 00:06:57,760 or get food. And so I think like, that's the number one thing. And you think, well, okay, 70 00:06:57,760 --> 00:07:03,280 if people cooperate, people can work together, that is a huge upgrade. And that's what things 71 00:07:03,280 --> 00:07:09,360 like money do. And things like law, things like culture. And so I just think, you know, the 72 00:07:09,360 --> 00:07:15,440 internet, the computer, it can give us knowledge, it can protect our rights, it's very, you know, 73 00:07:16,160 --> 00:07:19,360 the idea that you could just have all of your money in a 12 word seed phrase, 74 00:07:19,360 --> 00:07:24,400 memorize it, and then just walk, walk across the border, we want to increase the competitiveness of, 75 00:07:25,280 --> 00:07:30,000 you know, governments and corporations, whatever to be competing for us. So that that's big. 76 00:07:30,560 --> 00:07:34,960 For me, I'm also very interested in this idea of the prediction market that I championed 77 00:07:36,160 --> 00:07:40,560 for a really long time. But even in terms of blockchain prediction markets, like Polymarket, 78 00:07:40,560 --> 00:07:48,720 I was writing about doing that on Bitcoin in 2012 and 2013. And I produced software for that. And I 79 00:07:48,720 --> 00:07:54,560 produced, you know, research papers about that. So I'm very interested in that. And that is what 80 00:07:54,560 --> 00:08:00,720 drew me into this Blockstream sidechain idea back in 2014. And then they sort of, they dropped the 81 00:08:00,720 --> 00:08:04,720 ball on that and didn't do it and never released anything useful for that. So I had to do it 82 00:08:04,720 --> 00:08:10,800 myself. So those that maybe gives you some idea of like, I just think, just imagine any problem 83 00:08:10,800 --> 00:08:16,080 you've ever had everyone who's ever, you know, weeped for a dying loved one or been confused 84 00:08:16,080 --> 00:08:24,560 about how to handle like a relationship problem or a health problem or just bored or annoyed. And 85 00:08:24,560 --> 00:08:29,920 all those problems would be solved if we just had more knowledge, more human capital, more 86 00:08:30,720 --> 00:08:34,560 resources. And that's, you know, it's like Hong Kong versus mainland China. It's like, 87 00:08:34,560 --> 00:08:42,880 we know the formula is freedom, consent, innovation. You think it would help to solve 88 00:08:42,960 --> 00:08:46,480 all the world's problem? I'm going to be a bit devil's advocate here. I'm going to be a lot 89 00:08:46,480 --> 00:08:50,960 devil's advocate in this question. I have to warn you in advance. You think that it would help to 90 00:08:50,960 --> 00:08:56,240 solve the world's problem if America stopped spending 1 trillion US dollars on the defense 91 00:08:56,240 --> 00:09:02,160 budget and the army budget every year? I don't know why you would single that one out. I mean, 92 00:09:02,160 --> 00:09:08,320 you think that's too low or too high? I think it's way too fucking high. It is pretty high, 93 00:09:09,120 --> 00:09:13,280 but it's very low compared to other things. It's not, you know, isn't it like one quarter 94 00:09:13,280 --> 00:09:16,320 or something of the federal budget to say nothing of the state and local? 95 00:09:16,320 --> 00:09:22,160 Fuck the federal budget. It's the fact that, you know, what I see, you know, when I got to be, 96 00:09:22,160 --> 00:09:26,160 I'm going to try, like I said, I'm going to be devil's advocate. So I'm pretty much the same 97 00:09:26,800 --> 00:09:34,000 length as you in this industry since 2011, 2012, roughly when I came in. And, you know, I've been 98 00:09:34,880 --> 00:09:40,800 long through all of this, you know, like, okay, we struggle. What I came to realize and what I'm 99 00:09:40,800 --> 00:09:51,040 kind of like want to ask you is that, you know, no matter how and what we do, there is a problem 100 00:09:51,040 --> 00:09:55,760 with humans. That's what I came to realize. It's not the problem with technology. It's not a 101 00:09:55,760 --> 00:10:01,920 problem with, I don't know, anything else, money. Well, there is a problem with money. There is a 102 00:10:02,320 --> 00:10:05,360 problem with technology. There's a problem with a lot of things, problem with government. 103 00:10:05,360 --> 00:10:09,120 But at the end of the day, there is a problem with greed and lack of responsibility. 104 00:10:09,680 --> 00:10:14,080 And, you know, at the end of the day, when humans care, well, we're going to solve all the world's 105 00:10:14,080 --> 00:10:18,720 problem by fixing one, two, three. Why not start with the simple things? Why not start with the 106 00:10:18,720 --> 00:10:23,360 simple things like we know that wasting a trillion dollars on the state budget, you know, will 107 00:10:23,360 --> 00:10:29,360 probably, if it was directed somewhere else, like towards space exploration, probably would have 108 00:10:29,360 --> 00:10:34,880 helped a lot already. But it's not. So what I'm trying to ask you is, do you think that, you know, 109 00:10:34,880 --> 00:10:40,880 by fixing technology or fixing the unbanked system or bank system, whatever you believe in, 110 00:10:42,080 --> 00:10:47,840 we will manage to solve human greed and the lack of responsibility that humans take? 111 00:10:47,840 --> 00:10:52,000 But that's not really the criterion, is it? I mean, we will never reach a state where we have 112 00:10:52,000 --> 00:10:57,280 solved every problem. But that doesn't mean that we like we're climbing the ladder. You know what 113 00:10:57,280 --> 00:11:05,040 I mean? Like we start where we're all ignorant subsistence farmers. You know, on day one, the 114 00:11:05,040 --> 00:11:10,320 species was in a horrible state. And in fact, I think a lot of people think that the human race 115 00:11:10,320 --> 00:11:15,600 almost went extinct several times and even went down to like maybe 400 people or something at one 116 00:11:15,600 --> 00:11:20,160 point because there's just not enough genetic variation in some. I'm not sure if that's true, 117 00:11:20,160 --> 00:11:27,600 but something like almost every and all of the cousin and sister species of homo sapiens 118 00:11:28,480 --> 00:11:35,760 all went extinct, you know. So that was a pretty bleak outlook on day one. 119 00:11:37,120 --> 00:11:40,960 And now people have different problems. They have like the first world problems, like what do I 120 00:11:40,960 --> 00:11:45,360 watch on Netflix or people, someone somewhere is being greedy, like what you're saying, or that 121 00:11:45,360 --> 00:11:51,200 the defense budget is, you know, one trillion, like, it's a first world problem. And in the 122 00:11:51,200 --> 00:11:55,600 future, we can only hope that the problems they solve are different than maybe more about like 123 00:11:55,600 --> 00:11:59,680 art or like what planet, what color a certain planet should be when they create it out of 124 00:12:01,120 --> 00:12:03,920 space matter, they dig out of the sun or something. So 125 00:12:04,560 --> 00:12:17,120 people always disagree about what to do next. I think that is also just normal. And that fact, 126 00:12:17,120 --> 00:12:22,000 I think we should all accept that we will always disagree. But again, that doesn't mean that we're 127 00:12:22,000 --> 00:12:27,600 not, that doesn't mean that we should go back to the Aztecs and say, we need more rain. So we should 128 00:12:28,080 --> 00:12:33,680 what they would do is they would chain a bunch of children together, they would smash like iron 129 00:12:34,800 --> 00:12:41,680 hooks into their faces and chain them all together and then drag them up the pyramid and then and got 130 00:12:41,680 --> 00:12:51,200 them all. And that's what they would do to bring rain to the farmers, whereas today we have pipes. 131 00:12:51,200 --> 00:12:54,320 Well, the Nazis, you know, we're doing like what I'm trying to say is that, you know, 132 00:12:54,320 --> 00:12:58,720 we didn't change as a society much because, you know, if slavery, Holocaust, those things were 133 00:12:58,720 --> 00:13:03,520 legal, you know, so like what I'm trying to say here... But you wouldn't say that we haven't, 134 00:13:03,520 --> 00:13:11,440 I mean, people's attitude towards, for example, the, I mean, I was about to say the Jews, but 135 00:13:14,320 --> 00:13:21,280 distressingly, there has been a bizarre rise of anti-Semitism recently, which is distressing and 136 00:13:21,280 --> 00:13:27,360 bizarre. But I do think what's unusual is that it is met if you, I mean, certainly if you go back 137 00:13:28,080 --> 00:13:32,160 200 years, this type of thing would happen all the time and everyone would just look the other 138 00:13:32,160 --> 00:13:34,560 way and just be like, well, whatever, they're probably up to something. 139 00:13:34,560 --> 00:13:35,520 What's happening today? 140 00:13:35,520 --> 00:13:42,560 Today, more people do. I know it is. I was very surprised by that. But I don't think that 141 00:13:42,560 --> 00:13:47,120 actually when push comes to shove, normal people in America and even people who are going to vote 142 00:13:47,120 --> 00:13:54,160 based on this issue, I don't think those people look at the students protesting for Hamas and say, 143 00:13:54,160 --> 00:13:57,680 oh, I'm going to vote for that. I think they will just quietly ignore that and then they 144 00:13:57,680 --> 00:14:02,320 will vote against it. And so there will be no actual change in the official policy of the 145 00:14:02,320 --> 00:14:10,320 one trillion defense budget that to uphold basic Western values and like anti-terrorism and anti, 146 00:14:10,320 --> 00:14:15,680 like, just like complaining about a country existing and just like... So I don't think that 147 00:14:15,680 --> 00:14:24,320 that, but, but yeah, that is, that is a weird thing for mostly the, I, we have made enormous 148 00:14:24,320 --> 00:14:29,520 moral progress, I think, you know, and people don't put up with things that would have been 149 00:14:29,520 --> 00:14:33,600 common, even things like bullying or like parents beating their children. 150 00:14:33,600 --> 00:14:36,640 The, a lot, many of these things, the opposite positions were taken for granted. 151 00:14:37,280 --> 00:14:40,480 You know, the idea that you could just kill all the Jewish people was, that was 152 00:14:40,480 --> 00:14:46,880 normal part of life in Europe for a very long time. Now that is, that would be considered grotesque. 153 00:14:48,080 --> 00:14:53,680 It is true that some, I don't, I don't understand why there is a subculture that has moved 154 00:14:54,880 --> 00:14:58,400 extremely in the other direction, but my guess is that it's because that subculture is so 155 00:14:58,400 --> 00:15:03,040 defective and irrational that people have just stopped trying to, to reason with it. 156 00:15:03,040 --> 00:15:11,280 And so actually that's their own problem. And I think when push comes to shove, 157 00:15:12,800 --> 00:15:16,720 they will have wished that they were more open-minded, let's say. 158 00:15:16,720 --> 00:15:20,720 I guess, I guess that, you know, what I was referring to wasn't so much, even though the, 159 00:15:20,720 --> 00:15:26,240 the anti-Semitism, of course, you know, I haven't served once upon a time in Israeli army 160 00:15:26,240 --> 00:15:31,040 long, many years ago, you know, it is kind of close to me, but I'm not, I'm not that kind of person. 161 00:15:31,040 --> 00:15:35,840 I think it was a mistake what I did, but what I was referring to more was, you know, that 162 00:15:35,840 --> 00:15:41,200 for the last hundred or so years, for example, I forget the word all the time, it's on Wikipedia, 163 00:15:41,200 --> 00:15:46,720 it's a German word, a very long one, one of those like 30 letters words, a phenomenon, 164 00:15:46,720 --> 00:15:51,680 yes, which means, what is it? Yeah, I'm going to explain what it is. I cannot remember the word, 165 00:15:51,680 --> 00:15:56,800 basically what it means that, you know, as for the last hundred years, we are aware as, as a first, 166 00:15:56,800 --> 00:16:02,320 you know, as a, let's say, white dominant society, we are aware of roughly one billion people, 167 00:16:02,320 --> 00:16:08,640 one billion, that's roughly today, still 15 or so, 17 percent of the world population dying 168 00:16:08,640 --> 00:16:14,960 yearly of five illnesses, that is, hepatitis B, hepatitis C, malaria, tuberculosis and something 169 00:16:14,960 --> 00:16:20,320 else. The cure to each one of those per person is roughly two dollars per year per person, 170 00:16:20,320 --> 00:16:25,280 now per illness, so let's say ten dollars per person per year, so that is a lot less than a 171 00:16:25,280 --> 00:16:29,360 fucking trillion dollars. What I'm trying to say, the problems that we are having in the world are 172 00:16:29,360 --> 00:16:34,880 not the problems of the first world countries, those are the problems that we choose as first 173 00:16:34,880 --> 00:16:39,920 world countries to close our eyes to whatever the fuck is happening around us, single out a few 174 00:16:39,920 --> 00:16:44,880 problems and say, well, those are all big issues, but let's not look at the big things like that's 175 00:16:44,880 --> 00:16:50,480 happening, like 15 percent of the world population dying per year, because we decide to build a tank 176 00:16:50,480 --> 00:16:55,360 or a plane, you know, so. Let me go back to your earlier, like, because you asked like a big question 177 00:16:55,360 --> 00:17:01,520 about, I say I'm going to solve all these problems, what I don't say is I'm going to solve all the 178 00:17:01,520 --> 00:17:06,800 problems, I'm just trying to say, listen, I'm alive right now, I look around, what problems do I think, 179 00:17:06,800 --> 00:17:12,400 here's a list of the problems I think I can solve, sort that list by importance, okay, this is the 180 00:17:12,400 --> 00:17:16,960 most important problem I think I could maybe help solve, okay, I'll do that, that's pretty 181 00:17:16,960 --> 00:17:23,840 reasonable, I think that we were talking about like, we're never going to solve all the problems, 182 00:17:23,840 --> 00:17:30,480 the list will keep going, you know, and that's sort of a good thing, because I'm not sure what 183 00:17:30,480 --> 00:17:35,200 would exactly happen, like what it would mean if we had reached a perfectible state, I don't know, 184 00:17:35,200 --> 00:17:40,480 like that would be, that would almost be its own problem, because then it would be like confusing 185 00:17:40,480 --> 00:17:45,440 as to like, we would, that would have its own mysteries, which you could call problems, so. 186 00:17:45,440 --> 00:17:51,600 For sure, I agree. Now, you have this assertion that the trillion dollars 187 00:17:51,600 --> 00:17:58,800 we spend on defense is spent mistakenly, but I think no one really knows if that is correct, 188 00:17:59,520 --> 00:18:04,320 neither you or I really know, we don't know, like maybe things would be way, way worse, you 189 00:18:04,320 --> 00:18:09,600 know what I mean, if we, maybe the US, let's say that number was zero instead, and then we could have 190 00:18:09,600 --> 00:18:16,080 many authoritarian, you know, regimes around the world taking over their neighbors, you know, 191 00:18:16,080 --> 00:18:22,160 they are inherently, the authoritarians cannot grow as quickly as the free countries, so their 192 00:18:22,160 --> 00:18:29,680 only option to stay where they are is to expand and sort of coerce people. I do agree, I do agree 193 00:18:29,680 --> 00:18:34,480 with you that, you know, that, you know, solving all the world's issues is definitely not on the 194 00:18:34,480 --> 00:18:40,160 agenda here, I agree with you, so I'm going to go a little bit back and then. One reason I'm 195 00:18:40,160 --> 00:18:45,680 interested in prediction markets is because we could make these contracts, so we could improve 196 00:18:45,680 --> 00:18:51,040 the rational discourse on whether or not the one trillion is the right number, and you can make a 197 00:18:51,040 --> 00:18:56,720 special type of contract that I have tried to popularize, it was invented by Robin Hanson, but 198 00:18:57,680 --> 00:19:03,920 I tried to popularize it with, and I think I succeeded somewhat in Vitalik bought it, 199 00:19:03,920 --> 00:19:08,400 Hookline and Sinker and the Ethereum community knows a little bit about it, these multi-dimensional 200 00:19:08,400 --> 00:19:12,560 prediction markets, you say, okay, if we increase defense spending, what will happen to something 201 00:19:12,560 --> 00:19:18,640 else, like the value of all the land or the life expectancy of the earth or something, so you can 202 00:19:18,640 --> 00:19:26,720 then maybe start to get a handle on what you might think when it's like a thermostat, you think 203 00:19:26,720 --> 00:19:30,320 maybe we've gone too far, this, we're hitting diminishing returns, we're hitting negative 204 00:19:30,320 --> 00:19:35,520 returns, things are getting worse, we spend more on this, things get worse, and more, even more to 205 00:19:35,520 --> 00:19:39,920 the point, the prediction market gives everyone the same set of prices, so this is at least the 206 00:19:39,920 --> 00:19:44,800 beginnings of how to convince everyone else, you've learned the truth, oh, we're spending too 207 00:19:44,800 --> 00:19:49,760 much on X, Y, Z, but now you have to convince everyone else, but prediction markets solve both 208 00:19:49,760 --> 00:19:57,840 problems, they also have a superior ability to scale, conversation scales, oh, and squared, it 209 00:19:57,840 --> 00:20:00,720 doesn't scale very well, you have to have a conversation with each person has to talk to 210 00:20:00,720 --> 00:20:06,320 everyone else, that doesn't work, and then you have things like this show, which is like a 211 00:20:06,320 --> 00:20:13,600 podcast type show, where you have media elites get a reputation like Joe Rogan, but even that 212 00:20:13,600 --> 00:20:18,880 scale is what you might call like log N times N or something, you have a few competing elites, and 213 00:20:18,880 --> 00:20:23,680 then they choose who to interview, and they choose who to believe, the prediction market, the more 214 00:20:23,680 --> 00:20:29,520 people involved, the more liquidity the market has, the more accurate it is, and the more people who 215 00:20:29,520 --> 00:20:34,880 are convinced ultimately by that, so it has, it's a superior idea that, well, it actually works 216 00:20:34,880 --> 00:20:40,320 better the more people are involved, so in a world of eight billion people, so you may be right about 217 00:20:41,280 --> 00:20:44,720 the defense budget being wrong, and maybe it should be spent on hepatitis B, 218 00:20:47,040 --> 00:20:53,600 one thing to think about is, it's true that, it's probably true that everything you've said 219 00:20:53,600 --> 00:20:58,320 about a lot of people die of hepatitis B, hepatitis B cure is very cheap, less than two dollars, 220 00:20:58,960 --> 00:21:04,800 but that doesn't necessarily mean that we could save those people's lives for two dollars, there's 221 00:21:04,800 --> 00:21:10,720 a lot of other missing pieces of like distributing and administering the medicine, and maybe if you 222 00:21:10,720 --> 00:21:15,600 give them that, they die from hunger four weeks later, I don't know the facts, but I do think it's 223 00:21:15,600 --> 00:21:20,960 kind of implausible, right, because people prefer being alive, you know, every, the parents prefer 224 00:21:20,960 --> 00:21:25,600 having their children be alive, and if it were really the case, you would think that there would 225 00:21:25,600 --> 00:21:30,400 be some kind of, you know, some kind of deal that people could cut, if it was just this one two 226 00:21:30,400 --> 00:21:36,480 dollar thing, a single time, you would think that it would, but then oftentimes you investigate 227 00:21:36,480 --> 00:21:41,680 these matters, and it is a different story, for example, we already produce enough food 228 00:21:41,680 --> 00:21:47,680 to feed everyone, many people die of starvation, but this is because of the logistics of the last 229 00:21:47,680 --> 00:21:53,520 mile problem, it's very easy to get the food almost anywhere, but to get it the very last 230 00:21:53,520 --> 00:22:00,320 mile, if there's no roads, and there's no police, and there's no safety, and there's no, you know, 231 00:22:00,320 --> 00:22:06,800 like electricity, there's no gas stations, it just can't get there, and 232 00:22:08,080 --> 00:22:13,440 so I think it's not always obvious how, what's best for everyone, that's 233 00:22:13,440 --> 00:22:17,840 certainly something people disagree about. I am definitely going to move to prediction markets, 234 00:22:17,840 --> 00:22:22,000 because we seem, I definitely disagree with what you say here, so let me move a little bit to 235 00:22:22,000 --> 00:22:28,720 prediction markets there, but it's good to disagree, and I think that, you know, trying to, 236 00:22:29,520 --> 00:22:35,360 I think alternatives is definitely why, for example, this industry attracts a lot of smart 237 00:22:35,360 --> 00:22:41,120 people, in my opinion, is being able to see the amount of alternatives, and hear them, 238 00:22:41,120 --> 00:22:44,960 and then make your own decision for whatever information you think is right. Now about 239 00:22:44,960 --> 00:22:51,120 prediction markets, I, like for all the listeners, definitely guys, please check the show notes, 240 00:22:51,120 --> 00:22:58,560 if you haven't familiar with the BIP300 or BIP301, you will find links and read about them, 241 00:22:58,560 --> 00:23:02,720 and some of them happened a while ago, so we're talking 17, 19, if I'm not mistaken, 242 00:23:03,280 --> 00:23:08,480 but it's interesting, I mean, well, prediction markets, because in my opinion, oracles and 243 00:23:08,480 --> 00:23:14,960 prediction markets, I myself wrote a piece about the same time, roughly 2017, 18, on that, 244 00:23:15,600 --> 00:23:22,000 on the fact that, in my opinion, prediction markets are actually the sort of cleanest example 245 00:23:22,000 --> 00:23:28,160 of a P2P communication, without having, you know, anybody else in between, because technically 246 00:23:28,160 --> 00:23:35,600 anything can be a prediction market. Now, has, what can you, for the listeners and for myself, 247 00:23:35,600 --> 00:23:40,000 in your own two words, like, just, I mean, you talked about a prediction market and what, 248 00:23:40,000 --> 00:23:47,760 how it can be beneficial, how is that idea currently, since you have came up with it, 249 00:23:47,760 --> 00:23:51,840 implemented or not implemented into the Bitcoin protocol, and what is happening with it? 250 00:23:51,840 --> 00:23:56,720 These are very different issues of, like, I champion this idea of the prediction market 251 00:23:56,720 --> 00:24:01,520 in abstract, and I think it's the best thing since, you know, basically, I think, to me, 252 00:24:01,520 --> 00:24:06,400 it's like the printing press, it's like writing, it's like spoken language writing, the printing 253 00:24:06,400 --> 00:24:10,720 press, the internet, like prediction markets, so I think, like, this is, like, the next big 254 00:24:11,520 --> 00:24:17,920 media thing. That's a very different conversation from how is it actually implemented in our current 255 00:24:17,920 --> 00:24:24,320 industry and, like, what changes would I make? What I've decided to do, I have made lots of 256 00:24:24,320 --> 00:24:32,960 presentations about this topic, and a lot of people have had some success doing something that I 257 00:24:32,960 --> 00:24:36,720 advocated. I'm not saying that they got the idea from me, but in the past, I said we should have 258 00:24:36,720 --> 00:24:42,080 completely decentralized blockchain prediction markets on Bitcoin. I said that, like, 2012, 259 00:24:42,080 --> 00:24:49,760 2013, but I also said we should have, like, someone can kind of cut the corner of the Oracle and just 260 00:24:49,760 --> 00:24:54,320 do it, and they can create, I actually told many times we should have, like, oracle.bitcoin.com 261 00:24:54,320 --> 00:24:58,560 or something like that. There was this project Reality Keys by Edmund Egger and some other 262 00:24:58,560 --> 00:24:59,600 things. So, 263 00:24:59,778 --> 00:25:26,778 I think you could cut the corners and just start doing it, to just get the word out there about this institution, and some people have done that, including, I guess, Polymarket would now be the, sort of, the bigger one. I have a different conception of how to make this idea work, having seen countless ideas fail, and I even wrote, like, a little paper, like, the graveyard of prediction markets, like, how to make this idea work. 264 00:25:26,778 --> 00:25:27,658 The way most people emails me is 265 00:25:27,658 --> 00:25:31,058 they say, like, it failed because the resulting market failed because the underlying market, like that, 266 00:25:31,058 --> 00:25:35,498 it's got like oracles or rockets, or something, because this idea is trying very often, 267 00:25:35,498 --> 00:25:43,058 and then it fails, and I have just a huge, like, 268 00:25:43,058 --> 00:25:49,618 amount of, like, background knowledge and, like, notes about that. 269 00:25:49,618 --> 00:25:54,098 You can go to bitcoinhivemind.com, just like my side and I have, like, other papers there, 270 00:25:54,098 --> 00:26:02,978 and look, and operate, and then try that, because I have had mixed results in explaining what to do to other people, 271 00:26:02,978 --> 00:26:07,738 but I realize it's not a great answer for anyone who's listening who'll just be kind of confused by that. 272 00:26:07,738 --> 00:26:13,138 But some things that are under-emphasized are the multidimensional markets are, they are confusing, 273 00:26:13,138 --> 00:26:17,858 but I think people will figure them out, and when they do figure them out, they will like them a lot. 274 00:26:17,858 --> 00:26:24,418 For example, they allow you to bet in U.S. dollar terms or in ETH terms or in BTC terms. 275 00:26:24,418 --> 00:26:30,578 You can just switch by adding that as a dimension to the markets, so that would be big. 276 00:26:30,578 --> 00:26:38,298 But the other thing is with the market scoring rules that people have started to use, again, after I sort of suggested this, 277 00:26:38,298 --> 00:26:46,578 Robin Hanson invented this thing, logarithmic market scoring rule, and then it sort of passed into the Ethereum community. 278 00:26:46,578 --> 00:26:50,938 These allow you to just stack all these dimensions together without losing any liquidity, 279 00:26:50,938 --> 00:26:57,378 so the user experience can be made to not even notice that these are there, and now you can bet on all kinds of combinations of events. 280 00:26:57,378 --> 00:27:02,858 So the idea of this is, like, is one event related to another event? 281 00:27:02,858 --> 00:27:11,858 You say, well, actually, in America, if Donald Trump is elected or if the red team, if the Republican Party is elected, 282 00:27:11,858 --> 00:27:15,658 will the price of Bitcoin go up relative to the Democratic Party? 283 00:27:15,658 --> 00:27:23,898 And you just see at a glance, you can just see, there's no longer a need to debate or you just say, OK, well, if I vote this way, 284 00:27:23,898 --> 00:27:27,658 that would be better for the Bitcoin investment. What will be better for the stock market? 285 00:27:27,658 --> 00:27:31,858 What will be better for the, you know, anything else that you can measure? 286 00:27:31,858 --> 00:27:35,858 It doesn't have to be financial. So that's the key. 287 00:27:35,858 --> 00:27:39,778 Another thing that is related to that is the idea of liquidity. 288 00:27:39,778 --> 00:27:48,498 This is always killing the prediction markets, but it's actually easy to convert the liquidity problem into just something of just lacking money. 289 00:27:48,498 --> 00:27:52,218 And then it's very easy to solve with a different thing. 290 00:27:52,218 --> 00:28:00,698 I realize this is kind of not a great explanation, but that's part of why I think I just need to make the software as a demonstration. 291 00:28:00,698 --> 00:28:06,658 It's good. It's good. It's good. I think that, you know, for people who are not familiar with it, what you're explaining will help. 292 00:28:06,698 --> 00:28:12,498 And of course, if anybody wants to check it out, they just go and follow the links, like I said, and read the story. 293 00:28:12,498 --> 00:28:21,698 Because, I mean, there is a lot of implementations of oracles and prediction markets and not just on Ethereum, 294 00:28:21,698 --> 00:28:25,418 but on various ecosystems and outside of blockchain as well. 295 00:28:25,418 --> 00:28:31,298 So I definitely highly suggest for people who are listening to this and curious, please go and check it out. 296 00:28:31,338 --> 00:28:34,738 I have a different question for you about L2s now. 297 00:28:35,938 --> 00:28:48,658 Being sort of a champion in, you know, one of the initial ideas of L2, I guess, or I can see how from what you have been saying a long time ago, 298 00:28:48,658 --> 00:28:51,698 some of those L2 ideas could have came up today. 299 00:28:51,698 --> 00:28:55,458 Like, I'm going to again, once again, be a devil's advocate here, but I want to hear your opinion. 300 00:28:56,018 --> 00:29:02,698 Like, you know, L2s have been around around Bitcoin, especially for a long time, with Lightning Network is the most famous one. 301 00:29:02,698 --> 00:29:10,218 And now I don't know how whoever is listening to this thing, what they think about Adam Buck, unfortunately. 302 00:29:10,218 --> 00:29:12,058 Well, you know, facts in the eyes. 303 00:29:12,498 --> 00:29:23,898 It's a centralized piece of shit software today, at least semi-centralized, you know, that hasn't really done what it set out to do. 304 00:29:23,898 --> 00:29:26,018 And the same goes for, you know, Ethereum. 305 00:29:26,018 --> 00:29:32,898 They have like, you know, we have, they, we, whatever you want to say, there is about 70 L2s now on Ethereum or something like this. 306 00:29:32,898 --> 00:29:33,898 It's ridiculous as fuck. 307 00:29:34,258 --> 00:29:43,018 So the question is, like, the whole L2, like, thing, how do users choose? 308 00:29:43,218 --> 00:29:45,258 Do they just follow the same rules as with L1s? 309 00:29:45,258 --> 00:29:54,858 Or do they just, like, go by the longest chain and see which L2 generates more, I don't know, revenue or more volume or whatever? 310 00:29:54,858 --> 00:29:58,258 How do users understand that L2 is good to use? 311 00:29:58,618 --> 00:30:07,578 And if there is many, how do they, you know, decide which one is better for them or will be, will keep their money safe sort of? 312 00:30:08,098 --> 00:30:23,818 Yes, well, of course, the idea of the L2 goes back to this, this model of the internet where there's like the, the data that like the, there's like layers where there's like physical layer, like a wire is plugged in, like the ethernet cables are connecting the two computers. 313 00:30:23,818 --> 00:30:28,578 And then there's like, eventually, so these layers, it's like, you start electricity flowing, it's their data going back and forth. 314 00:30:28,938 --> 00:30:37,818 Then there's like, connection, like, so like, to compute, like you and I, our computers are connected, not directly, we're connected very indirectly. 315 00:30:37,818 --> 00:30:48,738 But the whole, the whole premise of the internet, of the packet switching is that you and I have a connection that will survive even if many of the routes along the way get interrupted, someone shuts the computer off. 316 00:30:49,178 --> 00:30:51,258 We don't even notice because the packets are streaming across. 317 00:30:51,418 --> 00:31:03,858 So the idea is that the internet scales in these layers, and that, you know, Bitcoin can only do seven transactions per second, everyone needs to have all the blocks and the entire history. 318 00:31:04,818 --> 00:31:07,538 So that's not ideal at all. 319 00:31:08,058 --> 00:31:13,818 That is, will only be one layer, and then we'll have a layer above, it's called layer two. 320 00:31:14,258 --> 00:31:21,898 But really, of course, it would be like layer, like whatever, like 18, or something in the whole, the whole scheme of just everything in the world is built with layer. 321 00:31:22,138 --> 00:31:25,138 So that's just the layers story. 322 00:31:26,418 --> 00:31:35,018 If in the abstract, but specifically, many of the layer twos are today are, they're just not very good. 323 00:31:35,018 --> 00:31:37,018 So just because something's layer two doesn't mean it's good. 324 00:31:37,018 --> 00:31:46,778 Like, if you go to a bar, and you order a drink, you order a few drinks, you have a bar tab, they keep track, and then they don't charge you, don't charge your card until the end. 325 00:31:47,658 --> 00:31:48,978 That's kind of a layer two. 326 00:31:49,378 --> 00:32:03,938 But you can see that that is something of sort of a cheating, you know, it's like, it's just assuming that it sort of spoils the problem in a way it says, well, how do we well, we just we'll just have one guy do it. 327 00:32:04,258 --> 00:32:06,098 You know, have one guy just keep track of it all. 328 00:32:06,818 --> 00:32:08,458 And then whatever he says goes, right? 329 00:32:08,458 --> 00:32:29,818 Or if you just run out the door and call the credit card company and say that my card was stolen, then they'll so many of these L two's or something like that, where it's just the money all goes to one person or a small desig, which is a fancy way of saying one person in practice, because it's just like one organization of people. 330 00:32:29,818 --> 00:32:34,578 So they'd say that this matters, but in reality, it makes no no real difference. 331 00:32:35,338 --> 00:32:42,658 Since the regular the average person has no idea how these keys got to the people they don't know to ski ceremony, no one knows, no one cares. 332 00:32:43,658 --> 00:32:44,338 So 333 00:32:45,498 --> 00:32:48,698 just because something's an L two doesn't mean that it is a good design. 334 00:32:49,138 --> 00:33:00,858 The idea, my view is actually that almost all the L two's designs will also be will also fail and be deleted, and only one or two will actually remain in use. 335 00:33:01,138 --> 00:33:17,578 And this is actually kind of similar to how in the internet stack, you know, you could have you we have different things like we have Wi Fi, in addition to Ethernet cable, and it is possible to have other cables, you know, coaxial cable type of a thing. 336 00:33:19,218 --> 00:33:29,538 But really, there are only so many, you know, there's really it's not like there's like 50 different Ethernet cables, you know, at different types of different shapes, and they have different plugs. 337 00:33:29,778 --> 00:33:35,978 Really, it's like one idea is just the best for that layer, and it will win, and the others will lose. 338 00:33:36,338 --> 00:33:44,378 And I think, in particular, any idea that does not pass its fees down faithfully to the L one miners will probably lose. 339 00:33:44,378 --> 00:33:54,538 So that would include all the centralized ones, unless they have some kind of way of tallying, you know, and reporting faithfully, and guaranteeing that they will report. 340 00:33:55,018 --> 00:34:10,258 You know, it's like, is it as if the bartender is going to keep track and say to visa, listen, this was actually eight purchases, not one, so I'm going to pay you eight times as much fees, you know, and it's just on the honor system, like, so I don't think that's going to work. 341 00:34:11,258 --> 00:34:11,778 And 342 00:34:13,018 --> 00:34:19,018 the things like lightning, liquid liquid, the fees actually go to a wallet controlled by Blockstream. 343 00:34:19,018 --> 00:34:32,858 So they, as it's currently set up, they pay 0% of the fees is lightning network, as it's currently set up a 0% of the fees, when people join and leave the L two, and they lift or fall, they sometimes call peg in peg out, but that's awkward. 344 00:34:32,858 --> 00:34:38,418 So I think lifts to the L two, or fall from withdraw from the L two back to the L one. 345 00:34:40,658 --> 00:34:44,618 That they pay the L one fee, but that's because those events happen on L one. 346 00:34:45,498 --> 00:34:54,658 So I think what we need is the L two that pays is incentive compatible, because then the miners will be cheering it on, they'll make more, they know that they make more money when the L two is more successful. 347 00:34:54,858 --> 00:35:00,778 I think that's the those are the ones that are viable, including the Drivechain at 300 301. 348 00:35:01,778 --> 00:35:18,938 So that's what I think actually will win. And I think all these other L two designs will probably not survive now label, they're not including the lightning network, I think the lightning network has we've seen, it always had a lot of theoretical questions, but now we have seen 349 00:35:20,218 --> 00:35:20,578 like, 350 00:35:21,298 --> 00:35:21,818 like, 351 00:35:23,418 --> 00:35:34,418 the many of these problems have come to light. And then many of the centralized the fake custodial lightning, which is fake lightning, it's not real light, it's not, it doesn't have Bitcoin, actually, or lightning at all. It's just 352 00:35:36,258 --> 00:35:41,058 a front end interface for like a server. It's like the bar tab and extremists. 353 00:35:41,738 --> 00:35:52,778 And some of those like Walter Satoshi got pulled from the App Store. So they those have just been killed. So I think I think that there will be more death in the L two space. I'll just be Yeah. 354 00:35:54,178 --> 00:36:09,298 So yes, I think those will be gone. I think they'll just be one that one model that survives. Eventually, I saw, I saw yesterday, I think on Twitter, I'm sure it was yesterday. So today, just as again, for the listeners, like it was 1615 of the same December, sorry, 355 00:36:09,578 --> 00:36:22,938 September, when I saw this on Twitter. And what do you think about what I saw was the first at least, okay, this is the advertisement, I have to say, I didn't go and check like, you know, the documents or the website, even I just saw this tweet of 356 00:36:22,938 --> 00:36:38,738 a big account, the first layer three for Bitcoin, and they were deadly serious, these guys were like, you know, we are but what do you think of that? Do you think it's viable in the future? Or do you think those ideas of layer 3427 is already like, you know, 357 00:36:38,738 --> 00:37:08,618 of course, there will be it's, it's trivial to add the layers, actually, but they have to be good. So that's sort of sort of what I was trying to emphasize with the bar tab example is that you can imagine a situation where I'd like two different people open a bar tab. They go to the same bar. And then one person, this often happens with friends, one person says, Oh, I'll get this round. And then says, I'll get the next round of drinks. That's like a layer three, really. Because you're saying we will put what we will put 358 00:37:08,618 --> 00:37:37,738 on the tab is, so it's trivial to actually add more layers. But the problem is, are the layers any good? Now, when you're interacting with a friend that you've known for a long time that you plan on interacting with for years afterwards, there is this is called the folk theorem in game theory about the repeated interactions impose discipline, because you have so much to lose. By betraying the person, you have a friend that you like, and then that you'll lose if you betray them. And so this 359 00:37:38,098 --> 00:37:51,138 induces people to act with your best interests in mind. And it does folds the field of game theory out, it says like you're no longer in an adversarial situation, you and the other person are on a team now, because you'll interact with them. 360 00:37:51,138 --> 00:38:21,058 So in that case, the trust is warranted. And similarly, for the bar tab, it's just since you're physically there, and everyone sees you and you have like a reputation in the town, and they don't want to call police, and it's not worth it for such small amounts. So when you have the trust, you can use trust you cheat. But you will you cheat, you don't need to solve the problem. But it's when so there's no such thing as the first layer three, there would have been many, you know, many such instances of people saying, Oh, I'll get this round of drinks. 361 00:38:21,138 --> 00:38:45,618 And agreeing that they have lightning channels open, and they're debugging the software. And they say, Oh, can you send me some testnet, like coin light lightning coins or something. So the, there is no such thing as having the first layer three or layer four, or whatever, that is not a good criterion. The only criterion is, does the design solve a problem that is unsolved? 362 00:38:45,778 --> 00:39:13,938 And I guess like, you know, you spoke in, well, you spoke, you wrote BIP301, you know, and you mentioned, merged mining, which is, of course, a logical economical incentive. Now, today, I want to ask you a question today. And again, once in your feeling or so in your opinion, I mean, you know, your surroundings, 363 00:39:14,498 --> 00:39:27,458 what role, because merge mining, I'm not talking about, of course, merge mining for layer two is like merge mining, in general, the whole idea of merge mining has existed, at least since I don't know, 2010, 15, since I remember it, but 364 00:39:27,458 --> 00:39:57,298 it's how she invented merge mining before he left, and he even co developed the first okay, altcoin, which was Namecoin, and Namecoin has been merged mind on the Bitcoin network. Yes, continuously since 2011. Miners can still get an extra, you know, extra little bit. I don't know what it is. Now used to be like five, the big, the Bitcoin block used to be worth like $7,000. And the Namecoin block was worth like $5. So now the Bitcoin block is worth who knows, you know, it's like, 365 00:39:58,018 --> 00:40:08,818 I guess it'd be worth like, you know, basically like 200 $300,000, something like that. And the Namecoin block is worth I don't know how much probably like a similar proportion. I don't know. 366 00:40:08,898 --> 00:40:20,898 That was actually the question, though. It was like, what role today is very small, but in the future, it will be life or death, and it will be much more than 99% of minor revenues will come from merge mining is my prediction. 367 00:40:21,298 --> 00:40:35,458 So my prediction is just that we haven't reached the point where the merge mine chains generate the fees. This is just I think this is all I think this is inevitable. And in fact, it's the hours is nigh. 368 00:40:37,138 --> 00:40:49,138 But this is a so far fringe point of view. But I think it's I don't see there's no reason why I would not I mean, miners get more money in return for doing nothing. 369 00:40:50,098 --> 00:40:54,258 Users get the ability to transact more at a lower fee. 370 00:40:55,458 --> 00:41:05,858 They did the exchange rate risk is insulated from them, they get to unite under one project that will win thus reducing the risk of the whole thing failing. 371 00:41:06,898 --> 00:41:13,058 These are just obvious, like good ideas to me the fact that we had more than 60% 372 00:41:14,018 --> 00:41:22,498 mining participation with merge mining back when it was only $5 of like a $7,000 package. 373 00:41:23,698 --> 00:41:34,258 That suggests that when it will eventually be more than 100% of the L1 total fee revenue or total block reward as the subsidy halves, there will be only fees so 374 00:41:34,738 --> 00:41:40,498 then there will be enormous adoption of merge mining and once people figure it out once the miners are very 375 00:41:41,778 --> 00:41:56,818 you know, no offense, they're very inept as far as the what happens with the software, they're very skilled when it comes to finding cheap power, you know, working hard, they have their own arena that they fight in and they fight 376 00:41:57,298 --> 00:42:13,778 they compete against other miners to mine so they're very good at that, but they don't really realize that these things are possible that will grow the pie enormously for the whole industry, they just don't I from firsthand experience I've spoken to many of the mining 377 00:42:14,498 --> 00:42:30,258 pools and their CEOs and their CTOs and they just don't understand it yet. Some of them do, of course, but I think this is just in the process of changing. It's just on the cutting edge. 378 00:42:31,058 --> 00:42:43,298 I would tend to agree. I mean, as much as the developers listening to this will hate me, but you know, it's kind of like developers in trading, you have your own arena, but when it comes to trading, unfortunately, most developers tend to 379 00:42:43,858 --> 00:42:54,178 there is a lot of funny stories, I know, anyways, very sad, but funny stories, but we will not go into them, you know, but about, you know, merge mining and about I want to ask about security and about the consensus. 380 00:42:54,898 --> 00:43:12,658 And so, because in proof of stake, for example, there is similar, slightly similar to merged mining, which shared security, I guess, and is the concept where validators, you know, can be hired by smaller networks from bigger networks. 381 00:43:12,658 --> 00:43:26,498 And, you know, sort of, but it hasn't also code owned that much. Now I'm wondering, now I am actually a self-hosted bare metal validator for we have our own equipment. We don't go by a data center. 382 00:43:26,498 --> 00:43:47,698 So I kind of understand the game, but, well, it doesn't like to think so. But, you know, the question is, why do you think still, because what you say has every single sense to it, right? Merged mining, more profit, shared security, more profit, less work, more profit. Why doesn't it catch up until now? Neither. And we talk about merged mining, of course, you know, stick with that. 383 00:43:47,698 --> 00:43:56,418 I didn't understand exactly what you meant. You mean the idea of a version of proof of stake that what specifically are you asking about? 384 00:43:56,978 --> 00:44:08,498 So basically, what I'm asking about is why you think it doesn't catch on the idea of merge mining until now or shared security, because I was just saying that shared security in proof of stake is very similar. 385 00:44:08,498 --> 00:44:27,538 But there is also a lack of adoption, so to speak. I mean, it's quite a recent thing still in proof of stake. But what I'm trying to say, in my opinion, merge mining is the first logical step. If I was a miner or if I'm a validator, those are logical steps. Now, why they don't catch up until now? 386 00:44:27,538 --> 00:44:53,058 Yeah, I don't know. But I do have some guesses. I mean, I certainly spent a lot of time in the Bitcoin community, and I am very familiar with Bitcoin culture. Bitcoin culture, as you probably know, it just, at this point, presumes that Bitcoin will be the winning coin. And it doesn't need anything else. It doesn't even need adoption. Like those people come crawling back, you know, and they want to get into the Citadel or something. 387 00:44:53,138 --> 00:45:05,218 So there's an enormous amount of overconfidence and complacency and just total obsession with the idea that Bitcoin is perfect the way that it is, and it's just the price is going to keep going up. 388 00:45:05,218 --> 00:45:27,298 And most people have bought into that, or at least they, I think it's even worse where most people subconsciously believe it, where they actually, they don't even really realize that this is what they're doing, which I think is truthfully the case, including many large miners, you know, mining pools. 389 00:45:27,298 --> 00:45:54,098 I think they wake up in the morning and they just think, okay, I hope, what's the latest, you know, Michael Saylor presentation or what's the latest meme that will pump the coin? They don't even realize, I think they don't even realize that they're doing it. And it would never even occur to them to say, like, how can we get more adoption? Because more adoption means more transaction fees, which means more revenue. It means more notoriety for the coin. They just don't think that way. 390 00:45:54,098 --> 00:46:12,498 So the culture, as is usually the case, the culture is operating on a subconscious level for many people. They don't even realize, you know, why are they going to church? Why are they going to the NFL? Why is it important that their kids go to school? They don't even really realize why they're doing it. 391 00:46:12,498 --> 00:46:27,458 You know, there could be really good reasons. But I do think the Bitcoin culture is not set up to reward merge mine transaction fees, because that would involve a different chain. And they think that the chain they have is perfect. So that's my guess, I would say, is the current headwind. 392 00:46:27,458 --> 00:46:56,098 It's a very interesting, like, I think it probably has a lot to, I mean, you saw me agreeing there. So I definitely think that it's growing from there. Because I can tell you that I know at least one very, like, person who introduced me to crypto. This was many years ago, so 2011, roughly. And the person, you know, went in cycles of like, Bitcoin altcoins, Bitcoin altcoins. 393 00:46:56,418 --> 00:47:17,538 But today, what you said describes, I think, that person perfectly. They are not aware of the fact that they believe in that. They and they live their life. But everything they say when you talk to this person, just keeps on, you know, kind of pile up on this idea. It's perfect. It doesn't need any improvement. It will finish like that. And yeah, it's a weird thing. 394 00:47:17,538 --> 00:47:44,338 And this is actually, I guess, kind of like my last question. We're coming up to an hour here. But to ask you a little bit about that, again, in your own words, you mentioned it at the very beginning of the conversation, the Bitcoin maxi attitude. And at least from my perspective, somebody, you know, who, at least I like to think I've been here long enough to see different behaviors. In my opinion, I see a shift. I see a change, a small change. 395 00:47:44,338 --> 00:48:06,978 There is, of course, the traditional Bitcoiners, you know, like, OK, guys, we are here and nothing will move. We are a wall, you know, like between East and West Berlin and nothing will break us. No Soviet Union will collapse here. And then, you know, you see now on Twitter, especially, unfortunately, Twitter is still being, you know, number one kind of platform to get our unusable crypto until 2024. 396 00:48:06,978 --> 00:48:28,418 But, you know, you see that you kind of feel that there are people, for example, you know, I'm having you on, I've had Vlad on, I've had a couple of more people who are proclaimed Bitcoiners on the show who don't speak solely about Bitcoin. They're starting to sort of like expand, you know, whatever they think can be beneficial to the Bitcoin network itself and for crypto in general. 397 00:48:28,418 --> 00:48:42,658 Now, the question, in short, do you think that that attitude of the maxi logic, is it changing? And if it is or if it's not, what do you think can, where is it going or what's going to happen with it in five years? I don't know, like a general. 398 00:48:42,658 --> 00:48:54,658 I think it has gone wrong and I think it will be fixed before. I don't think even five, I think three, I think, I don't think it can go the way it's going for another three years. So maybe I'm wrong about that, but I don't think so. 399 00:48:54,658 --> 00:49:08,898 The world of software is just too competitive. The original maximalist view that, I mean, I would have proudly adopted and sort of still adopt, you know, it's like 2014, 2015 and earlier, because, of course, it starts to shift. 400 00:49:08,898 --> 00:49:23,938 This is like the block size war sort of shifted it, I think, is the issue. But basically, the old view was something like, there's nothing wrong with like, it's like we were all in different plots of land or something. It was like, here we are in Bitcoin. 401 00:49:23,938 --> 00:49:48,978 We have a lot of work to do to make Bitcoin a success, but there's nothing inherently wrong with this plot of land. It's not like we should move to somewhere else. We just have to start over there. You know, we have to start over, build the power plant. It's like we're playing Sim City or something. We have to build the power plant. We have to build the roads. We have to build the skyscrapers. We have to build the universities. We have this big project here. 402 00:49:48,978 --> 00:50:00,258 So, but it's not like if we just move to Litecoin, it'll be better because of the faster block time. That everyone rightly called that view out as just being, 403 00:50:00,878 --> 00:50:08,878 a flimsy pretext for pumping the Litecoin price and it had nothing to do, and of course, it raised far more questions than it answered, like, if we move to Litecoin, why not move to something else? 404 00:50:08,878 --> 00:50:20,878 And if the shorter block time is good, why not make it like one second block times? And there were people who did this. It was like Litecoin, Fabricoin, et cetera, on and on and on, Dustcoin, on and on, exactly as you'd expect. 405 00:50:21,878 --> 00:50:35,878 Similarly with Bitcoin Cash, it was like, okay, the block size limit is raised, but then why not raise it again? And then as Bitcoin SV, it was like, why not just completely remove it? And, you know, why not hard fork more times? 406 00:50:35,878 --> 00:50:47,878 So this was the old critique that all of that stuff was just nonsense, which I really kind of think it was, but that never meant like that the city on day one is already perfect. 407 00:50:47,878 --> 00:51:01,878 And that, because no one would believe that because back then it was so small that you couldn't, it was again, subconscious. Everyone, when you showed up, you looked around and you saw, okay, this place has potential. 408 00:51:01,878 --> 00:51:13,878 But right now it's, no one has heard of us, CNBC is laughing at every, they ever mentioned, there were sites, I think it was called like bitcoincharts.com or something. 409 00:51:13,878 --> 00:51:27,878 It had a little news panel. And if anyone mentioned Bitcoin anywhere in any kind of like internet article or whatever, they would show up there and you would like refresh the page hoping for like maybe one a week, one a day. 410 00:51:28,878 --> 00:51:43,878 You know, and you'd refresh the page and you'd say, is anyone out there going to mention Bitcoin? So it was so small back then that no one would say, oh, it's, it's, it's, we take it for granted that this is, it's going to be hyper-Bitcoinization and there's going to be the Citadel. 411 00:51:43,878 --> 00:51:50,878 Everyone was worried all the time that it would just go to zero or that they would just like, no one would care or that something else. 412 00:51:50,878 --> 00:51:56,878 So again, it was subconscious that the idea that we're going to have to fight to make this a success and then it achieved more success. 413 00:51:56,878 --> 00:52:08,878 And then a bunch of people who joined, you know, in the last three years who don't know anything, they kind of just think, okay, the, the, the, the pitch to them was just buy this coin and you'll make a lot of money. 414 00:52:08,878 --> 00:52:14,878 So that's, that's kind of like why the Maxie idea has completely shifted to that. 415 00:52:15,878 --> 00:52:20,878 And that won't work. That, that is the unsinkable Titanic, so to speak. 416 00:52:20,878 --> 00:52:29,878 You know, that is the hubris that is, you know, I compared to Star Wars episode one or whatever, everyone thought it, you know, they thought the Titanic, they thought Rome would never fall. 417 00:52:29,878 --> 00:52:31,878 They thought the Titanic would never sink. 418 00:52:31,878 --> 00:52:38,878 And they thought everyone thought Star Wars episode one would be like a huge success because George Lucas was personally involved, et cetera, et cetera. 419 00:52:38,878 --> 00:52:40,878 He had on the CGI that he could want. 420 00:52:40,878 --> 00:52:43,878 And of course it's, you know, it's basically terrible. 421 00:52:43,878 --> 00:52:49,878 So this overconfidence and complacency is exactly what will, exactly what doesn't work. 422 00:52:49,878 --> 00:53:00,878 And it is inevitable that it will produce mistakes that will either kill the project or just have the culture be defeated. 423 00:53:00,878 --> 00:53:13,878 You already see it to some extent where the Ordinal stuff was an attempt to break away from the death cult of like, this is already perfect complacency and just do something fun, something that was new and fun. 424 00:53:13,878 --> 00:53:26,878 And that actually involved using the software because related to the L2 point is, is that the more things that the good model can do, if there's good software out there that does certain things, then the fewer scams people can get away with shilling. 425 00:53:26,878 --> 00:53:28,878 Because they say, here's the thing that already works. 426 00:53:28,878 --> 00:53:33,878 You can't sell someone like a word processing scam if they have Microsoft Word and Google Docs. 427 00:53:33,878 --> 00:53:36,878 Those stuff's already out there for free. 428 00:53:36,878 --> 00:53:41,878 So the Ordinal's people were just saying, OK, we want to use the software and have fun. 429 00:53:41,878 --> 00:53:48,878 And this was initially met with hatred and revulsion by many of the loud cultural people. 430 00:53:48,878 --> 00:53:53,878 But since it had real users and it paid fees, the miners were just like, OK, we're collecting the fees. 431 00:53:53,878 --> 00:53:58,878 And also it was like it would sell tickets to the conferences. 432 00:53:58,878 --> 00:54:04,878 So the conference people realigned to promote this type of thing, to promote actual users with actual customers. 433 00:54:05,878 --> 00:54:21,878 A lot of people, for example, I mean maybe I shouldn't list the examples, but a lot of people have said like one example was that like Safety and Amuse pulled out of the Bitcoin conference saying that he didn't want because it was shilling junk. 434 00:54:21,878 --> 00:54:26,878 Which was what he meant like the Ordinal's and it's no longer consistent with his brand or whatever. 435 00:54:27,878 --> 00:54:34,878 But the conference ended up doing very well and eventually attracted Donald J. Trump as the speaker. 436 00:54:34,878 --> 00:54:37,878 So it became enormously prestigious. 437 00:54:37,878 --> 00:54:42,878 And then all those people had to kind of come crawling back and say, oh, that they wanted to bury the hatchet. 438 00:54:42,878 --> 00:54:47,878 I don't think Mr. Amuse was one of them, but I know a lot of people. 439 00:54:47,878 --> 00:54:52,878 I just know from talking to the organizers of the conference, I've been involved with that conference ever since it was created. 440 00:54:53,878 --> 00:55:00,878 And so I just know some of the people there and they told me all about how these people angrily left before over this Ordinal's drama. 441 00:55:00,878 --> 00:55:03,878 Remember, this was like some big issue like two years ago. 442 00:55:03,878 --> 00:55:07,878 The fact that Eric Wall was allowed on stage in a wizard costume. 443 00:55:07,878 --> 00:55:14,878 This is like the guy was foaming at the mouth swearing on Spaces saying this is ruining the generational wealth of Bitcoin. 444 00:55:14,878 --> 00:55:19,878 And Bitcoin is something for his kids to save them from dying in poverty. 445 00:55:19,878 --> 00:55:25,878 And how can they disrespect him by allowing him up in a wizard costume and like just crazy people. 446 00:55:25,878 --> 00:55:31,878 And then that's revealed for how absurd it is. 447 00:55:31,878 --> 00:55:35,878 And then normal people don't want to interface with that. 448 00:55:35,878 --> 00:55:40,878 And so then nature sort of heals itself when the conference is a big success. 449 00:55:40,878 --> 00:55:43,878 More of a success because people are actually doing things they like and having fun. 450 00:55:43,878 --> 00:55:48,878 Then those people come crawling back and they say, oh, you know, I don't know what came over me. 451 00:55:48,878 --> 00:55:51,878 So we're going to hear a lot of that, I think. 452 00:55:51,878 --> 00:55:54,878 Well, I hope you're right. 453 00:55:54,878 --> 00:55:59,878 I hope that, you know, we keep on progressing as an industry, no matter what we do. 454 00:55:59,878 --> 00:56:05,878 No matter, you know, whether we're talking about, you know, merge mining, shared security, less maximalism, 455 00:56:05,878 --> 00:56:10,878 more prediction markets and more, you know, more decentralization or whatever. 456 00:56:10,878 --> 00:56:13,878 I hope that we keep progressing in all directions. 457 00:56:13,878 --> 00:56:17,878 And I want to thank you very much, Paul, for finding the time for the hour. 458 00:56:17,878 --> 00:56:24,878 And I hope even the disagreements, you know, we can still see that as an industry, 459 00:56:24,878 --> 00:56:28,878 our goal is definitely to keep on going, not just to disagree. 460 00:56:28,878 --> 00:56:34,878 Disagreement is good. Consensus might work great for the blockchain, but for humans, it is the kiss of death. 461 00:56:34,878 --> 00:56:37,878 So thank you for your polite disagreement. 462 00:56:37,878 --> 00:56:39,878 Yes, I agree. Thank you, Paul. 463 00:56:39,878 --> 00:56:41,878 Please don't hang up just yet. This is just a goodbye for the listeners. 464 00:56:41,878 --> 00:56:44,878 So everybody else, thank you for tuning in and see you next week.