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Hello.

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Do you want to sit here, Paul? I don't know, it's a bit far otherwise. I can sit
here, you can sit there.

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Alright, sure.

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Alright, welcome everyone to the Future of Sidechains panel. My name is Adolf
Wittem. I work for Bitcoin Magazine.

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I'm joined by Adam Back. Adam is the inventor of HashCash, which is the
proof-of-work system in Bitcoin essentially.

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And he's also the CEO of Blockstream. Paul is an independent Bitcoin researcher. He
has one of the best, maybe the best blog on Bitcoin.

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I would say it's Truthcoin.org, is that it?

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Truthcoin.info, but I own .com and .org and they both redirect at this point.

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Okay, smart. And you've been working on Drivechains a lot, which is a particular
type of sidechain.

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Well, Blockstream has the liquid sidechain, right? So there's two sidechain
proponents on the panel, which is nice because it's a panel about sidechains.

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Okay, so first of all, let's loop in the audience in case anyone doesn't know what a
sidechain is.

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So what is a sidechain and why is it something that people should care about? Do you
want to take this, Paul?

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Sure. A sidechain is basically an altcoin, but with Bitcoin instead of the altcoin
part.

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So you have a different piece of software and you can have a clone of Ethereum or a
clone of Zcash or something.

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And you don't need a new investment, you don't need a new coin, you just send
bitcoins over there and use it over there.

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So it's an altcoin without the altcoin.

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Yeah, so it operates exactly like an altcoin. It has its own software, it has its
own everything.

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But the idea is you can basically lock a Bitcoin on the Bitcoin network, of course,
and then it frees open a coin on the alternative network.

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And that's how, for example, the 21 million limit is maintained.

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So you can't create more sidechain coins than there are Bitcoin, right?

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And then on the other chain, it can operate under different rules like an altcoin.

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Adam, is this, did you want to add something to this?

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I mean, you can think about it as like innovation without speculation.

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And altcoins are often billed as utility tokens. You buy the token to gain the
utility.

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But really, it makes sense to use electronic cash, Bitcoin, to pay for things.

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So why not use Bitcoin as the utility token?

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And then if you work out how to do that, you end up with a Bitcoin layer 2, a
special kind of layer 2, which is sidechain, that allows you to have new features.

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Layer 2s like Lightning don't really allow new features.

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They're just faster cashed Bitcoin transactions.

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But a layer 2, which is a sidechain layer 2, can have lots of different, completely
new and novel features or incremental improvements.

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Yeah. So I think you just mentioned, Paul, you mentioned like an Ethereum. Did you
mention that?

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I think so. Like an Ethereum sidechain.

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So Ethereum has a bit, you know, you can do different types of smart contracts.

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But it also has its own coin, which fluctuates in value against Bitcoin.

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And now you can do it while still using Bitcoin, essentially.

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The mere introduction of new cryptocurrency is sort of like a dilution of the, as
Gavin Andreessen said a long time ago, is a sneaky way around the 21 million coin
limit, every altcoin.

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Right. And Adam, I think you're a co-author of the original sidechain paper. Is that
right?

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So what's the idea originally to sort of make altcoins obsolete? Was that always,
was that the motivation for even coming up with this idea? Is that how to, how we
should look at it?

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Well, no, not really. I mean, the point was, I mean, there were a few different
ideas that arrived at the same thing.

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But my motivation was I had developed this tech, which became known as confidential
transactions, which added some privacy.

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And I was interested to figure out how you would get something like that added to
Bitcoin.

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And it became apparent that that's kind of a complicated change and maybe difficult
for Bitcoin to adopt in the short term.

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So I figured, well, the real problem is that Bitcoin is not very modular.

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And so, like, you know, the Linux operating system has modules in user land so
people can add features without messing with the base.

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And so I was trying to think of a way to achieve that in Bitcoin. And so sidechains
was the kind of modular vehicle to add things.

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Now, apparently, after we released the sidechain paper, a lot of altcoins fell in
price.

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I don't know if that was correlated or not, but people commented on it.

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So there's a side effect. I mean, I'm not that interested in altcoins. I wasn't
looking at the prices.

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And as Paul mentioned, I think they are dilutive and mispriced ultimately because it
doesn't really make sense to use, to buy utility coins.

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It's like buying bus tickets or bandwidth credits when the cost of that is falling
over time.

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So it's a poor investment in principle.

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When that paper came out, it was October 2014. So actually altcoins were not very
big.

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It wasn't until 2016 that there was any, you know, Bitcoin had whatever.

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Very, very, very disproportionate prominence even.

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Right. OK. Yeah. Well, so you mentioned the first sidechain paper came out in 2014.

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So let's skip ahead to today then.

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I think the original idea was, so here we get into sort of the different designs.

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So the original idea was to have sidechains secured by miners.

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That was the original idea, I think. Is that right?

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Yeah. I mean, so it was somewhat auditable. So the idea was that the sidechain could
be merge-mined.

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I mean, there are different design variants, but the point is most of them require
new opcodes to enable on Bitcoin.

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And so one type of opcode that could be added to Bitcoin is to manage the peg

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and look for instructions from the sidechain for when to release coins that have
been moved back.

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And the version that we described in the paper was using a compact proof of the
merge mining that happened on the sidechain.

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And you could sort of show that, well, this much work was done

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and somebody would have a time window to disprove it, the so-called fraud proof.

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So it's a particular type. And Paul proposed a different variant, which is a bit
simpler,

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but maybe relies a bit more on the economics of actors.

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Right. So the one sidechain we have today, I think, right, is Liquid.

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Liquid essentially uses a multi-sig setup. So moving coins in and out from the
mainchain to the sidechain,

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it requires a federation of companies that need to agree that the transaction is
valid back and forth.

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Is that a short summary?

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So as part of the original sidechain's paper, there was a kind of annex where we
described

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as close as we could get to having something towards a sidechain without having
opcodes in Bitcoin.

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And so we ended up implementing that first. Well, we implemented the opcodes, too,

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but it takes longer to get consensus on that kind of thing.

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So we implemented this version and it basically supplements, you know,

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it's not as dynamic because you have to have members cosine,

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though it does have some ability to evolve amongst the functionaries for them to
evolve the members.

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But particularly it uses hardware security modules and confidentiality to try and
bridge the difference in trust model.

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Right. So, yeah, so you mentioned the current sidechain model, Liquid, didn't
require any protocol changes to Bitcoin.

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Your model, Paul, would require a protocol change. So that would also be a hash
power enforced sidechain.

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Moving coins back and forth depends on miners, right?

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Right. Yes.

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OK, so why don't we have that now? Why is that not a thing today?

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I mean, I proposed it a long time ago. It was November 2015.

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And back then, in effect, in that exact quarter, Q4 of 2015, I think we activated
three different soft forks.

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So back then, it was not really a big deal to propose a soft fork.

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But as time has gone on, it has become a bigger and bigger deal.

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And now it is almost heretical to propose any upgrade or modification to Bitcoin at
all.

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Even one like this, which would potentially be the last one and would open the door
to permanently ossifying Bitcoin.

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You could say with some real credibility behind it, you could say, now that we have
this change, we don't need to change Bitcoin anymore.

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And the software can stay as it is.

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Wait, you're saying if we would have this one change that would allow sidechain, we
wouldn't need any other change after it.

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Is that what you just said?

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Yes.

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OK.

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Some people say today the protocol is already ossified or should already be
ossified.

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I'm not sure if that's really the case because if push came to shove, probably there
would be a lot of pressure.

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So to summarize your point, your point is essentially if we have sidechains, any
change you would want to make to Bitcoin, which is very difficult,

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you can just do on the sidechain and people can use that.

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So that's why it would be your worldview be the last change to Bitcoin that's really
sort of necessary.

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Is that that's a summary, right?

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Right. It is.

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OK, so.

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I mean, I think it does make you I think any Bitcoin layer two tends to make
security tradeoffs.

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And to think about why that would be, you know, if there's a way to improve Bitcoin,
it would already do it.

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Right. It would easily adopt any new innovation or insight.

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And so layer two is like lightning make a tradeoff.

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You know, lightning has hot wallet risk, which Bitcoin doesn't.

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So but you get some advantages for that relaxation and security and a reactive
security model where you have to cancel attempts to do a hostile channel close.

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So and layer twos for sidechain layer twos have a different security tradeoff.

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You know, they're not not the lightning tradeoff, but nevertheless, the Bitcoin full
nodes are not really validating the rules on the sidechain.

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And so there's a kind of sort of necessarily a loose coupling where a smaller or
different set of people are validating it.

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So I think Bitcoin tends to get compared as the benchmark.

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So if anybody proposes, you know, a layer two, people will say, well, is it as
secure as Bitcoin?

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Is it a censorship resistant as Bitcoin?

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And usually the answer will be no, because it can't really be or Bitcoin would
already be doing that.

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And so I think the real question is, do you know, do we support people making use of
different tradeoffs?

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And I would say the answer is yes, we do.

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Because, you know, lightning is popular and growing quickly.

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There are other new layer twos like FedeMint and the Mercury Wallet state chains
approach.

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So there are at this point multiple layer twos and they all make different security
tradeoffs, which are inherently less than the main chain.

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Right. So there is a tradeoff when it comes to Drivechains.

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And I think the tradeoff would be that because miners control the peg in and the peg
out, they could, in theory, take coins from the sidechain that aren't theirs.

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But, you know, since the miners control the peg and they can send it to themselves
on the main network,

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that would be the tradeoff in a very nutshell way to put it.

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Anything with merge mining or something, there's an additional question of how
reliably will blocks be found.

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But, yeah, the BIP300 idea, the Drivechain idea is to basically take a hash of an
entire like three.

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This is a big summary of it, but it's basically take one hash of a giant period of
time, like three months, three to six months.

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And so a lot of crazy stuff might be happening.

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There might be enormous number of transactions.

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There might be enormous complexities, ZK-SNARK, whatever, Ethereum-like stuff.

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But it's just one hash for this big period of time.

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And so then on layer one, the miners have to basically assert that hash and then
back it up with another three months of agreeing with it.

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So it's designed to be very, very difficult.

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Like if they deviate one tiny bit from doing 100% honesty, then they have the wrong
hash.

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But that's basically the idea.

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I think that's 100% correct what Adam just said about this idea that Bitcoin has a
very high level of security

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and then regular users don't always need super, super, super strong security all of
the time.

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So most people most of the time don't need – the coffee transaction is very
different from other types of Bitcoin transactions,

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sending donations to a war-torn country or WikiLeaks or whatever, or running your
drug empire or whatever you're doing.

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So it's a completely different situation.

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And even if you run the drug empire, you also buy coffee sometimes.

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So even the same person has different needs throughout the day.

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And most people are totally comfortable with downgrading immediately from full
Bitcoin security to like a custodial wallet or to fiat or to something else.

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And to really get this sidechain idea going, we have to keep the Bitcoin community's
mind open to the fact that a regular user has a spectrum of needs.

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And so the solutions will also be a spectrum.

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It will include lightning and it will include lots of other different things.

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So in your view, essentially, the reason we don't have sidechains yet, or at least
not these kinds of sidechains,

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is because it's become this thing where the perfect has become the enemy of the
good.

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Like it would be an improvement, but it's not perfect, and therefore we don't have
it yet.

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That's what it comes down to.

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I think that could be one reason.

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Do you both think that way?

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I think you probably know better than I do why it doesn't – it continues to mystify
me why this idea isn't just a slam dunk for everyone.

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I thought everyone would love this idea.

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I thought it would even prevent the block size war from happening or something.

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But instead, everyone was like, no, we know that we're right, so we're determined to
fight this block size war and win.

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And then only one side won.

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I mean, I think Bitcoin is not as good at adopting things which aren't kind of
simple win-win.

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So if there's a kind of win-lose where you get more flexibility, but there's a
security trade-off.

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So Lightning was adoptable, and that required an opcode to do properly, and there's
a proposal for another one to improve it.

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But I think it's a sort of phenomena because the people working on it are kind of
independent volunteers.

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And so they're going to work on what they think is interesting or what they think is
demanded by users.

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And it's kind of up to users to – power users or people who want to build systems on
top of different layer 2s or different features to make the case for why they think
this is interesting.

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And of course, the technical audience among the implementers and the protocol
researchers is typically very security first.

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So they tend to be more in the angle of security first and think, well, this is
making a security trade-off, so I'm not sure that's great.

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And so maybe they'll be biased to hold out hope for a technical innovation that
hasn't happened yet and may not happen for 5 or 10 years.

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And there are some interesting technical directions which might get there where you
wouldn't need an opcode.

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You could do it in some other way, right, with more efficient scalable snarks, which
there's still room for improvement, or simplicity, which is kind of generic script
upgradability.

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That's an interesting thought experiment to say that there might be more enthusiasm
and wider support for a version 2 security first scripting upgrade for Bitcoin.

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Because it's harder to make the case for why you don't want extensibility where you
can implement new opcodes using the existing script language at that point, because
who doesn't like extensibility?

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And then that itself would enable to directly implement sidechains.

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Real quick, because I want to move to the future of sidechain.

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I was just going to say, I think those are very good arguments.

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The sidechain coalition in Bitcoin, I think, is constantly shedding users because
they become impatient, and then they just flip to their favorite altcoin.

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And then they leave, and then they're no longer in the Bitcoin community supporting
sidechain.

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So I think that's true, the user demand part.

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And I think, again, the developer part, that's very true, that if you're in the
Bitcoin community and you're a developer, and you say something like, hey, we can
use this thing, and we can copy Ethereum or something, then it might appear as
though you think that there's something great about that you're like an ether
supporter or something, and no one wants that.

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So I think all of those two things work profoundly against the idea, which is
something I never really considered when I posted.

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Real quick, Adam. Ideally, yes or no answers.

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Do you actually support BIP300, Paul's proposal? Are you on board with this?

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Yeah, I mean, I think that ideally you want a few opcodes to enable different
variants to be implemented, because the opcode is just the building block, and then
you implement something on top of it.

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And so as with Lightning, you can do a certain amount without the opcodes, you can
do more with the opcodes.

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And if there were two or three opcodes, maybe they would enable different variants
to be experimented with.

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So that's a yes?

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Yeah.

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Did you know that, Paul?

190
00:19:40,000 --> 00:19:49,000
No, I didn't know. He's been the only supporter for a very long time. He was the
only person in 2017 who could explain the idea at all.

191
00:19:49,000 --> 00:19:55,000
Okay, so the name of the panel, the future of sidechains. What is the future of
sidechains, and when will it arrive?

192
00:19:56,000 --> 00:20:04,000
Should we talk more about the simplicity snark angle?

193
00:20:04,000 --> 00:20:06,000
Okay.

194
00:20:06,000 --> 00:20:15,000
That would take a very long time, right? That would take many years.

195
00:20:15,000 --> 00:20:29,000
Yeah, I'm thinking, you know, there's some precedence for features being on
sidechain, like on a liquid sidechain, or technically elements, which is the
underlying open source system.

196
00:20:29,000 --> 00:20:46,000
So for example, Schnorr signatures were in elements in the initial release in 2015,
and Schnorr signatures came to Bitcoin in an improved form, which had various issues
fixed and improved in 2021, last year, right?

197
00:20:46,000 --> 00:21:01,000
So you can see there's a six-year elapsed time there, and so Paul's point is, you
know, let's say the liquid adds simplicity support this year, then it might be five
years before Bitcoin sees that.

198
00:21:01,000 --> 00:21:05,000
But then it would be a sidechain on a sidechain, essentially, right?

199
00:21:05,000 --> 00:21:07,000
He was saying if it's demonstrated first.

200
00:21:07,000 --> 00:21:09,000
Oh, okay, right.

201
00:21:10,000 --> 00:21:24,000
I mean, you can look at how long it took SegWit versus how long it took Taproot, and
you can see a very – you can just – actually, I've grafted out the whole history of
Bitcoin.

202
00:21:24,000 --> 00:21:28,000
There used to be very many – soft fork used to not be a big deal.

203
00:21:28,000 --> 00:21:35,000
It used to be like around two a year at some point, and then it fell to like one
every five years, basically.

204
00:21:36,000 --> 00:21:48,000
Well, I do think simplicity is probably the closest and best hope for kind of
mainchain ossification, because it adds self-extensibility directly to Bitcoin.

205
00:21:48,000 --> 00:21:49,000
So something like –

206
00:21:49,000 --> 00:21:53,000
Maybe you should explain what simplicity is in a nutshell.

207
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Simplicity is a kind of next-generation scripting language.

208
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It's very low-level.

209
00:21:59,000 --> 00:22:16,000
It has formal provability, and it was – and when people talk about MOST, actually,
that is related to simplicity, and it was proposed, I think, in 2012 or something on
IRC by Russell O'Connor, and he's been working on it at Blockstream for some years
now.

210
00:22:17,000 --> 00:22:28,000
And so, yeah, it's very low-level, and it enables you to implement things directly
in a relatively compact fashion, and then size and speed optimize them later.

211
00:22:28,000 --> 00:22:31,000
So it could sort of be the last soft fork or something, right?

212
00:22:31,000 --> 00:22:43,000
And particularly something like Schnorr signatures could be implemented directly in
simplicity with use of jets, which are kind of library functions that are
implemented natively.

213
00:22:44,000 --> 00:22:50,000
So it would be a new way to program Bitcoin transactions, essentially, and it would
be a soft fork.

214
00:22:50,000 --> 00:22:58,000
It would be another upgrade to the Bitcoin network, and this should allow
sidechains, like BIP300-style sidechains?

215
00:22:58,000 --> 00:23:00,000
I think so, because it's fairly generic.

216
00:23:01,000 --> 00:23:07,000
I mean, if you can implement Schnorr signatures from scratch, you can implement BLS
signatures, you can implement a lot of different things, right?

217
00:23:07,000 --> 00:23:21,000
And so the kind of functionality the Drivechain looks for, or even the skip list
proof, the alternate form of sidechains, those are all things that you could
implement in opcodes.

218
00:23:21,000 --> 00:23:24,000
Is this a strategy you agree with, Paul?

219
00:23:24,000 --> 00:23:26,000
Should we wait for simplicity?

220
00:23:26,000 --> 00:23:28,000
I think it's like – I don't really see it that way.

221
00:23:28,000 --> 00:23:32,000
I feel like just propose things for the community to decide for themselves.

222
00:23:32,000 --> 00:23:40,000
So BIP300 is obviously not activated on Bitcoin today, otherwise this conversation
would be completely different.

223
00:23:40,000 --> 00:23:49,000
But it does exist in a testnet form, and we have clones, BIP300 clone of Zcash and
a BIP300 clone of Ethereum.

224
00:23:49,000 --> 00:23:59,000
We also have a template that is a clone of Bitcoin Core, and people have used that
to make an NFT sidechain that uses UTXOs and not accounts.

225
00:23:59,000 --> 00:24:08,000
And also a joke sidechain where all the images are replaced with images of trains
for some reason, called TrainChain, which is a joke.

226
00:24:08,000 --> 00:24:16,000
But the point is that exists today in testnet form, and so I don't know.

227
00:24:16,000 --> 00:24:20,000
It depends on, I guess, if people become enthusiastic about that idea.

228
00:24:20,000 --> 00:24:27,000
I don't really – it's not really the Bitcoin style to force an idea upon anyone.

229
00:24:27,000 --> 00:24:31,000
And so I don't know exactly what the future of BIP300 is.

230
00:24:31,000 --> 00:24:34,000
I do think I've seen a lot of support for it.

231
00:24:34,000 --> 00:24:36,000
There was very low support for it for a very long time.

232
00:24:36,000 --> 00:24:37,000
I was very surprised by that.

233
00:24:37,000 --> 00:24:38,000
I had no idea why.

234
00:24:38,000 --> 00:24:41,000
But it has slowly started to pick up again.

235
00:24:41,000 --> 00:24:49,000
I think it may – the future of sidechains may be that at some point there is an
altcoin that really competes with Bitcoin.

236
00:24:49,000 --> 00:24:55,000
I think right now all the altcoins are terrible, and I find it even amusing that –

237
00:24:56,124 --> 00:25:00,124
it's not really that surprising that Ethereum is a competitor to Bitcoin because it
does everything so differently.

238
00:25:00,124 --> 00:25:04,124
So that part of it I understand, but I think it's just very badly designed.

239
00:25:04,124 --> 00:25:09,124
And so I'm surprised that that's the number two coin.

240
00:25:09,124 --> 00:25:16,124
But there may be something where the people, investors, start to say – because we
have – like I was trying to emphasize before,

241
00:25:16,124 --> 00:25:26,124
there was this increasing stasis in the Bitcoin protocol. And so I'm not sure that
that works in the technology world.

242
00:25:26,124 --> 00:25:30,124
Although people make comparisons to TCPIP and stuff, so I don't know.

243
00:25:30,124 --> 00:25:39,124
But that's the whole point is that you ossify at one level and then you move up to
the next layer and you do this stuff there.

244
00:25:39,124 --> 00:25:47,124
And that's what sidechains do. And when we don't have that, then we really don't
have that ability to ossify.

245
00:25:47,124 --> 00:25:53,124
So we've mentioned simplicity is one option to potentially get sidechains.

246
00:25:53,124 --> 00:26:00,124
And then I guess – well, I'm sure the other option is to have the new opcode, which
is also an upgrade, the BIP300.

247
00:26:00,124 --> 00:26:05,124
Are there other options of getting there? Are there other possibilities of getting
there?

248
00:26:05,124 --> 00:26:07,124
Yeah, possibly SNOX.

249
00:26:07,124 --> 00:26:11,124
Okay, so that's the – there are three options and that's the third one essentially?

250
00:26:11,124 --> 00:26:17,124
Well, I've never – this is kind of a weird quibble or something, or like splitting
hairs.

251
00:26:17,124 --> 00:26:25,124
But I've always kind of wondered if that is – because I see the sidechain as like
your layer one node is not validating what's happening.

252
00:26:25,124 --> 00:26:33,124
But if there's the SNARK, then it sort of is the only way to know that – so I'm not
sure if I kind of like – it's kind of splitting hairs, but I don't know.

253
00:26:33,124 --> 00:26:34,124
I think you're right. Like technically –

254
00:26:34,124 --> 00:26:35,124
What is a SNARK?

255
00:26:35,124 --> 00:26:44,124
Okay, so a SNARK is a compact proof that some code ran and produced a certain
output.

256
00:26:44,124 --> 00:26:52,124
So if the code that's running is to validate the sidechain, then you have a compact
proof that the mainchain could validate.

257
00:26:52,124 --> 00:26:55,124
And it's safer to validate a proof than to run a program.

258
00:26:56,124 --> 00:27:00,124
But Paul is right in the sense that that would really be more like an extension
block.

259
00:27:00,124 --> 00:27:05,124
Like it is being validated, but a compact summary of it is being validated.

260
00:27:05,124 --> 00:27:09,124
Okay, this is very much still in the research stage, I think?

261
00:27:09,124 --> 00:27:20,124
Well, I mean, there are viable SNARK systems, but they either have security
tradeoffs where they're using kind of novel experimental crypto with significant
risk,

262
00:27:20,124 --> 00:27:27,124
or they are very expensive to compute or verify, and the proof sizes are large and
things like that.

263
00:27:27,124 --> 00:27:34,124
But there are people doing interesting things with them, and there's some interest
to see that used for Bitcoin in some way.

264
00:27:34,124 --> 00:27:44,124
I think the other kind of connected, related system is that they're seeing some
enthusiasm in some of the other Bitcoin Layer 2s, which are sort of similar.

265
00:27:44,124 --> 00:27:56,124
So particularly Fetiment, which is some kind of hybrid. It's a bit like Liquid being
federated, but the operators of those nodes are users or communities.

266
00:27:56,124 --> 00:27:58,124
But it's not a sidechain, right?

267
00:27:58,124 --> 00:28:05,124
No, it's not a sidechain, but I mean, it's another Layer 2, and they are
experimenting actively.

268
00:28:05,124 --> 00:28:17,124
So it may be that that draws the enthusiasm and then pulls along some sidechain
ideas as people realize they're actually almost the same, but with different
tradeoffs.

269
00:28:17,124 --> 00:28:24,124
Okay, so we mentioned new opcodes. That's a protocol upgrade. Simplicity would be a
protocol upgrade.

270
00:28:24,124 --> 00:28:27,124
Snarks, would that also entail a protocol upgrade?

271
00:28:27,124 --> 00:28:29,124
Yeah, the validator on Layer 1.

272
00:28:29,124 --> 00:28:31,124
Also a software?

273
00:28:31,124 --> 00:28:33,124
Probably, yeah.

274
00:28:33,124 --> 00:28:40,124
But it's very difficult because you don't know with the – how do you know that the
validator hasn't malfunctioned?

275
00:28:40,124 --> 00:28:48,124
The only way is to like – I don't know. I see it more as the blockchain is kind of
like for auditability, I think.

276
00:28:48,124 --> 00:28:53,124
So it's really containing all those sidechain messages also.

277
00:28:53,124 --> 00:29:03,124
But in some sense, it's a good thing because it means that you can't – it means that
it will work reliably, but it also means when it breaks, it will break completely.

278
00:29:03,124 --> 00:29:08,124
And I think the other thing with the Snarks is that very few people seem to
understand them.

279
00:29:08,124 --> 00:29:16,124
So I think that you're really playing with fire with that, whereas BIP300 is just a
number being counted up to 13,000.

280
00:29:17,124 --> 00:29:22,124
Okay, so we have three options. We've heard three options so far.

281
00:29:22,124 --> 00:29:27,124
So opcode, simplicity, Snarks. Which one is it going to be? Or which one do you want
it to be?

282
00:29:27,124 --> 00:29:32,124
Or what's the plan here? Who wants to take it? Adam?

283
00:29:32,124 --> 00:29:37,124
I think that the opcodes are probably the fastest path.

284
00:29:37,124 --> 00:29:41,124
So I'd be interested to see more enthusiasm for that.

285
00:29:41,124 --> 00:29:47,124
I think there is new energy in Bitcoin Layer 2s with Fedimints, statechains.

286
00:29:47,124 --> 00:29:50,124
There are multiple companies working on those things.

287
00:29:50,124 --> 00:29:58,124
And so maybe we'll see – and they're also interested in novel new opcodes like
Covenants in Bitcoin and things like that.

288
00:29:58,124 --> 00:30:02,124
So it's a good time to have that conversation.

289
00:30:02,124 --> 00:30:04,124
Paul?

290
00:30:04,124 --> 00:30:14,124
Well, I don't know exactly what stimulates the Bitcoin community to prefer one thing
over another thing.

291
00:30:14,124 --> 00:30:22,124
But I do think that the idea that I had, BIP300, and just the sidechain idea more
generally, it has enormous –

292
00:30:22,124 --> 00:30:30,124
not only does it do extensibility, but it can be used to achieve huge scale very
quickly.

293
00:30:30,124 --> 00:30:33,124
It can be used for privacy with the Zcash sidechain.

294
00:30:33,124 --> 00:30:39,124
It can be used for new things like a Namecoin-like thing or prediction markets.

295
00:30:39,124 --> 00:30:41,124
So it does quite a few things.

296
00:30:41,124 --> 00:30:49,124
It also happens to solve the security budget fees question just as a beneficial side
effect.

297
00:30:49,124 --> 00:30:53,124
So I think it's a pretty good idea, and I think that would be the fastest way.

298
00:30:53,124 --> 00:30:59,124
I'm not sure even how long BIP300 would take to actually make it through the
process at this point,

299
00:30:59,124 --> 00:31:02,124
because the process seems to be going very slowly.

300
00:31:02,124 --> 00:31:04,124
Well, I want to ask you one more question.

301
00:31:04,124 --> 00:31:07,124
We're running out of time, so this is a question for you, Paul.

302
00:31:07,124 --> 00:31:12,124
I've asked you before at other conferences.

303
00:31:12,124 --> 00:31:18,124
So one of the things with SegWit, we had this sort of concern trolling, I would
almost say,

304
00:31:18,124 --> 00:31:22,124
that SegWit outputs, coins in SegWit could be stolen.

305
00:31:22,124 --> 00:31:27,124
And then one way to counter that – so that's similar to the sidechain stealing
argument, right?

306
00:31:27,124 --> 00:31:32,124
And one way to counter that would be – was SegWit was deployed on Litecoin,

307
00:31:32,124 --> 00:31:37,124
and then someone put a million dollars in a Litecoin SegWit output.

308
00:31:37,124 --> 00:31:44,124
Why don't we have a sidechain on Litecoin and someone have a million dollars on a
sidechain on Litecoin,

309
00:31:44,124 --> 00:31:46,124
see if anyone can steal it?

310
00:31:46,124 --> 00:31:50,124
If that doesn't happen, that's a real sort of – you know, that strengthens –

311
00:31:50,124 --> 00:31:53,124
Well, first of all, they're not totally comparable, because in one case,

312
00:31:53,124 --> 00:32:00,124
it was a soft fork enforcing rules on layer one, and whereas in BIP300,

313
00:32:00,124 --> 00:32:03,124
there is actually a novel distinction between breaking the BIP300 rules

314
00:32:03,124 --> 00:32:06,124
and just improperly withdrawing from the sidechain, so they're actually different.

315
00:32:06,124 --> 00:32:09,124
They're different, but are you going to do it?

316
00:32:09,124 --> 00:32:12,124
People can do – I mean, I think you should talk to the Litecoin people.

317
00:32:12,124 --> 00:32:14,124
They did Mimblewimble extension block, right?

318
00:32:14,124 --> 00:32:17,124
So this is way more straightforward than that.

319
00:32:17,124 --> 00:32:19,124
I think there's no – that's a great idea.

320
00:32:19,124 --> 00:32:20,124
All right, so someone could do it.

321
00:32:20,124 --> 00:32:21,124
Yeah.

322
00:32:21,124 --> 00:32:23,124
That's the call to the audience today.

323
00:32:23,124 --> 00:32:24,124
It's a great idea.

324
00:32:24,124 --> 00:32:25,124
All right, that's our time.

325
00:32:25,124 --> 00:32:27,124
Thank you, everyone, and thanks to Adam and Paul.

326
00:32:27,124 --> 00:32:35,124
Thank you.

327
00:32:35,124 --> 00:32:39,124
Welcome back to the Bitcoin Magazine Analyst Desk, brought to you by BitGo.

328
00:32:39,124 --> 00:32:44,124
We are live at Bitcoin Amsterdam, and I am joined here by Greg Foss and David Zell.

329
00:32:44,124 --> 00:32:46,124
Gentlemen, welcome to the Analyst Desk.

330
00:32:46,124 --> 00:32:50,124
Greg, we are getting some updates out of the U.K. right now as we speak,

331
00:32:50,124 --> 00:32:54,124
and I just want to know, is a generation of bond traders finally getting christened?

332
00:32:54,124 --> 00:32:57,124
Are their sphincters getting tightened?

333
00:32:57,124 --> 00:33:04,124
Okay, you know, having spent a career on a trading desk,

334
00:33:04,124 --> 00:33:06,124
there are points in time that you will remember.

335
00:33:06,124 --> 00:33:13,124
I think this will be one that the U.K. bond market participants remember.

336
00:33:13,124 --> 00:33:16,124
A statistic.

337
00:33:16,124 --> 00:33:26,124
Since December 2021, U.K. bonds have lost 52% of their value.

338
00:33:26,124 --> 00:33:30,124
Now, this is supposed to be termed a risk-free investment, okay?

339
00:33:30,124 --> 00:33:38,124
I'm not certain how you define risk-free, but losing 52% of your capital is not the
way.

340
00:33:38,124 --> 00:33:49,124
Today, it appears that the U.K. 30-year bond or 30-year guilt is going to pass
through 5% again.

341
00:33:49,124 --> 00:33:55,124
That's the last time the Bank of England had to come in on a buying binge

342
00:33:55,124 --> 00:33:59,124
to help push the price of bonds higher.

343
00:33:59,124 --> 00:34:03,124
And when you push the price of bonds higher, the yield goes down.

344
00:34:03,124 --> 00:34:07,124
The yield went down to under 4% when they did that,

345
00:34:07,124 --> 00:34:12,124
and now it's jumped right back to over or very close to 5%.

346
00:34:12,124 --> 00:34:16,124
This is a disaster for U.K. pension funds.

347
00:34:16,124 --> 00:34:20,124
And more importantly, they have been using leverage in the funds.

348
00:34:20,124 --> 00:34:29,124
So can you imagine, Q, if you levered that three times and you've lost 52%, okay?

349
00:34:29,124 --> 00:34:36,124
You've lost 152%, which means your strategy is vaporized

350
00:34:36,124 --> 00:34:40,124
and you've taken 50% returns from another portion of your portfolio.

351
00:34:40,124 --> 00:34:43,124
It's a disaster for U.K. pensioners.

352
00:34:43,124 --> 00:34:50,124
And I can't overstate the impact that you might have if you're in the U.K.

353
00:34:50,124 --> 00:34:56,124
and you open your pension plan after 90 days and you're like, what just happened
here?

354
00:34:56,124 --> 00:35:06,124
So absolutely, Bitcoin is the solution for U.K. pension managers that need to hedge
that risk.

355
00:35:13,124 --> 00:35:18,124
Transcription by CastingWords

356
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