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Welcome to Drivechain Twitter Spaces.

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This is Henry of LayerTwo Labs.

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Today is March 23rd, 2023,

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and we are excited to have another Drivechain conversation.

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Today we'll talk about anything the crowd wants to talk about.

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Bitcoin's fungibility and how that could be enhanced through

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the Zcash sidechain called zSide.

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There's also enormous on-chain scaling potential

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with the Thunder sidechain,

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and that would have big blocks as large as one gigabyte per block,

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so an enormous amount of on-chain onboarding potential there with Thunder.

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There's also the very exciting Hivemind peer-to-peer Oracle network

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that would be enabled through the Bitcoin Drivechain called Hivemind,

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and also DNS on the BitNames Drivechain

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could be enormously influential in the realm of naming, domain, and identity.

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There are many more planned Drivechains,

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each of which is a peer-to-peer sidechain that would be

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potentially tremendously valuable to Bitcoin's growth

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and centrality in the blockchain space.

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The goal here is, of course, to have every great blockchain idea

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be a Drivechain, be a Bitcoin sidechain.

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Instead of being an altcoin.

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So instead of great ideas being built on altcoins,

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we would have them all built on Bitcoin or copied onto Bitcoin sidechains

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instead of existing only as an altcoin,

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and then Bitcoiners can use these projects.

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Instead of having to sell their Bitcoin for an altcoin,

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they could just continue using Bitcoin,

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and that's the vision of Drivechain.

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Well, as the audience grows,

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all are welcome to come up to the stage, ask questions,

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and vibe with me up here if you'd like.

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I imagine we'll have more people joining,

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and all are welcome to come on up.

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All right.

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All right.

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All right.

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I've invited a bunch of the usual suspects to join.

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Mike Tidwell, Moon Settler, Super Testnet, Post Capone, and others.

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There are a lot of great people who talk on Drivechain Twitter spaces,

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and I've enjoyed all the conversations we've had.

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Hopefully some of those can join today,

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talk about the latest developments.

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There always is some new development, something going on,

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something happening,

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someone cooking up something to chat about.

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I think we should add a tweet to the nest,

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something for conversation.

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There have been a bunch of great posts by Adam Back,

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the head of Blockstream, about Drivechain.

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Two of my favorites are one where he talked about big block Drivechains,

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which are simply a clone of Bitcoin but with larger blocks,

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and it would exist as a sidechain.

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This would enable big blockers to remain within Bitcoin BTC

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and use the sidechain rather than go to an altcoin like BSV or BCH.

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In one of these tweets that Adam has written,

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he talked about Drivechain favorably to Roger Ver.

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Another time that Adam talked about Drivechain was in reference to Zcash

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and how it would be great to have a sidechain for privacy

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instead of having privacy enthusiasts use an altcoin.

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We have a request.

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Welcome to the stage.

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Oh dear.

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Is there a problem with connecting?

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This has been going on for a while where people are unable to connect.

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This has been going on for a while where people are unable to connect.

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All right,

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hopefully some people will join.

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Sometimes we just hang out here and chat the whole time.

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Sometimes we have a whole bunch of people joining.

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Who knows what the future

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holds?

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Oh, we have a new entrance to the space.

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Hello Malcolm. Come on up if you'd like and

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Ask a question or chat about any ideas or thoughts you have about Bitcoin.

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Sorry about that echo.

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I had my laptop on at the same time as my phone.

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So I'll invite you up, Malcolm.

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Let's see. Invite to speak.

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What a rare opportunity.

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You get to have the entire Twitter space to yourself.

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Say whatever you want.

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Welcome to the stage.

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Thanks for joining this very intimate gathering.

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What's up, man?

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Hey, hi.

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Thanks for bringing me up.

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I just got into this space because I was interested in listening and learning a little bit more about drivechains.

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And I don't think I quite understand how they work in the whole Bitcoin ecosystem compared to, say, the Lightning Network.

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So, yeah, I'm very interested in learning, mostly.

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That's great.

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The Lightning Network is a different technology than drivechain.

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What drivechain is focused on is what's called sidechains.

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So a drivechain is a sidechain that uses BIP300 and BIP301.

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And the Lightning Network doesn't require any new BIPs.

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Lightning was enabled in part through the SegWit upgrade for Bitcoin.

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And drivechain, similarly, is a technology which is enabled through an upgrade to Bitcoin that has not yet been adopted.

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So BIP300 and BIP301 are the two upgrades that drivechain would require.

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BIP300 is the one which is most important, which is the hash rate escrow.

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So a hash rate escrow is a miner controlled two-way peg for Bitcoin so that people can send their Bitcoin to an address.

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And as a result of that, that person would receive a token on the sidechain.

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And then when they're finished with that token, they send it back to an address and then they receive layer one Bitcoin.

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So that's called a two-way peg.

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And what it results in is people being able to use a protocol on Bitcoin that's different than Bitcoin layer one.

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And that protocol is the sidechain or the drivechain, you could say.

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And they're able to use that protocol and have the native account on the sidechain be a synthetic Bitcoin.

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So there's no altcoin involved. There's no speculative token.

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Because the native token on the sidechain trades one for one with Bitcoin.

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So it's merely a synthetic Bitcoin.

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It's not an altcoin that you would buy to make money relative to Bitcoin's value like Dogecoin.

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And the benefit of this is that you could have an entire new protocol like Monero or Zcash or Bitcoin Cash or Ethereum.

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Any of these altcoins could be cloned into a Bitcoin sidechain.

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And then people could benefit from their software.

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But at the same time, they wouldn't have sold their Bitcoin.

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So what sidechains are all about is enabling Bitcoiners to get different software experiences without having to get rid of their Bitcoin.

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So it makes Bitcoin more expressive, more extensible.

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That's the word Adam Back uses when he talks about the benefit of drivechain.

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He talks about extensibility.

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In other words, making Bitcoin have more of a broad platform for new technology and innovation.

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So it's making Bitcoin not just about one type of payment, but instead more complicated and interesting things like advanced privacy or advanced scalability.

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Making people have more options.

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It's like walking into a store where they sell many things instead of just selling one thing.

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So drive chainers want Bitcoin to be more competitive relative to altcoins.

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Drive chainers want Bitcoin to have all kinds of different technology built on top of it.

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And this would make Bitcoin more valuable.

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It would make Bitcoin's value go up, NGU potentially.

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It would also make Bitcoin more interesting.

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Make Bitcoin into a platform for more exciting innovation.

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A lot of the ideas and promise of Lightning are important and cool.

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But there's no doubt that drivechain could serve as a complement to Lightning.

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It would serve as a complement in the sense that there could be a drivechain that is built to facilitate Lightning.

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There could be a benefit to Bitcoiners for having more options.

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So instead of only using Lightning as a path for innovation and scalability, onboarding, people could also benefit from having the option to do things on sidechains.

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Can I continue asking questions?

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I would love it if you did.

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So the first one is, is the Liquid Network an example of a sidechain?

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Yes.

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Okay.

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What are some product users that are currently being applied?

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And which pain points has, for example, that sidechain fulfilled?

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Yeah, that's a great question.

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The Liquid Network is an outstanding achievement of Blockstream, which is one of the most important companies in the Bitcoin space.

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The Liquid Network, however, as described by its creators in their excellent white paper written in 2020, they talk about how there are some tradeoffs that are existing with Liquid.

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Notably, Liquid is, as I say, in many ways an outstanding achievement.

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One of the interesting tradeoffs involved in Liquid is it's not a miner controlled peg that holds the Bitcoin that is used in Liquid.

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Instead, it is a federation.

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So there are 15 parties that control that Bitcoin.

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Right now, it's about $50 million.

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Last time I checked, which was like maybe a month ago, $50 million worth of Bitcoin is in Liquid.

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So in theory, although there are all kinds of very intelligent safeguards in place, in theory, if those 15 parties or even maybe 11 of them were arrested, coerced, or decided to collude, then they could perhaps rob the users of the sidechain of their Bitcoin.

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Now, I don't want to misspeak, so I welcome anyone to come up and tell me how they think that's impossible.

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But it's my understanding that there is some amount of trust placed in those parties.

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Whereas if Liquid were instead a drivechain, then the collusion or coercion that would be required to rob the Bitcoin out of the sidechain, if it were a drivechain, would involve a majority of the Bitcoin hash rate.

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And the amount of time involved would be at a minimum, three months.

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And that's if the hash rate were entirely deployed 100% of it to this effort of robbing the sidechain.

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So the security model, as we say, of a federated sidechain is different than the security model of a drivechain.

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And the difference is that instead of a 15-party federation, you would instead have, with a drivechain, a miner-controlled peg.

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So I think what's great for Bitcoiners is to have the option to use the miner-controlled peg.

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No one should have to use it. It would be opt-in. So what drivechainers want to see is the Bitcoin

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community rally behind drivechain and enable it so that users can decide if they want to use it.

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It's kind of like, you know, people have a choice of what kind of neighborhood they want to live in,

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the city or the countryside. Some people prefer one, some people prefer the other.

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There's tradeoffs. In the city, you have noise, homeless people and pollution. And, you know,

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like, on the other hand, you have all the restaurants and the clubs and the exciting

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nightlife. So some people prefer the city. Others prefer living in the countryside with the cows,

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the clean air and the hiking trails. So some people might like a federation for their sidechain.

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Others might like the miner-controlled peg where a dynamic multitude of mining

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parties around the world control the peg.

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I would much prefer the drivechain approach. I think that the Bitcoin mining industry

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is a powerful and extremely economically robust phenomenon, and I would prefer that

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they are empowered to control the peg. Now, I myself have mining equipment,

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so I would participate in that potentially. So that's the essence of drivechain is that,

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in my view, it's peer-to-peer because Bitcoin is peer-to-peer and therefore Bitcoin mining

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is peer-to-peer because anyone can get started in mining. All you need is to have some hardware.

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You don't have to have anyone's permission. You have to have some computers, but, you know,

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it doesn't require permission to get computers, to get equipment.

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So, by contrast, a social approval is necessary to become part of the federation.

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You have to be admitted by the liquid authorities to become one of the 15 functionaries.

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So those are some of the differences. One of the key differences between the current sidechains on

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Bitcoin and the drivechains is that there's a different security model. So that's one key

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difference, just to kind of sum it up. So right now, every single sidechain on Bitcoin is federated,

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every single one, by necessity. There's no way around it. They're all federated sidechains.

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There's no way around it. They're all federated sidechains.

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That's something which even the drivechain critics would agree with, that all Bitcoin

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sidechains today are federated, period. Now, of course, each one, in the words of its advocates,

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would assert that they have designed their federation in a way that's optimized and that

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tries to mitigate the risks that accompany a federation. However, it's still federated.

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And what some of those critics of drivechain would say is that drivechain itself is a federation.

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However, I think that confuses the subject, because the drivechain is miner controlled,

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and therefore is fundamentally peer-to-peer. A federation is not peer-to-peer. So I think

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that's the angle. That's the dimension of analysis that I prefer, is that federations are fiat.

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And I say that not in a pejorative sense, but someone has to declare and deem someone else to

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be part of the federation. To become one of those 15 people, you must be chosen by some social group.

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Whereas to become part of the Bitcoin miners whose hash rate controls the miner controlled peg,

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you don't need anyone's approval. So some anonymous party right now in Africa, China,

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Russia, or America could start mining. And then if drivechain is enabled, they could start

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participating in the activities that are involved in drivechain. And no one's approval would be

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required. Miners in Bitcoin are presumed to be anonymous, mutually distrusting, and self-interested.

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Those are the three attributes of miners in Bitcoin that we can assume in the worst case,

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that they're all anonymous, mutually distrusting, and self-interested, and yet the system has

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emergent order. The same assumptions and presumptions are present in drivechain. We

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don't assume the miners will be good. We assume they'll be self-interested, and yet there'll be

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emergent order. And drivechain is a grand experiment. We don't know with absolute certainty

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how it would go. But part of making Bitcoin successful and competitive in the future,

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and trying to accelerate its adoption, means that we have to be trying to do things that'll

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make Bitcoin even stronger and better, and rapidly successful. And enabling all kinds

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of interesting, valuable sidechains on Bitcoin would be good, instead of having

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all of that innovation and demand flow to altcoins. So right now with sidechains,

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there's very little usage. It's like 100 million dollars of value are in the sidechains. There's

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50 million in Liquid, and 50 million in RSK, and those are the big two, and there's no other big

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ones. So their total value is 100 million. Bitcoin has a market cap of around 400 billion.

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So right now, the total utilization of sidechains is under 1%, because 1% would be 4 billion

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in a sidechain, and we're at 100 million. So we're at like 0.001% or something of Bitcoin's

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value is in these sidechains. So I would say that the current sidechain dynamic is a failure.

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It's minuscule. And what we want is Bitcoin to adopt a design for sidechains which is explosive

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in its value, that we have like in one year, maybe a billion dollars of value in the sidechain.

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And then in a couple of years from now, like 10 years down the road, hopefully,

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hopefully, in most optimistic sense, we would have half of Bitcoin's value in these sidechains,

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and a ton of fee revenue flowing from them, because they'd all be merged mind like RSK.

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That's one difference also with Liquid. It's not merged mind. So the transaction fees on the

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sidechain are not paid to Bitcoin layer 1 miners. And in the far future, or perhaps sooner, there

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could be growing concern as to whether the value of Bitcoin's block space, that is to say its total

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transaction fee rate, is perhaps lower than what would be optimal. So the security budget

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problem is one of the things that some drive chainers are attuned to much more than the

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average Bitcoiner. Welcome to the stage, Porkchop. Always nice to have you here.

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Howdy, Henry.

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Malcolm, did that answer your question? Do you have any more? Or should we pivot to Porkchop?

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Um, yes, that was a lot of information. Thank you. And I'll leave one more question,

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because it was connected to that one. In case you want to answer that one or help with the

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information. Say that from the point of view of a customer or a customer, like a participant,

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like a normal human being that wants value, right? And like, understands now that okay,

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this is what could be offered in a drivechain, like in terms of participating in one,

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like you said, that's a miner and or the other option of the federation. But what's the current

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value? Which pain point is it serving to say, for example, in like you said, and I don't know,

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I'm not very knowledgeable other coins and stuff, but I've heard like, oh, like the NFT or whatever

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value they see out there about other things, right? Which pain point or pain points are being

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addressed? That could potentially Lord, there's like, normal human being that going into a drive

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chain? Yeah, so the there are a set of drivechains that are planned right now. So if drive

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chains adopted, then these drivechains will get launched most likely. And this set of drivechains

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you can review on drivechain.info. So if you click on drivechain.info, and then in the list

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of links, click on sidechain projects. That's sidechain projects in the list of links. You'll

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see all of the cool sidechain projects which are planned. Each of these is currently an altcoin

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with a few exceptions. So one of the sidechains. So like, your question is, what are the pain

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points of Bitcoin that would be ameliorated by the introduction of drivechain. So one of them

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is a lack of privacy. Right now, Bitcoin layer one has a certain degree of privacy, but many people

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prefer Monero or Zcash. So if we have drivechain, we can clone the privacy tech of Monero

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and of Zcash into drivechains. And then maybe those users would switch over. Because those

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users probably would like to keep their savings in Bitcoin, and then use a Bitcoin sidechain for

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the tech, for the extreme privacy tech. Whereas right now, what they have to do is they keep most

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of their money in Bitcoin, as the case may be. And then they put some of their money into Zcash or

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Monero. And then they move those around among each other for the extreme privacy. And when they're

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done, when they've made their profit from doing whatever they're doing, then they send their

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savings back to Bitcoin. So then they're dealing with their suffering, they have a pain point.

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Because whenever you hold an altcoin, you're suffering from the fluctuating value of that

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altcoin relative to Bitcoin's value. You're suffering from the exchange rate risk.

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Exchange rate risk is a cost to users. Half the time, you might benefit because the altcoin

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appreciates against Bitcoin. But the other half the time, or maybe most of the time,

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the altcoin is devaluing against Bitcoin. So you're in the altcoin for the privacy,

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or the low fees, right? Maybe you want to send an altcoin that has a penny per transaction in cost

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instead of Bitcoin, where it's like a dollar or two. So if you want to do a lot of small

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transactions, which is something Satoshi thought was cool, you have to either use Lightning or

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a big block altcoin. So these sidechain projects listed at drivechain.info include the privacy one,

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the Ethereum clone, the BitNames, which is a clone of Namecoin. This, by the way, this DNS

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drivechain, this is exactly what Satoshi was interested in. He thought it'd be cool to have

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another blockchain called BitDNS that would be DNS on blockchain. So you could have self-sovereignty

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of a domain name or whatever it is. And that could be kind of like a decentralized identity

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solution. It could have enormous impact on everything. There's huge potential in the best

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possible case for these drivechains. Another one is Thunder, which is a big block drivechain.

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So there's actually a lot of insight and value to like the BSV, BCH idea of big blocks.

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Their fundamental mistake is to have the big blocks on layer one. What they need to do

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is understand that big blocks on a sidechain is the way to go because then it's opt-in.

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So instead of forcing everyone to have big blocks on layer one, make the big blocks optional.

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Because when you do big blocks, what ends up happening is it's very expensive to have a full

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node. So there are very few people with full nodes and therefore there's lower decentralization.

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What we want to do is make it opt-in. So maybe I would keep all my money on Bitcoin layer one,

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Bitcoin layer one, send a little bit into the big block sidechain, and then we can send the

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money around really cheap. And the user experience would be much different than with Lightning.

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Lightning is a very complicated system and it has lots of scaling and growing pains,

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and it's very developer-centric. There's all these people working on it all the time.

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Sidechains are a lot different. Sidechains are kind of simple. So if you have a big block

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sidechain, there isn't that much complicated development that goes into that. You just

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build it one time and then everyone can move the money around and pay a thousandth of a penny

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in a transaction fee. And then we have cheap, very scalable cash. Satoshi himself was excited

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about this. He thought that there'd be an economy. There would be an economy of micropayments.

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And he thought that'd be cool. He wrote about that like two or three times.

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And then it didn't happen with Bitcoin. Now the plan is to have high fees on layer one,

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and that's good. But we got to have these sidechains so people can opt-in to that low-fee

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format and then pay all the fees, approximately all of them, to the layer one miners. So it's

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really an ingenious approach, having all these different sidechains all paying their fees

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to layer one.

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Thanks for your questions. You can learn more at drivechain.info. You can also, I encourage you

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to read Fiatjaf's essay on drivechain. Fiatjaf is the creator of Nostr,

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and he is also a very enthusiastic advocate for drivechain. He has written about drivechain in

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very favorable terms. In fact, he has tweeted multiple times that if we don't do drivechain,

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Bitcoin probably will fail. For example, he said in a tweet, drivechain is our only hope.

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We need drivechain or all the work of thousands in the last 13 years will be in vain.

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So there you go. He's not unclear in his support. He's very clear. So his essay is at fiatjaf.com,

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and you can find it by clicking on Bitcoin and then click on drivechain and read his essay.

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I recommend it.

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Thank you, Lair.

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How's it going, Henry?

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You can call me Henry.

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Okay. So, question about your drivechain. I've obviously listened to you for quite some time.

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I'm sorry, you haven't.

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It's great. It's great, man. It's been a wealth of knowledge.

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So, the double peg, right? The understanding of drivechains working harmoniously with Bitcoin,

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you know, no shit coinery makes sense. When I look at something like Stacks,

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what's your opinion on that?

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I think the Stacks project is great. They're trying to do what they can do in the absence

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of drivechain. So, they are trying to enable technology and use of Bitcoin

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in the absence of drivechain. So,

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they are trying to enable technology and use of Bitcoin to some extent, while

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drivechain is not yet available. I think that their outlook is probably that maybe drivechain

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will never come. And therefore, instead of just advocating for drivechain and being patient,

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they are building what they can build. Their approach uses Bitcoin in a certain interesting

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way, proof of transfer. And it's the ideas of Munib, who has a PhD in computer science.

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Their approach does involve the creation of an altcoin,

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which yielded a lot of money for the creators of that program. If drivechain were adopted,

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then probably that altcoin would lose value, I think, because people would be building on Bitcoin

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in a drivechain approach, which doesn't necessarily require the use of an altcoin.

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So, if you told me that drivechain is going to be adopted in a year from now,

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I would not want to own STX. I've never owned any STX, but I don't have any hostility towards them.

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I think they're great. They're doing good work. And maybe they're right. Maybe drivechain will

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never come. And therefore, the next best thing you can do is build some kind of

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approach that uses an altcoin because maybe that's necessary.

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Now, of course, with Rootstock, there's all kinds of extensibility and potential with Rootstock. And

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Rootstock doesn't have a native altcoin. I know that in the history of Rootstock,

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there have been one or two ICOs and different approaches taken. But in my view, Rootstock is

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the main thing going on there is that they have a synthetic Bitcoin that's in a federated peg.

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So the RBTC token, which has about $50 million of value, maybe now it's like $60 million.

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And then they have things like Sovereign. So you can have altcoins and tokens on Rootstock

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because it's supposed to be similar to Ethereum in nature, but paying fees to Bitcoin.

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So I think Rootstock is the closest thing to drivechain in terms of like Rootstock is

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merged mind, Stacks is not. Stacks is not a merged mind sidechain.

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So I would say Rootstock is my favorite Bitcoin project. And then second after that comes

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Liquid and things like Stacks. I haven't looked into as much, but good for them for building on

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Bitcoin. They could have just completely done an altcoin like Ethereum or Monero,

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but instead they're doing something that is linked to Bitcoin. I think that some amount of fees

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actually come, some amount of fees are paid by Stacks somehow to Bitcoin's layer one miners.

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I would love to see how much fees are generated there.

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Yeah, I know that it's like a share mine of some sort. Incoming, you get something else,

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you get Stacks and Bitcoin outgoing, you get Bitcoin. I don't exactly know the process. I

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don't own Stacks and probably won't. But the understanding of what it was built for,

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the smart contracting and all that stuff.

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I know you're waiting on, I guess, approval to create drivechain, right?

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Yeah, the Bitcoin community has yet to rally behind drivechain and activate it.

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So there is code that could be merged into Bitcoin Core.

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That code, it needs to be tuned up and reviewed in a process called rebasing.

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And that's an important activity that's being done.

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And there's the possibility that I would say roughly, we could say if the Bitcoin community were to decide to do drivechain,

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then it could be done in maybe 12 months from now.

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We could actually have like an activation day where everyone's supposed to update their nodes at the same time.

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And then we're live with drivechain.

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So is that why, did Stacks not have the ability to create that sort of double peg synthetic Bitcoin process because of drivechain not being a protocol?

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Well, yeah, as I said, if drivechain had been on Bitcoin for the last few years, things like Stacks would never have been created.

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Like if we had drivechain in 2015, today, the idea that someone would launch something like Stacks wouldn't have made sense

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because people would have said to Manip, why aren't you just building a new drivechain?

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Why are you creating an altcoin?

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Because the whole purpose of that STX coin is to help secure that blockchain.

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So I think the rationale for a lot of altcoins is that they can't build on Bitcoins, they need the altcoin.

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So that rationale goes away.

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That's one of the essential achievements of drivechain is that it removes the leading rationale for altcoins.

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The main reason why everyone has created altcoins in terms of the rationale they've given is that they can't build on Bitcoin.

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Now, of course, cynical people will say, well, what they really want to do is make money.

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And yeah, that's why people do things and they give some other reason, the rationale.

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Like if you read the Ethereum white paper, the main thing that Vitalik says for the first couple of pages is he says that it's hard to build on Bitcoin.

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And his white paper discusses colored coins.

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It discusses counterparty, discusses these various projects that tried to increase the extensibility of Bitcoin and how they didn't work out so well.

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And then he says, we had to do an altcoin to have unlimited freedom to do something new.

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So he wouldn't have been able to say that if when Bitcoin was created, drivechain had been part of it.

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So I think that if drivechain had been a part of Bitcoin from the very beginning today, definitely Bitcoin would have higher dominance.

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And maybe it would have dominance roughly around 100 percent.

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If hypothetically Bitcoin had been launched at the very outset with drivechain, maybe the way things always would have been done is to have people just build on more sidechains rather than do all these altcoins.

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I mean, the path we've gone down is where there's a massive amount of altcoins.

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Today, there's more altcoins than Bitcoin in terms of value.

376
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It's just grown so much.

377
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And maybe it's going to be very hard to reverse that.

378
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But drivechain is an effort at doing that.

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Right.

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So I'm not a super techie person, but because of SegWit and then Taproot and now the Ordinals thing, I've heard a few people talking about the fact that the envelope is big enough now that you can actually put code and script into Bitcoin using the...

381
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I don't want to mix it up with the Ordinals because it's not the same.

382
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But because of that, you're able to write directly to Bitcoin.

383
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So is that going to change any of this possibly?

384
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Ordinals do not enable a miner controlled two-way peg.

385
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No.

386
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Ordinals enable more extensibility to Bitcoin.

387
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There are things that couldn't be done before that are now able to be done.

388
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But the innovation that Ordinals facilitate doesn't include miner controlled two-way pegs.

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And that's the essence of drivechain is that you can have a separate entire blockchain that is merged mine with Bitcoin.

390
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And the peg for it, the link between the two blockchains for moving value between them is trustless.

391
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And when I say trustless, I mean in the sense of it being a peer-to-peer control that is widely distributed in nature and dynamic in terms of who's controlling it.

392
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So I use the word trustless not to refer to something that's like perfect, but instead something that has roughly the same trust model as Bitcoin layer one.

393
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Now, of course, there is academic discussions about how the trust model for a drivechain is distinct from the trust model of layer one Bitcoin in terms of the exact nature of what kinds of theft are possible, whether they could be overt or covert.

394
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So there's lots of discussion around that.

395
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My personal view is that the trust is roughly the same.

396
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Of course, one difference is that the security budget of the drivechain is always going to be less than the security budget of the main chain.

397
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So there is differences.

398
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This is something Vitalik himself pointed out in a discussion in the drivechain talk telegram group to Paul about two years ago.

399
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He came in there and he discussed drivechain.

400
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I guess he was trying to learn about how sidechains work and wanted to talk to the expert's expert.

401
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And he asked Paul a pointed question, which was good, which is if you had a clone of Bitcoin as a drivechain, wouldn't the security be inferior on the drivechain?

402
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And Paul conceded that it would.

403
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So if you had exactly Bitcoin layer one cloned into a drivechain, you know, it would be worse to be in the drivechain than on layer one.

404
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Except that the fees might be lower on the drivechain.

405
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So the whole thing is very interesting and complicated, but basically.

406
00:46:56,394 --> 00:46:57,394
Yeah, what was your question?

407
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How about we'll go past that because you've answered it a couple of times in different ways.

408
00:47:04,394 --> 00:47:12,394
So basically the only thing, there's no other two-way pegs as of this moment right now because that's what would be able to create drivechain.

409
00:47:13,394 --> 00:47:14,394
Is that what you're?

410
00:47:15,394 --> 00:47:16,394
Yeah, the two-way peg is the whole deal.

411
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Like that's the whole reason for drivechain.

412
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You can have a trustless one-way peg and that's a space chain.

413
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Yeah, you can have a trustless one-way peg and that's a space chain.

414
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So Ruben Samson is one of the great thinkers in the space of sidechains.

415
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He's a great thinker in the space of sidechain analysis.

416
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And he's created a few different ideas for doing sidechains and trying to have them be trustless.

417
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One way is to have a merged mind sidechain where there's a one-way peg.

418
00:47:51,394 --> 00:47:57,394
And this can be peer-to-peer and you burn Bitcoin to create the sidechain token.

419
00:47:58,394 --> 00:48:03,394
But the problem with this is that you're burning Bitcoin, which is very unattractive.

420
00:48:04,394 --> 00:48:05,394
Yeah, that's how XEP was created.

421
00:48:06,394 --> 00:48:08,394
Yeah, because you're destroying Bitcoin to make this token.

422
00:48:09,394 --> 00:48:17,394
And because you can't peg back to layer one, there's no guarantee that the token is going to have the same value as layer one Bitcoin.

423
00:48:17,394 --> 00:48:22,394
Well, yeah, that's shown right now through XEP.

424
00:48:23,394 --> 00:48:26,394
Except for the fact that XEP can't be created more in this deflationary.

425
00:48:27,394 --> 00:48:29,394
It will at some point no longer exist.

426
00:48:30,394 --> 00:48:34,394
Yeah, so what people want is a two-way peg.

427
00:48:35,394 --> 00:48:41,394
They don't want a one-way peg because destroying Bitcoin just is psychologically and economically not attractive.

428
00:48:42,394 --> 00:48:46,394
People want to have a sidechain that has a token which is going to trade one-for-one with Bitcoin.

429
00:48:47,394 --> 00:48:49,394
Which is what drivechain achieves.

430
00:48:59,394 --> 00:49:00,394
Yeah, I like it.

431
00:49:01,394 --> 00:49:03,394
I like to see how it works out.

432
00:49:04,394 --> 00:49:05,394
I mean, it's been seven years, right?

433
00:49:06,394 --> 00:49:08,394
Yeah, seven years.

434
00:49:09,394 --> 00:49:12,394
Things are picking up traction since the Ordinal thing, or no?

435
00:49:13,394 --> 00:49:15,394
Since you see how excited people get?

436
00:49:15,394 --> 00:49:17,394
The Ordinal's people tend to like drivechain.

437
00:49:18,394 --> 00:49:24,394
Like, for example, I've reviewed all the tweets on drivechain by pretty much everybody who's notable in Bitcoin.

438
00:49:25,394 --> 00:49:28,394
So I know who supports drivechain and how much they support it.

439
00:49:29,394 --> 00:49:34,394
So Udi Wertheimer has been, I would say, neutral to favorable about drivechain.

440
00:49:35,394 --> 00:49:37,394
You know, slightly favorable.

441
00:49:37,394 --> 00:49:42,394
Eric Wall, another one of the key taproot wizard Ordinal people.

442
00:49:43,394 --> 00:49:47,394
Eric Wall is emphatically in support of drivechain.

443
00:49:48,394 --> 00:49:50,394
He's written about it a number of times.

444
00:49:51,394 --> 00:49:58,394
Saying things like, you know, it makes no sense how Bitcoiners complain about Ethereum but don't enable drivechain.

445
00:49:59,394 --> 00:50:05,394
Because if drivechain were enabled, in his view, there would be no reason for Ethereum.

446
00:50:05,394 --> 00:50:07,394
So what's their gripe?

447
00:50:08,394 --> 00:50:09,394
What's the main gripe against it?

448
00:50:10,394 --> 00:50:20,394
The people who don't like drivechain, the reason why they don't like it is that they think that drivechain gives too much power to miners.

449
00:50:21,394 --> 00:50:27,394
And that drivechain would increase centralization of miners.

450
00:50:28,394 --> 00:50:29,394
That's their main concern.

451
00:50:29,394 --> 00:50:38,394
So they think that the miners would either steal all the Bitcoin in the drivechain or they would not steal it, but they would collect fees.

452
00:50:39,394 --> 00:50:42,394
And the fees they would get would go to only the large miners.

453
00:50:43,394 --> 00:50:51,394
Or a disproportionate amount of the fees would go to large miners, which would, over time, centralize the mining sector.

454
00:50:52,394 --> 00:50:55,394
Well, we've kind of actually seen that with ordinals, haven't we?

455
00:50:56,394 --> 00:51:03,394
People want to push through a bunch of stuff real fast into one block so it matches, they'll pay a miner to do so.

456
00:51:04,394 --> 00:51:06,394
But does that actually go to the rest of them?

457
00:51:07,394 --> 00:51:09,394
Does it distribute to the rest of the miners that were within that pool?

458
00:51:10,394 --> 00:51:11,394
I don't know.

459
00:51:12,394 --> 00:51:18,394
That's the kind of concern people have, is that someone could get a payment who's only a large miner because of a MEV.

460
00:51:19,394 --> 00:51:24,394
I think those are incorrect analyses for complicated reasons.

461
00:51:25,394 --> 00:51:33,394
Let's hear from Moon Settler, our resident expert on the complexities of mining.

462
00:51:34,394 --> 00:51:35,394
Hello, sir.

463
00:51:36,394 --> 00:51:37,394
Hello, guys.

464
00:51:38,394 --> 00:51:41,394
So I just wanted to say that there is one more thing.

465
00:51:42,394 --> 00:51:47,394
You know, one more criticism about one more aspect.

466
00:51:48,394 --> 00:51:52,394
One can look at the hash rate escrow.

467
00:51:54,394 --> 00:51:57,394
So it is a miner-controlled peg.

468
00:51:58,394 --> 00:52:09,394
And basically, you can start looking at it from a perspective of what is the expected fee revenue your average miner could hope to get

469
00:52:09,394 --> 00:52:17,394
from operating a drivechain, as we all would like them to be operated.

470
00:52:18,394 --> 00:52:25,394
And basically, if you have, say, a 32 megabyte block, big block sidechain,

471
00:52:26,394 --> 00:52:33,394
and we see this trend that fees actually, you know, the bigger the blocks, the lower the fees.

472
00:52:33,394 --> 00:52:43,394
So let's say we estimate that you would have a fixed 1 sat per byte fee rate on a sidechain.

473
00:52:44,394 --> 00:52:46,394
And it wouldn't really go above it.

474
00:52:48,394 --> 00:52:56,394
So if you calculate, you have this 32 million sats per block.

475
00:52:57,394 --> 00:53:04,394
Then you get somewhat below 50 bitcoins per day as a miner revenue.

476
00:53:05,394 --> 00:53:13,394
And if you calculate for a 30-person miner, so roughly that size, you know, a larger pool, larger miner,

477
00:53:14,394 --> 00:53:19,394
but it's not a major, it's not a 51-person miner, right?

478
00:53:20,394 --> 00:53:27,394
So his five-year plan for, you know, getting rich or getting a return on his mining hardware

479
00:53:28,394 --> 00:53:35,394
would include an expectation of like 25,000 bitcoins from this big block sidechain.

480
00:53:36,394 --> 00:53:45,394
And the problems start to arise if the amounts logged in a hash rate escrow for this big block sidechain go way beyond that.

481
00:53:46,394 --> 00:53:55,394
So he sees that several hundreds of thousands of bitcoins are logged in this sidechain escrow.

482
00:53:56,394 --> 00:54:05,394
And basically he would never get the amount in fee revenues as he could get from not necessarily raiding that escrow.

483
00:54:05,394 --> 00:54:16,394
So if drivechains and the people, you know, going on the first principle assumptions that stealing is bad

484
00:54:17,394 --> 00:54:20,394
and the proprietary rights should be enforced and whatever.

485
00:54:21,394 --> 00:54:27,394
So we can assume that miners can steal from the drivechain escrow, but they can mess with it.

486
00:54:28,394 --> 00:54:34,394
So they can disable the conveyor, they can break the peg, the economic peg.

487
00:54:35,394 --> 00:54:42,394
Because if someone buys a drivechain asset in the assumption that from three months now he will get real bitcoins for it

488
00:54:43,394 --> 00:54:48,394
and suddenly he sees that the drivechain is disabled, the withdrawal is disabled,

489
00:54:49,394 --> 00:54:55,394
then he gets into something that we see in the banking sector called racial mismatch.

490
00:54:56,394 --> 00:55:03,394
So he has liabilities, he has expenses that he needs to pay and he just can't get the bitcoins.

491
00:55:03,394 --> 00:55:08,394
So he has this racial mismatch and he becomes distressed.

492
00:55:09,394 --> 00:55:14,394
And what this means, and of course there is the potential of panic, right?

493
00:55:15,394 --> 00:55:16,394
Simple outright panic.

494
00:55:17,394 --> 00:55:22,394
And this basically means that the price is expected to break down.

495
00:55:23,394 --> 00:55:29,394
So it will break parity with bitcoin and it will trade at a huge, huge discount.

496
00:55:29,394 --> 00:55:35,394
At least as much a discount as GBTC, where people have no idea when they will get their money.

497
00:55:36,394 --> 00:55:40,394
So it trades I think at a 40% discount, but it can be more.

498
00:55:41,394 --> 00:55:48,394
So if it looks like the miner could actually succeed in stealing and the initial panic can really, really bring it down.

499
00:55:49,394 --> 00:55:57,394
And not only the miner can very safely hedge, he can very safely short the drivechain asset to bitcoin

500
00:55:57,394 --> 00:56:03,394
because basically it's impossible for the drivechain asset to break upwards from bitcoin.

501
00:56:04,394 --> 00:56:07,394
So it's very easy to deal with that situation.

502
00:56:08,394 --> 00:56:13,394
It's very fast, very quick, very easy to deal with that situation.

503
00:56:14,394 --> 00:56:17,394
So it's a very safe thing to short the drivechain asset against bitcoin.

504
00:56:18,394 --> 00:56:25,394
So he can make a lot of money on shorting it and he can make a lot of money on buying at a huge discount

505
00:56:25,394 --> 00:56:28,394
and then restoring peg without stealing anything.

506
00:56:29,394 --> 00:56:34,394
So he can play this economic game and if a drivechain escrow is big enough, large enough,

507
00:56:35,394 --> 00:56:42,394
this game will be much, much more profitable than playing honestly and we expect him to play this game.

508
00:56:43,394 --> 00:56:49,394
So there is another criticism that can be voiced in regards of drivechains

509
00:56:49,394 --> 00:56:58,394
that miners who don't even need to be majority miners along their own economic motivations and economic realities

510
00:56:59,394 --> 00:57:02,394
or maybe they are themselves distressed, whatever the reason may be,

511
00:57:03,394 --> 00:57:06,394
they can mess with the two-way peg, they can break the peg, the economic peg,

512
00:57:07,394 --> 00:57:10,394
even for just the duration and they can make a huge amount of money doing that.

513
00:57:11,394 --> 00:57:13,394
So there's room for fuckery.

514
00:57:14,394 --> 00:57:15,394
Yes, definitely room for fuckery.

515
00:57:16,394 --> 00:57:24,394
And that's just the hash rate escrow because there is the other thing that blind merge mining may enable MEV,

516
00:57:25,394 --> 00:57:29,394
mining of extractable volume, and there is room for fuckery there too.

517
00:57:30,394 --> 00:57:31,394
But that's a high-frequency play.

518
00:57:32,394 --> 00:57:33,394
This is not a high-frequency play.

519
00:57:33,394 --> 00:57:37,394
It's much easier to execute for something who is not specialized in high-frequency plating.

520
00:57:48,394 --> 00:57:51,394
Doesn't the two-way peg lock up Bitcoin?

521
00:57:53,394 --> 00:57:54,394
Yes, for three months.

522
00:57:55,394 --> 00:58:01,394
So you have this expectation that a withdrawal period only lasts three months.

523
00:58:03,394 --> 00:58:11,394
And also the expectation that your property rights are enforced overall.

524
00:58:12,394 --> 00:58:17,394
So if you have claims on the sidechain for an amount of Bitcoin,

525
00:58:18,394 --> 00:58:20,394
then you will be able to eventually withdraw that Bitcoin.

526
00:58:20,394 --> 00:58:26,394
Otherwise, the sidechain Bitcoin, synthetic Bitcoin or alternative Bitcoin,

527
00:58:27,394 --> 00:58:31,394
or whatever you want to call it, wouldn't trade on peg on par with Bitcoin.

528
00:58:32,394 --> 00:58:36,394
So if you didn't have this expectation that you can get it out,

529
00:58:37,394 --> 00:58:40,394
that's the entire basis of the drivechain economic peg.

530
00:58:41,394 --> 00:58:45,394
You know, it can break upside because you can just inflate the supply.

531
00:58:45,394 --> 00:58:46,394
You can bring in Bitcoin.

532
00:58:47,394 --> 00:58:50,394
If a drivechain asset trades at 1.2 to Bitcoin,

533
00:58:51,394 --> 00:58:56,394
then you can just swamp that market that is hungry for this specific form of Bitcoin.

534
00:58:57,394 --> 00:59:00,394
You can swamp that market by pegging in in a single block time

535
00:59:01,394 --> 00:59:05,394
and you can sell that asset at a 20% arbitrage.

536
00:59:06,394 --> 00:59:10,394
And basically, this very quickly eliminates any upside.

537
00:59:10,394 --> 00:59:11,394
The peg-out is very slow.

538
00:59:12,394 --> 00:59:17,394
It's three months long and that is why users have basically UASF power

539
00:59:18,394 --> 00:59:21,394
to go there and to stop any stealing and whatever.

540
00:59:22,394 --> 00:59:26,394
But like I said, a miner does not actually have to carry through with stealing to cause a panic

541
00:59:27,394 --> 00:59:31,394
and to buy the drivechain asset very cheaply or make money on shorting it.

542
00:59:32,394 --> 00:59:33,394
Well, Henry?

543
00:59:34,394 --> 00:59:38,394
I think we should see how it goes if we enable it,

544
00:59:39,394 --> 00:59:45,394
because what Moon Settler is talking about here is not a risk that Bitcoin Layer 1 would be damaged.

545
00:59:46,394 --> 00:59:48,394
He's talking about, if I understand correctly,

546
00:59:49,394 --> 00:59:54,394
a risk that those who opted into the Bitcoin Layer 1 would be damaged.

547
00:59:55,394 --> 00:59:58,394
He's talking about, if I understand correctly,

548
00:59:59,394 --> 01:00:03,394
a risk that those who opted into the Bitcoin Layer 1 would be damaged.

549
01:00:04,972 --> 01:00:10,972
The failure of the drivechain to operate as intended in terms of the user experience.

550
01:00:11,532 --> 01:00:17,692
So if that's the only concern, enable the drivechain and see how it runs.

551
01:00:19,292 --> 01:00:24,652
Yeah, but that's my point. You won't see this behavior until the drivechain

552
01:00:24,652 --> 01:00:28,892
escrow size is well below the miners' expected revenue for their business plan.

553
01:00:29,852 --> 01:00:34,572
It's not logical for them to mess with this, and Paul argued this, that miners are not

554
01:00:34,572 --> 01:00:39,852
actually interested in messing with drivechains if it makes them good fee revenue. But you can

555
01:00:39,852 --> 01:00:45,052
basically make an upper estimation for the available fee revenue in certain cases,

556
01:00:45,771 --> 01:00:51,372
and you can see that there is a certain economic size if the drivechain grows below it,

557
01:00:52,332 --> 01:01:00,972
then it suddenly is not the smartest and the most profitable play for miners to play by the book.

558
01:01:00,972 --> 01:01:01,692
That's my point.

559
01:01:12,972 --> 01:01:17,531
I don't know. It seems like we have lost some listeners. Maybe it was my fault. I'm sorry.

560
01:01:17,611 --> 01:01:24,092
Moon Settler, one question I've asked you in the past a number of times is,

561
01:01:25,132 --> 01:01:34,412
why is it that in your approach you don't explicitly advocate for drivechain? You instead

562
01:01:35,611 --> 01:01:44,812
criticize the criticisms of drivechain, but then you focus on potential problems that drivechain

563
01:01:44,812 --> 01:01:53,531
could have. It seems like you don't have a clear opinion about whether you are a supporter or a

564
01:01:53,531 --> 01:02:06,812
critic. Yeah, that is correct. I can't really make up my mind on this subject, but I very much want

565
01:02:06,812 --> 01:02:16,092
this discussion to happen in the open. I want these ideas to conflict and to come to an honest

566
01:02:16,092 --> 01:02:25,372
resolution on good theoretical grounds over them. So I would very much like if very smart people

567
01:02:25,372 --> 01:02:34,972
very openly and not rudely and dismissively talked about these problems and potentials and

568
01:02:34,972 --> 01:02:46,092
possibilities. That is my primary interest in drivechains. I don't think that is the only way

569
01:02:46,092 --> 01:02:56,252
that Bitcoin can survive. I don't think it's not good enough to try out, as you said, so trying

570
01:02:56,252 --> 01:03:01,372
out and seeing how it goes. Because we have assumptions about the miners' behavior, but the

571
01:03:01,372 --> 01:03:07,131
miners are themselves Bitcoiners, and of course we don't know who will own the hash power in the

572
01:03:07,131 --> 01:03:13,771
future. So it's entirely possible that basically Wall Street, you know, the Wall Street sharks will

573
01:03:13,771 --> 01:03:19,612
own or maybe they are already owning 40% of Bitcoin's hash power, and they don't have the

574
01:03:20,652 --> 01:03:27,211
love for Bitcoin that early miners may have had, and their behavior may have been entirely different

575
01:03:27,211 --> 01:03:34,892
than, you know, future generations of miners. So we don't know a lot of things, and ultimately the

576
01:03:34,892 --> 01:03:40,331
game theory of drivechains is good enough to try out. I just want to caution that just because it

577
01:03:40,331 --> 01:03:46,252
works on a small scale in the early days, it doesn't actually mean that it will work 10 years

578
01:03:46,252 --> 01:03:51,211
from now when people actually put money in there, and it's entirely possible that it will just

579
01:03:51,211 --> 01:03:58,092
become a huge opportunity for basically robbing people who can't afford to be on mainchain.

580
01:03:58,092 --> 01:04:06,411
So basically the people who need stability and low fees the most, those people would be,

581
01:04:06,411 --> 01:04:14,652
the shrimps would be the true victims of some miner in the future deciding to basically

582
01:04:14,652 --> 01:04:23,211
fuck with it in ways that was not intended. So this is in the cards, and there are other reasons

583
01:04:23,211 --> 01:04:35,451
that I'm hesitant for to say that we absolutely must have drivechains, but I also see that

584
01:04:36,252 --> 01:04:43,931
it's pretty clever and well-rounded that Paul put together, and I think he's

585
01:04:43,931 --> 01:04:49,692
right in many things, and we should definitely discuss it and maybe even trial it.

586
01:04:50,891 --> 01:04:59,611
I just want to caution against overly optimistic, you know, hype-building, because

587
01:05:00,252 --> 01:05:05,372
I think it can actually go wrong. So there is a potential for it to go wrong,

588
01:05:06,412 --> 01:05:14,331
but it can actually work out as well. And in extreme cases, so if we could somehow turn miner

589
01:05:14,331 --> 01:05:23,692
extractable value into an open auction that is basically flowing all to bitcoin mainchain miners,

590
01:05:23,692 --> 01:05:28,731
if we can ensure that fees can be kept from the mainchain miners, it's an open auction,

591
01:05:28,731 --> 01:05:35,771
everyone can participate, and basically all the extractable value turns to fees

592
01:05:35,771 --> 01:05:42,652
anyhow in this open protocol, blind merge mining protocol, if we can ensure that I see a potential

593
01:05:42,652 --> 01:05:47,852
of having a hundred times the fee revenue that bitcoin would otherwise have if we just focused

594
01:05:47,852 --> 01:05:54,252
on payments, you know, and that is a huge difference that it could make in the sustainability of

595
01:05:54,252 --> 01:06:00,331
bitcoin, and it also changes what I talked about, you know, I talked about how low the fee revenue

596
01:06:00,331 --> 01:06:07,211
actually is expected to be from just payments, just for sidechain block space, it's not valuable,

597
01:06:07,211 --> 01:06:13,852
it's basically an infinite supply. But the moment you add high-frequency trading and this miner

598
01:06:13,852 --> 01:06:21,372
extractable value flows, the entire dynamic changes, you know, people are no longer paying

599
01:06:21,372 --> 01:06:26,092
for block space, people are trying to front-run each other, it's an entirely different game,

600
01:06:26,891 --> 01:06:34,812
and it's a lot more revenue that miners can expect from operating it with a lot less

601
01:06:34,812 --> 01:06:42,171
certainty in certain cases than otherwise for the same economic size of a drivechain, you know,

602
01:06:42,171 --> 01:06:49,292
so that's why I'm saying it can go a lot of ways, and we should probably try it out, but we should

603
01:06:49,292 --> 01:06:55,451
be very open about the possible problems and the possible solutions and all this when we

604
01:06:55,451 --> 01:07:04,011
discuss this, and not just say the people who have objections are just, you know, intellectually lazy

605
01:07:04,011 --> 01:07:12,331
and not thinking things through, or saying from the other side that anyone who wants this is

606
01:07:12,331 --> 01:07:17,692
just a shit-coiner and bitcoin doesn't need to change and fuck off, you know, so I think

607
01:07:17,771 --> 01:07:24,572
that's not the right approach here, but I really, really want this debate to elevate to more

608
01:07:25,611 --> 01:07:32,331
advanced technical levels on one side, and philosophically too, and people to engage

609
01:07:32,331 --> 01:07:38,011
with intellectual honesty. So implicit in your view, however, implicit in it, in other words,

610
01:07:38,011 --> 01:07:43,611
you're implying, I think, that if we don't do drivechain, bitcoin will survive,

611
01:07:44,412 --> 01:07:50,491
and that the objections to drivechain have a lot of merit, potentially. So you have a

612
01:07:50,491 --> 01:07:59,132
different view than Paul and Fiatjaf, who think that this is the way for bitcoin to continue to

613
01:07:59,132 --> 01:08:06,331
rapidly grow, and if we don't do it, then a drivechain similar design will eventually

614
01:08:06,891 --> 01:08:12,572
be achieved on Ethereum, and they will ossify their layer one, and then they will be digital

615
01:08:12,572 --> 01:08:19,292
gold on layer one, with all of the layer twos that are extensible, and then bitcoin will be

616
01:08:20,252 --> 01:08:25,852
defeated. Wait, wait, you said something very important, you said something very important,

617
01:08:25,852 --> 01:08:34,412
and this is probably the only reason why I even may appear that I support drivechain activation,

618
01:08:34,652 --> 01:08:44,972
because there is a time window here that is closing, when we can make our move to start,

619
01:08:44,972 --> 01:08:51,612
and I'm not even sure that drivechain needs to be the ultimate solution 10 years from now,

620
01:08:51,612 --> 01:08:59,292
right? It's possible that this whole ZK proof thing will replace the anyone can spend

621
01:08:59,932 --> 01:09:08,331
hash it escrow, and the way we interact with these protocols change eventually,

622
01:09:08,331 --> 01:09:14,172
but this needs time, and basically we are stagnating right now, we are not building

623
01:09:14,891 --> 01:09:22,092
stuff on top of bitcoin that we could be building, and so there is this time window where

624
01:09:22,092 --> 01:09:28,652
drivechains could start something, and let it grow organically and naturally,

625
01:09:30,092 --> 01:09:38,652
where we don't have anything better, and that's I think something, and a lot of people don't see

626
01:09:38,652 --> 01:09:44,092
the need for this, and don't see the urgency for this, and I'm actually in the camp that sees the

627
01:09:44,092 --> 01:09:53,052
need and the urgency for making a move now, and start building now. I think we are already too

628
01:09:53,052 --> 01:09:58,412
late, by the way, so I'm in the camp that says it's basically, it's almost already too late,

629
01:09:59,052 --> 01:10:07,131
because altcoins have a huge head start, and they are many, and they are much better at creating

630
01:10:07,131 --> 01:10:15,852
hype, and much less picky about, you know, how they advertise themselves, and what sort of

631
01:10:17,852 --> 01:10:27,211
morality they base their economic model on, and everything, so we are definitely not a good

632
01:10:27,292 --> 01:10:37,131
position already, and drivechains could be a bridge gap solution, that just change a trend

633
01:10:37,131 --> 01:10:42,811
and the perception about bitcoin, even if they don't end up being the ultimate solution,

634
01:10:43,771 --> 01:10:50,172
and I'm not sure that a one-way peg can achieve the same thing, but if we can't activate drivechains,

635
01:10:50,172 --> 01:10:54,891
then we will have to try with a one-way peg to do something about this, but I don't think

636
01:10:55,852 --> 01:11:07,211
the main point is to secure value, so I don't think a one-way peg will move people's imagination

637
01:11:07,211 --> 01:11:14,811
and enthusiasm the same way as a two-way peg would, and I don't think they would hold their

638
01:11:14,811 --> 01:11:22,492
value so well, and I don't think these space chains will generate the same interest as a,

639
01:11:22,571 --> 01:11:30,492
you know, a two-way peg would, and I have no idea how long, you know, it takes to have functional

640
01:11:30,492 --> 01:11:36,092
zk roll-ups on bitcoin, it's always just five years out, you know, it's one of those things

641
01:11:36,092 --> 01:11:41,292
that is always just five years out, and probably in five years it will still be five years out,

642
01:11:41,292 --> 01:11:50,811
I don't know, but it's possible, so there is this time window, time duration problem that I think

643
01:11:50,811 --> 01:11:54,811
makes it very, very important that we discuss drivechains now.

644
01:11:58,412 --> 01:12:02,972
To make sure I understood your view, are you basically saying that bitcoin is getting close

645
01:12:02,972 --> 01:12:06,811
to ossifying, and therefore if we do drivechains in the near future,

646
01:12:07,371 --> 01:12:10,412
that could help lead to roll-ups on layer one?

647
01:12:13,131 --> 01:12:19,932
No, no, I'm saying we have lost five to seven years by doing nothing, basically.

648
01:12:20,891 --> 01:12:27,292
In effect, from the perspective of building an ecosystem on top of bitcoin, we have done nothing,

649
01:12:27,292 --> 01:12:34,172
nothing worthwhile to mention. I don't even like to mention liquid, I have,

650
01:12:35,932 --> 01:12:40,492
I only have bad feelings about liquid, and I can't talk, you know,

651
01:12:41,292 --> 01:12:48,412
rationally and in an unbiased way about liquid, but the point is, I think we need to change

652
01:12:48,412 --> 01:12:59,292
something, and I'm definitely in the camp that says no to ossification, but slowing down in changes

653
01:12:59,292 --> 01:13:07,771
and the motivation over time going towards zero, to change bitcoin in a fundamental way, to

654
01:13:07,932 --> 01:13:13,211
change bitcoin in a fundamental way, to add features, let's say. The motivation to add features

655
01:13:13,211 --> 01:13:20,172
to bitcoin consensus can actually turn to zero over time, and if people call it ossification,

656
01:13:20,172 --> 01:13:26,652
then sure, that will happen, probably, but bitcoin will never stop changing, it can't stop changing,

657
01:13:26,652 --> 01:13:34,172
it will die if it stops changing and adopting and optimizing and improving. The question is,

658
01:13:35,131 --> 01:13:42,652
how much features do we need on-chain, because the entire way bitcoin tries to build this future

659
01:13:42,652 --> 01:13:49,691
ecosystem up is that we only do minimal things and large settlements on-chain, that seems to

660
01:13:49,691 --> 01:13:55,852
be the direction bitcoin is going, and that is why it's entirely possible that after a while,

661
01:13:55,852 --> 01:14:02,412
we don't want to add new primitives and new features to mainchain, because they are not needed,

662
01:14:02,412 --> 01:14:04,732
because that's not what people use.

663
01:14:08,492 --> 01:14:08,972
All right.

664
01:14:14,732 --> 01:14:16,732
I agree.

665
01:14:17,612 --> 01:14:37,451
By the way, so I heard earlier you guys talked about privacy and scaling, this is basically the

666
01:14:38,571 --> 01:14:45,292
two major technical flat points against bitcoin, I think, so privacy and scaling.

667
01:14:45,292 --> 01:14:45,532
Yes.

668
01:14:47,211 --> 01:14:55,052
And like I said, we basically did nothing about either one of those for like seven years.

669
01:14:56,251 --> 01:15:01,852
The SegWit extension block was a block size increase that did not actually increase the

670
01:15:01,852 --> 01:15:06,891
theoretical maximum transaction throughput of bitcoin, because inputs and outputs do not have

671
01:15:06,891 --> 01:15:13,211
more block space, so we actually just added block space that can be filled with either

672
01:15:13,771 --> 01:15:19,532
legitimate witness data or garbage or whatever people want to put there, so we added more

673
01:15:19,532 --> 01:15:24,571
block space that adds more burden to node. I don't think it's tragical, by the way,

674
01:15:25,451 --> 01:15:35,211
I don't think it's a huge deal, but what happened now with the inscriptions and ordinals, I think

675
01:15:36,092 --> 01:15:42,251
makes it extremely likely that we will never see another block size increase ever again,

676
01:15:42,251 --> 01:15:49,612
so there is that, and that basically sets us on a certain path in regards to scaling.

677
01:15:49,612 --> 01:15:56,412
If nothing changes, then bitcoin's future will be custodial, that seems certain at this point,

678
01:15:56,412 --> 01:16:04,891
if nothing changes. But we can actually do stuff, so I firmly believe that we will have

679
01:16:04,891 --> 01:16:12,652
covenants on bitcoin mainchain and they will open up an entire new frontier, they will push

680
01:16:12,652 --> 01:16:20,891
the envelope and open up a lot of possibilities in trustless off-chain scaling. Basically,

681
01:16:20,891 --> 01:16:29,532
what you can have with something like CTV is a huge off-chain state compaction, so you can have

682
01:16:29,532 --> 01:16:38,412
a huge settlement tree that only exists off-chain, and you can optimize a lot of things in the mempool

683
01:16:38,412 --> 01:16:45,052
and you can enforce your property rights, worst case on bitcoin mainchain, but you don't actually

684
01:16:45,052 --> 01:16:54,412
have to trust a federation or a custodian to custody of funds, you are basically, in a sense,

685
01:16:54,412 --> 01:17:02,172
trustless. But the important thing about this, and I believe we should go in this direction,

686
01:17:02,172 --> 01:17:08,011
and we should explore and see how far we can get, so short to medium term, I think activating

687
01:17:08,011 --> 01:17:14,412
covenants is the best thing that bitcoin could do. Drivechain is a bit longer term project,

688
01:17:14,412 --> 01:17:22,332
so I think it would take about 10 to 20 years to see if drivechains really pan out

689
01:17:22,891 --> 01:17:30,891
as we wish they would pan out. Covenants could have effect in between years, like one, two years,

690
01:17:31,611 --> 01:17:39,532
we could see what they can do. And basically, this off-chain scaling,

691
01:17:41,932 --> 01:17:48,572
right now, as we speak, already has excellent privacy, so much better privacy than Monero has.

692
01:17:49,532 --> 01:18:00,652
It is comparable to what you get with Zcash shielded pool, or if Zcash was in one shielded

693
01:18:00,652 --> 01:18:09,452
pool, or as many shielded pools as many of these means you have. We already have very good privacy

694
01:18:09,452 --> 01:18:14,652
there, but it's custodial, like I said, everything points in the direction, if bitcoin changes nothing

695
01:18:15,052 --> 01:18:20,652
in consensus, then people will be in custody. But we know it can be private, at least.

696
01:18:21,532 --> 01:18:30,332
We already know that we can make this, we can basically create the perfect banks on top of

697
01:18:30,332 --> 01:18:40,491
bitcoin. So, banks that do not know the customer's amounts, customers have perfect privacy. Banks

698
01:18:40,572 --> 01:18:48,572
that can't inflate away their customers, they can't just issue infinite amounts of notes

699
01:18:49,371 --> 01:18:58,011
on their reserves. So, we can do a sort of proof of reserves that would make it evident eventually

700
01:18:58,011 --> 01:19:06,971
if these banks would just print money out of nowhere. We could make the recovery non-interactive,

701
01:19:06,971 --> 01:19:11,212
so you could have a seed phase and you could recover your assets from these mint and burn

702
01:19:11,212 --> 01:19:16,731
proofs. So, all these things are coming together and we see, all right, lightning interconnected,

703
01:19:17,371 --> 01:19:22,251
private bitcoin banks can scale payments, we know that they can scale payments,

704
01:19:23,611 --> 01:19:29,692
but they don't scale self-custody. And with Covenants, if you are at Covenants,

705
01:19:29,692 --> 01:19:35,292
they are very small consensus change, very small code-based change compared to something like

706
01:19:35,292 --> 01:19:41,131
Drivechains, which is much more ambitious. So, I think CTV had like 200 lines of code

707
01:19:41,131 --> 01:19:46,731
changed in Bitcoin Core, something on that magnitude. And I don't know, Harry, you know how

708
01:19:46,731 --> 01:19:54,011
many lines Drivechain changes? Is there a pull request right now? I think there's a significant

709
01:19:54,011 --> 01:20:02,332
amount of code. Yeah, I heard 60,000 or something, but I'm not sure I remember correctly.

710
01:20:03,052 --> 01:20:10,652
I saw Gabriel Kerman of Rootstock, when he spoke here a few weeks ago, one of the co-founders of

711
01:20:10,652 --> 01:20:16,652
Rootstock, I think it was he, maybe it was someone else, but I think he said that there's a lot of

712
01:20:16,652 --> 01:20:24,412
code and that if it were very simplified, that might help. That maybe some people in the technical

713
01:20:24,412 --> 01:20:27,692
community don't like that Drivechain is so much code.

714
01:20:31,131 --> 01:20:38,891
Yes. So, basically, Jeremy Rubin couldn't have developers, core developers to review 200 lines

715
01:20:38,891 --> 01:20:44,891
of code. He couldn't. He begged them for years and he couldn't get them to review that code.

716
01:20:44,891 --> 01:20:50,251
And we are talking about much larger changes if we are going in different directions. So,

717
01:20:50,251 --> 01:20:55,932
these covenants are very small changes, very well reviewable, very well reasonable about. And

718
01:20:56,572 --> 01:21:03,292
they basically allow us to do this off-chain state compaction. But there is a big problem with that.

719
01:21:03,292 --> 01:21:09,371
So, if you go into the direction, you can have excellent privacy. You can have the same privacy

720
01:21:10,011 --> 01:21:16,412
if you want, as you have in these ChaoMemmins, in these private Bitcoin banks. You can have

721
01:21:16,491 --> 01:21:22,412
insane state compaction. So, you can basically move the money of thousands of people with a

722
01:21:22,412 --> 01:21:29,292
single transaction that has a single input, a single output. And it looks like a taproot single

723
01:21:29,292 --> 01:21:34,812
SIG. It's actually a Moosig. So, you have a lot of people signed, but it's all off-chain activity.

724
01:21:34,812 --> 01:21:39,932
It's their problem, their money, their problem, their responsibility. Bitcoin mainchain sees

725
01:21:39,932 --> 01:21:45,052
nothing of this burden. They are managing among themselves, divide and conquer. It's perfect.

726
01:21:46,011 --> 01:21:51,611
Very good privacy. And everyone's property rights are enforceable on-chain. So,

727
01:21:51,611 --> 01:21:58,812
it's not custodial. Fine. But it's interactive. So, people have to come together and sign

728
01:21:58,812 --> 01:22:02,652
in this Moosig, taproot Moosig. And that's an interactive process.

729
01:22:03,932 --> 01:22:11,611
And basically, it requires that every participant to be online in a time period. And how large the

730
01:22:11,611 --> 01:22:17,131
time period is determines how fast this thing can move from one state to another trustlessly.

731
01:22:17,851 --> 01:22:25,292
And if someone wants to mess with everyone else, then he can basically just not cooperate and

732
01:22:25,292 --> 01:22:32,652
force them to settle or split on-chain. So, it's not perfect in this sense, in this technical sense,

733
01:22:32,652 --> 01:22:39,052
that it is interactive. And it basically assumes that everyone is interested in keeping things

734
01:22:39,052 --> 01:22:45,851
cheap and smooth and working fine, which is not always true for humans. And

735
01:22:48,172 --> 01:22:52,731
so, we already know we can do that direction and it's likely it's going to happen.

736
01:22:53,452 --> 01:23:02,332
But drivechains actually make this entire thing non-interactive. So, they give you the

737
01:23:02,332 --> 01:23:07,212
same user experience or sidechains in general. They give you the same user experience as you

738
01:23:07,212 --> 01:23:11,532
have with Bitcoin mainchain. You don't actually have to cooperate with anyone

739
01:23:11,532 --> 01:23:21,452
to sign. You don't even have to. I think maybe coinjoins are a good analog to how

740
01:23:22,172 --> 01:23:27,452
this payment pool would work. So, it's basically a super effective coinjoin,

741
01:23:27,452 --> 01:23:32,572
super efficient coinjoin. That's how you can think about it, a rolling coinjoin.

742
01:23:33,532 --> 01:23:43,052
And so, blockchains can work without people having to come together and cooperate

743
01:23:43,052 --> 01:23:51,052
in real time. And that's a different direction. And maybe we need both. Maybe certain people

744
01:23:51,052 --> 01:23:58,251
will only be able to use non-interactive means because they don't have 24-7 good internet

745
01:23:58,251 --> 01:24:04,572
connection and can't run their own node that looks out for their own self-interest

746
01:24:06,891 --> 01:24:15,371
and stuff like that. And so, I don't think Bitcoin will work with a single solution,

747
01:24:15,371 --> 01:24:23,131
a single approach to scaling overall. But I'm pretty sure that nothing in itself will solve

748
01:24:23,131 --> 01:24:28,652
all problems perfectly. So, different humans have different needs and different

749
01:24:29,452 --> 01:24:36,572
pain points and different perspectives. Someone that just wants to self-custody his coins

750
01:24:38,011 --> 01:24:46,251
and maybe move them once a year, he will not like custodial solutions, preferably.

751
01:24:46,251 --> 01:24:53,131
He will not like custodial solutions in any shape and form. And maybe he will find it too risky

752
01:24:53,771 --> 01:24:59,611
to even hold his coins on a sidechain that can break back, can be disabled, whatever.

753
01:25:01,692 --> 01:25:10,731
But for certain things, these cooperative structures are just not adequate and they

754
01:25:10,731 --> 01:25:18,731
won't work, probably. I don't want to go into this too deep. I'm just saying,

755
01:25:18,731 --> 01:25:25,052
we have multiple directions we can go and drivechain is one of them. And I don't think

756
01:25:25,052 --> 01:25:31,611
Bitcoin will be over if we don't go into that direction. But I think it certainly covers

757
01:25:31,611 --> 01:25:37,292
something that others can't. That's it. I appreciate that. Well said. I understand

758
01:25:37,292 --> 01:25:41,371
what you're saying. It's always great to hear you. Every time I hear you speak about it,

759
01:25:41,371 --> 01:25:47,452
I gain more understanding of your perspective. It's nuanced, so it is valuable to hear it more

760
01:25:47,452 --> 01:25:53,932
than once, many times. These are complex topics. We have to break at the top of the hour.

761
01:25:54,971 --> 01:26:02,011
This has been LayerTwo Labs, Drivechain Twitter Spaces. We meet every Monday and Thursday.

762
01:26:02,971 --> 01:26:06,971
Next time will be on Monday. Next week, I look forward to seeing all of you back.

763
01:26:06,971 --> 01:26:12,491
Bring your friends and we'll talk more. Everything that gets big starts small.

764
01:26:15,851 --> 01:26:20,491
I look forward to seeing you all again. Thank you.