Okay, we are down at the Bitcoin mining stage. If you have heard the word Drivechains over

the last few weeks or months, then this is a conversation you want to come in and sit

in and listen on. We got Paul Sztorc of LayerTwo Labs. He is the CEO and co-founder, also the

author of BIP300/301. So we have a great presentation coming up here right

now, Collecting Every Transaction Fee on Earth.

Okay, thanks. So yeah, here's the whole talk in one slide. So if you only want to glance

at this one slide, you have the whole talk. I'm the author of these BIPs, and I'm saying

that miners can earn billions of dollars more in revenue if they only do one thing, which

is the morally correct thing of becoming more educated on technical issues. And so these

two BIPs, 300 and 301, BIP300 aims to convert altcoin transactions into Bitcoin transactions,

and BIP301 gives all of those transaction fees to you, the L1 Bitcoin miner. So there's

like an accounting operation that compresses all of the L2 transaction fees onto L1. And

there's other benefits and details. And how to get it is actually very easy. You just

have 51% of the hashrate update their software, but that is a touchy subject. So we'll get

into that slightly. But if you fail to act, there might be a future mismatch between L1

and L2 fees, which would lead to potentially further conflict. So this is the whole thing

in one slide. So if you are... But so what's going to happen now is the tech world and

the mining world are going to collide somewhat. And I just like to comment on how rare this

is. So this is the Miami Convention Center from where we had the big Bitcoin conference

in last year and in 2022. And these are all the different stages. And they always have

the miners far away in their own little room. And open source is also far away. And we're

sort of closer in our own small room. And now I'm going to... I'm coming over here.

So the worlds are colliding, which is a very rare thing, in fact. Before I was into Bitcoin,

I was a statistician at the Yale University Economics Department. And then I described

myself as a Bitcoin researcher. So I've written quite a bit about Bitcoin. And then my big

break, so to speak, was when Atomback linked to my blog. And I wrote this essay down here

that later became this essay with a famous title, Nothing is Cheaper Than Proof of Work.

And so that was sort of big. So I've been around for a very long time. I've done quite

a few things, including given many Bitcoin technical talks. Since that time, I've gone

all around the world. And then I wrote BIP300/301. And then last year, we raised

$3 million to start LayerTwo Labs. So that was the whole first section. So this is the

much longer second section about what is BIP300/301, which is also called Drivechain.

The goals of 300 and 301 are to make every transaction in the world a Bitcoin transaction

and have each of these contribute to minor revenues. But all those secondary goals are

that we want there to be many different networks to accommodate different people and different

use cases. And we also want there to be competition among networks and developers. So like in

other words, they all hate each other. So I'm pro-hate because I'm pro-competition.

And the more people hate each other, the more motivated they will be. And the harder they

will work to make the user happy. And the harder they work for the user, that means

more transaction fees for minors. And it means more Bitcoin adoption. So competition is good.

So BIP300 is the conversion. And BIP301 is pulling the transaction fee from each of

those into Bitcoin minors. So that probably doesn't make any sense at all. So I have a

little bit of an image here, which I'll flesh out, where this is the website cryptofees.info,

if you didn't know, which is a website that has all the different transaction fees paid

by all the different crypto networks. And normally, of course, Ethereum is usually around

10 times the size of Bitcoin, but Bitcoin has been on a tear recently. And so now it's

only about twice as much. So I have some... Let's see here if we can get... Yes. So BIP300

would be to kind of convert... You see converting Ethereum into a different thing that

would call BitEthereum, where it's the same as Ethereum, but you use Bitcoin only and

there's no Ether. And that's BIP300 to do all that. And BIP301 takes all the transaction

fees and compresses them into the L1 Bitcoin network transaction fee. And this is not limited

to altcoins that exist. It can be any network, including a centralized network or a new blockchain

network that we build from scratch to meet whatever use case that we like. And Earth

has 1.1 trillion transactions last year. And at $0.10 each, that would be $100 billion

per year in revenue from just from payments. And that figure doubles every five years.

Now, of course, $0.10 is a completely made-up napkin math figure, but it's not the... That

would make it already much cheaper than the explicit fee paid by every payment network.

And it also means that you can only be undercut by about $0.09. And it's highly unlikely that

the end user would care about $0.09. So it's just much easier also to chase revenues instead

of cutting costs because you get a two-for. You get a two-for-one. More users is more

Bitcoin transaction fees, but also more users is more Bitcoin adoption, which is a higher

price and more of a guarantee that the network is going to survive and make it. So this is

probably hard to believe, but there's really no financial cost to using this idea at all.

You just have to activate BIP300, which I'll get to. There are other costs, which include

that miners have to curate the portfolio of sidechains. But this is very easy since miners

have all the leverage. They can pull the plug on a sidechain at any time. So no one will

pollute the portfolio, so to speak. You also have to moderate disputes with respect to

withdrawals on the sidechain. But this is very, very easy to do because you run a node

and you only run the node if there is a dispute. And nodes are very cheap, even sort of the

worst of the worst networks, Solana, et cetera. Those only cost $3,000 to $5,000 a year, and

they only take a few days to sink. And there will probably not be any disputes because

of the way it's set up, where everything is prepped three months in advance and then it's

compressed to just one hash. So miners can defer to bulls anyway. So basically, there's

no financial cost to actually do this and pick up the $100 billion eventually. And there's

a lot more details about that, but we only have a very short amount of time together,

so we can't get into them. But now I wanted to give an idea that this is not vaporware

and it's actually highly endorsed. So it was a mere blog post in 2015, but there was a

software release in 2019. And then in 2022, we had cloned a few altcoins and even made

our own custom purpose Drivechains. And then in 2023, Luke did his work in progress

pull request to Bitcoin Core, which of course still needs review, but it's far from vaporware.

And we do have a lot of endorsements. So I have some of my three favorite endorsements.

So Adam Back, he said this live on stage in front of everyone at Baltic Honey Badger last

year. He said Drivechains are pretty cool and arguably could have been more important

or useful than let's say Taproot. And then Fiat Jaffa, the creator of Nostar, he said

we need Drivechain or the work of thousands in the last 13 years will be in vain. He's

referring to Bitcoin. He said Drivechain is our only hope. So he's an even bigger fan

of the project than I am. Rene Picard, author of Mastering Lightning, he said we need your

project, of course, for the obvious reasons. But there's actually another endorsement.

It's Robin Linus, founder of Zerosync and the creator of a BitVM. He said this recently.

The brain drain. This is a good microcosm of the whole idea. The brain drain is real, though.

I know dozens of bright researchers and engineers who left the Bitcoin community because it takes

more than a decade of pointless drama to activate even the most simple updates like covenants.

And this is very important because it's miners who do this activation, and it is miners who

have inadvertently created the pointless drama. And it is miners who can bring that to an end,

because we should activate BIP300 and then also the base layer.

So we do have detractors, and the detractors are people who are either hopelessly confused,

or I think there is a Bitcoin death cult, for lack of a better word. So they're hopelessly

confused. For example, Peter Todd, he mistakenly believes that this idea could cost miners as much

as $40,000 a year in software, which he says may harm small miners. That's not true, but it's also

irrelevant since every mining input costs something. And if Bitcoin is to succeed,

the revenues will increase enormously, and then as revenues increase, difficulty will increase,

and costs will increase. So the death cult is there's a lot of people in Bitcoin who think

that it shouldn't improve or can't improve because it's already perfect. Or they think

that Bitcoin shouldn't compete or doesn't compete for users. And they're also unwilling to give

altcoins any credit for innovation. They just kind of want to make Bitcoin part of their personal

brand, and then they want to be like sort of a king of the small pond. And those are the main

detractors in my opinion, but you certainly shouldn't take my word for it.

Now I have some more details. So this idea, by allowing people to switch software networks

whenever they like, we solve all of Bitcoin's biggest problems, which is my bold claim here.

And I'm going to put a little more details on this, but I think I want to get in. Yeah,

the zero risk part is very important to get into because every action should have some risk, but

not really this one. Because what you do is you take Bitcoin Core and you add BIP300,

301 soft fork, you get a new version, but it's interoperable with the old version.

And so the soft fork is easy to add, and it's optional. So people don't have to add it if they

don't want it. And it's also easy to remove. Even being optional, it's easy to subtract it later by

you take the blue thing, and then you add a new soft fork that bans BIP300 messages, and then

you're back to where you started. So you can always control Z this idea. So there really is

not really any risk. And we don't have anywhere near enough time to go into detail on these,

but I have a tiny little line of detail for each, so I'll just read that at you.

And in general, this is the different strokes for different folks kind of situation where

Bitcoin the network has the flexibility to grow and change as needed. And that solves lots of

different problems. So you have people who want different things on the blockchain, but it also

solves scalability, since you have a team of region-specific chains that each have a large

and growing block size. And you can onboard people directly to L2, unlike the Lightning Network.

We can immediately get the Zcash as a Drivechain and achieve Zcash-level privacy.

We can eliminate scams and distractions, since there's no reason to launch a new coin when you

can just launch this instead. It does solve the mining security budget problem, since you collect

revenues from all the chains. It does allow us to help with decentralization, since you can shrink

the L1 block size and then ossify L1. That's what Robin Linus was talking about. And it does actually

increase fundamental value of Bitcoin, since people will be incentivized to create chains

that are actually useful for real-world tasks. And so I'm going to go into, I think I have like

three or four slides about these, since we have nowhere near enough time to go into all of them.

But all these details are available on drivechain.info, and it's easy to find. I've given

many different talks on this. So the heterogeneity thing is that people say, oh, Bitcoin's great,

but can it do smart contracts or whatever? Can it do such and such? And instead of just trying

to explain yourself, you just say, yes, CBIP300. And then relatedly, you have a fringe idea. You

have an idea where you're not actually sure. It may be a genius idea, but you don't know yet.

And they say, well, I have my new idea. It just needs such and such. Can we merge it into Bitcoin?

And instead of trying to say, well, that's very difficult, blah, blah, blah, you just say,

OK, use BIP300, put it on L2. So yeah, with scalability, people will sometimes confuse

this idea with naive L1 large blockism, which is like Bitcoin Cash or whatever. That's not the

idea. The idea is you have an optional section of the Bitcoin network that is larger blocks,

so only the people who wanted them are over there. And that's the best of both worlds,

because those people get exactly what they want. They get cheaper fees, and they get more expensive

full nodes. And so, yes, we're almost at the end of the time. So I said how to get these BIPs.

It's very important that we bring this up and dwell on this slide for a little moment, because

something terrible happened in 2017, for those of you who don't know, where there was this activation

drama regarding SegWit. And that was the number, just a little one over 2017. And so before then,

Bitcoin upgraded in very many different ways, including the soft fork. But after SegWit,

the soft fork has fallen into disuse, and there's a lot of fear and hurt feelings and

and trauma as a result of this. And so we don't upgrade via the soft fork anymore.

Even though it's a very easy thing to do, you just have 51% of the hashrate upgrade the software,

we don't do it. And so this is not good, because BIP-118 is totally uncontroversial,

but it has been sitting around for years because no one wants to take the initiative

to ask miners to merge it. And then 119 had a very similar fate, where it was sitting around

doing nothing, someone tried to activate it. And then even though no one has a problem with the

actual content of the idea, just talking about activating it got this guy run out of town,

and he later quit Bitcoin development, and he actually quit Bitcoin altogether.

So basically, miners have to get involved and learn the issues if they want to potentially

help the Bitcoin network upgrade again, like it did before. And not everyone could be a specialist,

of course, but there are plenty of things you can do, like you're not a doctor either,

but you can get like a second opinion or a third opinion. There's things you can do to

pit different experts against each other and learn. So I'm just trying to say that, people,

we have to solve this soft fork deadlock problem, and someone has to take responsibility,

and it should be the miners, because they are the ones who will actually suffer the most

if Bitcoin underperforms. Okay, cool. Hey, thanks. Thank you very much.

Hey guys, thanks for coming out to the 2023 North American Blockchain Summit.

It was the best summit yet. We look forward to hosting you again next year. If you enjoyed the

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