1 00:00:00,000 --> 00:00:04,000 There's no second best crypto asset. There's a crypto asset, it's called Bitcoin, right? 2 00:00:04,560 --> 00:00:06,080 Right? There's no second best, okay? 3 00:00:10,960 --> 00:00:14,160 I was criticizing the treasury companies when they first started, and I was like, 4 00:00:14,160 --> 00:00:20,320 this is a pointless idea, there's no comparative advantage. Now that is finally, like, playing out. 5 00:00:20,320 --> 00:00:24,640 I was super early to sidechains, and I was super early to L2s, and I was super early 6 00:00:24,640 --> 00:00:28,480 into Lightning, and then I was super early into abandoning Lightning. Sometimes you're 7 00:00:28,480 --> 00:00:32,880 going to ask people questions like, how does the Lightning network work? Or which Lightning 8 00:00:32,880 --> 00:00:41,120 wallets are custodial? You can ask people some questions. A certain number of events could 9 00:00:41,120 --> 00:00:47,760 easily cause strategy to have to go bankrupt, at least certainly from the perspective of the 10 00:00:47,760 --> 00:00:51,920 people who own the common stock, in which case the MNAV premium would be like, who even cares, 11 00:00:51,920 --> 00:00:52,960 because you're getting nothing. 12 00:00:58,720 --> 00:01:02,880 Supported by Cascade. Use your Casper without selling it. 13 00:01:07,920 --> 00:01:12,960 Hi, welcome to XXIM podcast, your home of decentralization. Today, I'm joined by Paul 14 00:01:12,960 --> 00:01:17,680 Sztorc for a second sit-down session to discuss specifically drivechains. 15 00:01:17,680 --> 00:01:19,520 So welcome, Paul, and good to see you again. 16 00:01:21,120 --> 00:01:21,920 Thanks for having me. 17 00:01:22,720 --> 00:01:28,640 Awesome. Now, for anyone new here, Paul is a well-known Bitcoin researcher, developer, 18 00:01:28,640 --> 00:01:35,120 and thinker, and is launching Bitcoin HardFork next month. So coming very soon, in fact, 19 00:01:35,120 --> 00:01:40,320 in a month's time, right? Now, Paul, when we did our first session, it was a wonderful session, 20 00:01:40,320 --> 00:01:44,160 you know, we were just chit-chatting before the recording. I truly enjoyed it. You enjoyed it, 21 00:01:44,160 --> 00:01:49,680 too. So broadly speaking, we touched four topics, right? So we went through 22 00:01:51,120 --> 00:01:55,920 why Bitcoin development is stalled. Correct me, obviously, if you remember other things 23 00:01:55,920 --> 00:02:01,600 we discussed as well. So why Bitcoin development is stalled. BIP-300 and 301, which you've been 24 00:02:01,600 --> 00:02:09,280 working on for over a decade, right? Line merge mine, we went through that, 301. Why Bitcoin cash 25 00:02:09,280 --> 00:02:15,040 and Lightning have struggled to get any meaningful traction adoption, right? We went through a lot, 26 00:02:15,040 --> 00:02:19,600 actually. We discussed a lot on the Lightning front. And the last one is, you know, why you 27 00:02:19,600 --> 00:02:25,040 had to resort to plan B, HardFork with eCash, which is coming soon, right? So that was a quick 28 00:02:25,040 --> 00:02:30,320 summary for someone who didn't watch it. I'll put up a link. What's been the overall feedback 29 00:02:30,320 --> 00:02:33,120 you're getting from the Bitcoin community? You've done a lot of sessions, right? 30 00:02:33,520 --> 00:02:40,800 Well, I think, you know, we expected it to be very controversial, and of course it was. 31 00:02:41,600 --> 00:02:49,520 And you don't know, like, we get a lot of new supporters and a lot of critics. But absolutely 32 00:02:49,520 --> 00:02:54,800 nothing has surprised me whatsoever. It all happened basically exactly the way that I 33 00:02:54,800 --> 00:02:59,680 thought it would. And, you know, a lot of the things that I do, I have a long track record, 34 00:03:00,000 --> 00:03:05,280 a 10-15 year track record in the industry of being very, very early. Like I was super early 35 00:03:05,280 --> 00:03:09,920 in the prediction markets, and I was super early to sidechains, and I was super early to L2s, 36 00:03:10,720 --> 00:03:14,160 and I was super early into Lightning, and then I was super early into abandoning Lightning. 37 00:03:14,160 --> 00:03:18,720 So I have a really, really strong track record of being very early. I have a long history of 38 00:03:18,720 --> 00:03:22,400 saying a lot of things. You know, I say some stuff, like I was criticizing the treasury 39 00:03:22,400 --> 00:03:25,840 companies when they first started, and I was like, this is a pointless idea. There's no 40 00:03:25,840 --> 00:03:33,920 comparative advantage. Now that is finally, like, playing out. So no one has said anything 41 00:03:33,920 --> 00:03:39,920 that has made me think that, you know, in fact, a lot of, a surprising number of people have, 42 00:03:40,800 --> 00:03:44,880 you know, become new supporters, including financial supporters. And so we've had lots of, 43 00:03:45,600 --> 00:03:52,240 you know, people with ideas about content to make and stuff they're going to build. And so 44 00:03:52,240 --> 00:03:56,080 overall, it's been, I would say it was more positive than I thought. I expect it to be super 45 00:03:56,080 --> 00:04:00,000 controversial, which of course it was. I'm not doing it for the sake of controversy. I'm doing 46 00:04:00,000 --> 00:04:03,440 it because, you know, it's the right thing to do. It's really the only solution to the situation 47 00:04:03,440 --> 00:04:09,280 that we're in. And I don't expect a lot of people to understand it because, you know, it's like a 48 00:04:09,280 --> 00:04:13,760 very unusual situation. But because a lot of people just think that Bitcoin doesn't have any problems 49 00:04:13,760 --> 00:04:20,160 at all. So of course, those people are just baffled by why would you even need a new thing? 50 00:04:20,160 --> 00:04:24,400 That's so true, actually. You know, I've been to a few of the Bitcoin halving. The last one I went 51 00:04:24,400 --> 00:04:31,120 to was 2024. And man, people actually, like there'll be 50 people around that, right? It was 52 00:04:31,120 --> 00:04:37,280 a small gathering. But yes, exactly what you say. I don't think people truly understand what goes on 53 00:04:37,280 --> 00:04:42,160 behind the scenes when the development happens, right? Everyone is curious about their wallets 54 00:04:42,160 --> 00:04:47,120 and obviously price action. But I don't think many people care about what's happening and, 55 00:04:47,120 --> 00:04:52,080 you know, the direction of Bitcoin essentially. Sometimes you can ask people questions like, 56 00:04:52,640 --> 00:04:57,840 how does the Lightning Network work? Or, you know, like, what's your, what is the difference, 57 00:04:57,840 --> 00:05:02,000 which Lightning wallets are custodial? You can ask people some questions like, or you can, 58 00:05:02,000 --> 00:05:05,360 and the answers you get are really, even with the treasury companies, you could say, 59 00:05:05,920 --> 00:05:10,800 what's your price target for MSTR? And people will just be like, this question has never even 60 00:05:10,800 --> 00:05:14,960 occurred to them. They just say, oh, I think it can go up because, you know, Michael Saylor is, 61 00:05:14,960 --> 00:05:21,680 you know, a great guy. So these are like, this has become mainstream, it's become retail. I was, 62 00:05:21,680 --> 00:05:25,760 you know, a thought leader in the early days of Bitcoin. So it's just, this is just what it's 63 00:05:25,760 --> 00:05:31,680 like to be very early on, you know, to have your finger on the actual pulse of future, 64 00:05:32,320 --> 00:05:37,120 is that most people aren't there with you yet. Yeah, yeah. And I also think, I think a lot of 65 00:05:37,120 --> 00:05:42,640 people are actually critical of Bitcoin, especially the thinkers, right? The deep thinkers are critical 66 00:05:42,640 --> 00:05:48,160 of Bitcoin, but they never go out to discuss publicly. I think that's where you stand out. 67 00:05:48,160 --> 00:05:52,080 Yeah, everyone is a mindless coward and that they all want to be invited. They got to be 68 00:05:52,080 --> 00:05:55,840 invited to Michael Saylor's New Year party. They got to be invited to the Blockstream after party. 69 00:05:55,840 --> 00:05:59,600 They got to be invited to the Foundry after party of mine, Disrupt at the Big Country Club, 70 00:05:59,600 --> 00:06:02,240 which I've been to all these parties for years and years, five, six, seven years. I've been 71 00:06:02,240 --> 00:06:05,360 Satoshi Roundtail. I've been like all these, there's like, you know, everyone wants to be 72 00:06:05,360 --> 00:06:11,120 invited back. No, it's very hard. There's been a lot of like, there's like a lightning industrial 73 00:06:11,120 --> 00:06:15,040 complex. Cause like so many people have invested with lightning. So then there's a lot of pressure 74 00:06:15,040 --> 00:06:22,080 for people to say, Oh, what do you think of tarot or whatever? Uh, blah, blah, blah. And so you're, 75 00:06:22,080 --> 00:06:27,360 everyone's supposed to just be, this is what they call log rolling in, in politics where everyone, 76 00:06:28,560 --> 00:06:32,160 everyone says, that's really great. And everyone just stays really positive all the time. 77 00:06:32,160 --> 00:06:36,480 And that's, that's, that's productive to some extent, but we've been doing that for basically 78 00:06:36,480 --> 00:06:42,400 like 10, 15 years. And it's now become like a totally delusional, counterproductive 79 00:06:43,040 --> 00:06:47,360 call. And we have to escape while we still go. There's still time to escape. 80 00:06:48,160 --> 00:06:52,960 Yeah. And I would have thought, you know, after all the sessions you've done, 81 00:06:54,400 --> 00:06:58,560 you know, people would be more like open to the ideas that you're presenting, 82 00:06:58,560 --> 00:07:01,680 given you've been on, you've got a track record of really, you know, 83 00:07:02,160 --> 00:07:07,360 I have a really, really long track record and I have an extremely accurate track record also. 84 00:07:08,720 --> 00:07:12,240 I was thinking that after all these sessions, right, people would be more 85 00:07:12,240 --> 00:07:17,280 open to those ideas because not only, you know, you've been, you have a track record, 86 00:07:17,280 --> 00:07:21,520 but also on top of that, you, um, you know, you are giving a new coin. 87 00:07:21,520 --> 00:07:26,720 Giving everyone free money. I'm really respecting people. I'm saying here's this free BIP 300 88 00:07:27,200 --> 00:07:32,080 for free. The idea is free, even before the e-cash hard form. So this idea is free. 89 00:07:32,720 --> 00:07:35,920 And then they're kind of saying, well, we don't want it. And I'm saying, 90 00:07:35,920 --> 00:07:39,200 fine, then don't, then don't take it. And now give you some other free thing. 91 00:07:39,760 --> 00:07:45,520 And, and then people don't like that because humans are, you know, very social, 92 00:07:47,760 --> 00:07:52,480 everyone is conformist. Everyone cares about status. Everyone cares about, 93 00:07:52,480 --> 00:07:56,880 they care about being invited to the parties. They care about getting compliments. They don't, 94 00:07:56,880 --> 00:08:00,560 you know, so it's, it's, uh, people are just like that. 95 00:08:00,560 --> 00:08:06,240 You know, I was doing some research for this episode, right? I was going through your ex 96 00:08:06,240 --> 00:08:10,240 profile and man, I couldn't keep up with the number of outlets that have been invited to 97 00:08:10,240 --> 00:08:16,000 you to discuss, you know, um, e-cash and including your latest session, I think with the Mara 98 00:08:16,000 --> 00:08:22,160 foundation, uh, really, I think I felt it really shows the Bitcoin wider community is looking for 99 00:08:22,160 --> 00:08:28,000 a story right outside of Michael Saylor and price action, which you are, which you're giving it to 100 00:08:28,000 --> 00:08:32,880 them or gave it to them with e-cash. Uh, what's your, like, you know, are you seeing these haters 101 00:08:32,880 --> 00:08:36,160 somewhat opening up? Well, you know, the thing you have in the notes is that we did raise the 102 00:08:36,160 --> 00:08:42,400 $5 million. So we had mostly raised it before announcing in April, but after that we quickly 103 00:08:42,400 --> 00:08:49,040 closed it up. So, so it's like people, some people are haters and some people, you know, 104 00:08:49,040 --> 00:08:53,280 talk as cheap as they say. Yeah. So we had some people, big supporters, some people, big haters, 105 00:08:53,280 --> 00:09:01,520 but then actually, you know, the fundraising came in much more easily. So, um, but yeah, 106 00:09:01,520 --> 00:09:07,280 and then many people, I completely agree with what you said about, we, we haven't had any new 107 00:09:07,280 --> 00:09:13,520 story for a really long time. It was really already boring in 2022, I would say. And then 108 00:09:13,520 --> 00:09:18,800 the treasury companies and kind of like nation state adoption, like maybe El Salvador, that was 109 00:09:18,800 --> 00:09:25,520 like the next thing. But then that also has played out where that hasn't quite, you know, cause the, 110 00:09:25,520 --> 00:09:29,840 was the Chivo wallet or whatever in El Salvador, these people are like, not very, these are like 111 00:09:29,840 --> 00:09:35,520 very poor people. A lot of them don't like know that much about how to operate a computer and 112 00:09:35,520 --> 00:09:40,480 stuff like that. So they just like the, and then the actual wallet is like fully custodial, 113 00:09:40,480 --> 00:09:45,280 it's tied to their version of social security number, like the government ID. So it's like 114 00:09:45,280 --> 00:09:51,040 a nightmare. It's like the exact opposite of Bitcoin. Um, so that was like a new thing, 115 00:09:51,040 --> 00:09:54,880 but really there's not that much new stuff. And then of course, one funny thing that happened 116 00:09:54,880 --> 00:09:59,520 in my, I thought was entertaining was, okay, so you had the treasury companies, which I always 117 00:09:59,520 --> 00:10:06,000 thought were not that great of an idea. And then you had, uh, that what Bitcoin did episode 118 00:10:06,560 --> 00:10:11,200 with Danny, where he was kind of taking them seriously. And he was, and he was asking Michael 119 00:10:11,200 --> 00:10:16,000 Saylor like, oh yeah, you've got this great idea, the treasury company and the preferreds. 120 00:10:16,640 --> 00:10:22,720 And now other people are copying the idea. So in a sane world, that would be a, that would be a 121 00:10:22,720 --> 00:10:28,320 polite question and a compliment, right? Cause it would be like, oh, what if, you know, Elon Musk 122 00:10:28,320 --> 00:10:31,440 is saying, oh, we should have electric cars. We should have self-driving cars. Now everyone's 123 00:10:31,440 --> 00:10:35,360 Ford is doing that too. That would be an opportunity for a normal person to say, 124 00:10:36,000 --> 00:10:40,320 yeah, I was right the whole time. This is a great idea. But instead he had this defensive rant for 125 00:10:40,320 --> 00:10:45,280 like 24 minutes or something, and then saying that it's insulting, he's insulting him and stuff. 126 00:10:45,280 --> 00:10:50,240 So I think that speaks to this like dawning self-awareness that everyone's realizing this 127 00:10:50,240 --> 00:10:57,360 idea is kind of fake and there's no, you know, we could review, this is econ 101 about comparative 128 00:10:57,360 --> 00:11:03,920 advantage, which is to say, if Elon, you could invest in SpaceX or in Tesla, which whatever you 129 00:11:03,920 --> 00:11:09,200 think of Elon is certainly a very controversial person. And he says some insane tweets sometimes, 130 00:11:09,200 --> 00:11:13,360 and you just kind of groan and think whatever, but the guy knows how to run a company. 131 00:11:13,920 --> 00:11:22,880 You, when you invest in, you give cash to Tesla, they use the cash to buy stuff like the factory, 132 00:11:22,880 --> 00:11:26,800 the land, they build the factory on the raw materials, they assemble the car, 133 00:11:26,800 --> 00:11:33,360 they're better at building a car than the investor, I the investor am, they can do it better than me, 134 00:11:34,400 --> 00:11:38,800 but they don't have cash. So it's a mutually beneficial, I'm giving them what they need, 135 00:11:38,800 --> 00:11:43,680 they're then they do give me something that I need, they give me a return on my investment. 136 00:11:43,680 --> 00:11:48,400 Or of course, if you buy the car, you know, how long would it take someone to assemble a car by 137 00:11:48,960 --> 00:11:53,760 working only by themselves, it would take forever. But you go to your job, you work. 138 00:11:53,760 --> 00:11:57,920 So this is the econ 101, you know, and now with everything you've just learned, 139 00:11:57,920 --> 00:12:02,640 see, because the comparative advantage means it's mutually beneficial for both people to 140 00:12:02,640 --> 00:12:07,760 complete the trade. And this is why, as Benjamin Franklin said, here on this, this recording this 141 00:12:07,760 --> 00:12:14,480 on July 4, in America, he said no nation was ever ruined by trade. He was right, because the trade 142 00:12:14,480 --> 00:12:19,280 only takes place if it benefits both people. So this is all just a review. But the Treasury 143 00:12:19,280 --> 00:12:24,080 company is kind of there is no comparative because you could buy Bitcoin yourself. So if there's no 144 00:12:24,080 --> 00:12:28,000 comparative advantage, then it's one person is kind of winning and one person is kind of losing. 145 00:12:28,000 --> 00:12:33,680 And that's all you need to know to decode all this stuff about stretch and preferreds. It's all 146 00:12:33,680 --> 00:12:39,920 someone is gaining at the expense of someone else. And usually the MSTR stockholders are the ones 147 00:12:39,920 --> 00:12:45,760 losing out because you just print that in unlimited supply. But you only need this one 148 00:12:45,760 --> 00:12:52,640 little tool from econ 101, which everyone should have in their toolkit. I hope everyone takes this 149 00:12:52,640 --> 00:12:57,760 to heart and learns this the same as they would learn, you know, anything else they would need 150 00:12:57,760 --> 00:13:03,680 in life. This is a key thing, because this is how you go from a situation where two people cooperate 151 00:13:03,680 --> 00:13:11,040 and their lives improve to a situation versus an exploitative or a foolish situation where one 152 00:13:11,040 --> 00:13:17,200 person is losing. I think what you're mentioning is like productive asset versus financial 153 00:13:17,200 --> 00:13:21,680 engineering, right? Like essentially, you know, with Tesla's example, obviously you give money 154 00:13:21,680 --> 00:13:27,680 and they deploy into some productive assets, car example, right? SpaceX or whatever. I think here 155 00:13:27,680 --> 00:13:32,880 with the strategy, I think it's completely different because, you know, same thing with 156 00:13:33,840 --> 00:13:39,360 ETFs, also the same thing. Well, I would like to give, you know, if I may one tiny 157 00:13:39,360 --> 00:13:44,160 cheer for financial engineering and say that it's not so bad. Sometimes there's lots of stuff such 158 00:13:44,160 --> 00:13:49,440 as insurance, which is just moving money around, but that still helps make the world 159 00:13:50,640 --> 00:13:56,080 move around because someone, you could say in a situation where someone's not a helper, 160 00:13:56,080 --> 00:14:01,200 they have medical malpractice insurance or any other type of insurance, you'd say, well, I can't 161 00:14:01,200 --> 00:14:06,080 open my doctor's office until I have my medical degree and I've saved up a bunch of cash in case 162 00:14:06,080 --> 00:14:12,240 the very first patient I have sues me or threatens to sue me or the very first customer I have. 163 00:14:12,240 --> 00:14:15,600 But with the world of insurance, the insurance people come in and they'll say, listen, 164 00:14:15,600 --> 00:14:19,280 as long as you check these boxes, it doesn't matter if it's the first guy or the last guy. 165 00:14:19,280 --> 00:14:26,400 So insurance will create a lot of opportunity. Insurance is a case where you're just moving 166 00:14:27,360 --> 00:14:33,200 financial engineering and it will still benefit people. And in fact, the idea of investing that 167 00:14:33,200 --> 00:14:39,680 I brought up before, you have a situation where like maybe a young child has a new idea for like 168 00:14:39,680 --> 00:14:43,440 their lawn mowing business or something. They want to start up a business. And then like maybe an 169 00:14:43,440 --> 00:14:50,800 older guy has a bunch of cash saved under the mattress and they can cooperate. And you could 170 00:14:50,800 --> 00:14:55,200 say that's just financial engineering, but it's still a comparative advantage because 171 00:14:55,760 --> 00:14:59,360 one person has an idea and they're willing to work, but they don't have money. The other person 172 00:15:00,400 --> 00:15:03,360 has the cash, but they don't have, they're not getting a return on it. 173 00:15:04,560 --> 00:15:10,640 So financial engineering is actually fine by me as long as there is some, it's all about 174 00:15:10,640 --> 00:15:15,120 comparative advantage. You have to say, what am I getting out of this deal that I wouldn't get 175 00:15:16,000 --> 00:15:21,920 from myself? So you could buy Bitcoin. That's why the treasury company doesn't make any sense. 176 00:15:22,720 --> 00:15:27,760 You could just buy Bitcoin whenever you want. You don't have to pay. MicroStrategy has all 177 00:15:27,760 --> 00:15:32,240 these lawyers. They have like a giant brick and they have like a building. They have accountants 178 00:15:32,240 --> 00:15:37,040 that have to pay extra taxes, fees, compliance and stuff. You have to deal with the risk that 179 00:15:37,040 --> 00:15:46,800 they'll just lose all the coins. So yeah. What about Grayscale? Because obviously MicroStrategy 180 00:15:46,800 --> 00:15:51,600 is relatively new, you know, post 2020. Grayscale, you know, been around for a long 181 00:15:51,600 --> 00:15:56,800 time. Or ETFs. What's your take on those two fronts? Because in a way, you know, 182 00:15:56,800 --> 00:16:00,160 they're doing the same thing. Of course, slightly different. 183 00:16:02,160 --> 00:16:05,600 It's a very important difference. When MicroStrategy first came out, 184 00:16:06,320 --> 00:16:10,800 because Bitcoin went through a long period where there were no ETFs. So actually there is a 185 00:16:10,800 --> 00:16:17,280 comparative advantage because people have their money locked in a certain, I don't know how to 186 00:16:17,280 --> 00:16:25,680 describe it. It's like in pension funds or it's in like the IRAs. And the IRAs, there's no option 187 00:16:25,680 --> 00:16:30,720 to buy Bitcoin in the IRA or at least there wasn't for a really long time. So people create these 188 00:16:30,720 --> 00:16:36,560 ETFs and this is a comparative advantage because now instead of withdrawing money from the IRA, 189 00:16:36,560 --> 00:16:42,400 which is very inconvenient, it has like tax implications and stuff. Instead, you'd have to 190 00:16:42,400 --> 00:16:49,680 withdraw it from the IRA and then buy Bitcoin like with a briefcase full of cash on local 191 00:16:49,680 --> 00:16:53,520 Bitcoins or something weird like that, especially in these investment amounts that are like, you 192 00:16:53,520 --> 00:16:58,560 know, tens of thousands of dollars or more. That would be like really impractical. So this is a 193 00:16:58,560 --> 00:17:05,520 case where you could not buy Bitcoin through your setup. But then the ETF. Another important 194 00:17:05,520 --> 00:17:11,840 difference is that the ETF doesn't claim to mess around with this MNAV premium or Bitcoin per share 195 00:17:11,840 --> 00:17:17,360 or whatever. It just says, if you buy this, we'll give you the equivalent amount of a Bitcoin 196 00:17:17,360 --> 00:17:23,440 exposure. And so it's fixed at basically 1.0, whereas Strategy was trying to say like, oh, 197 00:17:24,320 --> 00:17:28,000 I literally have like clips because I couldn't believe that he said something so ridiculous, 198 00:17:28,000 --> 00:17:33,600 but I have the bookmark and downloaded, which they haven't even been ashamed enough to delete 199 00:17:33,600 --> 00:17:38,160 them. But there was like the CEO of Strategy, that other guy, Fong Lee or whatever his name is, 200 00:17:38,720 --> 00:17:41,600 I don't remember. I don't even really care that much. But he was saying like 201 00:17:42,320 --> 00:17:47,600 the MNAV had gone from like 1.0 to 2.0 and he was saying, yeah, it could go from 2.0 to 10.0 or 202 00:17:47,600 --> 00:17:54,640 maybe even to 20.0. And the ETFs just say, of course, now it's like below 1.0. So it's like 203 00:17:54,640 --> 00:17:59,040 the ETFs just say we will fix it at 1.0. And you can see this is much more honest. This is like 204 00:17:59,040 --> 00:18:04,720 you go to the ATM machine and they say, we'll give you $20 in cash for every $20 in your bank 205 00:18:04,720 --> 00:18:08,240 account. We're not going to like, there's not going to be like an ATM premium or something 206 00:18:08,240 --> 00:18:13,440 that could go up or down or whatever. It may go to zero. In fact, if a certain number of things 207 00:18:13,440 --> 00:18:21,680 happen, a certain number of events could easily cause Strategy to have to go bankrupt, at least 208 00:18:21,680 --> 00:18:26,000 certainly from the perspective of the people who own the common stock, because there's this other 209 00:18:26,000 --> 00:18:30,240 thing that people may not know. This is all like arcane minutiae to most people. But there's this 210 00:18:30,240 --> 00:18:37,600 thing, this pecking order idea that when in a corporation in the United States, like you have 211 00:18:37,600 --> 00:18:42,400 to pay all the people you owe money to first, so that you have to pay like the debt holders first, 212 00:18:42,400 --> 00:18:49,520 then these preferred people get paid out. They all get paid out 100% before the guy at the very 213 00:18:49,520 --> 00:18:55,920 bottom of the list. You're talking about Chapter 11 bankruptcy or Chapter 7, right? In the bankruptcy 214 00:18:56,000 --> 00:19:01,760 quote, right? So the shareholder is the bottom, Class 11 or something, right? At the bottom of 215 00:19:01,760 --> 00:19:07,360 the class. So they could very easily get wiped out and get zero, in which case the MNAB premium 216 00:19:07,360 --> 00:19:10,960 would be like, who even cares, because you're getting nothing. You invested all this money and 217 00:19:10,960 --> 00:19:16,160 you get zero back. So that's theoretically completely possible that they will get some 218 00:19:16,160 --> 00:19:20,960 kind of lawsuit for fraud, or they get some kind of corporate takeover, where someone says, 219 00:19:20,960 --> 00:19:25,680 hey, you know, we just want you to liquidate this company and give all the Bitcoin to the 220 00:19:25,680 --> 00:19:29,840 investors or something. I'm not saying that's going to happen anytime soon, but it's completely 221 00:19:29,840 --> 00:19:34,240 theoretically possible. Whereas with the ETF, you can see that that would never happen, 222 00:19:34,240 --> 00:19:39,280 because the ETF charges a tiny little convenience fee of like half a percent or whatever it is, 223 00:19:39,280 --> 00:19:43,280 and they just say, and that ensures that it's a fully sustainable. 224 00:19:43,280 --> 00:19:50,000 Yeah, I think the only, I do agree, I don't personally think micro strategy or strategy 225 00:19:50,000 --> 00:19:56,000 is going under chapter 11, chapter 7. I don't personally think, but it's a good discussion. 226 00:19:56,000 --> 00:19:59,280 At least it should be discussed openly, right? But I think what I was going to say, 227 00:20:00,400 --> 00:20:06,240 issue I have with the ETFs is the creation redemption process of ETFs are very, 228 00:20:06,880 --> 00:20:12,880 is behind the closed doors with the dealers and issuers. There's a lot of financial injury 229 00:20:12,880 --> 00:20:17,440 happens during the creation redemption process. And that's something we don't get to see. 230 00:20:18,240 --> 00:20:23,520 No, of course, it's better to buy the Bitcoin and hold it on the Bitcoin network if you can. 231 00:20:24,160 --> 00:20:28,960 And it's, I don't think it's that hard. It's not, of course, you do have to invest like a weekend 232 00:20:28,960 --> 00:20:34,000 and figure out like, okay, how do I know what's going on? Is my computer hacked? How do I download 233 00:20:34,000 --> 00:20:40,000 this wallet software? What does it mean to, what are our private keys? So it is a learning 234 00:20:40,000 --> 00:20:46,640 experience. But we learn to do, as people living in the modern times, we learned, a lot of people 235 00:20:46,640 --> 00:20:51,760 learn how to drive a car. A lot of people learn how to, just like how to connect to Wi-Fi and 236 00:20:51,760 --> 00:20:55,600 stuff. It's actually kind of tricky, as we all know, sometimes you have to do various 237 00:20:57,520 --> 00:21:04,800 rituals until I get the Wi-Fi to connect. So it's just something that I think is worth, 238 00:21:04,800 --> 00:21:10,320 if you're going to invest, if someone's going to invest like 10, 20 hours and learn about Bitcoin 239 00:21:10,320 --> 00:21:15,840 and then decide to invest their money in it, you should invest like another 10 or so hours into 240 00:21:15,840 --> 00:21:20,240 figuring out, oh, how do the private keys work? This is all like, this all goes into why you 241 00:21:20,240 --> 00:21:25,680 would invest. You'd say, this helps you figure out what it is you're actually buying. So that's 242 00:21:25,680 --> 00:21:33,680 very healthy. We, like people just buy on Coinbase, it kind of like nulls you to the, you're kind of 243 00:21:33,680 --> 00:21:39,440 numb to the pain of, but that also means that you are more remote. You don't understand as much, 244 00:21:39,440 --> 00:21:47,520 like why is, why is Bitcoin different? Yeah. Yeah. I mean, if you're investing in Bitcoin or 245 00:21:47,520 --> 00:21:52,560 any crypto for that matter, at least learn why you're doing that outside of just financial 246 00:21:52,560 --> 00:21:57,280 gains. Right. And I think that's the unfortunate part. A lot of people come in to make money, 247 00:21:57,280 --> 00:22:01,920 but then eventually they end up holding the bag, right. Because, or they think they end up holding 248 00:22:01,920 --> 00:22:06,560 the bag because price might go up by the time they already sold. So I think what you're saying 249 00:22:06,560 --> 00:22:10,400 is precisely what people need to do is to understand, you know, start with the white 250 00:22:10,400 --> 00:22:16,160 paper, at least read the white paper. Let's come back, I think, let's come back. No, this is not 251 00:22:16,160 --> 00:22:22,400 like a financial, this is not like a personal finance podcast. We've changed the topic today, 252 00:22:22,400 --> 00:22:26,400 but that's a beautiful discussion. So it's just coming back to it. You know, one thing you said, 253 00:22:26,400 --> 00:22:32,880 you guys, Layer 2 Labs and eCash, you guys have raised what, $5 million? So I wanted to get into 254 00:22:32,880 --> 00:22:38,960 a little bit of that discussion, you know, who's supporting the effort? Is it a family or friends 255 00:22:38,960 --> 00:22:44,400 round or is it some serious capital backing it? Mostly, yes. And in fact, I have to say we've 256 00:22:44,400 --> 00:22:50,080 never, even though we sent out to like big funds, we sent like the slide deck. It's funny, like the, 257 00:22:50,080 --> 00:22:55,520 there's like, I have like the gray matter, like website with like a lot of text and like a lot of 258 00:22:55,520 --> 00:23:00,080 like, and so that converts a lot of people who get really excited about it and tell their friends. 259 00:23:00,640 --> 00:23:04,000 And then like, we have like the really polished slide deck. I think that's like converted like 260 00:23:04,000 --> 00:23:09,600 zero people. They're very funny, but we're like basically, so we raised the 3 million back in 261 00:23:09,600 --> 00:23:15,120 2022 and we've come this far just with that. And then we just very recently raised 5 million. So 262 00:23:15,120 --> 00:23:20,240 if people, anyone who was, everyone who was a hater before, look out because now it's about 263 00:23:20,240 --> 00:23:27,040 to get even worse from your point of view. But like, so it was great. And most of it was raised 264 00:23:27,040 --> 00:23:31,760 even before the April announcement and people continue to invest and tell their friends. 265 00:23:31,760 --> 00:23:38,000 We, I would like for there to be a way for people to invest. That's that kind of, because you have 266 00:23:38,000 --> 00:23:42,720 to balance a lot of factors. You don't want it to be like, you don't want to like go to 267 00:23:42,720 --> 00:23:48,720 retail people who are more gullible and just be like, buy this now and stuff. So I was always 268 00:23:48,720 --> 00:23:54,240 very, very, very like clamped down on like saying like, this is like word of mouth and we need to 269 00:23:54,240 --> 00:24:00,240 know like, you know, exactly everyone's, you know, everyone's real name and stuff. So it was very 270 00:24:00,240 --> 00:24:10,320 like traditional like contract type of a thing. But of course, very soon the project will launch 271 00:24:10,320 --> 00:24:16,000 and if you, you know, I think even not that many people actually even know about it. Like we're 272 00:24:16,000 --> 00:24:19,280 going to try to do as best we can to make sure everyone does know about it. But if, you know, 273 00:24:19,280 --> 00:24:22,160 if you're listening to this podcast now, you're probably like, even when it launches, you'll 274 00:24:22,160 --> 00:24:27,520 probably be like, you know, what are the people, people hear about it in certain stages. So 275 00:24:27,520 --> 00:24:32,800 probably hearing about it on the stage is my guess. And yeah, we're using that money for 276 00:24:33,840 --> 00:24:36,080 development, education, et cetera. You need to, 277 00:24:38,720 --> 00:24:41,600 for the, to help because with hard fork, you want it to be, 278 00:24:42,640 --> 00:24:48,720 you want to have fully prepared on launch day. So you want to do a lot of work upfront. 279 00:24:49,680 --> 00:24:55,680 Yeah. So do you, like, are you happy to share who's backing it or names that people mostly? 280 00:24:57,440 --> 00:25:01,520 It's mostly like just people who have been in the industry a long time. 281 00:25:01,823 --> 00:25:06,823 Crypto, Bitcoin OGs that people have had been following me or drive chain project for a while. 282 00:25:08,823 --> 00:25:13,823 We have like a tiny little cult, I guess, but then it's like, they're also their friends. 283 00:25:14,823 --> 00:25:19,823 So it is usually people who have been in the industry for like a really long time, like five or 10 years. 284 00:25:20,823 --> 00:25:22,823 Like that's mostly what it is. 285 00:25:24,823 --> 00:25:26,823 And then like some random other people as well. 286 00:25:26,823 --> 00:25:30,823 So, but it has not been, it's funny, I would, you know, it is weird. 287 00:25:31,823 --> 00:25:38,823 I think there are, there are a lot of things that are kind of almost people who almost invested and then it kind of like just petered out, which is interesting. 288 00:25:39,823 --> 00:25:43,823 We haven't, as I said, we did not have like, like a big fund, like an A16Z. 289 00:25:44,823 --> 00:25:49,823 We didn't have any of anything like that, even though we of course emailed and some people knew through the professional network. 290 00:25:50,823 --> 00:25:59,823 And yeah, it's really surprising who you would think would be a big supporter versus who some people, they could be like a huge supporter of yours for years. 291 00:26:00,823 --> 00:26:03,823 And they'll just say, oh yeah, this is a genius. 292 00:26:04,823 --> 00:26:18,823 And then they never invest, which is weird because the, and then other people, you could just be like someone who, you know, like has like kind of maybe liked some of your Twitter posts. 293 00:26:19,823 --> 00:26:21,823 And they, someone tells them about it. 294 00:26:22,823 --> 00:26:25,823 They just message and they're just like, yeah, they want to invest like $300,000 or something. 295 00:26:26,823 --> 00:26:29,823 It's like one, like one single conversation. 296 00:26:30,823 --> 00:26:33,823 And then you're like, oh, I guess that person is actually really the actual supporter. 297 00:26:34,823 --> 00:26:39,823 So it's kind of interesting, like to what extent people are just, you know, flattering you maybe. 298 00:26:40,823 --> 00:26:41,823 And like, it's a very interesting exercise. 299 00:26:42,823 --> 00:26:45,823 I highly recommend it to anyone who wants to jump off of this cliff. 300 00:26:45,823 --> 00:26:52,823 If you do the fundraising, it's kind of like you really tell like, whoa, like some of these people are really, really big believers. 301 00:26:53,823 --> 00:26:54,823 And all of these people are kind of not. 302 00:26:55,823 --> 00:26:58,823 So it's a very intriguing, very intriguing event. 303 00:26:59,823 --> 00:27:05,823 Yeah, I've had my personal experience, but yeah, I think a hundred percent, you just don't know exactly what you're saying, right? 304 00:27:06,823 --> 00:27:07,823 You just don't know who's going to back you, right? 305 00:27:08,823 --> 00:27:10,823 Even the people that you think are going to back you, they're going to pull out last minute, right? 306 00:27:11,823 --> 00:27:12,823 But that's great. 307 00:27:12,823 --> 00:27:22,823 Congrats to you guys, you know, obviously showing there is capital coming behind this effort, which is always good because I'm a big believer to have, you know, to raise as much as possible when the time is right. 308 00:27:23,823 --> 00:27:24,823 Don't wait for that moment, right? 309 00:27:25,823 --> 00:27:26,823 So it's great that you raised. 310 00:27:27,823 --> 00:27:29,823 Yeah, and then like what people would say is like a horrible bear market. 311 00:27:30,823 --> 00:27:36,823 I don't think it was that, but until recently, back when we raised it, it was only, it was sort of bad. 312 00:27:36,823 --> 00:27:40,823 But people, even in January, people were saying, this is like when we sort of started the five million man. 313 00:27:41,823 --> 00:27:43,823 People were like, this is the worst time ever to raise. 314 00:27:44,823 --> 00:27:46,823 Somehow, somehow ended up doing it. 315 00:27:47,823 --> 00:27:49,823 So I think that maybe, maybe this month might be even worse. 316 00:27:51,823 --> 00:27:52,823 Luckily, long since we raised the five million dollar round. 317 00:27:53,823 --> 00:27:54,823 So let's move forward, right? 318 00:27:55,823 --> 00:27:56,823 So done your fundraise. 319 00:27:58,823 --> 00:28:03,823 So now you're running, actually, you know, getting to the, obviously the finish line or start line, whatever you want to call it. 320 00:28:04,823 --> 00:28:11,823 You are running this 100k bounty to find major vulnerabilities, you know, and you've got 21 submissions, which I saw. 321 00:28:13,823 --> 00:28:17,823 Yeah, we had 11 people enter round one and we had 10 people enter round two. 322 00:28:18,823 --> 00:28:24,823 Well, the way the contest works is if you, any bugs you find, you can submit, but there's like a little organization. 323 00:28:25,823 --> 00:28:26,823 There's like a hierarchy to them. 324 00:28:27,823 --> 00:28:30,823 So some of the software is much more mission critical. 325 00:28:31,823 --> 00:28:32,823 And other software is kind of new. 326 00:28:33,823 --> 00:28:35,823 And so it's obviously, or it's way more complicated. 327 00:28:36,823 --> 00:28:37,823 So it obviously is more likely to have some kind of bugs. 328 00:28:38,823 --> 00:28:39,823 And then the bugs themselves could be different. 329 00:28:40,823 --> 00:28:42,823 Some could like crash the whole network. 330 00:28:43,823 --> 00:28:48,823 And then others would just be like, this doesn't do like kind of what it says it does. 331 00:28:49,823 --> 00:28:50,823 It'll be like a minor bug. 332 00:28:51,823 --> 00:28:53,823 So people are really, really good at finding bugs. 333 00:28:53,823 --> 00:29:01,823 This is another tool everyone should have is that, okay, if you hire someone and you say, oh, I'm going to pay this person, whatever it is, whatever, $20 an hour, I don't know. 334 00:29:02,823 --> 00:29:06,823 You're going to pay someone to paint your house or something, I don't know. 335 00:29:07,823 --> 00:29:08,823 I'm just making this up. 336 00:29:09,823 --> 00:29:13,823 But if you say you pay them by the hour, then, you know, they're going to take, they're going to do a good job. 337 00:29:14,823 --> 00:29:17,823 They're going to take their sweet time though, because you're paying for each hour. 338 00:29:17,823 --> 00:29:22,823 So you get a lot of, you end up getting a lot of hours from their work because you're paying by the hour. 339 00:29:23,823 --> 00:29:28,823 But if you just say, hey, I'm going to, you say, I'm leaving for the weekend, paint my entire house and then leave. 340 00:29:29,823 --> 00:29:32,823 And I'll pay you whatever, whatever it is, $5,000, just making all this up. 341 00:29:33,823 --> 00:29:39,823 But then they will try to do it quickly, which might be bad, might be good. 342 00:29:40,823 --> 00:29:48,823 But they're not going to be wasting any time because they're going to think, hey, as soon as we finish, we can just get out of here with him and whoever else is painting. 343 00:29:49,823 --> 00:29:50,823 Now I'm saying it's a whole crew or something. 344 00:29:51,823 --> 00:29:56,823 So yeah, maybe he'll call all his friends and they'll just paint the house in like four hours and then they'll leave. 345 00:29:57,823 --> 00:30:01,823 And so with the contest, we paid people based on how many bugs, who could find more bugs than other people. 346 00:30:02,823 --> 00:30:03,823 So now people have found a lot. 347 00:30:04,823 --> 00:30:05,823 Some are not that important. 348 00:30:06,823 --> 00:30:07,823 Many of them are duplicates, et cetera. 349 00:30:07,823 --> 00:30:11,823 But yeah, this contest model is superior to like the grant model. 350 00:30:12,823 --> 00:30:17,823 Grant model is like you look around and you say, who should we hire basically? 351 00:30:18,823 --> 00:30:24,823 And we'll say, oh, we'll pay you whatever, $50,000 a year to write a journalism article. 352 00:30:25,823 --> 00:30:28,823 And now you're stuck with that person. 353 00:30:29,823 --> 00:30:30,823 You've given them the grant. 354 00:30:31,823 --> 00:30:35,823 And then of course they come back to you next year and they say, let's renew the grant so that we can keep this going. 355 00:30:36,823 --> 00:30:40,823 And then in stark contrast to that, you have the contest model. 356 00:30:41,823 --> 00:30:50,823 You say, listen, whoever submits the best journalism article on whatever, solar energy, painting houses, 357 00:30:51,823 --> 00:30:54,823 whoever submits the best journalism article wins $50,000 prize. 358 00:30:55,823 --> 00:30:59,823 That's a lot better because people self-select. 359 00:31:00,823 --> 00:31:05,823 Someone only tries that if they think that they can do it better than everyone else. 360 00:31:06,823 --> 00:31:08,823 And you usually have like a couple of options. 361 00:31:09,823 --> 00:31:14,823 Now it's also bad because you have risk aversion and you have like, you know, so it's not perfect. 362 00:31:15,823 --> 00:31:17,823 But yeah, we did this contest model, it's great. 363 00:31:18,823 --> 00:31:21,823 And people have found a lot of bugs, which is very, very helpful. 364 00:31:22,823 --> 00:31:23,823 We haven't found any that are like two. 365 00:31:23,823 --> 00:31:24,823 There are like one or two. 366 00:31:25,823 --> 00:31:31,823 But yeah, people like have the giant AI, like teams of AIs like talking to each other to help them find bugs. 367 00:31:32,823 --> 00:31:34,823 So then they make giant reports and stuff like that. 368 00:31:35,823 --> 00:31:39,823 So people are finding the good bugs, which is, that's exactly what we wanted. 369 00:31:40,823 --> 00:31:41,823 So it's working very well. 370 00:31:42,823 --> 00:31:43,823 And we are doing lots and lots of stuff. 371 00:31:44,823 --> 00:31:49,823 So we have like, it's hard to explain the whole software stack, but it's like layer one is just Bitcoin core. 372 00:31:49,823 --> 00:31:54,823 Then we have this QSYF BIP300301 activator, which activates the software without touching Bitcoin. 373 00:31:55,823 --> 00:31:56,823 But that's its own piece of software. 374 00:31:57,823 --> 00:31:58,823 That's basically done. 375 00:31:59,823 --> 00:32:00,823 But then we have all the L2s. 376 00:32:01,823 --> 00:32:05,823 And then we have the wallet, we have the mobile wallet, and we have the desktop wallet, Bitwindow. 377 00:32:06,823 --> 00:32:07,823 Mobile wallet is ecash.com. 378 00:32:08,823 --> 00:32:10,823 Wallet you can get from ecash.com slash download. 379 00:32:11,823 --> 00:32:14,823 You can try all this stuff out with like the fake coins, which I highly encourage everyone to do. 380 00:32:15,823 --> 00:32:17,823 So we have lots and lots of stuff that you could see for yourself. 381 00:32:17,823 --> 00:32:19,823 You get the fake coins, you can play around with it. 382 00:32:20,823 --> 00:32:29,823 And that is a very effective way of, for you to see my point of view and you see like, oh, this is what this project is actually about. 383 00:32:30,823 --> 00:32:31,823 So that's very helpful. 384 00:32:32,823 --> 00:32:34,823 On top of all that, we want to do like all kinds of other stuff. 385 00:32:35,823 --> 00:32:41,823 So like Bitwindow, the wallets have, they have like all these cool features that you could use on the regular Bitcoin network today. 386 00:32:42,823 --> 00:32:45,823 We have like much better, let's say, we have much better, we're the same deniability. 387 00:32:45,823 --> 00:32:47,823 We have like lots and lots and lots of cool stuff. 388 00:32:48,823 --> 00:33:00,823 And on top of that, I would like to do a second QSYF activator to have some things that should also be on Bitcoin's L1 without even editing the Bitcoin core L1. 389 00:33:01,823 --> 00:33:07,823 So that we could have, I think in particular, OpVault and like a bunch of quantum resistant signature options for people. 390 00:33:08,823 --> 00:33:10,823 They can be just options. 391 00:33:11,823 --> 00:33:14,823 And I think that those would be something that would be attractive to people on L1. 392 00:33:15,823 --> 00:33:21,823 And I have this thing QSYF, C-U-S-F, the core untouched soft fork, where you can do these soft forks without modifying Bitcoin core. 393 00:33:22,823 --> 00:33:25,823 So it's Bitcoin core when they keep putting out a new version, we just merge the changes. 394 00:33:26,823 --> 00:33:27,823 We don't do anything with that. 395 00:33:28,823 --> 00:33:29,823 We don't even touch that. 396 00:33:30,823 --> 00:33:38,823 And so it's possible to do soft fork without modifying the Bitcoin core code and so that we keep that on L1. 397 00:33:39,823 --> 00:33:40,823 We just don't even, we don't even change that. 398 00:33:41,823 --> 00:33:42,823 So that's very advantageous. 399 00:33:43,823 --> 00:33:44,823 So we have a lot of stuff that we are doing. 400 00:33:45,823 --> 00:33:46,823 And then, you know, we do all this stuff. 401 00:33:47,823 --> 00:33:49,823 And then it's more stuff for people to find in the bug contest, but it's very helpful. 402 00:33:50,823 --> 00:33:51,823 See, this is a much more healthy thing. 403 00:33:52,823 --> 00:33:55,823 You know, if you just hire someone to say, OK, look for bugs and report them. 404 00:33:56,823 --> 00:33:58,823 You know, you'll get some kind of report that has some bugs. 405 00:33:59,823 --> 00:34:06,823 But if instead you say, oh, you will get more money if you find more bugs, especially if you beat the rival person. 406 00:34:07,823 --> 00:34:09,823 Well, then your people are aggressively fine. 407 00:34:10,823 --> 00:34:13,823 They're like the best day of their life is when they find a bug that no one else can find.